Group project
Hi, I have Group project however we are not divided the work as yet. fIrst i need some ideas because they want me to share some ideas for the case study and then we will divide the work. I attached the Case study and the image file. Pls check. Given below is the outline for the case study.
As we discussed in the meeting, this is the starting point for an outline with problems, alternatives, and proposed solutions:
Section Problem
Supply chain/logistics problems
Issues with ingredients
Constrained by agreement to source the majority (70%) of food items locally
Quality of ingredients
Cheese
Rare
Little infrastructure
One cheese supplier is located, but too little milkfat creates poor cheese
Importing cheese to satisfy needs until cows can produce higher fat milk
Western grain needs shipped to provide milk with adequate fat
Meat
Quality, reliability issues with local meat suppliers
Swedish supplier agreed to joint venture to supply meat, but not ready for at least 1 year
Importing meats until this is ready
Black market goods
Not a reliable source
No consistent pricing model
Higher pricing than government regulated goods
Stable supply of ingredients
Long, difficult winters create shortages
Political instability leads to inability to get products from warmer republics
Increasing food prices by 300%
Issues with shipping
Adequacy of supply infrastructure (2 cold trucks for supplies)
Other Issues
Currency stability (devaluing of ruble)
Regional stability (issues with collapsing Soviet Union)
Cant convert ruble to currency and extract earnings from USSR
Distribution Issues
Marketing
Difficulty in forecasting unknown size and preferences for the market
Pricing
Determining affordable price
Setting prices amid fluctuating currency issues
Operational problems
Difficulties in communication due to language and culture differences
Turnover
Quality of Replacement Staff
Difficulties maintaining standards
Typical mentality of doing minimum work level
Require ongoing training
Understaffing
Morale
Setting Schedules to satisfy local requirements (2 day on, 2 day off, 12 hour shifts)
Section Alternatives
Section Proposed Solution
Supply Chain
Fall 2020
Case Report
Mark, Gall, and Soniya
Page 1 of 5
Case A: Pizza Hut Moscow
Problems
After reading the Pizza Hut Moscow case, we decided an additional set of problems they were facing dealt with the operations of the company. The big problem area in the operations section was dealing with staffing. They were having high turnover rates as well as the quality of the replacement staff was not up to standards. The replacement staff was having difficulty maintaining the standards of the company, which required the company to complete additional training with the employees, but also their work mentality was to just do the minimum required. Going along with staff problems, they had trouble finding a schedule that worked with all the employees. They tried to keep a 2 days on, 2 days off with 12-hour shifts schedule, but not everyone liked that which led to understaffing when people would not show up for work. The final problem dealing with operations was the morale of the staff, the staff did not know the culture of the company and therefore they did not complete the shifts with the best mentality.
Alternatives
To deal with the operational problems, we have come up with various alternatives. One alternative would be to help with the turnover, we believe if the employees had more focused training, they would understand the corporate culture and have a better understanding of the food service model. This might lead to employees staying longer with the company because they understand more of what is expected and feel more comfortable in their position. Another alternative we had would be utilizing daily reminders for the employees of what the company is all about. This could be in the form of daily questions to reinforce the cultural norms and expectations, it could be simple team building exercises to reinforce teamwork, they could possibly have short pre-shift meetings to help generate enthusiasm before they go out and work with the customers. Even just come up with short mottos to remind the employees of the standards, such as service with a smile. We also thought of changing the incentives model, making it more desired by the employees, the company could ask the employees for ideas. This could lead to less turnover as well. One final alternative we have would be to change the scheduling, allow people to still use the 2 days on 2 days off, 12-hour shifts, if that is their desired schedule, but add more schedule availabilities such as a part time morning shift only schedule. The flexibility might lead employees to put in more effort because they could choose their schedule around their needs.
Proposed Solution
We believe the best solution to solve to operational problem would be to incorporate a part time shift availability. This solution will help the problem of understaffing and also the problem of turnover, the part time shift would solve both. Another part of our solution would be to incorporate the pre-shift meetings, this really boosts the morale of the shift before they start talking to customers. By using both of these solutions, Pizza Hut should be able to fix multiple operational problems that they are having. Case 3 -2: Pizzt Hut Moscow
–
99
W
“Pizzastroika” was the term coined to commemorate the
September 1990 opening of the two Pizza H]ut restaurants
in Moscow. The opening was the culmination of five years
ofnegotiation, planning, and training involving Pepsico and
its joint-venture partner Mosrestoranservise, the restaurant-
operating division of the city of Moscow.
In May 1991, after nine months of operation, the Pizza
Hut restaurants were averaging 20,000 customers each
week. One of the restaurants was capable of producing
5,000 pizzas each day and had the distinction of being the
largest pizza kitchen in the world. Lines of people were
always waiting to gain entrance, and although many prob-
lems had arisen, the joint venture had generated more sales
than anyone had predicted.
Andy Rafalat, regional director of Pizza Hut’s opera-
tion’s in Eastem Europe and the Soviet Union, had man-
aged the Moscow venture from its inception. Rafalat, 39,
was faced in May 1991 with a difficult decision. During
initial negotiations with the city of Moscow, Pizza Hut had
agreed to transfer management of the joint venfure over to
the Russians eventually. Were the Russians prepared to take
the helm?
History of Plzza Htil
On June 15, 1958, Dan and Frank Camey, two college
students from Wichita, Kansas, opened the first Pizza H$
restaurant. It was a sterling success. By the following
-I-ffi
F
This case is to be used as the basis for class discussion rather than
to illustrate either elfective or inffictive handling of an adminis-
trative situation. This case was prepared hy Gregory B. Fairchild,
MBA 92 and Bonnie K. Matosich, MBA 92 under the supervision of
Elliott N. Weiss, Associate Professor of Business Adminisrration
Copyright a 1992 Darden Graduate Business School Foundation.
Preview the Darden case abstracts at www.dardenlcaselbib. Rev.
4t93.
February, the Camey brothers had opened two more restau-
rants and had begun to develop plans for the first franchised
outlet. The chain grew rapidly: 43 restaurants opened by
1963, and 296by 1968.PizzaHut went public in 1969 and
n 1977 was acquired by Pepsico, Inc. In 1971 Pizza Hut
had become the la.rgest restaurant chain in the world in both
sales and number of restaurants. Sales reached $1 billion in
1981 and $13 billion in 1988. In 1990 Pizza Hut, still
headquartered in Wichita, had over 7,000 units and 125,000
employees worldwide.
Pizza Hut restaurants usually displayed a distinctive free-
standing design and characteristic red roof. Until 1985 all
Pizza }{rtt restaurants were full-service, eat-in/carryout,
family-style operations seating about 60 to 90 customers and
normally open from 11 a.m. to midnight. In 1985 PizzaHut
began opening delivery-only units to meet rising competi-
tion from such pizza delivery restaurants as Domino’s.l
History of Russian Joint Ventures
In January 1987 the Presidium of the USSR Supreme
Soviet authorized the establishment of joint ventures be-
tween Westem companies and Soviet entities such as
factories and govemment organizations. President Mikhail
Gorbachev envisioned that this joint cooperation would
satisfy Soviet requirements for certain industrial products,
raw materials, and foodstuffs; attract foreign technology,
management experience, material, and financial resources;
and develop the expofl base of the country.2
When the law was first introduced, a foreign partner was
entitled to a maximum of 49Vo ownership in a venture.3 The
decree required that all joint ventures be self-supponing
and established a two-year tax holiday, after which proflts
would be taxed at 30%. No limitations existed on the
number of partners or composition of the joint venture’s
capital strucfure. Foreign companies were not allowed to
“repatriate” their profits, that is, they could not convert
ruble eamings into hard cunency. Therefore, Westem pafi-
ners often attempted to formulate strategies through which
rKaufmann, Patrick J.,PizzaHuq Inc., Hamard Business School
case,1987.
2Jeflrey M. Hertzfeld, “Joint Ventures: Saving the Soviets from
Perestroika,” Harvard Business Review, JanuatT-February I99I ‘
p. 85.
3In 1991, there was no ceiling on foreign ownership of joint
ventures—in ffict, joint enterpises could be 99Vo foreign-owned.
ln addition, President Gorbachev authorized the establishment of
100Vo foreign-owned companies in the Soviet Union.
—
100 Chapter 3: The Globalization of
the joint ventures would generate more hard currency than
they used.
History of the Pizza Hut Joint Venture
During 1987, Anatoly Dobrynin, then Soviet Ambassador
to the United States, and Donald Kendall, the chairman of
Pepsico, discussed the possibility of opening a Pizza Hut in
Moscow. Pepsico had been doing business in the Soviet
Union since 1972, when it signed an agreement to provide
Pepsi-Cola concentrate in exchange for Stolichnaya vodka.
Dobrynin and Kendall, believing that the time was right for
introducing a restaurant business, decided that the Pizza
Hut operation would be a component of a $3 billion
commercial countertrade pact between Pepsico and the
Soviet Union.
The pact involved the creation of 26 new Pepsi plants in
the Soviet Union; Pepsico retained exclusive rights to the
sale of Russian vodka in the United States. The deal also
included the construction by the Soviets of ten commercial-
shipping vessels that would be sold or leased. Foreign-
exchange credits generated for the Soviets from the sale
and lease of the ships would be partly used as investment in
the Pizza Hut restaurants.4 Kendall commented at the
signing of the deal:
This latest agreement further strengthens a highly success-
ful and long-standing trade relationship between Pepsico
and the Soviet Union. Equally important, as trade betuveen
nations expands, so does the level of understanding and
cooperation among those nations’ citizens. This agreement
reflects increasingly closer ties between the US, the Soviet
Union, and other Western interests, and the expressed
optimism for a shared future. It expands even further the
positive collaborations which can help bring the two super-
powers and their people closer towards the universally
shared goal of world peace.s
Altruism and improved relations were not the only
reasons for the trade agreement. Business rationale was also
strong. The Pizza Hut joint venture was viewed by some as
a symbolic “toe in the water,” for both Pizza Hut a d
Westem businesses planning to start joint ventures. Recent
political changes suggested that the East European market
would soon open to capitalist operations. Eastem Europe
was the largest untapped base of consumers in the world
and according to Rafalat the thinking at the time was that
Pepsico’s experience with both Soviet consumers and long-
standing trade relations with an East European govemment
n”Pepsi Wiil Be Bartered for Ships and Vodka in Deal with the
Soviets,” The New York Times, April 9, 1990, p. A1.
5″Pepsico Signs Largest-Ever Commercial Trade Pact with the
Soviet Union,” PR Newswire, April 9, 1990.
Operations Strategies
would provide the company with considerable leverage and
a strong “calling card” in this emerging market.6
The decision to begin USSR operations in Moscow was
a reasoned one. Moscow, with a resident population of 9
million, was one of the largest cities in the world.
Pizza Hut would be a 49Vo pafiner in the joint venture
and was required by the terms of the pact to source the
majority of its food requirements locally, to engage in the
transfer ofboth financial and technological expertise, and to
train a Russian management team for eventual on-site
management. The technology transfer included manage-
ment and distribution training and training on the state-of-
the-art equipment to be used in the restaurant.
Many business analysts believed that the joint venture
had symbolic importance to the future of business in the
Soviet Union. Kendall waxed philosophic: “We are not,
however, just bringing pizza to Moscow. Nor are we just
helping to satisfy the local Soviet appetite for consumer
goods. We’re helping to meet the changing needs of the
Soviet economy.”T
Culture Clash
Managing this joint venture was not an easy task. Many
times the problem was just getting each side to understand
what the other wanted. Many of the Pizza Hut team’s
preconceived notions about doing business didn’t apply.
Rafalat commented:
Don Kendall gets the request and passes it down on our
side. We can’t be sure it is always passed down on the
Russian side. The first people we met here were construc-
tion people. They simply wanted to build a pretty restau-
rant. We said, our job is not about buildings, it’s about a
system of management. It all dragged on and on, and after
18 months we were told there was no real interest in
developing Pizza Huts at all. They had no concept of the
difference betyveen a small Vietnamese restaurateur and a
multinational chain. We had to work out a book of rules.
That took time. The words we were using had totally
different meaning to these guys.8
This communication problem was the largest barrier in
the early days. Interpreters seemed unable to help. For
instance, the Soviet staff protested operations running 365
days a year. They believed, given a need to close for
“Abdo, Geneive, “Pizza Hut Opens its First Restaurants in Mos-
cow,” Reuters, September I1, 1990.
TPizza Hut News release,Pizzaflut Opens Fimt Two Restaurants in
Moscow September 1 1, 1990.
8Peel,
Quentin, “Pizza Hut Gives Food for Thought to Soviets,”
Financial Timeq September 21, 1990, p. 18.
Case 3 -2: Pizza Hut Moscow
“hygiene days,” that it was impossible. Pizza Hut had to
explain the concept of cleaning as a part of routine, daily
business operations.
During these times, Mosrestoranservise provided as
much assistance as it could. Assistance was limited, how-
ever, because of the difficulties and changing environment
in Moscow at the time.
Construction of the Restaurants
Senior Pizza Hut managers wanted to have two restaurants
in Moscow located in high-traffic areas. They finally sigaed
contracts to build restaurants at 12 Gorky Street, near
Pushkin Park and only minutes from the Kremlin, nd at 17
Kutozovsky Prospekt, one of Moscow’s busiest streets.
Taylor Woodrow lnternational was chosen to manage the
construction of the Pizza Hut restaurants using design and
construction standards similar to those found in the West.
Taylor Woodrow, based in England, assembled an inter-
national team to construct the restaurants’ Some 100 labor-
ers including skilled craftsmen from Britain, Italy, Sweden,
Portugal, Poland and Russia worked at the two sites- In the
demonstration of how to accomplish individual tasks, the
spoken and written word often took second place to sign
language. The work encountered supply problems, as Tay-
lor Woodrow, divisional director, Ian Greenwood, pointed
out: “We had no local builders’ merchants on hand, even
for basic things like nuts and bolts, so we had to import just
about everything in the way of tools and equipment–even
down to screwdrivers.” As a result, costs of production
were three to four times higher than they would have been
in Westem Europe.e
Finding and Creating Supply Sources
Pizza Hut managers soon found that the establishment of
intemal supply sources would be a significant challenge’
Although McDonald’s had created an entire food-
production facility to supply its restaurant, Pizza Hut
decided to source ’10Vo of all supplies from existing
local suppliers within the Soviet Union (see Exhibit 1)’ in
order to help them improve their quality and standards’
Rafalat believed that this approach would ensure the long-
term viability of the operation and provide benefits to the
growing class of Soviet enffepreneurs. “We are not food
producers,” he explained. “Our expertise is in restaurants’
Where possible, we’re happy to share know-how and
technology that enables the Soviets to make what we need,
sell it to us at a proflt, and also meet local market needs”‘
101
At the same time, however, Rafalat realized that Mos-
cow’s long and extreme winters would make intemal
sourcing especially challenging. The city often experienced
shortages during the winter months, and some Muscovites
were known to survive entirely on pickled vegetables.
Moreover, Rafalat could not expect to purchase supplies
from the warmer, southern republics of the country, which
were refusing to send supplies to Moscow because of the
escalating political and ethnic tensions.
PizzaHnt faced other supply problems. Cheese, one of
the main components of pizza, was common in the Soviet
Union, but not mozzarella cheese, which, was unavailable.
Rafalat visited numerous cheese-processing plants around
the country but with little success;
We couldn’t find anybody even interested in supplying us.
Finally, we found one in Motensk, 300 kilometres ftom
Moscow, somebody who had been touched by Western
thinking. He was happy to give it a try. We would prottide
the equipment and expertise, he would make the cheese.
Pizza Hut flew the Russian to England to see how the
cheese was made and brought cheese-making experts to his
plant to provide training on the modem process and equip-
ment. Nevertheless, the mozzarclla produced was unaccept-
able, because the domestic milk did not contain enough
bufterfat. Cheese had to be imported until a sufficient
number of cows could be raised on a strict diet of Westem
grain.
The search for a supplier for meat toppings also met
with no success. Both quality and reliability were missing
from every meat plant Rafalat visited. Finally’ Pizza Hut’s
Swedish meat supplier agreed to set up its own joint
venture with a partner in Moscow and guaranteed thatPizza
Hut would receive the lion’s share of its output. Unfortu-
nately, the plant would not be ready for at least another
year, so another key ingredient had to be imported,
PizzaHut also needed to find a way to transport supplies
to the restaurants. Because refrigerated trucks were virtu-
ally nonexistent in the Soviet Union, Pizza Hut had no
choice but to import two trucks to form its own distribution
system. The trucks were painted with the distinctive Pizza
Hut logo so that they might also serve as a traveling
advertisement for the joint venture.lo
Market Research
In many ways, the Moscow restaurants were an experiment’
Because of the novelty value of the Pizza Hut product,
typical marketing-research methods and tools were useless
for establishing market size and taste preferences’ Pizza
th.euters, September 1 1, 1990
o”Taylor Woodrow Creates a Slice of Western Living for Musco’
vites’,” Oign Universal News Services Limited, September 10′
1990.
t–
102 ChaPter 3: The Globalization of
Hut managers observed, however, as McDonald’s opened a
restaurant in the city’s Pushkin Square in January’ custom-
ers in the thousands lining up to taste Westem-style fast
food. They believed the same novelty value would play a
sffong role in bringing Russians tntoPizza Hut restaurants.
Pizza, however, was not an unknown food in the Soviet
Union; it had been served by Italian and Canadian joinr
venture restaurants. It was even prepared by some Russians
at home. In addition, a traveling pizza tntck offered cus-
tomers individual slices of pizza. These pizza foods were of
varying quality and taste; thus the Soviet consumer had
come to view products termed Pizza as having a varying
quality.
Pizza Hut scheduled bake-offs to allow Muscovites to
sample and compare its product with others. The company
received rave reviews. Rafalat believed the Soviet consum-
ers were easily able to discem quality and would commu-
nicate their findings quickly through word of mouth.
PizzaHnt would also be different because it would offer
both fast- and full-service meals. Rafalat thought that a
dinner at Pizza Hut could be viewed as a trip to an
expensive restaurant, while McDonald’s would still offer
only fast-food. Rafalat wanted to combine speed with
service and offer Soviet consumers something entirely new:
quick table service geared for the entire family. “The
market is not consumer driven at all,” Rafalat said, “. . .
there is a real lack of consumer choice. Pizza Hut will
immediately be ranked as a four- or five-star restaurant in
the city. ”
Pizza Hut decided to offer a menu comparable to that
found in Western Pizza Huts-with Pepsi soft drinks, a
newly brewed Soviet bottled beer, and wines from Hungary
and the Soviet Union. They also developed a “Moscow
Pizza” with a salmon-based topping designed to fit with the
fish-heavy Soviet diet. (See Exhibit 2.)
Operations Strategies
Pricing, the Ruble, and Hard Currency
The restaurants would also differ from other Moscow
restaurants in that customers would be able to purchase
pizza tn either rubles or hard curency’ The Gorky Street
restaurant would have a walk-up window for ruble custom-
ers and a full-service restaurant for hard-currency custom-
ers. The restaurant at 17 Kutozovsky Prospekt would
actually be two separate full-service restaurants. Both
ruble- and hard-currency customers would receive fuIl
service, but they would never interact with each other.
Rafalat had attempted to determine who would visit
each type of restaurant based on customer’s incomes. The
average monthly income for a Soviet citizen at the time was
250 rubles. Recently, however, a burgeoning middle class
of entrepreneurs had found a higher standard of living than
the govemment employees. Rafalat believed that this
middle class enjoyed an average monthly salary of approxi-
mately 2,000 rubles. He hoped to serve these enffepreneurs
in the ruble restaurants. He also thought that Westerners and
black marketeers would visit the hard-currency restaurant.
His initial estimates were that the foreign customers would
be 407o Americans md 30Vo Japanese with
Germans, Australians, and British making up the balance.
Ongoing changes in the currency exchange rate compli-
cated pricing decisions for the restaurants. At the time the
joint venture was being negotiated, the official govemment
rate was 1.6 dollars per ruble, although most people
believed that the ruble was worth far less. It was against the
law for Soviets to hold hard currency, which over the years
had led to the creation of a black market. In the late 1980s,
many Soviets were illegally purchasing hard currency on
the black market at a rate of approximately 10 rubles per
dollar. By the time thePizza Hut restaurants were ready to
open, Soviet President Gorbachev had acknowledged that
the ruble had been artificially propped up and he had
introduced a mixed exchange rate. He set an official rate of
2 rubles per dollar and a tourist rate of 6 rubles per dollar.
At the same time, however, because the poor quality of
Soviet goods had been recognized around the world, the
black-market rate had fallen to nearly 30 rubles per dollar.l 1
This trend suggested that the Soviet govemment still had a
long way to go before reaching an equilibrium between its
fixed exchange rate and the free market rate established by
the black market.
After studying these fluctuations in the exchange rate,
and attempting to set reasonable prices for restaulants’
food, Rafalat decided that the restaurants would offer
identical menus, but that the prices would differ. Prices in
Ir”Soviet Banks to Set Market Rate for ‘Tourist Ruble’,” Re:uters,
November 29,1991.
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Case 3 -2: Przza Hut Moscow
the ruble restaurants would be roughly comparable to those
found in some of the better full-service Soviet restaurants.
Prices in the hard-currency restaurants would be similar to
those found inPizza Hut restaurants in the United States.
For instance, a large pepperonipizza in the ruble restaurant
would cost 18.20 rubles, while it would cost $6.90 in a
hard-currency establishment. At the tourist exchange rate in
September 1990 (6 rubles per dollar), an American student
would pay more than twice as much money to eat in the
hard-currency restaurant as he/she would pay to eat in one
of the ruble restaurants.
Why then would an American choose to pay in dollars?
The answer was simple: PizzaHrt planned to maintain a
standing line of at least 30 minutes in front of the full-
service ruble restaurant. Therefore, foreigners would be
paying extra for the quick service. (The long line was also
intended to serve as a testament to the value of the Pizza
Hut product.) The mixed-pricing decision was key to
Rafalat’s strategy: Pizza Hut would gain a source of hard
currency, which was important because foreign companies
could not repatriate ruble profits, and be able to hedge the
exffeme exchange-rate risk.
Human Resources
The requirement that the management of the joint venture
would eventually be l00-percent Soviet made the hiring of
management personnel a critical task. “Our experience is that,
to make joint ventures work, you have to give the local man-
agement team the responsibility for running the business,”
Rafalat said. “I will be called the deputy general manager. I
will be like the coach, training the people around me, not
taking an active part in the business.”l2 This Pizza Hut strat-
egy differed widely from that of the McDonald’s joint venture.
In addition to the legal requirement, another rationale
for emphasizing Soviet management of the joint venture
was the sometimes contradictory Soviet view of Westem-
ers, particularly Americans. Westemers were loved because
of the economic and technical assistance they could provide
but hated because of the elite status thefu knowledge and
finances afforded them.
Rafalat decided that the best way to find managers was
to visit restaruants in Moscow. At one particular establish-
ment, he noted that the staff smiled (a rarity in Moscow) and
that the interior was clean. When Rafalat and representatives
from Mosrestoranservise spoke with the manager, Alexander
H. Antoniadi, they found that he also knew his sales and
profit figures. Highly impressed, they offered him the job of
general director of thePizza Hut restaurants. He accepted.
Antoniado, 46,hadmanaged five different restaurants in
the Moscow system, inctuding one full-service restaurant,
t2Peel,Frnancial Times, September 21, 1990.
103
two fast-food restaurants, and a bakery. Bom in Georgia
and of Greek descent, he was one of few Soviets who had
visited the West. He considered his exposure to Westem
management practices and service levels a significant factor
in his past (and potential future) success. “You can’t
compare Westem and Soviet restaurants,” Antoniadi said.
“You [Westerners] are used to taste, quality, and far higher
worker discipline. Moscow restaurants employ people who
are not used to Western service standards.”
After Antoniadi was named general director, Pizza Hut
still needed two on-site managers for the restaurants. They
approached Alexander Youdin and Boris Paiken, both 36,
who ran a Georgia-style fast-food cafe called the Pancake,
after its famous main dish as a joint venture. Both were
known for their commitment to quality and their democratic
form of management. kritially, Paiken resisted leaving his
joint venture, because he believed Pizza Hut would not
allow Soviets to manage the operations. He called them
“stables,” meaning that he thought Russians, like livestock,
would provide little more than physical assistance. After
lengthy discussions withPizza Hut managers, however, he
joined the team.
PizzaHut also needed a financial specialist. Olga Igna-
tova. 27 . was a former member of the Moscow Finance and
Planning Department. Rafalat and members of the Pizza
Hut team were so impressed with her work during the
initial phases of the joint venture that they offered her the
opportunity to come aboard as a member of the staff.
Valery Ginsberg, who held a doctorate in steel and
alloys from the Moscow Institute, was hired as director of
technical services. Ginsberg had initially been hired by
Taylor Woodrow Intemational during the construction
phase. His knowledge and exacting work ethic eamed him
an offer to join the management of the joint venrure.
The entire management staffwas flown out of the country
to train in a Pizza Hut restaurant in the United Kingdom. The
goal was to establish an understanding of the Przza }llut
philosophy, not necessarily standard procedures. “We
wanted people to understand both systems,” Rafalat said.
We told them to take a look at the UK system, and then
decide how it could best work in Moscow. Taking people
out for training meant they would come back totally
dffirent people. Telling them the same thing here had no
meaning. It was only when they went to London and saw
our restaurants working that the penny really dropped.
Hiring and Training Staff
In hiring staff for the joint venture, PizzaHut found it had
an extremely strong group of applicants from which to
choose. In an attempt to hire 300 kitchen and wait staff’
Rafalat placed an advertisement in the Moscow Communist
Youth daily newspaper. The text of the advertisement read:
.FrF
104 Chapter 3: The Globalization of Operations Strategies
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