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CASE TITLE 

KFC’S Radical Approach toChina

HBR South Asia Nov 2011

BY

David E B!ll " #ar$ %Sh!la&

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Case introduction

   'h! cas! tal(s a)out th! t$pical dil!&&ath! *lo)al co&pani!s +ac! ,hil! th!$ !nt!r!&!r*in* &ar(!ts

 

Ho, +ar should th!$ *o to locali-! th!iro.!rin*s +or local n!!ds

  Should th!$ adapt !/istin* products ust!nou*h to app!al to consu&!rs in thos!

&ar(!ts  ! ,ill discuss th! si/ point +or&ula us!d

)$ KFC in China to ,in Chin!s! consu&!rs

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Localize Ofering by Countryand Region

  n an !.ort to pl!as! local consu&!rs3th! co&pan$ r!inv!nt!d its &!nu andvari!d spicin!ss l!v!ls +ro& r!*ion to

r!*ion  4s!d !nlar*!d outl!ts as co&par!d to 4S

on!s ,hich ar! &ostl$ ta(! a,a$ outl!ts  KFC Chin!s! &!nu t$picall$ includ!d 50

it!&s co&par!d ,ith a)out 26 in 4SA

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Move Quickly to Add road!resence

  Rath!r than *o h!ad to h!ad ,ith#cDonald’s in )i* citi!s KFC !/pand!dits +ootprint in s&all!r citi!s to )uild

national )usin!ss and outl!ts across th!countr$

  KFC is op!nin* 1 r!staurant !v!r$ da$ inChina as on 2011

  t has 73700 outl!ts toda$ and tar*!t is totouch 153 000 outl!ts

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Take C"arge o# t"e Su$$ly C"ain

  KFC !sta)lish!d a local distri)ution ar& in1668 )$ )uildin* ,ar!hous!s and runnin* itso,n 9!!t o+ truc(s

 

Co&pan$ introduc!d a suppli!r ratin* s$st!&that allo,s &ana*!rs to conc!ntrat! on th!suppli!rs ,hich p!r+or& )!st

  KFC China clos!l$ &onitor!d th! !ntir!

suppl$ chain3 all th! ,a$ )ac( to ani&al +!!dco&pani!s and oth!r input provid!rs

  KFC has th! &ost advanc!d and int!*rat!dcold chain s$st!& in China

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eco%e a learning organisation

   '!a& o+ n!, !&plo$!!s ,or( sid! )$ sid! ,ith!/p!ri!nc!d on!s in !sta)lish!d outl!ts onc!train!d th!$ &ov! to a n!, location

  N!, r!cruits at KFC o+t!n hav! to )! tau*ht )asicp!opl! s(ills in ord!r to int!ract ,ith custo&!rs

  KFC n!!ds 1500 &ana*!rs and 70000 cr!,&!&)!rs !ach $!ar and th!$ &ust )! r!ad$ th!da$ th! r!staurant is launch!d )!caus! o+ +oot

+alls  KFC ,as :rst to pro&ot! th! conc!pt o+

custo&!r !/p!ri!nc! a+t!r d!cad!s o+co&&unis& in China

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Maintain &le'ibility

  60; o+ outl!ts in China ar! co&pan$<o,n!d

  =nl$ 12; in 4S and 11; in oth!r

int!rnational &ar(!ts ar! +ranchis!! run  =,nin* r!staurants allo,s co&pan$ to

clos!l$ control !v!r$ asp!ct o+ th!irop!ration 3 +ro& &!nu to d>cor

  t p!r&its c!ntrali-!d purchas!s ,hichr!duc!s costs

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(uard Against acklas"

  t could !asil$ )!co&! th! tar*!t o+ consu&!rs and*ov!rn&!nt’s )ac(lash a*ainst th! p!rc!iv!dn!*ativ!s o+ +ast +ood

  n 2005 th! co&pan$ d!v!lop!d th! conc!pt o+ ?n!,

+ast +ood@ that ,ould )! ?nutritious and )alanc!d@and pro&ot! h!alth$ livin*

  t !li&inat!d sup!rsi-! it!&s and add!d roast chic(!n3sand,ich!s3:sh3shri&p and &or! +ruit and v!*!ta)l!sdish!s to its &!nu

   #!als +or childr!n ar! s!rv!d ,ith v!**i!s and uic!s   'ra$ &at!s carr$ !ducational &!ssa*!   Nutrition &!ssa*! is print!d on !ach pac(

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Conclusion

   'h! KFC China’s succ!ss in ,inin* ov!r Chin!s!consu&!rs *r!, out o+ d!!p und!rstandin* o+ th!di.!r!nc! )!t,!!n !sta)lish!d and d!v!lopin*&ar(!ts and ,illin*n!ss to radicall$ alt!r th! 4S

)usin!ss &od!l  Also ,hil! !nt!rin* !&!r*in* &ar(!ts &ultinationals

&ust d!cid! ,h!th!r it ,ants to *arn!r uic( !/trasal!s or to !sta)lish th! lon* t!r& pr!s!nc!

  + its th!r! +or lon* haul3 it should install local&ana*!rs ,hos! vision is to )uild an or*ani-ation that,ill last