Kentucky Fried Chicken or KFC is an American fast food chain founded in 1939 by Harland D. Sanders. Firstly, we examine the sharp rise of the KFC corporation between 1964 and 1986. Sanders had sold his own business for 2 million dollars in 1964, and, 22 years later, PepsiCo, a multinational firm, acquired this same business for 840 million dollars. This figure leads us to examine the profitability and the success of this company. KFC, along with its different franchisees in worldwide operations, is one of the famous fast food chains all over the world, along the lines of McDonald's. However, the fast food market is saturated in USA with many competitors and scarce market shares.
Hence, in 1987, KFC, supervised by Tony Wang, decided to seize a huge opportunity in the world fast food market and entered the Chinese market. In 1987, the gamble was beginning to look very risky. Chinese food habits were very difficult to foresee and they didn't know if the Chinese were ready to adapt to this difficult lifestyle move.
Notwithstanding these trials, KFC and Tony Wang succeeded in convincing the Chinese by a suitable strategy and goodwill techniques. In fact, KFC became the leading fast food chain in China and continues to be the only one .
To understand this Chinese success and analyze KFC‘s strategy in this country, we will examine the external environment and the value chain of this incredible company.
[...] When you have a look at KFC‘s figures, you understand that KFC international is very efficient. With sales growth every year, more than 1000 outlets and 6000 units in China, KFC is the first fast food chain in China: units' growth in China against only for KFC USA. KFC has found its market, customers and obviously, its reputation. Meanwhile, to understand the key success, we have to analyse the framework of KFC' value chain. Value Chain Analysis The aim of the value chain is to to differentiate the company from its competitors. [...]
[...] It's the reason why a foreign company has to be careful about its choices: a suitable strategy and a Chinese boss are necessary to predict the Chinese demands. As all companies, KFC has also made some mistakes in China because the fast food market is profitable and risky as well. For KFC, it's now easier because the company is recognized by the Chinese and Chinese people trust the firm. Technological factors: The Internet is becoming a major marketing tool and computers, in general, are used more in fast food chains to keep the stock levels in check, to order just in time chicken suppliers .The web site allows Chinese to play interactive games, avail club membership with reducing prices and new products. [...]
[...] China can become the primary market for KFC and 200 million of its consumers could afford their food every day: this is just less than the entire population of the United States. The purchasing power of Chinese is also rocketing along with the sales of private cars which was rising as well ( 1.544 million cars sold in the first half 2002 and this proved to be a huge market for the automobile company as well). Several chicken suppliers are available in China and KFC set up a partnership with some of them: the price is cheap and the modes of communication is better . [...]
[...] Eventually, the barriers to entry in a fast food chain market like KFC are medium, and the business is easy to start but the risk is high, especially in China where the market is unpredictable. And KFC has been now on the Chinese market for 18 years and Chinese people trust this company who adopted the Chinese behaviour: the key of the success. Threat of substitute The threat of substitute is high. There are many alternatives to eating rapidly in the town centre or anywhere else. [...]
[...] This strategy enhances the trust between KFC and its suppliers and also between KFC and the government. The partnership with Bank of China is another strategic choice. Of course, we know that China is a communist country and everything is controlled by the government. Therefore, foreign companies have to be careful with the operation of their outlets. This is a more useful differentiation for KFC: the support of the Chinese government and its population. Eventually, KFC likes providing services to its customer, andopens its store as early as 7 a.m. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
