Kentucky Fried Chicken is the second largest fast food restaurant. KFC has focused on foreign markets since the 1960s. At first this report will detailed describe the history of the Kentucky Fried Chicken. And then next parts will analysis the international business of the Kentucky Fried Chicken. Finally the report will give some recommendations to the KFC.
Background to Kentucky Fried Chicken
Kentucky Fried Chicken (KFC) was established in Louisville, Kentucky, United states as a chain of fast food restaurant by Colonel Harland Sanders in 1952. At first the Colonel started to implement the franchising business operation with the Chicken Secret Recipe by travel tower to tower. In 1960s because of the Colonel’s hard working Kentucky Fried Chicken had some 600 franchised outlets in US and Canada. The most important year was 1974. In 1974 the American giant, Heublein bought Kentucky Fried Chicken and the Colonel remained a public spokesman for the enterprise. Heublein was willing to support the Kentucky Fried Chicken’s aboard expansion plan and constantly implemented the franchising business operation. Kentucky Fried Chicken became more famous in the world. After that the enterprise was sold twice. Finally the Kentucky Fried Chicken was taken over by PepsiCo in 1986. In order to decrease the risk, PepsiCo remain the franchising business operation. Despite it decreased the financial risk, the local franchisees insisted to make the maximizing profits. Therefore the local franchisees did not care about quality, service and cleanness (QSC). But the most important element that KFC got the success was Quality, Service and Cleanness (QSC). So the enterprise wanted to find out the balance between corporate and cultural sensitivity.
Discussion and Analysis
According to the case of Kentucky Fried Chicken and the Global Fast-Food Industry from Jeffrey A, this part of report will be divided into five main aspects to illustrate: International trade theories, FDI, Risk and Opportunities, Marketing, Strategies.
International trade theories
International trade theories help managers deal with the international business’s problem and influence the decision of strategies. And this part will be divided in to three parts: culture, political, legal and economics. Culture
Culture situation for international business is a big problem. In 1980s KFC started to build the restaurants in German. But KFC filed in the German market because Germans did not like take-out food. However McDonald could get the success in German. McDonald made many changes to adapt the German market. Firstly McDonald changed the menu which Germans liked. Such as, German beer was provided in the restaurants. But KFC was more success in Asia and Latin America because chicken was the traditional dish in there.
In 1994, United States, Canada and Mexico created the North American Free Trade Agreement (NAFTA). There were not any tariffs on goods traded between those three countries. KFC had a good chance to development because of NAFTA.
Mexico was a big market in Latin American for KFC. It had 98 million people and the transportation casts was low resulted in Mexico was near US. Also the wages in Mexico was lower than the US’s. In US the higher divorce rate was seen by the government. More and more individuals often ate out and mostly married women chose to ate outside because they had careers. The demographic changes created a good economic environment to expand the fast-food chain.
In 1990 Mexico acted a new law. The new law protected the technology transferred. The taxes about technology assistance were increased to 35%. During that time KFC built rapidly many franchised restaurants..
Franchising and Licensing
Licensing is a licensor grants a licensee right to in tangible property to use in a specified area for a specified period of time in exchange for a fee. Franchising is a specialized...