Kfc and the Global Fast-Food Industry in 2003-2004
KFC and the Global Fast-Food Industry in 2003-2004
Course: MGT 710
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1. Executive Summary
This paper analyzes the market situation of the major U.S. fast-food firms in Latin America in 2004 from the perspective of the KFC Corporation. By analyzing political, economic, cultural, logistical, and competitive forces, a potential strategy for KFC to successfully establish a strong position in Central and South America is proposed. Through a thorough analysis, it was determined that KFC should establish wholly-owned subsidiaries in Mexico and Brazil to manage operations in Central and South America, respectively. After a strong position is established in these countries, KFC should then open franchises in Central America, Argentina, Colombia, Venezuela, and Chile.
2. Problem
1. Expanding into Latin America
From 1993 to 2002, KFC dominated the chicken segment of the U.S. fast-food market. Their market share, however, decreased by 13.4% over that 10 year period (Exhibit 4, 553). As the fast-food market matured, firms began to focus on globalization to continue growth. By early 2004, 56% of KFC’s restaurants were outside of the U.S. (558). Their initial focus was on Mexico, Puerto Rico, and the Caribbean, where they established dominance among competitors. Their struggle was in expanding beyond those markets.
In their attempt to expand into Central and South America, KFC was met with many challenges. Many Latin American markets had not adopted the fast-food concept and preferred a more leisurely dining experience. The intense competition with major U.S. fast-food chains made it very risky to enter a new market. The geographic distance from the corporate offices made it difficult to control standards and quality. To continue growth, KFC would have to develop a strategy to overcome these obstacles and expand into these markets.
2. Strengthening position in Central America
KFC initially expanded into Mexico, Puerto Rico, and the Caribbean due
Course: MGT 710
[pic]
1. Executive Summary
This paper analyzes the market situation of the major U.S. fast-food firms in Latin America in 2004 from the perspective of the KFC Corporation. By analyzing political, economic, cultural, logistical, and competitive forces, a potential strategy for KFC to successfully establish a strong position in Central and South America is proposed. Through a thorough analysis, it was determined that KFC should establish wholly-owned subsidiaries in Mexico and Brazil to manage operations in Central and South America, respectively. After a strong position is established in these countries, KFC should then open franchises in Central America, Argentina, Colombia, Venezuela, and Chile.
2. Problem
1. Expanding into Latin America
From 1993 to 2002, KFC dominated the chicken segment of the U.S. fast-food market. Their market share, however, decreased by 13.4% over that 10 year period (Exhibit 4, 553). As the fast-food market matured, firms began to focus on globalization to continue growth. By early 2004, 56% of KFC’s restaurants were outside of the U.S. (558). Their initial focus was on Mexico, Puerto Rico, and the Caribbean, where they established dominance among competitors. Their struggle was in expanding beyond those markets.
In their attempt to expand into Central and South America, KFC was met with many challenges. Many Latin American markets had not adopted the fast-food concept and preferred a more leisurely dining experience. The intense competition with major U.S. fast-food chains made it very risky to enter a new market. The geographic distance from the corporate offices made it difficult to control standards and quality. To continue growth, KFC would have to develop a strategy to overcome these obstacles and expand into these markets.
2. Strengthening position in Central America
KFC initially expanded into Mexico, Puerto Rico, and the Caribbean due