Kfc Case Study

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CASE STUDY: KFC in China Kentucky Fried Chicken (KFC)- one of the most known fast food chains in the world started in the early 1930's by Kernel Sanders in the Southern USA as a small franchise operation. Colonel Sanders has become a well known personality throughout thousands of KFC restaurants World wide. Quality, service and cleanliness (QSC)represents the most critical success factors to KFC's global success. Throughout its 35-year history, the company has gone through several stages and has answered to a legion of corporate parents from Heublein to R.J. Reynolds. The most significant stage was when the enterprise was sold to the American giant, Hubelin International in 1974. Rapid growth throughout the use of franchising together…show more content…
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 joint 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 joint 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 joint 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 joint venture agreement commonly produce goodwill and commitment between the host

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