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1. Introduction: Company’s history and types of international business activities 2. External environment and type of international strategy (joint venture) 3. Implementing joint ventures and the advantages and disadvantages of this method 4. Organization’s corporate, business and functional level strategies 5. Culture and political environment 6. SWOT analysis 7. The 4 ps of KFC 8. References
HISTORY OF KFC Kentucky Fried Chicken, usually known as KFC, is a chain of fast food restaurants based in Louisville, Kentucky. KFC was a wholly owned subsidiary of Tricon from 19972002, and has been a wholly owned subsidiary of Yum! Brands since 2002. The chain also advertises itself as Poulet Frit du Kentucky or PFK in the province of Quebec in Canada. KFC primarily sells chicken in form of pieces, wraps, salads and burgers. While its primary focus is fried chicken KFC also offers a line of roasted chicken products, sides and desserts. Outside of North America, KFC offers beef based products such as burgers or kebabs, pork based products such as ribs and other regional fare. The popularity and novelty of KFC has led to the general formula of the fried chicken fastfood restaurant being copied by restaurant owners worldwide. The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952, though the idea of KFC's fried chicken actually goes back to 1930. The company adopted the abbreviated form of its name, KFC, in 1991. Starting in April 2007, the company began using its original appellation of Kentucky Fried Chicken again for its signage, packaging and advertisements in the United States as part of a new corporate re-branding program; newer and remodeled restaurants will have the new logo and name while older stores will continue to use the 1980s signage. Additionally, the company continues to use the abbreviation KFC freely in its advertising. Internationally the company is still known as KFC. Born and raised in Henryville, Indiana, Sanders passed through several professions in his lifetime. Sanders first served his fried chicken in 1930 in the midst of the Great Depression at a gas station he owned in North Corbin, Kentucky. The dining area was named "Sanders Court & Café" and was so successful that in 1936 Kentucky Governor Ruby Laffoon granted Sanders the title of honorary Kentucky Colonel, in recognition of
his contribution to the state's cuisine. The following year Sanders expanded his restaurant to 142 seats, and added a motel he bought across the street. When Sanders prepared his chicken in his original restaurant in North Corbin, he prepared the chicken in an iron skillet, which took about 30 minutes to do, too long for a restaurant operation. In 1939, Sanders altered the cooking process for his fried chicken to use a pressure fryer, resulting in a greatly reduced cooking time comparable to that of deep frying. In 1940 Sanders devised what came to be known as his Original Recipe. The Sanders Court & Café generally served travelers, often those headed to Florida, so when the route planned in the 1950s for what would become Interstate 75 bypassed Corbin, he sold his properties and traveled the U.S. to sell his chicken to restaurant owners. Sanders entered into franchise agreements paying him five cents for each piece of chicken sold. The first to take him up on the offer was Pete Harman in South Salt Lake, Utah; together, they opened the first "Kentucky Fried Chicken" outlet in 1952. By the early 1960s Kentucky Fried Chicken was sold in over 600 franchised outlets in both the United States and Canada. One of the longest-lived franchisees of the older Col. Sanders' chicken concept, as opposed to the KFC chain, was the Kenny Kings chain. The company owned many Northern Ohio diner-style restaurants, the last of which closed in 2004. Sanders sold the entire KFC franchising operation in 1964 for $2 million USD  Since that time, the chain has been sold three more times, most recently to PepsiCo, which made it part of its Tricon Global Restaurants division, which in turn was spun off in 1997, and has now been renamed to Yum! Brands. Additionally, Colonel Sanders' nephew, Lee Cummings, took his own Kentucky Fried Chicken franchises (and a chicken recipe of his own) and converted them to his own "spin-off" restaurant chain, Lee's Famous Recipe Chicken. Today, some of the older KFC restaurants have become famous in their own right. One such restaurant is located in Marietta, Georgia. This store is notable for a 56-foot (17 m) tall sign that looks like a chicken. The sign, known locally as the Big Chicken, was built for an earlier fast-food restaurant on the site called Johnny Reb's Chick, Chuck and Shake. It is often used as a travel reference point in the Atlanta area by locals and pilots.
The original handwritten recipe, along with vials containing samples of each of 11 herbs and spices, is kept locked away at the KFC corporate headquarters in Louisville, Kentucky. Only 2 executives have access to it and to maintain security, the company uses multiple suppliers each providing only a portion of the final ingredients. Products Packaging The famous paper bucket that KFC uses for its larger sized orders of chicken and has come to signify the company was originally created by Wendy's restaurants founder Dave Thomas. Thomas was originally a franchisee of the original Kentucky Fried Chicken and operated several outlets in the Columbus, Ohio area. His reasoning behind using the paper packaging was that it helped keep the chicken crispy by wicking away excess moisture. The rotating bucket sign was designed by Leonard Goldstein to advertise the availability of Kentucky Fried Chicken at his Lendy's Restaurants in Roanoke and Salem, VA. The signs first appeared in 1961, a year before Dave Thomas took over 4 Kentucky Fried Chicken stores in Columbus, OH. Menu items This is a list of menu items sold at KFC. Chicken
KFC's Original Recipe fried chicken and French fries
• KFC has two lines of sandwiches: its "regular" chicken sandwiches and its Snackers line. corn. The Snackers line are value priced items that consist of chicken strips and various toppings. tomato. including several types of barbecue sauces and buffalo sauce. cheese. The bowl had been available at KFC's special test market store in Louisville since the third quarter of 2005. which include a slice of cheese and a hash brown. KFC introduced its variation on Shepherd's pie called the Famous Bowl. • The KFC Twister is a wrap that consists of either chicken strips or roasted chicken. Shish kebab . nuggets and popcorn chicken. In the second quarter of 2006. • Several pies have been made available from KFC. In the UK the main sandwiches are chicken fillet burger (a chicken breast fillet coated in an original-recipe coating with salad garnish and mayonnaise) and a Zinger Burger (as with the former but with a spicier coating and salsa). gravy and vegetables. • Other products . KFC's primary product is pressure-fried pieces of chicken made with one of two types of breading: original recipe or extra crispy.• KFC's specialty is fried chicken served in various forms. chopped chicken in a sauce or fried chicken strips. popcorn chicken. The Pot Pie is a savory pie made with chicken. The regular sandwiches are served on either a sesame seed or corn dusted roll and are made from either whole breast fillets (fried or roasted). and a biscuit. it is layered with mashed potatoes or rice. Served in a plastic bowl. gravy.in several markets KFC sells kebabs. wings. • A variety of smaller finger food products are available at KFC including chicken strips. Both of these are available as "tower" variants. They also offer potato wedges. lettuce and (pepper) mayonnaise wrapped in a tortilla. These products can be ordered plain or with various sauces.
S. Chocolate Crème (once called the Colonel's Little Fudge Bucket). bacon and pineapple can be added upon request.Coleslaw • In some international locations. pork ribs or fish. tomato. and BLT salads (in the US). house. Lemon Crème and Strawberry Shortcake are available at most locations in the US. The Fish Snacker consists of a rectangular patty of Alaskan Pollock on a small bun. • Three types of salads (which can be topped with roasted or fried chicken) are available at KFC: Caesar."Little Bucket Parfaits" in varieties such as Fudge Brownie. In the U. "Variety Bucket": This has chicken. lettuce and mayonnaise in a burger bun. two sides. KFC began offering the Fish Snacker sandwich during Lent in 2006. biscuit. french fries and mashed . The Bonus Banquet Zinger Burger — A regular sized burger which regularly consists of a boneless fillet of hot and spicy chicken. KFC may sell hamburgers. various potato-based items (including potato wedges. Cheese. • • • Parfait desserts . • Sides • Other than fried chicken. popcorn chicken. many KFC restaurants serve side dishes like coleslaw. Barbecue sauce can also replace/join the mayonnaise.. and is the fifth KFC menu item in the Snacker category.  • Sara Lee Desserts — Available in either Cookies and Cream Cheesecake or Choc Caramel Mousse.
except ETC was prepared using chicken that had been soaking for at least a day in special marinade. For a time. steamed vegetables and corn on the cob. Purportedly made from a "lost" Col. it was sold as a whole roaster or a half bird. • Kentucky Nuggets were a chicken nugget product available at KFC until 1996. baked beans. only in Australia. There is some speculation that the marinade may have been made with trans-fats. the filler was a nine inch (22cm) sub available in four different varieties from November 2007-Mid January 2008.Chicken much like the Extra Crispy served today. . In the summer of 2007. similar to White Castle's mini chicken sandwich. and a healthier mindset of the general public avoiding fried food. • Tender Roast Chicken — This product was an off-shoot of 'The Colonel's Rotisserie Gold'. and KFC boasts to no longer use trans-fats in their chicken. • Chicken Little sandwich — a value oriented sandwich that sold for $0. Instead of whole and half birds. The chicken was dipped in chipotle sauce then doubled breaded and fried. It was a small chicken patty with mayonnaise on a small roll. biscuits. • • Smokey Chipotle — Introduced in April 2008.S. customers could request chicken "original". Sanders recipe. Discontinued products • The Colonel's Rotisserie Gold — This product was introduced in the 1990s as a response to the Boston Market chain's roasted chicken products. No reason has been given for their discontinuation. or "Tender Roast". macaroni and cheese.  • Extra Tasty Crispy (ETC) . customers were given quarter roasted chicken pieces. Fillers — A promotional item for a Cricket team. rice.39(USD) in the U.potatoes with gravy). "Extra Tasty Crispy". It has been discontinued since August 2008. KFC started marketing the chicken just as "Extra Crispy" without the marinade. during the late 1980s and early 1990s.
In October 2006. The Center for Science in the Public Interest (CSPI) filed a court case against KFC. anyone can. however. Trans fat-free soybean oil was introduced in all KFC restaurants in the U. which increases the risk of heart disease.S. and mashed potatoes would still contain trans fat. KFC announced that it would begin frying its chicken in trans fat-free oil." CSPI Executive Director Michael Jacobson said in a statement.Nutritional value KFC formerly used partially hydrogenated oil in its fried foods. with the aim of making it use other types of oils or make sure customers know about trans fat content immediately before they buy food. This variation was used beginning in 1999. CSPI announced that it would immediately drop its lawsuit against KFC and was hopeful that this would create a ripple effect on other restaurants or fast food chains that prepare food rich in trans fat. which deep-fries almost everything. Advertising KFC's logo used from 1991 until November 2006. This would also apply to their potato wedges and other fried foods. the biscuits. This oil contains relatively high levels of trans fat. Early television advertisements for KFC regularly featured Colonel Sanders licking his fingers and talking to the viewer about his secret recipe and the importance of a family . macaroni and cheese. "If KFC. can get the artificial trans fat out of its frying oil. by 30 April 2007.
with such drivers as Darrell Waltrip. the current KFC campaign revolves mostly around customers enjoying the food. this angle was quite common through the 1980s and up until the early-mid 1990s. He would often start out saying "The Colonel here!" and moved across the screen with a cane in hand. claymation ads. KFC ads began featuring an animated version of "the Colonel" voiced by Randy Quaid with a lively and enthusiastic attitude. It also features a . In the 80s. mentioning prolonged freezing and other negative aspects. The Colonel was often shown dancing. Still using a humorous slant. KFC was an associate sponsor for Junior Johnson's NASCAR Winston Cup Series cars. Despite his death in 1980. TV ads also featured Foghorn Leghorn advising Henery Hawk to visit the restaurant for better chicken. and Terry Labonte. A co-branded Long John Silvers and KFC By the late 1990s. In reference to these ads. Neil Bonnett. In 1997 KFC briefly re-entered the NASCAR Winston Cup Series as sponsor of the #26 Darrell Waltrip Motorsports Chevrolet with driver Rich Bickle at the Brickyard 400. Throughout the mid 1980s. the stylized likeness of Colonel Sanders as the KFC logo had been modified.joining one another for a meal. William Shatner shouted "The Colonel is breakdancing! Give me a break!" in the song "I Can't Get Behind That" The animated Colonel is uncommon today. These most often featured a cartoon-like chicken illustrating the poor food quality of competing food chains. KFC called on Will Vinton Studios to produce a series of humorous. singing. and knocking on the TV screen as he spoke to the viewer about the product.
KFC claimed to have made the first logo visible from outer space. the original. The commercial then shows the lead singer at a KFC eating the "wicked crunch box meal" and saying "Oh man that is hot". Nevada." The logo was built from 65. Pizza Hut. offering a single menu with food items from both restaurants. or A&W Restaurants.000 one-footsquare tiles.500 square feet (8.130 m2). In 2006. Long John Silvers. Taco Bell. non-acronymic Kentucky Fried Chicken name was resurrected and began to reappear on company marketing literature and food packaging. though the restaurant actually hails from Kentucky. the lead singer then swallows fire. Many KFC locations are co-located with one or more of Yum! Brands restaurants. and was placed in the Mojave Desert near Rachel. The commercial features a fictional black metal band called "Hellvetica" performing live. Sanders perfects the secret . The logo measured a record-breaking 87. and it took six days on site to construct in early November.000-plus KFC restaurants in over 80 countries over the next few years. The resurrected Kentucky Fried Chicken logo One of KFC's latest advertisements is a commercial advertising its "wicked crunch box meal". In 2007. KFC says "[It] marked the official debut of a massive global re-image campaign that will contemporize 14. as well as some restaurant signage Brief history of kfc 1939 Colonel Harland D. Many of these locations behave like a single restaurant. though Readymix has had one since 1965.modified version of Lynyrd Skynyrd's "Sweet Home Alabama" as the theme song for practically all its commercials.
Utah becomes the first Kentucky Fried Chicken franchisee. and Jack Massey for $2 Million. Kentucky. He signs his first international franchisee in Canada. 1980 Colonel Sanders dies and is buried in . 1971 Heublein Inc.blend of 11 Herbs & Spices in Corbin. 1964 KFC sold to a group of investors including John Y. Kentucky restaurant and goes on the road to enlist more franchisees. 1969 KFC listed on the New York Stock Exchange. Colonel Sanders buys first 100 shares. Brown Jr. acquires KFC. 1952 Pete Harman in Salt Lake City. 1956 Colonel Sanders sells Corbin.
J.) 1986 PepsiCo. 1991 A new logo is introduced to emphasize chicken variety. Inc. in Shanghai.000th KFC restaurant in the world. Reynolds Industries. Inc.Louisville’s Cave Hill Cemetery. becomes KFC’s parent when Heublein Inc. Inc. acquires KFC Corporation for $840 Million. replacing ‘Kentucky Fried Chicken’ with ‘KFC’ 1994 KFC officially opens its 9. 1982 R. . China. is acquired by RJR (now RJR Nabisco. Grand Opening of Colonel Sanders Technical Center in Louisville. 1987 KFC opens world’s first Western-style quick service restaurant in China. Kentucky.
Taco Bell.1995 KFC introduces Colonel’s Crispy Strips® and smashes Guinness record with ‘World’s Largest Pot Pie’ in New York City to introduce Chunky Chicken Pot Pie. KFC restaurants now in 82 countries around the world. 1996 KFC brings back one of the world’s most recognized packages. and Pizza Hut restaurants to form Tricon Global Restaurants. Tricon goes public. on October 7th. spins off domestic & international KFC. 1997 PepsiCo. Inc. Inc. (NYSE: YUM) 1998 KFC introduces new Colonel logo in signage & packaging. Reintroduces wildly popular Popcorn Chicken. new animated Colonel advertising campaign. the bucket of chicken. 2005 KFC NZ and AUS introduce "Cant Beat That . KFC opens first restaurant in Moscow. KFC introduces high spirited.
"Cheryl has done a marvelous job. the year-old ad campaign featuring former "Seinfeld" co-star Jason Alexander. Neal. In addition. -. and more resources on menu innovation--as providing momentum for further improvements. and . improving the quality of its food. is modernizing its restaurants. exterior design upgrades." said John R. Yet franchisees say it is difficult to pinpoint one magic bullet as the key sales driver at their restaurants. the company brought Bachelder onboard in February 2001 as the chain's leader. Instead. franchisees cite ongoing initiatives--like a move to plated meals. which sold its first franchise in 1952. is putting a fresh look on a seasoned fast-food brand. who kicked off a major makeover when she joined the chicken chain more than 18 months ago. Tenn. Previously she was the top marketing executive at Domino's Pizza. and the popularity of Popcorn Chicken. Driving sales LOUISVILLE.Taste" campaign at the same time as refurbishing our stores. such as operational enhancements. increased spending on national television commercials. "She has brought in some good people and a lot of good ideas. a 140-unit KFC franchisee based in Columbia. and focusing more on marketing--strategies that so far have pleased operators by driving sales over the past year. they point to several different tactics.KFC president Cheryl Bachelder. After KEC suffered from declining sales Irends in 2000. KY. KFC.
He is in charge of keeping us abreast of menu trends and how they apply to KFC's product. Hungry for menu innovation.254 company restaurants in the U. "We haven't seen any results yet in our stores. Bachelder described Law as "the liaison between marketing and product development. The chain has 4. I call him the inspiration behind food development. Neal said his KFC stores have generated 55 straight weeks of positive comparablerestaurant sales.S. "We need to make sandwiches work. which is unprecedented in his company's 32-year history. Right now the Twister is carrying the load." the operator said. which is a division of Yum! Brands Inc. The franchisee. several franchisees said business remained strong at their restaurants. an entree salad. we have had an historic year that started last August with a tremendous increase in same-store sales." said a long-time multi-unit KEC franchisee who has worked closely with the Louisville-based franchisor. like Burger King's Chicken Whopper and McDonald's limited-time Chicken Flatbread Sandwich. ended 2001 with positive sales momentum and has posted same-store sales increases in the first two quarters of this year.. KFC hired R&D veteran Johnny Law earlier this year from his post as corporate research and development chef for the Chili's Grill and Bar chain of Dallasbased Brinker International. and other healthier options "to compete against the growing fast-casual segment." He added that KFC is "sampling with a new flavor of crispy chicken" and improved mashed potatoes but declined to provide details. Bachelder admitted the competition continues to grow as burger chains promote more chicken products." KFC." . and he heads that up. We have established a culinary function. "We still need a value menu.consequently. who requested anonymity. said he would like KFC to develop a baked on-the-bone chicken product." Franchisees said they are hopeful Law will help create product news for the chain.166 franchised and 1. While sales at KFC's corporate stores were soft in July. but I'm sure there are more things in the pipeline.
Although KFC rolled out a line of chicken sandwiches about two years ago. "to create a focal point for customers from a long distance" in almost half of its stores with plans to debut the look system-wide in three to five years. which "could become a permanent menu item if the demand continues.S. KFC reintroduced Popcorn Chicken--a former limited-time offering more than five years ago--and has promoted it several times since on national television. according to Bachelder." Bachelder said. .S. has improved the quality of the food. KFC's 700 U. Bachelder admitted." which requires operators to cook smaller batches of chicken and other core menu items more often throughout the day. "The Twister consists of two fried chicken breast strips wrapped in a tortilla with shredded lettuce." In October." Bachelder said KFC would roll out plated-meal packaging--which involves the use of plastic plates with divided sections instead of foam cups and paper boxes--to all U. said he expects operators to keep contributions at 2. tomatoes and mayonnaise. and we now have the weight to compete. "the Twister is by far the strongest seller. Last year KFC rolled out a $200 million ad campaign that features Alexander on a crusade against "boring and bland burgers" with the tag line "There's fast food. Neal. restaurants by year-end." Following the debut of the new ads. Col. "We are a major player in the business. Then there's KFC. called the National Council and Advertising Cooperative. Bachelder said the company is exploring dining room upgrades as well. franchisees will vote on national advertising spending for 2003.5 percent of sales--a figure that increased from 2 percent in 2000. Harland Sanders. She said the chain's advertising helped boost sales of the product. KFC has incorporated an updated exterior design that features a larger image of its icon and founder. She added that the back-of-the-house program dubbed "Hot and Fresh. the vice chairman of the chain's marketing committee. "We are now spending at a level that is very comparable to Wendy's.
acquired KFC. Reasons for going overseas Companies moves beyond domestic markets into international markets for the following reasons: *Potential demand in foreign market *Saturation of domestic markets *Follow domestic customers that go abroad .600 units in 55 countries and territories. KFC operators said. By the time KFC was acquired by PepsiCo in 1986." Bachelder said. "The chain of events for KFC is that we have taken what we are good at-and that is the quality of the food--and have made it central to every way we present ourselves to our customers. In 1971. y 1964. Kentucky by Colonel Harland D. Heublein. Taco Bell and KFC) into a new company called Tricon Global Restaurants. the Colonel decided to sell the business to two Louisville businessmen. in 1997 PepsiCo spun off its restaurant businesses (Pizza Hut." Bachelder said she is looking to create a "fresh and contemporary" concept at KFC. In 1977 a "back-to-the-basics" strategy was successfully implemented. soon after.Going forward. conflicts erupted between the Colonel (which was working as a public relations and goodwill ambassador) and Heublein management over quality control issues and restaurant cleanliness. "Pete" Harman as the operator." External environment of KFC Introduction KFC operates in 74 countries and territories throughout the world. which opened its first franchised restaurant 50 years ago in Salt Lake City with Leon W. Sanders. Due to strategic reasons. Inc. which now owns A&W and Long John Silvers in addition to its core Pizza Hut and Taco Bell chains. they expect to open more multi-branded units. an endeavor that has become a major push at Yum. In 1966 they took KFC public and the company was listed on the New York Stock Exchange. She added. It was founded in Corbin. In the past a majority of our multibrands have been with Taco Bell. "But I think we will do more with A&W and Long John Silver's in the future. Inc. it had grown to approximately 6.
With high levels of resource commitment and little country-level flexibility and . Hewlett-Packard and Intel Organization structures for International Markets (Modes of Entry) *The mode of entry affects a company's entire marketing mix Exporting *Export merchant (Indirect) *Export agent (Direct) *Company sales branches Contracting *Licensing *Franchising *Contract manufacturing Direct Investment *Joint venture *Strategic alliance *Wholly owned subsidiaries Criteria for selecting a mode of entry 1. Due to China's strict foreign investment laws such a strategy is not feasible. on the expense of cultural sensitivity and control.Company's marketing objectives: . In addition. which is emphasizing standardization and reducing financial risk. KFC will be pioneering in the fast-food field and thus needs to be highly sensitive to cultural demands. often encouraged by government and spurred by the efforts of a few firms.Product quality requirements 5. KFC encountered problems with aligning corporate planning with franchisee's short-term focus on profitability. develops a technological advantage over the rest of the world.some countries possess unique natural or human resources that give them an edge when it comes to producing particular products.Learning curve requirements 8. This factor. for example.Control needs Mode(s) of entry for KFC *Franchising/Licensing *wholly owned subsidiary *Joint venture Firstly. *Technological advantage .Government encouragement or restrictions 4. For example.Human resources requirements 6. KFC's traditional franchising strategy.time scale (long/short term) . It also involves high investment expenses with no financial risk sharing.*Bandwagon effect *Comparative advantage . and the ability of developing countries in Asia with low wage rates to compete successfully in products assembled by hand.production volume . the United Sates dominated the computer industry for many years because of technology developed by companies such as IBM.In one country a particular industry. A wholly owned subsidiary represents the second option. In the past.coverage of market segaments 2. explains South Africa's dominance in diamonds.Company's size 3.Risks: political or economic 9. Such a strategy relies upon total control over competitive advantages and ensures complete operational and strategic control.Market information feedback 7.
Such an international business strategy will attempt to. Recommended market entry strategy: joint venture The essence of a joint venture is the synergy effect of two different entities merging. ease the access to the Chinese market. KFC. provide excellent distribution channels and have personal network access to government officials. on the other hand. well established. The potential joint-venture partner should be large.responsiveness. It is recommended that a partner is found by backwards integration. local business customs and laws can be quicker understood and established ways to cut bureaucratic red-tape can be further utilized. knowledge. It should also have modern equipment and a good management record. For instance. language and geography is . this option is not recommended. A joint venture will also significantly ease the entry to the virgin Chinese market. Also. In order to ensure total commitment and balance of power between the two partners. the local partner can learn from KFC how to produce a better product at a lower cost and further expand on its new competitive positioning. a 55/45 joint venture. By building on each partner's core competencies. A new entrant would find it very difficulty to form local and personal networks between businesses and government agencies. the local knowledge of culture. a mutually beneficial synergy effect could be achieved as a result of joint venture activities. In addition. it is a good domestic poultry supplier. In other words. and efficiencies. share risk with a local entity. In addition. and finally serve as a sign of commitment to the host government increasing goodwill. a potential partner with sufficient contacts/networks with government agency officials may smoothen the process of setting-up operations in the nation. with KFC as the dominant partner should be set-up. which are crucial to success and provide access to the local market and domestic suppliers. can maintain quality supply which is detrimental to its success. due to the complexity of many barriers to entry into China. solve many logistic problems such as access to good quality chicken and other supplies.
personnel and other institutions in the value chain can reduce learning and experience curves. KFC's operations may also inspire local competitors to increase service and quality of food. collection. . In addition. There is always a risk of domestication measures imposed by the host government. Factors that influence marketing decisions Social and cultural forces *Family *Social customs and behaviour *Education *Language differences Economic environment *Infrastructure *Level of economic development *Competition Political and legal forces *Trade barriers oTariff oImport quota oDumping oLocal-content law oBoycott *Trade agreements oGATT oWTO oEU oNAFTA oAPEC oASEAN Information gathering (Marketing Research) Marketing research . By having a 55/45 joint venture agreement. Maintaining good relations with the host government is a critical success factor as government policy impacts intensely upon business activities. KFC will be able to ensure cost.the systematic and objective identification. often leading to major financial losses for the foreign investor.beneficial for any foreign entrant into a relatively unknown market. a local joint venture partner will share this risk. and dissemination of information that is undertaken to improve decision making related to identifying and solving problems (opportunities) in marketing. by being the dominant partner. It can also help to create a competitive fast-food industry in China as new competitors respond to KFC's ideas. In such a relationship. this risk is potential eliminated. If such an unfavorable situation would arise. but rather show willingness to share. The Chinese government may very well find KFC beneficial to the nation. Moreover. a joint venture agreement commonly produces goodwill and commitment between the host government and the foreign investor. Training the joint venture partner. In order to cope with the significant political risk of investing in China. quality and strategic control measures. as it is the pioneering western fast-food outlet. the foreign investor is not seen as trying to take advantage of the nation for profit purposes. since only 55 percent of operations are domesticated. analysis. KFC has clearly less to loose in such an agreement.
It is indeed.. Lexis/Nexis.time and cost requirements to collect primary data 4. has a broad range of applications and plays a crucial role in the marketing decision-making process.coordination of multicountry research efforts 5. Marketing research plays a significant part in the development of marketing plans because it allows the organization to become less isolated from the key trends and changes.Complexity of research design due to environmental differences 2.Sampling (unit. ambiguous or out of context. . Company conduct and use marketing research to stay competitive and to avoid high costs associated with making poor decisions based on unsound information. Steps in international marketing research: 1. from the researcher that is clear and accurate.define research problem(s) 2. procedure) . personal interview. therefore it may be incomplete.report and present the findings of the study Major research challenges 1. Problems with secondary data research: *Accuracy of data *Age of data *Reliability over time *Comparability of data .collect the data (secondary and primary) 5. size.Contact Methods (mail. It also has to satisfy your pre-determined goal for your research.determine information needs 4. organizations must receive information. valid. phone.triangulate . ACNielsen. reliable.difficulty in establishing comparability across multi-country studies Primary Research The use of: .Functional or conceptual equivalence *Lumping of data *The data may have been collected and manipulated for a specific use.*Focus group *Survey methods for cross-cultural marketing research Questionnaire .develop a research design 3. To continue to be successful. etc.lack and inaccuracy of secondary data 3. and current information to aid marketing decision marking. online survey) *Collecting information Secondary Research Use of : *Secondary data (data which is already available) *Primary data (when information is not useful or not exist) *Secondary data sources: government. The task of marketing research is to assess the information needs and provide management with relevant.analyze the data and interpret the results 6. accurate. FINDEX. which surround their product.
wealth based on minerals).lack of telephones. However using a variety of methods. Also infrastructure may reflect channelled funds. GNP may be understated for political reasons and may not reflect education (i. thus introducing bias. language. a lot of them can be ingeniously . in the UK they are measured on tax receipts plus household surveys and production sources. for example. data analysis difficulties (lack of computer technology) *Infrastructure difficulties . *Many of these facets apply more to developing than developed countries. in Germany consumer expenditures are estimated largely on the basis of turnover tax receipts. availability of data and research services *Many markets are small and do not reflect the cost of obtaining data for such a small potential *Methodological difficulties may be encountered like nuances of language. say for tourism. transport. interpretation. outlined in the section. it only reflects average health per head of population and not how it is dispersed. roads. therefore. As seen earlier.e. respondent locations and. definitional error. *Data may be nonexistent.reluctance to talk to strangers.*Data may be compiled in different ways in different countries making comparability difficult. be treated with care and caution Special problems in international marketing research As well as the difficulties associated with secondary data described earlier.typical of many African countries. inability to talk to women or children. sampling error. trained workers. legal constraints on data collection/transmission. difficulty of fieldwork supervision. unreliable or incomplete thus making inter country comparisons very difficult *Data may be inflated or deflated for political purposes *Data from documented sources must. For example. rather than society as a whole . there are a number of other problems connected with obtaining data in the global context. non response error. bimodalities are normal. Similarly with GNP measures. *Cultural difficulties . These are as follows: *Multiple markets need to be considered each with unique characteristics. social organizations. etc. cheating. *Data may be corrupted by methodological and interpretive problems. section error.
Weaknesses. Let us consider how culture influences the marketing decision. (Fried chicken) The early entry into international markets placed KFC in a strong position to benefit from international expansion. it still has an opportunity in its market. each giving data of a general or specific kind. it is now facing a threat. In larger markets there was a tendency to build company-owned restaurants. due to the fact that they were owned and operated by local entrepreneurs with a deep understanding of local language. Opportunities and Threats. The rationale was that fixed costs could be spread over a large number of restaurants and lower prices on products could be negotiated. The two most important modes of scanning are surveillance and search. Nevertheless. and marketing characteristics. Also. Most of KFC's international expansion was through franchises. it has its own unique skill in fried chicken and it has established a good brand name. it is now under economic crisis. It is because KFC is an leader in fried chicken market. In all decisions whether to obtain data or not. China was one of the international markets KFC focused on. customs. without it the marketer would be planning in the dark. The elements of culture: *Language *Religion *Values *Attitudes *Manners and . Often used as part of the development process for a marketing plan. invaluable to the strategy formulation process. should we first consider the elements contributing to the culture context. Influences in marketing decisions Cultural factors Cultural: the basic beliefs and values cherished by a society as a whole and handed down from one generation to the next. there are mainly two weaknesses for KFC. law. However. costs versus benefits have to be considered carefully SWOT SWOT is a method of analysis which examines a company's Strengths. Before we go into detail. For its strength.overcome *Whilst the gathering of information in the international context is fraught with difficulties. One of them is financial problem and the other one is that KFC concentrates on only one single market. culture. or to feed the results of a marketing audit back into a revised plan According to the analysis. people are more concerned with the healthiness in food and their demand for high quality of food is increasing. Nowadays.
To appreciate people's buying motives. To avoid conflict against home place's religion is very important. In addition. For non-verbal language. consumption and social organization. In numerous Asian countries. it refers to gesture. customs & practices. proper placement & arrangement of a man-made structure & its interior objects will bring good fortune to its residents & visitors. When marketer has little or no understanding of a religion. which are crucial to success and provide access to the local market and domestic suppliers. Religion and Superstition Religion is one of most sensitive elements of a culture. For verbal language. a crucial value distinction is a culture's attitude . local business customs and laws can be quicker understood and established ways to cut bureaucratic red-tape can be further utilized. body position and eye contact. by the ways the words that are spoken. awareness & understanding of their religion is often crucial.Customs *Material culture *Aesthetics *Education *Social Institutions Language Language can be categorized into verbal and non-verbal one. Religion has an impact on international marketing that is seen in a culture's values and attitudes toward entrepreneurship." "right. ancient Chinese philosophy of feng shui (wind-water) plays an important role in design & placement of corporate buildings & retail spaces According to feng shui. it is easy to offend unintentionally. A new entrant would find it very difficulty to form local and personal networks between businesses and government agencies. language and geography is beneficial for any foreign entrant into a relatively unknown market. Values They are enduring moral beliefs shared by members of a society and contributing to its culture and beliefs of what is "good. the local knowledge of culture. messages can be conveyed into words." and appropriate in behaviour Attitudes For marketers. Also.
In South Africa. In some places. For example. goods with American roots are strongly valued .using as a selling point. Take China as an example. Different attitude will determine the ease of entering the market. On the other hand. Also. It is a . people think that as long as KFC can give delicious fried chicken. This arouses a great controversy in many places. the attitude will also determine what kind of industry can enter the host country. the demand and supply of the host country can be known so what the related produnt decision can be made to match the demand of the market. if a place likes having home made food. it can tell if a fast food shop or take away is more suitable. in China.toward change Societies that are resistant to change are usually less willing to adopt new products or production processes Local attitudes toward foreign culture will drive product positioning & design decision. There is not as many problems that has to be faced as in other advanced placed in the world. some people think that the use of GM chicken will have great influence on the food chain which is very crucial to the environmental health and nature development. According to the above data. people there begin to try and accept new and foreign stuff. it does not matter what kind of chicken they are using. Manners and Customs Potential problem areas for marketers arise from an insufficient understanding of: *Different ways of thinking *Necessity of saving face *Knowledge & understanding of the host country *Decision-making process & personal relations *Allocation of time for negotiations When you understand the customs and manners of the host country. the amount of affect or feeling for or against a stimulus. KFC uses GM chicken. Different values will influence if the product can be consumed by the market. For example. like if the selling point has to very verify. It will also determine the marketing segment. you can determine what kind of promotion and organization is best for that country. the people there do not have very strong and clear idea on GM food.
energy. cultural convergence. It is manifested in the availability and adequacy of the basic economic. form. . It will seriously affect how the product is promoted and its design. KFC was able to utilize existing distribution networks serviced by the partner and at the same time. For example. What is and what is not acceptable may very dramatically even in otherwise highly similar markets. Material culture Results from technology and is directly related to the way a society organizes its economic activity. as expressed in the arts and in the particular symbolism of colors. and music. as KFC was able to ensure a stable supply of quality supplies to its operations. The basic economic infrastructure consists of transportation. and marketing infrastructures. the company chose to form a joint venture with a large scale poultry producer with excess capacity. adhere to exiting rules and regulations imposed by the Japanese government on foreign direct investment. This 50/50 joint venture served the two partners very well. Managers must be concerned with differences in the ways products are used. Furthermore. The degree of industrialization can provide a marketing segmentation variable. Moreover. and the local corporation was able increase efficiencies in production by selling its excess supply. social. Aesthetics Each culture makes a clear statement concerning good taste. financial. red which is a main color in its package and logo symbolize wealth and happiness. the original packing might not be as well as accepted in host country. So it can be well accepted by people in China without much difficult in establishing a good image. When KFC first went into the Japanese market in the early 1970's.good opportunity to enter the market at this moment. In China. and communications systems. the packing has been well accepted in the worldwide so it can be easily accepted by the people in China.
social classes. Each institution has an effect on marketing because each influences behavior. & age groups are interpreted differently within every culture. Education Education is one of major vehicles to channel culture from one generation to the next Two facets of education that matter to international marketers include: level & quality of education. values. print ads. and survey research. Education in general affects employee training. competition for labor and product characteristics. Respecting cultural traditions may also generate goodwill toward the international marketer. Social Institutions They refer to the positions of men & women in society. Marketers need to exercise caution such as product labeling. but local tastes may often warrant modifications. group behavior. Education affects employee training. They may have general policy of uniformity in building or office space design. family. The international marketing manager may also have to be prepared to fight obstacles in recruiting a suitable sales force or support personnel. & survey research. & overall patterns of life The fitting of an organizational culture for internal marketing purposes to the larger context of a national culture has to be executed with care. print ads. For KFC in China. They have not rushed into situations but rather built their operations carefully by following the .The international firms have to take into consideration local tastes and concerns in designing their facilities. The internationally successful companies all share an important quality: patience. this helps to balance the supply and demand in the market. As this job does not require a very high education and the general education is not very high yet. it has advantage that it is easy to employ manual labors as there is a large pool of manual workers suitable for it. competition for labor and product characteristics marketers need to exercise caution such as product labeling.
globalization is a fact of life. The major challenge to the international manager is to make sure that rejection is not a result of cultural myopia or even blindness. following the model of Pepsi and McDonald's. you have a series of graph. One is that business is business the world around. To continue to be successful. however. charts and tables. Setting up policies and procedures in each country has been compared to an organ transplant. descriptive and predictive. Instead of raw data. In some cases. It also has to satisfy your pre-determined goal for your research. The other school proposes that companies must tailor business approaches to individual cultures. from the researcher that is clear and accurate. These principles are to know your adversary. Summary Culture is one of the most challenging elements of the international marketplace. diagnostic. Two schools of thought exist in the business world on how to deal with cultural diversity. There are three main types of research. Political/Legal factors Economic factors Appendix Marketing Research Methods Marketing research plays a significant part in the development of marketing plans because it allows the organization to become less isolated from the key trends and changes. know your audience and know your customer. through the analysis of the results. cultural differences are still far from converging. . The results and obtained information must be collated and presented in a form that is easy to understand.we have to live it." Market research identifies issues that have a direct effect on the organization. The most complicated problem in dealing with the cultural environment stem from the fact that we cannot learn culture . customer and the public to the marketer through information. the critical question centers on acceptance or rejection. "Marketing research is the function which links the consumer. which surround their product. organizations must receive information.most basic business principles.
Predictive research is about identifying new opportunities in a market place and calculating the effect of marketing decisions. Usually most research contains particles from both sections. which has been collected. which relate to the product but focuses on the reasons lying behind certain areas. This research cannot be generalized as it deals with complex issues that tend to be unique to the individual. When conducting research. The research data. The reason why you use a sample is because you can't physically research every single person in the country. human emotions. qualitative research and quantitative research. you have to use a sample of your population. When using Qualitative research. can be categorized into two main sections. Descriptive research is fact finding secondary data. in comparison with quantitative . You would use this if the organization were planning to expand or regenerate their product. Qualitative research is when the information is open to broad interpretations. it identifies and analyses their emotions. Sampling is cost and time effective.Diagnostic research is used when you need to analyze the effectiveness of an advertising campaign. for example consumer feeling and motivation. Your sample should consist of people who fit into the research requirements. It is not concerned with finding statistics. The techniques must be on a more personal scale. there are several research techniques that you can use. unless you are the Government and you are conducting a census. Qualitative research is a more flexible approach as it explores customer behavior. You would use this when you planned to sample a section of a target audience for a particular product. This research is usually conducted on small samples because the finding will be divers and full of 'richness'. which are extremely important to the organisation that is commissioning the research because they are anxiously waiting for the results of the research.
The research is through a 'mystery/test shopper'. With a group environment.research. High street clothing companies. as it is collected directly from the respondent. is being observed and recorded. who satisfies the criteria. Examples are surveys. The observer will note the person's body language and behavior and will analyze it in order to understand the problem. A controlled environment would be a room with only the observer and subject present. It is relatively cheap and less time consuming. exchange experiences. Again I have been involved in an observational research campaign. The researcher takes on the role of a customer and rates the staff's performance. Primary data is excellent as it is specifically designed to address the problems identified in the research objectives. Surveys are an excellent form of researching. Group Discussions (Focus Groups) is when six to ten people. It can be quick and accurate in pinpointing the information required because there is no room for distraction. The observer will either be conducting this research in a controlled or noncontrolled environment. The researcher recorded my expressions and feelings towards each . The survey has been carefully designed to address your objectives. The whole discussion is recorded and everyone is informed about the recording. following ethical guidelines. who are recruited according to the pre-determined criteria. Ethics are breached when someone is being recorded against their will or are unaware. interviews and observations. as the research requires that source of information. Respondents either chose an answer or make their own. evaluate and are affectively displayed in several formats. It is a semi controlled environment and a moderator lead the conversation flow. group discussions. Mark and Spencer's and Next all carry out observational research. A non-controlled environment would be a busy street. I was asked to look at several different types and styles of packaging for "Southern Comfort" whiskey. the respondents are less intimidated because they are not alone. such as Arcadia. Most observational research is conducted in controlled environments because fewer ethics are involved. Primary data includes information that is 'first hand'. The results are excellent to interpret. Observational research is when a person. attitudes and beliefs about certain topics.
However secondary information is complicated. most sources are available free of charge to the public. With mail questionnaires you can cover a vast . with their clipboards on most high streets. trade press or association files. and direct to the point.packaging idea. During this hour the researcher is recording your responses and is able to expand on your answers because a rapport has been built up. This type of research can be conducted through the use of telephone interviews. The remaining section from your collected data is quantitative research. The speed of the interview must be fast and last no longer than ten minutes. You have to keep the respondent interested in order to get a response. press articles or report commissioned by independent authorities or watchdogs. from an external body. it may take a long time to get relevant information that you can use. This is an example of low cost research. The majority of the information may not be relevant to your research. This type of research involves a mass collection of measurable information. The sample is then supposed to fill them out and return them to the researcher. This form of research is more common as you see the researcher. Quantitative methods tend to be more impersonal. It involves sending out selfcompletion surveys to a population sample. The process can last up to an hour. Quantitative research also utilizes secondary data sources. face-to-face interviews and mail questionnaires. which is not open to interpretation. When using quantitative research the methods differ from qualitative methods. Individual interviews are another form of research. The types of secondary data sources are information that has already exists. Mail questionnaires are a more popular form of research. Telephone interviews are excellent because the survey 'script' has been designed to combat the issues that the research is trying to find out. Government published data.
amount of your sample. Sweden *Chambers of commerce *Food and Agriculture Organization of the United Nations Conclusion This analysis is focused by exploring. the size of the market . universities. What can make this region attractive to so many companies? First.Geneva (information service) iii) Business. trade. human resources or perceived sources. giving information on markets. There are excellent sources of overseas data. Sources of global information Sources of information include documented sources. Germany *CBI. professional *Chambers of Commerce *Institute of Marketing *American Management Association *The Market Research Society iv) Foreign embassies. prices and produce required for those wishing to sell into Europe. When conducting research I suggest that you use both types of data. With the types of research available. Secondary data will allow you to build up a background and may even hold some relevant information to your research. Examples of these are given below: *International Trade Centre (ITC) Geneva *COLEACP. or Ministry of Commerce ii) International bodies *the UN Statistical Yearbook *World Bank . trade missions *Commercial newspapers *Financial agencies .general statistics *OECD . through different perspectives. Various sources of documented data are available including: i) Governments *Central office of information (UK) *Central Statistical Office (Zimbabwe) *EU documentation centres *Boards of trade.Price Waterhouse *Kompass Register of companies *Economist Intelligence Unit (UK) v) Other *Libraries. I personally believe in qualitative research because there is a greater need to expand and develop your research.it has a . especially in the documented or "secondary" source area. Documented sources In recent years there has been an information explosion. This is useful because it allows your finding to be more accurate and richer in source. as you are able to send out thousands of questionnaires.general statistics *ITC . the pros and cons of KFC investing in China. The only problem is that response rate tends to be low. colleges. Paris *Natural Resource Institute (NRI) UK *GTZ. in the horticultural industry. (Primary data collection will be dealt with later). Netherlands *IMPOD.
6 billion. Third. That way the chance of all loosing or all winning is quite the same KFC SWOT ANALYSIS STRENGHTS 1) Brand equity 2) Second only Mac do in foreign sales 3) Strong cash flows 4) Generate $1billion each year . KFC can follow the competition into the new markets. if McDonald's invest in the risky market X and KFC doesn't. These factors make investment in this market less risky. Second the investment fails. Second. most countries are successfully stabilizing their economies. two situations may happen. in which case KFC gains the advantage from McDonald's misfortune. in which case McDonald's gains the advantage. To playing safe. If the competition is exploring the China market and you aren't.population of more than 1. can't that be risky? For example. most countries are becoming fully functional democracies. companies are not only dependent on their strategy but also on the strategy of their competitors. In a competitive market. First the investment succeeds.
5) Very strong internationally UK. Middle east..ect 6) Strong franchise and license fee revenue for cash flow 7) Interactive relationship marketing 8) Strong trademark recipes 9) Ranks highest among all chicken restaurant for its convenience and menu variety. 10) Largest multibranded in the world with 100 KFC and pizza hut combo`s 600 KFC and taco bell combos OPPORTUNITY 1) Growth of 18-24 age demographic 2) Increase in USA median income 3) International beef scare from mad-cow and hoof and mouth disease .
4) Home meal replacement market will exceed an estimated $577 billion by 2020 5) Targeting growing ethnics market.Hispanic 6) New leadership 7) Domestic market 8) Updating restaurant 9) Balanced menu 10) Customer focus 11)Increase delivery service Weaknesses 1) Recent drop in sales for KFC .Asian American .
supplier and costumer 6) Franchising leads to loss control and quality 7) Lack of focus on research and development THREATS 1) Rated 83 out of 100 in term of competitiveness 2) Increase wage rates directly affect menu prices 3) 85% annual employees turnover for fast.food market 4) Supermarket and new competitors threaten HRM market 5) International exchange rates .2) Failed to rank in growth in 2000 3) Same store sales decline 4) Lack of knowledge about their costumer 5) Lack of relationship building with employees.
g. with French fries Our product is different e. Subash Jain “A product’s position is the place the position occupies in consumers’ minds relative to competing products.6) Health trend away from fried foods 7) Changing customer demands 8) Quality of service focus TARGET MARKET EVERYONE IN HURY OR FEELING BUSY OR LAZY TO PREPARE HOME MEAL. zinger max (low in cholesterol) Listerine (kills germs) Amex Blue credit card (6-month rate of 15. chicken fried .” Philip Kotler Generic Positioning Strategies Our product is unique e.g.9% vs the market rate of 24%) . Positioning Positioning refers to placing a brand in that part of the market where it will have a favorable reception compared to competing brands.
The Council does not have the power to force the issue other than by negotiation.g. chicken Product Positioning Using Perceptual & Preference Maps Marketing managers use a Mapping technique to help them visualize the competitive structure of the market before they develop differentiation and positioning strategies. Our product is similar e.4 at the astroturf pitch .4 at the car park . Example: For KFC. Walsall MBC/POLICE D Elrington December 2007 . the low cholesterol level is the only healthy alternative because it is safe for frequent consumption What we propose to do Install additional litter bins:. the [concept] is [the primary claim] because [it is the single most important factor]. Positioning Statement For [a target segment].2 outside the Leisure centre Carry out a Who will do it? Action When will we do it? Progress Walsall MBC D Elrington Completed KFC have so far not agreed this.
uk/low/english/business. Retrieved 22 April.com/business/management/thompson/11e/case/starbucks-2.com/articles/advantages_and_disadvantages_jv. Adhesive signs are located on lampposts at Oak Park/KFC.number of litter enforcement days in conjunction with the Police More frequent litter picking of the astro-turf pitches to be arranged KFC to consider litterpicking after dark (currently contrary to company policy) KFC P Jeffrey Completed Walsall MBC D Elrington December 2007 which is currently considered to be unlikely. . Business & Company Resource Center.thdo.co.” (April 30.bbc. 2002).htm http://www. “KFC Corp. – Chronology” (April 15. References http://www. Arrangements have been made for hard backed signs to be placed at the entrance.rpemery. “KFC. 2002 on the World Wide Web: http://news6.mhhe. 1998).html BBC News Online: Business.
. International Development.com.hoovers.com. Hoovers.com.com. Retrieved 20 April. Retrieved 22 April.bizjournals. Retrieved 20 April. 2002 on the World Wide Web: http://seattle. Retrieved 22 April. Retrieved 20 April. Retrieved 24 April. “Albertson’s to open KFC c” (November 11. Puget Sound Business Journal.com/lists/bestcompanies. 2002 on the World Wide Web: http://www.bizjournals. 1999).starbucks.Business Wire. 2002 on the World Wide Web: http://www. Retrieved 19 April. Best Companies to Work For. 2002 on the World Wide Web: http://yahoo.com.marketguide. Retrieved 21 April. 2002 on the World Wide Web: http://www.com/annuals. Ratio Comparison for SBUX from Multex.com.KFC. 2000. 2002 on the World Wide Web: http://www.hoovers. KFC Corporation Annual Financials – Hoover’s Online. 2002 on the World Wide Web: http://www.com.com/aboutus/internationaldev. Starbucks Corporation.com. 2002 on the World Wide Web: http://seattle. Fortune. Retrieved 20 April.com/MGI.asp. Puget Sound Business Journal.fortune. 2002 on the World Wide Web: http://www.businesswire.
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