Get First 2 Pages Absolutely Free

Get Top Grades In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework Writing

100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

kfc in china case study solution

Category: Business Paper Type: Homework Reference: APA Words: 1500

KFC and McDonald’s are two well known and successful companies in fast food industry and they have been competing in the industries for years. Following analysis has been conducted based on the case study titled “McDonald’s and KFC: Recipes for Success in China” and this case nicely evaluates the endeavors of both companies in China. International strategy differs with the strategy intended to target a specific country like in China. Following is the analysis of the case:

Country level analysis
Positive aspects of China
GDP growth
China was one of the fastest growing economies in the world and according to the article its growth averaged at more than 9 percent since the year 1978. When KFC decided to make the entry in the country the per capita income was only $621 which grew later years in the result of continuous growth rate of the country.

Population
China is the most populated country in the world with 1.3 Billion people which make it an attractive market for the investors. This is one of the main strengths of the country to have vast population to support the operations of the companies investing in the country.

Meat consumption
One of the benefits of China is high possibilities of growth in the country as annual meat consumption in China is 74 KG compared with 128 KG per head in the United States. Optimistic aspect of these facts is that consumption rate has increased from 59 kg per head annually in 2005 to 128 kg per head in 2009. This growth rate shows that growth rate in meat consumption is fast in China.

Case Analysis: McDonald’s and KFC: Recipes for Success in China Name Affiliation Case Analysis: McDonald’s and KFC: Recipes for Success in China KFC and McDonald’s are two well known and successful companies in fast food industry and they have been competing in the industries for years. Following analysis has been conducted based on the case study titled “McDonald’s and KFC: Recipes for Success in China” and this case nicely evaluates the endeavors of both companies in China. International strategy differs with the strategy intended to target a specific country like in China. Following is the analysis of the case: Country level analysis Positive aspects of China GDP growth China was one of the fastest growing economies in the world and according to the article its growth averaged at more than 9 percent since the year 1978. When KFC decided to make the entry in the country the per capita income was only $621 which grew later years in the result of continuous growth rate of the country. Population China is the most populated country in the world with 1.3 Billion people which make it an attractive market for the investors. This is one of the main strengths of the country to have vast population to support the operations of the companies investing in the country. Meat consumption One of the benefits of China is high possibilities of growth in the country as annual meat consumption in China is 74 KG compared with 128 KG per head in the United States. Optimistic aspect of these facts is that consumption rate has increased from 59 kg per head annually in 2005 to 128 kg per head in 2009. This growth rate shows that growth rate in meat consumption is fast in China. Negative aspects of China Low disposable income China was fastest growing economy but disposable income of the country is not high enough to consume much other than fast food items. However, this aspect is increasingly getting minimal given high growth of Chinese economy in sustainable manner. Fast food new concept China already had its own fast food style restaurants before entry of KFC and McDonald’s but that style was totally different from the style of these western foreign players. The companies need to create new concept of fast food integrated in the lives of Chinese consumers. Lack of experiences HR Although, China already had its own style of fast food chains but they were not high scale restaurants and understaffed. Therefore, the foreign players had to face difficulties in finding experienced HR because at least five years of experience is required for restaurants. General aspect of the industry Growth The retail restaurant industry is in its growing phase since 1991 when its share in consumer goods was merely 2 percent which was 14 percent in the year of 2007. Share of fast food in the retail sector of China was 74 percent in 2007 which was expected to touch 93 percent in 2011. Seasonality The impact of seasonality is not clear on the industry because the consumption of fast food items is based on lifestyle rather than on natural seasons. However, fast food is getting popular and it will take time to be integrated in the lifestyle of Chinese consumers as it has been part of Western consumers. Competitors Main competitors in the Chinese fast food industry are KFC and McDonald’s along with different local fast food players. A new competitor is Burger king which entered the Chinese market in 2005 which would intensify the competitive landscape in the country. Technology complexity The fast food industry of China is full of challenges as well and one of those challenges is technology complexity as the technological problems occur in the operations of fast food chains because traditional methods to do business are less efficient. Type of industry Type of fast industry is quick and ready to serve food to the customers especially for those ones who are indulged in busy schedules. Safety regulations So far as the safety regulations are concerned, the Chinese authorities are aware of it and they have passed a new law in 2007 which is suitable for franchisors as well as for franchisees. Industry classification Fast food industry is classified the retail industry and it is also a part of restaurant industry. Fast food restaurants sell consumer goods and the industry is classified as hotel and restaurant industry to please consumers. Porter’s 5 forces So far as Porter’s five forces are concerned it is revealed that China has been welcoming country for fast food chain since KFC stepped in the year of 1987. Barriers of entry are low as compared to other protectionist policies in other industries. It might be due to higher demand for fast food in Chinese market. There are substitutes of fast food products by KFC and McDonald’s in shape of local competitors but they are not strong enough. Main rivalry is between KFC and McDonald’s in the fast food industry of China. Threat of new entrant is not yet over as Burger King entered the Chinese market in 2005 with strategic motives and this is more alarming for McDonald’s in China as KFC has made strong footing in the country already. Future of the industry? The growth prospects of industry reflect successful future years ahead as local population has been welcoming the fast food trend warmly. The steps of competitors to locate their head offices in China and other competitors entering the market, it is obvious that future of fast food industry in China is bright. General information of the companies Location KFC is the first fast food player which entered China in 1987 and opened its first store in Beijing Qianmen. While McDonald’s opened its first store in 1990 and selected the city of Shenzhen as its location. History In the first year of 1987, KFC entered the market through joint venture under B-KFC which was between Beijing Animal Production Company and Beijing Tourism Board. McDonald’s had been matching with KFC in its first six years since entry but since 1997 it could not continue its pace as in 2005 its total stores were only 600 as compared to 1500 of KFC. Evolution of the firm KFC has the title of first mover in China as it is the first to enter in China in 1987, it 2002 it opened first drive-through restaurant in China. From 1987 to 2005, it continued to grow by 50 percent annually and in 2002 it opened its 1000th restaurant. Since entry in 1990, McDonald’s has evolved very much and it boasted of having the largest McDonald’s franchise in Beijing and it attracted 13000 customers in its first day of opening. Company entering China Product KFC and McDonald’s products fall in the category of fast food and McDonald’s is more aware of its standardization of menu efforts as it has kept its focus on three domains named as ingredients used in the product, procurement of ingredients and raw material, and preparation of food in a way to ensure quality. Labor Force Labor force has been quite important for both companies as KFC set base salary of employees at 140 RMB but in the beginning the focus of the company was hiring those trained employees who have experienced and know the culture and language of China. Later, it started to hire high school graduates from China but experience was not given importance in later hiring. McDonald’s also hired those employees which had previous experience in fast food industry then later they turned to hire less experienced employees from China. Supply Chain KFC adopted different approach of supply chain in China as it relied less on outsourcing of supply chain activities so it established its own logistics system by integrating its efforts with local retailers. While McDonald’s relied on its global supply chain partners in China like HAVI foods which established logistics centers exclusively for McDonald’s. McDonald’s have three logistics centers in China in cities of Beijing, Shanghai, and Guangzhou along with other mobile centers for dispatching. 70 percent of its 43 suppliers in China are its global partners. Geographic focus Like any foreign entrant into China, initial geographic focus of KFC and McDonald’s has been eastern and coastal cities and increasingly they move towards western cities through mainland cities. However, the geographic focus of KFC is wider because in its first ten years of operations in the country, it had established its outlets in almost every urban center of the country while, McDonald’s aspirations to cover large geographic area have dwindled especially after six years since its entry into the country. I-R framework For better integration of operations, KFC has focused China exclusively separated from its global operation in a sense that it prioritizes China in its operations. The example of largest logistics system of Asia in China reveals company’s aims in China. On the other hand, McDonald’s decided to locate its Asian headquarter in Shanghai from Hong Kong in 2005 so that better communication and integration within the company might be possible. Strategy type Both companies have been pursuing aggressively expanding global strategy but in this strategy KFC is ahead of McDonald’s because after six years since entry McDonald’s pace decreased as compared to KFC’s. The aggressively growth strategy of KFC has been successful as it has successfully captured third and fourth tier cities of China as well. Which company’s strategy is more successful…In China? In China, KFC is more successful company than McDonald’s as the operating profits of KFC were increasing 38 percent out of its China’s operations and it reached the milestone of 1500 outlets in China while McDonald’s was at half of that number. In the rest of the world? However, KFC is not that successful at global level as compared to McDonald’s as the operating profits of KFC in the United States have been increasing in lesser growth rate than those of China’s growth numbers. Conclusion: It is concluded that although McDonald’s is world leader in fast food industry but KFC has adopted successful and effective strategy in China. Aggressive expansion strategy in China helped the company to go ahead that it lagged the McDonald’s behind too much. McDonald’s is also successful and profitable in China but it is behind KFC in number of outlets and in terms of profits. Although, there is only difference of three years between the entry years of both companies but KFC managed well to align itself with the dynamics of Chinese market as it had its presence even in third and fourth tier cities as well. This is competitive advantage of KFC as it already had first mover advantage in the country. As new competitor Burger King also entered the market in 2005, it is more alarming new for McDonald’s than KFC as it had already strengthened its footings.

Need Help In Coursework Writing?

We have a diverse variety of writers from native English to English as secondary language experts. Our Expert’s qualification range is from Master’s to Ph.D. Our experts pass a test and qualify series of training session to make sure that they attain the best skills to provide you high quality Essay and Dissertation writing service.


Similar Papers


Kfc in china case study


Tata nano case study solution


Midland case study solution


Google and china case study


Googling with china case study


Google in china case study analysis answers


Danaher corporation case study solution


Google in china case study ethics


Something rotten in hondo case study solution


Google in china case study answers


Meli marine case study


Kfc china prices


Kfc marketing strategy in china


Kfc marketing in china


Volkswagen do brasil case study


Airbus and boeing case study answers


KFC’s Radical Approach to China


Haier case study summary


Ecco case study


Emirates airline in 2017 case study


Our Top Rated Writers

Top Grade Tutor

ONLINE

Top Grade Tutor

10374 Orders Completed

Top Academic Guru

ONLINE

Top Academic Guru

9345 Orders Completed

Top Essay Writer

ONLINE

Top Essay Writer

8379 Orders Completed

Free Homework Help!

Get First Two Pages Of Your Homework Absolutely Free! Within 3 Hours!

Get First 2 Pages Absolutely Free