...Comparative Study of McDonald's and Kentucky Fried Chicken (KFC) Development in China Wei Hu & Yuanyuan Xie Bachelor’s Thesis 28. 04. 2013 International Business Administration Bachelor’s degree (UAS) SAVONIA UNIVERSITY OF APPLIED SCIENCES THESIS Abstract Field of Study Social Sciences, Business and Administration Degree Programme Degree Programme in International Business Author(s) Wei Hu & Yuanyuan Xie Title of Thesis Comparative Study of McDonald's and Kentucky Fried Chicken (KFC) development in China Date 28.04.2013 Pages/Appendices 53+2 Supervisor(s) Jari Niemelä &Heikki Likitalo Client Organization/Partners McDonald's Corporation & Kentucky Fried Chicken Corporation Abstract McDonald's and KFC are two international fast food restaurants. They both expended their businesses in global scale. It is obvious that McDonald surpassed KFC in terms of sales and fame in international level. However, in China, KFC performs better than McDonald's. The aim of this study is to find out how these two companies developed differently in Chinese market. By making a comparative study of McDonald's and KFC, different operation and competitive strategy theory will be integrated with their development situation. Research is made based on strategy theory, Internet sources and interviews. The thesis is started with general information, Chinese fast food industrial situation introduction and thesis structure. After having introduced the two companies background, we illustrated strategy...
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...Comparative Study of McDonald's and Kentucky Fried Chicken (KFC) Development in China Wei Hu & Yuanyuan Xie Bachelor’s Thesis 28. 04. 2013 International Business Administration Bachelor’s degree (UAS) SAVONIA UNIVERSITY OF APPLIED SCIENCES THESIS Abstract Field of Study Social Sciences, Business and Administration Degree Programme Degree Programme in International Business Author(s) Wei Hu & Yuanyuan Xie Title of Thesis Comparative Study of McDonald's and Kentucky Fried Chicken (KFC) development in China Date 28.04.2013 Pages/Appendices 53+2 Supervisor(s) Jari Niemelä &Heikki Likitalo Client Organization/Partners McDonald's Corporation & Kentucky Fried Chicken Corporation Abstract McDonald's and KFC are two international fast food restaurants. They both expended their businesses in global scale. It is obvious that McDonald surpassed KFC in terms of sales and fame in international level. However, in China, KFC performs better than McDonald's. The aim of this study is to find out how these two companies developed differently in Chinese market. By making a comparative study of McDonald's and KFC, different operation and competitive strategy theory will be integrated with their development situation. Research is made based on strategy theory, Internet sources and interviews. The thesis is started with general information, Chinese fast food industrial situation introduction and thesis structure. After having introduced the two companies background, we illustrated strategy...
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...ase 3–6: McDonald’s and C KFC: Recipes for Success in China Quick Service Restaurant Giants in the Middle Kingdom In 2008, McDonald’s and KFC were the two largest quickservice restaurants (QSR) in the world, with 31,999 and 15,580 outlets, respectively.1 Both chains were renowned for their broad spectrum of consumers on a global basis. McDonald’s appeared to be a clear winner in international expansion. It had over 17,500 international outlets and was the first corporation to set up a solid foundation for international franchising. It spearheaded global expansion with its first overseas outlet in Canada in 1967, and entered Japan in 1971.2 McDonald’s outlets had tremendous success in Japan—despite the difference in culture— with record-breaking daily sales and speed of expansion in the initial stage.3 KFC also started international expansion early, opening its first overseas outlet in England in 1964. However, it was given a bumpy ride when it began to penetrate the market in Asia. The Japanese outlets were far less successful than McDonald’s and only started to make a profit in 1976, six years after KFC entered Japan. KFC outlets opened in Hong Kong in 1973 but were all closed down within two years. The company would eventually win the confidence of Hong Kong customers ten years after its first entry. In Taiwan it experienced relatively smoother development, although KFC headquarters was to spend a huge amount of money and effort in order to get the...
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...Analysis of Why KFC is more successful than McDonald in China Analysis of Why KFC is more successful than McDonald in China Kentucky Fried Chicken (KFC) is a chain of fast food restaurants based in Kentucky in the United States. KFC is famous for its fried chicken and the sales revenue is ranking number seven in American Market (Figure 1). McDonald's Corporation is the largest chain of hamburger fast food restaurants in the world and also the largest in American, serving more than 58 million customers daily (Breitbart, 2009). But in China, KFC and McDonalds are in a totally different situation. KFC is the most popular restaurant in China and McDonalds, although popular either, but is performing much less than KFC. This contrast is not a miracle and everything happens for a reason, this report is going to analyze the reasons for KFC is more successful than McDonald in China. Figure 1. KFC and McDonalds in American Contrast |American Market| |McDonalds|KFC| Revenue|2003|$22.1 billion|$4.936 billion| |2002|$20.3057 billion|$4.86 billion| RestaurantsNumber|2003|13,609|5,524| |2002|13,491|5,472| Ranking inAmerican Market|2003|No.1|No.7| Source: The data are adapted from “KFC and McDonalds: A huge difference in China”, retrieved from http://finance.people.com.cn/GB/3799268.html Figure 2. KFC and McDonalds in China Contrast|Chinese Market| |McDonalds|KFC| Revenue (2003)|¥5.3 billion|¥9.3 billion| Revenue increase in 2003|Increase...
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...SUMMARY Boasting a secret recipe of numerous spices and “finger licking good” chicken meals, KFC was started by Harland Sanders as a tiny restaurant called “Sander’s Court and Café” at a gas station. Now, a more than 11000 restaurants in 85 countries, KFC is the world’s largest chicken fast-food restaurant and one of the top fast-food chains worldwide. It was also one of the first fast food restaurants to go international4 and is popular in many countries. After having gone through many different hands, KFC is now under Yum! Brands Inc together with A&W All-American, Food Restaurants, Long John Silver’s, Pizza Hut, and Taco Bell. With a market such as China with a longstanding tradition, KFC executes must realize that they are faced with customers very different from the rest of the world. It cannot distribute the exact same products there as it does in every other part of the world. As they are faced with different markets, KFC must learn to adjust its products accordingly. Like most multinational companies, KFC was first attracted to China by the size of the country’s market potential which is 1.3 billion people, 20% of the world’s total. China is a market with a few thousand years of recorded history, a deeply entrenched culture, and very different from the West. KFC’s decision to pursue a broad and active localization strategy in China began with the assembly of its local leadership team made up of US-educated ethnic Chinese drawn from Taiwan and other parts of...
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...Hoi Shan Wu Prof. Dennis Lee Doing Business in China 16 May 2017 KFC in China As China develops the pace of life has gotten quicker. The Chinese people’s demand for fast food service with good hygiene has grown due to fit their busier lifestyle. An analyst from China Venture Group, Wan GE, said that fast-food has become the first choice for 85% of Chinese city residents when eating out. (Hu and Chen) The fast-food industry in China is fast growing with an 11.6% growth from 2010 to 2015. (Fast-Food Restaurants in China: Market Research Report) Kentucky Fried Chicken (KFC) a subsidiary of YUM! Brands, was the first quick-service restaurant (QSR) to enter China in 1987, and remains China’s number one QSR today with more than 5000 restaurants in over 1100 cities. (Yum! Restaurants in China) KFC started as a joint venture company; 60% stake held by KFC, 27% by the Beijing Tourist Bureau and 13% by Beijing Food Production. In 1988, Bank of China bought 25% of the venture, diluting KFC to 51% of shares. The first KFC was opened in Beijing, Qianmen, five minutes away from Tiananmen square. (Qingfen) When KFC first entered China, it was a great success. It was an eye-opener into American cuisine and culture. Chinese consumers had the perception that anything from the west is the best; since KFC is from the west it was the best. Chicken is the second preference of meat followed by pork in China. Naturally Chinese customers loved KFC’s fried chicken not only because of the product...
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...Professor Gervais April 24, 2012 Yum! China Case Analysis Yum! Brands China, a division of the Yum Brands Company, is a fast food restaurant company that owns several restaurant chains such as KFC, Taco Bell, Pizza Hut and Long John Silvers overseas. Yum! China first opened its KFC in Beijing in 1987 and over the years has successfully expanded its operations and other chain restaurants throughout Mainland China, becoming one the largest fast food companies in that region. Seeing the success of Yum! overseas has spawned other western chains to open up in China. With growing competition from Subway, Dairy Queen, Starbucks, McDonalds and Burger King, Yum! China has been able to successfully manage the pressure and increase their presence in China. 1. What were the special challenges in business environment that Yum! had to overcome it he 1990’s to develop its business in China? When Yum! started its operations in the early 1990’s the company has barriers to overcome in launching their operations in China. Yum! had to get through the government restrictions, handle their missteps in advertising, invest in a supply chain, expand company growth, organize a team, and contend with ownership. Government ‐ When Yum opened restaurants and wanted to expand faster, the company had to follow regulations imposed by the government. At that time, government was more interested in bringing in foreign companies that could bring technology into China. That changed when the Deng Xiaoping...
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...offers food products including chicken sandwiches, drinks and other food materials. This segment is engaged in the manufacturing and sale of packaging materials, the sale of processed chicken, as well as the advertising activities for its products. The company met a number of challanges to overcome when entering the Japanese market, in terms of the difference in culture and eating habits. Japanese did not accept the brand so it was not easy to build trust in the KFC brand through advertising showing scenes depicting Colonel Sander’s beginnings in Kentucky that conveyed southern hospitality, old American tradition, and authentic home cooking. Kentucky Fried Chicken Corporation (KFC) was one of the first american companies, based consumer products and services companies to tackle the tough Japanese market. Briefly summarize the key facts, scope and aspects of the case Corporate values, local market, and culture knowledge are the key success factors to be successful in a global economy. Within the industry KFC soon learned that effective store management was also a key factor in profitability. DEVELOP Political environmental Economic environmental Legal environment Demographic trends Technology Competitive environment (Porter 5 competitive forces) Threat of new entrants Bargaining power of suppliers Rivalry among existing competitors Bargaining power of buyers Threat of substitute products or services KFC’s key competencies and weaknesses Any organization...
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... We have decided to select Kentucky Fried Chicken (KFC) as our choice. There are five sections in this essay. The first section is to inform you the key elements in the paper. The second section will address the most important issue confronting the firm. Section three is external analysis. In this section, the external environmental analysis will be discussed. The fourth section is internal analysis. The same with section three, we will make our analysis of internal environment of KFC. In the last section, we will give our recommendation to KFC to help them further success. The more detailed information are as following. 2. Issues and Outlook Profile KFC is one of the world's largest fast-food chains, which held more than 55 percent of the US market in terms of sales. It is also one of the first fast-food chains to go international. Nowadays, KFC operates more than 5,200 restaurants in the United States and more than 15,000 units around the world (Loh, 2009). KFC's early international strategy was to grow its company and franchise restaurant base throughout the world. By 2000, however KFC refocused its international strategy on several high growth markets such as Canada, Australia, China, Thailand and so on. KFC planned to base much of its growth in these markets on company-owned restaurants, which gave KFC greater control over product quality, service and restaurant cleanliness. In other international markets, KFC planned to grow primarily through franchises, which were...
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...Franchising Industry in China 1. An Overview of Franchise Development in China Franchising first emerged in China in the late 1980s. In 1987, KFC’s first Chinese outlet was opened in Beijing, the capital city of China. Franchising industry in China experienced a period of disordered development in the early days. In the poor legal environment, some franchisers conducted substandard business or even defrauded franchisees of money. In some cases, franchisees delayed payments to the franchisers or infringed on their intellectual property rights. In 1997, the Ministry of Internal Trade established the first Chinese franchise law, the Regulation on Commercial Franchise Business, which included guidelines on such issues as trademarks, copyrights, and intellectual property protection. A lack of specific provisions in the 1997 version governing foreign direct franchising allowed relatively few major international companies to have significant franchise businesses in China. Although many of these international brands such as 7-Eleven, McDonald’s, KFC and Pierre Cardin, normally do business through franchising, in China foreign franchising was still a grey area before the new rule was published. Because franchising typically does not involve investing in equities, the Chinese Government used to put less focus on such business. But the government came to find that franchises are a good business model for China to help solve its job problems and its scattered private capital. China’s capital...
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...BU5003 International Business operation Tutor Dr Neil Moore Assessment number G35691 Number of words 2015 Date 14/11/2012 Essay topic: “The decision to develop and grow business operations can be a daunting prospect for any galvanization. In particular, the decision to expand into overseas markets generates a broad range of challenges and issues. Using contemporary examples and concepts considered in this module discuss the challenges and issues faced by business organizations as they decide whether or not to internationalize their operations.” As a company expands, it begins to get itself involved in marketing programs that may not have been part of the original business plan. Businesses evolve, and plan change and a company may begin to realize that it needs to get involved in international markets. Obviously, it has a lot of benefits when a company enters into a foreign market. Expanding sales, acquiring resources and minimizing risk are the three principal operating objectives that why companies engage in international business. Normally, these three objectives guide all decisions about whether, where and how to engage to be international business. So in order to seek high sales and profits, gain global market share and reduce dependence on existing markets, it is inevitable for any companies to go abroad. However, it also generates enormous number of challenges and issues...
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...BA 304 Marketing Management Individual Assignment “Colonel comes to Japan” KFC case study Presented Colonel Comes to Japan This case study we going to talk about how and when KFC come to japan? KFC (Kentucky Fried Chicken) is the biggest company that everyone know as a fast food restaurant that serve a quality fried chicken around the world but some people don’t know how KFC come to be famous in in the world including Japan. KFC (Kentucky Fried Chicken) was founded by Colonel Harland Sanders, and the first "Kentucky Fried Chicken" franchise opened in Salt Lake City, Utah in 1952. KFC was one of the first fast-food chains to expand internationally, opening outlets in England, Mexico and Jamaica by the mid-1960s. Throughout the 1970s and 80s. The chain continued to expand overseas. A series of documentary programs examining the American business community with concentration on the attempt by American fast food chain Kentucky Fried Chicken to gain a foothold in the protected Japanese market. Focusing on the daily duties of Loy Weston, chair of Kentucky Fried Chicken in Japan, the program examines the cultural differences, which had to be overcome for the American poultry powerhouse to open and maintain over 300 restaurants in Japan in eleven years. Highlights include the following: footage of many life-size statues of "Colonel Harlan Sanders" -- the chicken chain's apocryphal antebellum progenitor - on the back of a flatbed truck being hauled to various franchise...
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...RED LOBSTER MOVES to CHINA? HTM 540, International Tourism Development May 26, 2013 Review key points from Darden Restaurant’s most recent 10-K. Their stock symbol on the NYSE is DRI Darden Restaurants based on company sales, market and the amount of company owned and managed restaurants, is the world's largest casual dining restaurant company who has a variety of dining brands to choose from. Their mission is to be “The best, now and for generations... and a place where people can achieve their dreams” (Darden 10K, 2012). According to their most recent 10-K report (2012), there are many key points for review. “Of the 1,961 restaurants across the United States & Canada none of them are franchised” (Nation’s Restaurant News, 2012, p.1). Domestically Darden doesn’t offer franchise opportunities. However, they do have 28 restaurants outside of the United States operated and independent to third parties. Other key points are company sales and stocks. The total company started out in 1970 with 3.5 million in sales ending with 7,998.7 million, with 9.5% attributing to alcohol, in 2012, showing significant growth. Stock prices were at a high 55.84, low 40.69, and closed at 53.06 per share as of May 27, 2012. Ford Equity research (2013) projects that Darden will perform in line with the market over the next 6-12 months based on key factors such as earnings strength, relative valuation, and recent price movement (para. 1). “To support future growth,...
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...Business Communication Issues The global marketplace creates many opportunities for business development, but ineffective communication that comes along, both internal and external, can harm employees, customers, and stockholders. Therefore, when conducting business globally, it is important to understand the barriers to effective communication and know how to overcome them. Based on different objectives, we can identify these business communication issues from three dimensions. In the case of multinational corporations, the first barrier exists in the multi-level communication between headquarters and the overseas branch. With limits or no authorization in making big decisions, the branch has to report to headquarters and make requests for approvals before implementations. However, the information has to be passed through many more layers than in a local business during the procedure, which inevitably affects the efficiency of communication. Amazon, whose market value surpassed the U.S. nation's largest retailer Walmart in July 2015, has never performed as shiningly in China as it does in the U.S. Left behind by Taobao and JD.com, the leading businesses in China’s C2C and B2C area, respectively, Amazon’s market share kept slipping in recent years. Steve Frazier, Amazon’s ex-CEO in China, attributed the reasons to the very limited decision-making power that the China management team has, and the redundant layers of hierarchy that result in ineffective communications with the...
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...Jiang Zhenghui Past Development of Yum!Bands In 1997, with KFC, Pizza Hut, Taco Bell three famous brands of food systems (This system is a business unit of PepsiCo, PepsiCo's three main business is soft drinks, snack foods, fast food.), Yum!Bands separated from PepsiCo and listed on the New York Stock Exchange. From then, the world's largest restaurant group - Yum global food Group has been formally established. All shareholders and members of the company may not have thought of that just used two years, Yum! Bands operation achieved a great success in market especially in Chinese market. Today, Yum! has more than 30,000 chain stores worldwide and 500,000 employees, a turnover of $ 20 billion, ranks among the world's top 500 listed companies. Since separating from PesiCo, Yum! had to compensate for the loss caused by the past, while also facing a serious challenge: how to create corporate culture? How to create three well-known food brands to collaborate with each other, rather than competitive relationship? How to build for the future development of the enterprise staff confidence. At that time, CEO Mr. Andrakk Pearson and David Novak took a series of bold and new measures. For example, KFC, Pizza Hut, Taco Bell still continued their existing operational management, but to play a coordinating role with each other; Through packages form, did a joint promotion of the three brands. The raw materials were unified procured, distributed by the company, It helped to controlling...
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