Pret A Manger: Brazil SWOT analysis

A SWOT analysis pursues an integrated approach including key company variables and environmental variables with the objective to confirm the company’s internal strengths and weaknesses as well as business opportunities and threats in order to generate possible strategic options. (Böhm, 2009, Pg.1). As such, a Swot analysis is suitable to evaluate Brazil’s macroeconomic foundations and to assess what Pret A manger can add to the Brazilian food experience.

Strengths

Chemical Free products and Fresh food

Pret A manger uses a simple but unique ethos of chemical free food which abhors weird chemicals used at large in modern food (Gifford and Mcnally, 2007 Pg.7). This ethos has seen the company open 335 shops worldwide since 1986, although most of them are situated in the UK. It’s ‘ethos’ is a building block to it’s business model acting as a unique selling point. In Brazil, if carried out the same way, Pret A Manger can stand out as in they d0 in the UK despite competition from other fast food outlets such as Cafe Nero, Subway etcetera.

Strong social responsibility record.

Pret A Manger deals with fresh food only with new ingredients delivered every day and what is not sold is given away to charity (Gifford and Mcnally, 2007 Pg.10). Leftover ingredients are transported by electric vans all over England  for free. For example, in 2006, they gave away about a quarter of a million pounds worth of food and cash. In a country like Brazil, dogged with high-income inequalities, Pret A Manger would be a positive addition to Brazilian society because 8.9% of the population lives below the poverty line according to the world bank. This is because there is a strong association between social responsibility and behavioural customer loyalty  (Mandhachitara and Poolthong, 2011).

Excellent employee management

Pret A Mangers success is built around its employees who are not given scripts for serving customers or pigeon holed into performing the same repetitious tasks all day long (Daft, 2007, Pg.263). According to Pret A Manger, “first and foremost, we are passionate about food and keeping it fresh and interesting; secondly, Pret A Mangers passion is their staff, all 2200 of them spread across 116 stores.” (Dimant et al. 2011, Pg.2). Furthermore, the company only hires only 5% of those who apply for jobs (Schmitt, 2003, Pg.160). This enables to cultivate a culture of competition where employees feel a sense of achievement. Consequently, in 2010, Pret A Manger won the award for the best retail company in the UK in recognition for “commitment to its people and to its fresh preservative free food.”(Dimant et al. 2011, Pg.2).

Weakness.

A business model is the manner by which the enterprise delivers value to customers, entices customers to pay for value and convert those payments into profit (Teece, 2010).  Pret A Manger’s business model is to sell fresh food devoid of chemicals, however, this service is easily replicable and today there is a variety of stores in Brazil that serve fresh product, in fact, Brazil is among the world’s top agro-exporters, fresh produce is readily available and easily accessible. As such, Pret A Manger might not be as successful as in the United Kingdom.

Opportunities

New food regulations favour Pret A Manger

In 2014, Brazilian health officials designed guidelines to help and protect against undernutrition, to prevent the health consequences of overweight and obesity, which are sharply increasing (Nestle, 2014). The guidelines are hinged on the three golden rules below.

  • preparing meals from staple and fresh foods,
  • use of oils, fats, sugar and salt in moderation
  • limiting the intake of ready to consume products, avoiding those that are ultra-processed.

This is a great boost for Pret A Mangers business model. As earlier mentioned, at the centre of Pret A mangers success is selling fresh food that is chemical free. Given the company’s success in the UK and their experience in non-processed foods, Pret can scale expertise to the Brazilian food market. 

Growing economy and Middle class.

As aforementioned, the Brazilian middle class has grown from 15 to a third of the population, in fact as of 2015, Brazils consumer spending is thought to be 1.4 trillion dollars (Statista, 2015). Moreover, the Brazilian fast food market has seen a rapid growth over the past years with the sector hitting sales of 50 billion Brazilian real ($21.7) in 2013, up 82% since 2008 (Kharpal,2013) This middles class provides Pret A Manger an opportunity to expand to Brazil and increase its revenue.

Threats.

Corruption

Companies in Brazil have to deal with a wide range of regulatory agencies. In effect, according to transpeancey.org, “bureaucracy can increase the likelihood to demand bribes by public officials”. Furthermore, according to a survey in 2009,  almost 70% of Brazilian business owners and top manager identify corruptions as a major constraint in the private sector (Transparency.org, 2015). Pret A Manger is seen as an ethical business in the UK and other countries where it has operations. However, it could face challenges in Brazil where many business function on the basis of bribes which is not Pret A Mangers style. As such, corruption in Brazil is a threat to Pret A Mangers operations in Brazil.

Unpredictable tax bills.

In Brazil, tax disputes are a common feature in business life, businesses are often handed tax bills by authorities due to misunderstandings, nothing is certain and uncertainty hurts business. For example, in mid-2012, Eike Batista one of Brazil’s richest was handed a tax bill out of the blue relating business activities in 2007 amounting to 3.8 billion reais ($1.8 billion) (The economist, 2013). However, he is not alone, Petrobras, the state-controlled oil giant in 2013 was fighting a 4.8 billion reais tax bill relating to the leasing of oil platforms between 1999 and 2002. This threatens Pret A managers expansion to Brazil.

 


Bibliography

Rujirutana Mandhachitara, Yaowalak Poolthong, (2011) “A model of customer loyalty and corporate social responsibility”, Journal of Services Marketing, Vol. 25 Iss: 2, pp.122 – 133

Daft, Richard L. Organization Theory And Design. Mason, OH: Thomson South-Western, 2007. Print.

Dimant, E et al. Prêt A Manger. A Business Model Analysis. Munich: GRIN Verlag GmbH, 2011. Print.

Transparency.org. ‘Transparency International – Country Profiles’. Transparency.org. N.p., 2015. Web. 7 Feb. 2015.

 Gifford, Jane, and Paul McNally. Pret. Millers Point, NSW: Murdoch Books, 2007. Print.

Kharpal, Arjun. ‘Fast Food Giants Locked In Battle For Brazil’. CNBC. N.p., 2013. Web. 7 Feb. 2015.

Nestle, Marion. ‘Food Politics » Brazil’S New Dietary Guidelines: Food-Based!’. Foodpolitics.com. N.p., 2014. Web. 7 Feb. 2015.

Statista, ‘Total Consumer Spending In Brazil 2013 To 2018 | Statistic’. N.p., 2015. Web. 7 Feb. 2015.

The Economist, ‘Nothing Is Certain’. N.p., 2013. Web. 7 Feb. 2015.

Teece, D. J. Business Models, Business Strategy And Innovation. 1st ed. Long Range Planning, 2010