An Evaluation of KFCs Worldwide Strategy

International Business Strategy MN50452 Dr. Elena Novelli

Saloni Sheth Siddhi Kanakia Anupi Chiniwala Jack Barrett Charlie ONeill Shuai Yuan Sren Brns-Poulsen

Agenda
Introduction Strategies used Worldwide Effectiveness Finger Lickin Good? Recommendations Conclusion

Introduction
Founded in 1952 in Kentucky, USA Grown to over 15,000 KFC outlets in 105 countries and territories around the world USA
Highly standardised menu Rapidly losing its market share (York, 2010)

Introduction to Strategies
International Less need for local adaptation Low market pressure Global Homogeneous products Competitive market Multinational Merging of local culture Highly decentralised Transnational Ideal Strategy for global markets Global scale efficiency Multinational flexibility

Bartlett and Ghoshal (2006)

1. Strategies
Forces to global standardisation & cost reduction
HIGH GLOBAL Europe

Bartlett and Ghoshal (2006) TRANSNATIONAL China India

Latin America Africa LOW INTERNATIONAL LOW MULTINATIONAL HIGH

Forces of differentiation & local responsiveness

2. Finger Lickin Good?

STRATEGY Multinational COUNTRY Latin America RESULT REASON Economical pricing Customised menu

Global

Europe

Standardised approach Unexploited European market due to high barriers to entry

Invested in segmented marketing Differentiated product offering Compliance to norms and policies Decentralised organizational structure Customised product offering

Multinational

Africa

Transnational

China

Transnational

India

Standardisation of menu Poor quality of products

3. We Recommend
COUNTRY Latin America Europe RISK Dynamic market growth Primary competitors have adapted to local tastes RECOMMENDATION Invest in a growing economy Set up more production units Provide resources to localise menus in separate markets

Africa

Ineffective supply chain Poor supporting infrastructure

Macroeconomic Competitive Resource Majority of the market share is owned by McDonalds

Limited recommendations

China

Low pricing should be maintained despite inflation Use self-service machines Delegate greater authority to local managers Introduce more vegetarian options

India

Conclusion
KFCs main success has been attributed to their international operations in emerging markets like China, Latin America and Africa, where they have attempted to customise their menu in accordance with local tastes and preferences. Overall recommendation for KFC: Localise their menu Provide healthier alternatives Ensure high quality by controlling suppliers Empower local managers

References

Bartlett, C. A., and Ghoshal, S., 1988. Organizing for worldwide effectiveness: The transnational solution. [journal]. Developing Transnational Strategies, chapter 3, pg. 194. BBC News., 2012. KFC restaurant shut in India after worm complaint. [online] Available at: <http://www.bbc.co.uk/news/world-asia-india-19893520> [Accessed 12 October 2012] Bell, D., and Shelman, L., 2011. KFC's radical approach to China. [journal] Harvard Business Review. 11 (2) pg. 137-142. Euromonitor International., 2012. Fast food in Venezuela. [online] Available at: <http://www.euromonitor.com/fast-food-in-venezuela/report> [Accessed 11 October 2012] Interbrand., 2012. Best Global Brands 2012. [online] Available at: <http://www.interbrand.com/en/bestglobal-brands/2012/Best-Global-Brands-2012-Brand-View.aspx> [Accessed 12 October 2012] NYT.,1994. KFC Tries for a Turnaround in Chile. [online] Available at: <http://www.nytimes.com/1994/12/27/business/kfc-tries-for-a-turnaround-inchile.html?pagewanted=all&src=pm> [Accessed 11 October 2012] Webber, H., 1998. Divide and Conquer: Target Your Customers Through Market Segmentation . Canada: John Wiley & Sons, Inc. York, E.B., 2010. KFC's Stunts Make Nightly News but Don't Stop Sales Slide . Advertising Age [online] Available at: <http://adage.com/article/news/fast-food-kfc-s-stunts-stop-sales-slide/143359/> [Accessed 11 October 2012]

Any Questions?