Kfc Strategies
2. How would you describe KFC’s international strategy? Which cross-border synergies can KFC reap and how locally responsive is the company?
KFC’s international composition provides an exemplary mix of international entry strategies. The company enters a foreign market either by a greenfield entry by establishing a company-owned foreign subsidiary (21 %) or by a joint venture (10 %) (figure 10.2 in the book). However, in most of the cases, KFC expands it global franchise-network (69 %). In Latin America, KFC illustrates this mix, too. The entries into Mexico and Puerto Rico, accessed firstly because of their geographical and social proximity to KFC’s home country, were established through company-owned subsidiaries, where small markets in the Caribbean were opened up by franchisees. The country differences in KFC’s distribution channels have effect on the way the company is able to reap cross-border synergies between it’s Latin American country units and its local responsiveness in each country. An interesting discussion point here would be why: in general, franchisees are less able to build on global synergies yet are more locally responsive, where more integrated company-owned subsidiaries provide more means for the corporate center to capture cross-border synergies yet could be less receptive to country-specific demands. This is illustrated by the case example of Pepsi interfering in
KFC’s franchise operations in an attempt to capture more synergies, and the resistance of the franchisees that followed.
First, the teacher can handle the synergies that KFC can capture by using the business model tool from Chapter 5. When handling this question, figure 10.5 (‘forms of cross-border synergies) can be used as a slide template. Cross-border synergies can be reaped by leveraging resources, integrating activities and aligning positions.
The resources KFC can leverage are mainly intangible. Students could come up with the following examples:
Relationships: Connections
KFC’s international composition provides an exemplary mix of international entry strategies. The company enters a foreign market either by a greenfield entry by establishing a company-owned foreign subsidiary (21 %) or by a joint venture (10 %) (figure 10.2 in the book). However, in most of the cases, KFC expands it global franchise-network (69 %). In Latin America, KFC illustrates this mix, too. The entries into Mexico and Puerto Rico, accessed firstly because of their geographical and social proximity to KFC’s home country, were established through company-owned subsidiaries, where small markets in the Caribbean were opened up by franchisees. The country differences in KFC’s distribution channels have effect on the way the company is able to reap cross-border synergies between it’s Latin American country units and its local responsiveness in each country. An interesting discussion point here would be why: in general, franchisees are less able to build on global synergies yet are more locally responsive, where more integrated company-owned subsidiaries provide more means for the corporate center to capture cross-border synergies yet could be less receptive to country-specific demands. This is illustrated by the case example of Pepsi interfering in
KFC’s franchise operations in an attempt to capture more synergies, and the resistance of the franchisees that followed.
First, the teacher can handle the synergies that KFC can capture by using the business model tool from Chapter 5. When handling this question, figure 10.5 (‘forms of cross-border synergies) can be used as a slide template. Cross-border synergies can be reaped by leveraging resources, integrating activities and aligning positions.
The resources KFC can leverage are mainly intangible. Students could come up with the following examples:
Relationships: Connections