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Pizza Hut Report in UAE

Thesis · January 2011

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Umair Usman
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Pizza Hut in Russia

 Submitted By: Umair Usman Ghani
Registration # 1511-107-010
Dated to: 10th January, 2011

Table of Contents

1. Introduction ------------------------------------------------------------------------- 1
2. History ----------------------------------------------------------------------------- 2-3
3. SWOT Analysis -------------------------------------------------------------------- 4-5
 4. Corporate Objectives ---------------------------------------------------------------- 6
5. UAE Subsidiary Objectives ----------------------------------------------------- 7
6. Global Strategic Thinking ----------------------------------------------------------- 8
7. Organizational Strategy ------------------------------------------------------------- 9
8. DFI Strategy ------------------------------------------------------------------------ 10
9. Marketing Strategy ---------------------------------------------------------------- 12
a. Segmentation --------------------------------------------------------------- 12
b. Targeting ------------------------------------------------------------------- 12
c. Positioning ------------------------------------------------------------------
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10. FinancialStrategy ------------------------------------------------------------------- 13
11. HRM Strategy ---------------------------------------------------------------------- 14
12. Operational Strategy --------------------------------------------------------------- 15
13. Recommendations and Future Implementations ----------------------------- 16-17
14. Annexure --------------------------------------------------------------------------- 18

Acknowledgement
I would like to thanks to the most Merciful, Benevolent, and Beneficial Almighty ALLAH, who
has helped me at every stage and make me able to thoroughly study and understand the case and
give my best efforts to complete this report, with my best understanding.
 Introduction
After thoroughly studying the case of Pizza Hut in UAE, according to the situation it is in 1997, I
have written down certain points to carry out its operation efficiently. Those points includes from
corporate and UAE subsidiary objectives to strategic global thinking, organizational, DFI,
marketing, financial, HRM, and operational strategy.

In the end of this report, I have made recommendations regarding the UAE operations of Pizza
Hut to the management. And also have given future implementation guidelines.

I have use the SWOT analysis tool to set Pizza Hut strategies. Through which I have evaluated
Pizza Hut UAE operationswhich give no good sign for success foe future if they carry out
operations in same way as they are doing now. My study about Pizza Hut shows that in Russia
there is threats in-comparison to opportunities. And unfortunately Pizza Hut has not done well in
utilizing its strengths which ultimately turn into its weaknesses, which are greater in numbers.

As on the page 9, in marketing strategy formed that there is strong need for right positing on the
bases on good quality food, minimum time to get delivery, and with international taste. All these
variables describe Pizza Hut identical position which they have to create in the minds of UAE
people.

On the financial and DFI ends, although Pizza Hut have sound financial position but, as describe
on page 10, to avoid financial risk they needs to set some financial arrangement and investment
portfolio management to get better returns. Also some valuable strategies have give for DFI and
other components for international operations.

At the end of this report valuable recommendations and future implementation suggestions have
given to improve Pizza Hut UAE, as well as international operations.

History of the Case

Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of Wichita,
Kansas. When a friend suggested opening a pizza parlor, they agreed that the idea could prove
successful, and they borrowed $600 from their mother to start a business with partner John

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Bender. Renting a small building at 503 South Bluff in downtown Wichita and purchasing
secondhand equipment to make pizzas, the Carneys and Bender opened the first "Pizza Hut"
restaurant; on opening night, they gave pizza away to encourage community interest. They chose
the name "Pizza Hut" since the sign they purchased only had enough space for nine characters
and spaces. Additional restaurants were opened, with the first franchise unit opening in 1959 in
Topeka, Kansas. The original Pizza Hut building was later relocated to the Wichita State
University campus.

Dan and Frank Carney soon decided that they needed to have a good standard image. The
Carney brothers contacted Wichita architect Richard D. Burke, who designed the distinctive
mansard roof shape and standardized layout, hoping to counter competition from Shakey's Pizza,
a chain that was expanding on the west coast. The franchise network continued to grow through
friends and business associates, and by 1964 a unique standardized building appearance and
layout was established for franchised and company-owned stores, creating a universal look that
customers easily recognized.

By 1972, with 314 stores nationwide, Pizza Hut went public on the New York Stock Exchange
under the stock ticker symbol NYSE: PIZ. In 1978, Pizza Hut was acquired by PepsiCo, who
later also bought KFC and Taco Bell. In 1997, the three restaurant chains were spun off into
Tricon, and in 2001 joined with Long John Silver's and A&W Restaurants to become Yum!
Brands. The oldest continuously operating Pizza Hut in the world is in Manhattan, Kansas, in a
shopping and tavern district known as Aggieville near Kansas State University.

Traditionally, Pizza Hut has been known for its ambiance as much as pizza. Vintage "Red Roof"
locations can be found throughout the United States, and quite a few exist in the UK and
Australia. Even so, many such locations offer delivery/carryout service. This building style was
common in the 1960s and 1970s. The name "Red Roof" is somewhat anachronistic now, since
many locations have brown roofs. Dozens of "Red Roofs" have closed or been rebuilt. Many
"Red Roof" branches have beer if not a full bar, music from a jukebox, and sometimes an arcade.
In the 1980s, the company moved into other successful formats including delivery/carryout and
the fast food "Express" model.

SWOT Analysis
Opportunities

− International operations apparently seem sound and no negative impact is coming on the
subsidiary of Pizza Hut.

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Threats

− Recently the country is getting out of the totalitarianism and moving to more liberal
reforms. And disparity needs DFI including improving their export base.
− Former USSR culture is far different from USA.
− Pizza Hut did not show any competency in understanding the immensely different culture
and social aspects.
− Legal systems are far different from western world and many certain laws non-existence.
− Russia has attracted DFI but its policies related with industries suffering from

comprehensivesupply system. Strengths

− Pizza Hut is maintainingformidable position in direct competition.

− The suppliers are happy in dealing with Pizza Hut.
− Pizza Hut is sound in the area of finance.

Weaknesses

− While entering into UAE Pizza Hut did not carry out namely and more importantly
consumer study customers are incling towards patenizing American fast food within
Pizza Hut.
− Pizza Hut did undertake detail comparative analysis in the areas of genetic marketing,
product type market, and varied market.
− Pizza Hut fails to understand how to maintain upstream relationship and bringing about
effectiveness in supply system.
− There is no system in place where by labor can be governed including their rights and
interest.
− The strategic thinking of globalization more importantly establishing subsidiaries in other
countries lacks dimension and professionals.
− Overall marketing management needs improvement particularly in the areas like
segmentation, targeting, positioning, and product strategy.

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− Human resourcemanagement has a trust in developing a pool of competent people
retaining them and rotating them for the benefits of organization and developing the
carriers of individuals.
− Industry standards related to operations are not functioning appropriately and there are
gaps resulting inefficiency.

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−
Corporate Objectives
Pizza Hut focused on to make greater market presence in Easter and Russian market
place.
− It performance is measured on minimum time and high quality food with well managed
financial portfolio.
− Within 5 years, Pizza Hut will achieve profitable market share in developing market.
− Pizza Hut corporate objectives are to get wealthy market share in new region of Eastern
Europe.
− Try to reinvent efficient Supply Chain Management.
− Provide well trained work force and introduce on job development program.

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−
− Increase profitability margin.
− Set new recycling system for social welfare.

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−
UAE Subsidiary Objectives
Open 5 new franchises by expanding.
− Creating new product-line and offering better variety current product.
− Pizza Hut managers needs to learn UAE rules, negotiation, and threats from local officials.

− Local managers need to get well study about local operation before getting into the
operations and this require development programs for managers assign by Pizza Hut.
− Pizza Hut has to made good relations with UAE in order to smoothly run it UAE
operations.
− There is a need to develop proper supply system before coming into actions.

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−
Strategic Global Thinking
To spread its horizon Pizza Hut need to view world as its one pool for hiring and
competitive people and resources.
− They rapidly have vision for globe but act locally.
− Their decisions are based on what is best for the overall company.

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−
Organizational Strategy
Organization structured based on the basis of mixed that best meets the needs of the
company.
− Russian operations are important as international operations at present.
− In business and product strategy functional structure is best to little need to adopt local
taste.
− To carry out effective operations in emerging market from socialism, Pizza Hut needs to
decentralize its international operations.
− It is better to hire local managers in rather than bringing from home country. Because local
much better understand how to get job done instead to wasting time and making mistakes.

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−

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−
Direct Foreign Investment Strategy
Invest to get strong foothold in Eastern Europe and Russia.
− To enhance corporate image, Pizza Hut needs to explore world markets.
− Not only too rely on triad nation it needs expand its investment in other regions.
− To increase sales and profit they have to find place in developing countries.
− Protect foreign market inevitable if they do not local competitors would have to erode the
firm position.
− Direct foreign investment to improve market position. −
It also helps to enhance product recognition.

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 Marketing Strategy
Segmentation:

− Fast-food is a new trend in Russia, so there is no direct competition and organization has
vast experience in this industry. To tap new area and create new value in market.
− Those people who are time constrained and young are place on primary segment of Pizza
Hut.
− Those who are intended toward experience new foreign taste.
− Low income group are on preference. As Pizza Hut products are available at affordable
prices.
− Consumers become loyal to Pizza Hut as they benefited and get new lifestyle.

Targeting:

− Pizza Hut target market will be based on those who are on fast lane, price conscious, and
taste adventurous.
− This will show healthy financial gain and increase financial performance.
− Sales on frequent consumption bases.
− Reputable market position in fast food industry.
− Customer satisfaction measure in loyalty and consumption.

Positioning:

− In this, we decided that our target market perceived Pizza Hut as fast food, with
international taste, excellent food quality, and affordable food brand.

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−

Financial Strategy
Pizza Hut has to reinvest in UAE operations.
They have to start franchising operations to minimize their financial risk associated with
Russian economy.
There is also possibility for licensing arraignment.
As Russia is intended toward market oriented nation and welcoming DFI. So, there are more
chances to approve good amount of loan from local financial institutions.
To avoid the risk of currency fluctuation, Pizza Hut needs to reinvest in UAE operations.

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−

Human Resource Strategy

Pizza Hut needs to provide training to their workers of UAE operations, so that they can
meet world class standard.
Pizza Hut provides management development to enhance their skills, experiences, and
attitude. So that they become successful leaders.
Provide cultural orientation to familiarize with cultural institutions and value system of
UAE.
Give field experience by sending managers to UAE assignment to undergo some of the
emotional stress of living and working with people of Russia.
Pizza Hut designs a program for culture orientation by familiarizing their personal with
Russian institutions and value systems.

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−

Operational Strategy
Pizza Hut localizesproduction by investing in research. So they can identify local needs
of the market.
− They need to reinvest in local Supply Chain operations to make it more efficient and
become self-sufficient.
− Pizza Hut encourages its managers to learn UAE culture and become part of country.
− Through delegating authority to their managers and developing and promoting them
wherever possible, Pizza Hut can get best result in productivity.

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 Recommendations and Future Implementations
After thoroughly studying Pizza Hut case in Russia, I recommend to the management that there
is a lack of understanding Russian marketplace and Pizza Hut need to make a complete research
on newly market oriented country, which is emerged from totalitarianism.

There are some basic pillars which have to be well study before making any decisions. These
components are listed below;

a) Social environment
b) Cultural factors
c) Economical conditions
d) Financial position
e) Legislations and policies
f) Competition
g) Government policies for the industry

After studying these factors Pizza Hut can avoid on the job mistakes and can develop efficient
market share with utilizing minimum resources.

For future implementations, I would like to suggest Pizza Hut to implement strategies which are
pointed out in this report, namely the organizational strategy, direct foreign investment strategy,
marketing strategy, financial strategy, human resource strategy, and operational strategy.

In which there is much more space for improvement in especially in organizational, human
resource management, and marketing strategy.

They have to restructure there organization according to the international operations, function,
and product needs bases. As well as they have to develop their management skills.So that they
become able to tackle unusual situations arrived in foreign country.

The same thing will apply in marketing strategy, where they need to come-up with sound study
and research to avoid mistake – try-and-error – which give horrible impact on marketing
operations.

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 Annexure
A questionnaire made for management personal assigned at UAE for Pizza Hut operations.

1. Are you satisfied with the autonomy assign you for conducting efficientlyoperation in
UAE city?

Satisfied Not satisfied Don’t Know

2. Do you think there is a need to add local food taste in Pizza Hut foreign flavor?

Yes No

3. Customers who frequently visit your restaurant are look in hurry.

Yes No Sometime

4. Are majority of customers are looking for discount offers?

Majority Average Minority

5. Do you continuously face problems in dealing with intermediaries?

Highly agree Agree NeutralD is agree Highly disagree

6. Is their perception developing of demotivating within personal from upper management?

Yes No

7. Give us your valuable suggestion on how to improve company image;

________________________________________________________________________
________________________________________________________________________
____________________________

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