PEST Analysis

Political Factors- the policies and actions of the government where Pizza hut is located,
whether national of local affects how the business is being conducted. The political and
legal conditions that could affect the business of Pizza Hut are the policies of the local and
national government towards business, if the government is more open in the
establishment of numerous Pizza Hut restaurants, then more restaurants will be
established. On the other hands, if the policies do not protect the business then fewer
restaurants will be established. Another factor is the regulation of the business and the
environment. If the business environment is not friendly with the company, then there is a
possibility that Pizza Hut will not open a restaurant and instead move to a more businessfriendly government.
Economic Factors- this part is concerned on the overall perspective of the economy. The
macro economy of a nation has a huge impact on the business such as Pizza Hut. Factors
in the economy include the gross domestic product, the unemployment and inflation rates,
the foreign trade deficit and surplus. If the overall economy of a country is not favourable,
lesser people will franchise Pizza Hut because they will most likely loss a great amount of
money instead obtaining profits.
Social Factors- it is the most difficult from the four factors because the attitudes and
beliefs of people are difficult to quantify. Aside from the attitudes and beliefs,
demographic factors such as population and life expectancy are also important aspects in
the analysis of the social factors. The influence of the values and beliefs affects the
business of Pizza Hut, example in Muslim countries such as Egypt and Middle East; the
recipes of the Pizza do not include pork. In the case of India beef is not served in the Pizza.
The changing trends in the taste of the consumers also play an important role in the
external analysis of the environment, if the current trend in food is Thai, Japanese or
Vietnamese, therefore Pizza Hut can add an additional food such as Vietnamese or Thai
soups. If the current trend in the society is being health conscious, thus consumers will
demand that the foods be healthy.
Technological Factors- the fast changes in technology nowadays has far-reaching effects
in the businesses. The factors that have a huge impact are the research and development,
internet and e-commerce, and new technologies. The research and development has effects
on the business of Pizza Hut because through R&D new products are developed for the
business, the internet and e-commerce also contributes to the technological factors because

through them customers can give feedback regarding the products of Pizza Hut which can
also aid in the research and development, and the service of the company.

SWOT Analysis
Strength
A franchising concept allows to increase its own position without having too many risks in
finance and managing. Pizza Hut concept in delivery is aimed to open a cluster of deliveryonly units in each market and keep its costs as low as possible because of the small
expected market.
A really good advantage is the Customer Service Center (CSC). It allow customers in a
particular market to call a single number and to place an order. The caller will be asked
about his phone number and the operator can connect him to his relevant delivery unit.
Also callers data can be stored and the operator can suggest him to order the same pizza
he previously ordered. It is important that the CSC system works because customers, who
orders by phone, changes their pizza-delivery unit, if they have to wait too long or getting
the wrong order. Eat-in consumers tolerate waiting to be seated, caller dial the number of
the competitor if the call is unanswered.
Being part of the Yum!Brands, is also considered as a strength. This is one of the largest
brands in the fast food industry and has a good reputation and branding. It can raise the
profile of the company to gain the ability to sell at higher price, and also to recognise its
products through the corporate image and to launch new products more easily.

Weakness
An advantage can also be a disadvantage. Too many franchisees can have too many
different business concepts, only a couple of franchisees can become too powerful. Pizza
Hut's weaknesses are the complex computer systems and internal conflicts from
franchisees. This computer system was contracted to develop delivery pizza service
because Pizza Hut management was convinced that the installation of this system was
essential to the delivery strategy and would be a significant competitive advantage. One
major issue presented in developing a profitable delivery concept was whether there
would be a charge for service taking into account that, for competitive reasons, the
company could not charge for delivery. The solution to this problem was that the size and
the price of delivered pizzas would be slightly increased over pizzas in traditional
restaurants. Customers would pay approximately 10% more for a small, medium or large

pizza but would get more as well. But the Pizza Hut franchisees saw no reason for
delivery and they openly expressed their disagreement with the company's delivery
concept, especially regarding upsizing. They also questioned the necessity of the
computerised Customer Service Centres (CSC) which were so expensive and the rivals as
Domino's didn't have one. Those issues brought significant tension between the company
and its franchisees.

Opportunities
Pizza Hut can readily grow in other markets because it has a very good organization and it
has solid market share. Despite it having slightly fallen in recent years, it still has quite a
good market share implying that people buy Pizza Hut's products simply because they like
its products. But the company cannot stop looking after its customer's satisfaction.
Consumer research has shown that the standard Pizza Hut pizza served in the traditional
restaurants was not as well-suitable to the delivery environment, causing quality to suffer.
Pizza Hut research and development managers were confident that they could solve the
problem by developing a new product designed especially for delivery. This would involve
an entirely different production process than that used currently in the traditional
restaurants. In the same way that Pizza Hut management intended to pursue strict the new
segment of delivery, it can try to change growth because it allows Pizza Hut to make better
use of their management, technical and financial resources.

Threads
A threat to Pizza Hut is the intense competition and some possible negative consequences
with it , like to cut down the quality of the products, the service and the attention to the
customers so as to develop new products to increase profit. Such course of business will
lead to disaster.
For Pizza Hut, Inc. it is necessary to know, what is the perception of its reputation, product
quality, service, strength and price. In the same way, it should know how the different
classes of customers make their buying decisions.
Pizza Hut should also obtain as much information as possible about its competitors, their
identification and what the objectives and strategy of each one of them are. Also should be
well informed about the competitors weaknesses and strengths. That way Pizza Hut can

outperform the competition.

Hofstedes cultural dimensions in USA

There are only seven countries in the Geert Hofstede research that have Individualism
(IDV) as their highest Dimension: USA (91), Australia (90), United Kingdom (89),
Netherlands and Canada (80), and Italy (76).
The high Individualism (IDV) ranking for the United States indicates a society with a
more individualistic attitude and relatively loose bonds with others. The population is
more self-reliant and looks out for themselves and their close family members.
The next highest Hofstede Dimension is Masculinity (MAS) with a ranking of 62,
compared with a world average of 50. This indicates the country experiences a higher
degree of gender differentiation of roles. The male dominates a significant portion of the
society and power structure. This situation generates a female population that becomes
more assertive and competitive, with women shifting toward the male role model and
away from their female role.
The United States was included in the group of countries that had the Long Term
Orientation (LTO) Dimension added. The LTO is the lowest Dimension for the US at 29,
compared to the world average of 45. This low LTO ranking is indicative of the societies'
belief in meeting its obligations and tends to reflect an appreciation for cultural traditions.
The next lowest ranking Dimension for the United States is Power Distance (PDI) at 40,
compared to the world Average of 55. This is indicative of a greater equality between
societal levels, including government, organizations, and even within families. This
orientation reinforces a cooperative interaction across power levels and creates a more
stable cultural environment.
The last Geert Hofstede Dimension for the US is Uncertainty Avoidance (UAI), with a
ranking of 46, compared to the world average of 64. A low ranking in the Uncertainty
Avoidance Dimension is indicative of a society that has fewer rules and does not attempt to
control all outcomes and results. It also has a greater level of tolerance for a variety of
ideas, thoughts, and beliefs.