KFC is one of the most successful fast-food restaurant chains, and the company specializes on

fried chicken. Colonel Sanders was the founder of KFC, which was founded by Harland Sanders.
Furthermore, KFC was one of the first fast-food restaurant chains to expand worldwide, with
locations in Beijing, China, opening in November 1987. (KFC Website, 2013). The fact that KFC
was the first Western fast-food company in China makes satisfying the Chinese market extremely
difficult. Most franchise businesses' global expansion strategies involve trying to market the same
products or services. KFC, on the other hand, does not take a one-size-fits-all strategy.

Location decisions are extremely important for all services because they have a significant impact
on customer visits and consequently the long-term profit of the company. Due to this reason, KFC
China had spent plenty of time selecting strategic locations. According to them, the regional
location strategies would decide how many outlets should be opened in one particular area and not
the area to be penetrated. With the consideration of all the factors that determine the location
decision on the city level, KFC China is able to choose the most valuable locations thus, grabbing
as many potential customers as possible. We used Factor rating method here, which is very
sensitive method cause if you changed the score slightly the result will hugely be affected.

Which city to start in China?

Region Community Decision

Key Success Factors:
1. Corporate desires
2. Attractiveness of region
3. Labor availability of utilities
5. Environmental regulations
6. Government incentives and fiscal policies
7. Proximity to both customer and suppliers
8. Land construction
Factor-Rating Method:

Key success Factors Weight Shanghai Score Guangzhou Score Beijing Score
Proximity suppliers/ .25 KFC has good relations 90 Little difficulty to 30 Several poultry 85
Supply of chicken with Chia Tai Group–the find an adequate producers
largest poultry supplier supplier
in Shanghai. Has ample
supply of quality
chickens
22.5 7.5 21.25
Attractiveness to tourists .10 Home of a large variety 70 Frequented by 30 Known for various 80
of Western hotels, Western tourist spots such
business facilities and businesspeople as Forbidden City,
tourists. and tourists who Summer Palace
Noise and pollution visited on one-day and Great Wall.
discourage tourists excursions from
Hong Kong.
7 3 8
Corporate desires/ Future .15 Has potential to facilitate 70 Has potential to 60 Has potential to 80
expansion future expansion being a facilitate future facilitate future
business district. expansion expansion being
one of the largest
cities.
10.5 9 12
Government incentives .20 One of the self- 30 Has greater 80 One of the self- 20
and fiscal administered autonomy in administered
policies/Government municipalities approving foreign municipalities
control investment High profile
projects, reducing operations
tax rates and heightened the
encourage possibility of
technological government
development. interference.
6 16 4
Demographics/ Proximity .17 Largest city in China 80 0 Second most 75
to customer Highest population with populous city with
11 million people 9 million citizens
Educational
capital of China
13.6 0 12.75
Industrial Orientation .12 Most prosperous 65 One of 14 special 75 Political and 80
business center– coastal cities as cultural center of
accounts for preferential China.
approximately 11% of treatment centers Has subway,
China's total industrial for foreign freeway system
output and 17% of the investment and international
country's exports airport.
Contains three of the
four Special Economic
Zones
7.8 9 9.6
Total: 1.0 67.4 44.5 67.6
Factor Rating conclusion:
Beijing is the best location to put the first store of KFC in China since it is the highest weighted
score according to the method we used.
Beijing would be able to provide KFC with the profile necessary to facilitate eventual national
market penetration. As to the proximity for its raw materials, several poultry producers are
just outside the city of Beijing. Also, the advanced infrastructure of Beijing would highly
complement to the operational need for expansion of KFC in China.

Recommendation: Even though there are no ports available inside Beijing, the adjacent city of
Tianjin has one. Furthermore, with the right advertisement and marketing strategy, western fast
food can be properly introduced in China and can replicate the success of the operations in
Hongkong. Moreover, as long as KFC maintains a harmonious relationship with the government,
I don’t think government will interfere for the sake of politics. After all, they welcome foreign
investors warmly. Finally, KFC should take advantage the large population, popularity among
tourists and readily available chicken Beijing has to offer. Beijing also offers a lot of competent
managers that are well versed with the market since it is the educational center of China.
In conclusion, even though the expansion in China is riddled with high political risks paired with
cultural unfamiliarity, I believe that operating in China is a good move for KFC. If strategized
right, KFC’s expansion will yield high profit repatriation which equates to maximization of
shareholders’ wealth. After all, “high risks yield high rewards”.
Plan B: In this situation, because Shanghai's weighted score is so close to Beijing's, it could be a
perfect place for KFC to expand and expand in the future.
 A) Chart layout:

A B E
F G H

C D

B) Cycle time:
Production time available/Units required= 8hr*60(min/hr)/40units= 480/40= 12min

Number of workstations:

Minimum number of workstations=

= 38 min/12(min/cycle)= 3.17 station round it up to 4 stations.