Kfc in China Essay Example for Free

Kfc in of importland mainland China EssayIs Tony Wang correct in assuming that China is an ideal market for KFC? Should KFC be act the Chinese market at the present time? Considering China as a strategic emplacement was based from a SWOT analysis. Availability of Supply (Strength) T here(predicate) is ready access of forest fowl in the major metropolitan beas such as Shanghai, Guangzhou and Beijing. Poultry industry is one of the top antecedency categories in Chinas agriculture modernization and it is highly encourage by the government. Thus, the company drive out ensure a reliable supply of high quality s so-and-sodalmongering. Low Competitive Pressure (Strength) capability competitors such as MacDonalds face major barriers to enter the China market due to wretched beef supply while KFC, aside from availability of high quality squawker supply, has the clear payoff since its main product-chicken- is eaten al to the highest degree everywhere in the human. Furthermore , chicken is already familiar in China and even so more than cheaper. Companys Control Measures (Strength) KFC s control mechanisms ar designed to ensure streamer levels of quality, help and cleanliness (QSC) at all of the restaurants chain stores. This fits the positive image in Asia of American fast food restaurants as famous, air-conditioned, and hygienic.Product Consumption (Strength) Chicken has long been regarded as a gracious of nutritious food, which is especially good for the patients, the elders and children. An increase in health conscious consumers excessively raises the role of chicken. Moreover, chicken is a more popular meal than hamburgers in most(prenominal) Asian countries and KFC has the opportunity to offer an American style friendship that is different from most other food establishments. Drawing Area (Opportunity) In former(a) 1978, China began implementing economic enlightens to modernize its economy by lessening the governments control of the econo my.This reform referred as a socialist market economy boosted the national wealth and the consequent 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 potential size and evolution for KFC makes the Chinese market very attractive. Not to mention, the possibility of establishing the first Western style fast-food operation in China as a historic opportunity for the company. Scarce Human Resources (Weakness) Managerial resources atomic number 18 wanted because of the scarcity of Chinese-speaking KFC managers.There are also possible conflicts between KFC-appointed managers and local employees. Lack of Local connections (Weakness) Pioneering in the fast-food field would find KFC very difficult to form local and personal networks between businesses and government agencies, which are crucial in providing access to the local market and domestic suppliers an d eventually, to the companys success. Entering into a relatively unknown market, KFC, as a unsanded entrant will have to get in touch with the local business customs and laws as strong as with knowledge of culture and language. quality of Government (Threat)A communist government with strict foreign investment laws rules China. Setting up here requires heavy investment expenses and high levels of resource commitment. The lay on the line of domestication measures may be imposed by the multitude government, often leading to major financial losses for the foreign investor. Overcoming Threats and Weaknesses KFC has three preferences of entering the China market thru, namely Franchising, Wholly owned subsidiary and Joint venture. The traditionalistic franchising schema, in markets where political risk and cultural unfamiliarity exists, certainly would reduce financial risks.However, KFC had already encountered problems in the past with the aligning of embodied planning with the franchisees short-term focus on profitability. In addition, KFC will be pioneering in the fast-food service and thus requests to be highly sensitive to cultural demands. In such case, franchising is not feasible. On the other hand, a wholly owned subsidiary would rely upon total control over matched advantages and ensures complete operational and strategic control. It also involves high financial risk and little acres-level flexibility and responsiveness. This option is not recommended.Entering into a joint venture is highly recommended. Such an external business strategy will attempt to solve many 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 ways to cut bureaucratic red-tape and finally, serve as a sign of commitment to the host government increase goodwill. In addition, due to the complexity of many barriers to entry into China, a potential partner with sufficient conta cts or networks with the government officials may smoothen the process of setting-up operations in the country.The potential joint-venture partner should be large, well established, provide excellent distri exception 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, damage, quality and strategic control measures are maintained. By building on each partners core competencies, knowledge, and efficiencies, a mutually well(p) 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 new competitive positioning. KFC, on the other hand, can maintain quality supply, which is critical to its success. RE COMMENDATION 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 treatment 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 closely 9 million inhabitants.The numerous universities located in the city c ontri hardlyes to more affluent and educated tidy sum that may make them more open to foreign ideas including Western fast-food. More importantly, plenty of Western tourists are attracted to Beijings many tourist attractions, increasing the potential for generating foreign currency sales. Furthermore, supplies of poultry are readily available. Beijing can serve as the sign platform of KFCs operations and subsequent expand into other potential areas such as Shanghai and Guangzhou. One or two initial 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 issue for the customers with above-average disposable incomes. In order to serve large numbers of customers due to the sheer size of the population, the skilful cultural fit of the business restaurants must be highly functional and effect ive. 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 best 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 standing in front of the main gate. Having experienced the initial surprises brought by a never-seen westerly 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 livelihood and tastes of the fast food, KFC taken advantage of McDonalds. By offering 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 adult success of KFC in China is not only the outcome of KFCs persistent tenets quality, service and cleanliness but also the achievements of its keen perception of cross-cultural marketing and its understanding of Chinese culture.Based on its exam 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 like Mexican Chicken Warp and New Orleans Barbeque Wings.This means can satisfy young consumers who are more open and acceptable to the foreign intuitive feelings. 2)To cater to consumers taste for traditional Chinese meal by offering Chinese style fast food from time to time, say, white-haired Beijing Chicken Roll, a wrap modeled after the way Peking duck is served, but with fried chicken inside and accompanied 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.