1. The SWOT analysis reveals the depth of problems for IPH in Rio Grande del Sul. The company has no strengths. The company thinks that its brand and pizza are sources of strength, but consumers in the region think otherwise. Consequently, all of the things that IPH thinks are strengths are not. The brand is not valued by consumers. The pizza is terrible, compared with real pizza made by the local competition. The cost structure is very high, and Maxxi is constrained by the franchise agreement to seek out cost savings. Some of the things that come with a franchise like automated technology have not been delivered and this also increases the costs. The marketing plan has been an unmitigated disaster, offending the locals. The strategy of marketing as a premium pizza without having a premium product to back it up was not nearly as successful in Porto Alegre as it has been in the US. The product does not even come in a format that competing products utilize. Topping it off, Maxxi came into this business with little experience in adapting franchises to the Brazilian market.
There are some opportunities. Internal improvements can remedy some of the problems that IPH has had, both with respect to costs and marketing, not to mention the product mix. The market is oversupplied right now because there is no demand, but if demand can be restored, the company still owns the rights to the entire state. Also, the economic reforms of the Cardozo regime are improving the size of the