External Influences that Impact Business

Introduction

The culinary industry supported by the wave of globalization is growing, following that numerous cultures have the opportunity to share in food habits. The growth is evident in the distribution of multiple franchises all around the world such as Pizza Hut, McDonalds, KFC, Domino’s Pizza and many others. Pizza Hut is an American restaurant chain that has made tremendous efforts to globalize its operations through the provision of different pizza styles along with side dishes. Several factors ranging from the economic, legal, political and cultural factors play a role in influencing the distribution of the various restaurants. As a subsidiary of Yum! Brands Inc., Pizza Hut prides in having a multitude of stores all around the world. This paper analyzes its performance in India, along with some of the legal, political, economic and cultural factors that favor the growth of the franchise.

The Indian market is one that presents promise. The market growth as explained by Sengupta & Raghupathi (2012) is because of an increase in the young population, busy working routines, and the growth of the middle-class society. As a company, Pizza Hut boasts in its worldwide culture of satisfying each customer, while having their preferences in mind (Pizza Hut, 2011).

Legal System Influence

The legal system plays a role in the operations of any business as it provides the frameworks needed to start and sustain a business. Different countries as explained by Johnson & Turner (2004) operate on various laws and policies, each differing on how business operations are in play. India as a country as explained by Saju (2013), is one that supports investments, particularly foreign investments. With common law being the center of the legal framework, it relies on tradition and precedents to formulate laws and policies, (Daniels, Radebaugh & Sullivan, 2015). The legal system as such is flexible in encouraging business operations as lengthy legal procedures descriptive of most developing countries is not the case in India. Regardless, the challenging aspect of the legal system concerns the regulations needed to begin a business. While they aim to protect consumers from fraudulent activities, they equally discourage investors from going through with their investments, pending the length of time required to complete the process. Within the market, there is a need for patience on the part of the investor pending that Pizza Hut, invested in India in 1996, having the first store in Bangalore, (Pizza Hut, 2011).

Within the legal system, a factor supporting the business is having companies take an online director identification, which encourages accountability. With the registration of enterprises, taking priority, international companies undergo more scrutiny to discourage exploitation of consumers through unfavorable business practices, (Saju, 2013).

Political System Influence

The dynamic nature of India’s political environment encourages multiple investors to invest in the country. Executives as explained by Daniels, Radebaugh & Sullivan (2015), have to evaluate and monitor aspects of the political environment likely to affect business. They go on to study the authority of government officials, legislation of policies and the punishment of wrongdoers. A peaceful political system encourages business success, while an unruly environment discourages business, (Daniels, Radebaugh & Sullivan, 2015). India is a democratic republic with twenty-six states, each having its own government elected officials governing it, (Sinha, 2001). As explained by Daniels, Radebaugh & Sullivan, (2015), an element of pluralism is apparent in the Indian political system with religion fueling political orientations. Some of the political ideologies in Indian culture center on collectivism as they enjoy being together with family values taking center stage. Concerning a business context, collectivism helps businesses have in mind what works best for the citizens of the country. An advantage with politics in India is the idea of political freedom where there is fairness in the electoral process. To foster a favorable political environment as explained by (Daniels, Radebaugh & Sullivan, 2015), freedom sanctions rights and liberties in economic terms have to be in place. This would help legitimize prosperity, which India already has.

One of the challenges in India’s political system centers on the increased corruption of government officials. Corruption as a vice encourages unfair business practices as it discourages fairness in the operation of business activities.

Cultural Influences

Culture plays an important role as it influences attitudes towards the firm. International companies have to have an awareness of the culture of the country they want to invest. India as a country is rich in culture with religion forming a major aspect of culture. According to Daniels, Radebaugh & Sullivan, (2015), religion influence specific beliefs that affect business. In India for instance, production centering on beef or pork is limiting with religion discouraging the consumption of the products, (Sinha, 2001). A cultural aspect influenced by religion is the caste system being one that places value on some individuals than others especially those belonging to a family of higher, social economic status, . Pizza Hut as a company has managed to bridge the gap by having their prices affordable for most individuals. The company equally boasts of being an international brand with an Indian heart. It prides in reinventing recipes using the best of Indian based ingredients. With the Indian culture primarily encompassing a vegetarian diet, Pizza Hut has made efforts to have purely vegetarian dine-ins at Chowpatty, Surat, and Ahmedabad, (Pizza Hut, 2011).

Concerning the religious values of the Jain community that takes on an all-vegetarian meal, Pizza Hut opened a branch in Gujarat that specializes in providing vegetarian based meals. With India having a rich food cultural heritage, Pizza Hut uses local flavors to make most of its pizzas. The tandoori range of pizza managed well to the point of developing a menu mix of over twenty percent.

Economic Influences

An analysis of the economic system is essential in fuelling the operations of a business. This means that managers examine trends and opportunities for investment while carrying out thorough analysis of anticipated future outcomes, (Daniels, Radebaugh & Sullivan, 2015). Countries have different capacities for economic environment and India presents a favorable economic environment. Economic freedom is a considerable factor that encourages business operations as it gives businesses the flexibility they need to succeed.

Conclusion

The external influences play an important aspect in business operations. Pizza Hut is a company that has achieved tremendous success, following its concerted efforts to satisfy the customer. Through having an understanding of the external influences and developing ways of mitigating them, it is then possible to achieve the stipulated outcomes.

References

Daniels, John D., Lee Radebaugh, Daniel Sullivan. (2015). International Business: Environments and Operations, 15th Edition . Pearson Course Smart Archive Vital Book file.

Johnson & Turner (2004) International Business: Themes and Issues in the Modern Global Economy. New York: Routledge.

Kessaries, Perry, A. (2008). Global Business, Local Law: The Indian Legal System as a Communal Resource . University of London

Pizza Hut Inc. (2011). Pizza Hut Website Retrieved from www.pizzahut.com/

Sinha, J. B. P., Sinha, T. N., Verma, J. and Sinha, R. B. N. (2001), Collectivism coexisting with individualism: an Indian scenario. Asian Journal of Social Psychology , 4: 133–145. doi:10.1111/j.1467-839X.2001.00081.x

Saju, Noelta. (2013). Political and Legal Environment : Slide share. Web Retrieved from www.slideshare.net/ on 30 Aug 2016

Sengupta & Ragupathi. (2011). A Case Study on Pizza Hut: Competitors Envy Consumers Choice. Print.