When KFC opened in Beijing, it was one of the first companies to promote excellent customer service—a concept then unfamiliar in China after decades of communism. KFC China’s rapid growth poses challenges: A highly visible company could easily become the target of a consumer or government backlash against the perceived negatives of fast food. Local consumers and netizens were in an uproar over the scandal, which eventually in 2013 broke the group's 11-year streak of double-digit growth. KFC China offers important lessons for global executives seeking guidance in determining how much of their existing business model to keep in emerging markets—and how much to throw away. The area food security authorities scrutinized the scenario and found that KFC China had been conscious of … But in the most populous country in the world, a fast-food giant stepped off the conveyor belt KFC will be a really important case study in terms of scrutinising how the tendering process and procurement took place, how the collaboration was established and run (given that we now have ISO standards for managing collaborative relationships), how the handover was carried out with the previous partner involved. Taco Bell was similarly positioned by Yum! Or should they rethink the business model from the ground up? KFC was a novelty, a taste of America. Although young “white collars” in Shanghai might eat a KFC lunch with friends once or twice a month, a family in a smaller city might go once or twice a year, to celebrate a special event. Some times will make the company lost the market or suffer a setback. Yum! Brands China Division, which owns KFC and a number of other brands in the country. The kfc case study. Papa John’s plans to increase the number of its outlets in China from 155 to 300 within three years. Harvard Business Publishing is an affiliate of Harvard Business School. Cross-cultural influences on brand identity impressions: KFC in China and the United States. Initial reading is to get a rough idea of what information is provided for the analyses. Rejecting the measured growth of its China competitors and of KFCs in other countries, KFC China set its sights on rapid expansion. Owning the restaurants allows the company to closely control every aspect of their operation, from menu to decor, and to monitor results and the success of new products. To maintain its current restaurant-opening rate, KFC needs at least 1,000 new managers and 30,000 new crew members a year, and they must be ready the minute an outlet opens, because it is likely to be packed. But the strategy that emerged was remarkably clear and embodied five truly radical elements: turning KFC into a brand that would be perceived as part Chinese; expanding rapidly into small and midsize cities; developing a vast logistics and supply chain organization; extensively training employees in customer service; and owning rather than franchising the restaurants. This is the first of several historical case studies that illustrate how important aspects of Chinese political economy have evolved over the first 40 years of the country’s Reform and Opening policies. KFC rushed to establish a presence in 16 locations from which it could grow and develop. Wang, P. (2011). Brands. Rather than go head-to-head with the Big Mac, KFC decided to embrace smaller cities and to build a national business with outlets all over the country. China has a total area of 3.7 million square miles. KFC was a novelty, a taste of America. The typical Western approach to foreign expansion is to try to sell core products or services pretty much as they’ve always been sold in Europe or the United States, with headquarters watching closely to make sure the model is exported correctly. The number of overweight and obese children aged seven to 17 has tripled to 8.1% over the past 10 years, according to the same agency. Over 10 million scientific documents at your fingertips. The case provides information on the external environment of the company – the global restaurant and fast food market.KFC is one of the leading companies in fast food and […] The chain, which opened in Shanghai in 2005, offers such favorites as beef rice and bean curd at prices similar to KFC’s. As KFC expands rapidly in China, it formulates specific strategy aiming to Chinese customers and accomplishes unprecedented success. One of the most impressive stories of a U.S. multinational in an emerging market is unfolding right now in China: KFC is opening one new restaurant a day, on average (on a base of some 3,300), with the intention of reaching 15,000 outlets. 2 pages, 953 words. Here’s a look at some of them. KFC China’s executives believed that the company’s U.S. model, although good enough to do moderately well in the largest Chinese cities, wouldn’t lead to the level of success the company sought. Recently, Yum! Brands’ annual opening rate in China surpassed 500 restaurants, most of them KFCs—compared with 103 new KFCs in the United States.) New recruits at KFC often have to learn basic people skills and teamwork. Kfc And China Case Study. Free Powerpoint Templates Page 2 3. CASE STUDY ON KENTUCKY FRIED CHICKEN(KFC) SUBMITTED BY: SUBMITTED TO: MANISH SINGH SHEKHAWAT MR. VIKAS KUMAWAT 12EBKEE056 2. Once such an approach is entrenched, companies are reluctant to rethink the model. Over time, KFC China has come to reflect China itself in some respects: It is large, growing, confident, and eager for variety and new experiences. All rights reserved. HBS cases: KFC’s explosive growth in China. order now. This case KFC in China focus on KFC is able to please the Chinese palate with its 'finger licking good' chicken that is part of the well-established dietary habits of the Chinese. With a closely involved parent, KFC China might not have been free to pursue its homegrown strategy. Fast-food culture grows in China. Therefore, it is necessary to combine the US fast food business model and adapted them to serve the needs of Chinese consumers. Later this year Two Fen will publish a series of in-depth essays on China’s economic transformation to commemorate this 40th anniversary. But the company works with its suppliers to build their capabilities and capacity; it is even working with growers to introduce U.S. varieties of sweet corn. In an effort to please local consumers, the company reinvented its menu and varied spiciness levels from region to region. portfolio; it has some 500 dine-in restaurants and 120 delivery-only outlets. The extended menu means that food preparation is more complex in Chinese KFCs than in American ones and requires more hands (thus the bigger kitchens).These outlets typically employ 60 people—nearly twice as many as in the U.S. Often one of those employees is a hostess who greets customers and organizes pastimes, such as learning English songs, for young children in play areas. has focused on acquiring a competitor, Little Sheep, a Hong Kong–listed chain of hundreds of Mongolian-style hot-pot restaurants. The company has achieved this success by abandoning the dominant logic behind its growth in the United States: a limited menu, low prices, and an emphasis on takeout. So the company changed its recipes to suit the regions. These keywords were added by machine and not by the authors. Much of what the company has accomplished is the result of its homegrown strategy—and of the independence that PepsiCo gave Su and his leadership team in the early days. Typically they try to sell core products or services pretty much as they’ve been sold in Europe or the United States, with headquarters calling all the shots—and usually with disappointing results. It now offers a lengthy menu that includes seafood pizza, beefsteak, and fried squid, and it attracts an older and more affluent crowd than KFC does. The local food safety authorities investigated the situation and found that KFC China had been aware of the situation since 2010 but had chosen to remain silent. They understood that in China, as in many other developing countries, food is at the very heart of society, inextricable from national and regional cultures, and that an abundance of flavors and an inviting ambience would be necessary to win over consumers in great numbers. Like KFC, it has undergone a transformation in China. has experimented with developing East Dawning, a chain that takes its name from a line in an ancient Chinese poem. KFC raises prices in China. The US chicken giant adapts its Western business model in Chinese market through acknowledging the social and cultural differences. > Case Study of KFC: Establishment of a Successful Global Business Model Case Study of KFC: Establishment of a Successful Global Business Model By mid 1950s, fast food franchising was still in its infancy when Harland Sanders began his cross-country travels to market “Colonel Sanders’ Recipe Kentucky Fried Chicken.” (2011). Case Study Kfc In China. I choose KFC Company as the case study because KFC Company is the worldwide company that has many branches around the world. This, like the company’s extensive logistics network, is an advantage that is difficult for any competitor to emulate. Starvish, M. (2011). Being first also means garnering free publicity when officials celebrate an outlet’s opening as marking the city’s coming of age. Rice on the menu at Shanghai KFC. Brands is opening a KFC store every day. It works well when a pool of experienced, entrepreneurial candidates are available to run franchises and when restaurant operations are relatively simple—built around, for example, a limited menu of easy-to-make products. Reuters (2012). pp 17-23 | In China, Yum! By 2010 Yum! Across the company, from logistics to food preparation to customer service, employees require extensive training, and experienced managers must be constantly developed as the company grows and changes. Having an average growth rate of 8% in GDP and a population of 1. Teaching employees how to interact with customers is no small matter. It is said that case should be read two times. Some Western health problems are already showing up in China. Not affiliated This was still a very conservative nation, not prepared for the “Fast Food” … It also offers congee, a popular rice porridge that is hard to make at home, which is KFC’s number one seller at breakfast. Mexican food, with its emphasis on dairy and beans, didn’t appeal to Chinese consumers. Many Chinese still wore the tunic suits of the Mao era, and bicycles were the main means of transportation. In fact, it is the limiting factor in the chain’s expansion, according to Sam Su. Burger King has about three dozen restaurants in China, where its first outlet opened in 2005. Menus offer spicy chicken, rice dishes, soy milk drinks, egg tarts, fried dough sticks, wraps with local sauces, and fish and shrimp burgers on fresh buns. Part of Springer Nature. Euromonitor International (2011). Witkowski, T. H., Ma, Y., & Zheng, D. (2003). BBC News (2011). Executives say they believe there is huge potential to drive coffee consumption in China. It permits centralized purchasing, which reduces costs, and gives the company a larger share of outlet profits. This case study is related to corporate culture of KFC China and its related effect on marketing strategy of the business. Global companies face a critical question when they enter emerging markets: How far should they go to localize their offerings? A recent case study written by professor David Bell and Agribusiness Program director Mary Shelman reveals how the chicken giant adapted its famous fast-food formula for the local market. In China, Yum! Initially, fast reading without taking notes and underlines should be done. Yum! People’s Daily Online News (2010). Brands, the parent company of Kentucky Fried Chicken (KFC), are opening a KFC store every day. How KFC make a stride in China’s QSR market. The clean, efficiently run restaurants have Chinese decor and serve Chinese food exclusively—no U.S.-style fried chicken, no pizza, no burgers. Su (who joined KFC China in 1989) created a knowledgeable, motivated top management team, hiring ethnic Chinese and painting a scenario they could believe in: The company they would build would make China a better place. Not logged in Ever since KFC China opened its first outlet, in Beijing in 1987, the number of foreign-owned chain restaurants has grown steadily in China. KFC China’s menus typically include 50 items, compared with about 29 in the United States. McDonald’s opened its first restaurant in China in 1990 and plans to double the number of outlets there to 2,000 by 2013. Bell, D. E., & Shelman, M. L. (2011). China division execs, Su now CEO. KFC and Pizza Hut owner Yum Brands sees profits rise. It was a place where residents with spending money could go for a special occasion. Two men’s race: McDonalds and KFC in China. The company introduces about 50 new products a year (some of them are offered only temporarily), compared with one or two in the U.S. Its executives have what they consider to be a very aggressive program for new product development, which is handled by a committee of managers from marketing, operations, product safety, and the supply chain. Yum! Franchising has long been a mainstay of the fast-food industry, because it reduces investment costs and risk and enables rapid geographic expansion. That same year the company implemented a supplier rating system that allows managers throughout China to concentrate purchasing with the suppliers that perform best. Summary: In 2007, KFC had opened 2000 outlet stores in china, leaving rival MacDonald’s far behind, achieving high praise from Chinese consumers and defeating challengers again and again. Food safety is a matter of paramount importance, especially given Chinese consumers’ concern in recent years over incidents involving tainted milk powder and contaminated livestock feed. 1284 Words | 6 Pages. STEP 2: Reading The The Kfc In China Harvard Case Study: To have a complete understanding of the case, one should focus on case reading. 1863 Words 8 Pages. A Case Study of Kfc’s Cross-Cultural Marketing in China . The policy has a few unavoidable exceptions, including certain herbs and spices—for KFC’s “secret” fried chicken recipe—that can’t be obtained in China. Execution of the strategy turned on a fluke of corporate ownership. China has some fast food chains. New recruits at KFC often have to be taught basic people skills in order to interact with customers. 3 billion (Li 2004), the China presents an increasingly large buying force. (More than 90% of Yum!’s outlets in China are company owned, compared with 12% in the U.S. and 11% in other international markets.). Moreover, a national presence means that KFCs (and other Yum! Dairy Queen has some 300 Chinese outlets. From site selection to grand opening, it takes KFC China four to six months to bring a new restaurant into the world—about half the time required in the U.S. Tray mats carry educational messages. Some 700 Chinese cities now have outlets. A master of adaptation is the Swiss food giant Nestlé, which has created an array of products that incorporate differing regional flavors—and cater to local tastes—in coffee, chocolate, ice cream, and even water. Filed Under: Research papers Tagged With: Fast-food. China is again selected as the case study market because though it is the largest fast food chain restaurant in the world, McDonalds has been unable to gain competitive advantages over KFC in the Chinese market, and it recently announced that it would be exiting the market. (Current base: ~3300)• KFC China intends to reach 15000 outlets by 2015.• The strengths and competencies KFC China has developed over the years, now pose formidable threats to its competitors. KFC’s children’s meals are served with vegetables and juice, although fries and soda can be substituted on request. KFC China offers important lessons for global executives who seek to determine how much of an existing business model is worth keeping in emerging markets and how much should be thrown away. No such networks exist in many of the world’s emerging markets. In 1987, when the first Chinese KFC opened in Tiananmen Square, Western-style fast-food restaurants were unknown in China. The restaurant margin for those six months was 22%—well above the U.S. margin of 11%. Cite as. It was a place where residents with spending money could go for a special occasion. Case Study YUM - KFC’s in China Introduction Homogenization has made it easy for fast-food joints to circle the globe, spitting out carbon copies of themselves, their burgers, and their fries along the way. McDonald’s famous golden arches and Yum! Buying locally is essential to keeping costs low, and it strengthens the parent company’s relationship with the Chinese government. Spiciness levels are very important to customers. Brands, the parent company of Kentucky Fried Chicken (KFC), are opening a KFC store every day. Customers spend the equivalent of $2.50 to $3.50 per visit, a price point that puts KFC way above street vendors and local restaurants and even somewhat above other fast-food chains. The company prides itself on being a “learning organization.” Teams of new employees work side by side with experienced ones in established outlets; once trained, they move to a new location. Introduction The case “KFC and the Global Fast Food Industry in 2003-2004” by Jeffrey A. Krug describes the development of the KFC company and its strategy. ... We Will Write a Custom Case Study Specifically For You For Only $13.90/page! The results of the strategy of heavy localization have been impressive: In the first half of 2011 sales at Yum! Case Study 1 KFC China should continue its strategy of rapid expansion through China, as there are an increasing number of female workers in the workforce and they should expand particularly in developing and affluent cities to take advantage of … Asia delivers for McDonald’s. China’s strengths in service, logistics, and training have positioned the company to support additional restaurant formats, including a local one with which it had no experience: Chinese fast food. KFC which entered China through Beijing in 1987 was the first western fast food restaurant, which provided KFC first mover advantages and a huge potential market for KFC’s products. The menu variety adds traffic and encourages repeat visits. KFC parent Yum sees more China price hikes in 2012. KFC’s rapid expansion in China has allowed the company to widen the gap between itself and competitors: McDonald’s has about one-third as many outlets and owns a 16% market share. Kfc Case Study China - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. This process is experimental and the keywords may be updated as the learning algorithm improves. Kentucky Fried Chicken (KFC) The first KFC was opened in Tiananmen Square, China 1987; it struggled as western food was unknown to the east. The third quarter of 2010 marked the first time that China revenue (more than $1.1 billion) had surpassed U.S. revenue, and many analysts expect that Yum!’s China business will be twice as large as its U.S. business within five years. They made a special effort to welcome extended families and groups. Domino’s Pizza nearly failed in Australia because it underestimated the need to adapt its offerings to local tastes; only after it turned the country over to a local master franchisee did Domino’s become the largest pizza chain there. The Chinese, who until the1980s, were used to untidy restaurants and unfriendly service, have embraced the ambience, rich decors and friendly service of KFC. Wendy’s/Arby’s has only about 300 restaurants outside North America. as an upscale restaurant, but it was shut down in China after a five-year experiment. KFC’s radical approach to China. The kfc: human resource problem in china. Brand’s Kentucky Fried Chicken (KFC) are among the most iconic fast food establishments in the United States of America, but had mainly stayed in the home country. Many other companies have followed KFC’s example in customer service (last year McDonald’s announced that it was opening a Hamburger University in China), but KFC’s training program functions exceptionally well, churning out a continual stream of new managers. human resouce problem in china Essay by lsun012 , University, Master's , B+ , May 2008 download word file , 39 pages download word file , 39 pages 3.0 1 votes If there is an overriding lesson to be drawn from KFC’s experience in China, it is that when entering an emerging market, a multinational must decide whether it wants to garner quick extra sales or to establish a long-term presence. KFC outpaced its nearest competitor, McDonald’s, by more than 1,000 restaurants in China and is outpacing its development by a roughly three to one. 1. The 2002 China National Nutrition and Health Survey revealed that 22.8% of Chinese adults were overweight, up from 6% in 1982. outlets) are popular with mall developers. Quick Service Restaurant (QSR) web (2010). The opening of the first KFC restaurant in 1987 was largely covered by local medias and was watched by millions of Chinese. In China, Yum! It announced earlier this year that it was considering expansion in China. Although customers didn’t like the food much, KFC made steady progress, ac… Hostesses teach lessons on nutrition to kids. KFC China’s success in winning over Chinese consumers grew out of a deep understanding of the differences between established and developing markets and a willingness to radically alter the U.S. business model. Jargon, J. One factor in this decision was the presence of McDonald’s in China’s four largest cities. KFC China closely monitors the entire supply chain, all the way back to animal feed companies and other input providers, and it trains employees in personal hygiene, including how to dress for the workplace and how often to wash their hands. China revenues and operating profits in 2010 were $4.1 billion and $755 million, respectively; comparable figures for the overall company were $11.3 billion and $1.77 billion. Kfc In China Case Study. PUBLICATION DATE: June 23, 2014 PRODUCT #: HK1043-PDF-ENG. © Springer-Verlag Berlin Heidelberg 2014, http://www.qsrweb.com/article/95404/Yum-Brands-promotes-two-Yum-China-Division-execs-Su-now-CEO, http://www.bbc.co.uk/news/business-13153516, http://www.mintel.com/press-centre/press-releases/910/breakfast-key-to-growth-of-foreign-fast-food-market-in-china-reports-mintel, http://www.investmentu.com/2011/February/fast-food-culture-grows-in-china.html, http://www.bloomberg.com/news/2011-01-26/mcdonald-s-no-match-for-kfc-in-china-where-colonel-sanders-rules-fast-food.html, http://english.peopledaily.com.cn/90001/90778/90860/6912182.html, http://www.strategicsourceror.com/2011/11/kfc-raises-prices-in-china.html, http://www.reuters.com/article/2012/02/07/yum-idUSL2E8D77CY20120207, http://www.euromonitor.com/fast-food-in-china/report, http://blog.caijing.com.cn/expert_article-151538-15237.shtml, http://online.wsj.com/article/SB10001424052970204397704577074982151549316.html, Coventry Business School, Coventry University, https://doi.org/10.1007/978-3-642-36861-5_4. In 1987, when the first Chinese KFC opened in Tiananmen Square, Western-style fast-food restaurants were unknown in China. Kfc Case Study. Training adaptions of KFC in China Since KFC started its business in China in 1978, KFC in China has developed to be the largest restaurant company in China and become a separated incorporation belonged with Yum! 985 Words 4 Pages. Brands, the parent company of Kentucky Fried Chicken (KFC), are opening a KFC store every day. Show More. Global companies face a crucial question when they enter emerging markets: How far should they go to localize their offerings? In 2005 the company developed the concept of a “new fast food” that would be “nutritious and balanced” and promote “healthy living.” It eliminated “supersize” items and added roast chicken, sandwiches, fish, shrimp, and more fruit and vegetable dishes to its menus. In the United States, by contrast, KFC outlets are designed primarily for takeout—most of the dining is done at home. A Case Study of KFC’s Cross-cultural Marketing in China Summary: In 2007, KFC had opened 2000 outlet stores in china, leaving rival MacDonald’s far behind, achieving high praise from Chinese consumers and defeating challengers again and again. has become China’s largest restaurant company by far, with more than 250,000 employees and about 40% of the market for fast-food chains. D’Altorio, T. (2011). KFC realised that the US fast food model needs to be adapted because China’s culture is not individualistic which is the characteristic of the US culture. KFC China’s menus typically include 50 items, compared with about 29 in the United States. … Like every other multinational in China, KFC made its way up the learning curve by trial and error. To succeed, the fast-food giant had to throw out its U.S. business model. (In 2008 Yum! INTRODUCTION KFC is based in Louisville, Kentucky, and is the world’s most popular chicken restaurant chain. But despite an abundance of willing workers, staffing is a perennial obstacle. The company’s managers sought to stretch the brand so that consumers would see KFC as part of the local community—not as a fast-food chain selling inexpensive Western-style items but as restaurants offering the variety of foods and the traditional dishes that appeal to Chinese customers. Should they adapt existing products just enough to appeal to consumers in those markets? With all this activity to support, KFC can’t position itself as the cheapest dining option—nor does it want to. In recent years Yum! Although the problem was resolved quickly, Yum! Most of all, it is, like China’s economy, dynamic and capable of expanding still further—at a remarkable pace. One-child families and the proliferation of home computers mean that Chinese children interact less with other people than they did in previous generations. By 1999 it was opening dozens of restaurants a year, and in 2002 it picked up the pace even further. It now has the most advanced and integrated cold-chain system in China, with 11 full-service logistics centers and six satellite centers serving every province except Tibet. But this is not the KFC you know in America. Fast food in China. With KFC as its flagship chain, Yum! KFC’s executives believed that the dominant logic behind the chain’s growth in the U.S.—a limited menu, small stores, and an emphasis on takeout—wouldn’t produce the kind of success they were looking for in China. Most products are sourced in China. Kfc In China Case Study. Concern in the West over high-fat, high-carbohydrate foods prompted the company to begin changing its menu and educating consumers about health. This is a preview of subscription content. The researcher aims to assess and evaluate the effects and purposes of different marketing strategies while conducting a case study on KFC, China. 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