A Brief History Of Kfc 6w502o

CONTENTS

1. Introduction: Company’s history and types of international business activities 2. External environment and type of international strategy (t venture) 3. Implementing t ventures and the advantages and disadvantages of this method 4. Organization’s corporate, business and functional level strategies 5. Culture and political environment 6. SWOT analysis 7. The 4 ps of KFC 8. References

HISTORY OF KFC Kentucky Fried Chicken, usually known as KFC, is a chain of fast food restaurants based in Louisville, Kentucky. KFC was a wholly owned subsidiary of Tricon from 19972002, and has been a wholly owned subsidiary of Yum! Brands since 2002. The chain also s itself as Poulet Frit du Kentucky or PFK in the province of Quebec in Canada. KFC primarily sells chicken in form of pieces, wraps, salads and burgers. While its primary focus is fried chicken KFC also offers a line of roasted chicken products, sides and desserts. Outside of North America, KFC offers beef based products such as burgers or kebabs, pork based products such as ribs and other regional fare. The popularity and novelty of KFC has led to the general formula of the fried chicken fastfood restaurant being copied by restaurant owners worldwide. The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952, though the idea of KFC's fried chicken actually goes back to 1930. The company adopted the abbreviated form of its name, KFC, in 1991.[2] Starting in April 2007, the company began using its original appellation of Kentucky Fried Chicken again for its signage, packaging and ments in the United States as part of a new corporate re-branding program;[3][4] newer and remodeled restaurants will have the new logo and name while older stores will continue to use the 1980s signage. Additionally, the company continues to use the abbreviation KFC freely in its advertising. Internationally the company is still known as KFC. Born and raised in Henryville, Indiana, Sanders ed through several professions in his lifetime.[5] Sanders first served his fried chicken in 1930 in the midst of the Great Depression at a gas station he owned in North Corbin, Kentucky. The dining area was named "Sanders Court & Café" and was so successful that in 1936 Kentucky Governor Ruby Laffoon granted Sanders the title of honorary Kentucky Colonel, in recognition of

his contribution to the state's cuisine. The following year Sanders expanded his restaurant to 142 seats, and added a motel he bought across the street.[6] When Sanders prepared his chicken in his original restaurant in North Corbin, he prepared the chicken in an iron skillet, which took about 30 minutes to do, too long for a restaurant operation. In 1939, Sanders altered the cooking process for his fried chicken to use a pressure fryer, resulting in a greatly reduced cooking time comparable to that of deep frying.[7] In 1940 Sanders devised what came to be known as his Original Recipe.[8] The Sanders Court & Café generally served travelers, often those headed to Florida, so when the route planned in the 1950s for what would become Interstate 75 byed Corbin, he sold his properties and traveled the U.S. to sell his chicken to restaurant owners. Sanders entered into franchise agreements paying him five cents for each piece of chicken sold.[citation needed] The first to take him up on the offer was Pete Harman in South Salt Lake, Utah; together, they opened the first "Kentucky Fried Chicken" outlet in 1952.[9] By the early 1960s Kentucky Fried Chicken was sold in over 600 franchised outlets in both the United States and Canada. One of the longest-lived franchisees of the older Col. Sanders' chicken concept, as opposed to the KFC chain, was the Kenny Kings chain. The company owned many Northern Ohio diner-style restaurants, the last of which closed in 2004. Sanders sold the entire KFC franchising operation in 1964 for $2 million USD [10] Since that time, the chain has been sold three more times, most recently to PepsiCo, which made it part of its Tricon Global Restaurants division, which in turn was spun off in 1997, and has now been renamed to Yum! Brands. Additionally, Colonel Sanders' nephew, Lee Cummings, took his own Kentucky Fried Chicken franchises (and a chicken recipe of his own) and converted them to his own "spin-off" restaurant chain, Lee's Famous Recipe Chicken. Today, some of the older KFC restaurants have become famous in their own right. One such restaurant is located in Marietta, Georgia. This store is notable for a 56-foot (17 m) tall sign that looks like a chicken. The sign, known locally as the Big Chicken, was built for an earlier fast-food restaurant on the site called Johnny Reb's Chick, Chuck and Shake. It is often used as a travel reference point in the Atlanta area by locals and pilots.[11]

The original handwritten recipe, along with vials containing samples of each of 11 herbs and spices, is kept locked away at the KFC corporate headquarters in Louisville, Kentucky. Only 2 executives have access to it and to maintain security, the company uses multiple suppliers each providing only a portion of the final ingredients.[12] Products Packaging The famous paper bucket that KFC uses for its larger sized orders of chicken and has come to signify the company was originally created by Wendy's restaurants founder Dave Thomas.[citation needed] Thomas was originally a franchisee of the original Kentucky Fried Chicken and operated several outlets in the Columbus, Ohio area. His reasoning behind using the paper packaging was that it helped keep the chicken crispy by wicking away excess moisture. The rotating bucket sign was designed by Leonard Goldstein to the availability of Kentucky Fried Chicken at his Lendy's Restaurants in Roanoke and Salem, VA. The signs first appeared in 1961, a year before Dave Thomas took over 4 Kentucky Fried Chicken stores in Columbus, OH.[citation needed] Menu items This is a list of menu items sold at KFC. Chicken

KFC's Original Recipe fried chicken and French fries

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KFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried pieces of chicken made with one of two types of breading: original recipe or extra crispy.

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KFC has two lines of sandwiches: its "regular" chicken sandwiches and its Snackers line. The regular sandwiches are served on either a sesame seed or corn dusted roll and are made from either whole breast fillets (fried or roasted), chopped chicken in a sauce or fried chicken strips. The Snackers line are value priced items that consist of chicken strips and various toppings. In the UK the main sandwiches are chicken fillet burger (a chicken breast fillet coated in an original-recipe coating with salad garnish and mayonnaise) and a Zinger Burger (as with the former but with a spicier coating and salsa). Both of these are available as "tower" variants, which include a slice of cheese and a hash brown.

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A variety of smaller finger food products are available at KFC including chicken strips, wings, nuggets and popcorn chicken. These products can be ordered plain or with various sauces, including several types of barbecue sauces and buffalo sauce. They also offer potato wedges.

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Several pies have been made available from KFC. The Pot Pie is a savory pie made with chicken, gravy and vegetables. In the second quarter of 2006, KFC introduced its variation on Shepherd's pie called the Famous Bowl. Served in a plastic bowl, it is layered with mashed potatoes or rice, gravy, corn, popcorn chicken, cheese, and a biscuit. The bowl had been available at KFC's special test market store in Louisville since the third quarter of 2005.

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The KFC Twister is a wrap that consists of either chicken strips or roasted chicken, tomato, lettuce and (pepper) mayonnaise wrapped in a tortilla.

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Shish kebab - in several markets KFC sells kebabs.

Other products

Coleslaw •

In some international locations, KFC may sell hamburgers, pork ribs or fish. In the U.S., KFC began offering the Fish Snacker sandwich during Lent in 2006. The Fish Snacker consists of a rectangular patty of Alaskan Pollock on a small bun, and is the fifth KFC menu item in the Snacker category.[13]

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Three types of salads (which can be topped with roasted or fried chicken) are available at KFC: Caesar, house, and BLT salads (in the US).

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The Bonus Banquet

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Zinger Burger — A regular sized burger which regularly consists of a boneless fillet of hot and spicy chicken, lettuce and mayonnaise in a burger bun. Cheese, tomato, bacon and pineapple can be added upon request. Barbecue sauce can also replace/ the mayonnaise.

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Parfait desserts - "Little Bucket Parfaits" in varieties such as Fudge Brownie, Chocolate Crème (once called the Colonel's Little Fudge Bucket), Lemon Crème and Strawberry Shortcake are available at most locations in the US. [14]

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Sara Lee Desserts — Available in either Cookies and Cream Cheesecake or Choc Caramel Mousse.

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"Variety Bucket": This has chicken, popcorn chicken, two sides, biscuit.

Sides •

Other than fried chicken, many KFC restaurants serve side dishes like coleslaw, various potato-based items (including potato wedges, french fries and mashed

potatoes with gravy), biscuits, baked beans, macaroni and cheese, rice, steamed vegetables and corn on the cob. Discontinued products •

The Colonel's Rotisserie Gold — This product was introduced in the 1990s as a response to the Boston Market chain's roasted chicken products, and a healthier mindset of the general public avoiding fried food. Purportedly made from a "lost" Col. Sanders recipe, it was sold as a whole roaster or a half bird.[15]

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Tender Roast Chicken — This product was an off-shoot of 'The Colonel's Rotisserie Gold'. Instead of whole and half birds, customers were given quarter roasted chicken pieces. For a time, customers could request chicken "original", "Extra Tasty Crispy", or "Tender Roast".

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Chicken Little sandwich — a value oriented sandwich that sold for $0.39(USD)[16] in the U.S. during the late 1980s and early 1990s. It was a small chicken patty with mayonnaise on a small roll, similar to White Castle's mini chicken sandwich. [17]

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Extra Tasty Crispy (ETC) - Chicken much like the Extra Crispy served today, except ETC was prepared using chicken that had been soaking for at least a day in special marinade. There is some speculation that the marinade may have been made with trans-fats, and KFC boasts to no longer use trans-fats in their chicken. In the summer of 2007, KFC started marketing the chicken just as "Extra Crispy" without the marinade.

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Kentucky Nuggets were a chicken nugget product available at KFC until 1996. No reason has been given for their discontinuation.

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Fillers — A promotional item for a Cricket team, the filler was a nine inch (22cm) sub available in four different varieties from November 2007-Mid January 2008, only in Australia.

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Smokey Chipotle — Introduced in April 2008. The chicken was dipped in chipotle sauce then doubled breaded and fried. It has been discontinued since August 2008.

Nutritional value KFC formerly used partially hydrogenated oil in its fried foods. This oil contains relatively high levels of trans fat, which increases the risk of heart disease. The Center for Science in the Public Interest (CSPI) filed a court case against KFC, with the aim of making it use other types of oils or make sure customers know about trans fat content immediately before they buy food. In October 2006, KFC announced that it would begin frying its chicken in trans fat-free oil. This would also apply to their potato wedges and other fried foods, however, the biscuits, macaroni and cheese, and mashed potatoes would still contain trans fat. Trans fat-free soybean oil was introduced in all KFC restaurants in the U.S. by 30 April 2007. CSPI announced that it would immediately drop its lawsuit against KFC and was hopeful that this would create a ripple effect on other restaurants or fast food chains that prepare food rich in trans fat. "If KFC, which deep-fries almost everything, can get the artificial trans fat out of its frying oil, anyone can," CSPI Executive Director Michael Jacobson said in a statement.[18] Advertising

KFC's logo used from 1991 until November 2006. This variation was used beginning in 1999. Early television ments for KFC regularly featured Colonel Sanders licking his fingers and talking to the viewer about his secret recipe and the importance of a family

ing one another for a meal. Despite his death in 1980, this angle was quite common through the 1980s and up until the early-mid 1990s. Throughout the mid 1980s, KFC called on Will Vinton Studios to produce a series of humorous, claymation ads. These most often featured a cartoon-like chicken illustrating the poor food quality of competing food chains, mentioning prolonged freezing and other negative aspects.[19] TV ads also featured Foghorn Leghorn advising Henery Hawk to visit the restaurant for better chicken. In the 80s, KFC was an associate sponsor for Junior Johnson's NASCAR Winston Cup Series cars, with such drivers as Darrell Waltrip, Neil Bonnett, and Terry Labonte. In 1997 KFC briefly re-entered the NASCAR Winston Cup Series as sponsor of the #26 Darrell Waltrip Motorsports Chevrolet with driver Rich Bickle at the Brickyard 400.

A co-branded Long John Silvers and KFC By the late 1990s, the stylized likeness of Colonel Sanders as the KFC logo had been modified. KFC ads began featuring an animated version of "the Colonel" voiced by Randy Quaid with a lively and enthusiastic attitude. He would often start out saying "The Colonel here!" and moved across the screen with a cane in hand. The Colonel was often shown dancing, singing, and knocking on the TV screen as he spoke to the viewer about the product. In reference to these ads, William Shatner shouted "The Colonel is breakdancing! Give me a break!" in the song "I Can't Get Behind That"[20] The animated Colonel is uncommon today. Still using a humorous slant, the current KFC campaign revolves mostly around customers enjoying the food. It also features a

modified version of Lynyrd Skynyrd's "Sweet Home Alabama" as the theme song for practically all its commercials, though the restaurant actually hails from Kentucky. In 2006, KFC claimed to have made the first logo visible from outer space, though Readymix has had one since 1965.[21][22] KFC says "[It] marked the official debut of a massive global re-image campaign that will contemporize 14,000-plus KFC restaurants in over 80 countries over the next few years." The logo was built from 65,000 one-footsquare tiles, and it took six days on site to construct in early November. The logo measured a record-breaking 87,500 square feet (8,130 m2),[citation needed] and was placed in the Mojave Desert near Rachel, Nevada.[23] Many KFC locations are co-located with one or more of Yum! Brands restaurants, Long John Silvers, Taco Bell, Pizza Hut, or A&W Restaurants. Many of these locations behave like a single restaurant, offering a single menu with food items from both restaurants.[24]

The resurrected Kentucky Fried Chicken logo One of KFC's latest ments is a commercial advertising its "wicked crunch box meal". The commercial features a fictional black metal band called "Hellvetica" performing live, the lead singer then swallows fire. The commercial then shows the lead singer at a KFC eating the "wicked crunch box meal" and saying "Oh man that is hot". In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and began to reappear on company marketing literature and food packaging, as well as some restaurant signage Brief history of kfc 1939 Colonel Harland D. Sanders perfects the secret

blend of 11 Herbs & Spices in Corbin, Kentucky.

1952 Pete Harman in Salt Lake City, Utah becomes the first Kentucky Fried Chicken franchisee.

1956 Colonel Sanders sells Corbin, Kentucky restaurant and goes on the road to enlist more franchisees. He signs his first international franchisee in Canada.

1964 KFC sold to a group of investors including John Y. Brown Jr. and Jack Massey for $2 Million.

1969 KFC listed on the New York Stock Exchange. Colonel Sanders buys first 100 shares.

1971 Heublein Inc. acquires KFC.

1980 Colonel Sanders dies and is buried in

Louisville’s Cave Hill Cemetery.

1982 R.J. Reynolds Industries, Inc. becomes KFC’s parent when Heublein Inc. is acquired by RJR (now RJR Nabisco, Inc.)

1986 PepsiCo, Inc. acquires KFC Corporation for $840 Million. Grand Opening of Colonel Sanders Technical Center in Louisville, Kentucky.

1987 KFC opens world’s first Western-style quick service restaurant in China.

1991 A new logo is introduced to emphasize chicken variety, replacing ‘Kentucky Fried Chicken’ with ‘KFC’

1994 KFC officially opens its 9,000th KFC restaurant in the world, in Shanghai, China.

1995 KFC introduces Colonel’s Crispy Strips® and smashes Guinness record with ‘World’s Largest Pot Pie’ in New York City to introduce Chunky Chicken Pot Pie. KFC opens first restaurant in Moscow.

1996 KFC brings back one of the world’s most recognized packages, the bucket of chicken.

1997 PepsiCo, Inc. spins off domestic & international KFC, Taco Bell, and Pizza Hut restaurants to form Tricon Global Restaurants, Inc. on October 7th, Tricon goes public. (NYSE: YUM)

1998 KFC introduces new Colonel logo in signage & packaging. KFC introduces high spirited, new animated Colonel advertising campaign. Reintroduces wildly popular Popcorn Chicken. KFC restaurants now in 82 countries around the world.

2005 KFC NZ and AUS introduce "Cant Beat That

Taste" campaign at the same time as refurbishing our stores.

Driving sales LOUISVILLE, KY. -- KFC president Cheryl Bachelder, who kicked off a major makeover when she ed the chicken chain more than 18 months ago, is putting a fresh look on a seasoned fast-food brand. KFC, which sold its first franchise in 1952, is modernizing its restaurants, improving the quality of its food, and focusing more on marketing--strategies that so far have pleased operators by driving sales over the past year. Yet franchisees say it is difficult to pinpoint one magic bullet as the key sales driver at their restaurants. Instead, they point to several different tactics, such as operational enhancements, the year-old ad campaign featuring former "Seinfeld" co-star Jason Alexander, increased spending on national television commercials, and the popularity of Popcorn Chicken. In addition, franchisees cite ongoing initiatives--like a move to plated meals, exterior design upgrades, and more resources on menu innovation--as providing momentum for further improvements. After KEC suffered from declining sales Irends in 2000, the company brought Bachelder onboard in February 2001 as the chain's leader. Previously she was the top marketing executive at Domino's Pizza. "Cheryl has done a marvelous job," said John R. Neal, a 140-unit KFC franchisee based in Columbia, Tenn. "She has brought in some good people and a lot of good ideas, and

consequently, we have had an historic year that started last August with a tremendous increase in same-store sales." KFC, which is a division of Yum! Brands Inc., ended 2001 with positive sales momentum and has posted same-store sales increases in the first two quarters of this year. The chain has 4,166 franchised and 1,254 company restaurants in the U.S. Neal said his KFC stores have generated 55 straight weeks of positive comparablerestaurant sales, which is unprecedented in his company's 32-year history. While sales at KFC's corporate stores were soft in July, several franchisees said business remained strong at their restaurants. Bachelder itted the competition continues to grow as burger chains promote more chicken products, like Burger King's Chicken Whopper and McDonald's limited-time Chicken Flatbread Sandwich. Hungry for menu innovation, KFC hired R&D veteran Johnny Law earlier this year from his post as corporate research and development chef for the Chili's Grill and Bar chain of Dallasbased Brinker International. Bachelder described Law as "the liaison between marketing and product development. We have established a culinary function, and he heads that up. He is in charge of keeping us abreast of menu trends and how they apply to KFC's product. I call him the inspiration behind food development." Franchisees said they are hopeful Law will help create product news for the chain. "We haven't seen any results yet in our stores, but I'm sure there are more things in the pipeline," said a long-time multi-unit KEC franchisee who has worked closely with the Louisville-based franchisor. The franchisee, who requested anonymity, said he would like KFC to develop a baked on-the-bone chicken product, an entree salad, and other healthier options "to compete against the growing fast-casual segment." He added that KFC is "sampling with a new flavor of crispy chicken" and improved mashed potatoes but declined to provide details. "We still need a value menu," the operator said. "We need to make sandwiches work. Right now the Twister is carrying the load."

Although KFC rolled out a line of chicken sandwiches about two years ago, Bachelder itted, "the Twister is by far the strongest seller. "The Twister consists of two fried chicken breast strips wrapped in a tortilla with shredded lettuce, tomatoes and mayonnaise. Last year KFC rolled out a $200 million ad campaign that features Alexander on a crusade against "boring and bland burgers" with the tag line "There's fast food. Then there's KFC." Following the debut of the new ads, KFC reintroduced Popcorn Chicken--a former limited-time offering more than five years ago--and has promoted it several times since on national television, according to Bachelder. She said the chain's advertising helped boost sales of the product, which "could become a permanent menu item if the demand continues." In October, KFC's 700 U.S. franchisees will vote on national advertising spending for 2003. Neal, the vice chairman of the chain's marketing committee, called the National Council and Advertising Cooperative, said he expects operators to keep contributions at 2.5 percent of sales--a figure that increased from 2 percent in 2000. "We are now spending at a level that is very comparable to Wendy's," Bachelder said. "We are a major player in the business, and we now have the weight to compete." Bachelder said KFC would roll out plated-meal packaging--which involves the use of plastic plates with divided sections instead of foam cups and paper boxes--to all U.S. restaurants by year-end. She added that the back-of-the-house program dubbed "Hot and Fresh," which requires operators to cook smaller batches of chicken and other core menu items more often throughout the day, has improved the quality of the food. KFC has incorporated an updated exterior design that features a larger image of its icon and founder, Col. Harland Sanders, "to create a focal point for customers from a long distance" in almost half of its stores with plans to debut the look system-wide in three to five years. Bachelder said the company is exploring dining room upgrades as well.

Going forward, KFC operators said, they expect to open more multi-branded units, an endeavor that has become a major push at Yum, which now owns A&W and Long John Silvers in addition to its core Pizza Hut and Taco Bell chains. In the past a majority of our multibrands have been with Taco Bell," Bachelder said. "But I think we will do more with A&W and Long John Silver's in the future." Bachelder said she is looking to create a "fresh and contemporary" concept at KFC, which opened its first franchised restaurant 50 years ago in Salt Lake City with Leon W. "Pete" Harman as the operator. She added, "The chain of events for KFC is that we have taken what we are good at-and that is the quality of the food--and have made it central to every way we present ourselves to our customers." External environment of KFC Introduction KFC operates in 74 countries and territories throughout the world. It was founded in Corbin, Kentucky by Colonel Harland D. Sanders. y 1964, the Colonel decided to sell the business to two Louisville businessmen. In 1966 they took KFC public and the company was listed on the New York Stock Exchange. In 1971, Heublein, Inc. acquired KFC, soon after, conflicts erupted between the Colonel (which was working as a public relations and goodwill ambassador) and Heublein management over quality control issues and restaurant cleanliness. In 1977 a "back-to-the-basics" strategy was successfully implemented. By the time KFC was acquired by PepsiCo in 1986, it had grown to approximately 6,600 units in 55 countries and territories. Due to strategic reasons, in 1997 PepsiCo spun off its restaurant businesses (Pizza Hut, Taco Bell and KFC) into a new company called Tricon Global Restaurants, Inc. Reasons for going overseas Companies moves beyond domestic markets into international markets for the following reasons: *Potential demand in foreign market *Saturation of domestic markets *Follow domestic customers that go abroad

*Bandwagon effect *Comparative advantage - some countries possess unique natural or human resources that give them an edge when it comes to producing particular products. This factor, for example, explains South Africa's dominance in diamonds, and the ability of developing countries in Asia with low wage rates to compete successfully in products assembled by hand. *Technological advantage - In one country a particular industry, often encouraged by government and spurred by the efforts of a few firms, develops a technological advantage over the rest of the world. For example, the United Sates dominated the computer industry for many years because of technology developed by companies such as IBM, Hewlett-Packard and Intel Organization structures for International Markets (Modes of Entry) *The mode of entry affects a company's entire marketing mix Exporting *Export merchant (Indirect) *Export agent (Direct) *Company sales branches Contracting *Licensing *Franchising *Contract manufacturing Direct Investment *t venture *Strategic alliance *Wholly owned subsidiaries Criteria for selecting a mode of entry 1.Company's marketing objectives: - production volume - time scale (long/short term) - coverage of market segaments 2.Company's size 3.Government encouragement or restrictions 4.Product quality requirements 5.Human resources requirements 6.Market information 7.Learning curve requirements 8.Risks: political or economic 9.Control needs Mode(s) of entry for KFC *Franchising/Licensing *wholly owned subsidiary *t venture Firstly, KFC's traditional franchising strategy, which is emphasizing standardization and reducing financial risk, on the expense of cultural sensitivity and control. Due to China's strict foreign investment laws such a strategy is not feasible. In addition, KFC will be pioneering in the fast-food field and thus needs to be highly sensitive to cultural demands. In the past, KFC encountered problems with aligning corporate planning with franchisee's short-term focus on profitability. A wholly owned subsidiary represents the second option. Such a strategy relies upon total control over competitive advantages and ensures complete operational and strategic control. It also involves high investment expenses with no financial risk sharing. With high levels of resource commitment and little country-level flexibility and

responsiveness, this option is not recommended. Recommended market entry strategy: t venture The essence of a t venture is the synergy effect of two different entities merging. Such an international business strategy will attempt to; solve many logistic problems such as access to good quality chicken and other supplies, ease the access to the Chinese market, share risk with a local entity, and finally serve as a sign of commitment to the host government increasing goodwill. In addition, due to the complexity of many barriers to entry into China, a potential partner with sufficient s/networks with government agency officials may smoothen the process of setting-up operations in the nation. The potential t-venture partner should be large, well established, provide excellent distribution channels and have personal network access to government officials. It should also have modern equipment and a good management record. It is recommended that a partner is found by backwards integration. In other words, it is a good domestic poultry supplier. In order to ensure total commitment and balance of power between the two partners, a 55/45 t venture, with KFC as the dominant partner should be set-up. By building on each partner's core competencies, knowledge, and efficiencies, a mutually beneficial synergy effect could be achieved as a result of t venture activities. For instance, the local partner can learn from KFC how to produce a better product at a lower cost and further expand on its new competitive positioning. KFC, on the other hand, can maintain quality supply which is detrimental to its success. A t venture will also significantly ease the entry to the virgin Chinese market. A new entrant would find it very difficulty to form local and personal networks between businesses and government agencies, which are crucial to success and provide access to the local market and domestic suppliers. In addition, local business customs and laws can be quicker understood and established ways to cut bureaucratic red-tape can be further utilized. Also, the local knowledge of culture, language and geography is

beneficial for any foreign entrant into a relatively unknown market. In order to cope with the significant political risk of investing in China, a local t venture partner will share this risk. There is always a risk of domestication measures imposed by the host government, often leading to major financial losses for the foreign investor. By having a 55/45 t venture agreement, this risk is potential eliminated, since only 55 percent of operations are domesticated. If such an unfavorable situation would arise, KFC has clearly less to loose in such an agreement. In addition, by being the dominant partner, KFC will be able to ensure cost, quality and strategic control measures. The Chinese government may very well find KFC beneficial to the nation, as it is the pioneering western fast-food outlet. Training the t venture partner, personnel and other institutions in the value chain can reduce learning and experience curves. KFC's operations may also inspire local competitors to increase service and quality of food. It can also help to create a competitive fast-food industry in China as new competitors respond to KFC's ideas. Moreover, a t venture agreement commonly produces goodwill and commitment between the host government and the foreign investor. In such a relationship, the foreign investor is not seen as trying to take advantage of the nation for profit purposes, but rather show willingness to share. Maintaining good relations with the host government is a critical success factor as government policy impacts intensely upon business activities. Factors that influence marketing decisions Social and cultural forces *Family *Social customs and behaviour *Education *Language differences Economic environment *Infrastructure *Level of economic development *Competition Political and legal forces *Trade barriers oTariff oImport quota oDumping oLocal-content law oBoycott *Trade agreements oGATT oWTO oEU oNAFTA oAPEC oASEAN Information gathering (Marketing Research) Marketing research - the systematic and objective identification, collection, analysis, and dissemination of information that is undertaken to improve decision making related to identifying and solving problems (opportunities) in marketing.

It is indeed, has a broad range of applications and plays a crucial role in the marketing decision-making process. The task of marketing research is to assess the information needs and provide management with relevant, accurate, reliable, valid, and current information to aid marketing decision marking. Company conduct and use marketing research to stay competitive and to avoid high costs associated with making poor decisions based on unsound information. Marketing research plays a significant part in the development of marketing plans because it allows the organization to become less isolated from the key trends and changes, which surround their product. To continue to be successful, organizations must receive information, from the researcher that is clear and accurate. It also has to satisfy your pre-determined goal for your research. Steps in international marketing research: 1.define research problem(s) 2.develop a research design 3.determine information needs 4.collect the data (secondary and primary) 5.analyze the data and interpret the results 6.report and present the findings of the study Major research challenges 1.Complexity of research design due to environmental differences 2.lack and inaccuracy of secondary data 3.time and cost requirements to collect primary data 4.coordination of multicountry research efforts 5.difficulty in establishing comparability across multi-country studies Primary Research The use of: - *Focus group *Survey methods for cross-cultural marketing research Questionnaire - Sampling (unit, size, procedure) - Methods (mail, phone, personal interview, online survey) *Collecting information Secondary Research Use of : *Secondary data (data which is already available) *Primary data (when information is not useful or not exist) *Secondary data sources: government, Lexis/Nexis, FINDEX, ACNielsen, etc., Problems with secondary data research: *Accuracy of data *Age of data *Reliability over time *Comparability of data - triangulate - Functional or conceptual equivalence *Lumping of data *The data may have been collected and manipulated for a specific use, therefore it may be incomplete, ambiguous or out of context.

*Data may be compiled in different ways in different countries making comparability difficult. For example, in consumer expenditures are estimated largely on the basis of turnover tax receipts, in the UK they are measured on tax receipts plus household surveys and production sources. Similarly with GNP measures, it only reflects average health per head of population and not how it is dispersed. As seen earlier, bimodalities are normal, thus introducing bias. GNP may be understated for political reasons and may not reflect education (i.e. wealth based on minerals). Also infrastructure may reflect channelled funds, say for tourism, rather than society as a whole - typical of many African countries. *Data may be corrupted by methodological and interpretive problems, for example, definitional error, sampling error, section error, non response error, language, social organizations, trained workers, etc. *Data may be nonexistent, unreliable or incomplete thus making inter country comparisons very difficult *Data may be inflated or deflated for political purposes *Data from documented sources must, therefore, be treated with care and caution Special problems in international marketing research As well as the difficulties associated with secondary data described earlier, there are a number of other problems connected with obtaining data in the global context. These are as follows: *Multiple markets need to be considered each with unique characteristics, availability of data and research services *Many markets are small and do not reflect the cost of obtaining data for such a small potential *Methodological difficulties may be encountered like nuances of language, interpretation, difficulty of fieldwork supervision, cheating, data analysis difficulties (lack of computer technology) *Infrastructure difficulties - lack of telephones, roads, transport, respondent locations and, *Cultural difficulties - reluctance to talk to strangers, inability to talk to women or children, legal constraints on data collection/transmission. *Many of these facets apply more to developing than developed countries. However using a variety of methods, outlined in the section, a lot of them can be ingeniously

overcome *Whilst the gathering of information in the international context is fraught with difficulties, without it the marketer would be planning in the dark. The two most important modes of scanning are surveillance and search, each giving data of a general or specific kind, invaluable to the strategy formulation process. In all decisions whether to obtain data or not, costs versus benefits have to be considered carefully SWOT SWOT is a method of analysis which examines a company's Strengths, Weaknesses, Opportunities and Threats. Often used as part of the development process for a marketing plan, or to feed the results of a marketing audit back into a revised plan According to the analysis, there are mainly two weaknesses for KFC. One of them is financial problem and the other one is that KFC concentrates on only one single market. For its strength, it has its own unique skill in fried chicken and it has established a good brand name. However, it is now facing a threat. Nowadays, people are more concerned with the healthiness in food and their demand for high quality of food is increasing. Also, it is now under economic crisis. Nevertheless, it still has an opportunity in its market. It is because KFC is an leader in fried chicken market. (Fried chicken) The early entry into international markets placed KFC in a strong position to benefit from international expansion. Most of KFC's international expansion was through franchises, due to the fact that they were owned and operated by local entrepreneurs with a deep understanding of local language, culture, customs, law, and marketing characteristics. In larger markets there was a tendency to build company-owned restaurants. The rationale was that fixed costs could be spread over a large number of restaurants and lower prices on products could be negotiated. China was one of the international markets KFC focused on. Influences in marketing decisions Cultural factors Cultural: the basic beliefs and values cherished by a society as a whole and handed down from one generation to the next. Let us consider how culture influences the marketing decision. Before we go into detail, should we first consider the elements contributing to the culture context. The elements of culture: *Language *Religion *Values *Attitudes *Manners and

Customs *Material culture *Aesthetics *Education *Social Institutions Language Language can be categorized into verbal and non-verbal one. For verbal language, messages can be conveyed into words, by the ways the words that are spoken. For non-verbal language, it refers to gesture, body position and eye . A new entrant would find it very difficulty to form local and personal networks between businesses and government agencies, which are crucial to success and provide access to the local market and domestic suppliers. In addition, local business customs and laws can be quicker understood and established ways to cut bureaucratic red-tape can be further utilized. Also, the local knowledge of culture, language and geography is beneficial for any foreign entrant into a relatively unknown market. Religion and Superstition Religion is one of most sensitive elements of a culture. To appreciate people's buying motives, customs & practices, awareness & understanding of their religion is often crucial. When marketer has little or no understanding of a religion, it is easy to offend unintentionally. In numerous Asian countries, ancient Chinese philosophy of feng shui (wind-water) plays an important role in design & placement of corporate buildings & retail spaces According to feng shui, proper placement & arrangement of a man-made structure & its interior objects will bring good fortune to its residents & visitors. To avoid conflict against home place's religion is very important. Religion has an impact on international marketing that is seen in a culture's values and attitudes toward entrepreneurship, consumption and social organization. Values They are enduring moral beliefs shared by of a society and contributing to its culture and beliefs of what is "good," "right," and appropriate in behaviour Attitudes For marketers, a crucial value distinction is a culture's attitude

toward change Societies that are resistant to change are usually less willing to adopt new products or production processes Local attitudes toward foreign culture will drive product positioning & design decision. In South Africa, goods with American roots are strongly valued - using as a selling point, the amount of affect or feeling for or against a stimulus. KFC uses GM chicken. This arouses a great controversy in many places. In some places, people think that as long as KFC can give delicious fried chicken, it does not matter what kind of chicken they are using. On the other hand, some people think that the use of GM chicken will have great influence on the food chain which is very crucial to the environmental health and nature development. Take China as an example, the people there do not have very strong and clear idea on GM food. There is not as many problems that has to be faced as in other advanced placed in the world. Different values will influence if the product can be consumed by the market. It will also determine the marketing segment, like if the selling point has to very . Different attitude will determine the ease of entering the market. According to the above data, the demand and supply of the host country can be known so what the related produnt decision can be made to match the demand of the market. Manners and Customs Potential problem areas for marketers arise from an insufficient understanding of: *Different ways of thinking *Necessity of saving face *Knowledge & understanding of the host country *Decision-making process & personal relations *Allocation of time for negotiations When you understand the customs and manners of the host country, you can determine what kind of promotion and organization is best for that country. Also, the attitude will also determine what kind of industry can enter the host country. For example, if a place likes having home made food, it can tell if a fast food shop or take away is more suitable. For example, in China, people there begin to try and accept new and foreign stuff. It is a

good opportunity to enter the market at this moment. Managers must be concerned with differences in the ways products are used. Material culture Results from technology and is directly related to the way a society organizes its economic activity. It is manifested in the availability and adequacy of the basic economic, social, financial, cultural convergence, and marketing infrastructures. The basic economic infrastructure consists of transportation, energy, and communications systems. The degree of industrialization can provide a marketing segmentation variable. When KFC first went into the Japanese market in the early 1970's, the company chose to form a t venture with a large scale poultry producer with excess capacity. This 50/50 t venture served the two partners very well, as KFC was able to ensure a stable supply of quality supplies to its operations, and the local corporation was able increase efficiencies in production by selling its excess supply. Furthermore, KFC was able to utilize existing distribution networks serviced by the partner and at the same time, adhere to exiting rules and regulations imposed by the Japanese government on foreign direct investment. Aesthetics Each culture makes a clear statement concerning good taste, as expressed in the arts and in the particular symbolism of colors, form, and music. What is and what is not acceptable may very dramatically even in otherwise highly similar markets. In China, the packing has been well accepted in the worldwide so it can be easily accepted by the people in China. Moreover, red which is a main color in its package and logo symbolize wealth and happiness. So it can be well accepted by people in China without much difficult in establishing a good image. It will seriously affect how the product is promoted and its design. For example, the original packing might not be as well as accepted in host country.

The international firms have to take into consideration local tastes and concerns in deg their facilities. They may have general policy of uniformity in building or office space design, but local tastes may often warrant modifications. Respecting cultural traditions may also generate goodwill toward the international marketer. Education Education is one of major vehicles to channel culture from one generation to the next Two facets of education that matter to international marketers include: level & quality of education. Education affects employee training, competition for labor and product characteristics marketers need to exercise caution such as product labeling, print ads, & survey research. For KFC in China, it has advantage that it is easy to employ manual labors as there is a large pool of manual workers suitable for it. As this job does not require a very high education and the general education is not very high yet, this helps to balance the supply and demand in the market. Education in general affects employee training, competition for labor and product characteristics. Marketers need to exercise caution such as product labeling, print ads, and survey research. The international marketing manager may also have to be prepared to fight obstacles in recruiting a suitable sales force or personnel. Social Institutions They refer to the positions of men & women in society, family, social classes, group behavior, & age groups are interpreted differently within every culture. Each institution has an effect on marketing because each influences behavior, values, & overall patterns of life The fitting of an organizational culture for internal marketing purposes to the larger context of a national culture has to be executed with care. The internationally successful companies all share an important quality: patience. They have not rushed into situations but rather built their operations carefully by following the

most basic business principles. These principles are to know your adversary, know your audience and know your customer. Summary Culture is one of the most challenging elements of the international marketplace. The most complicated problem in dealing with the cultural environment stem from the fact that we cannot learn culture - we have to live it. Two schools of thought exist in the business world on how to deal with cultural diversity. One is that business is business the world around, following the model of Pepsi and McDonald's. In some cases, globalization is a fact of life; however, cultural differences are still far from converging. The other school proposes that companies must tailor business approaches to individual cultures. Setting up policies and procedures in each country has been compared to an organ transplant; the critical question centers on acceptance or rejection. The major challenge to the international manager is to make sure that rejection is not a result of cultural myopia or even blindness. Political/Legal factors Economic factors Appendix Marketing Research Methods Marketing research plays a significant part in the development of marketing plans because it allows the organization to become less isolated from the key trends and changes, which surround their product. To continue to be successful, organizations must receive information, from the researcher that is clear and accurate. It also has to satisfy your pre-determined goal for your research. "Marketing research is the function which links the consumer, customer and the public to the marketer through information." Market research identifies issues that have a direct effect on the organization, through the analysis of the results. The results and obtained information must be collated and presented in a form that is easy to understand. Instead of raw data, you have a series of graph, charts and tables. There are three main types of research, diagnostic, descriptive and predictive.

Diagnostic research is used when you need to analyze the effectiveness of an advertising campaign. Descriptive research is fact finding secondary data. You would use this when you planned to sample a section of a target audience for a particular product. Predictive research is about identifying new opportunities in a market place and calculating the effect of marketing decisions. You would use this if the organization were planning to expand or regenerate their product. When conducting research, you have to use a sample of your population. The reason why you use a sample is because you can't physically research every single person in the country, unless you are the Government and you are conducting a census. Your sample should consist of people who fit into the research requirements. Sampling is cost and time effective, which are extremely important to the organisation that is commissioning the research because they are anxiously waiting for the results of the research. The research data, which has been collected, can be categorized into two main sections, qualitative research and quantitative research. Usually most research contains particles from both sections. Qualitative research is when the information is open to broad interpretations. It is not concerned with finding statistics, which relate to the product but focuses on the reasons lying behind certain areas, for example consumer feeling and motivation. Qualitative research is a more flexible approach as it explores customer behavior, it identifies and analyses their emotions. This research is usually conducted on small samples because the finding will be divers and full of 'richness'. This research cannot be generalized as it deals with complex issues that tend to be unique to the individual, human emotions. When using Qualitative research, there are several research techniques that you can use. The techniques must be on a more personal scale, in comparison with quantitative

research, as the research requires that source of information. Primary data is excellent as it is specifically designed to address the problems identified in the research objectives. Primary data includes information that is 'first hand', as it is collected directly from the respondent. Examples are surveys, group discussions, interviews and observations. Surveys are an excellent form of researching. The survey has been carefully designed to address your objectives. It can be quick and accurate in pinpointing the information required because there is no room for distraction. Respondents either chose an answer or make their own. It is relatively cheap and less time consuming. The results are excellent to interpret, evaluate and are affectively displayed in several formats. Group Discussions (Focus Groups) is when six to ten people, who are recruited according to the pre-determined criteria, exchange experiences, attitudes and beliefs about certain topics. It is a semi controlled environment and a lead the conversation flow. The whole discussion is recorded and everyone is informed about the recording, following ethical guidelines. With a group environment, the respondents are less intimidated because they are not alone, Observational research is when a person, who satisfies the criteria, is being observed and recorded. The observer will note the person's body language and behavior and will analyze it in order to understand the problem. The observer will either be conducting this research in a controlled or noncontrolled environment. A controlled environment would be a room with only the observer and subject present. A non-controlled environment would be a busy street. Most observational research is conducted in controlled environments because fewer ethics are involved. Ethics are breached when someone is being recorded against their will or are unaware. High street clothing companies, such as Arcadia, Mark and Spencer's and Next all carry out observational research. The research is through a 'mystery/test shopper'. The researcher takes on the role of a customer and rates the staff's performance. Again I have been involved in an observational research campaign. I was asked to look at several different types and styles of packaging for "Southern Comfort" whiskey. The researcher recorded my expressions and feelings towards each

packaging idea. The remaining section from your collected data is quantitative research. This type of research involves a mass collection of measurable information, which is not open to interpretation. This type of research can be conducted through the use of telephone interviews, face-to-face interviews and mail questionnaires. Quantitative research also utilizes secondary data sources. The types of secondary data sources are information that has already exists, from an external body. Government published data, trade press or association files, press articles or report commissioned by independent authorities or watchdogs. However secondary information is complicated, it may take a long time to get relevant information that you can use. The majority of the information may not be relevant to your research. This is an example of low cost research, most sources are available free of charge to the public. When using quantitative research the methods differ from qualitative methods. Quantitative methods tend to be more impersonal, and direct to the point. Telephone interviews are excellent because the survey 'script' has been designed to combat the issues that the research is trying to find out. The speed of the interview must be fast and last no longer than ten minutes. You have to keep the respondent interested in order to get a response. Individual interviews are another form of research. The process can last up to an hour. During this hour the researcher is recording your responses and is able to expand on your answers because a rapport has been built up. This form of research is more common as you see the researcher, with their clipboards on most high streets. Mail questionnaires are a more popular form of research. It involves sending out selfcompletion surveys to a population sample. The sample is then supposed to fill them out and return them to the researcher. With mail questionnaires you can cover a vast

amount of your sample, as you are able to send out thousands of questionnaires. The only problem is that response rate tends to be low, With the types of research available, I personally believe in qualitative research because there is a greater need to expand and develop your research. This is useful because it allows your finding to be more accurate and richer in source. When conducting research I suggest that you use both types of data. Secondary data will allow you to build up a background and may even hold some relevant information to your research. Sources of global information Sources of information include documented sources, human resources or perceived sources. Documented sources In recent years there has been an information explosion, especially in the documented or "secondary" source area. (Primary data collection will be dealt with later). Various sources of documented data are available including: i) Governments *Central office of information (UK) *Central Statistical Office (Zimbabwe) *EU documentation centres *Boards of trade, or Ministry of Commerce ii) International bodies *the UN Statistical Yearbook *World Bank - general statistics *OECD - general statistics *ITC - Geneva (information service) iii) Business, trade, professional *Chambers of Commerce *Institute of Marketing *American Management Association *The Market Research Society iv) Foreign embassies, trade missions *Commercial newspapers *Financial agencies - Price Waterhouse *Kom of companies *Economist Intelligence Unit (UK) v) Other *Libraries, universities, colleges. There are excellent sources of overseas data, in the horticultural industry, giving information on markets, prices and produce required for those wishing to sell into Europe. Examples of these are given below: *International Trade Centre (ITC) Geneva *COLEA, Paris *Natural Resource Institute (NRI) UK *GTZ, *CBI, Netherlands *IMPOD, Sweden *Chambers of commerce *Food and Agriculture Organization of the United Nations Conclusion This analysis is focused by exploring, through different perspectives, the pros and cons of KFC investing in China. What can make this region attractive to so many companies? First, the size of the market - it has a

population of more than 1.6 billion. Second, most countries are becoming fully functional democracies. Third, most countries are successfully stabilizing their economies. These factors make investment in this market less risky. In a competitive market, companies are not only dependent on their strategy but also on the strategy of their competitors. If the competition is exploring the China market and you aren't, can't that be risky? For example, if McDonald's invest in the risky market X and KFC doesn't, two situations may happen. First the investment succeeds, in which case McDonald's gains the advantage. Second the investment fails, in which case KFC gains the advantage from McDonald's misfortune. To playing safe, KFC can follow the competition into the new markets. That way the chance of all loosing or all winning is quite the same

KFC SWOT ANALYSIS STRENGHTS 1) Brand equity

2) Second only Mac do in foreign sales

3) Strong cash flows

4) Generate $1billion each year

5) Very strong internationally UK, Middle east..ect

6) Strong franchise and license fee revenue for cash flow

7) Interactive relationship marketing 8) Strong trademark recipes

9) Ranks highest among all chicken restaurant for its convenience and menu variety.

10)

Largest multibranded in the world with 100 KFC and pizza hut

combo`s 600 KFC and taco bell combos

OPPORTUNITY

1) Growth of 18-24 age demographic

2) Increase in USA median income

3) International beef scare from mad-cow and hoof and mouth disease

4) Home meal replacement market will exceed an estimated $577 billion by 2020

5) Targeting growing ethnics market- Asian American ,Hispanic

6) New leadership

7) Domestic market

8) Updating restaurant

9) Balanced menu

10)

Customer focus

11)Increase delivery service

Weaknesses 1) Recent drop in sales for KFC

2) Failed to rank in growth in 2000

3) Same store sales decline

4) Lack of knowledge about their costumer

5) Lack of relationship building with employees, supplier and costumer

6) Franchising leads to loss control and quality

7) Lack of focus on research and development

THREATS 1) Rated 83 out of 100 in term of competitiveness

2) Increase wage rates directly affect menu prices

3) 85% annual employees turnover for fast- food market

4) Supermarket and new competitors threaten HRM market

5) International exchange rates

6) Health trend away from fried foods

7) Changing customer demands

8) Quality of service focus TARGET MARKET EVERYONE IN HURY OR FEELING BUSY OR LAZY TO PREPARE HOME MEAL. Positioning 

Positioning refers to placing a brand in that part of the market where it will have a favorable reception compared to competing brands. Subash Jain



“A product’s position is the place the position occupies in consumers’ minds relative to competing products.”

Philip Kotler

Generic Positioning Strategies 

Our product is unique 



e.g. chicken fried , with French fries

Our product is different 

e.g. zinger max (low in cholesterol) Listerine (kills germs) Amex Blue credit card (6-month rate of

15.9% vs the market rate of 24%)



Our product is similar

e.g. chicken Product Positioning Using Perceptual & Preference Maps Marketing managers use a Mapping technique to help them visualize the competitive structure of the market before they develop differentiation and positioning strategies.

Positioning Statement For [a target segment], the [concept] is [the primary claim] because [it is the single most important factor]. Example: For KFC, the low cholesterol level is the only healthy alternative because it is safe for frequent consumption

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policy)

References http://www.rpemery.com/articles/advantages_and_disadvantages_jv.htm http://www.mhhe.com/business/management/thompson/11e/case/starbucks-2.html BBC News Online: Business, “KFC.” (April 30, 1998). Retrieved 22 April, 2002 on the World Wide Web: http://news6.thdo.bbc.co.uk/low/english/business. Business & Company Resource Center, “KFC Corp. – Chronology” (April 15, 2002).

Business Wire. Retrieved 21 April, 2002 on the World Wide Web: http://www.businesswire.com. Fortune.com; Best Companies to Work For. Retrieved 22 April, 2002 on the World Wide Web: http://www.fortune.com/lists/bestcompanies. Hoovers.com. Retrieved 19 April, 2002 on the World Wide Web: http://www.hoovers.com. International Development. Retrieved 24 April, 2002 on the World Wide Web: http://www.KFC.com/aboutus/internationaldev.asp. Puget Sound Business Journal, “Albertson’s to open KFC c” (November 11, 1999). Retrieved 20 April, 2002 on the World Wide Web: http://seattle.bizjournals.com. Puget Sound Business Journal. Retrieved 20 April, 2002 on the World Wide Web: http://seattle.bizjournals.com.

Ratio Comparison for SBUX from Multex.com. Retrieved 20 April, 2002 on the World Wide Web: http://yahoo.marketguide.com/MGI. Starbucks Corporation, 2000. Retrieved 20 April, 2002 on the World Wide Web: http://www.starbucks.com. KFC Corporation Annual Financials – Hoover’s Online. Retrieved 22 April, 2002 on the World Wide Web: http://www.hoovers.com/annuals.