With the advent of globalization, almost every organization is expanding in other parts of the world, that not only enables them increase the share of profitability, but also helps them earn brand recognition. However, the international expansion policy of an organization must be backed up by an effective international management approach, or else the organization’s international ventures will fail to thrive itself in a highly competitive environment (Alden et al. 2017). While operating business in a cross-cultural set up, an organization may encounter linguistic, behavioral as well as cultural differences that if not handled well can pose a threat to the long-term sustenance of the company. The aim of this report is to analyze the strategies undertaken by Pizza Hut for its international expansion. In addition to this, the issues faced by the organization in doing so shall be discussed as well.
Pizza Hut, founded in the year of 1958, has emerged to be one of the most recognized America restaurant chains and although the company is primarily known for selling Italian-American cuisine menu including pizza and pasta to its consumers, it operates in more than 15,000 locations across the world (Pizzahut.com.au 2017). Despite being the largest pizza selling company of the world, the company is encountering various international management issues that can pose a threat to its future sustenance in the foreign nations. The organizational culture, business approach as well as the structure has remained same, although the company has been operating business in foreign areas. The work style, leadership style and the organizational approach of the company remains the same, although the company operates business in the foreign locations. Hence, the present report intends to analyze and evaluate the international management issues as encountered by Pizza Hut and understand the underlying factors behind the same.
As an international franchise, Pizza Hut has earned huge recognition over the last years. Operating in more than 94 countries, Pizza Hut has been known for satisfying the demands of each consumer (Pizzahut.com.au 2017). However, in the process of international expansion, the organization doe encounter many issues as its structure or organizational culture does not always comply with the same followed in other parts of the world. Hence, the objectives of the present research are to analyze and evaluate the international management issues as encountered by Pizza Hut in the process of global expansion.
In order to conduct any research, it is imperative to adopt the most effective and systematically organized method of collecting and analyzing the data, and herein lays the importance of selecting the most effective research methodology. A research methodology offers the structural framework of the methods intended to collect the data. The research method adopted to collect the data in the research is the Qualitative Research Method. The qualitative data helps in getting an insight into multiple opinions and ideas expressed regarding a specific issue, and develop an in-depth understanding of the entire scenario by interpreting the facts and issues unraveled there (Liamputtong 2013). The following research has been conducted by collecting secondary data from various literary sources, such as books, commercial journals, and company websites of Pizza Hut, annual profit reports, online journals and published business articles (Bryman and Bell 2015).
The research has been carried out by collecting two types of secondary data- the former group of data gave an insight into the international management issues as encountered by some of the eminent business organizations of the world, and the latter group gives an insight into the international management issues as encountered by Pizza Hut in general. It is equally important to interpret the collected data as well, and accordingly the research data has been analyzed as well (Liamputtong 2013). After the review of the literary articles, important statistical as well as factual information about the revenue earning capacity of Pizza Hut and its international market challenges have been noted down. The facts and information collected has been cross-checked with other articles and business reports to validate the inferences, and subsequently the facts have been compared to the theories of international management such as the cross-cultural business theory of Holfstede. Accordingly the relation between the variables- ineffective international business management strategies at pizza Hut and fall in the share of profitability has been established.
The global sensation of deliciousness named pizza hut started back in 1958 in Wichita, Kansas, with second hand equipment worth borrowed 600 dollars in a small rented building. The organization has progressed a long way since then, and has successfully expanded all across the globe. The presence of a colorful pizza hut outlet can be seen everywhere, in every nook and cranny of different continents. It has to be understood that the global response that pizza hut has received in the past is exceptional and inspiring, however thinking from a corporate point of view, the resistance to international expansion is an inevitable phenomenon, and Pizza hut has not been an exception (Iyer et al. 2015).
In the last few decades they have taken over the Asian, European and African demographics appreciably. The international presence of the organization includes India, Pakistan, Bangladesh Malaysia, Thailand, Singapore, Indonesia, China, Saudi Arab, and Iraq in the Asian continent. And in the European continents, emerging markets of UK, Sweden, and Spain have been taken over swiftly as well. The Australian and African markets have not been deprived of the delicious goodness of Pizza hut products as well, and to presume they have not received a substantial resistance would be blasphemous (Christian and Gereffi 2010).
It has to be understood that the Italian American fusion of a cuisine that Pizza hut is characterized for has been a breath of fresh air to the countries it opened in. They have been pioneers in the oath they chose and the lack of any possible competition in market is what drew them to expand into the uncharted territories. On the face of their global domination of the international market, to say that their expansion strategies have been fruitful would be an understatement (He et al. 2013). However, parallel with the phenomenal success, they have also faced a few pitfalls in their journey as well.
The history internal turmoil and expansion resistance to the business of pizza hut started with their expansion in Canada, where the acquisition brought the air of trouble of accounting system errors and franchise problems to the mix which led to flattened sales and reduced profit back in mid 1900s. Along the way the organization has survived the occasional pitfalls by changing their organizational structure and continued to expand to Germany, Munich, Japan, Moscow, UK and Australia and was successful in attaining the title of being the largest pizza chain of the world in the late 1900s (Iyer et al. 2015).
Coming back to the present, the company has been successfully taken over the market of China and Africa, where they have encountered a significant failure in the last decade. Due to the difference in culture and cuisine choices, the American first choice of delicious fast food has failed to captivate the target market of china and Africa. The organization however has attempted to overcome this failure by rebranding into takeout and delivery services adding local flavours to the mix, a strategy that has been successful in luring back the alienated local customers (Lee and Yoo 2012).
Strategic planning is the most crucial element of the Human Resource Management. This is important for every action undertaken by the organization in order to carry out their organizational activities. The best strategic planning undertaken by Pizza Hut in order to compete with other fast food giants like Domino’s, Burger King or McDonald’s is to deliver Pizza in the shortest possible time. Thus, they are the hunger specialists who shall be present there to serve people in no time (Watrous 2017). For instance, one of the strategic decisions that Pizza Hut took was related to Supply Chain Management. In Africa, in countries like Kenya, Ghana and Nigeria, there were fewer competitors in terms of supply chain. The supply chain companies were less reliable but the market gave the right opportunity to Pizza Hut for its expansion. Taking the advantage of the same, Pizza Hut invested in the supply chain management and made the delivery options and supply of goods easier for the organization (Finance.yahoo.com 2016).
The strategic planning was not only limited to organizational activities but it was also concerned with the kind of food products that is offered to the people. For example, it has been found that when the Company expanded in the Asian regions like India, where there are mixed cultural people, the organization started offering a large variety of food products. The products offered by Pizza Hut were mainly based on chicken and other meat items like pork or beef (He et al. 2013). However, when it started operating in India, it has to limit its non-veg products and in fact, it has also been found that they started offering vegetarians as well. Considerations were also made in terms of using toppings for the pizza as it is quite clear that the taste varies from people of one country to other. Therefore, it can be easily said that the strategies change when it comes to international operation.
The strategies for fighting against the increasing competition in the market were related to a number of factors. For example, in many countries it has been found that the only major international competitor of Pizza Hut was Domino’s and there were other local competitors. Pizza Hut offered the scope of dining for the consumers that no other pizza companies were found to offer (Sheehan 2014). Cost effectiveness is another measure that has been used by the organization as a part of their strategic management. Strict check on the price of the products of the competitors was kept that helped it to overcome the competition and attract more consumers. In addition to this, it has also been found that the organization has also come up to offer a wide range of products to the consumers. Thus, the food products were not only limited to pizza but other items as well.
The organizational structure plays a profound role in constructing the path for success for any organization, and when expansion is brought onto the scenario, the organizational structure is heavily influenced by the cultural differences largely. Pizza hut was founded by Carney brothers in Kansas, and this US based company is now expanded all over the globe, naturally there have been profound changes to the organizational structure as it continued to expand (Rijal 2015). Their American style cutthroat business processes had to undergo many changes to fit into different demographics. For example in order to successfully expand in Asian countries, their organizational structure has been influenced by the Asian culture and values along with the Asian target market and their cuisine choices. Pizza hut started with a strictly Italian American cuisine, which is still followed in the American outlets, while the menu and the organizational structure have been completely modified in the international franchises in accordance with the cultural differences (Mansi 2010).
Apart from that, the impact of a culturally diverse workforce on the organizational structure of a business organization is paramount and the corporate business process has changed with the influence of local employees and their cultural backgrounds in the expansion outlets as well (Hogan and Coote 2014). As mentioned above, in the last five years the company faced a huge failure after a multimillion dollar expansion project in china and Africa due to the vast difference in the culture and lifestyle choices of the target market, and the company survived this pitfall by completely changing the business process into takeout and delivery services including local flavors rather than emphasizing on the signature American style (Rijal 2015). Hence the changes in the business process and structure on the face of global expansion is inevitable, moreover these changes are the integral elements that allows the organization to overcome the resistance and establish a stable niche in alien market.
Organizational Culture issues face by Pizza Hut:
The culture is an important concept and is defined as the set of values, ideals and norms followed by the members of a group that distinguishes them from the members of another group. The organizational culture of a company is defined as the values and the ideals as well as the underlying assumptions that underlie the managerial decisions undertaken by the management authority of a company in handling its employees as well as its consumers (Hogan and Coote 2014). Initially during the early years of its expansion, Pizza Hut did encounter adequate challenge with it organizational culture. The organizational culture followed at Pizza Hut is more of an informal, free and rewarding one. During the earlier stage of expansion, the company being a US one used to reward its employees with money for their outstanding contribution. However, while it expanded in Japan, it kept on retaining the organizational culture and did not alter or modify its reward strategy. However, it soon discovered that the relation between job pay and incentives and employee satisfaction is not as same in US as in Japan. Hence, it is recommended that the company while expanding in countries enjoying collectivist cultures must ensure that it offers flexible working schedules or work from home facilities as a means of rewarding employees (Alden et al. 2013).
Having a thorough understanding of the foreign culture forms an important part of the marketing strategy of any company. In this connection, it should be mentioned that international organizations should look to adopt and unify culture so that there is less friction between different business units as well. Again, although in the West, the business units of Pizza Hut already enjoyed the leadership of women, the traditionally patriarchal attitude to life and business has initially hindered acculturation of the organization at Asia. The arrival of expatriate female leaders in Asian countries for the respective branches of Pizza Hut has not been welcome warmly. Hence, it has become imperative that Pizza Hut sends corporate leaders to local subsidiaries should be aware of the key competencies of a global manager and use appropriate tactics for staffing and selection (Putra et al. 2016).
Conclusion
The report has offered a wide of discussion in terms of international expansion of Pizza Hut and the way the management strategies differ from one region to the other. It has been evident that Pizza Hut has its own organizational culture and structure but the same was found to drift away when it started expanding in other regions of the world. The Organization faced lots of challenges in terms of socio-economic condition of the country or the government policies but the same has been rightly overcome by the organization. The organization has been successful in its international marketing. A detail analysis of the organizational structure and culture has lead to the outcome that with the change in the region, an organization also has to change its leadership style or way of conducting the business. It is important to adapt to the particular region else, the organization could not be successful in fulfilling its international strategies.
References:
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