International Business BUSI 14321
Course project
T.G.I Friday’s in Saudi Arabia
Done by:
ElhamBokhari
200801550
Malika Al-Sharif
200801556
Dr. WegdanHagag
1
Table of Contestants
Abstract ………………………………………………………………………………3
Foreign Direct Investment Method…………………………………………….………...5
The Cultural Analysis Done For The Selected Foreign Country………………………...7
Distribution Strategy……………………………………………………………………. 9
Applied Communication Strategy………………………………………………………..11
Pricing Strategy…………………………………………………………………………..12
Conclusion……………………………………………………………………………….14
References………………………………………………………………………………. 15
2
Abstract:
Globalization means living in an integrated and interdependent world which mean make the
world a small village. Globalization considers a tough and risk step a company can take to sell
their product or service internationally. When companies want to start to think globally they have
to think about alot of factors that could make their business failed globally and these factors is
due to the differences between countries. Each company should consider these differences such
as cultural differences to be accounted, political issues, investment and currency-involved
matters and other similar issues to be considered. In our report we chose a franchise company
and we will analyze each of the important topics and any hurdles that may be relevant to their
existence in Saudi Arabia which may affect their international growth.T.G.I Friday’s is an
international franchise company that considers one of the successful restaurants in Saudi Arabia
and in our report we will discuss their applied foreign direct investment method, the cultural
analysis done for the selected foreign country, their distribution strategy, applied communication
strategy and their pricing strategy. T.G.I Friday’s restaurant chain was founded by Alan Stillman
in 1965 in America and this restaurant chain focus on casual dinner and the name is taken from
the expression “Thank God it’s Friday”. Also, Friday’s consider one of the best restaurant
families can go to around the world and it have currently over 920 restaurants in 61 countries
excluding the United States branches. Friday’s took the risky globalization step to Saudi Arabia
and itlocates in Jeddah, Riyadh and Al Khobar. Moreover, after analyzing the company most of
the outcomes of this paper point out the fact that Friday’s is succeeding in the Saudi market.
3
Foreign direct investment:
Foreign direct investment (FDI) it’s when a firm invents directly to produce or market a
product in a foreign country. In the global market as long as you market or sell your product
worldwide then these companies consider international companies. Also, FDI has two forms of
being international one of them is green field which mean new operation take a risk and open in
a foreign country. Acquisition or merging firm it’s joining an existing firm in the foreign country
or firm is well known locally and opens branches internationally. Most of firms prefer to use the
second form of the FDI which is acquisition because it has a lot of advantages and it’s more
desirable because of the brand loyalty, customer relationship and production.
T.G.I Friday’s consider a franchise firm because it exist in the market and their
international company, but they took a step in being more internationally and enter the Saudi
market. Even though, in Saudi Arabia there is a lot of regulation according the FDI which made
most of the companies don’t want to open or operate in it. According to Saudi Arabia
government to let a foreign business firm enter the market they should have a partnership with a
Saudi citizen. Also, the government of Saudi Arabia has permitted foreign investors to invest directly in
the market, but the law allows all nationalities to have right of 100% ownership of the business(SAGIA ).
Moreover, before interring the market of Saudi Arabia there is a lot of regulation they have to
know its well described in the Saudi Arabian General Investment Authority SAGIA website. They
provide you with the basics and what you should do to enter successfully in the market andit was ranked
as the 11th easiest place to conduct a business worldwide. Thus, Friday’s even of all of this regulation they
opened in Saudi Arabia because they knows that Saudi Arabia citizen spend money on food more than
anything so having new restaurant in the region is something always helpful so it’s not that hard for a well
known company such as Friday’s to open in Saudi and be a successful in a very short time.
4
Recommendations:
T.G.I Friday’s is an authorized franchised and their investment is going good and by opening in some
cities in Saudi Arabia they helped the country economy by increasing its revenues, and status. Also, they
can help in avoid the employment effect by employing Saudi men instead of foreign labors.
Moreover,because Friday’s in Saudi Arabia considered one of the best casual restaurant Saudi families
went to it,we recommend opening branches in Maddinah and Makkah which is two of the important cities
in Saudi because most of Muslims went to the holy mosques and they can benefit a lot during the seasonal
months such as hajj in making more revenue and profit.
Cultural analysis:
Culture is a system of value, norms that is shared among a group of people and it’s the thing
that differ people from each other because each country has their own value and idea about what
they belief is right and wrong. Each country has their own social structure, language,religion,
political philosophy,economic philosophy andeducation that determine them, and this factors
must be taken in consideration when an international company think of invest globally.
As we know that Friday’s is a franchise firm and they provide food product and it is an
American casual restaurant so entering the Saudi market has a lot of cultural consideration and
responsibilities. Thus, they talked to the Saudi partner before entering the market and they solved
most of the factors before entering the market. Saudi Arabia considered a country that follows
the Shareaalaw in their life style and they do their businesses according religion. Thus, to fit the
Saudi market Friday’s solved the religion dilemma by understanding what they should change,
and they started with changing their menu and they make sure their food don’t contain pigs meet
and the meet should be slayed in the Islamic way and they added in their menu “everything is
5
halal”. Also, Friday’s in the united state offer a bar section were they providealcoholic drinks
and having this section in Saudi branches is totally not expected, so Friday’s took these religion
consideration and removed it. Moreover, language was one of the dilemmas because having an
English menu while most of the citizen talked Arabic was a problem so they made an Arabic
menu and they trained their employees for the basic Arabic words in ordering so they can
communicate effectively with the customers and they had an Arabian manger in each branch.
Education is one of the important elements in culture, so educating the management team and
employees was the first thing they did, they educated them about everything they should know
about Saudi regulation such as: closing in prayer time, having different sections for families and
single, and a lot of things that can be different than USA. Furthermore, they entered a special
traditional food in there menu in Ramadan so they understand the local taste of the society and
by offering this seasonal menu they tried to survive in the market by follow their culture.
Culture in the workplace has its own definition, but for any business want to open and be global they
should consider Hofstede factors that set the four cultural dimensions. The first dimension is power
distance and Saudi Arabia is well know with the highly power distance and people know the fact that
people are not equal in the wealth and power .Thus, Saudi Arabia take a high level of inequalities between
the social class and Friday’s study that and tried to put suitable prices in the middle that most people can
offer. Second, factor they studied is Saudi Arabia a collectivism or individualism culture and the answer
was Saudi Arabia is a highly collectivism country and the people care about the family interest more than
self interested. Saudi citizen care about the collaboration and working in group and we can see that
families are the most important in Saudi culture. Thus, Friday’s consider the first family’s destination in
weekend for having a casual meal in a casual place that care about their satisfaction. Third dimension is
the uncertainty avoidance which points the differences between the level of expectance of the unknown
countries and their cultures. Saudi Arabia considers a high uncertainty avoidance country and they define
6
strict structure of low and regulation because religion affects this and as a Muslim community we believe
that we don’t know the unknown. Also, Friday’s consider a fast and casual food chain that can fit in our
community so easily if they took the cultural differences in consideration. The fourth and last dimension
is masculine or feminine community and its well knows that most of Middle East countries are feminine
culture which mean the culture is tender and caring. Fridays is an American food chain company and the
united stated will know with their masculine cultures were they value the performance and achievement is
very important in raising the competition without caring of the other competitors. Thus, Fridays
management team understand the differences and they didn’t find this is a big problem but they started to
come with different kind of idea such as provide a full meal for employees on the lunch time with a half
price.
Recommendations:
Friday’s considered one of the best international food chain around the world and it’s very
successful and we can say that this success because of their strong management team that
searched and understood very well the cultural differences and obstacles. Even though, Fridays
can implement new cultural strategy such as having food with Arabic seasoning to distinguish
the culture and by this strategy they can satisfy most people who like to eat Arabian food. Also,
we recommend the competition between the companies so they can do special offers that will
make customers would come every weekend for example; they can make discount to the loyal
customer. Moreover, they can increase the competition between employees to increase their
performance and productivity, so they can have employee of the month and this employee can
chose his rewords. By implementing these recommendations they would change their progress.
7
Distribution strategy:
Each business has it is own way to distribute its product or services, and each company
choose it is own delivering way to distribute its product and services it is customers locally and
around the world. There are several ways business use when they distribute their products and it
differs from one company to another depends on the country the business is conducted in.
T.G.I Friday restaurant use couple of distribution channel depends on the country they offer their
services and product in. first they use a simple way of distribution which is Friday restaurant
(vendor) deliver the product and service directly to the customer (consumer) without
intermediaries, so, Friday sell directly to the consumers without using the intermediaries in this
process of distribution, and it is one of the common ways restaurant uses as a channel for
distribution.
In some states in the US Friday restaurant started to use intermediaries (retailers) to
deliver their product even to the people who cannot din in the restaurant, Friday has a strategy to
serve the food for everyone even for consumers who cannot come to the restaurant for dinning.
They started to make frozen meals and appetizers and made them available in stores for pick up
home meals for everyone who love Fridays and want to have a perfect Friday meal at home. So
this can make them keep their loyal customers and make them continue eating Friday's food even
at their home.
But here in Saudi Arabia, Friday do not offer frozen meals in stores for pick up home
meal, they only have a direct way of delivering food direct to the customers by dinning in, they
do not offer drive thru services nor delivery services, but customers can order take away food
from the restaurant.
8
Recommendations:
We recommend T.G.I Friday's to offer delivery system for customers who cannot come
to din in the restaurant for certain reasons, and also to offer frozen food at stores for pick up
home meals and snack, so the customers can enjoy Friday's food at their comfort of their homes,
and by doing this Friday's can get more customer and customer satisfaction by offering frozen
food at the stores and delivering services for their loyal customers. Also, they can offer ordering
online through their website and make reservation for family gathering that need more space and
do not want to wait at the restaurant for clearing space.
9
Applied communication strategy:
Since T.G.I Friday's is an international restaurant which operates in 61 different countries
around the world, it needs to communicate with other countries culture to reach their customers.
For T.G.I Friday's to operate in different countries, it is going to have some barriers in
communication with the other countries because of differences in each country they operate in it.
In order to communicate with other countries they have certain channels they operate
with it and use it, they use simple distribution channels, advertising and promotions, marketing,
and pricing; all of those consider Friday's marketing mix strategy. They use effective advertising
and promotions in each country that make them gain more customers and keep their current
customers, they focus a lot of advertising either by billboards, promotions, flyers with
newspapers, newspapers advertising, and commercial advertising. And each country gets
different type of advertising, so they can reach the maximum level of customers. So advertising
in efficient way is one of the Friday's strategies to communicate.T.G.I Friday's sell directly to
their consumers, they do not use intermediaries to sell the product to their customers in Saudi
Arabia. In Saudi Arabia they use billboards in nearly every street when they have new promotion
or new meal they offer, also they use flayers that come in the newspapers in the morning with
their new meal and new drinks they start to offer for limited time.
In order to operate in Saudi Arabia, T.G.I Friday's need to address the cultural barriers
they are going to face while they conduct their business in the Kingdom. Saudi Arabia is a
country follow the Shreah law and the Islamic law in everything, restaurant and franchising
companies need to know what they can provide and what they cannot offer. So, Friday's cannot
offer open bar with alcoholic drinks like they offer I different countries like for example UK and
10
China; so, Friday's need to replace their alcoholic drinks with non-alcoholic once. Also, they
need to make sure everything is Halal and meet the Islamic requirements for providing food, like
no pigs meat for example they need to replace beacon made of ham with beef beacon and the
steaks with beef one.
The noise level in Saudi Arabia is very high, and there are a lot of competitors in the food
industry market, and Friday's compete with a lot of other restaurant in Saudi Arabia like Chilies,
Apple Bee's, and Steakhouse. So Friday's need to maintain their good quality in providing food
and services so they will not lose against their competitors.
Recommendations:
We recommend Friday's to use more commercial advertising in the region more than just
using billboards and flyers. So, by having commercials advertisement they can reach bigger
target market and keep their loyal customer coming in to din in the restaurant by encouraging
them through the commercial advertising in the TV. Also, we recommend them to have Arabian
website or website for each country the operate in and to have it in Arabic and English so the
customers can know the deals and the menu they have and what the offer in the seasons.
11
Pricing strategy:
For every business pricing strategy is an important strategy they need to focus on it and
get it right. Friday's set pricing objectives they want to reach like revenue maximization, profit
maximization, and price stabilization.
Since T.G.I Friday's is a casual dining restaurant the pricing strategy of food should be
focused on how to attract their target market customers. And in order to continue to bring more
customer to din in the restaurant Friday's had set strategy for pricing like the discount for
customers and meal deals that will save money to the customers. So in the United States Friday's
set a lot of promotions to keep their loyal customers to come to the restaurant like in 2009 they
offered buy one lunch and get the other one for free, and in Saudi Arabia they offer in some
certain months a value meal where the customer can choose some dishes and lunch type for less
amount of money than the usual.
Since the economy go down and come up again restaurants try to adjust to the economy
by charging higher prices when they economy is doing well and make some promotions and
discounts when the economy go down.so, they try to adjust their prices depending on where the
economy is going. Also, Friday's change their prices depend on the location and how they
operate and make profit, if they found out in some sort of location are not making profit they try
to offer promotions only for that branch to make the customers to come and pay money and to
enjoy lunch or dinner with low price.
So, T.G.I Friday's use a lot of promotion techniques to promote and charge different
prices on meals and to inform their customers about new meal deal or lunch deal with saving bit
of the customer's money and gaining in the other hand. Consumers are aware of the pricing in the
12
food industry and when a restaurant offer new promotions or discount in a time where the other
restaurant does not, they will gain more advantage in ahead since the consumers are educated
when it comes to prices and promotions.
Recommendations:
Friday's set a good pricing strategy by having promotions and discounts on their meals
and lunch deals that will bring them more customers and attract them. We recommend Friday's
by adding a section in their menu and call it the "value menu" where customers can see different
meals with prices that will fit their income level and make them enjoy Friday's meals and come
back again. Since the name of the restaurant is Friday they can offer in some Friday's night a
discount on appetizers or certain meals for the customers.
13
Conclusion:
In conclusion, T.G.I Friday's have a good reputation in Saudi Arabia and a lot of families dine in
the restaurant in the weekend and it is one of their favorite places to dine in. but since the
competition is very high among families causal restaurant in Saudi Arabia Friday's need to take
in consideration a lot of strategy to help gaining more customers and keep their loyal customer
coming in every week, by making attractive TV commercials where they can attract people
around the kingdom to come and give Friday's a visit and enjoy a family pleasant time at the
restaurant. Also they can offer food with Arabian seasoning for limited time to make consumers
to come and try their new steak with Arabian seasoning or burger, moreover, they can offer value
meals and value menu for people who do not like to spend a lot of money but enjoy dining in a
restaurant, and they can offer promotions and discount to bring in more customers to have a high
profit.
After all, T.G.I Friday's took a good consideration before having the franchise in Saudi Arabia
deal the cultural and Islamic law and Shareaa and operate with it to bring more profit to the
company and gain more loyal customers around the world, since Saudi law made them change a
lot of their menu and productsso they can suit the culture and the regulations in Saudi Arabia
T.G.I Friday's succeeded in that and it made them one of the best and favorite restaurant for
Saudi families to dine in.
14
References:
Cassell, M., & Blake, R. (2011). Analysis of hofstede’s 5-d model: the implications of conducting
business in saudiarabia. Retrieved December 10, 2012, from
http://conferences.cluteonline.com/index.php/IAC/2011NO/paper/viewFile/339/347
Ferhman, C. (2009, June 12). A Table for few at T.G.I. Friday's [Article]. Retrieved December
27, 2012, from http://www.salon.com/news/brand_graveyard/
feature/2009/06/12/T.G.I.f/index.html
Hill, C. W. (2009). Foreign Direct Investment.International business: competing in the global
marketplace (7th ed., p. 242). Boston: McGraw-Hill/Irwin.
NetMBA. (2002-2010). Pricing Strategy . Retrieved December 28, 2012, from Internet Center
for Management and Business Administration, Inc. website:
http://www.netmba.com/marketing/pricing/
Saudi Arabia leads in Middle East FDI. (2012, octobar 19). Retrieved 12 2012, from Arab News:
http://www.arabnews.com/saudi-arabia-leads-middle-east-fdi
Saudi Arabian General Investment Authority . (n.d.). Retrieved 12 2012, from
http://www.sagia.gov.sa/en/Why-Saudi-Arabia/
T.G.I. friday's . (2012). Retrieved from http://www.T.G.I.fridays.com/home/ welcome.aspx
15