Kfc Has a Refocused International Strategy

Topics: Fast food, Fast food restaurant, Pizza Hut Pages: 8 (2774 words) Published: October 31, 2011
KFC has a refocused international strategies to grow its company and franchise restaurant based on over the world. Competitive MKT strategy: developed 3 types of chicken :Original recipe (pressure cooked) Extra crispy (fried) tender roast (roasted). If there were just a few things that China has wholly embraced from the West, it would be their love for Kentucky Fried Chicken, or KFC as it is more commonly known. In 1987, the fast-food operator opened its first outlet near Tiananmen Square in Beijing. Then came 2,000 other outlets, which sprung up across China within the next 20 years – a phenomenal achievement by any standard. The improbable success of KFC China can be attributed to a few key ingredients: context, people, strategy and execution, so says Warren Liu, a former vice president of business development and a member of Tricon Greater China Executive Committee. Tricon was the predecessor to KFC China’s parent company YUM! Brands. |

In his book ‘KFC in China: Secret Recipe for Success’, Liu says it was firstly the context in which KFC entered the China market, that paved the way for its eventual success. “Strategy is context-dependent; a strategy that works well in a stable and mature market economy would most likely not work well in China, given the diversity of its people, geography, the heritage of a rich and complex culture, and a rapidly and continuously changing business environment since China’s economic reforms commenced in 1978,” Liu says in his book. |

Case in point: when KFC first entered Hong Kong in 1973, it quickly grew to 11 restaurants in the following year. But it misjudged the local market and failed to develop a suitable business model. By 1975, all 11 restaurants were forced to close their shutters. Ten years later, KFC came back with a vengeance, eventually franchising its operations to a company called Birdland, which was backed by a group of local investors. KFC’s rocky experience in Asia served as invaluable and relatively inexpensive lessons in preparation for its 1987 entry into China. At a time when joint ventures were the only viable alternative in the late 1980s and early 1990s, KFC China selected local partners with government connections and effectively leveraged their tangible and intangible local resources. Once JVs were no longer required by Chinese regulations, and sufficient knowledge and resources had been transferred from the local partners, KFC went direct in order to avoid the paralysis that can result from disagreements between partners. The ‘Taiwan Gang’

Another vital ingredient in KFC’s secret recipe is its leadership team, specifically its founding leadership team known as the ‘Taiwan Gang’, mainly because most had hailed from Taiwan and to a lesser extent, other parts of Asia. According to Liu, members of this pioneering team of KFC in China had accumulated at least 10, if not 15 to 20 years of fast-food industry experience prior to landing in China. Though predominantly Western-educated, being ethnic Chinese, they inherently understood China. Many also came with a background from McDonald’s. That factor led to an intuitive knowledge of the market context, which then put KFC China on track to becoming a successful enterprise. “In order to be successful, especially for foreign companies or non-local companies, a deep understanding and a broad understanding of that market context is critical to success. To the extent that understanding is (even) intuitive.  Intuitive – meaning that you don't have to do the market research, you don't have to have multiple meetings to come to the best solution to a problem or to point to a future strategic direction,” Liu told INSEAD Knowledge.  “Those money and time saved are going to add to your probability of success in the long run because in a dynamic and fast-changing market environment, speed becomes a lethal competitive differentiator. The speed with which to come up with the best ideas, to make the optimal decisions, and to...
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