Question
#1
‐
What
are
the
key
differences
across
countries
that
confront
international
competitors
in
 the
fast
food
restaurant
industry
 Although
the
fast
food
industry
can
be
divided
in
at
least
12
categories,
according
to
the
case
study
we
 just
focus
on
the
main
four
segments:
Burger,
Pizza,
Chicken
and
Mexican
food.
Despite
culinary
and
 cultural
differences
global
players
also
face
other
competitive
challenges
concerning
market
 segmentation
in
these
distinguished
categories.
 In
order
to
have
a
better
analysis
structure
we
decided
to
use
the
STEP
Analysis
by
Stonehouse,
which
 uses
four
main
categories:
social
cultural
demographic
effects,
technological
and
infrastructural
effects,
 economical
and
financial
effects,
political
and
legal
effects.

 Within
each
category
we
will
distinguish
between
the
four
main
segments
of
the
fast
industry.

 Social,
Cultural
and
Demographic
 An
overall
phenomenon,
we
can
see
in
all
segments
of
fast
food
industry,
is
a
general
openness
to
 international
products
especially
in
the
Asian
market.
There
are
also
differences
regarding
the
target
 groups
in
the
different
markets,
e.g.
KFC,
which
was
positioned
for
the
middleclass
in
Australia
whereas
 attracting
blue
collar
in
the
U.S.
 The
first
and
the
biggest
category
is
the
burger
segment
with
McDonalds
and
Burger
King
as
main
 players
of
the
market.
One
of
the
main
problems
competitors
are
facing
in
this
segment
are
health
 concerns
by
the
customers
like
mad
cow
disease,
overweight,
cholesterol
or
diabetes
especially
in
 western
countries.
Another
challenge
for
the
burger
industry
is
the
religious
and
ethical
background.
 Very
good
examples
for
this
are
the
lamburger
in
India
and
the
abolishment
of
pork
in
Muslim
countries.
 In
our
opinion
the
main
effect
influencing
the
business
strategy
concerning
standardization
or
adaption
 are
the
different
taste
preferences
in
various
countries
and
cultures.
This
effect
is
majorly
seen
in
the
 burger
and
chicken
segment.
According
to
the
case
study
Italians
prefer
local
food
over
American
fast
 food,
Asians
prefer
spicier
and
crispier
chicken
than
Westerns
and
people
in
South
Africa
demand
more
 meat
on
their
burger.
For
pizza
the
main
issue
is
the
thickness
of
the
curst.
 Technological
and
Infrastructural
 Given
the
high
level
of
standardization
in
the
fast
food
industry
this
point
can
be
neglected.
However
 though,
one
of
the
only
challenges
in
that
area
is
the
infrastructure
of
the
country,
which
is
crucial
in
 setting
up
the
supply
chain.
 Economic
and
Financial
 Another
striking
difference
between
countries
is
the
cost
level.
For
example
in
Asia
labor
and
rental
 costs
are
proportional
low,
New
Zealand
benefits
from
its
low
supply
costs
and
the
transaction
costs
 acquiring
a
company
in
Turkey
is
higher
than
the
one
in
the
U.S..
Other
financial
influences
are
the
 currency
exchange
level,
experience
a
company
has
made
in
the
country
and
the
risk‐reward
profile.
 

International
Business
Strategy
•
Case
Study
No.
1
‐
Tricon


Political
and
Legal
 On
the
political
and
legal
side
a
company
in
the
fast
food
industry
faces
several
differences
among
 countries.
Amongst
others
we
would
like
to
name
taxation
and
accounting
regulations,
labor
laws,
the
 legislative
situation
of
franchising.
One
point
that
in
particular
caught
our
attention
is
the
use
of
 advertisement,
whereas
in
some
countries
there
are
only
a
few
regulations
but
in
other
countries
the
 density
of
regulations
is
higher
thus
forcing
companies
to
adapt
their
advertisement.
As
mentioned
in
 the
case
study
KFC
was
able
to
compensate
that
issue
by
using
an
animated
figure
of
the
founder
Col.
 Sanders
and
adapting
the
voice
over
to
the
different
countries.
 
 Question
#2
–
Do
you
agree
with
Tricon’s
emphasis
on
greater
standardization
across
the
country
 operations?
Why
or
why
not?
 In
order
to
answer
this
question
we
must
first
take
a
look
at
the
reasons
why
the
management
decided
 to
take
this
strategy.
 One
cannot
talk
about
the
fast
food
industry
without
talking
about
McDonalds.
This
also
applied
for
 Tricon.
Mc
Donald
as
the
overall
market
leader
in
the
fast
food
industry
has
been
successfully
 implementing
this
strategy.

 From
their
experience
we
can
also
see
the
benefits
of
a
franchise
partnership.
 As
we
take
a
look
at
the
history
of
Tricon,
we
will
also
be
more
able
to
see
why
the
decision
on
greater
 standardization
was
made.

 Being
pulled
of
from
PepsiCo
in
1996
and
being
left
with
outstanding
liabilities
the
company
was
facing
 difficulties
raising
enough
money
on
their
own
and
not
making
use
of
synergy
effects,
Tricon
was
forced
 to
change
it’s
strategy.

 Standardization
offers
a
lot
of
advantages
for
multinational
enterprises:

 Regarding
the
company
structure
standardization
can
help
to
decrease
the
cost
of
administration
and
 management
and
it
simplifies
the
search
of
franchise
partners
around
the
world.
The
company
can
offer
 a
lot
of
expertise
and
bargaining
power
to
the
franchise
partners
and
in
return
they
can
simplify
market
 entry
for
MNEs.
 Standardization
also
attracts
people
in
for
example
Asian
countries,
who
want
to
taste
a
original
 Western
Burger
without
any
local
adaptation.

Furthermore
customers
all
over
the
world
feel
very
 comfortable
and
safe
while
eating
at
a
standardized
fast
food
chain,
because
the
company
is
able
to
 provide
the
same
product
all
over
the
world.
 There
are
of
course
also
downsides
coming
along
with
the
standardization.
 The
most
obvious
is,
that
the
higher
the
density
of
regulations
and
standards,
the
lesser
the
ability
to
 adjust
to
local
preferences.
That’s
probably
one
of
the
reasons
why
smaller
local
companies
have
 managed
to
outrun
McDonalds
in
their
respective
region.
Tricon
has
taken
that
information
into
account
 and
adapted
its
strategy.
While
McDonalds
is
going
by
a
95%
standardized
products
vs.
5%
local
 products
strategy,
Tricon
is
running
on
an
80%
vs.
20%
thus
giving
enough
room
to
make
use
of
synergy
 
 International
Business
Strategy
•
Case
Study
No.
1
‐
Tricon
 


effects
and
still
having
enough
room
for
local
preferences.

 Another
issue
Tricon
encountered
during
the
standardization
process
was
the
evaluation
process
of
 performance.
Since
polite
behavior
takes
different
forms
in
different
countries
and
cultures
Tricon
was
 not
just
able
to
apply
the
North‐American
standards.
But
again
Tricon
overcame
this
problem
by
 involving
cross‐national
management
in
the
selection
process.
 
 Because
of
its
position
Tricon
has
to
act
globally
‐
with
a
high
density
of
standards
as
well
as
locally
‐
 leaving
enough
room
for
country
specificities.
A
too
high
level
of
standardization
can
lead
to
 disappointed
customers
and
entry
failures.

As
an
example
let’s
focus
on
KFC
entering
the
Japanese
 market.
At
the
beginning
KFC
wasn’t
performing
very
well,
because
they
did
standardized
advertisement
 but
after
some
research
they
figured
out
that
Japanese
customers
prefer
KFC
as
a
romantic
place
to
go
 on
a
date.
 In
conclusion
we
can
agree
with
the
decision
Tricon
has
made.
Even
though
there
are
downsides,
the
 overall
result
speaks
for
its
success.
Tricon
used
the
information
it
had
from
other
companies
as
 McDonalds
and
made
necessary
changes.



International
Business
Strategy
•
Case
Study
No.
1
‐
Tricon