Christopher A. Bartlett U. Srinivasa Rangan

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REV: DECEMBER 30, 1992

CHRISTOPHER A. BARTLETT U. SRINIVASA RANGAN

Kentucky Fried Chicken (Japan) Limited
In January 1983, Dick Mayer leaned back in his chair and gazed absent-mindedly at the Norman Rockwell portrait of Colonel Sanders on his office wall. Mayer, a veteran Kentucky Fried Chicken (KFC) executive, had recently been promoted from vice chairman and head of the company's U.S. operations to chairman and chief executive officer, and for the past few weeks had been focusing his attention on the challenges facing him in Kentucky Fried Chicken-International (KFC-I). As he talked to KFC-I managers about their problems, opportunities, and challenges, he was exposed to a wide range of opinion on what was needed to continue KFC's growth and profitability overseas. At one end of the spectrum was Loy Weston, president of KFC's highly successful joint venture in Japan. Weston's view was that in recent years headquarters staff interference in local national operations was increasingly compromising the spirit of entrepreneurship that had built the overseas business. In Louisville, however, Mayer heard a different story. For example, Gary Burhow, vice president of strategic planning, felt that the lack of effective planning and control in the early years of KFC-I had led to suboptimal financial performance, inconsistent strategies, and stalled expansion into new markets. He emphasized that, the recent efforts by headquarters staff was aimed at supporting the overseas subsidiaries and bringing to them the very considerable resources and experience of the parent company.

The Beginnings
Harland Sanders was born in Henryville, Indiana, in 1890, the son of a farmhand. A sixth-grade dropout, he occasionally worked as a cook. In his late forties, he developed a recipe for chicken based on a pressure cooking method and a secret seasoning mix of eleven herbs and spices. When Sanders' gas station, restaurant, and motel were bypassed by the new interstate highway system in 1956, he decided to try to franchise his chicken recipe. With his white suit, goatee, string tie, and benign charm, he sold some 700 franchises in less than nine years. In allocating franchising rights for KFC, Sanders was generous to his friends and relatives. His management style was to rely on the basic goodness of the people around him and trusted his franchisees to play fair. There were no management systems or strategic controls.

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Professor Christopher A. Bartlett and Research Associate U. Srinivasa Rangan prepared this case. The contributions of Mario Hegewald and Jeff Vincent (MBA 1984) are gratefully acknowledged.HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 1986 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

387-043

Kentucky Fried Chicken (Japan) Limited

Industry Growth and Development
Colonel Sanders became a pioneer in one of the fastest-growing industries of the postwar era. Many of the practices he initiated were quickly imitated by others and within a few years, several "rules of the game" came to be accepted in the U.S. fast food industry. One of the first norms to be established was expansion through franchising. The high capital cost of opening new stores, together with the need to expand rapidly to stake out the...
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