Global Business: Analysis of Pizza Hut's Market Entry Strategy in Laos

This report evaluates the market entry strategy of Pizza Hut in Laos by analyzing the external environment using PESTLE analysis and the internal environment using VRIO framework. It also discusses the culture, ethics, and norms of Laos and provides recommendations for the implementation of the chosen market entry strategy.

Running head: GLOBAL BUSINESS
Global Business

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Table of Contents
1. Introduction..................................................................................................................................2
Background of Pizza Hut.............................................................................................................2
Purpose of report..........................................................................................................................2
2. Business environment analysis....................................................................................................2
2.1 PESTLE analysis....................................................................................................................2
2.2 culture, ethics, and Norms......................................................................................................8
3. Internal environment analysis....................................................................................................11
3.1 Resources.............................................................................................................................15
3.2 Capabilities...........................................................................................................................16
4. Entry strategy.............................................................................................................................17
Evaluate difference strategy.......................................................................................................17
Selection of one strategy............................................................................................................18
5. Implementation..........................................................................................................................20
Key process................................................................................................................................20
Timeline to Store Opening.........................................................................................................22
Organizational structure.............................................................................................................23
Conclusion.....................................................................................................................................25
References......................................................................................................................................26
Appendix........................................................................................................................................30

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1. Introduction
Background of Pizza Hut
Pizz Hut is an American bistro chain and international franchise initiated in 1958 by Frank
Carney and Dan. This organization is known for their Italian-American cuisine considering pasta
and pizza along with desserts and dishes. Moreover, Pizza Hut has more than 16,796 restaurants
at international level as it is largest pizza chain with respect to the locations. This organization is
a subsidiary of Brands and Yum. It is also one of the largest restaurant organizations (Pizza Hut,
2018).
Purpose of report
The key purpose of this report is to evaluate the situation of business to start their business in
Laos. This report presents the external analysis by using the PESTLE strategy. It also discusses
the culture, ethics, and norms of Laos. This report also demonstrates the internal analysis by
using the VRIO framework. It also evaluates the different market entry strategy. This report also
illustrates the feasible market entry strategy for Pizza hut in Laos. It also discusses the timeline
for implementing the chosen market entry strategy. In last, it demonstrates the organizational
structure of Pizza Hut.
2. Business environment analysis
2.1 PESTLE analysis
Political factor

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Laos is a collectivist nation which is directed by revolutionary party of Lao. As per the United
State branch, Laos is a exploitive state and a country of extraordinarily harsh supervision control.
Laos will demonstrate no meaningful political modification in 2018-19 as one-party rule by the
revolutionary party. Laos is generally a passive and politically stable nation. The uncertainty of
political violence is directed by a foreign company and business person is low (Facts and details,
2018).
In this way, Pizza Hut has the chances to make bigger the business in Laos due to effective
international trade as it can improve supply chains. The company will have chances to modify its
approaches to decline the effect of taxation on the corporate without violating specified law. But,
PHP (public health policy) gradually will tend to discourage an individual from consuming fast
food organizations like Pizza Hut. The company will have the chances to address the external
factor by enhancing the healthfulness of their products (Export.gov, 2018).
Economic factor

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It is stated that GDP rate is high i.e. 15.9 in Laos. Furthermore, foreign direct investment is
543.59 as well as the unemployment rate is 0.7 in Laos. In this way, it is evaluated that Pizza Hut
has the chances to expand, even slowly, in Laos, which is the biggest market in the company.
However, the existing economic circumstances in Laos can threaten the growth of Laos in this
region. Along with this, the slowdown of Laos market can threaten the growth of the company in
Laos (Export.gov, 2018).
Social factor
Pizza Hut has the chances to grow their business as the company targets the consumers highly
from the medium and low-income households. As a result, it has possibilities to enhance their
products mix due to persuading further different target marketplace. Healthy lifestyle tendency
can be threat for business as different Pizza hut goods are criticized for their adverse health
effects. But, Pizza Hut has chance to enhance the healthfulness of their goodss (The global
economy.com, 2018).
Technological factor

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From the above chart, it can be stated that competitiveness is low in Laos as it can provide the
opportunity to Pizza hut to extend their business in Laos. Furthermore, it is stated that research

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and development expenditure is increasing in Laos that is favorable for pizza hut for expanding
business in Laos. Along with this, Pizza Hut has the chances to enhance its research and
development investment in order to improve efficiency and effectiveness of business. Pizza hut
can implement more automation in order to increase the productivity as in Laos, business
automation is increasing (Trading economics, 2018). Moreover, Pizza hut can enhance its mobile
facilities to increase consumers through its websites and mobile app in Laos.
Legal factor
The Lao labor market is very rigid due to a shortage of labor at all phase as it could be
unfavorable for Pizza Hut. The minimum wage is determined by separate regulation. The new
law developed regarding occupational health and safety standard, however, inspections remain
conflicting. As a result, labor standard like minimum wage as well as health and safety standards
should apply uniformly in spite of investment vehicle and use of special economic zone (Trading
economics, 2018). During 2016, the government continues to perform on new regulation
associated with labor dispute resolution mechanism. It can be unfavorable for Pizza hut for
expanding the business in Laos.
Pizza hut will face the threat of higher minimum wage that leads to higher expenses and prices.
In addition, local health regulations can impact on the food services in the workplaces. School
can decline the revenue of company from these areas. Moreover, Pizza hut should identify the
animal welfare supervisory effects on their supply chain. For illustration, pizza hut can apply
different policies to make sure animal safety between meat creators (Trading economics, 2018)
Environmental factor

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From the above chart, it can be stated that precipitation is average in Laos. It shows that Pizza
Hut has chances to expand their business in Laos due to favorable climate changes. Pizza Hut
can also expand its CSR strategies to arrive at the higher performance in identifying the
environmental issues. But, climate change may remain to threaten for pizza hut as it may
negatively impact on farms and supply chain of Pizza Hut (World bank, 2018).
2.2 culture, ethics, and Norms
The following chart shows the culture of Vietnam that is capital of Laos:
Culture of Laos

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Power Distance
In Laos, an individual accepts a hierarchical structure in which an individual has placed and that
needs no further explanation. Hierarchy in the organization is demonstrated as imitating inherent
disparities. In this structure, centralism is standard and assistants predict to be told what to do
and the ideal superior is a benevolent autocrat. Along with this, experiments of leadership are not
properly received (Trading economics, 2018).
Individualism
Laos is a collectivistic society as it can be favorable for Pizza hut to expand their business. It is
visible in a long-term pledge to member group, lengthy family, and relationship. Faithfulness in
a collectivist philosophy is leading and prevail the social rules and regulations. These societies
focus on enhancing the relationship in which each person takes accountabilities to fellow
members of their group (Hofstead insight, 2018). In collectivistic societies, offense directs to
indignity and face loss. Along with this, the association between company and employees are
observed in ethical terms, elevation, and signing and take account of in-group.
Masculinity

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Laos is measured as a society of feminine. Under the womanly nations, the emphasis is on
working in order in live. Furthermore, persons value cohesion, impartiality, and quality in their
working lives. Along with this, managers strive for harmony. Conflicts are determined by
negotiation and compromise. Incentives like flexibility and free time are favored by business in
Laos. Further, the focus is on well-being and status is not demonstrated by business. Hence, the
manager should be supporting one as well as decision making can be attained by involvement
(Hofstead insight, 2018).
Uncertainty Avoidance
Laos in this dimension shows the low partiality for avoiding insecurity. Low UAI philosophies
keep relaxed attitudes wherein performance shows over principles and deviance as compared to
tolerated norms. Furthermore, in low UAI, individuals trust that there should be no more rubrics
as compared to essential rules. Along with this, when people are ambiguous and do not perform
well then should be replaced within the business. Schedules are flexible as well as hard work is
carried out when required but not for its own intention. Furthermore, it is assessed that exactness
and promptness do not come obviously and novelty cannot be seen as threatening (Hofstead
insight, 2018).
Long-Term Orientation
Laos is a practical philosophy. Societies with practical location believed that truth relied on
different circumstances, time as well as context. People demonstrate a competency to adapt the
tradition easily to change the condition and strong tendency to save as well as invest. Moreover,
perseverance and thriftiness are used to accomplish the objective and attain the outcome
(Hofstead insight, 2018).
Indulgence

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A low score in this dimension shows that culture of Laos is demonstrated as Restrained. Under
this dimension, societies have a tendency to pessimism and cynicism. In opposed to this,
restrained societies do not put the focus on leisure time and control the fulfillment of their
desires. People with this dimension have a belief that their performance is restrained by social
norms (Hofstead insight, 2018).
Ethics of Laos
In Laos, promptness is valued, and frivolous suits, shirt, and tie should be worn. Further, English
is not spoken by officials and understanding of French is beneficial for commercial. Moreover,
business cards might have Laotian conversion on the converse. As a result, it would be favorable
for Pizza hut to extend their business in Laos (Chatzoglou, et al., 2018).
Norms of Laos
There are the different norms in Laos that could be effective for enlarging their business.
Business association is Laos is not as formal as those in other East Asian nations and is often
relied on personal relations built within social circles. Furthermore, the personal relationship is
high and having a reliable and well-linked local agent and representative is significant for the
success of pizza hut (Indartono and Wibowo, 2017). Along with this, event progress is slow in
Laos in which step by step strategy and cultural premium is required. Representatives of U.S
nation is looking to penetrate into the Lao market and also processes to move slowly. Thus,
norms of Laos are favorable for Pizza hut for enlarging their business.
3. Internal environment analysis
Value
chain
resource-
based
Name Val
ue
Rar
e
Imita
te
Organizat
ion
Sustaina
ble

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view
(RBV)
competiti
ve
advantag
es
Capabilit
ies
Resources
Tangible Intangib
le
Operati
on
Prompt
delivery
services
with
quality
Human
resources
Technolo
gy
✔ ✔ ✔ ✔ Yes
Inbound Research
and
developm
ent
Patents,
investments
and
financial
office
Innovatio
n Dyson
ideas,
Creative
ideas,
and
knowled
ge
✔ ✔ ✔ ✔ Yes
Outbou
nd
Distributi
on
managem
financial
vacuum
Network,
reputatio
✔ ✔ ❌ ✔ No

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ent cleaner n
Marketi
ng and
sales
Sales
managem
ent
Sales
representati
ves
Goodwill ✔ ✔ ❌ ✔ No
After
sale
services
Customer
support
Customer’s
feedback Custome
r
relations
hip
✔ ✔ ❌ ✔ Yes

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Primary Activities
Inbound logistics
Inbound logistics will focus on organizing food and materials supply to Pizza hut via permitted
other party logistics operators. Furthermore, development in massive plants can be restricted to
switch food delivery and packing schemes (Perkins, et al., 2018).
Operations
Operation of Pizza Hut will make sure the particular guidelines regarding food preparation.
Operation of Pizza Hut will contain computerized order tracking technology as it will assure the
consistency of food production and services (Rothaermel, 2015).
Outbound Logistics
Outbound logistics is growing as a part of Pizza hut’s recycling system. It will integrate the
logistics with different distribution centers. Pizza Hut will also have an efficient crew who can
store as well as distribute the products from the warehouse at the appropriate time.
Marketing
Pizza hut will break down the long-term objectives into short-term measurable targets. It can be
used as milestone accomplishments. Moreover, franchises are given sovereignty in marketing
mix decisions (Kozlenkova, et al., 2014).
VRIO Analysis
Value:
Pizza hut will keep a high value as per its brand image and makes utilization of the existing
resources. As a result, it will aid to expand the business successfully.
Rarity:

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The exploitation of resources can be franchise-oriented and spread via their breadth. However,
the key control still leftovers in the hand of higher authorities. The franchise has to follow
corporation regulations strictly in order to run a franchise of Pizza Hut (Luoma, et al., 2018).
Imitability:
Pizza Hut cannot be complex to imitate in the feature of products however, its functionality is
manifested to achieve.
Organization support:
Pizza Hut is continuously ready to use new properties and administrative structure is also well
planned. It facilitates decent sustain to its franchise processes.
3.1 Resources
Resources are an asset of the firm such as people, capital equipment, its brand, financial
resources and skills of employees. These resources can be both tangible and intangible.
Furthermore, resources of Pizza Hut is patent, investments and financial office, firm’s cash and
cash equivalents, financial vacuum cleaner, network, reputation and creative ideas and
knowledge. These resources are beneficial to manage the operation and prompt delivery with
service quality (Weismann, et al., 2014). These resources are valuable, rare, imitate and support
the organization, as it would be beneficial to obtain the sustainable competitive benefits. Under
the inbound process, Pizza Hut will use Innovation Dyson ideas, Creative ideas, and knowledge
that would be valuable, rare, imitate and support the organization. As a result, it would be
significant to attain the sustainable competitive benefits. Under the outbound process, the
company will use financial vacuum cleaner and Network, reputation as resources that would be
valuable, rare and support the organization but can be imitated by others. Hence, in this activity,
Pizza Hut cannot get sustainable competitive advantages (Ensign and Lunney, 2015). In the

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Marketing and sales, Pizza Hut will use Sales representatives and Goodwill that would be
valuable, rare and support the organization but can be imitated by others. In the after sale
services, the organization will use Customer’s feedback and Customer relationship technology.
These resources would be valuable, rare, imitate and support the organization as Pizza Hut can
get sustainable competitive benefits.
3.2 Capabilities
Capabilities are the ability of firm that would be valuable and cannot be imitated by other
company. These capabilities are Prompt delivery with quality, research and development,
Distribution management, Sales management and Customer support. These capabilities would be
beneficial to obtain the sustainable competitive benefits (Williams and Vrabie, 2018).
Core competencies
Core competencies are the combination of resources and capabilities that integrate to become the
sources of the company in order to obtain the competitive benefits. From the above table, it is
stated that Prompt delivery with quality, research and development, Distribution management,
Sales management and Customer support are capabilities of Pizza hut (Burton and Cross, 2015).
Along with this, resources of Pizza Hut is Human resources, Technology, patent, investments
and financial office, firm’s cash and cash equivalents, financial vacuum cleaner, network,
reputation and creative ideas and knowledge, Customer ’s feedback and Customer relationship
technology. Both capabilities and resources are beneficial to provide quality services to
customers and obtain the sustainable benefits (Ahi, et al., 2017).

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4. Entry strategy
Evaluate difference strategy
There are many ways that will be used by most of the organization can enter the foreign market.
These strategies are directly exporting, licensing, franchising, partnering, and joint venture
(Chatzoglou, et al., 2018). An organization could imply one of them to operate their business
and obtain the reliable result in less time and cost. In addition, it is also evaluated that these
strategies could support the organization to effectively operate the business and get a reliable
outcome. These strategies are discussed as below:
Direct Exporting
Direct exporting is an effective technique for selling the products and services into the new
market. Many organizations, once organization have created sales culture then they would be
capable to represent in the marketplace. In addition, it is also addressed that organization uses
direct exporting wherein the agents and distributors work closely (Indartono and Wibowo, 2017).
Licensing
Licensing is also an important strategy that facilitates one company to transfer their rights to
another company for using their goods and services. It is an imperative approach if purchaser of
license has a comparatively higher market portion where the organizations want to share their
products and services. Licencing could be an effective strategy for marketing a getting reliable
result (Rothaermel, 2015).
Franchising
Franchising is a type of the entry strategy as it enables the organization to operate their business
in another place in limited cost and resources. Consequently, the organization would be capable
to obtain a positive result. It is the process by which a firm would be capable to expand their

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market in limited time and get higher competitive benefits. During the franchise model, the
organization required two caveats to operate their business in a new market (Perkins, et al.,
2018). Firstly the chosen organization should be unique and have a positive image in the
marketplace at the international level. Secondly, the organization will have been the capability to
create the competition in future.
Partnering
Partnering strategy plays an important strategy to enter in the new market caused by a decline in
the probabilities of risk. Partnering is a useful approach in those markets where an entrepreneur
has lack of capital and resources along with they did not want to make take the whole risk of the
business. In this situation, partnership strategy could be effective to enter into the new mark
place and obtain positive response (Kozlenkova, et al., 2014).
Joint Ventures
Joint ventures are a specific method of partnership that entails formation of the third
autonomously managed organization. In this, two organizations work together in the specific
market and develop a third organization to start any particular products and services in the
specified area. It is analyzed that risks and profits generally shared equally (Luoma, et al., 2018).
Selection of one strategy
After research, it is addressed that the franchising is an important marketing strategy for Pizza
Hut to effectively start their business in Laos and obtain a reliable result. Self-employment could
be risky for the organization to obtain a higher competitive benefit. In addition, it is also
analyzed that franchising could enable the organization to operate the business in the new market
and obtain the reliable result (Weismann, et al., 2014) The franchise agreement is an imperative
technique for saving the cost of the organization in promoting the brand image and market

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research. It could enhance the success level and decline the failure possibilities of the firm. The
following factors demonstrate the benefits to use franchises:
Brand Recognition
Brand recognition could be effective for the organization to effectively operate in the business
and make a unique image in the marketplace. In addition, it is analyzed that franchise agreement
could be a legal document by which Pizza Hut will operate their business in Laos. Moreover, one
of the main benefits of franchising is that the organization is building the brand on the global
basis, which should have value in the consumer’s eyes. It is also analyzed that the political
parties of Laos also support the franchises entry strategy for the business. At the same time,
goodwill of Pizza Hut aids to obtain sustainable competitive benefits in Laos (Ensign and
Lunney, 2015).
Training Programs
An organization could also use training programmes to use the franchises and operate their
business in the marketplace. In addition, it is also analyzed that training programmes could also
have reference materials to aid the company in dealing with whatever comes up at the time
operating a business in the marketplace (Williams and Vrabie, 2018).
Quality Control
The franchises will enable the Pizza Hut because they know what to expect with others. In
addition, it is also examined that franchisee also ensure that they have not need to worry about
the consistency and quality of goods and services. The assurance of quality usually extends the
fixture and growth as well.
Higher Success Rates

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The franchisee will also give the golden opportunity to start their business at lower cost by
making the franchise agreement with other organization. The franchise entry strategy could also
be imperative for business because a franchise has 95% while start-up business has 35% of
possibilities of success. Hence, the Pizza Hut select franchises agreement as compared to
independent business as it would be effective for entering in the new marketplace. In addition, it
is also analyzed that Pizza Hut could be more successful in Laos (Ahi, et al., 2017). Furthermore,
it is also stated that Pizza Hut will use the latest technology and prompt delivery of products and
services as will support to obtain higher success rate in Laos.
Opportunity for Growth
The franchises agreement enables the company to increase their sale in the least resources. It is
because franchisees may operate out of diverse locations. In addition, it is also stated that
franchises entry strategy could decline the advertising cost as it could be imperative to increase
the growth of the organization. In addition, it is also evaluated that the GDP rate of Laos is
Higher that could lead the Pizza Hut to effectively use Franchise and obtain reliable outcome
(Burton, and Cross2015).
5. Implementation
Key process
A franchise is a method that will enable the Pizza Hut to start their business in Laos and obtain
higher success in the market. In this process, the franchise will purchase a business unit from the
franchisor of Pizza Hut. It will support to obtain reliable outcome by effectively marketing,
staffing, and financing of sources. The following steps will be followed by Pizza Hut to enter in
the market:
Determine Type

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Initially, Pizza Hut will identify the type o franchise as it could be appropriate for the
organization. In addition, it is also stated that Pizza Hut will consider many factors like skills,
work environment, and involvement of the organization. Moreover, this organization will assess
the amount of money to effectively enter in Laos market and obtain reliable outcome (Broocks et
al., 2017).
Seek Financing
The franchisors could arrange finance as it could lead to effectively make an entry in the new
market. Franchisors will require a personal credit score to operate their business and get higher
success. Further, it is also analyzed that Franchisors will use the traditional sources include
traditional bank loan as it facilitates to complete the business requirement. For completing the
business requirement, franchisors will use both short-term and long-term financing (De Villa, et
al., 2015).
Obtain Information
For franchising, the franchisor will collect the feasible information about profits for getting
higher competitive benefits at the particular place. In Laos, Pizza hut will need to determine the
possibilities to effectively launch their organization among a higher number of consumers. Pizza
Hut will contact to the franchises and demonstrate their interest by sending the preliminary data
towards franchise and phases that are considered in unit purchasing (Luthans and Doh, 2018).
Evaluate Possibilities
Examine the franchise history and financial stability that is provided by the franchisor. In this,
the franchise will use financial disclosure statement. Pizza Hut will also contact with existing
franchise operators to identify possibilities of success and failure of the business unit in the

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marketplace. Moreover, it is also examined that Pizza Hut will spend their time observing the
franchise unit on their daily basis (Karakaya and Parayitam, 2018).
Examine Franchise Agreement
In last, Pizza Hut will determine the franchise agreement as it could be written data that spells
out the responsibilities between franchisee and franchisor. In addition, it is also illustrated that
there are many factors that will be considered by Pizza Hut are territorial rights, royalty’s amount
and feasibility of business unit. Pizza Hut will be sure towards the agreement and understand the
law of franchise before sign (Watson IV, et al., 2018).
Timeline to Store Opening
The specified time between adoptions between signing company franchise agreement and the
opening of stores are coming between 6 to 12 months. There are many factors that could affect
time like financing availability, the location of the site, and local construction delays. The
primary goal of the organization is to grandly open as quickly as possible (Yan and Liu, 2017).
From the above chart, it is analyzed that there are different activities that could be considered in
the franchise like signed franchise agreement, and business training. Other activities are secure
financing and real estate, operations, and store training, store build-out, and inventory build-up.

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From this, it is also analyzed the first to fourth steps takes 1 to 8 weeks while the fifth to last
activities will take 8-12 weeks.
Organizational structure
Hierarchy structure
The Pizza Hut will select Hierarchy structure to enter in the marketplace. There are many
managers that are considered by the Pizza hut like regional head, country manager, franchises
director, marketing director, operation director, and chief financial officers (Watson IV, et al.,
2018). The role of such mangers are discussed as below:
Regional Head

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The regional head is accountable for each activity that will be taken place in Laos under any
other department head. The regional head of Pizza hut could directly report to the head office of
the organization.
Country Manager
The country manager of Pizza Hut will manage the other four department heads. After supports
of franchises director, marketing director, operation director, and chief financial officers, they
will manage strategies, rules, and policies of Pizza Hut. The country manager will also liable to
report for their every activity to their regional activity (Broocks et al., 2017).
Franchise Director
The Franchise Director of Pizza Hut will assist 3 Franchise manager and one sales development
manager as it could be effective to manage the sales activity of the firm. The franchise's director
could also be responsible to report their daily activity to their Franchise director.
Marketing Director
The marketing director could lead three brand managers associated with the water, flavor, and
soft drink. These departments will also support Pizza Hut to promote their products in Laos (Yan
and Liu, 2017).
Operation Director
The operational director will be responsible for operation department as it could directly
influence the performance of Pizza Hut. The operational direction assists the operational
manager to smoothly operate the business process in Laos.
Chief Finance Officer
The chief finance officer could lead three important managers that are controlling manager,
planning manager, and business evaluation managers. They will aid the Pizza hut in financial

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analysis, budgeting, taxing system, controlling, and cost evaluation. It could lead the
organization to smooth business process (Watson IV, et al., 2018).
Conclusion
From the above analysis, it can be concluded that different strategies would be used by Pizza Hut
to analysis the situation of Laos through formal and informal analysis. It can also be concluded
that internal environment analysis techniques will also be used by Pizza Hut to understand
internal factor that could influence the organization to enter in a new market. It can be
summarized that organization would examine internal environment by considering the VRIO
framework. It can also be summarized that different market entry strategies could be used by
Pizza Hut to effectively enter in the new market. These strategies are a joint venture, franchises,
merger and acquisition, and direct exporting, licensing, and partnering. It can also be concluded
that organization would select franchising strategies for operating their business in the new
market. The timeline for implementing the franchising strategy will be 12 weeks. It can also be
concluded that hierarchy structure will be used by Pizza Hut to enlarge their business in Laos.

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Appendix
Political factor
Economic factor

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Technological factor

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Environmental factor
Culture of Laos

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