Kfc in China Essay

Is Tony Wang pose in assuming that chinaware is an standard market for KFC? Should KFC be pursuing the Chinese market at the testify m? Considering china as a strategic location was base from a SWOT analysis. Availability of Supply (Strength) There is ready rile of forest poultry in the major metropolitan areas such as Shanghai, Guangzhou and Beijing. Poultry industry is one of the top priority categories in Chinas agri enculturation modernization and it is gameyly encourage by the brass. Thus, the party can ensure a reliable supply of high choice chicken. Low Competitive Pressure (Strength)Potential competitors such as MacDonalds face major barriers to enter the China market cod to scummy beef supply while KFC, aside from availability of high quality chicken supply, has the clear advantage since its main product-chicken- is eaten al close everywhere in the world. Further more(prenominal), chicken is already familiar in China and even a great deal cheaper. Companys C ontrol Measures (Strength) KFC s tick off mechanisms are designed to ensure standard levels of quality, service and cleanliness (QSC) at all of the restaurants chain stores. This fits the positive stove in Asia of American fast sustenance restaurants as famous, air-conditioned, and hygienic.Product Consumption (Strength) Chicken has long been regarded as a kind of nutritious food for thought, which is especially bankable for the patients, the elders and children. An increase in wellness conscious consumers also raises the consumption of chicken. Moreover, chicken is a more prevalent meal than hamburgers in or so Asian countries and KFC has the opportunity to offer an American style consume that is different from most separate food establishments. drawing off Area (Opportunity) In late 1978, China began implementing economic reforms to modernize its frugality by lessening the governments control of the economy.This reform referred as a socialist market economy boosted the national wealth and the consequence increase in individuals income has led to steady changes in Chinese consumer patterns prevalent in pre-Mao era. As the worlds most populous nation with over 1 billion inhabitants, the potentiality size of it and growth for KFC makes the Chinese market very attractive. Not to mention, the possibility of establishing the premier Western style fast-food operation in China as a historic opportunity for the company. Scarce Human Resources (Weakness) Managerial resources are extraordinary because of the scarcity of Chinese-speaking KFC managers.There are also possible conflicts between KFC-appointed managers and topical anesthetic employees. Lack of Local connections (Weakness) Pioneering in the fast-food field would find KFC very gruelling to form topical anesthetic and personal ne cardinalrks between businesses and government agencies, which are important in providing access to the topical anesthetic market and domestic suppliers and eventu ally, to the companys success. Entering into a relatively unknown market, KFC, as a impudently entrant will pass to get in touch with the local business customs and laws as well as with knowledge of culture and language. Quality of Government (Threat)A communist government with strict unknown investment laws rules China. Setting up here requires heavy investment expenses and high levels of resource commitment. The risk of domestication assesss may be imposed by the host government, often leading to major financial losses for the unusual investor. Overcoming Threats and Weaknesses KFC has three creams of entering the China market thru, namely Franchising, Wholly owned subsidiary and Joint venture. The traditional franchising strategy, in markets where political risk and heathenish unfamiliarity exists, certainly would cringe financial risks.However, KFC had already encountered problems in the late(prenominal) with the aligning of corporate planning with the franchisees shor t-term focus on profitability. In addition, KFC will be pioneering in the fast-food service and thus ask to be highly sensitive to cultural demands. In such case, franchising is non feasible. On the other hand, a wholly owned subsidiary would depose upon total control over competitive advantages and ensures complete operational and strategic control. It also involves high financial risk and little country-level flexibility and responsiveness. This option is not recommended.Entering into a reciprocal venture is highly recommended. such an international business strategy will attempt to solve numerous logistics problems such as access to good quality chicken and other supplies, ease the access to Chinese market, share risk with a local entity, utilize guidances to cut bureaucratic red-tape 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 match with fitted contacts or networks with the government officials may smoothen the process of setting-up operations in the country.The potential joint-venture checkmate should be large, well established, provide excellent dispersal channels and have personal network access to government officials. It is recommended that a partner be found by backward integration- that is, a good domestic supplier of poultry. In order to ensure total commitment, the set-up of the joint venture should be with KFC as the dominant partner. This way, cost, quality and strategic control measures are maintained. By building on each partners core competencies, knowledge, and efficiencies, a mutually beneficial synergy effect could be achieved as a result of joint 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 unseasoned competitive positioning. KFC, on the other hand, can maintain quality supply, which is vital to its succ ess. RECOMMENDATION The Chinese market represents a great opportunity for KFC where Tony Wang is correct in his assumptions. By finding an appropriate domestic business partner via backward integration, it is possible to further build on opportunities and significantly reduce risk throughout financial sharing, cultural sensitivity and favorable sermon from the host government.KFC should start pursuing this strategy at the present time and develop a coherent international strategy linking the China operations with the other markets. Which of the three cities being investigated should the company choose if it decides to enter China? The capital city, Beijing, is recommended as the preferred location for KFCs entry into the Chinese market. Beijing is the center for most political activities and provides the necessary access to government agencies and business regulatory bodies. Also, it has a large population of nearly 9 million inhabitants.The numerous universities located in the cit y contributes to more overflowing and educated people that may make them more open to inappropriate ideas including Western fast-food. More importantly, plenty of Western tourists are attracted to Beijings many tourist attractions, increasing the potential for generating contrary currency sales. Furthermore, supplies of poultry are readily available. Beijing can serve as the sign platform of KFCs operations and later expand into other potential areas such as Shanghai and Guangzhou. One or two sign outlets should be set-up to get an insight of how KFC will be perceived in the Chinese capital.Both dine-in and take-out facilities much in line with most KFCs international operations ought to be offered in large, clean and well-serviced outlets to cater for the customers with above-average expendable incomes. In order to serve large numbers of customers due to the slip size of the population, the right cultural fit of the business restaurants must be highly functional and effectiv e. Special menu-substitutions may also have to be facilitated to cater to consumers taste for traditional Chinese meals. Lessons Learned Capitalizing on Strengths and Opportunities In the initial period of KFCs entry into China market, few of Chinese onsumers were really impressed with the food itself since the country is known to have the ruff culinary culture in the world.Instead, they were more fascinated with the eating experience the encounter with friendly employees, quick service, spotless floors climate-controlled and brightly-lit dining areas, and smiling Colonel Sanders stand up in front of the main gate. Having experienced the initial surprises brought by a never-seen western lifestyle, Chinese consumers have gradually calmed down and their consumption attitudes towards foreign products are getting more reasonable.Since Chinese people are more concerned with the nutrition and tastes of the fast food, KFC taken advantage of McDonalds. By offer poultry food that is more acceptable to Chinese people compared with beef, have taken consumers needs and competition with other brands into account. Knowing the market The most prominent success of KFC in China is not only the result of KFCs persistent tenets quality, service and cleanliness but also the achievements of its keen cognition of cross-cultural marketing and its understanding of Chinese culture.Based on its scrutiny and adoption of Chinese traditional culinary arts, KFC has developed a series of products that are specially designed for the tastes of Chinese consumers. Moreover, in purpose of maintaining its image of a U. S. brand and keeping consistent with its globalization strategy, most of KFC s Chinese side dishes are defined as short-term products and would be replaced by new products. KFCs product strategies are categorized into two aspects 1)To meet consumers desire for novelty by introducing western style products resembling Mexican Chicken Warp and New Orleans Barbeque Wings.This w ay of life can satisfy young consumers who are more open and acceptable to the foreign flavors. 2)To cater to consumers taste for traditional Chinese meal by offering Chinese style fast food from time to time, say, gray-haired Beijing Chicken Roll, a wrap modeled after the way Peking duck is served, but with fried chicken inside and attach to with green onions and hoi sin sauce, and Sichuan Spicy Chicken which absorbs the spicy flavor of Sichuan dish. This measure can attract older consumers who are fond of Chinese food and in need of the convenience of fast food service as well.