SUCCESSFUL FAST-FOOD FRANCHISING IN BRAZIL AND THE ROLE OF CULTURE ...

SUCCESSFUL FAST-FOOD FRANCHISING IN BRAZIL AND THE ROLE OF CULTURE: FOUR CASES

By MARY E. RISNER

A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT

OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS

UNIVERSITY OF FLORIDA 2001

ACKNOWLEDGMENTS I would like to express my gratitude to Dr. Terry McCoy, my thesis committee chair, for being a helpful mentor as I have became more and more involved with the study of business aspects in Brazil. I thank my other committee members, Dr. Ginway and Dr. Perrone, for their scholarly suggestions on the Brazilian cultural issues considered in my research. I also would like to thank the Center for Latin American Studies for its financial support in the form of the Tinker Grant I received in order to conduct my research in Brazil. I sincerely thank Peter Rodenbeck, a kind and helpful businessman in Brazil, whose efforts allowed me to set interviews with key professionals associated with franchising in Brazil. Finally, I thank the all the Brazilian executives that took the time to meet with me for my research.

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TABLE OF CONTENTS

page

ACKNOWLEDGMENTS .................................................................................................. ii

LIST OF TABLES ............................................................................................................. vi

CHAPTERS

1 INTRODUCTION ...........................................................................................................1

Significance of the Study................................................................................................ 2 Franchising...................................................................................................................... 3

Definition .................................................................................................................... 3 Standardization vs. Adaptation ................................................................................... 5 Franchising In Brazil....................................................................................................... 5 Organization of the Study............................................................................................... 8

2 REVIEW OF THE LITERATURE................................................................................10

International Franchising Research............................................................................... 10 Why Expand Internationally? ................................................................................... 10 Advantages of Franchising Over Other Foreign Investment .................................... 12 Entry Modes.............................................................................................................. 13 Franchising Studies on Brazil: Contributions and Findings ................................... 14

The Role of Culture in International Franchising......................................................... 16 What is "Culture"?.................................................................................................... 17 Adapting to Local Culture......................................................................................... 18 Case Studies Dealing with Cultural Differences....................................................... 19

Other Factors to Consider Before Franchising Internationally..................................... 20 Brazilian Culture........................................................................................................... 23 Hierarchy/The Elitist Tradition..................................................................................... 27

Personalism............................................................................................................... 28 Paternalism................................................................................................................ 30 Malandragem (Cunningness).................................................................................... 30 The jeito .................................................................................................................... 31 Sensualism and Attraction to Adventure .................................................................. 32 Brazilian Corporate and National Culture ................................................................ 34 Regional Differences................................................................................................. 36

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3 RESEARCH APPROACH ............................................................................................38

Research Method-Similar and Contrasting Case Studies ............................................. 38 Inter-relational Dimensions........................................................................................... 40

Universalism and Particularism................................................................................ 41 Individualism and Collectivism ................................................................................ 42 Neutral versus Affective ........................................................................................... 42 Specific versus Diffuse ............................................................................................. 43 Achievement versus Ascription ................................................................................ 44 Other Inter-relational Dimensions ............................................................................ 45 Structure.................................................................................................................... 45 Thinking Styles ......................................................................................................... 46 Problem Solving........................................................................................................ 48 Human Resource Issues ............................................................................................ 49 The Cases ...................................................................................................................... 50 Use of Case Study Method and Personal Interviews................................................ 51 Sources of Information............................................................................................. 52 Collection of Data ..................................................................................................... 52

4 PRESENTATION OF CASES ......................................................................................55

McDonald's................................................................................................................... 56 History....................................................................................................................... 56 Product ...................................................................................................................... 57 Operations ................................................................................................................. 59 Store format/Location ............................................................................................... 59 Training..................................................................................................................... 60 Marketing.................................................................................................................. 60 Customer Service ...................................................................................................... 61 Local Networking ..................................................................................................... 61 Selection of Joint Venture Partner ............................................................................ 62 Franchiser-Franchisee Relations ............................................................................... 62 Community Service................................................................................................... 63

Dunkin Donuts .............................................................................................................. 64 History....................................................................................................................... 64 Product ...................................................................................................................... 64 Operations ................................................................................................................. 67 Store Format/Location .............................................................................................. 67 Training..................................................................................................................... 68 Marketing Strategies ................................................................................................. 68 Customer Service ...................................................................................................... 69 Local Networking ..................................................................................................... 69 Master Franchiser Selection...................................................................................... 70 Franchiser/Franchisee Relationship .......................................................................... 70

Pizza Hut ....................................................................................................................... 71 History....................................................................................................................... 71 Product ...................................................................................................................... 75

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Store Format/Location .............................................................................................. 76 Training..................................................................................................................... 76 Marketing.................................................................................................................. 77 Customer Service ...................................................................................................... 77 Local Networking ..................................................................................................... 78 Master Franchise Selection ....................................................................................... 78 Franchiser/franchisee Relationship........................................................................... 78 Subway.......................................................................................................................... 80 History....................................................................................................................... 80 Product ...................................................................................................................... 82 Operations ................................................................................................................. 82 Store Format/Location .............................................................................................. 82 Training..................................................................................................................... 83 Marketing.................................................................................................................. 84 Customer service....................................................................................................... 85 Local Networking ..................................................................................................... 85 Master Franchiser Selection...................................................................................... 86 Relationship between Franchiser and Franchisee ..................................................... 86 Subway Today........................................................................................................... 87 A New Subway at PUC-Rio: FASTWAY .............................................................. 87 Analysis Of Cases And Cultural Factors ...................................................................... 89

5 CONCLUSIONS............................................................................................................95

Principal Findings ......................................................................................................... 95 Significance................................................................................................................... 99

APPENDICES

A LETTER SENT TO EXECUTIVES...........................................................................101

B SAMPLE INTERVIEW QUESTIONS.......................................................................102

Questions for Paulo Guimar?es: ................................................................................. 102 Questions for Gerson Keila:........................................................................................ 103 Questions for Jorge Aguirre:....................................................................................... 104 General Questions for Marcelo Cherto, Ricardo Young and Daniel Pl?.................... 105

C KEY FACTORS FOR SUCCESS...............................................................................106

D FACTORS FOR SUCCESS FROM EXECUTIVES INTERVIEWED.....................108

LIST OF REFERENCES .................................................................................................109

BIOGRAPHICAL SKETCH ...........................................................................................117

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