PIZZA HUT MOSCOW

TIME CONTEXT

The case story occurred in May 1991, during Pizza Hut's first nine (9) months of operations in Moscow, Russia. It was a time when the former communist state was experiencing political and social unrest, which, as history recorded, eventually led to the transformation of the USSR into a capitalist nation - just a few more months after this case story happened. The said political revolution was attributed to the people's growing dissatisfaction with the Marxist way of life - which was marred and plagued with economic stagnation and oppressed freedom.

POINT OF VIEW

There are numerous characters in the case that play important roles in order to resolve Pizza Hut's dilemma; however, the main focus of this case is on Andy Rafalat, the regional director of Pizza Hut in Eastern Europe.Being the head of this franchise in Moscow, his management decisions would, definitely, be of significant effect to the firm.

STATEMENT OF THE PROBLEM

The case study mainly emanates on the problem of addressing the upcoming turnover of Pizza Hut Moscow from Rafalat's guiding hands to the Russians, who, at the time, were branded as people who perform sub-par work, a crisis that was blamed on the then-Soviet mentality to maintain one's minimum potential, which is, again, one of the negative effects of an autocratic government and management system/s.

This setback was further aggravated by the state's economic, social, ethnic, and political turbulence. The government was furiously attacked by a barrage of protest, people dissatisfaction and even a number of inter-agencies bickering, as the power struggle between the Moscow City Council and the District Council, which once led to the temporary closure of Pizza Hut, would attest.

The central problem, also, has its complications.For one, there is the lack of a regular supplier for all of the restaurant's ingredients, followed by the problem of how to uplift the standards of Russian work. Another is the problem with job-matching. The Russian employees, though most have academic proficiency, were given jobs that did not fit and were "inapt" with their background (e.g., kitchen staff should have expertise in culinary; however, Pizza Hut Moscow's crew in this department were doctorates in Engineering - obvious evidence of job mismatch). Training these employees to become adept and fluent with the Western-style would be an arduous task to do and to ultimately accomplish. The turn-over is also high at one per day. Though this is generally acceptable in Russia, in the global setting, this is a management, especially an HR, indication for a future disaster, since no employee would last long enough to master the process of making pizza.

In addition, the monetary conditions of the state were, indeed, not enticing for business. Instead of hard currency, which could easily get converted with the USD or any other international currency with strong value/s, the country has more rubles. This scenario was, again, a manifestation of a Leninist's economic backward development.

The competition was not much of a problem, for the reason that McDonald's caters to an entirely different segment. However, the problem lies in the market's perception. Pizza Hut was dilly-dallied that the Russians might consider them as a fine-dining restaurant that charges high on its prices, but somehow, Rafalat found a way to negate this assumption. Through his molding hands, the firm was able to capitalize on the Russian's cravings for Western food. Yet, despite this turnaround, the market was, still, not consumer-driven. The effect of communism on the mindset of the people takes its toll on the foreign firms at that time.

QUESTION

HOW COULD YOU MARKET PIZZA HUT IN MOSCOW?