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Marketing Research of Darden Restaurants -
April 1st, 2011
Darden Restaurants, Inc. (NYSE: DRI) is a multi-brand restaurant operator headquartered in Orlando, Florida, USA. The firm owns several casual dining restaurant chains, most notably Olive Garden, LongHorn Steakhouse, and Red Lobster. Darden owns and operates 1,800 restaurant locations throughout North America and has more than 180,000 employees, making it the largest full-service casual dining company in the world by number of stores. Darden does not franchise its restaurants in the United States, but many of its international locations are not under corporate control.[
t global automotive players. North America and Western Europe have been experiencing stagnation in their automotive market, characterized by sluggish sales, overcapacity, and closure of a number of manufacturing facilities. In contrast, Russia has been enjoying remarkable growth not only in relative terms, but also in absolute number, breaking the two-million-unit milestone in 2006. By volume Russia is already eight globally and fifth in Europe, outpacing big markets such as Spain and Brazil and approaching the level of France and Italy.
Market Entry Strategies
Among the widely employed market entry strategies by international businesses are:
1. Portfolio Investment
At the simplest level of involvement, a firm may just decide to make financial investments in foreign firms, buying shares of stock, much as it could do within its own domestic equities market.
Historically, exporting has been the initial step of internationalization. Owing to a foreign inquiry as to the possibility of buying or selling the firm’s products, or the desire by the firm to expand beyond its domestic markets, many firms begin to export their products or services to foreign markets through the use of direct sales to foreign customers or they sell through import/export firms or through foreign distributors. Exporting is the mode of entry that is characterized by the process of marketing and direct selling of domestically-produced goods in another country.
Franchising is a method of organization that combines large and small business into a single administrative unit. A franchise is usually permission or a license granted by the franchiser to the franchisee to sell a product or service in an agreed upon territory. Franchising is typically a continuing relationship in which the franchiser provides assistance in organizing, training, merchandising, systems, and management in return for payments from the franchisee. There are two general types of franchise organizations (Dicke 1992, pp.2-3). Franchising is helpful to some entrepreneurs who are planning to start a business, but lack vision, creativity, resources, or skill to start a completely new venture (Kallianpur et al 2001, p.106).
Franchising as a business model only came to Russia in the early 1990s. The first foreign franchises were primarily American and Italian restaurant chains. Franchise legislation was formally adopted in 1994 by the Russian Civil Code.
One of the primary methods of participating in new markets through cooperative contractual means is by licensing the firm’s products, services, or technology to another company (James Jr. and Weidenbaum 1993).
Licensing the rights to manufacture and/or market one’s product(s) is an option for internalization of business. In this strategy, the firm usually locates foreign firms that have the experience to manufacture and to market its products with minimal technology transfer, in order to bypass import duties and to provide the simplest avenue to local sales (Briscoe and Schuler 2004). One of the primary methods of participating in new markets through cooperative contractual means is by licensing the firm’s products, services, or technology to another company. Under this arrangement, the firm sells a limited right to produce and market the product in return for royalty payments. The typical limit is a specified geographic area in which the original firm does not market, at least to any significant degree (James Jr. and Weidenbaum 1993).
6. Shared Equity/ Joint Venture
Shared-equity alliances entail the foundation of a new business, commonly referred to as a joint venture (Freidheim 1998). Joint ventures are the most common form of strategic alliances, which means that two or more firms create an independent business unit by contributing their share of equities. Joint ventures are considered independent legal entities from their parents.
Though not as common as in the past, international companies may become strategic partners with Russian firms by taking an equity position in Russian joint stick companies and thus establishing joint ventures (JV). Establishing a JV in Russia demands meticulous planning and sustained commitment.
This research will make use of both quantitative and qualitative research methodologies. According to Newman and Benz (1998), a qualitative research involves an interpretative, naturalistic approach of the subject matter. Qualitative research is about studying things in their natural settings. A researcher conducting qualitative research attempts to make sense of, or interpret, phenomena in terms of the meaning people bring to them. Qualitative research involves different methods of gathering and collecting of empirical materials such as case study personal experience, introspective, life story, interview, observational, historical, interactions, and visual texts. This method of data collection is about exploring issues, understanding phenomena and answering questions. The quantitative paradigm is based on positivism which takes scientific explanation to be nomethetic (i.e. based on universal laws). Its main aims are to measure the social world, to test hypotheses and to predict and control human behavior (Newman and Benz 1998). Quantitative research is based on the assumption that the world can be investigated using scientific method and that there is an independent reality. Quantitative research is based on the belief that measurable influences (independent variables) affect measurable outcomes (dependent variables) in a cause-effect manner. Quantitative studies are studies in which the data can be analyzed using conventional statistical methods (Peat 2001). As its name implies, quantitative research is concerned with quantities – how to measure phenomena and how to express those measurement. A researcher who takes a quantitative approach to investigating a topic aims to learn more about it. Taking a quantitative approach to research implies asking questions about the phenomena that can be counted. Researchers who take a quantitative approach often work within positivism, as this paradigm frames the world as a collection of apparently independent phenomena to be counted, measured and otherwise catalogued as the prelude to deducing the rules or laws underlying them and giving them coherence (MacNaughton et al 2001). This is a method of data collection, that usually emphasizes on words rather than numeric in the collection of data and analysis whereby questionnaires, surveys and experiments are carried out (Bryman and Bell, 2003).