Where, their focus was on streamlining the construction and the permit approval process, by establishing good contacts with local individuals. This would allow KFC to quickly construct a number of different restaurants throughout China. As they would grow, from: just one store in 1987 to opening it 1000th store in 2005. This information is important, because it highlights how the underlying business strategy that KFC would use in China (rapid growth), helped the company to become a major fast food chain in this newly developing market. Where, the faster they would open restaurants, the greater their profits would increase.
The information from this source is useful, in establishing the basic strategy that KFC was using in China. Where, once they had found a business model that would work for this market. They would quickly begin opening a variety of restaurants around the country. As a result, this information can be used in conjunction with other sources, to highlight how the business model was customized to China. Where, the company would figure out how to make the business model work with the first store. Then, once they had determined out how to maximize profits, is when they would begin opening stores as quickly as possible.
Liu, W. 2008, Developing a Structured Approach to Restaurant Growth, KFC in China: Secret Recipe for Success, Wiley, Singapore, pp. 38-40.
In this piece of literature, the author discusses the overall business strategy that was utilized by KFC in China. Where, they would concentrate on establishing a distribution center outside of the major cities. The reason why, is because placing them in close proximity to the various cities, would allow these centers to be resupplied quickly and they would serve as the support center, for all of the stores that would be built within a particular area. At which point, the various restaurants would be constructed in different locations throughout the city. At the same time, the company would focus on establishing restaurants throughout the urban centers in Eastern provinces and then rapidly expanding into other areas. Where, they would follow the same basic formula of establishing distribution centers and then building the different restaurants. This is important, because it shows that the company's basic strategy for expansion into China was to create circles of support in particular areas. As each store would be in close proximity to the distribution centers, creating a network of independent supply chains; that are responsible for resupplying particular locations.
This information is useful, because it highlights the overall strategy that KFC was using to expand in China. As a result, this could be used with some of the previous sources, to highlight how the company's strategy took into account the unique geography of China and then was augmented, with a proven strategy for establishing / resupplying different stores.
Chinese Restaurant Industry Review
Liu, W. 2008, China's Restaurant Industry, KFC in China: Secret Recipe for Success, Wiley, Singapore, pg. 15.
In this source, the author discusses the overall size of China's restaurant industry. Where, it accounted for a total of $100 billion in sales for 2005, as the sector has continued to deliver consistent increases of 45% per year. In the future it is estimated that annual growth rate for the next several years will be 27% per year. This information is important, because it can be used to establish the overall size of the Chinese market and why so many fast food chains are building restaurants throughout the country. As a result, this can be used to ascertain the potential for increasing profitability.
The information that was presented is useful, because it identifies why KFC has been utilizing such an aggressive strategy in China. With executives determined to keep up with these increases, through the opening of a variety of locations around the country. This can be used to with the other sources of information, to provide an overview of the basic strategy that is being used by the company, to fuel growth in China. In many ways, one could take this information and make inferences about possible challenges the company will face in the future. As they must find a way, to be able to keep up with the consistent growth rate, while not over saturating the market. This is the biggest challenge that executives will face, as they need to keep the number of locations in balance, to prudently keep up with the changes.
Parsa, H, 2002, Western Impact on the Chinese Restaurant Industry, Quick Service Restaurants, Franchises and Multi-Unit Chain Management, Routledge, New York pp. 168-170.
In this piece of literature, the author discusses the impact that fast food restaurants are having on the Chinese restaurant industry. Where, they have: brought new levels of quality / taste to China, they have forced Chinese companies to improve their management / marketing and they have brought the franchise system to the country (which can serve as model for the industry in the future). Then, the literature discusses the overall impact that these companies are having on the industry. With them causing, the majority of companies to focus on keeping prices low and maximizing profits through high volume turnover. Next the author discusses what the future of the industry will look like. Where, the establishment of Western fast food restaurants will help to foster the development of a trade association and it will encourage Chinese-based companies to follow a similar model. At which point, Chinese companies will begin to utilize the same kind of strategies that are be used by the major fast food chains. This information is important, because it discusses the impact that these restaurants are having upon the industry. Where, they have helped to redefine the sector, by introducing new quality standards to the China. This has caused the market to focus on delivering products at a low price that can generate high sales volumes. Over the course of time, these standards will help Chinese companies to begin establishing similar operations.
This information is useful, because it highlights the impact that KFC is having upon the restaurant industry in China. As the basic model that they are using, to fuel growth and expansion, is helping to redefine the industry by: increasing quality standards and providing a formula for being successful in the Chinese market. This can be used with the information from the previous source, to establish the impact that KFC is having on China and how the overall growth rate of the industry, is helping to fuel rapid changes for the better.
Historical Context for KFC
Liu, W. 2008, Historical Context, KFC in China: Secret Recipe for Success, Wiley, Singapore, pp. 3-4.
In this source, the author discusses the impact that Western culture has had on China. Where, the country would go through a love -- hate relationship with the West. Part of the reason for this was because of the constant colonization and wars that occurred during the 19th as well as 20th centuries. This would cause some people to view foreigners with suspicion. However, some of the various ideals and philosophies of Western society are embraced by the people such as: the different books, magazines and movies. This would create a clash within Chinese culture, where the people enjoyed certain aspects of Western civilization, but are apprehensive to a certain extent (based upon the conflict / colonization of the past). Then during the period between 1949 and 1978, China would closed off to the West, until economic reforms would be introduced. At which point, the different ideas of the West would be openly explored once again. This information is important, because it can be used to highlight the overall challenges that many restaurants would face, when entering China. Where, they would have favorable views to a certain extent; while having to deal with the negative stereotypes from the past. This was the initial challenge that all restaurants would have to overcome when entering these markets. As a result, this source can be used to corroborate, why many restaurants will often combine American and Chinese themes, as part of their business strategy.
This information is useful, because it can be used to show how KFC would have to change their entire business model when entering the Chinese market. As they wanted to be able to take advantage of the positive perceptions; while, avoiding the negative associations with Western culture and ideas. Once the company figured out how to encompass, both Chinese and American culture into their strategy is when they would be able to redefine the marketplace. As a result, one could use this information to infer that the overall approach used by KFC was: a work in progress, when the first location was opened. Then, as time went by, they perfected their operations, creating a unique brand that is a combination of both…