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Organizational Culture a Source of Sustained Competitive Advantage: a Study on Fast Food Chain of Pakistan

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Organizational Culture A Source Of Sustained Competitive Advantage: A Study on Fast Food Chain of Pakistan


Competitive Advantage is an advantage that a firm has over its competitors helping it to make greater sales, profit ratios and retains more customers than its competition. There are two main types of competitive advantage are Comparative advantage and Differential Advantage. Comparative Advantage is a firm's capability to provide products and services at a price lower as compare to its competitor whereas Differential Advantage is a firm's ability to differentiate the firm on the basis of some unique characteristic like quality, excellence, worth, innovative product, outstanding service or distinguishing culture. So the topic of the research discusses about the Differential Competitive Advantage i.e. organizational culture can be a source of Sustained Competitive Advantage (SCA). The title introduces us with the concept that unique culture of any organization may lead it to achieve long term and sustained competitive benefit.

A lot of researches have been done on this topic on many companies like HP, IBM, McDonalds, Proctor and Gamble, Southwest Airlines, Wall Mart. McDonald's is operating in China, India, Pakistan & many other countries being diverse, in terms of culture, from the United States of America, and had adjusted itself to fit in the likes of the people. On international level the core value of company is flexibility and gaining trust of people in the country where they are working. Like adopting the national culture of the country is one of their Organizational Culture for example in India they introduced "Maharaja Mac", that serves as a replacement for Big Mac which is made of beef, for 80 % of Hindus for whom cow is sacred and "McAloo Tikki Burger" for vegetarian population of India. This culture of McDonalds helps the company to gain trust of the customers which results in high sales and profit margins.

The culture at KFC is also wide-ranging.KFC believes "Our people are our culture and that makes for a diverse mix of personalities and good times". They are supported and encouraged, right from the beginning. If anyone of them has a concern, their Open Door policy means there is always someone available to speak to. For customers KFC culture is based on the philosophy of CHAMPS. Champs stands for their belief that the most important thing is to focus on the customer. It stands for their dedication to provide the best food and best experience for the best value. CHAMPS stand for the six components of customer expectation common to all cultures and all restaurants concept. It stands for "Cleanliness, Hospitality, Accuracy, Maintenance of Facilities, Product Quality, and Speed of Service". Eating in Pakistan is a inspiring practice and food has many different styles with immense restaurants in all the big cities of Pakistan. Likewise Fast food chains are gaining popularity because they are convenient and easy to approach. It has now become trend in Pakistan that people enjoy their time in restaurants while eating. Fast-food industry shows high growth potential in Pakistan that is one of the biggest reasons why foreign fast food companies invest here. Fried and roasted food is one of the favorites and specialty among Pakistani food culture and eating habits. Young people are the most targeted population by this industry. Pakistani people changing life style and preferences welcome fast food warmly. It became one of the growing industries in Pakistan as in the rest of the world. Literature shows very limited work on this industry in Pakistan. No research is done in Pakistan on the topic of culture and competitive advantage. All these researches are conducted on international level. So we are performing the same research on fast food chain industry. The companies which we selected are McDonalds and KFC. We selected this industry because in Pakistan there is lot of competition in fast food industry. But there is no research on these industry regarding culture and competitive advantage. The basic purpose of the study is to evaluate the role of culture on sustained competitive advantage and financial performance of fast food chains.

Theoretical framework which we develop for our research consists of three independent variables that are cultural characteristics which includes valuable culture, imperfectly imitable culture and heterogeneous culture. The dependent variable is sustainable competitive advantage, and the mediator of our research is management decision making and innovation. So if a culture posses these 3 cultural values only then he can be able to get sustainable competitive advantage and in absence of any one value from culture company may be able to get competitive advantage but it will not be sustainable. Moderators play an important as in absence of independent variable they have capability to affect the dependent variable. According to our framework innovation & better management decision making are sources to obtain competitive advantages. We focused on qualitative methods to conduct this research. We used both primary sources and secondary sources for data gathering. For getting primary data we prefer interviews of McDonalds and KFC managers instead of surveys because our independent variable demanded interview based research and for secondary data we use previous researches conducted on this topic. For each proposition we develop a separate framework to asking questions which must be valid and fulfill its purpose.

Literature Review

Organization Culture

Deal (1999) defines organizational culture as principles, attitude, and behaviors that differentiate one organization from another. Schein (1999) outlines the appearance of organizational culture as the way things are done, rite and rituals are performed, the how environment is managed and the basic values and beliefs of company. Organizational culture is noticeable in the distinctive characteristics of the organization. Organizational culture can be considered as the right way in which things are done or ambiguities are solved in the organization (Lundy & Cowling, 1996). In another viewpoint, culture is considered as software of the organization. So, managers are responsible to study it cautiously and try to find how does each component of 'software' works on the basis of 'hardware' simply regarding an organization as an operating system. Organizational Culture is a system which has some collective values and beliefs. Values defines that what is important and beliefs tell that how thinks work. These values and beliefs are communicated with people, organization structures, and external environment to show how



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