SUBMITTED BY:

MD. Hamja Islam 16304129

Ali Akif Ahmed 16304054
Rezwana Islam 16104189
TERM PAPER ON Afrida Hossain 16204083
Abul Kashem Ahmed Fiaz 16304148
ANALYSIS ON PIZZA HUT Submitted to: Fabiha Enam
Senior Lecturer & Assistant Proctor
INDIA
Submission date: 21st September 2020
Team PULVERIZERS
BRAC UNIVERSITY.
 Table of Content

Serial Topic Page

No No

1 Abstract 2

2 Letter of transmittal 3

3 Introduction and analysis of Pizza Hut India 4-7

4 Focal Point of Globalization Pizza Hut 7-8

5 Comparative Advantage 8-10

6 Regulatory environment 10-12

7 Institutional Perspective 12-15

8 Culture of Pizza Hut 15-17

9 Future Prospects and conclusion 17-18

10 Reference 19-20

1
 Abstract

In terms of an international business, culture plays a very important role. FMCG market giants as
like Burger king, Dominos, KFC Pizza Hut etc. enhances their business wing by providing their
franchises to the host country. As like Pizza Hut have their franchise at India and in India they tries
to grab the huge demandable market of Pizza. As India is a large country with lots of state, and
new generation likes fast foods so Pizza Hut use that opportunity. But entering a new country is
not that much easy. In terms of making a brand globalize, the company have to maintain certain
policies including host countries governmental rules, peoples demand, market condition, economic
condition, and probable profit structure. However, in India Pizza Hut started their franchise with
their signature items but by the market analysis and countries policies they have introduced first
ever vegetarian pizza. Moreover, the company also introduced budget pizza only around the rupees
of 300 to 350 RS. The initial outcome of this steps was huge and this create a huge market hype
and people started to but vegetable cheese pizza just to taste it but also they like it. In order to
maintain a global brand Pizza Hut also have to ensure the availability of raw materials from local
source and labor cost etc.

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September 21, 2020
Fabiha Enam
Senior Lecturer & Assistant Proctor
BRAC Business school
BRAC University

Subject: Letter of Transmittal

Dear Madam,

With due respect, we, the students of BRAC business school have reported on the term paper
regarding the analysis of India’s Pizza Hut, under the course “International Business”.
Though we are in the learning curve, this report has enabled us to gain insight into the core fact of
global business. So, it became an extremely challenging and interesting experience. Thank you for
your supportive consideration for formulating an structured analysis. Without your Inspiring, this
report would have been an incomplete one.

Lastly, we would be thankful once again if you please give your judicious advice on the effort.

Yours’ sincerely,

Team Pulverizers.

3
 Introduction and analysis the country of choice (India) by the firm
(Pizza Hut)

The Indian fast-food market has been witnessing rapid growth on the back of positive
developments and presence of massive investments. Currently, market growth is largely fueled by
the rising young population, working women, hectic schedules, and increasing disposable income
of the middle-class households. Some of the unique properties of fast food like quick served, cost
advantage, etc., are making it highly popular among the masses. Thus, India offers enormous
opportunities for both domestic as well as international players. According to a recent research
report, “Indian Fast-Food Market Analysis”, the Indian Fast-Food Industry is anticipated to grow
at a CAGR of around 34% during 2011-2014. Anticipating the future growth, many big
international players are entering into the market by making deals with the domestic players. And
those already present in the Indian market are expanding their presence in different parts of the
country.

Pizza Hut ventured to start business in India in 1996. The first Pizza Hut restaurant was opened in
Bangalore, which was the first international restaurant chain to enter this category. Their
operations in India are 100% franchise based. In 2011, Pizza Hut had 131 outlets in India and plans
to double the number outlets in India by 2015.The expansion is expected to happen in tier II and
tier III cities. In 2011, it had 27 per cent market share of the eating-out market. Pizza Hut, a division
of US-based Yum! Brands Inc, is betting big on India which has been identified by the fast-food
chain as one of the key markets for its future global growth, says a top company official

The company, which today opened its 9,000th restaurant outside the US in Mumbai, has already
lined up plans to double its outlets in India to over 700 over the next five years. “Pizza Hut is in
105 countries across the world and we choose India for celebrating this milestone because it is one
of the key countries for accelerating the global growth," Pizza Hut International President Milind
Pant told”. Presently, Yum! Brands has over 350 stores of Pizza Hut spread over 100 cities in India
and are operated by its two franchise partners -- Devyani International and Sapphire Foods India.
India now has five consecutive quarters of same store sales growth and it's on cusp of accelerating
growth which has been mentioned by the officials. India has a great franchise partner to operate
the business, that’s why Pizza hut decided to conduct their business in India with the higher

4
expectation of profit growth. The newest Pizza Hut store in Mumbai shines a spotlight on the
growth of the Pizza Hut Fast Casual Delivery Business in India and globally. Furthermore, it marks
out India as a key market for global growth. Among the many challenges Pizza Hut is facing in
recent times are: Constant need and assured supply for adequate manpower to run the outlets, a
problem common to all operators in the sector Challenges of solid supply chain system and Ever-
increasing real estate cost. However, there are several drivers which provides opportunities for this
sector, such as, segmenting the market to make the products more affordable to a varied range of
customers, Increasing the number of offerings in the menu at affordable cost from appetizers to
pizzas, pastas, and desserts. An example of the above is the introduction of a introduction of the
‘3-course meal for Rs 99’ to recruit more people into the brand by Pizza Hut. Another driver to
increase the consumption base is affordability. Pizza Hut, for instance introduced less than Rs 100
offerings across its menu, from appetizers, pizzas, pastas, and desserts. Further to enhance its
strategic hold and intent in the Indian market, the company has launched a new adverting campaign
particularly to celebrate its 15 years in India. The campaign focuses on people who have been
visiting the brand-outlets have also grown up over the past 15 years. The campaign highlighted the
sweet and sour moments of life, when the “irresistible” taste of Pizza (of Pizza Hut) acted as a
catalyst to maintain the emotional bond among people. The campaign has been conceptualized by
JWT India. Well-known actors in the campaign include, well-known faces like, Rajat Kapur and
Shernaz Patel. Since the beginning, Pizza Hut launched various products (apart from pizzas), such
as, garlic breads and masala lemonades, pastas, skewers, shakes, mojitos, salads, gelatos,
cheesecakes, and so on. Additionally, Pizza Hut planned to launch a new range of 15 different
pizzas, which have been inspired from regional cuisines and flavors from around the country. The
most recent offering by Pizza Hut in India is an extended menu of 15 localized pizzas derived from
regional tastes including Sev puri, Chettinadu paneer, Chicken achari, Nimbu mirchi. The new
product line marketed heavily through a 360-degree campaign, celebrates the Kansas based chain’s
15 year anniversary in India. It also reflects the brand’s aggression in a market where several new
brands have entered the fray. Pizza Hut, which has over 38,000 customers walk in everyday in its
outlets throughout India, claims to have about 50 percent of the organized pizza-retailing segment.
People are very familiar with pizzas now. There is no education involved in getting them to try it
out. What has made this change possible is that pizza is becoming more accessible and more within
the customers' reach. In India, the average investment for each outlet is at Rs 1.25-1.5 crore (Rs

5
12.5-15 million), which is done by the franchisee. For instance, the franchisee rights for Mumbai,
Bangalore, Andhra Pradesh and Gujarat are with Dodsal Corporation. The Pizza Hut restaurants
are set up by the franchisee, while Yum looks after the quality, services, supply chain and brand
management and based on the success of the outlets it got positive appreciation from the customers.
The five drivers, which it believes has fuel its growth in the culture where everyone made and is
making a difference, customer and sales mania, competitive brand differentiation, continuity in
people and process, and consistency in result. Internally, yum! has adopted best operational
practices to ensure high customer orientation, which is demonstrated through C.H.A.M.P.S. This
is the umbrella operation program for training, measuring and rewarding an employee's
performance against customer standards. C.H.A.M.P.S stands for: cleanliness, hospitality,
accuracy, maintenance, product quality and speed. Furthermore, Pizza hut believed in the
statement. "their challenge here is to make sure they meet their quality standards in terms of food,
facilities, people and the overall experience. They want to ensure that the customers experience in
India is no different from a Pizza Hut outlet anywhere else in the world’’. Pizza Hut is believed to
have close to 50 per cent market share of the organized pizza-retailing segment in India. According
to an article in Financial Express, the market size of the pizza segment is around US$ 87 million
and currently growing at the rate of 15 per cent to 17 per cent per annum. According to Pizza Hut
sources, most of their outlets are financially successful, encouraging further expansion. In India,
the average investment for each outlet is US$ 275,000-335,000 and is borne by the franchise. Its
offering value food in a sense, its delivery offer of US$ 4.4 for four personal pan pizzas has been
very successful, helping it grow the business by 25 per cent. They have recently introduced a range
of vegetarian personal pan pizzas for US$ 1.1. Most Pizza Hut restaurants are located in the metros
and smaller metros. In taking long strides across the country, Pizza Hut is consolidating its position
by opening more restaurants in the metros where it already has a presence as well as opening
outlets in new markets. Pizza Hut is moving beyond the metros and foraying into 12 to 13 new
markets including Trichy, Nagpur, Bhubaneshwar, Thiruvananthapuram, and Pondicherry to
increase penetration. Pizza hut has undertaken aggressive marketing strategy, it has increased its
visibility by launching a well-received TV campaign aimed at the young crowd. It has formed
partnerships with recognized brands such as Nestle and Pepsi. It also holds regular promotional
campaigns targeted at children and uses these alliances to offer packages during these campaigns.
Pizza Hut is one of the first international pizza chains with purely vegetarian dine-ins at Chowpatty

6
(Mumbai), Ahmedabad and Surat, which also serve Jain menus. Pizza Hut has even opened two
all-vegetarian restaurants in the western state of Gujarat to cater to the Jain religious community,
whose members prefer not to eat at places where meat is served. According to Pizza Hut, the Indian
food heritage is very rich, and hence Indians like local flavors. The Tandoori range of pizzas,
which was developed locally, has a menu mix of over 20 per cent. Pizza Hut has reduced costs
through indigenous sourcing of raw material. It has tied up with a local company Dynamix Dairy
Industries Ltd (DDIL) for sourcing mozzarella cheese. The landed cost of imported mozzarella
comes to US$ 3.3 - 3.5 per (US companies in India)per kilogram. The domestic price, however,
works out to US$ 2.99 - 3.1 per kilogram. Pizza Hut is adding to the bottom line by localizing
equipment as well as by paying attention to inventory replenishment, which has been reduced from
60 to 30 days.

Focal Point of globalization Pizza Hut

Globally food is central to cultures and this brings uniqueness and diversity to global cuisines.
Food habits in a society have been passed on from generation to generation, influenced by culture,
food availability, economy, and nutritional knowledge. In India many exotic foods are replacing
traditional foods. For instance, many Indians are interested to eat Pizza at their lunch and even in
dinner where they substitute rice and curry here. However, pizza is appreciated worldwide and is
an important product of the Italian gastronomy but is associated with fast-foods and bad nutritional
habits.

In India, the formal whole fast-food and franchise sector is increasingly become recognized as a
significant sector for job creation and its economic contribution to the economy on the back of its
profound growth. Of all the franchise categories, the pizza franchise category is the fastest growing
one in India. It can be argued that the rapid growth in the pizza market ignited the interest of
overseas pizza companies. For example, Domino’s Pizza and Pizza Hut increased their presence
in India. From a study it has been found out that t pizza, burgers, fried chicken and soft drinks
were the most popular consumption items on the youth’s purchase lists. However, in India people
are strongly maintain the food habit as like vegetarian or non-vegetarian. Pizza Hut usually sell
various types and flavors of pizza. Before entering the Indian market the Pizza Hut authority have
analyzed the market demand and launch vegetable cheese pizza for the vegetarian people. As in

7
India the population is so huge the number of vegetarian customer is also very high. As a result,
Pizza Hut focus the host countries market demand and make a strategy based on the current market
demand and people’s choice. They don’t want to lose that vegetarian huge number of customers,
so they take steps and bring some change in their food menu. Although they have their signature
items in their menu, but they modified it based on the country and countries policy and terms.

However, to run the franchise in the host country Pizza Hut globalize their menu and pizza recipe
and they maintain the government rules and regulations. They select they target market segments
and based on that they started to work in India. The main focus they provide in Indian market is to
make their brand popular among the young generations and try to grab the current economy to
sustain on that country. They launch various campaign and food fest in India and promote their
product. However, India is a large country and many states of that country people are not thinking
about to purchase a pizza Hut pizza at rupees 500 to 600. In order to meet up that peoples demand
they launch budget pizza for the first time, and they made a huge demand when they segment that
budget pizza in vegetarian and non-vegetarian version.

Comparative advantages

In the past, Pizza Hut has always had the first mover advantage. Their marketing strategy in the
past has always been to be first. One of their main strategies that they still follow today is the
diversification of the products they offer. Pizza Hut is always adding something new to their menu,
trying to reach new markets. For example, in 1992 the famous buffet was launched in Pizza Hut
restaurants worldwide. They were trying to offer many different food items for customers who did
not necessarily want pizza. Another strategy they used in the past and are still using is the
diversification of their pizzas. Pizza Hut is always trying to come up with some innovative way to
make a pizza into something slightly different - different enough that customers will think it is a
whole new product. For example, look at some of the pizzas Pizza Hut has marketed in the past.
In 1983, Pizza Hut introduced their Pan Pizza, which had a guarantee of being ready to eat in 5
minutes when dining at Pizza Hut restaurants. In 1993, they introduced the "Bigfoot," which was
two square feet of pizza cut into 21 slices. In 1995, they introduced "Stuffed Crust Pizza," where
the crust would be filled with cheese. In 1997, they marketed "The Edge," which had cheese and
toppings all the way to the edge of the pizza. Currently, they are marketing "The Big New Yorker,"

8
trying to bring the famous New York style pizza to the whole country. Lastly, Pizza Hut has always
valued customer service and satisfaction. In 1995, Pizza Hut began two customer satisfaction
programs: a UAN (in USA 1-800) number customer hotline and a customer call-back program.
These were implemented to make sure their customers were happy, and always wanted to return.

Pizza hut started with the single product but with different sectors emerging and the degree of
competition, it diversified with the several products to serve different segments. It came with
chicken nuggets, garlic bread, pan pizza, etc. Pizza hut was the first entrant in the pizza market of
India and followed early entrant strategy in order to be the market leader it continued to refine the
product and develop new product to suit the Indian food culture. Pizza hut has been operating in
Indian market by analyzing all the economies of scale in promotion, distribution, and
manufacturing facilities. If papa johns or dominos came out with competitive pricing strategy or
innovative product then pizza hut quite aggressively fight back by bringing new innovative
products and more competitive prices to sustain in market. This forced competitors to look for new
methods of increasing their customer bases. Many pizza chains decided to diversify and offer new
nonpizza items such as Buffalo wings, and Italian cheese bread. The current trend in pizza chains
today is the same. They all try to come up with some newer, bigger, better, pizza for a low price.
Offering special promotions and new pizza variations are popular today as well. For example,
chicken is now a common topping found on pizzas.

In India Pizza hut is targeting the rich and higher middle-class people with a great ambience of
enjoyment and amusement. They are offering an organized restaurant system and demanding the
higher price for the pizzas. In the pizza hut different types of foods are available like appetizer,
soup & salad, beverages, pasta etc. So, for the variety’s kind of food the pricing strategy is different
in the pizza hut. Their customers are more or less fixed and they are price insensitive. Pizza Hut
follows “A High/Low Pricing” (“Price Skimming”) strategy as far as its new product are concerned
where it fixes the price higher than its competitors and then gradually lowers the price below the
competitor’s prices.

Sometimes in face of competition either from pizza players or from its substitutes, Pizza Hut has
also reduced price by maintaining the same level of customer service and quality. At 30-35 per
cent market share, 'Pizza Hut' is working hard to woo Indians. Their strategy always has been
localizing flavors. And while it's hard to imagine eating a pizza that tastes like sev puri or nimbu

9
mirchi, that's exactly what the global giant has deemed necessary to attract local palettes by
launching 15 variants of pan pizzas two months ago based on these flavors. These are priced
between Rs 135 to Rs 225. From 200 stores today, Pizza Hut hopes to reach up to 500 stores by
2015 which will be in both the casual dining and delivery formats. Owning a pizza chain is not the
easiest of things to do in India. The country has stringent food regulations and procuring food
licenses is tough. The industry is highly fragmented and plagued by poor infrastructure, volatile
real estate prices, shortage of skilled and semi-skilled manpower, high attrition rates and no
organized supply chain.

Worldwide and in India, Pizza Hut has come to become synonymous with the ‘best pizzas under
one roof’. This is because at Pizza Hut the belief is that every pizza has its own magic, thus making
it a destination product – which everyone seeks. It is this belief that has ignited the passion to
create, innovate and serve the finest product the industry has to offer, while setting standards for
others to strive to replicate Pizza hut uses many promotional strategies. The main promotion is a
coupon to purchase. This promotion is also distributed mainly by mail, but also by fliers on college
campuses around the country in order to reach the target market. A critical factor in Pizza Hut’s
success has been its unique dining experience. Crewmembers at Pizza Hut strive each day to
provide ‘customer mania’ - the kind of service that ensures that every visit of the customer is a
memorable one.

Pizza hut has mastered the art of pull strategy. It pioneered the practice of advertising and
promotion in the fast-food industry. Pizza hut achieved this remarkable feat by adopting a different
marketing strategy that involved increasing ambiences and amusement for the customers.

Regulatory environment

Due to the huge development over the most recent couple of years that has driven Yum! partnership
to begin the different Yum! Cafés India in 2011. Starting at now, it runs more than 220 KFC
establishment in India, close by 320 Pizza Huts and in excess of a hundred Pizza Hut Home Service
Units. Pizza Hut has additionally been positioned as the #1 most believed food establishment in
India by The Economic Times. It has a decent future without a doubt as the Indian QSR industry
is growing quick.

10
India is one of the quickest developing business sectors on the planet. The sorted-out portion is
esteemed at around 8,000 crores, becoming 20%-25% every year. Worldwide chains are searching
for more control of India activities and need more portion of the worth making of their brands.

Indeed, the expense of beginning a Pizza Hut establishment in India is very high. In the United
States, least venture required for opening a Pizza Hut franchisee would be something around
$350000 to $400000. Converted into Indian money at the common rates, that implies almost 2
crore rupees. The underlying establishment charge is 25 thousand USD, or almost 14 lakh rupees
according to the current change rates. Also, you should pay a yearly 6.5% sovereignty on your
benefit. In this type of franchise, pizza and other products approved by PHLLC are available for
dine-in and carryout services. For possessing ownership of this type of franchise, an individual
requires to invest around 25 to 30 lakh rupees.

The government institutions and frameworks in a country, while technically also political and thus
subject to whichever political party holds the majority in a government body are also legal. Often
policies on their own are not enough to efficiently protect and its workers, making appear an
undesirable place of employment that may repel skilled, talented workers.

The legal factors that deserve consideration include the following:

Intellectual property laws and other data protection laws are, as mentioned earlier, in place to
protect the ideas and patents of companies who are only profiting because of that information. If
there is a likelihood that the data is stolen, then will lose its competitive edge and have a high
chance of failure.

Discrimination laws are placed by the government to protect the employees and ensure that
everyone in is treated fairly and given the same opportunities, regardless of gender, age, disability,
ethnicity, religion, or sexual orientation.

Health and safety laws were created after witnessing the horrible conditions that employees were
forced to work in during and directly after the industrial revolution. Implementing the proper
regulations may be expensive, but has to engage in it, not only due to the law but also out of 's
personal feeling of ethical and social responsibility to other human beings.

11
Laws are also placed to ensure a certain level of quality or reasonable price for certain products to
keep the customer safe and prevent them for being provided. The industries this applies to find
often their costs elevated.

To control costs (and boost profits), Pizza hut uses patented manufacturing processes that add large
volumes of water, salt, and food starch to so-called “granules” of “Pizza Cheese” prior to flash-
freezing. Food starch is a particularly profitable addition to processed foods since food starch holds
ten times its own weight in water. All that food starch, water, and salt in the Leprino’s “Pizza
Cheese” creates problems for both cooking and refrigerated shelf-life.

The franchisee will not receive an exclusive territory. The franchisee may face competition from
other franchisees or licensees, from restaurants that PHI owns, or from other channels of
distribution or competitive brands that the franchisor or affiliates control. The term of the franchise
is five years for each Licensed Location. PHI may agree to a longer term, but in no event will the
Term end more than 10 years from the Starting Date. There is currently no option to renew. The
franchisee must designate two individuals as “Pizza Hut Champions” for each Licensed Location.
A Pizza Hut Champion can be designated to cover more than one Licensed Location. The Pizza
Hut Champion will be responsible for ongoing training of unit level employees, ensuring the
quality of operations at the Licensed Location, and visiting the Licensed Location at least
biweekly. The Pizza Hut Champion most successfully complete PHI's training and must be
certified by PHI as capable of functioning as a Pizza Hut Champion. All employees exposed to the
Pizza Hut Information must sign a written agreement to maintain the confidentiality of PHI's trade
secrets and proprietary information. The franchisee must sell only those products that PHI has
approved for the Licensed Location in the area of the Licensed Location associated with the
Licensed Concept and PHI's Marks

Institutional Perspective

Institutions, their quality and level of development play a crucial role within one society's ability
to develop, grow and promote economically stable environment. Having in mind that firms are
generally keen to invest in countries which protect property rights, have a developed legal
framework, and enforced rules of law, provide well developed public services without burdensome
bureaucracy and a redundant regulation or corruption.

12
Political Institution had a direct role for Pizza hut to run their business in India. High political
stability provides a stable and friendly business environment with predictable market growth
trends. However, when there is political chaos, it deters the investors and harms the stakeholders'
trust in economic and consequent organizational performance. Currently, Pizza Hut. is present in
different countries, each having own political tensions. Growing tensions and instabilities in the
global political environment can affect the Gold industry growth and limit the growth opportunities
available to Pizza Hut. But when Pizza hut analyzed the Indian market it was very much stable
because India is the largest democracy in the world. Frequent changes in government policies harm
business performance by increasing environmental uncertainty. It is important for Pizza Hut. to
study the current trends in the country's political scenario as changes in government may alter the
government's priorities towards the development of different industries. Pizza hut did study the
Indian market and found that a major area of concern in India is corruption. It badly affects the
country’s business and political environment, posing a challenge to the country’s economic
growth. Corruption increases the cost of business operations and often affects foreign direct
investment. But one thing which attracted Pizza hut to do business in India was a growing public
awareness and government initiatives were combating the challenges of corruption. Moreover,
Pizza Hut did carefully analyze the protests by pressure groups, social/environment activists and
worker unions as such protests play an important role in the policy making process. Close
collaboration with such groups enhanced Pizza Hut’s ability to collaborate with community and
achieve long-term corporate goals. Moreover, a well-developed governance system with a
democratic political environment made the business environment more comfortable for
international business organizations like Pizza Hut. Furthermore, Pizza Hut did study how
intellectual property rights are protected in India and make the business strategies accordingly so
that no corruption occurs while maintaining the sustainable solutions. High taxation affects
international trade and prevents exports. Pizza Hut entered in low taxation markets and benefitted
from high profits that can be invested in research and development activities. The organization
also studied the industry specific taxation policies to understand the host government's priorities
and interest in developing industries. The corporate tax rate in India is among the lowest in the
world. In September 2019, the country reduced the tax rates to 22% from 30% for existing
companies and to 15% from 25% for new manufacturing companies. It is worth noting that the
country witnessed frequent corporate tax rate changes over the years. The demand and supply of

13
labor determine the wage rates and supply of skilled workforce. Pizza Hut also studied and
predicted the labor market conditions to understand how it can attract talented workers and
leverage their skills to improve business performance. When labor markets are flexible, Pizza Hut.
can take advantage of higher labor productivity. Whereas, operating in rigid labor markets may
cause labor wage and other issues raised by powerful labor unions which is actually a common
scenario in India. For regulatory institution, Pizza Hut carefully analyzed the availability of skilled
human capital as a shortage of skilled labor can affect business efficiency and make talent
attraction and retention more challenging in Indian market. It is important for Pizza Hut. to
understand the people’s general attitude towards migration as it can influence firms’ ability to
bring international managers to host country. Pizza hut had also played an important role in
business entry regulations where culture is a major part. Each society has distinctive norms and
values that play an important role in shaping consumer behavior. Pizza Hut developed local teams
and developed local partnerships to understand the societal attitudes and norms to tailor marketing
strategies according to unique cultural context of India. The observation of social class
stratification is also important for Pizza Hut. Offering luxury products at premium prices to a
market where the high-end market is considerably small in number required Pizza Hut. to adopt
the niche marketing strategies. Similarly, market segmentation based on social class may be
ineffective where social class stratification is low. So, for Pizza Hut local market knowledge were
very much needed to be a part of regulatory institution.

To conclude major element of Pizza hut to enter into the Indian market was the legal institution.
Pizza Hut. cannot enter a new market without studying in detail the legal environment and
regulatory structure of the new consumer market. A careful evaluation of legal aspects is required
to avoid getting into some serious trouble. Ignorance in this regard can cause undesired
circumstances for Pizza Hut., such as- hurting competitive advantage as a result of intellectual
property rights violation and harmed organizational image due to violation of
consumer/employee/environment protection standards.

a) Employee protection laws:

Pizza Hut did follow the employee/labor health and safety laws as its host country India have a
strict regulation to ensure labor safety. Providing a secure work environment for the workforce is

14
the ethical and moral obligation of Pizza Hut. Similarly, anti-discrimination laws (like equal
employment opportunity) also carefully studied by pizza hut while developing human resource
practices as discriminatory suits against employer harm the organizational image and affect
organizations’ ability to attract and retain the talent

b) Consumer protection laws:

The data protection had become an important issue due to consumers’ privacy and security
concerns. Pizza Hut needed to study data protection regulations to protect the customer data.
Moreover, there are laws to set the maximum price, ensure a certain quality standard and protect
consumers from fraudulent marketing claims. Pizza Hut did consider these factors to ensure
compliance with consumer protection laws to retain its business in India.

c) Intellectual property laws:

Intellectual property regulations are designed to protect the companies' patents and valuable ideas.
Inability to protect intellectual property rights can result in losing competitive advantage, which
may weaken the positioning of Pizza Hut. against other market players. To avoid the risk of losing
its positioning, Pizza hut protected the company patents and valuable ideas.

Culture at Pizza Hut

As already mentioned in the earlier part of the case, Pizza Hut was acquired by PepsiCo, and
eventually went on to become Yum! Brand. It was found that PepsiCo management system was
incongruent with the quick service restaurant business of Pizza Hut. PepsiCo was more focused
on individuals instead of team success. Therefore, to build long term capabilities, coaching had to
be brought as a tool to support the restaurant focused culture in a number of ways. Its effectiveness
is maximum when done face to face as it requires physical proximity.

It also required partnership, and market coaches, area coaches and restaurant managers to network,
mirroring the teamwork required in the restaurants (Mike & Slocum, 2003).

15
Considering the above requirements, a coaching cultural model with three simple processes and
easy to learn acronym, EAR, was developed:

Exploring: Observe/ask/listen

Analyzing: Facts? Isolated or pattern? Root cause?

Responding: Teach new skills and knowledge, provide feedback, Offer support and gain
commitment

Operational leaders (not training personnel) would be responsible for teaching all coaching classes
for those two levels down from them. This method had huge implications for fostering a new
culture at Pizza Hut, such as:

1. All the coaches had to acquaint themselves with the coaching model to teach the same.

2. Demonstration by coaches on their commitment was mandatory, even before they got to teach
it to others and, at the same time, they were held accountable for achieving results.

3. It put the one level down coaches (the direct supervisors of the students) on notice for
accountability to their immediate subordinates.

4. Operators were able to bring real-life examples into the role-plays, increasing the relevance,
impact, usefulness, and credibility of the coaching material.

5. In addition to training, coaching logs were created in each restaurant to document each coaching
session, its lessons and commitments.

6. Audiotapes of coaching sessions were circulated to restaurant managers to provide real-life

demonstrations.

To motivate employees, a successful recognition system has been instilled at Pizza Hut, based on
three key elements (Mike & Slocum, 2003).

1. Starting at the top.

2. Ensuring it was continuous and ongoing, and got built into communications; and

3. Reinforcing it publicly.

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At Pizza Hut, an award known as the “Big Cheese “award has been started, which included
awarding a rubber cheese hat (similarly to those worn by fans of the Green Bay Packers football
team.) This was also numbered, and personally inscribed by the representative from the top
management. The recipient had to wear it while being photographed with the existing President of
the company. For example, Mike Rawlings, during his five-year tenure, handed out over 500 Big
Cheese awards. The frequent tears, positive emotions and heartfelt gratefulness of the recipients
were reinforcing both for the cultural assimilation process and for the company’s retention strategy
and attrition management process.

These awards which were given during all operational meetings, helped to develop pride and
goodwill among the recipients, and reinforce their positive behavior, since it was given in open
public and with positive feedback. Since these awards were spontaneous and completely voluntary
(never dictated by corporate), and operational at the restaurant level, over time, the continuity of
recognition started generating a sense of anticipation and pull for awards. It also fostered
tremendous organizational commitment among the employees in the company.

Future prospects of Pizza Hut in India

India is one of the most densely populated countries around the world and the second-largest
population after China. Accordingly, worldometers.info India population will be equivalent to
17.7% of the total world population. Over the years India's economic growth rate increases heavily
so people are busier with their work and consume fast food more and more frequently. According
to statistica.com a survey about how often you eat fast food we get to know that from 2016, 2017,
2018 data shows that in a week average food consumption is four to six times per week from
9.14%, 8.65%, and 8.69%. People like Pizza a lot because this pizza can be eaten by more people.
Pizza hut business in India right now is very good. From till now Pizza hut India mainly doing
their business with the franchisee business model and India Pizza Hut has two franchisee partners
one is Devyani International and Sapphire Foods India. Yam! Brands Inc. has officially said in
their statement that because of the global growth we invest our business around the world and
India has a great global growth so we have also invested and expanded our products there with the
local companies for its accelerating growth. If think about future prospects of Pizza Hut in India

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and that will be already there are 350 stores of Pizza Hut spread over 100 cities know Pizza Hut
plans to open over another new 200 outlets in India by 2022 whereby 2022 there will be 700 outlets
of Pizza Hut in India. Pizza Hut also focused on online sales so that they can have more sales of
their item.

Conclusion

As we know that Pizza Hut India is basically doing their business as a franchisee model business.
Pizza Hut the USA based owing company Yam! Brands Inc. always focuses on the global growth
and market opportunity to run their operation. Regard in this Pizza Hut India has good operation
in the Indian market. Though Indian market is very much competitive because there are also
different brands are competing and on the other hand local food chain is also competing. Pizza Hut
India has understand this type of situation and they do good market research and made budget
friendly so that they can grab the whole market for all type of people. Pizza Hut has always had
the first mover advantage. Their marketing strategy is always fast then their competitor. To take
share in the market they always invest on the market research. One of most challenging part is
taste differences. This is because in India or Indian subcontinent people eat too much spices
powder and their taste different is so much from the basic Pizza. Apart from that Pizza Hut India
has always followed Indian govt. law maintain their rules and regulation, maintained all the labor
laws. In the institutional perspective their quality and level of development play a crucial role
within one society's ability to develop, grow and promote economically stable environment.
Having in mind that firms are generally keen to invest in countries which protect property rights,
have a developed legal framework, and enforced rules of law. Cultural perspective Pizza Hut India
is very dynamic and they follow the part of an Indian Culture. In future they will increase their
outlet so that they can serve more and more people.

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