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Globalization has augmented the competition within firms. There are more and more
companies which are inspired to master in international markets and broaden their
company on these markets. For various reasons, companies adopt strategies to enter
international markets and find new networks of distribution.

Pizza Hut is one of the world's leading chains of fast food restaurants. The key to rapid
and effective international expansion of Pizza Hut is the franchise model initiated by

Pizza Hut recognized early in their life that overseas market required a tremendously high
degree of local sensitivity and that they needed to manage business spread across
different areas effectively and efficiently which would be accomplished only through
"International Strategy". The Porters five forces model constructed to analyze the
competition in order to enter in to the right market at the right time.

International marketing

International marketing is simply the application of marketing principles to more than

one country. It is the act of business activities that direct the movements of a companys
products to consumers or users in more than one nation for a revenue.

Motives for companies to go international

Many dissimilar reasons encourage companies to go international and enlarge with their
products to international markets. These reasons can be divided into the reactive and the
proactive reasons.

Reactive reasons

The reactive reasons include all activities where a company receives information about a
new or foreign market and performance consequently to these information or a possibly
changed condition. The recognition of a new foreign market with capable future
possibilities could pledge a company to go international and expand to that market.

The evidence of an internal progress and potential profits lead companies to expand their
activities to a new market, strengthen its position in their segment and safeguard regional

Proactive reasons
The proactive reasons is all about to performance in advance, to anticipate a potential
change and consequently plan for a future situation. Companies who are proactive in
worldwide business and conquer accordingly are, in most cases, better positioned and
equipped for changes within their market. To accomplish a strategic improvement,
companies increase their activities to new, untouched markets and gain a market leading
position in this region, related to its competition. Power and reputation constitutes a
further motive to enter a foreign market. By merging with further firms, companies
achieve market power and develop to a greater and stronger corporation with associated
operations in added countries.

Reasons for international expansion

There are various reasons businesses expression towards international expansion, Such
as; higher profits, lower costs, the gaining of new skills and technologies and the
divergence of cost and profit bases between them. And also being Specialization, gain the
competitive advantage, incensement of brand reputation etc.

Introduction to the selected company

Pizza Hut introduced by two brothers Dan and Frank Carney in Wichita, Kansas in1958.
After taking 600 Dollar from their parents, they have started the business in a small
rented building with second-hand equipments. In very next year, the 3 rd Pizza Hut
restaurant was established as a Franchise. The companys vision is to grow Franchise
model which help to become an international successful marketing ideal. Closely within
ten years of establishment, Pizza Hut serving one million customers in a week in their
310 locations. Pizza Hut placed on the New York Stock Exchange in 1970 under ticker
sign PIZ. International Pizza Hut restaurant became 100 in number while the total
number of Pizza Hut reached 2000 in 1976.In 1986, Pizza Hut introduced delivery
service, and something no other restaurant was doing. Pizza Hut opened its 5000 unit in
Dallas, Texas. Pizza Hut celebrated its 30 th anniversary with more than 6000 units in
1988. In 19thMay 1982, Pizza Hut began its operations in Malaysia with the opening of
its first outlet. In 1996, Pizza Hut sales in the United States were over $5 million.
However, Pizza Huts market share has slowly matured because of intense competition
from their rivals which is Dominos, Little Caesars and Papa Johns. In the past, Pizza
Hut has always had the first mover advantage. Their marketing strategy in the past has
always been to be first mover. One of their main strategies, which 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. Nowadays, Pizza Hut is the largest pizza
restaurant company in the world specializing in American style pizza. As of 2012, more
than 6,000 Pizza Hut restaurants in the United States, and more than 30,000store
locations which is 30,190 restaurants in 94 countries and territories around the world.
Employing more than 300,000 people. Nowadays they serve different style of pizza along
with side dishes including mushrooms soup, pasta, chicken wings, breadsticks and garlic

International marketing entry strategies

Internationalization strategy is how the market of business is rapidly globalized by
expansion of the company to the growing number of nations. Entry strategy is the initial
stage in the process of entering new markets, whereas internationalization is a long-term
process that observes expansion of the company in a global business context

There are three ways an organization must consider if it intends to explore overseas
markets. These include decisions regarding what the foreign market to enter, timing of
entry, and scale of entry or strategic commitments. Once the organization has selected an
area to enter, the next step, the company needs to consider is time of entry. If the
company is first to enter into the market, then it has certain advantages such as brand of
early entrant will be well known and accepted by the market, as well, the first mover is
able to capture a large share of market demand. The company also has cost advantage
which can be used to cut the price to eliminate competitors for market. However, there
are various disadvantages also, firstly, the pioneering costs are needed if the company is
first to enter that market. This means, the company has to pay much time, effort and
expense to understand that foreign market

There are various international market entry strategies that company can implement when
entering into a new market. Strategies of entry vary in terms of degree of control the
company has over resources, the transaction costs associated with these resources, ease of
knowledge transfer and enforceability of legal rights. Below mentioned are some of
international market entry strategies that are relevant for companies engaged in retailing
and are intending to enter foreign markets:

Exporting: When a company wants to involve in international retailing at lowest

level, then exporting is main choice. It is one of the easiest ways to reach the foreign
market and has minimal impact on operations of the firm. Exporting is classified into two
categories: direct (every function is owned and controlled by the firm itself) and indirect
(some business functions involve intermediaries). From the companys perspective,
exporting requires low investment, increase production capacity, allow the company to
achieve competitive edge over rivals, and most importantly improves the financial
position of the company. It also allows the firm to uphold control over production
function and reaching maximum consumers. On the contrary, exporting has certain
disadvantages; the company may lose market control and in some instances exporting
may affect financial performance of the company which can be caused by high tariff
costs, transportation costs and quotas. This type of entry mode is appropriate when a
domestic country has cost advantage and there are low entry barriers.
Licensing: Licensing is in use when a firm allows another firm to produce their
product under that firms name; it can be process technology transfer from home country
to the host country. Licensing involves low initial investment, easy access to the local
market, avoidance of trade barriers and ease of understanding local market needs. While
on the other hand, licensing has some major drawbacks also; the company may lack
control over its operations and may also face difficulty in transferring knowledge. The
company can exercise this entry mode when it has a location advantage in the host

Joint venture: When a firm glues with other firm for similar interest and form a
new business unit, then Joint venture is in action. The main attribute of this strategy is
that rights and control are collective. By forming a joint venture with local partner, the
company can enjoy varied advantages, such as, difference in language and culture in the
host country will not be a barrier for company to enter another market. Secondly, risks
and costs can be shared among partners. Moreover, a joint venture with local partner will
allow the firm to have land lease rights and exemption on certain taxes and duties.
However, there are various disadvantages also; the company may not enjoy tight control
on its subsidiary. Additionally, shared ownership may also cause disputes and conflicts
among partners, which can affect business to a great extent.

Franchising: In this type of entry mode, the company gives franchiser the right to
use its name to sell the product. In context to the present case, the retailer can also
provide the franchiser with technological knowledge and training required to operate the
business effectively. Franchising is one of the simplest ways to expand business
networks. As far as disadvantages are concerned, under this agreement, the company may
not have much control over operations, and moreover, the potential revenue will have to
be divided among the partners. It has been observed that most of business organizations
that are engaged in retail adopt franchise entry mode to enter in foreign market as it
involve lower costs and risks.
Wholly-owned subsidiary: Under this type of entry mode, the company wholly
owns a business in foreign markets, i.e. from production to ultimate selling, every
business function takes place in a foreign nation. Basically, there are two ways to
establish subsidiary in foreign market. First is by acquiring an established local company
in foreign nations and then to manufacture its own products in that company. The other is
by setting up a whole new operation in foreign nation, this is called Greenfield venture.
Under this entry mode, the company has tight control on every business operation and
will thus not lose its technologies to others. However, this type of entry mode requires
huge investment and is relatively more risky than other entry modes.

Entry Strategy of Pizza Hut

After being success in their home country, United States, Pizza Hut decided to expand
their market from domestically to internationally .It is because their market growth at
domestic market has increases makes Pizza Hut believe that this firm must do
internationalization to find new market that is doing international entry strategies.
International entry strategies can be defined as firms strategy in moving the company
towards greater acceptance domestically and mainly at international level .There are
some basic decisions that Pizza Hut must take before a foreign expansion such as where,
when and how to enter .

Pizza Hut mode of entry into international market is through wholly owned subsidiary
and franchising .Pizza Hut is a wholly owned subsidiary of Yum! Brands, the world
largest fast food restaurant company in terms of system unit .Yum! is the company that
operates and give licenses to Pizza Hut to operate as worldwide restaurant .This entry
strategies is allows a firm to speed up market penetration and can control the resources
.In Pizza Hut company ,this firm use franchising to entry into international market .Pizza
Hut start to open new branch of franchising on 1959 in Topeka ,Kansas . The franchiser
will help local firms with business by providing training the workers, supply in the
setting up of restaurants and equipment. The franchiser strictly controls the business
system to guarantee the customer a constant and consistent experience of the product
quality. Pizza Hut franchise is part of YUM! Brands and to be considered for a Pizza
Hut franchisee you will need to have $360,000 in cash and must pay royalty fee of 6.5%
per month based on monthly profit .

The uniqueness of Pizza Hut is their sets itself apart from a lot of its competitors because
it allows Franchisee's independence in deciding some of the items they will carry on.
Being free to use different kinds of toppings from different suppliers. While there are
differences in ingredients, the basic elements in each pizza are the same. This allows
consumers to get the familiar taste they love, but also allows franchise owners to branch