Yum Brands

Porters 5 Forces Model is a valuable tool in evaluating the condition of the Yum! Brands China Division and the fast-food industry that Yum Brands is actively dominating. While there is much competition in China in the food industry, it is undeniable that with the CEO’s guidance, Sam Su, the growth that they have accomplished over the years is exponential. This growth is due to the fact that Su looks at the bigger picture, imaging what he wants the company to be like in five to ten years, and making that dream happen immediately. Porter shaped this strategy to give a thorough analysis of the condition of any given industry and determine the feasibility of entering, but also to determine the level of competition being dealt with by current established participants in the industry in order to reposition themselves for further growth and development. Thus, Porter gives the 5 Basic Competitive Forces and suggests analyzing each one in the scope of the industry.
1. Barriers to Entry
In China’s fast-food industry, largely dominated by Yum! Brands, the barriers to entry are high due to several key factors. First, a company trying to break into the Yum! Brands market must compete with their restaurants, Kentucky Fried Chicken, Pizza Hut, Taco Bell, which have a combined total of over 3600 stores in their market. Economies of scale come into play because most fast-food companies have the capital and production abilities to produce their product and additional products for much cheaper than a beginning fast-food restaurant that is entering into the market. A major factor in the Yum! Brands China Division and the fast-food industry in China is now differentiation and the altering of the product is order to suit the Chinese people’s tastes rather than American’s tastes. The restaurants in the market are attempting to find new ways to appeal to consumers without drifting away from their key products who have brought them lots of success. For example, compared to Americans,