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Yum! provides visitors with a unique experience which is not dominated by American "young and hip" (Case 7-2), but pays respect to the home country. "A plaque at the entrance of one KFC describes it as "an exchange channel between KFC fast-food culture and Chinese folk culture" (Mellor, W. January 26, 2011. PP. 1). These operational strategies place KFC as the superior brand for fast food dining; "KFC is certainly doing better than McDonald's at becoming more Chinese" (Mellor, W. January 26, 2011. PP. 1).
What Successful Companies have in Common
Without question the success of companies in China depends on adaptation to local Chinese ways of doing business and the intricacies of culture. While not to indicate that Chinese consumers do not want the West, rather they embrace the chance to experience Western culture; Chinese consumers do appreciate and respect those companies which seek to provide connectivity to the Chinese culture and the local flavor to which they are accustomed. Adaptation is the key strategy, how best to continue offering products or services which provide a fusion between Western brands and Chinese culture. A story from KFC illustrates this concept:
Yum's cultural flexibility doesn't end with the localized menu. While fast-food restaurants in the West often host kids' birthday parties, KFCs in Urumqi, capital of the Xinjiang autonomous region that's home to the Muslim Uyghur people, advertise parties for the families of boys who have just undergone the religious ritual of...
(Mellor, W. January 26, 2011. PP. 1).
Companies can learn from Yum! KFC which; "got in early, adapted the product, expanded aggressively and gave their Chinese managers real decision-making power" (Mellor, W. January 26, 2011. PP. 1).
Conclusion
For Yum! Brands their Chinese revenue and store growth is a compelling story.
"David Novak, Yum's chairman and CEO, noted the China business 'continues to fire on all cylinders' (Fontevecchia, a. April 18, 2012. PP. 1). With designs "to eventually have 20,000 outlets in the country" (Case 7-2), Yum! Brands, with KFC as its standard bearer, offer the Chinese consumer a mix of Western flair with traditional Chinese menus and culture. This recipe will continue to pay dividends for Yum! even as new rivals attempt to poach the company's strategy. Going forward the company will focus on harnessing its palpable energy in China to deliver on the synergies between Western and Chinese culture.
References
Case 7-2. KFC China Targeting Through Localization
Fontevecchia, Agustio. (April 18, 2012). Yum! Brands' Profit Jumps 73% in Q1 Despite
China Concerns. Forbes.com. PP. 1. Retrieved May 3, 2012 from http://www.forbes.com/sites/afontevecchia/2012/04/18/yum-brands-protif-jumps-73-in-q1-despite-china-concerns/
Mellor, William. (January 26, 2011). McDonald's No Match for KFC in China as Colonel
Rules Fast Food. Bloomberg.com. PP. 1. Retrieved May 3, 2012 from http://www.bloomberg.com/news/2011-01-26/mcdonald-s-no-match-for-kfc-in-china-where-colonel-sanders-rules-fast-food.html
Many companies in this industry are no longer trying to expand the number of restaurant, but rather focus on other growth strategies, such as international expansion or product innovation. The last strategy is very suitable for the home market. The eating habit trends point to a change in the average American towards a healthier lifestyle. Yum! has a weakness point in this area as its products are not perceived
According to Spring (2002), in 2002, YUM! Brands acquired a&W and Long John Silver's; at that time, the company reported that, "The acquisition allows us to accelerate our multi-branding strategy and...to be expanded international leaders...in chicken, pizza, Mexican and seafood" (quoted in Spring at 203). As noted above, the company's motto is, "Our passion is to put YUM on our customer's faces all over the world," and this marketing approach
S. It is at a stage where it would be considered a cash cow. Yum is feeling out international expansion opportunities for Taco Bell, but there is little possibility that Taco Bell will supplant KFC and Pizza Hut as the key driver of economic growth. Those two firms have stronger product offerings for international markets. The role that Taco Bell plays, providing cash that can fuel global expansion of other
Aspects such as weight reduction, disease reduction, and overall peak performance will be emphasized (Jeffery, 2006). Sponsoring many of Australia's more popular sporting events with the products would also be very beneficial. Placement of these products will occur within all of the Yum! Brands locations. As mentioned above, two strengths of the company are its global positioning in regards to its brand, and its overall depth of franchises (McGinley,
S. market anticipated to deliver between 5 and 7% margin growth over the next five years. Further, the Chinese marketplace is also one marked by lower labor costs and a lack of the stigma associated with working in fast food establishments that exists in the United States and other westernized nations. Looking at Table 2: U.S. Operating Profit Source by Brand for 2004 according to SEC filings (2004) clearly Taco Bell
The final option is the joint venture. There are several benefits to entering the market with a JV. Among them is the local experience that KFC would gain. Their local partner would be able to help them maneuver through the social and political pitfalls that the company may run into. A JV is less risky as well because the risk is shared among the partners. With each partner bringing different