Chapter-1
Introduction to research
Introduction:
This chapter will outline a general view of
the research gap, the problem statement behind the motive for conducting this
research. The motive is followed by the importance of this research study. In
addition, this chapter will outline the objectives and research questions that
will be addressed in the research. This research is the study of south Asian
entrepreneurs operating in restaurant industry in London. This research will
set out to scrutinize the current mindset of south Asian entrepreneurs on
international expansion of their businesses and critical analysis of the
external and internal environment of the south Asian restaurant industry in
London and suitable recommendations based on the findings of the research. This
research article will analyse different theoretical perspectives and primary
research with the aim to critically
analyse ethnic entrepreneurship and its impact on the society notably
UK,international expansion strategies (theories and frameworks) for restaurant
industry, Ethnic entrepreneurshipin restaurant industry (examples of the
successful restaurants chains and lessons to learn), attractiveness of their
industry in London, nature of their engagement andmovement or change in south
Asian diaspora entrepreneurship in London, mindset of south Asian entrepreneurs
regarding international expansion and its related variables and their internal
and external environment.To present a clear framework the first chapter
will be divided in to 10 sections.
Background, Statement of the problem,
Rationale of the research,Aims of the research, Research objectives,Research
questions, Significance of the research,Research methodology, Scope and depth
of the research and constraints and ethical consideration.
Background:
In this era of constantly changing business
and social environment there is augmented recognition of the fact that
entrepreneurship is at the heart of economic empowerment specially minority
groups living in different regions. In addition, entrepreneurship has become a
global phenomenon for economic development(Jing, Qinghua and Landström, 2014).This
stirring evolution of entrepreneurship has created new challenges, such as
diaspora entrepreneurship. Diaspora entrepreneurship is a wide field of ethnic
entrepreneurship. Besides challenging the conventional wisdom and pressing the
knowledge boundaries, ethnic entrepreneurship exposes the paradoxes of the
ethnic minority groups in the context of their entrepreneurship wisdom(Elo et al., 2018).
London is among the alpha cities for the
entrepreneurial activity. London is the second city in the world after
Frankfurt for number of early stage entrepreneurship. 34% of entrepreneurs in
London are expected to have a high growth and have survived and grew to at
least 10 employees after 5 years(EDCI, 2019).
There is an assumption that ethnic entrepreneurship in UK is different from
entrepreneurship in the rest of the general population. In addition, most of
the work done on ethnic entrepreneurship in UK is qualitative in nature i.e.
based on small group and focused on limited number of ethnic groups. For the
same reason there is not much qualitative results available for ethnic groups
in UK.
Upon research it has been
discovered that there are a few studies done on ethnic entrepreneurship on
large groups of more than 100 but they were 20 years back e.g. Aldrich and Waldinger (1990), (for exceptions, see Smallbone et al. 2003; Jones, McEvoy, and Barrett 1994; Basu and Altinay 2002).
In addition, these research
studies use the convenient words of “migrants” and “ethnic minority”. These
masks hide important differences among different ethnic groups and it effects
how they approach entrepreneurship e.g. (education, housing tenure, working
partners, beliefs, gender based stereo typing etc).
Their approach is
independent of their ethnic groups. E.g. There are multiple studies that are
done on entrepreneurship among African and Caribbean people. These studies have
put African and Caribbean people under one umbrella “Afro-Carribean” or on the
basis of their colour “black community”. Since Africans and people from
Caribbean island belong to different regions and may possess distinct response
to a same environment. They should be studied separately to gain in depth knowledge
in to their diaspora entrepreneurship. People from different cultures and
regions cannot be put under one umbrella to be analysed for diaspora
entrepreneurship..
Considering all these facts
it is very safe to assume that there is less research available on ethnic
entrepreneurship in UK that highlights different ethnic groups in UK that are
distinct from each other.
In addition, South Asian entrepreneurs are
ignored by academic researchers. There are a few research studies available on
south Asian restaurants that are more focused on south Asian food and cultural
diffusion across UK, industrial analysis of “curry houses” and British
perception of south Asian restaurants in terms of health and safety, taste etc
(Palat, 2015). These research
studies will be discussed in the literature review section and formed the
starting point of conducting the research. Butthere is absence of any
research on issues and challenges faced by south Asian diaspora operating in
the restaurant industry in UK and business growth strategies for them(Frost, 2011).
Statement of the
problem:
From personal observation and anecdotal
evidence it has been found that many self-employed south Asian entrepreneurs in
London engage in small scale businesses such as takeaway restaurants, food
delivery from home and ethnic food restaurants. There are many areas that are
dedicated to south Asian cuisine in London e.g. brick lane, green street, south
hall and Ilford etc. There is little
information available on south Asian entrepreneurs in London due to their
highly scattered nature. South Asian diaspora live in relative obscurity as
they have never been a part of systematic and focused research. It would be
fair to say that they are unexplored. Several factors might have made contribution
to the absence of reliable statistics. Less contribution in the formal sectors,
habit of keeping secrets and habit of keeping themselves partly or fully in the
shadows i.e. more inclined towards embedding in their ethnic markets rather
then engaging with the main stream.
Based on what is already known, and building
on the back of existing work a lacuna has been found that south Asian
entrepreneurs operating in the restaurant industry do not expand their business
internationally. London is one of the most developed cities of the world. The
city has flourished by successfully managing culture diversity. That is why
London is known as the alpha cities of the world in terms of innovation and
entrepreneurship and culture diversity(EDCI,
2019). Why it is that there are no famous south Asian
international brand names in the restaurant industry that originated from
London?. This research will explore different aspects of this issue. Mindset of
south Asian entrepreneurs, analysis of their industry and external and internal
environment to present an analysis of the challenges and hurdles that need to
be addressed to fill this gap.
This research will focus on south Asian
entrepreneurs that operate in restaurant industry in London. The research
available on south Asian restaurants is more focused on south Asian food and
cultural diffusion across UK, industrial analysis of “curry houses” and British
perception of south Asian restaurants in terms of health and safety, taste etc
(Palat, 2015). There is
absence of any research on issues and challenges (internal or external) faced
by south Asian restaurant industry in London (the world’s 1st most
entrepreneurially active city) and business growth strategies for them. There
is no research available on how south Asian entrepreneurs in the restaurant
industry can exploit different opportunities and expand their business
internationally (Frost, 2011).
South Asians (Pakistani, Bangladeshi and
Indian) constitutes 5.1% of the total UK population excluding people of mixed
ethnicity Ukdataservice.ac.uk.
(2018). In addition, the south
Asian living in UK have purchasing power of £5 Billion (Arsiwala, 2018). But that is not their industry
cap. South Asian have been living in UK for a very long time (before 1946).
“Chicken Tikka Masala” is one of the national dishes of UK.The first curry
house in UK was opened in 1801 in central London. Chicken tikka masala is as
traditional to British as fish and chips (Raman, 2011).
So, what is the current growth rate of
south Asian restaurants? what are the factors that is resulting in growth in
south Asian restaurants? To what extent their growth can be related to ethnic
entrepreneurship? What are the threats facing the industry? What are the
problems and challenges faced by the south Asian restaurants? What are the
growth opportunities for the south Asian restaurants?
These are all the questions that need to be answered to fill the gap in the
research and practise and contribute to personal understanding of the dynamics
of south Asian entrepreneurs in restaurant industry and how can they exploit
opportunities to drive growth and develop strategies to expand internationally
in search of new revenue streams and sustainable sources of income.
Rationale of the
research:
The predominant objective of this research is
to add knowledge in the field of ethnic entrepreneurship in UK. In addition,
this research will also contribute to improve the understanding of the
contribution of south Asian entrepreneurs in the restaurant industry in the UK.
Moreover this research will also contribute overall to ethnic entrepreneurs to
overcome the barriers that they face and improve their performance when they
operate in an environment or market that is different from their country of
origin. Succinctly, The justification for conducting this research is to
understand the environment and mindset of south Asian entrepreneurs with
regards to international expansion and develop focused strategies for the
promotion of diaspora entrepreneurship with a motive to address the problems
that are faced by ethnic enterprises.
Aims
of the Research:
Aim of the research is to develop growth
strategies for south Asian entrepreneurs operating in hotel/restaurant industry
to expand their business internationally.
To help south Asian entrepreneurs not only to
flourish their businesses but also reduce the risk from changing political and
legal situation in UK by targeting other markets for revenue streams.
To gain valuable information on the
contribution and current situation of south Asian entrepreneurs in London.
Research
Objectives:
This research will achieve 4 objectives. The
research objectives are as follows:
1. Critically
analyse ethnic entrepreneurship within the context of diaspora entrepreneurship
and its importance and contribution in an economy (predominantly UK economy).
2. Critically
analyse current growth strategies (theories, models and concepts) for
international expansion and find their relevance with restaurant/hotel
industry.
3. Critically
evaluate key drivers for market penetration. (potential revenue streams) for
south Asian restaurant outside of the UK.
4. Critically
evaluate issues and challenges faced by south Asian entrepreneurs in hotel
restaurant industry in London and formulate strategies based on recognised
opportunities.
Research
Questions:
Typically, the research question is firmly
scoped within the context of existing theories, and the substantiation relies
strongly on the ability of qualitative data to advance insight into complex
social processes that quantitative data cannot easily expose (Eisenhardt &
Graebner, 2007).
Thus the initial inquiry of this research is,
what are the different international expansion frameworks in the theory and
what is their relevance with the restaurant industry?. Following are the 6
questions for the research.
1. How
did ethnic entrepreneurship evolved throughout time and what is the importance
and contribution of ethnic entrepreneurship in global economies most notably
British economy?
2. What
are the different growth strategies that can be used by ethnic restaurants to
diversify their business internationally?
3. What is the Financial/non-financial performance of south Asian
restaurants in London.
4. What
are the theories and models to identify new (potential) market/s for expansion
of south Asian restaurants outside of the UK?
5. Can
ethnic entrepreneurship be used to drive growth (international expansion) in
south Asian restaurant industry?
6. What
are the issues and challenges and opportunities for south Asian entrepreneurs
in ethnic food restaurant industry in London?
7. How
south Asianentrepreneurs operating in restaurant industry in London can expand
their business internationally?
These 6 questions will address each of the
objectives of the research. These questions will be addressed by looking at all
the vistas and their indicators such as the person, firm and external
environment to help the researcher tocomprehend and in-depth analysis of the objectives listed in
the previous section.
Significance
of the study:
South
Asian restaurants are an integral part of British culture. They include Indian,
Pakistani and Bangladeshi food. According to a research South Asian food is the
4th most ordered food in Britain after Chinese, pizza and burgers (Statista, 2018). There are over
10,000 south Asian restaurants in UK giving jobs to 80,000 people and have
yearly revenues over £3.5 Billion. These restaurants serve 2.5 Million
customers every week. South Asian restaurants are thriving in the UK according
to Asian catering foundation but there are a lot of challenges faced by the
business immediately or in the near future (Sayid, 2018).
It
is expected that half of the south Asian restaurants also known as curry houses
will get effected with issues facing the business. Costs of raw material has
increased due to the weakness of the pound (post-Brexit). Since most of the
south Asian restaurants must import the raw material from south Asia. The
weakened currency has increased price of spices, cooking oil and rice etc
imported from south Asian countries (Dunham,
2018). Curry houses backed Brexit because they were assured it would
lead to more visas from south Asian countries, but Brexit has threatened to
tighten the immigration policy on eastern Europeans as well. They have
currently filled the workforce gaps in the south Asian restaurants all over London.
In
addition to tight immigration policy for eastern Europeans there is already
stiff immigration policies for chefs. As the industry average salary for a
curry chef is £22,000-£25,000. But according to immigration policy a chef
should have a minimum £35,000 to apply for sponsorship visa. These issues have
created shortage of staff. Staff costs are also rising Palat, R. (2015). Despite the overall increase in the
market size the business faces threats for its future. Right now south Asian
restaurants have all their eggs in one basket.
According
to a survey curry houses are shutting down at a rate of two a week due to chef
and kitchen staff shortage (Michalec
et al 2018). South Asian restaurant owners need strategies to grow their
business internationally to keep a continuous revenue stream. The need is more
than ever.
Research Methodology:
This research will use inductive approach
for research. In addition, with inductive approach the research will use mix
methods. i.e. both qualitative and quantitative. The research will rely on
multiple tools for data collection. i.e. questionnaire, observation and
interviews (group and individual). The collected data will be sorted and
analysed for description and interpretation by using SPSS.
Scope
and depth of the research
The
scope of this research stretches to cover three distinct dimensions the
individual, the organisation and the environment. Lumkin and Dess in 1996
presented a three-dimensional conceptualisation of entrepreneurial framework. Individual
orientation (that consists of autonomy, innovativeness, risk-taking,
proactiveness, and complete aggressiveness). Entrepreneurial organisational
factors include (size, structure, strategy, strategy making processes, firm
resources, culture, and top management team characteristics)While the
environmental factors that effect and entrepreneurial organisation includes
(complexity, dynamism, munificence, and industry characteristics). (Gartner,
1984) studied 106 entrepreneurial firms. The research was based on the
questions that how an individual characteristic of an entrepreneur when
combined with environmental characteristic and firms characteristic effect
start up behaviour. These 3 elements were studied under an interactive
environment. These three elements mentioned in the Lumkin and Dess study are
found to be inter related and seemed to effect performance. The performance is
characterised by sales growth, profitability, market share and stakeholder
satisfaction. (Aldrich et al 2001) conducted a study which can help to not only
find out the relationship between the three dimensions, but also construct a
framework to examine the degree of this relationship in a particular scenario.
This study focused on the self-employed immigrants with a focus on their social
and business environment. The question asked was “ How strategies are
constructed, moulded and adapted in processes of interaction with environments”
So,
the investigation in this research will be performed at three level:
Individual
(Micro-Level)
Firm
(Meso-Level)
Environment
(Macro-level)
If
put differently, micro level determinants will focus on the decision making
process of south Asian entrepreneurs and their mindset and motivation to be
self-employed in London, their knowledge and level of education and their
motivation to enter new markets. In addition, at micro level the research will
also determine the level of risk that self-employed entrepreneurs are willing
to take for expanding their business in to a new market. At the meso-level the
investigation will be industry and market specific to find out profit
opportunities, stability of their business in London, competition, growth
forecast, internal processes aligned for going international (e.g.
standardisation/focused customisation, branding, cash reserve etc). At the
micro level the research will investigate environmental factors such as
technological, economic, cultural, potential of the target market, support of
the home market (London, to expand internationally) in terms of policies and
business friendliness (ease of doing business).
The
final analysis that will lead to results and formulation of strategy for south
Asian entrepreneurs in the restaurant industry in London will be fostered by
the mediation of these three levels of investigation.
Location decision:
The preference of London based south Asian entrepreneurs is expedient because London is the 2nd most entrepreneurially vibrant city in the world after Frankfurt. Non-white population constitutes 40% of London’s population. In addition, London holds 13% of the UK population. Most importantly,this study is exploring the geographic scope of the resources available through ethnic networks. South Asians living in London are perfectly situated to determine the scope and depth of the south Asian entrepreneurs living in UK.
Constraints and Ethical Consideration:
While conducting research study, a
researcher experiences unexpected problems and limitations that impacts the
quality of the research despite robust strategies and planning.
The research will disclose information to the
participants so that they can understand before they agree to participate.
In addition, the research will have informed
consent before respondents take part in the research study.
All the measures will be insured to avoid any
harm to the participants.
Anonymity of the participants will be guaranteed.
No staff members will be required to write their names or any other information
that discloses their identity. In addition, if any other interview participant’s
request to keep their contribution anonymous will be fulfilled.
The researcher will demonstrate that the
research study is independent and impartial. In addition, the main access issue
is time constraint. In addition, the access issues may also occur once the
primary data collection starts. The researcher will make sure that ease and
secrecy is provided to minimise access issues.
Conclusion:
This study focuses on the south Asian
entrepreneurs that are based in London and operate in the restaurant industry.
The research will be carried out in the context of global migration and impact
of ethnic entrepreneurship (diaspora). Gap in research is also discussed.
Dominant view in ethnic entrepreneurship is that due to labour market
disadvantages minorities pursue the path of entrepreneurship for economic
emancipation. There is insufficient understanding of different ethnic groups
and their situation based condition of entrepreneurship. Since there is
insufficient research available on UK based south Asian entrepreneurs. This
research will plug the hole in the literature of UK based south Asian
entrepreneurs that will help future researches to have in-depth understanding
and generate new insights in the wider south Asian entrepreneurs based in UK.Due
to this background the research has intention
to explore the evolution of south Asian ethnic entrepreneurship in UK and their
economic and non-economic contribution in British society. But the primary
intention of the research is to critically analyse the previous work in ethnic
entrepreneurship and use it to develop a framework or perspective that will
assist south Asian entrepreneurs to expand their restaurant business outside of
UK (international expansion). For the purpose the research will critically
analyse issues and challenges faced by south Asian entrepreneurs, opportunities
that can be utilised and research on their mindset and approach towards
international expansion and how it relates with best practises (that will be
defined).
Besides this, the gap recognised will also
encourage other ethnic groups to recognise that various ethnic groups in UK
have different responses to external environment and should not be held under
one hat of ethnic entrepreneurship. This will help to understand various
diaspora and address their issues and challenges. Because if different ethnic
groups have different responses to same external environment then they will
have different issues and challenges that need to be addressed.
Chapter- 2
Literature Review
Introduction
The review of literature is very essential
for appraising the significant points and theoretical concepts in the current
knowledge. This section is arranged in order to address the need for clarity
and reduce ambiguity. The dominant aim is to highlight concepts, theories and
frameworks that relates to ethnic entrepreneurship, international expansion in
the restaurant industry and get a clear understanding of the best practises in
successful restaurant chains to relate with south Asian restaurants and to
critically analyse their approach towards creating strong brand names and
international expansion. The process of relating best practises with south
Asian restaurant industry in London will also help in developing variables to
be addressed in the questionnaire and interviews. Moreover, critical analysis
of theories and concepts relating to international expansion for businesses in
the current knowledge will also provide a strong base for creating independent
variables (criterion) to be used in the questionnaire to address its presence
or degree of agreement/ disagreement by the respondent. The road map of
literature review begins with the critical analysis of entrepreneurship its
different types and how ethnic entrepreneurship evolved and contributed in UK.
The second part of review of literature will dig deep in to different research
articles on ethnic entrepreneurship in UK notably south Asian entrepreneurs and
the depth of research that already exists. This section will be followed by a
critique of theories, models and concepts around international expansion for
organisations that are relevant to restaurant industry to have a panoramic view
of to do lists or find out variables to be addressed in the primary research.
The last section will complete a 360 degree analysis around the research topic
by researching practical examples of successful restaurant chains and how they
have developed their unique advantages. It will help to consolidate knowledge
and put things in their perspective.
Critical analysis of the concept of entrepreneurship and evolution of ethnic entrepreneurship:
The concept of entrepreneurship has evolved
overtime and has presence in every aspect of current society i.e. governmental,
private, commercial and social settings (Steyaert et al 2004). Entrepreneurship
has evolved from an undescribed label to an activity that can be applied to
many paradigms in our society other than the traditional realm of business,
commerce and cultural (Hisrich, 2005). It is linked to numerous other
professions that were unimaginable such as accounting, medicine, education etc (Greenwood
& Suddaby, 2006) and even expanded to include governments as entrepreneurs.
The government’s social and economic schemes are planned via entrepreneurship.
Entrepreneurship is seen as a vehicle of job creation and growth. But
entrepreneurship is prevailing in a society that has a growing economic climate,(Baumol,
1990) argued that entrepreneurs were present during leaps in economic growth
but were absent when economies slowdowns.
So, what is entrepreneurship and who is an
entrepreneur. It is important to examine literature on the personality of
entrepreneur and it’s orientation. This will help to better understand the
concept of entrepreneurship and create better understanding of ethnic
entrepreneurship. Although there is hardly any consensus on the definition of
entrepreneurship. It extends to a broad range of theories and concepts moreover
the impact of entrepreneurship on economic development is also contentious.
Since entrepreneurship has gradually evolved overtime and has importance in
socio-economic advancement. It has embedded in many fields sociology,
economics, medicine, cultural and political etc. This wide application has
created the definitional dilemma. E.g. psychology looks at human behaviour,
while sociology will look at the background of entrepreneurs. While economics
will access the decisions related to resource allocation, performance of firms
and the economic progress of a nation. According to (Thornton et al 2011)
entrepreneurs are people who grow enterprises while entrepreneurship is a
process to grow enterprises. While (Knight, 1961) defined it as a taker of
non-quantifiable risk. Social agent for change and able to spot and exploit opportunities
(Kirzner, 1973).
(Kaufman et al 1998) classified definitions
of entrepreneurship into three categories i.e. traits, processes, and
activities. (Sharma et al 1999) assert entrepreneurship belongs to two schools
of thought; the first group focuses on its characteristics (that is,
innovation, growth, uniqueness) and the second focuses on the outcomes for
example, the creation of value. Other demarcations recognise three major
intellectual traditions which are detectable in the multitude of definitions of
entrepreneurship. Three theories have been recognised to define
entrepreneurship among multitude of definitions which are based on intellectual
tradition. Schumpeter’s (1934) innovation theory (innovative technical ability)
is based on German tradition, the Austrian Kirzner’s (1973) market process
theory (spotting ability of an
entrepreneur or the alertness towards opportunity defines the degree of
entrepreneurship) and the American Knight’s (1961) uncertainty bearing theory
build upon the assumption that entrepreneurs are built to take risks
(speculative ability).
One can safely assume that entrepreneurship
is a process. Baron et al (2008) defines entrepreneurship as a process, a chain
of events that take place over time. This process involves the ability to spot
opportunities that have the potential to be profitable and sizeable.
Theories of entrepreneurship:
There is a range of theories in
entrepreneurship. The focus of these theories is diverse but they have a common
context in which they are created. These theories provide guidelines how
multiple concepts in the these theories are linked to the main domain
(entrepreneurship).
·
Sociological Theories:
Sociological theories discusses
entrepreneurship from a social context. The key concept underpinning these
theories is that entrepreneurship grows in a social culture that has specific
society’s values, religious beliefs, customs and taboos that effect individuals
in a society. Max Weber’s (1905) theory of religious beliefs stresses upon the
effect of religious beliefs on economic activities. Following are the key
elements of weber’s theory.
1.
Spirit of capitalism:
This concept defines the evolution of
capitalism as based on the religious idea of protestant Christians. Capitalism is
linked with fostering entrepreneurship as it encourages economic freedom.
2.
Adventurous spirit:
According to weber adventurous spirit
promotes entrepreneurship. Adventurous spirit is linked to the free force of
impulse.
These two elements are distinct in nature
but help shape entrepreneurial culture. But Weber’s theory was criticised for
proclaiming that Protestantism is linked with promoting entrepreneurial
culture. A vibrant entrepreneurial culture exists in the tigers of south east
Asia (Malaysia, South Korea, China, Singapore and Thailand) in the absence of
Protestantism.
·
Economic Theories:
The underlying concept in the theories that
are classified as economic theories is that economic development and
entrepreneurship are dependent on each other. Entrepreneurs increase a
country’s national income which leads to economic growth. In addition, these
theories also assume that economic incentives are the main inspiration behind
people becoming entrepreneurs. Stimuli for entrepreneurs in a country include sources
of finance, tax structure, raw material, access to information and
infrastructure availability.
Topics to be covered in this section:
Determinants of entrepreneurship
Entrepreneurial mindset
Ethnic entrepreneurship (diaspora
entrepreneurship)
.
Critical evaluation of the theoretical evidence of ethnic entrepreneurship in UK in restaurant industry
Critical analysis of strategic theories, models and frameworks for international expansion strategies relevant to restaurant industry
Discovery led approach:
Organisations make the most important
decisions when they know the least
Discovery led approach is an important
decision making framework. Ben shenoy presented this model for strategic level
decision making in a business environment that is constantly changing
(uncertain business environment) which makes strategic level decision making
more difficult than ever before. This approach ensures that the need for change
be recognised and efforts be focused on that. The interventions should be
tested evaluated and revised. In addition, the organisations should recognise
successful interventions and that should be effectively rolled out throughout
the business.
The author wants to consider the following
choices when making decisions. An organisation has to consider the three
factors due to uncertainty and changing business environment. We can include
whatever is relevant. After making a decision this framework can be used to
consider additional factors to re-enforce the decision.
This is an important framework that
consists of why, where and how? Of international expansion. It provides a step
by step process to create a panoramic view of decisions around international
expansion. In addition this model is much more detailed.
The model argues that organisations follow
an expansion strategy for one of the following reasons.
- To improve the cost-effectiveness of their
operations
- To expand into new markets for new customers
- To follow global customers
This model is more aligned towards changing
business environment. Although some of the factors can be considered but it is
more aligned towards businesses that are more progressive e.g. technology
related business, internet based business etc.
Model for choices of international
expansion:
Managing across the border
This model provides a more in depth view
and answers questions that related to decision making around many factors that
starts from motivations for expansion and operational factors i.e. PESTLE, HR,
location decisions etc. This model provide realistic and specific questions to
address before making expansion decisions.
Model for decision making around
expansion strategy:
The company can decide their strategy from
one of these. This model helps to determine how aggressively the company will
enter new market. Financial position (budget) and risk taking attitude can
guide the selection of one of these options.
Examples of successful restaurant chain businesses that have successfully used ethnic entrepreneurship to drive growth and international expansion.
This
section will critically analyse success stories in the restaurant industry that
are operating in UK. It will be helpful for the research to research on their
drivers for growth, culture and internal and external environment. It will help
the research to find out best practises that will help to compare and contrast
with the operations and mindset of south Asian entrepreneurs and find out
inconsistencies and lacking.
Following
are the few of examples of international restaurant chains and their best
practises and competitive advantages.
Nando’s:
Nando’s
is a restaurant chain famous for its different flavours of chargrilled chicken.
It has 1,200 restaurants in 30 countries around the world. Nando’s is very
popular in UK, Canada and Australia. Nando’s group holdings revenue is over
£969.3 Million in the fiscal year ending February 2018. In UK alone Nando’s has
304 restaurants. Nando’s humble beginnings goes back to 1987 (Nandos.co.uk,
2019).
The first restaurant was opened in south Africa which was influenced by
Portuguese cooking style. Their favourite peri-peri chicken gained an instant
fame. The fame helped them to diversify their restaurant chain. We will break
down the restaurant’s case study in to different parts to understand their
business model and their way of conducting business to understand the success
behind Nando’s.
Does
Nando’s have a Competitive Advantage?
Nando’s
introduced peri-peri chicken which gained instant fame. That is the reason that
Nando’s quickly diversified their business globally. Secondly, the great idea
is copied by great many restaurants around the world (Omarjee,
2015). Moreover People are becoming health
conscious and it is a healthy choice for its customer base (compared to the
competition KFC, Burger King and McDonalds etc). In addition, Nando’s
atmosphere is warm and hospitable. As soon as a customer enters, an attendant greets
the customer and explains him about the process of ordering the food. The
ambience is welcoming (Riley, 2016).
Nando’s
did succeeded in differentiating itself from its competitors and placed itself
different from the competition in one many ways. It helped them to diversify
the business. But did it succeed in giving them a competitive advantage? The
answer is no. Because none of this is sustainable. Nando’s is flourishing
(Nando’s saw 14% increase in their revenues to £969.3m in 2018 as compare to
2017) but they lack a durable competitive advantage. Nando’s was still able to
become a successful diversified restaurant chain without a durable competitive
advantage.
Culture:
“It’s a business about making money and
having fun,” she says. “Our values say it’s okay to make mistakes and try
different things. The company has a long history of things that haven’t worked
out and things that have worked out successfully. So it’s built on a strong
foundation of those values and it’s really made the business what it is today.”(Riley, 2016)
Nando’s has an entrepreneurial culture
instilled. The foundation of the business was based on a new concept of cooking
chicken.
Business Model:
Nando’s have a standardisation in their
business. All the processes in the restaurants globally are pre-defined and
employees are trained to perform their job.
In addition, they source fresh African eye
chilli from south Africa for their secret sauce. To maintain their taste the
sauce to their main business regions i.e. UK, Australia, Canada, and the US is still supplied from south Africa. This
also has a draw back because twice Nando’s faced a shortage of supply and it
was difficult for them to source sauce for global operations and poultry for
local restaurants chains because of drought in South Africa. The secret sauce
can easily be declared as the back bone of their business. Putting all eggs in
one basket can risk to disrupt matching supply to the demand.
They have an innovative logistics as well.
The chicken is pre marinated for the sauce to settle down. It helps in their
business model of using fresh chicken. Although latest cold management systems
have increased the shelf life of chicken up to 7 days. But their logistic
system is complex and can lead to shortage of supply.
Nando’s has plans to further diversify
their business. For the purpose they have recalibrated their business model.
That includes reviewing the locations of their restaurants(relocating if
necessary). Expanding their drive-thru concept from south Africa to other countries.
Overhaul restaurants to fit the style of fast casual dining. It will be a
challenge for Nando’s because they have diversity in customer base and have
different business landscapes they operate in.
Marketing:
Nando’s introduced loyalty card in 2013 to
follow the latest trend (at that time) of data driven approach to marketing for targeting customers. The
loyalty card has taken the shape of mobile app from the physical card. Nando’s has an online portal that was
recently revamped. Along with PR and in-store marketing they have strong
presence on social media (Joseph,
2019). Nando’s has more then 3million followers on
Facebook and 1.39million on Twitter.
According to E-digital research hub the social media campaigns of Nando’s e.g. the recent “finger selfies”
campaign help them to become one of the
well-known restaurants and helps them to truly engage customers to appeal them
for repeat visits. “Nando’s is no chicken when it comes to social media”. Their
social media engagement truly adds value for their international expansion (Engage Customer 2019)
Wagamama:
Wagamama is a British owned restaurant
chain first introduced in 1992 which has
global operations in 22 countries of the world including UK, USA, Europe and
the middle eastern Asia. Out of 190 total restaurants owned by Wagamama. 130
are in the UK. Wagamama has a turnover of £81.6 Million in 3rd
quarter of 2018/2019. Turnover grew by 13.2% as compared to the last quarter.
Wagamama saw 9.1% growth in UK revenues (D&B Hoovers, 2019).
Business Model:
Wagamama serves pan-Asian cuisine. Their
Japanese and Asian inspired food is innovative and differentiate them form the
competition. They have equal focus on not juts the taste but the look of the
food (Wagamama.com,
2019). Another
uniqueness about their cuisine is personalised dishes. The price is also
reasonable. Like all the globally diversified chains. They follow the standard
practise of standardisation throughout their chain.
Wagamama offers a unique example of global
chain that did not had tight control over its global business unlike Nando’s.
The US has 5 restaurants. Wagamama has appointed an independent management team
to manage operations and supply chain. Although they do coordinate with the
head office (Price, 2018).
Excluding USA and UK Wagamama has 58
locations in Middle East, New Zealand and Europe. Wagamama has made franchise
arrangements with various partners for its 58 locations. These franchises
manage their own supply chain with a mix of their own and Wagamama suppliers.
Wagamama has 4,300 square feet in size in
UK. All of this space is leased (Seymour,
2018.
Wagamama had a change of ownership. The new
group TRG has plans to inject Millions in to Wagamama. Wagamama is expanding to
open 40 to 60 more locations inside the UK. The new diversification also
includes diversifying international business and focus on food to go. Wagamama
is already in the top the list of Deliveroo (Wilkinson, 2019). The new business owner TRG also plans to change the ownership
model and focus on customer preferences. They want to change the
standardisation of Wagamama across the globe and build restaurants with
customised menus (outside UK). In addition, they have plans for multi
restaurant agreements for international expansion. A contract (with French
Cases Loisirs- owned company W restaurants) has been done to open a restaurant
in Paris, France.
In addition, the new owners are not satisfied with their presence in the USA. The global diversification of Wagamama will put special focus on “truly cracking America”. America has 5 Wagamama branches but TRG believes the target is 650 restaurants in US with just 40 in Boston, USA alone in the next 5 years (Wingett, 2016).
In addition, the new owners are not satisfied with their presence in the USA. The global diversification of Wagamama will put special focus on “truly cracking America”. America has 5 Wagamama branches but TRG believes the target is 650 restaurants in US with just 40 in Boston, USA alone in the next 5 years (Wingett, 2016).
Wagamama focused on healthy eating and low
prices with innovative food. They achieved strong growth but started loosing
market share and their growth slowed down with years. Since 2011 Wagamama’s
growth has slowed down. Mainly because of the competition in healthy food
restaurants (Wingett, 2016).
Culture and Restaurants experience:
Wagamama has a minimal site design. The
main focus is on the food. Healthy food and the outlook of dish. Another
uniqueness about Wagamama is open style kitchen. Restaurants are re vamped to
place kitchen very near to the entrance. The restaurant branch in Uxbridge has
the kitchen so close to the entrance that passers by can see the chefs cooking
the food. Wagamama has made this the new blue print of their future restaurants
and already revamped 30 existing restaurants on the same theme. The unique
process introduced by Wagamama truly sets them apart. “walk out and pay app”
but it is only for master card that truly provide ease to the customers by
allowing them to just walk out rather then waiting for the bill.
The chain follows Kaizen. An approach of
continuous improvement and efficiency. But it leaves little roam for making
mistakes or trying new ways of doing things. As the business says “Its not a
place of learning. We know you are good, that’s why you are here. Now get on
with it” (the Guardian,
2019).
Marketing:
Wagamama has plans for the future but not
yet launched a loyalty card. In addition, they also have their name on two cook
books for marketing their brands. Moreover, Wagamama also has a ready to
use cooking sauce in the super market
carrying the brand name. Wagamama has run many different online (incentive
based) campaign e.g. the recent one was
an experiential campaign to engage student and new customers. The first phase
targeted 12 universities and has served 8,000 portions of noodles and prizes
that can only be redeemed in Wagamama restaurants. Wagamama brands itself as a
progressive Asian cuisine brand. Unlike the typical Asian food restaurants with
red lanterns, dragon sculptures and signs which are more Chinese then British.
They have focus on healthy eating habits and less environmental impact. Their
new packaging is a step towards that. The grey plastic will help Wagamama to
recycle 15.4 Million pieces of plastic every year. In addition to ethical
marketing they have a visual website with an award winning customer engagement
platform and responsive design for different digital devices (Pearlfisher, 2019).
Although Wagamama has weak following on
social media i.e. 55.7k on twitter and 560k on Facebook. Wagamama’s marketing
strategy does not add value to the business. They need more energy and money to
be invested into marketing (specially digital marketing) to increase brand
awareness globally while they carry their plan of further global expansion.
Hard Rock Café:
Hard rock café has aggressively diversified
its restaurant chain globally. It’s a unique case because the restaurant chain
diversified its revenue streams in other industries as well. Hard Rock was
founded in 1971. The first restaurant then was opened in central London. The chain
started diversifying internationally in 1982 with opening restaurants in
Canada, US, France and Germany. Since then chain has 185 cafes, 25 hotels and
12 casinos in 74 countries of the world(Hardrock.com, 2019).
Hard rock cafés has a American restaurant
menu. It includes burgers, sandwiches, smoked and chargrilled food, dessert and
beverages. The uniqueness about the café is that it is for customers who love
music and food. The restaurant collects rock and roll memorabilia from around
the world. Their global archive has more then 80,000 items. This is the largest
private collection of rock and roll memorabilia. These unique collections are
part of the decors throughout their business sites. It offers a sense of
attachment to its target customers. This has helped hard rock café to increase
customer engagement and loyalty(Hardrock.com,
2019).
. Another uniqueness about the business is
that they have diversified in to similar industries to look for new revenue
streams rather then putting all eggs in one basket. Besides hotels and casinos
HRC has resorts in India, Colombia, Thailand and US. In addition, they also
have live venues around the globe for events. They have a diversified business
that has multiple revenue streams (Hrcplc.co.uk, 2019).
HRC is a perfect example for restaurant
chains who want to expand globally by giving the customers a unique sense of
attachment (through their branding). That does not only serve their cuisine but
a dine in place that depict an association with their culture, values or beliefs.
Conclusion:
Methodology:
Research Approach:
There are two main research approaches.
Deductive and inductive.
Deductive approach is mostly used for
scientific investigation. Data collection is used to evaluate a proposed
hypothesis by relating it to an existing theory. This approach is mostly used
for falsifying or verifying a theory. Inductive approach is an effective
approach when examining experiences of individuals. Data collection methods are
used to explore a phenomenon, recognise patterns and for creating a conceptual
framework. In inductive approach the theory is created or build at the end (Clapham et al 2012).
This research will be using inductive
approach. The research is starting from a general statement. There is no
proposed hypothesis that will be rejected or accepted. Neither there will be a
theory that will be validated. The research is starting from a problem
statement (research gap). There are no controlled specific expected results.
The research is starting from an observation and new theory will emerge based
on the collected data.
Research philosophy:
Research philosophy is a belief about the way
data will be collected, analysed and used in the research. Two major research
philosophies identified in the western tradition are called as positivist and
interpretivist.
Positivist believes that society has
objective social facts. Researchers should remain detached and research should
be value free. Using this approach for the research, the contribution to the
knowledge can only be based on hard, observed and tested facts. In positivist
philosophy generalisation the population is sought. This research philosophy is
linked to hypothetical-deductive approach. There are a few limitations of
positivist approach. It assumes that there is an orderly world and cause and
effect relationships among phenomena are predictable and consistent. It also
argues that we can detach our self from the world and then study and observe.
Positivist philosophy also believes that there is a single reality or law to
explain a phenomenon.
Interpretivist believes that the external
world is perceived or viewed differently by different group of people. World
should be observed by giving attention to those different interpretations.
Knowledge is created and is based on interpretations of experiences.
Interpretivist use inductive approach and rely on qualitative methods of
research (Kennedy, 2017).
This research will use interpretivism because
it is based on a simple statement. There are no fixed theories that needs to be
tested. The results of the research will be based upon the data collection.
There are no fixed expected results. In addition, the research will use
inductive and qualitative methods and small sample which are compatible with
interpretivist philosophy.
There are two types of research:
Quantitative:
Quantitative approach is associated with
positivism. Quantitative data is collected and converted data is presented in
the form of numerical data. It is easier to conduct statistical analysis on
quantitative data and draw conclusions from them.
Researchers normally have one or more than
one hypothesis at the beginning of the research. Data is collected by various
measures (questionnaires, tally sheets or interviews). Strict procedures are
followed during the collection of data and questions asked are normally closed
ended. The collected data is sorted and prepared for statistical analysis.
Objectivity is most important in quantitative research. The researcher must
take extra care so that the presence and attitudes do not affect the results.
In addition, researcher must take great care so that they are really measuring
what they are supposed to be measuring (Kennedy, 2017).
Qualitative
method:
Qualitative research is associated with
interpretivism and social constructivism paradigm. It is about attempting to
uncover deeper meaning and significance of human behaviour and experience.
Researchers are concerned with understanding complex experiences of people. Qualitative methods normally move
from the specific and normally uses bottom up approach. Data collection
normally takes place in several stages rather than once. The researcher may
even change the process midway between collecting primary research. The
researcher may decide to add additional questions or address some additional
issues during the research. In short, the process of collecting primary data
may continue until the researcher finds that there are no issues emerging (Kennedy, 2017).
This research will use mix method during the
research. The research is using inductive approach and interpretivism. In
addition, the main aim of the research is to address an issue and the answer is
unknown. It is not based on validating a theory or rejecting or accepting
hypothesis. But a theory will be presented at the end of the research. These
are the reasons due to which the research will use mix method approach.
Research design:
Research design is a general plan that you
will use for answering your research questions. A research design should
clearly state objectives that are derived from research questions. The research
design will also clearly specify the sources for data collection and propose
how to collect this data and analyse it.
Data
Collection:
·
Primary
data:
This data will be collected by the researcher
themselves for the study. The research will use 3 tools for collecting primary
data:
Questionnaire:
A mixed questionnaire (with both open ended and close ended questions) will be
designed for the staff members and their restaurant managers and supervisors. It
will contain questions based on the variables that will be recognised through
secondary research. The questions will access the degree of that variable. In
addition, there will be open ended questions that will ask respondents to
provide their opinion and feedback. Close ended questions will use Likert
scale. Respondents will be asked to give their agreement from 1-10 (one being
the weakest and 10 being the strongest).
From the three dimensions that this research
aims to cover (individual, firm and external environment). The questionnaire
will gather data on the individual and firm. The variables to be addressed in
the questionnaire will connect to general mindset of south Asian entrepreneurs
about international expansion, their ways of doing things as compare to
industry best practices and issues and challenges faced by the business at
different levels i.e. (staff, middle management and top management).
Interviews:
The research will also conduct structured interviews with restaurant owners and
industry experts. There will be two kind of interviews. The interview with the
restaurant owners will contain questions that will try to explore the reasons
or barriers that is stopping south Asian restaurants from international
expansion. In addition, a second structured interview will be designed that
will be based upon exploring industry attractiveness, opportunities, expansion
strategies, risks of international expansion and general opinions on several
issues related to south Asian restaurants in Britain by relevant experts.
Observations
(Inside restaurants): The research will also use
observation for collecting primary data. Sitting in the restaurants and
observing the level of customer services. The research will design a
questionnaire that will grade each restaurant on different criteria of customer
services. In addition personal observation will also be made part of the
research for restaurants that have multiple outlets in London. It is to observe
and access them in terms of order fulfilment time and customer handling, theme,
prices and customer services.
·
Secondary
data:
Secondary data is the data that already
exists. This data will be obtained from previous research as explained in
detail in the literature review sections. In addition, the research will also
use quantitative data from Asian catering foundation and government reports.
The secondary research will use data from government department under the
freedom of information act 2000.
Sample
Size and population:
The total population of south Asian restaurants
in London is in between 1700 to 2200. This population includes small takeaways,
medium size restaurants and large size chain restaurants (UK India Business Council, 2018).
The research will only select restaurants that have more than 6 staff members.
This will remove small takeaways from the population. These restaurants will be
selected based on the following criteria.
1. The
restaurant should have more than 6 employees.
25 south Asian entrepreneur owned restaurants
from all over the London will be made part of the research. It will be made
sure that the sample consists of a
scatter of restaurants from all over the London rather than choosing a cluster
from a particular area i.e. south, east, west, central and north London. To
select these 25 restaurants the sampling will be done through network and
purposive methods. (Hemmington, 1999; Robson, 2002). In network sampling the
list is gathered through connections, friends & families. While, in
purposive sampling the researcher use their judgment to choose the suitable
respondents with the relevant expertise that will enable him to answer the
research questions to best meet the research objectives. Thus through personal
contacts that owns the restaurants and staff members that work in these
restaurants the researcher will carefully select the sample.
Specific
research instruments:
For collecting primary data, the research
will use the following research instruments.
·
Camera
·
Microphone
·
Questionnaire
·
Tally sheets
Camera and microphone will be used for
conducting interviews with the industry experts and restaurant owners. While,
questionnaire will be used to conduct survey among staff members working in
restaurants. While there will be another questionnaire that will be used by the
research for writing down information collected from observation. Tally sheets
will also be used for the observation purposes.
Data
Analysis:
The research will mostly rely on qualitative
data. The data will be collected, and the Likert scale data will be analysed in
SPSS software. Each question asked in the questionnaire will be based on
measuring a variable. The degree of agreement on a scale of 1-10 will help to
translate that data to be put for statistical analysis.
Statistical
analysis:
Since the study is mostly qualitative. Some
data will be translated in to quantitative e.g. the questionnaire will ask to
mark on a Likert scale from 1-10. This can be translated into numerical data
and use for analysis in SPSS. The research will be interested to find
correlation of each variables i.e. each answered question. Descriptive
statistics (mean, median and mode) will also be used to find relationship among
variables and find the variation among different answers. The research will
also find out ANOVA. The purpose of which is to find out if there is any
significant difference between the mean of two or more groups (two different
restaurants).
Besides, the research will also conduct
interviews. The data will be in the form of purely qualitative nature. The
research will conduct a Chi square analysis to test the goodness of fit i.e. there is any difference between the
observed and expected value.
Thematic analysis will be used for
qualitative data obtained from interviews and observation. The thematic
analysis is normally used to
identify patterns of meaning across a dataset that provide an answer to the
research question being addressed.
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Appendices
Appendix-1:
Economic Market intelligence report:
Model for international expansion.
Strategy and approach:
Motivating factors
Economist survey for the motivating factors
in Europe.
Expansion
options for the business
l Direct entry l Acquisition l Joint
venture l Local partnership
Location
concern:
These are some of the reasons that can be
considered during making a location decision for the business. Although this
table is for company’s recent expansion and how did it go. It can be used for
companies new expansion strategy and decision making for the location
selection.
Operational challenges:
Making the vision a reality:
Strong leadership, cohesive project
management skills, whether to outsource operations or use inhouse resources or
a mix of it?
Government support:
This section talks about the support of
local government i.e. part that UK government will play that will help
organisation expand internationally. E.g. data from London chamber of commerce,
support of government agencies in terms of legal, compliance, accounting tax
etc.
Legal role and challenges:
legal/compliance, HR/payroll and
accounting. This involves decision making around these key areas. Is business
going to use mix of inhouse and outsourced or one of the other after expansion.
Culture first:
Organisation has to make necessary changes
in the culture expanding internationally (different
culture models). What is the hiring decision. Will it be overseas or
hiring form the local talent pool .
The model shows the issues around these
factors related to HR.
Accounting role and challenges:
This author has discussed accounting role
and challenges in the previous section as well. Keeping in view the nature of
the business (restaurant industry) this challenge needs limited attention
Book on ethnic entrepreneurship in UK
