Chipotle: Mexican Grill, Inc., Food with Integrity

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Corporate governance is also a primary element in a successful expansion into international markets. Corporate governance “is a set of mechanisms used to manage relationships with stakeholders” (Hitt, Ireland, & Hoskisson, 2015). Chipotle boast a comprehensive corporate governance structure that includes, The Board of Director, shareholders, a Chief Executive Officer, accountability of senior management and responsibilities for all parties (Chipotle, 2012). An importance aspect of the corporate governance structure is a Quality assurance department that monitors quality and food safety for all suppliers, distribution centers and food they serve.

Justification

All aspects of Chipotle international strategy fits with its mission of “Food with Integrity.” The focused differentiation strategy targets the primary market of the millennial generation. This generation is typically more health conscious than traditional Baby Boomers and is now the largest population group.

The millennials also embrace non-traditional methods of advertising. Chipotle capitalizing on this uniqueness by employee low-cost strategies such as customer loyalty programs, contest, Facebook and Twitter advertising and cooperative marketing and sponsorships.

By analyzing the strength, weaknesses, opportunities, and threats, along with Porters’ Five Forces, it is easy to understand why Chipotle’s differentiation strategy of using organic, ingredients, meals and an overall unique experience has provided successfully.

Another reason for Chipotle’s success lies with the strategic alliance with McDonalds, who had resource similarities and therefore shared distribution networks, and supply chain systems. Upon successful expansion, McDonalds decided to divest, to focus on their initial core focus.

By using Chipotle’s core competencies, international expansion became the next untapped market. The global expansion allowed the company to increase their market size by taking advantage of increasing organic food trends. Other benefits included cost savings by utilizing economies of scale and allowed location benefits of access to additional organic suppliers.

A final aspect of the success of Chipotle is the corporate governance structure which boasts of one of the most comprehensive Quality Assurance Departments in the restaurant industry.

Summary

Chipotle Mexican Grill, Inc. has built a reputation of uniqueness while maintaining sustainability. With all the success in the “fast casual market,” Chipotle has experienced, this differentiation may be the company’s undoing. Chipotle has had several cases of food poisoning, and Noroviruses reported worldwide. Noroviruses are a group of related viruses that create gastroenteritis. The illnesses have caused the stock to fall dramatically and removed Chipotle as one of the top four fast casual Mexican restaurants in the world. (NYSE, 2016)

Obviously, the safety of organic ingredients is called into question or at a minimum the corporate governance of the Quality Assurance Department. With this knowledge, it will be interesting to see how the company retrenches and what their next strategy is to win back their target market.

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References

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