kanan gupta - global marketing assignment kfc nift

7/27/2019 Kanan Gupta - Global Marketing Assignment Kfc nift

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1 | P a g e N A T I O N A L I N S T I T U T E O F T E C H N O L O G Y , 2 0 1 3

GLOBAL MARKETING

Assignment on Global Expansion Strategy of a Firm

On

K.F.c

(Kentucky Fried Chicken)

Submitted To: Submitted By:

Asst. Prof. Sachin Bhatnagar Kanan Gupta

MFM III

(2012-2014)


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Contents

Global Expansion Strategy.3

Introduction to KFC...3

History of KFC.3

SWOT Analysis of KFC..4

Global Expansion Strategies of KFC5

References.10


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Global Expansion Strategy:

The planned expansion of a company's business activities into countries in several regions

throughout the world. Global expansion implies more than just making investments in

nations outside of the company's home; the concept includes maintaining an actual

business presence in those countries.

Source:http://www.businessdictionary.com/definition/global-expansion.html

Some reasons for global expansion are listed below:

To seek revenue growth opportunities.

To compete against global competitors.

To support global customers.

To access global knowledge.

To achieve efficiency in managing value-chain activities.

Introduction to KFC:

KFC is the worlds No.1 Chicken QSR (Quick Service Retailer) and has industry leading stature

across many countries like UK, Australia, South Africa, China, USA, Malaysia and many more.

KFC is the largest brand of Yum Restaurants, a company that owns other leading brands like

Pizza Hut, Taco Bell, A&W and Long John Silver. Renowned worldwide for its finger licking

good food, KFC offers its signature products in India too!

History of KFC:

Way back in 1930s Colonel Harland Sanders got some distinguished Kentucky folks lickin

their fingers. Its been in fashion since then!

Colonel Harland Sanders, founder of the original Kentucky Fried Chicken, was born on

September 9, 1890.When he was six, his father died and his mother was forced to go to

work while young Sanders took care of his three year old sibling. This meant he had to do

much of the family cooking. By the time he was seven, Harland Sanders was a master of arange of regional dishes.

After a series of jobs, in the mid 1930s at the age of forty, Colonel Sanders bought a service

station, motel and cafe at Corbin, a town in Kentucky about 25 miles from the Tennessee

border. It is here that Sanders began experimenting with different seasonings to flavour his

chicken which travellers loved and for which he soon became famous.

During the next nine years he developed his secret recipe of 11 herbs and spices and the

basic cooking technique which is still used today. Sander's fame grew. He sold his chicken on

the highway! But when the highway was removed, he sold up and travelled the United
http://www.businessdictionary.com/definition/company.htmlhttp://www.businessdictionary.com/definition/business-activity.htmlhttp://www.businessdictionary.com/definition/country.htmlhttp://www.businessdictionary.com/definition/region.htmlhttp://www.businessdictionary.com/definition/maker.htmlhttp://www.businessdictionary.com/definition/investment.htmlhttp://www.businessdictionary.com/definition/nation.htmlhttp://www.businessdictionary.com/definition/concept.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/global-expansion.htmlhttp://www.businessdictionary.com/definition/global-expansion.htmlhttp://www.businessdictionary.com/definition/global-expansion.htmlhttp://www.businessdictionary.com/definition/global-expansion.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/concept.htmlhttp://www.businessdictionary.com/definition/nation.htmlhttp://www.businessdictionary.com/definition/investment.htmlhttp://www.businessdictionary.com/definition/maker.htmlhttp://www.businessdictionary.com/definition/region.htmlhttp://www.businessdictionary.com/definition/country.htmlhttp://www.businessdictionary.com/definition/business-activity.htmlhttp://www.businessdictionary.com/definition/company.html


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States by car, cooking chicken for restaurant owners and their employees. If the reaction

was favourable Sanders entered into a handshake agreement on a deal which stipulated a

payment to him of a nickel for each chicken the restaurant sold.

By 1964, from that humble beginning, Colonel Harland Sanders had 600 franchise outlets for

his chicken across the United States and Canada. Later that year, Colonel Sanders sold his

interest in the United States operations for $2 million. The 65-year-old gentleman had

started a worldwide empire using his $105 social security cheque. Sadly, Colonel Harland

Sanders passed away on December 16th, 1980 aged 90.

His legacy lives on with KFC restaurants all over the world. KFC now stretches worldwide

with more than 13,000 restaurants in more than 80 countries and territories around the

world serving up the Colonels Original Recipe. It is a $13 billion brand based out of

Kentucky and is the leading QSR around the world which is based in Louisville, Kentucky.

Yum! Brands own 5 brands, out of which KFC is the largest brand within the Yum! Portfolio,

founded by Colonel Harland Sanders in the year 1938.

KFC is a Market Leader: Worlds largest chicken restaurant chain and third largest fast-food chain in

2000.

Source:http://www.kfcec.co.za/kfc-history

SWOT Analysis Of KFC:

Strengths:

KFC had refocused international strategies to grow its company and franchise

restaurant base all over the world.

Competitive marketing strategy: Developed three types of chicken, have an original

recipe (pressure cooked), also is extra crispy (fried) and tender roasted (roasted)

Distribution strategy: First, focused on building smaller restaurants in non-traditional

outlets like airports.

KFC continued to dominate the chicken segment ($4.4B) past its nearest competitor

Popeyes at a distant second ($1.0B).

KFC is the market leader in the world among companies featuring chicken as their

primary product offering

Weakness:

KFC has difficulty in entering the German market due to culture incompatibility.

KFC sales stagnated. There was widespread discontent among the franchisees, some

of whom felt the new owners (PepsiCo) did not understand the chicken business and

were not providing leadership expected from a franchisor.

Unhealthy food menu.
http://www.kfcec.co.za/kfc-historyhttp://www.kfcec.co.za/kfc-historyhttp://www.kfcec.co.za/kfc-historyhttp://www.kfcec.co.za/kfc-history


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Untrustworthy suppliers.

Negative publicity generally in terms of cruelty to animals.

Opportunities:

New Markets: Globalization has opened doors to new markets for the company. As

developed markets are mostly saturated, the developing countries like India and

China promises a good market and generation demand in the future.

Changing Demographic Trends : More demand for restaurants selling affordable,

quick and tasty food.

Introducing new products to its only chicken range.

Threats:

Organizations like PETA ( People for Ethical Treatment of Animals) constantly attack

KFC regarding the treatment of chickens kept in their facility. AntiKFC campaign

are affecting KFCs brand image in a negative way and this results in direct dollar

loss.

More and more people are becoming health conscious round the globe.

Saturated US Markets: KFC cannot only rely on the sales of its US stores as market

has become saturated and leaves little scope for growth, hence KFC has to compete

at global level along with its competitors an capture new markets.

Competitors like McDonalds are fast catching up with the market.

Local fast food restaurant chains.

Source:http://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.html

Global Expansion Strategies of KFC:

Yum! Brand is the largest restaurant group in the world. Kentucky Fried Chicken, or KFC, is

the dominant subsidiary of Yum! Brands and what KFCs product focus in the fast food

industry is fried chicken.

KFC is very successful in the fast food industry internationally. According to KFC official

website description, There are more than 15,000 KFC outlets in 105 countries and

territories around the world. In 2011, KFCs sale revenue is around 15 million (Yum! Brands

Annual Report). In my personal opinion, the key to KFCs global success is accredited

towards their global strategies.

For KFC, brand is not only a name or symbol, but also a tool to create and spread customer

value.
http://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.htmlhttp://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.htmlhttp://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.htmlhttp://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.html


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KFC has top restaurant quality to improve its brand value, called CHAMPS. The word

CHAMPS is the abbreviation of Cleanliness, Hospitality, Accuracy, Maintenance, Product

Quality and Speed of Service. KFC insisted on promoting CHAMPS to its global market

because KFCs organizational goal is to satisfy all customer needs in the world. The CHAMPS

strategy incorporates very strict guidelines that are mandatory for KFC restaurants toimplement in their daily operations. The unified rule helps KFC easily manage and enter the

global market.

KFC has another important strategy that has contributed to their global success called local

cultural strategy. Local cultural strategy means KFC spend much of their time and

resources on analyzing the local consumption eating habits. According to the eating habits,

KFC will create and produce related cultural fast food. Customers will directly benefit from

the perceived value derived from KFCs menu. The local cultural strategy helps KFC to

increase customer loyalty.

Best Example of Expansion of KFC in China:

Fig.1 A KFC store in China

With its Go Global, Act Local market penetration strategy, KFC adapted their fast-food

model to fit the Chinese market by positioning itself as a native company, not a foreign.Specifically, KFCs success in China was accomplished by taking the following strategic steps:

First Step:KFC identified customers likes and dislikes at the local and cultural level.

Besides chicken, KFC serves food that appeals to Chinese tastes, items never seen on

an American KFC menu; chicken with Sichuan spicy sauce, rice, egg tarts, and

soybean milk. It is also part of the Chinese culture to eat in groups, so KFC offers

larger dishes for sharing.

Second Step: KFC hired managers who could read and speak the local language, who

could understand the Chinese consumer, the restaurant trade, as wells as theWestern way of doing business.
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And finally the Third Step: KFC carefully followed Chinese strict foreign investment

laws and entered into Joint Ventures with local producers a departure from its

traditional US based franchise approach.

Although Chinese market often represents a huge risk for many foreign companies, KFCsGo Global, Act Local market penetration strategy created and filled an untapped

marketplace by identifying and prioritizing cultural, business and regulatory sensitivity. Since

opening its first store in Beijing in 1987, the KFC has grown to over 3,800 locations in 800

cities with finger lickin performance. Colonel Sanders recipe was secret, but KFCs success

in China is not.

Source:http://www.growthstrategy.com/insights/kfcs-winning-recipe-in-china-go-global-

think-local/

KFC International Strategy:

To grow its company and franchisees restaurant base all over the world.

By 2000, out of 5595 restaurants 69% were franchised, 21% were company owned

and 10% were licensed restaurants or joint ventures.

In small markets (Bermuda, Grenada), company was emphasizing on franchising

strategy but in large markets (China, Mexico & Canada), the company was

emphasizing on company owned restaurants.

Expansion of KFC in India:

Starting off with 10 stores in 2005, KFC has been the fastest growing restaurant brand in

India crossing 100 stores in 2010. They aim to have 500 stores by 2015. The rapid growth of

the fast food industry in India, as well as the fact that 90% of the SEC A and B population

eats out once a month, have helped in creating the huge potential for KFC that exists today.

Marketing Strategy of KFC in India:

KFC is a youthful, quick service restaurant brand that serves unique, great tasting food and

beverages. The focus of KFCs brand strategy is to highlight this across all their

communications, menu offerings and the experience that they deliver in their stores.

At KFC they undertake integrated marketing including media like television advertising,

outdoors, in store promotions etc. as well as online campaigns, discussions on social

networking sites. The wide range of flavours has been well received and they still continue

to refresh and innovate on this range.

They have recently released 2 new TVCs which have evoked a strong response from their

consumers as TVC refreshes consumers memory regarding the brand and is an effective

tool to increase sales and increase visibility.
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As India's fastest growing quick service restaurant, KFC sees huge potential for growth in a

market that is still in its infancy. In the last five years, KFC has grown at a CAGR of 75%, and

continues to expand aggressively. The company's goal is to set up brand driving stores that

are marked by their signature dcor and feel and run by their highly motivated & trained

team members. KFC has 112 stores presently and is looking at touching 500 stores across 75cities in the next four years.

KFC is committed to the highest poultry welfare standards and our suppliers meet all

relevant national animal welfare legislation and industry standards.

Source:http://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-

+Marketing+KFC,+India

Marketing Strategy of KFC in Japan:

Japan is the third-largest market for KFC after China and the United States with 1,200

outlets. In Japan, 70 percent of sales are takeout, with customers tending to buy fried

chicken for parties and other special occasions and eating it alongside other foods. KFC

Japan was originally formed as a joint venture between the American parent and the

Japanese Mitsubishi Corporation. After four years of negotiations, Mitsubishi were finally

awarded the franchise rights to KFC in Japan, and a test store was opened at the Osaka

World Expo in March 1970. After the dbut proved to be a success, the first store proper

was opened at a suburban location in Nagoya in November 1970. The American parent

wanted suburban locations, whereas Mitsubishi had argued for city centre locations, as thecar had not been widely adopted in Japan at that time. Two more locations were opened

in Osaka, but the stores struggled, and after less than a year operations had lost JP 100

million. As a result of this failure, Mitsubishi's original plan for urban locations was pursued.

The first new strategy store opened in Kobe in 1972, an upmarket residential area with a

large Western expatriate community. The new strategy was a success, and by December

1973, 100 outlets had been opened. In December 1974, KFC Japan began to promote fried

chicken as a Christmas meal. Eating KFC as a Christmas time meal has since become a widely

practised custom in Japan. In August 1990, KFC Japan was listed on the Tokyo Stock

Exchange. KFC had ridden Japan's economic boom during the 1980s, but rapid expansion of

outlets saw competing franchisee's eating into each other's market share, and around 100

outlets were closed down in the mid-1990s. In December 2007, Mitsubishi assumed

majority control of KFC Japan in a JP 14.83 billion transaction.

Source:http://en.wikipedia.org/wiki/KFC

Marketing Strategy of KFC in United Kingdom & Ireland:

As of 2012, there are 840 KFC restaurants in the UK and Ireland, the fourth largest number

of KFC outlets in any country. Restaurant ownership is split 40 per cent equity and 60 percent franchised. The company has over 8,000 employees in the UK. The majority of KFC
http://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://en.wikipedia.org/wiki/KFChttp://en.wikipedia.org/wiki/KFChttp://en.wikipedia.org/wiki/KFChttp://en.wikipedia.org/wiki/KFChttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+India


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ingredients are sourced from the UK. Annual sales in the UK amount to 60,000 metric

tonnes of chicken. 60 per cent of chicken is purchased from the four largest suppliers in the

UK, including Faccenda Group and 2 Sisters Food Group, and delivered fresh to outlets at

least three times a week. The remaining 40 per cent is sourced from Europe, Thailand and

Brazil. All of their Original Recipe chicken is sourced within the UK.

KFC claim their Original Recipe chicken is no different from a chicken that can be bought in

the supermarket. Frying oil is sourced from an Aarhus Karlshamn facility in Hull. The most

popular menu item in Britain is the mini fillet burger with annual sales of more than 19

million, followed by snack box popcorn chicken (14 million) and the boneless meal for one

(12 million sales plus). The chain has sold Lavazza coffee since 2009.Non-essential trans fats

were removed by 2007. System sales were over $1 billion in the UK and Ireland in 2009,

having more than doubled in the past 5 years, and representing over 100 million meals

served per year. In 2011, chains across the UK and Ireland stopped using palm oil and

switched to rapeseed oil in order to reduce saturated fats across its range by 25 per cent.

Food miles have also been reduced as this oil is sourced from Kent instead of Asia.

England had the first overseas franchise for Kentucky Fried Chicken in 1964. England also

had the first overseas branch, which opened in Preston in the North West in May 1965, and

was the first American fast food restaurant chain in the country, pre-dating the arrival of

McDonald's, Burger King and Pizza Hut by almost a decade. The first London branch opened

in North Finchley in November 1968. In the early days most business occurred in the

evenings, when the primary customers were young men arriving from the pub. In 1971

there were 31 outlets; by 1975 the chain had grown to 250 outlets. In the late 1970s and

throughout the 1980s, KFCs began to introduce seating. KFC opened its first drive through

restaurant in the UK in 1984. By 1987 the company had almost 400 outlets.


Marketing Strategy of KFC in Australia & New Zealand:

There are around 600 KFC outlets in Australia, and around 100 in New Zealand. KFC was the

first American style fast food chain to open in both Australia and New Zealand. The largest

franchisee is Collins Foods, which operates 121 stores across Queensland.

The first Australian KFC was opened in April 1968 in Guildford, a suburb of Sydney. The

franchise was owned by a Canadian called Bob Lapointe. The chain rapidly expanded to 75outlets within twelve months. This had a major impact on Australian chicken production,

which increased by 38 percent during the period.

The first KFC opened in New Zealand in August 1971 at Royal Oak, a suburb of Auckland. By

1980 there were 37 outlets. In 1989, PepsiCo acquired the 50 percent stake in KFC New

Zealand that it did not already own from the local Goodman Fielder conglomerate. In 1991

New Zealand turnover topped NZ$100 million for the first time.

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References:

http://en.wikipedia.org/wiki/KFC

http://www.audiencematters.com/interview-

individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+India

http://www.growthstrategy.com/insights/kfcs-winning-recipe-in-china-go-global-

think-local/

http://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.html

http://www.kfcec.co.za/kfc-history

http://www.businessdictionary.com/definition/global-expansion.html
http://en.wikipedia.org/wiki/KFChttp://en.wikipedia.org/wiki/KFChttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.growthstrategy.com/insights/kfcs-winning-recipe-in-china-go-global-think-local/http://www.growthstrategy.com/insights/kfcs-winning-recipe-in-china-go-global-think-local/http://www.growthstrategy.com/insights/kfcs-winning-recipe-in-china-go-global-think-local/http://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.htmlhttp://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.htmlhttp://www.kfcec.co.za/kfc-historyhttp://www.kfcec.co.za/kfc-historyhttp://www.businessdictionary.com/definition/global-expansion.htmlhttp://www.businessdictionary.com/definition/global-expansion.htmlhttp://www.businessdictionary.com/definition/global-expansion.htmlhttp://www.kfcec.co.za/kfc-historyhttp://www.strategicmanagementinsight.com/swot-analyses/kfc-swot-analysis.htmlhttp://www.growthstrategy.com/insights/kfcs-winning-recipe-in-china-go-global-think-local/http://www.growthstrategy.com/insights/kfcs-winning-recipe-in-china-go-global-think-local/http://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://www.audiencematters.com/interview-individual.php?title=Dhruv+Kaul,+Director+-+Marketing+KFC,+Indiahttp://en.wikipedia.org/wiki/KFC

kanan gupta - global marketing assignment kfc nift

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