Case Study - Kfc China Strategies
Case Study 1
Introduction
Since KFC opened the first outlet in Beijing in 1987, the fast-food giant has occupied its dominant position in China(Bell and Shelman 2011). As KFC expands rapidly in China, it formulates specific strategy aiming to Chinese customers and accomplishes unprecedented success. Among all the strategies, the localization strategy and the different operation management contribute significantly. While analyzing such strategies, benefits and weakness both emerge and some questions need to be resolved. What is the best business strategy to ensure long term success for KFC in China? What are three key challenges to its localization strategy that KFC China might face in the future? I would give analysis to the strategies and illustrate the conceivable challenges.
Analysis
• Strategies
• Company-owned Outlets Strategy
KFC employs an operation strategy different from other fast-food chains. As Bell and Shelman (2011)agree, KFC China sticks to the strategy of company-owned outlets, which asks the headquarter to closely monitor all the outlets. Up to ninety per cent of the outlets in China are comprised of company-owned outlets. According to YUM!Restaurants(China) Investment Company Limited(n.d.), the only way to franchise is to purchase an profitable ongoing restaurant and take courses to be qualified to own the restaurant. Such strategy guarantees the reputation of KFC and creates a win-win situation. However, owning most restaurants and strictly selecting franchisees increases the initial cost of opening a new outlet.
• Localization Strategy
Localization has long been the outstanding merit of KFC compared with other western fast-food chains. It alters the domestic U.S. business mode and adjusts the strategy to cater to Chinese customers(Bell and Shelman 2011). KFC China emphasize on customer service and Chinese-styled fast food.The fast-food giant has been upgrading the menu with Chinese-styled breakfast like soya milk and fried dough sticks
Introduction
Since KFC opened the first outlet in Beijing in 1987, the fast-food giant has occupied its dominant position in China(Bell and Shelman 2011). As KFC expands rapidly in China, it formulates specific strategy aiming to Chinese customers and accomplishes unprecedented success. Among all the strategies, the localization strategy and the different operation management contribute significantly. While analyzing such strategies, benefits and weakness both emerge and some questions need to be resolved. What is the best business strategy to ensure long term success for KFC in China? What are three key challenges to its localization strategy that KFC China might face in the future? I would give analysis to the strategies and illustrate the conceivable challenges.
Analysis
• Strategies
• Company-owned Outlets Strategy
KFC employs an operation strategy different from other fast-food chains. As Bell and Shelman (2011)agree, KFC China sticks to the strategy of company-owned outlets, which asks the headquarter to closely monitor all the outlets. Up to ninety per cent of the outlets in China are comprised of company-owned outlets. According to YUM!Restaurants(China) Investment Company Limited(n.d.), the only way to franchise is to purchase an profitable ongoing restaurant and take courses to be qualified to own the restaurant. Such strategy guarantees the reputation of KFC and creates a win-win situation. However, owning most restaurants and strictly selecting franchisees increases the initial cost of opening a new outlet.
• Localization Strategy
Localization has long been the outstanding merit of KFC compared with other western fast-food chains. It alters the domestic U.S. business mode and adjusts the strategy to cater to Chinese customers(Bell and Shelman 2011). KFC China emphasize on customer service and Chinese-styled fast food.The fast-food giant has been upgrading the menu with Chinese-styled breakfast like soya milk and fried dough sticks