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Kfc - Japan

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Kentucky Fried Chicken (Japan) Limited

Background • Harland Sanders – 6th grade dropout – casual cook. Late 40’s – developed a recipe for chicken based on a pressure-cooking method and secret seasoning mix of 11 herbs and spices. • Sold 700 franchises < 9 years. • Sander’s management style – relied on basic goodness of people around him and trusted the franchises to play fairly. There were no formal management systems or strategic controls in place. • Sanders in his 70’s – Jack Massey offered him $2 million, lifetime salary, and position in control of business. • Explosive growth – revenues increased from $7 million to $200 million. • Loy Weston took the challenge to open the first store in Japan. o Studied the culture of Japan. o Performed test marketing – found that Japanese did not like mashed potatoes and the cole slaw was too sweet. Changed to French fries and lowered the sugar content in the slaw.

Company Culture - Industry and Growth – the industry norms and rules of the game of the fast food industry

• Expansion via franchising. • Location – important for economies of scale – high fixed costs and small returns on sales required high traffic volume. • Effective store management – keeping waste, shrinkage and inefficiency to a minimum. • Market image – focused on theme or product – consistency and reliability throughout all stores was critical.

Organizational Structure • Headquarters structure over all franchises – Functional structure within the organizations when it came to consistency between all of the stores. o Coordination – hierarchy supervision, plans and procedures o Decision rights – highly centralized o Boundaries – core/periphery • International stores, specifically Japan – Divisional structure o Coordination

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