[IB - Group 1] Impacts of Differences in Culture on Burger King’s entrance into Vietnam PDF

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Warning: TT: undefined function: 32FOREIGN TRADE UNIVERSITYSCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS---------***--------INTERNATIONAL BUSINESSMID-TERM PROJECTGroup 1Topic: Impacts of Differences in Cultureon Burger King’s entrance into VietnamLecturer: Ms. Nguyễn Hồng HạnhHanoi, 2020TABLE OF CO...

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FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS ---------***--------

INTERNATIONAL BUSINESS MID-TERM PROJECT Group 1

Topic: Impacts of Differences in Culture on Burger King’s entrance into Vietnam Lecturer: Ms. Nguyễn Hồng Hạnh

Hanoi, 2020

INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 TABLE OF CONTENTS A. INTRODUCTION ...................................................................................................... 3 B. BRIEF INTRODUCTION OF BURGER KING ..................................................... 4 1. Overview of Burger King .......................................................................................... 4 2. History of Burger King.............................................................................................. 4 3. Burger King in Vietnam ............................................................................................ 5 C. ANALYSIS OF VIETNAMESE CULTURE ........................................................... 6 1. Vietnamese cuisines: Street and fast food alternative to Burger Kings products ..... 6 2. Vietnamese Culinary and Eating Habits ................................................................. 10 3. Current trend in Vietnamese cuisines ...................................................................... 15 4. Future trend of Vietnamese cuisines ....................................................................... 16 D. BURGER KING ADAPTATION TO THE VIETNAM MARKET ..................... 18 1. Overview of Burger King in Vietnam situation ...................................................... 18 2. Analysis of the Marketing mix adaptation to Vietnamese consumers .................... 19 E. EVALUATION AND LESSONS FOR MNCS IN THE F&B INDUSTRY WHEN ENTERING VIETNAM.................................................................................................. 22 1. Evaluations of Burger King’s strategies .................................................................. 22 2. Lessons for MNCs in F&B industry when entering new market ............................ 23 F. REFERENCES ............................................................................................................ 24

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INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 A. INTRODUCTION Globalization has brought lots of opportunities for the development of Vietnam in recent years. Along with globalization, various foreign cultures are imported into Vietnam, especially food culture. In the past, when it came to “fast food” in Vietnam, people would think of sidewalk foods, until western fast food brands entered Vietnam and changed the concept of "fast food" to with Vietnamese people. Burger King, a popular fast food brand in the world with lots of chain stores all around the world, has entered the Vietnamese market since 2012. Since then, Burger King has also dealt with many challenges when entering a new market with different eating cultures. Nevertheless, they have constantly changed and developed to satisfy Vietnamese tastes. We will discuss “How food culture and eating habits affect Burger King when entering the Vietnamese food industry”. This report comprises of 4 parts: 1. Brief introduction of Burger King 2. Analysis of the Vietnamese eating culture, including the cuisine and eating habits 3. Analysis of Burger King’s response to the national differences in eating culture in Vietnamese market with 4Ps model 4. Evaluation and lessons for MNCs in the F&B industry when entering Vietnam About Group 1, we are a group consisting of 5 members: • Phạm Việt Hoàng – 1711140034 • Phạm Đức Nguyên – 1711140067 • Lê Huy Phương – 1714140070 • Nguyễn Ngọc Quang – 1711140073 • Trần Quyết Thắng (Leader) – 1711140076

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INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 B. BRIEF INTRODUCTION OF BURGER KING 1. Overview of Burger King Established in 1954, Burger King is currently the world's fastest food restaurant chain. Every day, more than 11 million customers come to Burger King restaurants around the world to enjoy high quality food, absolute taste and affordable prices. Wherever you are, Burger King always holds the spirit of Taste is King, satisfying the most demanding customer when waking up at the restaurant. Burger King stores will also keep Burger King's motto of “family-friendly meals”, as demonstrated by its professionally trained, fast and friendly staff, comfortable space, modern furniture, delicious and hot food, cool drinks and absolute hygiene. Burger King's motto is that wherever, at any time, they serve the world's best Whopper burger to discerning customers.

2. History of Burger King According to the company, Burger King was started in 1954 by James W. McLamore and David Edgerton in Miami. McLamore and Edgerton sold their first franchises in 1959, and Burger King soon became a national chain. The company expanded outside the United States in 1963 with a store in Puerto Rico. Persistently lagging behind McDonald’s in sales and profitability, Burger King underwent many changes of ownership and corporate governance. In 1967 it was sold to the Pillsbury Company, which, in the late 1970s, brought in Donald N. Smith, a former McDonald’s executive, who revitalized Burger King by expanding the menu and tightening control of franchisees. Diageo sold Burger King in 2002 to a consortium of private equity financiers, namely the Texas Pacific Group, Bain Capital, and Goldman Sachs Capital Partners. In 2010 3G Capital, an investment group controlled by the Brazilian billionaire Jorge Paulo Lemann, took over the company in a leveraged buyout. After that, Burger King Worldwide merged with the Canadian doughnut and fast-food

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INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 chain Tim Hortons in 2014, and a new parent company called Restaurant Brands International was formed. A large hamburger called the Whopper is Burger King’s signature product. The Whopper was introduced in 1957, at a time when its competitor McDonald’s was still selling only small hamburgers. The chain took a new direction by adding hot dogs to the menu in 2016.

3. Burger King in Vietnam • History of Burger King in Vietnam Burger King started to penetrate Vietnamese fast food’s market by 2012 by collaborating with LTD. Dịch vụ Thực phẩm và Giải khát Cánh Diều Xanh (BKV) (belongs to Corporation Imexpan Pacific). They planned an approaching strategy to thrive in Vietnamese market by dominating prime locations with an investment up to 40 million dollars and aimed to spread over the country to amplify their images and awareness to the customers. However, there are only 10 Burger King stores in Vietnam (4 in Hanoi, 5 in Ho Chi Minh City, 1 in Phu Quoc Island) by now. The growth of Burger King Vietnam does not meet their expectation due to several external factors. • Products offered in Vietnam Burger King is not only offering Vietnamese customers with their renowned Whopper Burger, they are also tailoring their menu to the Vietnamese taste with a variety of food products from fried chicken, chips to a national signature – rice.

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INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1

Fried Chicken, Potato Chips and Rice offered by Burger King Vietnam (Source: BurgerkingVN)

The worldwide Whopper Burger is also served in Vietnam (Source: BurgerkingVN)

C. ANALYSIS OF VIETNAMESE CULTURE 1. Vietnamese cuisines: Street and fast food alternative to Burger Kings products When talking about Vietnam, people are often impressed by the cheap price and “low” standard of local life here. “Low” does not mean Vietnamese people have to suffer a harsh living, but it would be better to illustrate a Vietnam of a simple, humble and lowcost image. This image can be most outstanding through the example of street foods - the most challenging obstacle for foreign fast food chains wishing to penetrate Vietnamese market. Our group has researched and will look through some cultural street foods that 6|Page

INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 distinguish Vietnam from other countries, in which “Banh mi” will be analyzed in more detail. For the local Vietnamese, “Banh mi” has grown to be a very familiar term in their daily life. Wandering around every corner of this S-Shaped country, we would spot “Banh mi” everywhere. Vietnamese prefer to have this kind of street food thanks to its convenience and its various tastes depending on every baker.

Vietnamese “Banh mi” (source: Pinterest) Banh mi is believed to be introduced to Vietnam by the French in the 19th century. At the very first days, it was the famous French baguette, however, Saigonese at that time changed the way we knew about baguette - smaller shape, crunchier crust and reduction of plain flour inside paving the way for the development of different flavors later on. First, like French baguette, bacon was served separately from Banh mi with plate and knife. However, not every individuals at that time found enough time to sit still and eat Banh mi, especially when they were in rush for work; thus, the owner of a famous bakery at that time, Hòa Mã, came up with an idea to put the bacon, vegetables and many other ingredients inside the Banh mi for easy take-away. And this became more and more popular among the citizens of Saigon during the 1960s, leading to the widespread of Banh mi across the province and gradually, all over Vietnam. And up till now, with more than 50 years of development, Banh mi is still one of the most preferred street foods in Vietnam, both among the youngsters and the elders. With a very long and great history, Banh mi can be considered as the biggest competitor that foreign fast food chains related to bread or hamburger need to overcome 7|Page

INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 to be successful. Especially, compared to Burger King, rather than being an alternative, Vietnamese Banh mi is believed to achieve a much higher score in many aspects. First of all, Banh mi has developed into many kinds through the making of the bakery. Every Banh mi made depends on which the makers decide to put inside it. The crust may be familiar for every baker, however what makes each Banh mi unique is the sauce and the ingredients like the pork liver pâté, herbs, etc. and consumers can add whatever they want to be the most suitable for their tastes. This makes Banh mi a better choice compared to Burger King, since like other fast food chains, Burger King only serves what sticks to their menu. Although Burger King has sorted their list to specific categories suitable for consumers’ choices, Banh mi does better than that concerning the number of ingredients and the uniqueness in the choice of individuals. Secondly, Banh mi has an advantage over Burger King in their price. As Burger King is a foreign chain, the price will be higher than the domestic ones like Banh mi. A burger in their menu costs around 50,000VND ($2.16) to 150,000VND ($6.5) depending on the sizes, types of burger and types of meat inside, let alone the French fries or the soft drinks accompanied in their combos. Whilst, a typical Banh mi only costs around 10,000VND ($0.4) to 30,000VND ($1.3) for each flavor irrespective of size (some places can increase the size of the Banh mi but they are just in the minority) - a much lower price compared to Burger King. Though the size of Banh mi may be smaller than every burger; considering the number of each product consumed for the same price, buying Banh mi helps you save more. For instance, at a price of 50,000VND, we are limited by the numbers of burgers in the menu of Burger King (since very few products are available at or under this price) whereas for Banh mi, we can choose a variety of ingredients, or even buy two or three of them. Therefore, if people are meant to divide the frequency of consumption between these two, the majority will definitely go for Banh mi. Thirdly, Burger King will definitely experience some challenges when entering Vietnamese market since it is not an Asian chain. The youngsters may find it modern and delicious to try something new on the fast foods, however, for the elders and adults 8|Page

INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 nowadays, burgers are something out of their tastes, and sometimes they may even become a waste of money. The reason behind this statement lies in the cultural differences between Vietnam and America, in which typical Vietnamese tend to have rice for lunch and dinner (or even morning) while American can vary their meals with burger, pizza, pasta, etc. Thus, Vietnamese tend to prefer Asian food to the foreign chains and often consider American fast food chains like KFC, Burger King, McDonald as luxurious stuff since through their lens, Asian foods fit their taste better, at the same time, can meet their demand concerning their budget. It is clear that every new brand ever come to foundation in Vietnam will attract lots of attention at first since Vietnamese people are always affected by “crowd effect”; this leads foreign chains in Vietnam to develop very well during their initial months in Vietnam. However, concerning long-term development, not every chain can maintain their standing like their first days because Vietnamese people would realize they no longer fit with these stuffs anymore. In reality, Burger King was once put on scale with Banh mi before. Date back to more than one year ago in April, 2019, a new advertisement of Burger King was posted on a social network in New Zealand - this advertisement was about some people eating burgers with giant chopsticks. It was soon received much debate since a majority expressed their anger toward such advertisement, claiming that Burger King was racist against Vietnamese in particular, and Asia in general. At that time, many Vietnamese youngsters showed their disappointment with Burger King and compared it with traditional Banh mi, made compliment on Banh mi and widely spread the hashtag #BurgerkingGetOutOfVietNam on social networks like Facebook.

Burger King online advertisement (source: Báo Thanh Niên) 9|Page

INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 Apart from Banh mi, many cuisines are also tough competitors that Burger King and other fast food chains need to overcome to be successful in Vietnamese market, which is mainly street foods. “Bánh tráng nướng” (or Vietnamese pizza) is one example. It is now very popular among Vietnamese youngsters thanks to its unique taste and reasonable price. Another cuisine that can be taken into consideration is Vietnamese pancakes (or “bánh xèo”) - a traditional street food that attracts not only youngsters but also elders for their deliciousness and the harmony in its combination with the herbs and green papaya sauce. These two kinds of street foods may sound different from Burger King in the way they eat, but they can be among the best alternatives to burger in Vietnam besides Banh mi.

Vietnamese pancakes (Source: VnExpress) All in all, Vietnam can be listed as a country famous for unique street foods as well as the traditional ones. It somehow makes the development of foreign fast food chains more difficult; therefore, to make a good brand and profit in Vietnamese market, foreign chains like Burger King need to innovate themselves more to fit in the customers’ needs in Vietnam.

2. Vietnamese Culinary and Eating Habits Culinary culture is a natural culture formed in life. For many ethnic groups, cuisine is not only something material but also a culture of spirit. Through cuisine, people can understand the culture that shows human dignity, the ethics, rules, customs of a country in the way of eating, etc. When it comes to the beautiful country of Vietnam, 10 | P a g e

INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 cuisine is always an interesting topic. Vietnamese cuisine is not only famous for dishes and recipes, but also for their characteristics such as: sociable, varied, low-fat; rich in flavor with a combination of many different ingredients and spices to help increase the flavor and attractiveness of each dish. With a country that is rich in history and geography, each region on this S-shaped strip of land has its own unique dishes, special specialties and the rules of etiquettes that cannot be mixed. • Regarding the meals within the day Traditionally, breakfast, lunch and dinner are the main and the only meals within a day for Vietnamese people. This habit originated from the people living in the countryside, and unlike the British people, we do not have the tea-break or the tea-time between these three main meals. However, in the modern era nowadays, some Vietnamese people living in the cities may drink some coffee during the day. The first meal of the day is breakfast. Despite the fact that the Vietnamese always honor the gathering at the table, breakfast is different and is not treated as a meal for many Vietnamese families since people usually do not have time to meet. It depends on the time that each family member starts their day, but the woman in the family is usually the one who wakes up early and prepares all the dishes for them. The most popular Vietnamese dish for breakfast is Banh Mi, which is a baguette stuffed with pork, vegetables, eggs or pate. However, we have plenty of options for breakfast, from the simplest dish like a bowl of noodles to more complex ones such as Bun Cha, Pho, Sticky rice, Rice crepes, Porridge, etc. No matter what we eat, in contrast to our Western counterparts, who may eat sweet dishes for breakfast like cereals and milk, we prefer our breakfast completely salty. In addition, Vietnamese people tend to eat this meal before 9 o’clock. The next meal within the day is lunch, which occurs mostly after 12 pm but before 1 pm. Because this meal happens during working time, most people consider this a quick but nutritious meal, and they usually prepare a lunch box from home or order from

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INTERNATIONAL BUSINESS – MIDTERM PROJECT – GROUP 1 nearby restaurants, which comprises rice, vegetables and some types of proteins (fish, beef, pork, chicken, tofus). The last, but also the most important meal of the day, is dinner. It’s the time where families get together, and they usually prepare the food at home. Many families do not have a dining table, but they can dine simply on a mattress on the floor. Dinner is a harmony between meat, vegetables and broth. For a long time, eating out was not a frequent occurrence in Vietnamese people’s eating habits. It used to be the way to celebrate special occasions, such as birthdays, anniversaries or maybe an increase in salaries. However, with the evolution of diners and restaurants along with the busy and hustle life in big cities, the citizens there, especially young and wealthy families, and youngsters, eating out has become part of their lifestyles. • Regarding the main food and ingredients Vietnam is an agricultural-based country belonging to a hot and tropical monsoon region. In addition, the territory of Vietnam is divided into three distinct regions: the North, Central and South, along with 54 ethnic groups. It is geographical, cultural, ethnic and climatic characteristics that define the specific characteristics of the cuisine of each region. Every region has a typical taste, which contributes to rich and diverse Vietnamese cuisine. However, they all share some common characteristics. The wet rice civilization is an ancient civilization that appeared about 10,000 years ago in Southeast Asia and South China. The wet rice plant has a lot to do with the cultural, social and economic formation and development of our country through each historical period. As a country with a long-wet rice civilization, the impacts of wet rice on the lives of Vietnamese people are pretty evident. As a result, in our culinary culture, products made from rice are so important that rice has become an indispensable ingredient. Rice is used in the main meals and processed into a variety of dishes. Today there are many types of fast food, but rice will never be replaced in Vietnamese meals, and we eve...