Project Report On

Submitted by:
Khawaja Haris Hassan BB-09-98

Date: 14, May 2013

Submitted to: Sir Khurram Bukhari

Contents
Executive Summary ............................................................................................................................. 3 SWOT Analysis..................................................................................................................................... 4 COMPETITOR ANALYSIS ................................................................................................................. 7 Dealing with the Competition .............................................................................................................. 8 PORTERS GENERIC STRATEGIES ............................................................................................... 8 THE ANSOFF MATRIX ....................................................................................................................... 9 PEST Analysis .................................................................................................................................... 11 Porter's Five Forces Model Of Competition ................................................................................... 13 Financial Analysis............................................................................................................................... 19 Liquidity Ratios ............................................................................................................................... 19 Quick Ratio ...................................................................................................................................... 20 Vision Statement ................................................................................................................................ 24 Mission Statement.............................................................................................................................. 24 Recommendations ............................................................................................................................. 25 Recommendations particularly for franchise in Multan................................................................. 26 References .......................................................................................................................................... 27

Executive Summary
SUBWAY was started 48 years ago in the summer of 1965 by an 17 years old young man, Fred Deluca . Subway is the market leader in the sub and sandwich shops offering a healthier alternative to traditional fast foods. Subways annual sales exceeded $ 6.3 billion, while countless awards and accolades have been bestowed its chain over the past 48 years . Subway has more than 28,000 units worldwide whilst its rapid growth has attracted many investments and brought it many competitors such as KFC and Burger king . Recent initiatives attract customers beyond Subway traditionally health conscious consumers should increase the companys share of the fast food market. Subway's marketing program addresses health, fresh, custom-made sandwiches expectations of consumers through a number of approaches The Subway concept of serving fresh made sandwiches on fresh baked bread, made right in front of customers, the way they like it has proven to be a winning marketing strategy in Europe. Their customers have really respond to the high level of service that Subway restaurants are famous for. They have also become popular with health conscious customers in Europe who are searching for higher quality fast food options. Subways low initial investment and ability to fit into unusual spaces are other reasons for their success. Without the need for heavy equipments for cooking a Subway restaurant is the perfect business for the small spaces and tight real estate of U.K. Their regional office makes the franchise start process simple and easy. Europe is currently wide open for development. As their brand awareness grows in Europe, more and more people are becoming aware of Subway as a great tasting lunch option and also as a great way to start their own business within their community.
According to SUBWAYs future market expansion strategies they have planned to open 1600 locations in the U.K by 2013. In this Report I am going to discuss and explain what are the SUBWAY existing strengths, weaknesses, opportunities, threats, their marketing strategies, branding strategies and their recent and future changes which are effect their marketing success as a company. And also , as a marketer ,I discuss what are the changes they can do to minimize deviations from their original marketing objectives . In this plan I use my marketing knowledge to evaluate SUBWAY marketing strategies and , will be discussing their potential growth from my point of view. For this I use some marketing theories and concepts for explain my ideas. First I use small marketing environment audit using SWOT analysis, P.E.S.T analysis and five forces analysis to discuss SUBWAY marketing environment. Then I will discuss subway marketing strategies using Ansoff metrics and Porter s generic strategies while considering their marketing mix and finally will go for recent and future changes.

SWOT Analysis
Strengths
Worldwide brand recognition Customizable menu offerings Menu reflects demand for fresh, healthy and fast food Hygienic food and quick service. Offer healthy subs sandwich that are preferred and much better as compared to food items offered by other fast-food chains Franchisee staff training is structured, brief and designed to assure rapid start-up for new employees Low startup cost for franchisee Partnership with American Heart Association

Size and number of subway stores

Subway Restaurants is one of the leading submarine sandwich franchise based in the United States and having presence in almost hundred countries having over 37,248 restaurants all over the world. Subway has well established itself as a brand in the fast food industry and having brand recognition all over the world. The company has even positioned itself in places like hospitals, churches, schools and popular retail stores like Wal-Mart. In Multan subway has also positioned itself in education sector like southern Punjab by putting stalls there. Franchisee training is structured, brief and designed to assure rapid start-up and success. Subway is known to be a company that offers healthy subs sandwich that are preferred and much better as compared to food items offered by other fast-food chains. The company has partnered with the American Heart Association to add to its image further. The food menu of the Subway reflects the high demand of healthy and fresh food which is fast too.

The market share and the profits of the company that were due to sandwiches increased greatly as an effect to the decreased interest of the customer towards the chips and hamburgers due to increase awareness about healthy foods.. A Subway stores start-up costs are exceptionally low for a franchise and one reason the costs are so low is that Subway outlets feature a very simple operation. No cooking is involved so franchisees dont have to invest large sums in expensive grills and

fryers. Also, the dcor package is streamlined so that money isnt wasted on non recoverable assets. The marketing and promotional strategies adopted by the company are an example of the positive focus on demand, consumer preferences, trends, innovation. These further add to the strengths of the company.

Weaknesses
The decor and the look of the franchises seem to be old and outdated. Same case in Multan, the franchise is congested and outdated. Employee turnover is high Service delivery is inconsistent from store to store Small menu list and increasing operational cost of franchise Some franchises are unhappy

The decoration and look of the franchises is said to be old and outdated. Another problem with franchises is that the satisfaction level of the consumers is not the same across franchises and also some franchises perform very poor. Service commitment is not consistent from store to store. This can be said to be related to staff as there is not much motivation and the turnover rate of the employees is very high. For better marketing growth Subway should critically evaluate these weaknesses and make them manageable under some certain level.

Opportunities
Continue to grow Global business Improve franchisee relations Continue to revise and refresh menu offerings Update decor to encourage more dine-in business Expand packaged dessert offerings By improving the customer service model customer loyalty and satisfaction can be increased

There is always an opportunity to grow globally. Subway can invest more to expand its business in the international market. Subway should continue revise and refresh menu offerings. Subway can also make improvements in its decoration and look to encourage dine-in as it will make the sales up. Brand competition is getting stiffer in fast food industry so improvement in relation to customer service can make a visible difference.

Threats
Food contamination (spinach) Competition Interest Costs Economic downturn Disputes with franchise Legal issues

Main threats we can identify for Subway might be the food contaminations which are more popular recently (Ex. Spinach). Food contaminations are increasing in recent years and Subway marketing badly effect from it. In future it will be more due to lots of pollutants in environment. The Company faces serious threats from some of the large fast food chains in the world which include KFC, McDonalds etc. These restaurants are very old and have developed large loyal customer base over the years. The current economic recession is another threat for the company as it effects the consumption and spending power of consumers.

COMPETITOR ANALYSIS
Competitors

McDonalds Yum! Brands i)KFC ii)Pizza Hut iii) Long John Silver's iv)Taco Bell Dominoes Burger King Papa John's Pizza

Competitors

The purpose of analyzing competitors is to try and asses what they will do. This will enable the organization to respond accordingly. Competitors are sometimes used as
benchmarks.

Subway is not without competitive pressures. Chief competitors include Yum Brands, McDonalds. Four of the company's highly recognizable brands, KFC, Pizza Hut, Long John Silver's and Taco Bell, are global leaders of the Mexican, chicken, pizza, quick-service seafood categories. Yum! Has a workforce of 336,000 employees. In Multan the major competitor of Subway includes KFC and Pizza Hut which are the brands of Yum. McDonald's is the largest food service retailing chain with more than 33,000 fast-food restaurants in 119 countries. The company also operates restaurants under the brand names 'The Boston Market' and 'Chipotle Mexican Grill'. McDonalds operates largely in the US and the UK and is headquartered in Oak Brook, Illinois employing 420,000 people.

Dealing with the Competition

Use differential advantage of satisfying customers needs for convenient, value oriented products that taste good The customers may change the mix of which they consume fast food, so provide them with the variety Loyalty programs for heavy users to make them stay with Subway Events like sponsoring sports events, training youths for it, weight loss programs, hold brand ambassadors like Michel Phelps, SHILPA SHETTY ( in Indian Context) etc

PORTERS GENERIC STRATEGIES

Competitive Advantage
Low cot Higher cost

Narrow

Competitive scope

Overall cost leadership

Differentiation

Broad

Cost focus

Differentiation focus

Porters Generic strategies Focus means the company consolidates its efforts on a small range of products in a market niche. Differentiation means to establish a unique sales proposition or feature that competition cannot match. Cost leadership means the lowest price in the market. SUBWAY menu offered a wide variety including salads, pasta, dinners, soups and desserts. They have steps taken to improve business during dinner and late night sales and marketing to children. Their nutrition factors- fresh and so much healthier than others. More value for money improving quality will increase the value of the product. They have differential pricing strategy with value pricing. But create value products by service in terms of quality, ambience, variety and convenience.

THE ANSOFF MATRIX

Some of the more common marketing strategies are illustrated by the Ansoff matrix. Existing Products New Existing

Market penetration

Product development

Markets

Market development

Diversification

New

Market Penetration
Market penetration is when a firm increases its share of a market in which it already operates. SUBWAY always focuses their marketing strategies to penetrate the markets which they are already operating. They have one operating department, it is Franchise sales, this group is dedicated to finding those individuals who possess the entrepreneurial spirit required to open a SUBWAY franchise of their own. They find new franchisees to penetrate the market. Other way they use existing franchisees to penetrate the market. For this purpose also they have separate department, Profit Building & Local Marketing This department helps franchisees in local markets with initiatives designed to increase sales at their restaurants.

Market Development
This strategy involves finding new markets for the products a firm already makes. SUBWAY has developed a team specifying for market development. New Business Development This team works closely with potential franchisees who wish to open a SUBWAY restaurant in non-traditional locations--such as in a supermarket, movie theatre or gas station Subway restaurant sites are adaptable to any type of location. The simplicity of the Subway Restaurant operation and the ability to fit into spaces that competitors cannot enables them to open restaurants in many unusual and non-traditional sites, such as:

Airports amusement parks business centers coliseums and stadiums

colleges and universities convenience stores convention centers hospitals military bases recreational facilities elementary and secondary schools supermarkets travel centers/truck stops

Diversification
Diversification involves the firm going into new markets which are totally different from those targeted by the existing activities of the firm. SUBWAY is going for real estate markets, mobile phone markets and some financial markets to reduce their business risk through diversification. They have a team called Subway Real Estate Corp the men and women of this division assist franchisees with real estate leasing and negotiations.

Product Development
Improvement of products over time to maintain their competitive position. Product development is one of the main marketing strategies of SUBWAY, specially introducing improved healthier menus. SUBWAY has a Research & Development team this department is responsible for developing and test marketing the food that we serve and the equipment that is used.IN 2005 SUBWAY; their low-fat sub choices are expanded to 8 Subs less than 6 Grams of Fat. In 2007 The SUBWAY restaurant chain launches its Fresh Fit and Fresh Fit for Kids meals, which feature healthier-for-you side options such as apple slices, plump raisins, low-fat milk, bottled water and Dannon yogurt. The meals are developed to fit into the American Heart Associations approach to a healthy lifestyle. All trans fats are removed from SUBWAYs core menu items. Menu choices now include higher fiber Wheat and Honey Oat Breads, personal size Pizzas, Black Forest ham, and The Feast Double Stacked sub

PEST Analysis
Political Factors Technolo gical Factors

Economic Factors

Political Factors
Health and safety guidelines Labeling and GM foods Animal rights campaigns

Economic Factors
Low set up costs Franchising facilities set ups Support from major suppliers Growing market Perceived value for money Increasing disposable income

Social Factors

Technological Factors Investments in technological innovations Computer ordering(Till system)

Busy life styles Healthy eating and obesity Increased vegetarianism Homogeneity Social activities

PEST Analysis It is a huge advantage for a company that it considers its environment before beginning the marketing process. Letters PEST comes from words political factors, economic factors, social factors and technological factors. Although it is quite hard for companies to control or influence the macro-environment, PEST is one of the tools that help with becoming acquainted with the macro-environment.

Political Factors

Political factors can have either a huge impact or low impact depending on the way business operates. It includes areas like tax policies, employment law and consumer protection and governments decisions. Main political factors which are affecting to Subway are health and safety guidelines of the government. Labeling of genetically modified foods and animal rights campaigns specially organize by some environment friendly groups can affect business of Subway. Genetically modified food rejections also will be a big challenge for all kind of food produces especially for fast food producers. And environment friendly groups always make problems for meat and in future it will accelerate, so Subway should have think about alternatives for meats like flavored soy products, but Subway can take advantage of that problem since Subway go for healthy and low calorie food product marketing.

Economic Factors
Economic factors have an effect on all businesses, nationally and globally. Economic factors affect the purchasing power of the customers and the firms cost of capital. It includes areas like exchange rates, economic growth and inflation rate. Low set up cost is a good advantage for Subway. Franchising facilities setup, Support from major suppliers, Growing market for healthy foods, Perceived value for money and increasing disposable income are the main economic factors Subway face.

Social Factors
Social factors include also demographic changes. There are many factors that affect lifestyle. Some important factors are family, religion, education and locality. Population growth rate, age distribution and career attitudes are all included in social factors. Busy life style of the new generation is very good advantage for any kind of fast food industry. Awareness of healthy eating and obesity, increasing vegetarianism, homogeneity and social activities regarding fast and healthy foods are the main social factors which effect to Subway.

Technological Factors
Like all kind of companies Subway also facing the rapidly advancing of technologies. Subway also introduces and gets use of new technological innovations to expand and penetrate their markets. When they are designing decor for franchisees they widely use new technological designing tools.

Technology is driving the businesses and reduces time to market. Some Technological factors are research and development activity, automation. Investments in technological innovations and computer orderings are the technological factors.

Porter's Five Forces Model Of Competition

Subway and the global fast-food industry

Using the five forces model, assess the strength of each force within the fast-food industry.
The fast-food industry includes group of companies that are offering different products and services, which satisfy customers' needs. These products and services might be considered as close substitutes for each other. Therefore, the critical task of managers is to analyze the competitive forces in the industry's environment in order to identify the threats and opportunities that the firm can protect or get benefit from. Porter's five forces model helps manager to identify and analyze the competitive force within the industry. This model stated that the increase in the strength of a particular force limits and reduces the ability of established companies to increase their prices and earn more profits. By using this model, managers would

be able to identify new opportunities or threats that might affect their businesses' operations. The five forces model includes the following:

Risk of entry by Potential competitors.

Potential competitors are companies that are not currently operating and competing in a certain industry, but they are expected to enter the industry as they have the capability to compete with other companies if they choose. Potential competitors might face some difficulties or barriers that are formed by established companies that are already operating in the industry to discourage them from entering the industry. This is because the entry of potential competitors reduces the ability of established companies to hold their market share and generate profits. In addition, the barriers to entry increase the costs of entering potential competitors to the industry. These barriers include the following: Brand loyalty. It is basically about the buyer's preference for the products of established companies. The company can build its brand loyalty through the continuous advertising of the company's different products and brands, patent protection of product innovation that can be achieved through the research and development efforts. In addition, the firm could maintain its products' high quality and improve its customer's services and after-sales services in order to maintain its brand loyalty. Brand loyalty plays a key role to make it difficult for new entrants to take the market share of existed companies. Therefore, it reduces the threat or risk of the entry of potential competitors as they might found it difficult and costly to break down the well-established consumer's brand loyalty. Absolute Cost Advantages. The risk and threat of new entrants can be reduced, if incumbent companies have an absolute cost advantages. The incumbent companies can acquire absolute cost advantages by achieving superior production operations of having a good a control of inputs that are needed for production. In addition, established companies could obtain an absolute cost advantage by having an access to cheaper funds as they represent lower risks than entrants, which are not yet established.

Economies of Scale. They are the cost advantages that associated with large sized company. The sources of economies of scale include discount on bulk purchases, cost reduction, spreading of fixed costs over large outputs and economies of scale in advertising. The established companies that have high economies of scale would be able to reduce the risks of new entrants. Since, new entrants would face the risk of entering on a small scale and suffering of high cost disadvantage or entering on a large scale and hold a huge risk of high capital costs. In addition, new entrants would be forced to reduce their prices due to the high supply of products in a large-scale of entry.

 Governmental regulations. Government's regulations have played a key role as barriers into different industries. These regulations restrict the entrance of new companies into the industry. As a result this would reduce the competition level and help established companies to earn more profits. The sales in the fast-food segment of the food industry are growing rapidly. For instance, the sales increased from $287 million in 2011 to $393 billion in 2012 in the United States. The rapid growth would encourage lots of potential competitors who are not currently operating and competing in the industry to enter and establish their businesses. These potential competitors might be Heublein, Inc and R. J. Reynolds Industries, Inc or other companies, which have diversification strategy that includes the acquisition of different companies in several industries. For example, RJR has a diversification strategy into unrelated areas to its major business. It merged with KFC in 1982, but it sold it to PepsiCo after 3 years. Therefore, such companies could enter the industry if they have the capability to compete with other fast-food companies. Potential companies or new entrants would face some difficulties or barriers that eliminate their entrance. For example, brand loyalty to goods produced by incumbent companies is considered as a barrier to new entrants as they would take a long time to shift customers' loyalty to their products. In addition, the threat of new entrants can be reduced because most of the established companies in the industry have economies of scale advantage. For instance, McDonald's has cut its building costs and spread this fixed cost over large outputs. Also, PepsiCo has improved its economies of scale within its business operation by adopting the dual branding strategy. Therefore, this enables KFC to improve its customer base by increasing its menu offerings. This would reduce the threat of new entrants because they will not be able to compete in the market and hold high cost disadvantages compare to the already established firms. What is more, government regulations and other bureaucratic procedures make it difficult for new competitors to enter the market.

Rivalry among established companies:

The second competitive force is the extent of competition or rivalry among established companies in the industry. For instance, if the rivalry is weak, companies have an opportunity to increase prices and gain more profits. While, if there is a strong competition, companies would compete in prices, which might result in a price war. This would reduce or limit profitability due to the reduction in the sales margins. The extent of rivalry among established companies depends on the following factors:

 Competitive Structure. The industry's competitive structure refers to the number and the size of distribution of companies in the industry. The structure might be fragmented or consolidated the t have different rivalry implications. A fragmented industry includes a large member of small or medium sized companies, where no company dominates the industry. It characterized by low barriers to entry and its products are hard to differentiate. Therefore, whenever demand and profit are high, there will be a flood of new entrants who hope to enter the market. A consolidated industry is dominated by a small number of large companies (oligopoly) or in other cases by just one company (monopoly). In this industry, companies are interdependent, which means the competitive actions of one company directly affect other competitors' profitability and market share. Demand Conditions: The growing demand from new customers or additional purchases by existing customers helps to moderate competition as it provides companies with greater ability for expansion. In addition, it could reduce rivalry because all companies can sell more without affecting other competitors' market share, which increases their profits, While the reduction in demand increases rivalry in the industry as companies fight to maintain their market share and revenues. Therefore, companies can grow by taking market share away from competitors, which represents the decrease in demand to be viewed as a threat for companies. Exit Barriers: They are strategic, economic and emotional factors that keep companies in the industry even when returns are low. If exist barriers are high companies would be locked into an unprofitable industry where the overall demand is unstable or declining. This would result in an excess production capacity that would lead to a strong price competition, as companies would tend to reduce their prices to get rid of their idle capacity. The exit barriers include high fixed costs of exit (severance pay for large number of employees) and investment in plant and equipment that have no other uses and cannot be sold off. In addition, if the company is not diversified and highly depends on the industry as a source of income. As it was mentioned previously, the fast food industry is growing rapidly, which increases the competition among its existed companies to increase their sales, profits and market share. Therefore, each company is doing its best to acquire more of the sales and market share. For instance, there is a huge competition between KFC and McDonald's as each one of them is

competing to improve its customer services such as introducing new items in its menu and home delivery service.

The bargaining power of buyers

Buyers of a company might be the customers who used its products (end users), and companies that distribute the products to end users such as retailers and wholesalers. Buyers can be in positions that view them as a competitive threat for the company. For instance, when they are able to demand lower prices or better services. But, when buyers are weak, the company can increase its prices and gain more profits. Based on Porter's model, buyers are powerful in the following conditions: - When the buyers buy in large quantities as they can bargain for price reduction. - When the supply company depends highly on the buyer for large portion of its total orders. - When the supply industry includes small companies and the buyers are few in number and large. This allows the buyers to dominant and control supply companies. - When the buyers switch orders between companies as they bargain for higher quality or more services or lower prices, which makes companies play off against each other. - When buyers can supply their own needs through vertical integration. As a result, the supply companies would be threatened and forced to reduce their prices. - When it is possible and feasible for buyers to buy the input from different companies at once. The bargaining power of buyers in the fast food industry is very strong. This is because the buyers such as Subway, KFC and McDonald's are small in number and big in size, which gives them the ability to bargain for price reduction as they purchase in large quantities from suppliers. In addition, these firms have large internal cash flow that allow them to invest in cheap and less risky countries to supply their own input needs (vertical integration). As a result, the suppliers would be threatened and forced to reduce their prices. Also, the buyers would be able to reduce their costs and increase the competitiveness of their goods in the market. Another thing is that individual customers (end users) can have power over the fast food companies and force them to reduce their prices. For example, in

1991 families in the US looked for greater value in the food they purchase and forced fast food chains to reduce their operating costs and prices.

The bargaining power of suppliers

Suppliers can be a competitive threat in an industry because they can increase the prices of raw materials or reduce products' quality, which reduces companies' profitability. This is because the companies would not be able to pay or cover the price increase that suppliers have created. According to Porter, suppliers can be powerful when: - The products have few substitutes and are important for the buying companies. - The buying companies are not important for suppliers have their businesses and they don't depend on them to operate their businesses. Therefore, suppliers have little incentive to improve quality or reduce prices. - The industry's companies have differentiated products, which makes it costly for them to change their suppliers. This means companies depend on their suppliers and can't play them off against each other. - The suppliers use the threat of vertically integrated forward into the industry and compete directly with the industry's companies. This allows suppliers to increase their prices. - The buying companies can't match with the threat of vertically integrating backward and supply their own needs to reduce their prices. The bargaining power of supplier could be very strong, if we assumed that the buying companies are not important for the supplier as its business profitability doesn't depend on them. Therefore, he could set his own terms and offer them to the buying companies and if they refused to approve on the terms, the suppliers could go to other buying companies in the industry such as McDonalds if KFC refused the terms. From this it is clear that the buyer could not force the supplier to reduce prices or improve quality. On the other hand suppliers could have relatively moderate or weak bargaining power in the fast food industry. This is because the industry's products have lots of substitutes that customers can use to satisfy their needs. Also, the buyer's products are not highly differentiated, which makes it easy for them to change their suppliers. This means they don't depend on one supplier and can switch to other suppliers. Furthermore, the buying companies such as PepsiCo are not heavily depended on this industry to generate profits, but it diversify their business operations into

several unrelated industries to diversify its source of income. This helps to reduce the bargaining power of suppliers. Another thing is that the buyers who distribute the products to end users are big companies that are financially strong. This enables them to invest their money on cheaper countries such as Mexico and supply their own needs. From this we can see that buyers can match with the threat of vertical integrating backward and reduce the bargaining power of suppliers.

The threat of Substitute products:

Substitute products are alternative products that satisfy customer's needs in a similar way to those being served and provided by the industry. Therefore, product's shortage or increase in prices would shift customers to substitute products. That is why, the existence of substitute products acts as a strong competitive threat for companies as it restricts its ability to rise prices and increase profitability. On the other hand, if a firm's products have few close substitutes, it would have a good opportunity to raise its prices and gain more profits. The companies in the fast food industry are selling products that might be considered as substitute for each other as they satisfy customer's needs in the same way. Therefore, the shortage or increase in price of one of the products would shift customers to the substitute products. Also, if one of the fast food firms has developed new items in its menu, this might shift customers to the firm and increase its sales. For instance, KFC has lost its market share over the last two years to both Boston Market and Kenny Rogers Roasters because they have offered roasted chicken over the traditional fried chicken offered by chicken chains. Therefore, the increase in KFC prices would shift customers to other substitutes. Another point that I would like to mention is that products in each segment of the fast food chains is considered as substitute for the products that are being offered in other segments. For instance, the items that are being offered by Subway might be considered as substitute for other items offered by KFC.

Financial Analysis
Liquidity Ratios Current Ratio Current ratio= Current asset/current liabilities

We are familiar of the fact that if current liabilities are rising faster than current assets, than current ratio will fall, which is the sign of trouble. Current ratio of year 2010 and 2011 of Subway are C.R10 = 4,368,500/ 2,924,700 =1.493

C.R11 = 4,403,000/3,509,200=1.254 As the current ratio is more than one so it is acceptable .We can say that assets of Subway are more than liabilities that can cover them. The current ratio has shown a decrease in 2011because liabilities has increased with the more proportion as compared to assets. But still the current ratio is acceptable because its more than 1.

Quick Ratio
Quick ratio of Subway is calculated by cash plus short term marketable investments plus receivables divided by current liabilities Quick ratio = Total quick assets Current liabilities 2010 calculations Quick Ratio= 3,566,100/2,924,700 =1.22 2011 calculations Quick Ratio= 3,670,400/ 3,509,200 = 1.05 Quick Ratio is an indicator of company's short-term liquidity. It measures the ability to use its quick assets (cash and cash equivalents, marketable securities and accounts receivable) to pay its current liabilities. Subways Quick ratio has slightly deteriorated from 2010 to 2011. If quick ratio is higher, company may keep too much cash on hand or have a problem collecting its accounts receivable. Higher quick ratio is needed when the company has difficulty borrowing on short-term notes. A quick ratio higher than 1:1 indicates that the business can meet its current financial obligations with the available quick funds on hand

Cash Ratio
Cash ratio of Subway is calculated by (cash plus short term marketable investments) divided by current liabilities Cash ratio = Total cash assets Current liabilities

2010 Calculations

Cash Ratio= 2,387,000/ 2,924,700=0.82 2011 Calculations Cash Ratio= 2,335,700 /3,509,200 = 0.67

Cash ratio measures the immediate amount of cash available to satisfy short-term liabilities. A cash ratio of 0.5:1 or higher is preferred. Cash ratio is the most conservative look at a company's liquidity since is taking in the consideration only the cash and cash equivalents. Cash ratio is used by creditors when deciding how much credit, if any, they would be willing to extend to the company. Subways Cash ratio has slightly deteriorated from 2010 to 2011. It is an indicator of company's short-term liquidity. It measures the ability to use its cash and cash equivalents to pay its current financial obligations. Profitability ratios Operating Profit Margin Operating Profit Margin is calculated as operating income divided by revenue. Operating profit margin = 100 Operating income Revenues 2010 Calculations Operating Profit Margin=100x7, 473,100/24,074,600=31.04% 2011 Calculations Operating Profit Margin= 100 8,529,700/ 27,006,000 = 31.58% Subway operating profit margin has improved form year 2010 to 2011. A high or increasing operating margin is preferred because if the operating margin is increasing, the company is earning more. Operating profit margin measures what proportion of a company's revenue is left over, after deducting direct costs and overhead and before taxes and other indirect costs such as interest.

Net Profit Margin It is calculated as net income divided by revenue. Net profit margin = 100 Net income Revenues 2010 calculations

Net Profit Margin=100x4, 946,300/24,074,600=20.55% 2011 Calculations Net Profit Margin= 100 5,503,100 /27,006,000 = 20.38% Subway Net profit Margin is slightly deteriorated from 2010 to 2011. Net profit margin is a key financial indicator used to assess the profitability of a company. A low profit margin indicates a low margin of safety: higher risk that a decline in sales will erase profits and result in a net loss. Return on Equity It is calculated as net income shareholder equity. ROE = 100 Net income Shareholders equity 2010 Calculations ROE=100x4, 946,300/14,634,200=33.80% 2011 Calculations ROE= 100 5,503,100 /14,390,200 = 38.24% Subways ROE has improved from 2010 to 2011. Return on Equity (ROE) is an indicator of company's profitability by measuring how much profit the company generates with the money invested by common stock owners

Return on assets It is calculated as net income divided by total assets. ROA = 100 Net income Total assets 2010 Calculations ROA=100x4, 946,300/31,975,200=15.47% 2011 Calculations ROA= 100 5,503,100/ 32,989,900 = 16.68% Subway Return on Assets has improved in comparison of the previous year. Return on Assets (ROA) is an indicator of how profitable company's assets are in generating profit. The only common rule is that the higher return on assets is, the better, because the company is earning more money on its assets. Activity Ratios

Net Fixed Asset Turnover It is calculated as total revenue divided by net fixed assets. Net fixed asset turnover = Revenues Net property and equipment 2010 Calculations Net Fixed Asset Turnover=24,074,600/22,060,600=1.09 2011 Calculations Net Fixed Asset Turnover= 27,006,000/ 22,834,500 = 1.18 Subways Net Fixed Asset turnover ratio has improved. A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues.

Total asset turnover It is calculated as total revenue divided by total assets. Total asset turnover = Revenues Total assets 2010 calculations Total Asset Turnover=24,074,600/31,975,200=0.75 2011 Calculations Total Asset Turnover= 27,006,000 /32,989,900 = 0.82 This ratio has improved. Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue the higher the number the better.

Equity turnover It is calculated as total revenue divided by shareholders equity. Equity turnover = Revenues Shareholders equity 2010 Calculations Equity Turnover=24,074,600/14,634,200=1.65 2011 Calculations Equity Turnover= 27,006,000/14,390,200 = 1.88

Subways this ratio has also improved. The higher the ratio is, the more efficiently a company is using its capital to generate revenue.

Vision Statement
A vision is a statement of the future picture of an organization. Vision statements are important to remain focused on the goals of organization. The vision statement for subway is, Be the #1 Quick Service Restaurant franchise in the world, while delivering fresh, delicious sandwiches and an exceptional experience. Subway's vision is to provide its customers hygienic fast food and to be the largest fast-food franchise in every market.

Mission Statement A mission is a statement of purpose or core values. The Subways mission statement is, To provide the tools and knowledge to allow entrepreneurs to compete successfully in the Fast Food industry worldwide, by consistently offering value to consumers through providing great tasting food that is good for them and made the way they want it. Subways takes pride in serving each other, customers and their communities, and they know that the success depends on the initiatives they take individually and ability to work as a team. To Achieve Its Vision statement Subway is Working so hard to open its Restaurant in All the places of the world, and it is also successful in it, Since 2010 Subway has opened 579 New Restaurants and went to 8 New Countries. It has never Compromise on Hygienic food regardless some of their Customers asked them to change their taste by little bit compromise on Hygiene but Subway has Never done such Activity which can reduce its Hygiene, Subway has always Tried to get those suppliers who can provide them best quality raw materials even if its expensive e.g in Pakistan Subway is buying raw materials from Dawn, K&Ns & Haleeb & Unilever. SUBWAY is always committed to customer satisfaction through offering high quality food with exceptional service and good value. They always maintain their quality of customer service every franchisee outlet. They take great pride in serving each other, customers and communities. They seek continuous improvement in that entire

do. SUBWAY Value a sense of urgency and emphasize an innovative, entrepreneurial approach to business because especially they are in fast food industry. They expect fairness and mutual respect in all activities. They know their success depends upon the initiative they take individually and their ability to work as a team.

Strategies Subway Should

Recommendations Subways franchising concept offers the franchisee many advantages. The worldwide brand recognition and the slogan eat fresh is a benefit for every Subway restaurant. Subway offers the franchisee all kinds of support, for example site selection, restaurant design, equipment ordering. Subway has to focus its message on tasty, but healthy food, which is prepared quickly and freshly in front of the eyes of the customer. To get into the market, promotion activities according to the customers expectations like menu specials, free drinks and other performances should be considered, as a tool to get awareness. As discount importance, kids menu and entertainment are seen as very significant, it is recommended to adjust the marketing mix to the customers preferences. Moreover, the price of Subway sandwiches id comparatively higher as compared to the burgers of KFC and few other competitors. In this competitive market when customers has lot of options to avail then obviously most of the price conscious customers will prefer any other brand over Subway. The decor is also outdated. Customer expects some sort of attraction when they come to join Subway for the first time. Most of them want to have a family sitting arrangement in privacy which subway has no option. They treat all customers as same in pattern of sitting. There must be place allocated for kids so that they also come to have fun and of course a separate menu for kids must be added up as I explained before. Most of the Subway franchises in the world have the congested area inside so most of the time customer feel suffocation and if many customers come at the same time the place is not enough to compensate all of them. Subway must add few more items in the menu list as pizzas are only available to few places in the world. In order to grasp the more market share menu list must be expanded by offering various other items. One of the main target groups of Subway has been identified as teenagers and pupils. As they spend their free time hanging out with friends, online communities like Face book or chatting on the internet, online marketing would fit very well to this segment. One opportunity is to add banners with hyperlinks and/or pop-ups on the most popular websites. They could show the weekly and daily specials or promote the opening event. Due to the slowing down economy and fast food market growth, the conditions might seem demanding.

However, using this challenge as an opportunity to sell quick and healthy food can lead entrepreneurs to good achievements. The upcoming and still ongoing wellness and healthiness trend should be used as a steppingstone.

Recommendations particularly for franchise in Multan

Subway at Multan is operating well. As per the freshness and quality is concerned it is doing perfect performance but during my stay there as internee I have found that sales of Subway have declined as they were at the start. I have analyzed many reasons behind it. At first the sales were up because Subway has worldwide brand recognition so customers were waiting for a long to have subway in Multan as well. So at the start there was a charm and sales were even equal to 3 lacks a day but only the brand name is not enough to earn the profits and remain in competition. With the passage of time Sales has reduced. Few main important reasons in front of me are; 1) There is need of parking. As in Multan everyone has to face the problem of traffic jam due to poor conditions of roads so because that Subway do not have their own proper parking place, most of the customers prefer to go to KFC that is opposite to Subway as it has allocated a wide area for parking. I have asked this question many times to operations manager about the parking and every time he used to say that Development Agent is trying to get the nearby location for parking and soon this issue will be resolved. This will consider the weakness of Subway, two years has passed and yet the problem of parking has not resolved. 2) The area inside the Subway is congested and there is no separate place for family sitting in privacy. 3) There is no place allocated for kids fun as compared to its competitor KFC which is just opposite to it has provided a separate area for kids and most of the time kids force their parents to visit KFC because it has captured the attention of kids as well while is far behind in it. 4) Sometime a problem of temperature also occurs because of mismanagement when light goes and a delay occurs in starting the generator and in the end customer has to face it. 5) I have observed that many customers come and ask about the french-fries as in Lahore Subway offer it to the customers but in Multan they do not have french-fries in the menu list as it is not the part of Subway international menu but I think according to the need of customers there must be little bit

modification in the menu as they have done in Lahore but not yet available in Multan.

References
http://en.wikipedia.org/wiki/Subway_(restaurant) www.subway.com Personal Interview with Khawaja M. Jawad. http://www.dailymail.co.uk/health/article-2321877/Subway-meals-UNHEALTHIERMcDonalds.html Subway (2009) Mission and values, web page accessed on 10/05/2013 from http;//www.subway.co.uk.