Case Study - Kfc China Strategies

1303 WordsApr 27, 20136 Pages
Case Study 1 Introduction Since KFC opened the first outlet in Beijing in 1987, the fast-food giant has occupied its dominant position in China(Bell and Shelman 2011). As KFC expands rapidly in China, it formulates specific strategy aiming to Chinese customers and accomplishes unprecedented success. Among all the strategies, the localization strategy and the different operation management contribute significantly. While analyzing such strategies, benefits and weakness both emerge and some questions need to be resolved. What is the best business strategy to ensure long term success for KFC in China? What are three key challenges to its localization strategy that KFC China might face in the future? I would give analysis to the strategies…show more content…
• The First Challenge The first challenge comes from the dilemma between additional costs and the benefit generated from the adjustment for regional differences. As mentioned before, further localization is a feasible solution to ensure long-term success. Nevertheless, it demands not only fund but also human resources. New products have to be developed, resulting in the accompanying new advertisement. Employees have to learn the new cooking method and use the localized recipe. Additional costs then arise and managers have to do trade-off between the costs and the benefits. • The Second Challenge The second challenge comes from labor force. The exhausted demographic dividend will trigger a shortage of 140 million workers in China in the near future(Evans-Pritchart 2013). As the supply of labor shrinks, the equilibrium condition will alter. Thus, KFC has to increase the real wage to recruit enough employees. As the KFC SWOT ANALYSIS 2013(2013) suggests, high employee turnover also raises the risk of unexpected costs, for the work in KFC is low paid and doesn’t require specific technical skills. • The Third Challenge The third challenge is the contradiction between healthy diet and fast-food. These years, Chinese are aware of the importance of a balanced diet(Atsmon, Y., Magni, M., Li, L. and Liao, W. 2012). The entrenched stereotype that fast-food is deemed as junk food has jeopardized the reputation of KFC.

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