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. KFC’s radical approach to China. 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. KFC’s approach may not apply across the board, but it suggests a mind-set that can position multinationals to win in emerging markets. Yum! They enlarged the outlets, which are about twice the size of those in the U.S., to allow for bigger kitchens and more floor space where customers can linger. Initial reading is to get a rough idea of what information is provided for the analyses. Yum!’s initial hope was to create a large national chain, but Chinese food poses significant challenges in a fast-food context: Noodles and vegetables must be prepared just before serving; customers are highly discerning about freshness and traditional flavors; and tastes vary widely across regions. The chain has relatively few outlets, and nationwide expansion is still a distant goal. portfolio; it has some 500 dine-in restaurants and 120 delivery-only outlets. Abstract. Hostesses teach lessons on nutrition to kids. How KFC make a stride in China’s QSR market. 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. (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.). Brands is opening a KFC store every day. Kfc China Case Study. Over 10 million scientific documents at your fingertips. Mexican food, with its emphasis on dairy and beans, didn’t appeal to Chinese consumers. has focused on acquiring a competitor, Little Sheep, a Hong Kong–listed chain of hundreds of Mongolian-style hot-pot restaurants. In KFC’s early days, China required foreign companies to have local partners; but when the country became more receptive to wholly owned foreign enterprises, KFC China switched to a strategy of company-owned outlets—another way in which it challenged the dominant logic. Founded by Colonel Harland Sanders in in the early 1930s by cooking & serving food for hungry travelers. 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. 2 pages, 953 words. 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. The results of the strategy of heavy localization have been impressive: In the first half of 2011 sales at Yum! The 2002 China National Nutrition and Health Survey revealed that 22.8% of Chinese adults were overweight, up from 6% in 1982. Asia delivers for McDonald’s. In 1987, when the first Chinese KFC opened in Tiananmen Square, Western-style fast-food restaurants were unknown in China. 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. Jargon, J. The clean, efficiently run restaurants have Chinese decor and serve Chinese food exclusively—no U.S.-style fried chicken, no pizza, no burgers. Mellor, W. (2011). Some 70% of McDonald’s Chinese outlets are open 24 hours a day. 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. 1. order now. The company says its strong sales in the Asia/Pacific, Middle East, and Africa regions are led by results in China, and it cites the appeal of such conveniences as delivery, drive-through, and extended hours. … The chain, which opened in Shanghai in 2005, offers such favorites as beef rice and bean curd at prices similar to KFC’s. Executives say they believe there is huge potential to drive coffee consumption in China. Kentucky Fried Chicken in China (C) case study (referred as “Kfc Fried” for purpose of this article) is a Harvard Business School (HBR) case study covering topics such as Global Business and strategic management. The opening of the first KFC restaurant in 1987 was largely covered by local medias and was watched by millions of Chinese. 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 Quick Service Restaurant (QSR) web (2010). pp 17-23 | KFC and Pizza Hut owner Yum Brands sees profits rise. Taco Bell was similarly positioned by Yum! Kfc Case Study China - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. Rejecting the measured growth of its China competitors and of KFCs in other countries, KFC China set its sights on rapid expansion. KFC parent Yum sees more China price hikes in 2012. Recently, Yum! 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 lost part of its market share in the recent years in China, but their success in the Chinese market is legendary.. KFC entered the Chinese market in 1987, and it’s now the largest restaurant chain in the country, with a total of 4,563 restaurants.KFC controls as much as 40 percent of the Chinese market share, while McDonalds, far and away the most popular fast food restaurant in … The kfc case study. © 2020 Springer Nature Switzerland AG. Fast-food culture grows in China. As long as KFC China’s financial results were good, PepsiCo was happy. In China, Yum! D’Altorio, T. (2011). In an effort to please local consumers, the company reinvented its menu and varied spiciness levels from region to region. Focusing on owned restaurants rather than franchises enabled the company to make changes where necessary to meet local needs. In recent years Yum! 985 Words 4 Pages. Kfc In China Case Study. Utilising a different strategy compared to other Western fast service counterparts, KFC has become the largest restaurant company in mainland China. 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. We recently studied KFC China’s transformation of the business model that had made Kentucky Fried Chicken a global brand, and we learned how, in the process, the company accumulated strengths and competencies that now pose formidable barriers to competitors. Wang, P. (2011). 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 And China Case Study. Papa John’s plans to increase the number of its outlets in China from 155 to 300 within three years. This often starts with selling imported goods to the expat community or opening one or two stores for a trial run. Download Citation | Case study 2: KFC in China | In China, Yum! Brands, the parent company of Kentucky Fried Chicken (KFC), are opening a KFC store every day. It was a place where residents with spending money could go for a special occasion. 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. 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. Burger King has about three dozen restaurants in China, where its first outlet opened in 2005. If it’s there for the long haul, it should install local managers whose vision is to build an organization that will last. Reuters (2012). It was a place where residents with spending money could go for a special occasion. > 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.” Starvish, M. (2011). as an upscale restaurant, but it was shut down in China after a five-year experiment. KFC was a novelty, a taste of America. PUBLICATION DATE: June 23, 2014 PRODUCT #: HK1043-PDF-ENG. 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. Case Study Kfc In China. Yum! 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 Like KFC, it has undergone a transformation in China. China is a country that is located in East Asia. 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. China has some fast food chains. 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. New recruits at KFC often have to be taught basic people skills in order to interact with customers. Two men’s race: McDonalds and KFC in China. Rice on the menu at Shanghai KFC. 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. This process is experimental and the keywords may be updated as the learning algorithm improves. 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. 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. Part of Springer Nature. 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. Therefore, I can research different cultures from KFC’s branches and make an analysis of potential problems and challenges related to the case. One-child families and the proliferation of home computers mean that Chinese children interact less with other people than they did in previous generations. 1284 Words | 6 Pages. The restaurant margin for those six months was 22%—well above the U.S. margin of 11%. As KFC expands rapidly in China, it formulates specific strategy aiming to Chinese customers and accomplishes unprecedented success. 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. 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. 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. 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. Although customers didn’t like the food much, KFC made steady progress, ac… 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. (In 2008 Yum! To circumvent the traffic jams that sometimes extend for miles in the winter, it relies on contingency plans that involve renting temporary warehouses and reserving space on cargo airlines. held a 27% stake in Little Sheep, and earlier this year it proposed to increase its ownership level to 93%. 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. A Case Study of Kfc’s Cross-Cultural Marketing in China . © 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. Many Chinese still wore the tunic suits of the Mao era, and bicycles were the main means of transportation. Kentucky Fried Chicken (KFC) The first KFC was opened in Tiananmen Square, China 1987; it struggled as western food was unknown to the east. But despite an abundance of willing workers, staffing is a perennial obstacle. New recruits at KFC often have to learn basic people skills and teamwork. Ever since KFC China opened its first outlet, in Beijing in 1987, the number of foreign-owned chain restaurants has grown steadily in China. U.S. retailers and food corporations that have spent years saturating the huge home market tend to cling to what has worked in the past. has experimented with developing East Dawning, a chain that takes its name from a line in an ancient Chinese poem. In the absence of logistics providers, KFC China created a distribution system to ensure adequate and high-quality supplies. Most of all, it is, like China’s economy, dynamic and capable of expanding still further—at a remarkable pace. outlets) are popular with mall developers. KFC’s children’s meals are served with vegetables and juice, although fries and soda can be substituted on request. To succeed, the fast-food giant had to throw out its U.S. business model. 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. Perhaps the greatest tribute to the strategy is that many consumers around the world believe Nestlé is a local company. Scale allows the company to reduce costs, and being the first to enter a city means getting the pick of locations with good foot traffic and visibility. KFC China’s menus typically include 50 items, compared with about 29 in the United States. Teaching employees how to interact with customers is no small matter. (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. 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 … INTRODUCTION KFC is based in Louisville, Kentucky, and is the world’s most popular chicken restaurant chain. By 1999 it was opening dozens of restaurants a year, and in 2002 it picked up the pace even further. 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. 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. The researcher aims to assess and evaluate the effects and purposes of different marketing strategies while conducting a case study on KFC, China. 1863 Words 8 Pages. Another word for things in an essay a short essay on earth sap sd module case study case china study in Kfc solution sample of essay pdf research paper filter design, competitive analysis case study pdf christmas celebration essay in hindiCase study research in entrepreneurship central idea of an essay on man. The kfc: human resource problem in china. 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. China reported a resulting 30% drop in operating profit in the second quarter of 2005. Nutrition information is printed on every package. 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. 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. In China, Yum! Therefore, it is necessary to combine the US fast food business model and adapted them to serve the needs of Chinese consumers. 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. This was still a very conservative nation, not prepared for the “Fast Food” … Tray mats carry educational messages. For example Twain’s many was suffering a setback in China. McDonald’s no match for KFC in China as Colonel Rules Fast. This Case is about MANUFACTURING, MARKETING, STRATEGY, SUPPLY CHAIN. These keywords were added by machine and not by the authors. Some 700 Chinese cities now have outlets. McDonald’s opened its first restaurant in China in 1990 and plans to double the number of outlets there to 2,000 by 2013. Harvard Business Publishing is an affiliate of Harvard Business School. Yum! Should they adapt existing products just enough to appeal to consumers in those markets? Execution of the strategy turned on a fluke of corporate ownership. Some times will make the company lost the market or suffer a setback. HBS cases: KFC’s explosive growth 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. Like every other multinational in China, KFC made its way up the learning curve by trial and error. Although customers didn’t like the food much, KFC made steady progress, according to Sam Su, now the chairman and CEO of Yum! Initially, fast reading without taking notes and underlines should be done. Mintel (2012). No such networks exist in many of the world’s emerging markets. 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. Kfc Case Study. All rights reserved. Kfc In China Case Study. That same year the company implemented a supplier rating system that allows managers throughout China to concentrate purchasing with the suppliers that perform best. (2011). The menu variety adds traffic and encourages repeat visits. With KFC as its flagship chain, Yum! Brands. Brands, the parent company of Kentucky Fried Chicken (KFC), are opening a KFC store every day. China locations that had been open a year or more rose 16%, compared with a decline of 2% at U.S. locations. Utilising a different strategy compared to other Western fast service counterparts, KFC has become the largest restaurant company in mainland China. It permits centralized purchasing, which reduces costs, and gives the company a larger share of outlet profits. For a hundred years Nestlé’s country managers have been empowered to say no to the head office if a product or a campaign doesn’t suit their locales. Brands promotes two Yum! 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. But KFC China’s model was more complex and evolving rapidly. Brands could take action to forestall such problems in China. Expansion should be progressed in order to take advantage of China’s increasingly growing economy. Global companies face a critical question when they enter emerging markets: How far should they go to localize their offerings? KFC China’s menus typically include 50 items, compared with about 29 in the United States. 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. It is said that case should be read two times. 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. In 1992, after the Chinese government granted foreign companies greater access to markets, KFC China’s managers gradually developed the blueprint that would transform the chain. They made a special effort to welcome extended families and groups. Strategic Sourceror (2011). 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. But this is not the KFC you know in America. China division execs, Su now CEO. It also offers congee, a popular rice porridge that is hard to make at home, which is KFC’s number one seller at breakfast. ... We Will Write a Custom Case Study Specifically For You For Only $13.90/page! Free Powerpoint Templates Page 2 3. Show More. KFC China’s five competitive advantages all depart from the U.S. model. 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. Being first also means garnering free publicity when officials celebrate an outlet’s opening as marking the city’s coming of age. This was an expensive undertaking, but necessary if the company was to expand rapidly, carry a lengthy and complex menu, and introduce new products quickly. KFC raises prices in China. Cite as. KFC rushed to establish a presence in 16 locations from which it could grow and develop. 192.254.250.18. 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. KFC China had a brush with this issue a few years ago, when a colorant that had been linked to cancer was found in one of the company’s sauces. 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. This is a preview of subscription content. This case study is related to corporate culture of KFC China and its related effect on marketing strategy of the business. Kfc Case Study China Fast food in China. THE RESEARCH APPROACH 2.1 Research objective The research objective of this case study is to find out the potential reasons why KFC achieve greater success over McDonald’s in China market, which is contradictory in most other countries. Cross-cultural influences on brand identity impressions: KFC in China and the United States. 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. Many Chinese still wore the tunic suits of the Mao era, and bicycles were the main means of transportation. 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. Once such an approach is entrenched, companies are reluctant to rethink the model. Later this year Two Fen will publish a series of in-depth essays on China’s economic transformation to commemorate this 40th anniversary. Aware of a growing sense in the West that high-fat, high-carbohydrate foods play a role in the obesity epidemic, Su asked himself how Yum! In 1987, when the first Chinese KFC opened in Tiananmen Square, Western-style fast-food restaurants were unknown in China. 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. 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. By 2010 Yum! McDonald’s famous golden arches and Yum! 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. China has a total area of 3.7 million square miles. Wang, P. (2011). Buying locally is essential to keeping costs low, and it strengthens the parent company’s relationship with the Chinese government. The area food security authorities scrutinized the scenario and found that KFC China had been conscious of … Harvard Business School. In the United States and Europe, fast-food chains rely on networks of distributors to ensure that food is handled properly and kept refrigerated from the farm to the restaurant. Euromonitor International (2011). 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. In fact, it is the limiting factor in the chain’s expansion, according to Sam Su. But in the most populous country in the world, a fast-food giant stepped off the conveyor belt 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. Global companies face a crucial question when they enter emerging markets: How far should they go to localize their offerings? Brands China Division, which owns KFC and a number of other brands in the country. BBC News (2011). People’s Daily Online News (2010). Some Western health problems are already showing up in China. Here’s a look at some of them. Concern in the West over high-fat, high-carbohydrate foods prompted the company to begin changing its menu and educating consumers about health. It announced earlier this year that it was considering expansion in China. Copyright © 2020 Harvard Business School Publishing. 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. 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. In the chain’s early days, when the same recipes were served at all outlets, Shanghai customers complained that dishes were too hot, while diners in Sichuan and Hunan complained that they were too bland. In China, Yum! 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 established 16 beachheads as a way of quickly expanding throughout the country. So the company changed its recipes to suit the regions. 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. One factor in the United States. study Specifically for you for $! Its own fleet of trucks 2003 ) to localize their offerings 2002 it picked the... A closely involved parent, KFC has become the largest restaurant company in mainland China to throw out its business. 2004 ), are opening a KFC store every day a fast-food giant off. Needs of Chinese consumers trial and error era, and gives the company changed its recipes to the. 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