International Market Assessment and Entry – United States’ Fast Casual Firm Entering the Brazilian Food Market A thesis presented to the faculty of the Center for International Studies of Ohio University In partial fulfillment of the requirements for the degree Master of Arts Rafael Bizzotto Magalhães Garcia May 2019 © 2019 Rafael Bizzotto Magalhães Garcia. All Rights Reserved. 2 This thesis titled International Market Assessment and Entry – United States’ Fast Casual Firms Entering the Brazilian Food Market by RAFAEL BIZZOTTO MAGALHAES GARCIA has been approved for the Center for International Studies by John M. Geringer Professor of Management Systems Arthur Hughes Associate Professor of Modern Languages Lorna Jean Edmonds Vice Provost for Global Affairs 3 ABSTRACT BIZZOTTO MAGALHÃES GARCIA, RAFAEL, M.A., May 2019, Latin American Studies International Market Assessment and Entry – United States’ Fast Casual Firm Entering the Brazilian Food Market Director of Thesis: John M. Geringer This thesis strives to analyze the fast casual food market in order to understand if Chipotle would be successful in Brazil and what the concerns would be if the American chain decides to internationalize its operation to Brazil. This thesis has developed as a prospective case study based mainly on business and cultural analysis. The study analyzed Brazil by using the theory of market assessment, and also analyzed the fast casual, fast food, and food service industries and products by applying other business theories such as PESTEL, Porter Five Forces and VRIO. Furthermore, the study interviewed one entrepreneur in the fast casual industry in Belo Horizonte, Minas Gerais, Brazil to understand the local industry dynamics. Regarding all the information analyzed, this thesis creates a business model that consists on explaining how Chipotle would operate in the country. Brazil is an attractive market for Chipotle, there is room for rapid growth, and Chipotle could provide a positive impact for Brazilians. 4 DEDICATION I dedicate this work to my mother and my father; they are the reason that I am in this world and the reason for any success that I have in my life. 5 ACKNOWLEDGMENTS Dr. Geringer was the first to help me with all knowledge that he holds about international marketing, all the extra time that he created to be have meetings and discuss this thesis with me. Also, Dr. Hughes and Dr. Partyka not only reading and helping me as a professional, but also mentally motivating me to accomplish this work. I would like to mention Dr. Toledo and Dr. Livanis, who added great value with insights and recommendations on this thesis. 6 TABLE OF CONTENTS Page Abstract ...........................................................................................................................3 Dedication .......................................................................................................................4 Acknowledgments ...........................................................................................................5 List of Tables...................................................................................................................9 List of Figures ............................................................................................................... 10 Chapter 1: Introduction .................................................................................................. 12 International Business .............................................................................................. 12 Chapter 2: Research Questions ...................................................................................... 15 Chapter 3: Literature Review ......................................................................................... 16 Definition of Fast Casual ......................................................................................... 16 General Food Market ............................................................................................... 17 Brazil ................................................................................................................. 20 Fast Casual Market and Fast Food ...................................................................... 26 United States’ Fast Casual Market ...................................................................... 28 Fast Casual Impacts in the United States .................................................................. 33 Chapter 4: Methodology ................................................................................................ 35 Market Assessment .................................................................................................. 35 PESTEL: Political, Economic, Social, Technology, Environment, And Legal .......... 37 Porter’s Five Forces ................................................................................................. 37 VRIO ....................................................................................................................... 38 Chapter 5: Analysis ....................................................................................................... 39 Country Assessment ................................................................................................ 39 Product .............................................................................................................. 39 Target ................................................................................................................ 39 1. Basic Needs Assessment ................................................................................ 41 2. Financial and Economic Assessment .............................................................. 42 3. Political and Legal Assessment ...................................................................... 47 4. Socio Cultural Assessment ............................................................................. 51 5. Competitive Assessment ................................................................................ 54 Strategy ................................................................................................................... 61 7 PESTEL .................................................................................................................. 61 Political.............................................................................................................. 62 Economical ........................................................................................................ 62 Social ................................................................................................................. 63 Technological .................................................................................................... 63 Environmental.................................................................................................... 63 Legal .................................................................................................................. 64 Porter Five Forces .................................................................................................... 65 Rivalry among Competitors: Moderate ............................................................... 66 Threat of New Entrants: Moderate ..................................................................... 68 Threat of Substitutes: Moderate to High ............................................................. 69 Bargaining Power of Suppliers: Low to Moderate .............................................. 71 Bargaining Power of Buyers: Low to Moderate .................................................. 72 VRIO ....................................................................................................................... 73 Value ................................................................................................................. 73 Rare ................................................................................................................... 74 Imitate Costly .................................................................................................... 74 Organization ...................................................................................................... 75 Entry Choices .......................................................................................................... 76 Franchising X Joint Venture ............................................................................... 80 Interview ................................................................................................................. 81 Chapter 6: Business ....................................................................................................... 83 Business Model ....................................................................................................... 83 Executive Summary ........................................................................................... 83 Business Overview ............................................................................................. 85 Expansion Opportunity ...................................................................................... 87 Product and Services .......................................................................................... 89 Overview – Store Atmosphere............................................................................ 90 Marketing Strategy ............................................................................................