Global Expansion

Global Expansion: A Critique

Domino’s Pizza written report argues that the firm is in need of global expansion. The reason to expand is surpassing largest competitor Pizza Hut, and take the lead in the ready-made pizza industry. Emerging markets in Europe, Latin America, and Asia invite to be optimistic. The goal is to focus in one single target nation at a time. The members choose Argentina in order to execute an efficient expansion through franchising. Legal and economic openness, awareness of cultural preferences, and identification of entry barriers serve as the basis for Domino’s expansion in the Argentinean market.

As shown by the report, on a macro level aspect, Argentina offers relative openness to franchise. Despite such openness, cultural differences between the two countries are evident. According to research, cultural value is a key element associated to brand image, which creates a big impact when it comes to customer’s decisions on purchasing products and services (Park and Rabolt, 2009). Competition might also serve as an obstacle with the local “pizzerias” fulfilling Argentineans culinary traditions for quality pizzas. In addition, the reporter’s pricing strategy to adapt to local preferences might be too risky and not bring profitability to the firm. On the following report, we will break down each of these factors in order to understand why targeting Argentina might not be the right move for Domino’s pizza intentions of global expansion.

Analyzing previous failures in the targeted market by direct competitors illustrates the magnitude of the existing cultural barriers. According to researchers, Pizza Hut’s failure to conquer Argentina (twice in the last thirty years) is associated to high standardization of product, not enough adaptation to the local market, and misunderstanding of the country culture (Mararquia, 2011). The leading competitor failures illustrates the difficulties that Domino’s would face when trying to conquer such country. Cultural differences between The United States and Argentina are evident, and they represent a major threat for Dominos expansion in Argentina. The written report limits its knowledge to the dine-in preferences combined with high quality pizza that Argentineans demand. However, that information might be limited to understand the extend to which Argentina differs culturally to the United States, and how such differences might impact the marketing strategy established by the report.

According to empirical frameworks and statistical analysis, cultural differences between The United States and Argentina can be analyzed based upon Hofstede’s Culture Dimensions. Such dimensions are labeled as follows; Individualism (self) and collectivism (others), power distance (hierarchy), Uncertainty avoidance (tolerance of rules), Long-term orientation (live in the moment versus save for the future), masculinity and femininity