Resturant Industry

Literature Review

Internationalization theory which is the prominent theory in international business regarding how firms expand overseas, is a behavioral theory that suggests that firms minimize the uncertainty associated with going abroad by doing so only gradually, starting with modes of entry that involve little commitment, such as exporting, and only increasing their involvement in those markets where they have found success (Johansen & Vahlne, 1977 and 1990).

This view of international expansion is not inconsistent with the options value approach, where firms also commit resources only gradually and thus have occasion to update their evaluation of different opportunities. Internationalization theory, however, with its focus on risk aversion, also suggests that firms expand abroad only once they have exhausted opportunities within their home market, and that they then expand first in markets that are ―familiar‖ to them, namely markets similar culturally or in close geographic proximity to those they are already in, and that they exhaust opportunities in each market  before moving into new ones. Economic theory suggests instead that the firm will continuously  pursue best opportunities across all markets. In 1983, Theodore Levitt published a provocative Harvard Business Review article entitled “The Globalization of Markets” , in which he stated that a new global market, based on uniform products and services, had emerged. He asserted that large scale companies have stopped emphasizing on the customization of their offers to providing globally standardized products that are advanced, functional, reliable and low priced. He argued that informed customers were heading toward a “convergence of tastes”; thus corporations should exploit the ―economics of simplicity‖ and he maintained that the future belonged to global corporations that did not cater to local differences in taste but, instead, adopted strategies that „operated as if the entire world (or...