$5 Footlongs

Last week, in the midst of finals I stumbled upon the following article about Subway's $5 footlong promotion that wasn't the product of some marketing genius or a business savy Board of Directors but a store mananger in South Florida. In fact, the promotion was ignored for a year and then initially rejected by Subway's board of directors. However, this $5 footlong "phnomenon" not only boosted Subway to record sales (they earned an unprecedented 17% growth in a time of economic recession) but in the process, also "scrambled the whole industry." Every fast food restaurant seems to have some sort of copy on the $5 deal. It is surprising that a franchise that wasn't even in the top 10 last year is now setting the standard for the entire industry. In 2009, Subway gained more market share than both Burger King, Wendy's and Arby's. In 2010, Subway is poised to have more world-wide locations than Industry leader, McDonalds.

The success of this strategy "illustrates how a huge company can wake up and eventually seize on a good idea that's not generated at headquarters." It reminds me of the emergent school of strategic management that we discussed in my last International Business class. It is basically strategic managements reponse to the chaos theory, in that it only places limited importanance on top-down business strategy. This strategy, recognizes the fact that it is the day to day responses to a quickly changing environment that really determine success. We cannot predict the future so any long term plan must be fluid and flexible. A window of opportunity is usually only opened for a short period and the companies that can capitalize on that opportunity quickly are those who win. See...I really did learn something!

http://www.businessweek.com/magazine/content/09_46/b4155058815908.htm