Fighting Chicken

A uniquely American restaurant experience

Written by:

Halie Agan
Victoria Braud
Ian DeLaney
Gilbert Kwimi
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Table of Contents

Executive Summary .......................................................................................................................3

Section One: Background Analysis ..............................................................................................3

Section Two: Global Trade & Investment Considerations ........................................................5

Section Three: Strategy and Market Considerations .................................................................5

Section Four: Marketing Considerations ....................................................................................6

Section Five: Product & Pricing Strategy ...................................................................................8

Section Six: Political & Institutional Considerations .................................................................9

Section Seven: Corporate Social Responsibility........................................................................11

Section Eight: Financial & Economic Considerations .............................................................11

Section Nine: Legal & Regulatory Considerations ...................................................................12

Section Ten: Natural Resources & Environmental Considerations........................................13

Section Eleven: Sociocultural Considerations ...........................................................................13

Citations:.......................................................................................................................................15
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Executive Summary

Fighting Chicken is a popular, uniquely American chicken wing and sports restaurant.

The company is currently seeking to expand beyond the borders of North America into the South

Korean Market. South Korea is a prime location, given its culture that praises many things

American. The exact considerations and strategies to successfully launch this expansion are

discussed in detail in the plan that follows. In short, Fighting Chicken will utilize its widely

successful North American business model and make slight changes to accommodate the local

culture, in order to successfully gain a foothold in the market.

Section One: Background Analysis

Internal Analysis

Fighting Chicken Inc. is a widely renowned casual wing restaurant that currently operates

primarily in the United States. There are a number of capabilities and strengths that have allowed

Fighting Chicken to become the brand it is today.

First, the company has developed a cost effective and scalable model of opening both

company owned and franchised store fronts. Within those stores, the strength and efficiency

continues. The kitchen equipment investment is relatively minimal. Being a wing and related

foods restaurant, a limited amount of kitchen equipment is needed. The kitchen is also designed

as an assembly line, so a limited amount of staff training is required to reach full productivity.

This allows labor costs to remain relatively minimal.

Fighting Chicken also gains strength through its administrative operations. The company

negotiates its purchasing contracts as one giant unit, rather than having each store or region

source their own supply chain. This allows Fighting Chicken to combat the often time volatile

nature of chicken and other food prices. The company has also led successful marketing
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campaigns that have given Fighting Chicken the image of a fun, exciting place to hang out with

friends and family.

External Analysis

The external analysis for Fighting Chicken is examined through the lens of the Five

Forces Model. First, the threat of new entrants is high (Lawrence 2016). The casual restaurant

segment sees new entrants on a regular basis. While there are few widely recognized casual wing

restaurants, at a local and regional level, new entrants are much more common.

The bargaining power or suppliers and buyers, in this case, are low. The reason for this is

because the prices are poultry is predominantly set by the market. There are numerous suppliers

whose prices are dictated by things like animal feed cost. From the buyer side, it is difficult to

flex buying power, because there are multiple large buyers, like McDonalds, KFC, and Chick-

Fil-A. Add in additional smaller buyers and it becomes hard for any one buyer to dictate prices to

suppliers.

The threat of substitutes is high. The restaurant industry as a whole is volatile. It is

affected more drastically in times of economic hardships than other industries. The reason for

this is that when consumers are facing budget decisions, money for restaurants is often the first

thing cut. This makes other alternatives, like eating at home or having food delivered to the home

or business more attractive.

Lastly, the threat of rivalry is high. As mentioned previously, new entrants arrive

regularly. Already established businesses are constantly competing on price, marketing, and

overall diner experience. It is an industry where small nuances are the difference between

success and failure.

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Section 2: Global Trade & Investment Considerations

In the aftermath of the Korean war, global trade and investment between the United

States and South Korea are excellent (US Department of State). The enacting of the Korea-U.S.

Free Trade Agreement (KORUS FTA) entered into force on March 15, 2012, further opened up

trade between the two countries. Additionally, the trade is not one way; there is a frequent

exchange of various between the two countries, leading to South Korea being roughly the sixth

largest trading partner with the United States.

Another factor underscoring the friendly relations between the United States and South

Korea are the exchange of its people. South Korean students are one of the largest individual

groups of international students at American Universities. There is also significant opportunity

for American students to study abroad in South Korea.

Taken together, the friendly economic and social relations between the United States and

South Korea make it a top choice for Fighting Chickens international expansion. South Korea

has a relatively stable political environment and with a mutual defense treaty with the U.S.

makes war a much smaller threat. These factors lessen the chance that an investment in South

Korea will be endangered by factors that Fighting Chicken cannot control.

Section 3: Strategy and Market Considerations

The South Korean culture is loyal to the roots of cuisine set in place by the ancestors.

Which could create a create a non-traditional barrier to entry, but the young Korean culture has

turned to a modern-day, Americanized demand (USDA). The main strength Fighting Chicken

will have is the strength of its recognized American brand.

Fighting Chicken is American company now expanding globally, starting in South Korea.

A threat the company will face, is the new culture challenges. The Korean diet is primarily
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salads and soup with a protein, either a fish, pork or poultry. It will be a challenge to take the

American-structured company and influence it with the South Korean culture without causing

damage to the brand.

The company will also have the opportunity to integrate technology into the restaurant

for better service in order to enhance the customer experience. The largest threat is rejection of

the restaurant from the community; without customers there is no business.

The Korean version of Fighting Chicken will be a franchised chain. This will give

independence to the restaurant and allow the franchisee to use the structure of the Americanized

Fighting Chicken coupled with the South Korean Lifestyle (Buffalo, 2013). Entering as a

Franchise will cut cost on tariffs and foreign investment, keeping some cost at bay. This strategy

will give Fighting Chicken the best chance at surviving and turning a profit.

Section 4: Marketing Considerations

Similar to the American sports culture; soccer, golf, basketball, rugby and baseball are

popular sports in South Korea, along with the some of the more traditional Korean sports such as

Martial Arts, Tae Kwon Do, Jokgu, and Ssireum (Sports, 2016). With this in mind, Fighting

chiecken will take advantage of marketing sixty plus televisions to watch all the local popular

sports.

The Target market is men and woman who are of drinking age, but not limited to, anyone

who enjoy sports and a variety of beers (Bufflao, 2013). This target will range from those who

enjoy watching sports, to those who are athletes themselves. The particular segment being

targeted will change depending on the sport in season.

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The goal of Fighting Chicken is to expand into global markets, starting with South Korea.

The mission is to be conscious in honoring the culture and manipulating the companys current

market strategy to fit the community needs. The first objective is to reflect the lifestyle and

behavior of the Korean culture. Fighting Chicken is known as having a loyal sports-fanatic fan

base. Fighting Chicken will serve the community with at least 60 TV screens for all the sports

viewing a person can handle.

South Korea is a technologically advanced country and Fighting chicken plans to use this

to its advantage as part of its marketing strategy. High-speed WI-FI will be available for all

guests to use. Fighting Chicken will use free internet as part of advertising with the mindset

of, if a person sits and uses the free service long enough, they will eventually need to eat. In

addition, Fighting Chicken will utilize QR readers that would direct customers to the closest

Fighting Chicken location and show them the menu. Subways are the main source of public

transportation, as such, advertising the QRs in the sub-stations would be ideal.

As mentioned above, the main source of transportation is subways. Locations will be

played near subway stations. Fighting chicken will pay an advertising fee to advertise in the

subway, how many stops until you arrive at Fighting Chicken or the game starts in 50

minutes, Fighting Chicken has your table waiting.

Fighting Chicken wants to extend the same marketing strategy for trivia night as the

American restaurants. On a week night that generally does not pull in a bigger crowd, offer

sports trivia challenges. Teams of 3 4 people are able to compete with each other for a free

basket of wings or bucket of beers, winners preference. This would create a fun night when

there was not a sports event to watch.

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Section 5: Product & Pricing Strategy

Product and service selection for target market.

Fighting Chicken offers variety of products made from chicken parts. The bodily part of a

chicken utilized for nourishment by Fighting Chicken are legs, breast and wings. Due to market

place dynamics, Fighting Chicken will use line-extension of its product to meet its customers

expectation in South Korea by serving product made out of chicken meat and skin. This way the

menu includes numerous other items that have been added through the years. Below are the basic

items sold by Fighting Chicken locally and to be sold in South Korea:

Poultry serves as joint (cuts), bone-in or deboned, seasoned in various ways and ready
cooked
Chicken Breasts (Fight muscle on chickens chest)
Chicken legs (Walking muscle on the legs), also called Thigh or Drumstick)
Chicken Wings (May be split into three segments: the meatier drumette, the
wingette, and the wing tip, also called flapper)
Processed Products made of Chicken meat:
Chicken Nuggets (Ground meat mix)
Chicken Sticks or Fingers (Muscle strips)
Chicken Burger (spiced ground chicken/poultry meat mixes)
Chicken Meat balls (a product in high demand in the Asian region)

Standardization vs. Adaptation

Based on the Global market, Fighting Chicken is pursuing a Standardization strategy; the

companys decision is made taking into account the competitive strategy variables (advertising,

personal selling effort, price, etc...) and assessing performance at the target market (market share

and profitability). With the expansion in South Korea, Standardization is the appropriate route in

order for Fighting Chicken to have a positive influence in the South Korea restaurant business.

Maintaining standardized specifications for firms equipment technology, product

offerings, customer service, cleanliness, values, and operational system. Though the companys
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menus may vary somewhat from country to country, its core product offering is going to stay

consistent. This allows Fighting Chicken to achieve economies of scale.

Pricing Strategy

There is existing competition in the South Korean market. Fighting Chicken will use a

Penetration pricing strategy for now, which involves entering the market with a low price that

will capture market share in South Korea. The lower price is emphasized as a competitive

differential advantage over the existing competition.

Once Fighting chicken products are well established in the south Korean market place

and the demand for our products reaches a high point, the price may be raised to be leveled with

our competition. In order for this strategy to work, Fighting Chicken needs to make sure that the

focus is on the competitive advantage, of higher quality and better service.

Distribution Strategy

Fighting Chickens distribution strategy refers to the effective way in which the

restaurant serves its customers. As the Marketing Mix is concerned, distribution, also called

Place is one of four Ps which determines where the product will be sold and how it will get

there. To develop an effective and efficient distribution strategy that will develop a strong market

share in South Korea, Fighting Chicken, through its restaurant, will create an atmosphere that

suits the target market and moves customers to eat there.

Section 6: Political & Institutional Considerations

Which Institution can help or hinder your business

Corporate registration in South Korea is known to be a little bit challenging for foreign

companies, but the Office of the Foreign Investment Ombudsman helps foreign companies

overcome obstacles in the course of doing business in Korea. Fighting Chicken will need to
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register the Korean expansion with the foreign exchange bank, the court registration office, and

the tax office in Seoul, South Korea.

Political Stability

Fighting Chicken is relying on the political stability index of South Korea which

according to the World Bank (govindicators.org), the average of South Korea political stability

was evaluated between -2.5 weak and 2.5 being strong from 1996 to 2014. South Korea was

rated at 0.17 in 2002, 0.53 in 2007 and 0,19 currently. This simply means that South Korea is

less likely to be destabilized or overthrown by unconstitutional or violent means such as

politically motivated violence or terrorism.

Country Risk Assessment

Generally speaking, the risks of investing in South Korea are low. Although tensions

between South and North Korea have increased since May 2010 due to the killing 46 South

Korea sailors. With that exception, macroeconomic risk will remain slightly elevated due to the

risk that the global economy could suffer from a double-dip recession. Moreover, exports have

remained the main growth driver due to robust sales in South Korea.

Tariffs, Quotas, Subsidies, Non-Tariffs barriers

Most of incentives offered by Korean government are provided:

Via tax support:

Corporate tax and income tax reduction
Local tax (acquisition tax, property tax reduction)
Exemption from custom duties, etc
For foreign investments that satisfy certain conditions, the central and local government of
Korea may provide cash grant for:
Land purchase
Lease expense
Employment/Education/Training Subsidy
BY leasing land to foreign invested companies that meet specific requirement at a reasonable
rate or for free:
Location Support
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Subsidy for difference of sale price

Rent reduced subsidized
Other support

Section 7: Corporate Social Responsibility

Ethical Consideration

One of the owners at Fighting Chicken did a study abroad in South Korea for a few years

and understands the social and cultural life in South Korea. This will facilitate Fighting

Chickens integration into the Korean consumers day to day life. Fighting Chickens ability to

achieve success in the South Korean market will be determined by the ability to understand and

take advantage of socio-cultural life of the consumer that has become driven by the American

culture. Fighting Chicken will take into consideration the Dos and Donts in the Korean

culture; following the norms by respecting the values and beliefs of South Koreans.

Section 8: Financial & Economic Considerations

Inflation

South Koreas inflation rate was slightly higher than the United States inflation rate in

2015 at .71% versus .7%. Because these numbers are similar, Fighting Chicken should have no

problems in regards to inflation when opening its doors in Seoul.

Exchange Rate Considerations

The current exchange rate is 1 USD to 1112.05 KRW. The rates will be something to

keep in mind as we import from the US to our restaurant in Seoul, and as we send our profits

back.

Capital Considerations

An important thing to note, obtaining company startup loans in South Korean will be

challenging. As such, it would be best to use the money already owned and convert it to KRW.
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Since the KRW has been declining against the USD these last few months, this will not be a

difficult compromise.

Another thing to keep in mind regarding the capital market is that mortgage payments

typically go for 20 years. This will be important because in Seoul, the rental contract will be

jeonsei, meaning that rent is paid in its entirety for the year up front. Rent prices for apartments

and store locations are extremely high compared to the US. Typically in the millions per month,

in regards to KRW. As such, a prime location in Seoul is going to be costly, making our

financing method even more important. We will be relying on exchanging money for our

restaurant costs as much as we can. Loans originating in Korea will be kept to a minimum.

In addition, we will be opening a banking account in Seoul, not only because it is

required in order to obtain licenses to sell alcohol and food, but also because we will need to

have a local bank account there to accept Korean credit cards.

Section 9: Legal & Regulatory Considerations

Legal and Regulator considerations for entering the South Korean market are not

extensive (Cho 2016). This is not to say that the South Korean laws and regulations are the same

as in the United States; however, they are similar. The South Korean justice system and business

environment are heavily influenced by customs in Western Europe, as well as the United States.

As a result, Fighting Chicken will hire a consulting firm that is intimately familiar with the

nuances of South Korean regulations to ensure that Fighting Chicken is abiding by proper South

Korean business practices.

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Section 10: Natural Resources & Environmental Considerations

Energy Management Considerations

South Korea uses a system of energy pricing called a smart grid. This is a complex

pricing structure that is affected by the time of day energy is used, the season, the voltage, and

the type of business you are in. For example, a school would have different rates than a

homeowner. An average amount to pay for heating, electricity, water, and garbage would be

161,003.96 KRW (145 USD). Understanding this structure will allow Fighting Chicken to

optimize restaurant operations to lower utility costs.

Environmental Impact

Fighting Chicken will reduce its environmental footprint by renting an already built store.

This reduces the use of materials that would have been needed had we decided to buy a store,

tear it down, and build it back up. Our dishes will be served on reusable plastic and metal plates.

Our chopsticks and forks will be non-disposable and made from metal. The only disposable

waste left from customers would be the napkins we provide them.

Section 11: Sociocultural Considerations

Aesthetics, Religion, Language, Societal Organization

Fighting chicken will be an American owned restaurant located in the Dongdaemun

district of Seoul. One of the owners extensive study abroad yielded the following cultural

insights. Dongdaemun is a shopping district in Seoul that is especially popular for foreigners.

Chinese shoppers are particularly popular and it is not uncommon to see a family make a trip to

Dongdaemun to go on a shopping spree for fashionable and economic clothes to bring home.

Dongdaemun hosts late hours. Although most stores close after midnight, there are plenty of
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stores that will not close until 6am; however, most stores and restaurants will not open until

10am; even the Dunkin Donuts.

Fried chicken is popular among Koreans after various Korean dramas began to promote

the food. Fried chicken is cooked differently than American chicken and often uses a rice flour

based batter with a more complicated frying process. American brand food is more expensive

than Korean food and is considered special. Young Korean couples will often dress up for dates

at a McDonalds or Starbucks. By combining our American name brand with Korean style

chicken, we hope to attract customers who wish to experience what American style chicken

tastes like.

Our stores aesthetics will be an American and Korean fusion. We will serve chicken

cooked in either the American or the Korean style and our servers will wear American uniforms.

The same uniforms that they currently wear in our US location.

Korea is a mix of Christianity and Buddhism among other religions. Korean shamanism

has been repressed for decades, but is still practiced. Korea is a very high context culture with a

high power distance. Corporate level jobs are extremely competitive, and as a result schooling is

made to be the number one priority. Time is considered monochromic and the people tend to

value feminine qualities. Ascription is important and business dealings are relationship based.

Business relationships must be formed before business can be conducted. As a result, our

company will be teaming up with a Korean business partner who will oversee the setup

processes such as obtaining licenses and forming those relationships in exchange for managing

the restaurant based on guidelines that we shall set.

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