International Business Assignment A3 PDF

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TACO BELL’S FAILURE IN DUBAI 1. Introduction Taco Bell is a US fast food chain with headquarters in Irvine, California, and Yum! Brands, Inc. A variety of Mexican and Tex American dishes, including tacos, burritos, quesadillas and nachos are served in the restaurants (Wikipedia n.d.). Taco Bell runs 7072 restaurants internationally, and services more than 40 million customers per week in the US, along with over 350 franchise organizations. .With almost 500 restaurants in almost 30 countries around the world the company has expanded globally (Yum! Brands, Inc. n.d). Bloomberg says Taco Bell is currently the fourth largest fast-food chain in the US above Burger King and Wendy's by sales. Taco Bell's success in selling its products to its main customers, Millennials (Millennial Marketing, n.d) due to innovative marketing campaigns and savoury dishes. While Taco Bell's popularity at home has been tremendous, it has strived to take off globally. In 2008, Taco Bell prevailed in the United States and became the second most profitable brand name in the USA, and it's a parent company Yum Brands wanted to try the Mexican food franchise in Dubai. In November 2008, a Taco Bell was launched at the Dubai Mall in the United Arab Emirates. Unfortunately, after February, Taco Bell has absolutely withdrawn from Emirati and closed all of its facilities in Mall Dubai, City Deira Center and MIRDIF City Centre. This paper explores the case of Taco Bell in Dubai in depth through 4 key parts: a company description, an analysis of the causes for their failure in Dubai, a range of business recommendations for the company and finally a final conclusion for the report. 2. Analysis Dubai was developed into one of the fastest growing cities in the world in the early 2000s by large-scale construction. Mainly megaprojects like the Palm Islands offshore boost the property boom. On 4 November 2008, with nearly one thousand retailers, the Dubai Mall was opened after twice delay, which marked the biggest ever shopping mall in the world at the time. Recognizing that the company's profits would benefit tremendously, Taco Bell planned to enter the Middle East market and placed its first store on the Dubai Mall. Originally, Taco Bell's response at the Dubai Mall was great as queues were regularly more than 10 deep in the opening morning and customer feedback was great (Jump, 2018). As CNBC reports, Dubai is the world's largest restaurant concentration and the public usually loves US brands, in particular the rivals of Taco Bell, such as McDonald and KFC. In spite of their auspicious beginning, after just four years, Taco Bell declared it to leave Dubai and marked Dubai as their unsuccessful market for three reasons below. The local taste buds (CNBC 2019) are the significant contributor to the failure of the company in Dubai. Emirates don't really have any Mexican cuisine appetite. Throughout the research by KPMG, the purchasing of UAE customers in Central and Latin American cuisine was ranked dead last, even though it was a cuisine option in the first, second and third. Thus, the way in which customers select restaurants still remains constant, consumers have

the consistency of their food and service and their favored cuisine as the major determinants (61%) of the choices of restaurants when it comes to customer preference. On average, every year between 2009 and 2013, Latin food contributed to only 0.14% of all fast food sales in the UAE. Therefore, analysis into the processes of consumer decision-making reveals that the ongoing customer quest is based on a personalized interest in a certain brand in stage two of five stages in the process. This stage would have a lot of effect on the purchases of Emirati customers for Taco Bell because they are not into Mexican cuisine as mentioned above. The store format is another aspect that could play against Taco Bell in Dubai. Emirati consumers regard hanging out with their family and acquaintances not only as convenience, but also as a social event. Emirati customers are most concerned with food, service and choice, according to Arabian Business, when choosing the restaurant. In addition, people in the UAE are willing to pay high prices if it is reasonable, since the citizens of Dubai are mostly rich.In reality, the overall market was 30 percent occupied by full service restaurants. Full-service restaurants like Chili’s (a popular Mexican food brand in Dubai) were better than fast food outlets when Taco Bell was located in Dubai. Last but not least, in the failure of Taco Bell in Dubai, the Taco Bell Beef lawsuit had played a critical role. In 2011, TACO Bell was the defendant for a mis prompt, with just 35 percent of real beef containing the restaurant's "seasoned ground beef" ingredient with most of the remainder were "isolated oat.", meanwhile, the US Department of Agriculture demands that the filling of beef taco must be at least 40%. After the company provided more specific details that their product was 88% actual meat, the plaintiffs dropped the suit. But as Taco Bell's business in Dubai decreased in 2011 and 2012, it is apparent that Taco Bell Beef Lawsuit has played a decisive role in their failure within this country of the UAE. Throughout the Customer Behaviour research, five stages have been demonstrated in the decisionmaking process for customers and the second stage is internally and externally researched information, especially in terms of customer updated brand information. This stage is before the stage of repurchasing their favorite brand, as a result, consumers have lost their faith in Taco Bell in 2011 and make Taco Bell’s revenue dramatically decline 4% compared to same store sales growth in the previous year. Through the analysis above, it is clear that Taco Bell did not research carefully about the Emirati taste buds and consumers behaviours as well as their store outlets. The company followed the same business model for Emirati, believing that they would be successful as they were in the US. 3. Recommendation If they consider recommencing their business in Dubai, three strategies below must be applied. First, customized dishes for the local is essential, whether Latin-American food is definitely the Emirati consumer’s last option. According to World Population Review, 51% of Dubai population are Indian and their official religion is Islam which has a complex food cuisine such as their Islamic dietary laws. Based on these demographics, Indian taste etc. should be offered in their stores in order to attract more customers.

Second of all, Taco Bell can slightly adjust their store outlets. In the past, Taco Bell also encountered failure in China and quitted the market in 2008 with no chance of further expansion. Nevertheless, after nine years, Taco Bell decided to reopen in China and surprisingly succeeded for the reason that they have modified their theme from their traditional Mexican vibes into Chinese appearance by redesigned the bell in the logo. This example is to indicate that they can change their outlets into a local-familiarized theme. Last but not least, word of mouth from friends and relatives will be absolutely effective if they want to give a second try in Dubai. KPMG research on UAE food and beverage has shown that this factor occupied about 41% apropos of influencers on their restaurant decisionmaking. In order to run their marketing campaigns, whenever a customer finishes their meal, provide each one a code and invite them to encourage their friends and relatives to try a meal at Taco Bell’s store. With the provided code, their friends and relatives’ meals can be discounted and so do their, stimulate them by apprising them of the more they can tell their friends to come over and have a meal at Taco Bell, the more discount they can have. Of course, if Taco Bell wants to run these marketing campaigns smoothly, they must ensure their products’ quality. 4. Conclusion Finally, after years of struggling, Taco Bell's withdrawal from Dubai has provided a valuable lesson for not only the company, but also every other MNEs that is targeted at reaching a foreign market-culture is a vital element in the cycle of internationalization. Comprehensive and systematic analysis into the local characteristics, cultures and customer behaviors will also must be worked out before seriously entering and adapting the new market. Doing so would allow the company to compete not only with other foreign labels but also with local firms. 5. Reference 6. Wikipedia n.d, Taco Bell, Wikipedia, viewed 19 April 2020, . 7. Wikipedia n.d, Economy of Dubai, Wikipedia, viewed 19 April 2020, . 8. Wikipedia n.d, The Dubai Mall, Wikipedia, viewed 19 April 2020, . 9. Yum! Brand Inc. n.d, Taco Bell, Yum! Brand Inc., viewed 19 April 2020, https://www.yum.com/wps/portal/yumbrands/Yumbrands/company/our-brands/tacobell 10. Leslie, P 2018, 'Taco Bell Overtakes Burger King as the Fourth-Largest U.S. Chain', Bloomberg, 21 February, viewed 19 April 2020, . 11. How High 2008, 'Taco Bell Opens in Dubai Mall', Jump, 4 November, viewed 19 April 2020, . 12. CNBC 2019, Why Taco Bell failed in Dubai, Youtube, 6 February, CNBC, United

States, viewed 19 April 2020, . 13. Euromonitor International 2018, Fast Food in the United Arab Emirates, industry report, Euromonitor International, viewed 19 April 2020, . 14. Thor Jensen, K. 2019, 'New Jersey Couple Taking Taco Bell to Federal Court for $2.18', Newsweek, 17 November, viewed 19 April 2020, . 15. Adunola, O, Parinda, K, Oluwamayowa, P, Musibau, A and Olusola, O 2016, Consumer Behavior towards Decision Making and Loyalty to Particular Brands, industry report, International Review of Management and Marketing, viewed 19 April 2020, . 16. Lubna, H 2015, 'The latest food trends in the UAE', Arabian Business, 4 June, viewed 19 April 2020, . 17. KPMG 2016, Hungry for more?, industry report, KPMG, viewed 19 April 2020, . 18. World Population Review 2020, Dubai Population 2020, viewed 19 April 2020, ....