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Yum Extends Global Reach

Kenneth Goodson

IBA 301

20 Oct 2016

Dr. Douglas Ruml

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The Yum Brand is currently focusing on major strategic acquisition mergers expansion

along with cost pressure easement methods to adhere to economies of scale realization within

local responsiveness system pressures. Throughout the spectrum of globalization Yum has

predominantly kept prestige consumer surplus towards the strategic significance of providing

value with low cost mechanisms. The theory behind the realization to economies of scale has

effect in Yum Brand global web creation. The implementation of franchisees globally with

regard to Taco Bell’s operation establishment productivity motion is the concentration. The

theme for preferences to be advantageous with regard to comparative advantage is to license

franchises rather than to direct exports.

The approach to this kind of formula is the realization that the parent company Yum

would be experiencing lower cost pressures with a foreign exchange market. The kind of foreign

market exchange is an international stock that provides an insurance coverage toward total and

systematic risks. The inductive reasoning is broadening their global reach by opening more than

1,000 Taco Bell restaurants in 40 countries. A fine ideology strategy use to meet a broad demand

base within the next six years accordingly to consumer preference is the objective. Forces to be

reckoning with to competitively compete with the likes of Restaurant Brands International Inc.

and Dunkin Brands Group Inc., parent companies.

A perspective view on the design goal to accommodate is to first notice where Yum

Brand’s Taco Bell is forecasting to be in terms of establishment productivity. The Yum Brand

Company recently opens a new KFC establishment every 8 hours, however KFC has the ability to

open 1 every 5 hours going forward. Pizza Hut opens 2 restaurants a day currently in overseas

markets and plans to open 3 a day by 2020. A corporate responsibility embraced with

considerable appeasement with regards to Yum’s shareholders as well. An experience curve

realization due to the international expansion regime is to then increase company revenue while

consumer surplus is reasoned with value and relative low prices.

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The consolidation strategy which Yum Brand expresses as a leaner or slim concept while

realizing global reach is used from a shift or merging motion. The motion is transforming

restaurant ownership into license franchises. The theory behind the swift shift to franchises is

the volatile easement module that China faces relentlessly. The companies 10,000 restaurants

will fall to a narrow 3,000 once the China business becomes their own stand-alone establishment.

This strategic easement is how Yum deems fit to be a well-known establishment within the long-

term aspect of the economic specter.

We are going to view the wide range aspect of theories to why KFC China experience

volatility in sales in recent years. First, the concepts of the emergence of competitors tend to shift

real-time changes in strategy, which stem from local responsiveness and cost reduction pressures.

When competitors experience advantages with subsidiaries that aid Yum’s competitors drives

price and cost down shifting consumer taste and preference to Yum competitor or competitors.

Thus pushing Yum competitor further along the experience curve at a rapid advantage that Yum

cannot compete.

Second government regulation from WTO such as food safety has resulted to China’s

volatility. The increase to provide good standardized consummation products to consumers

increases the cost side to Yum Brands within China. The realization to subsidiary leveraging

and food safety regulation are the major causes to China’s volatility effect accordingly to their

history of data.

Establishments reason for a producer brand taste and preference to a theorized asset light

structure is the known advantage to remunerative realization. A maintainable stream to capital

inflows in the acts of dividends or other payment types with regard to foreign direct investments

appeals to establishments more than spot transactions. A kind of forward exchange market

brings a national security appeasement to the financials of restaurant establishments. A certain

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coverage that protects and gives a psychological advantage to be reassured that capital inflows

will be maintained. This capital inflow is in the concentration of “percentage franchisee sales.”

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Reference:

Jargon, Julie. (2016). “ Yum Extends Global Reach”. DOW Jones &

Company Inc,. Retrieved October 14, 2016 from

http://www.nasdaq.com/article/yum-extends-global-reach--wsj-

20161012-00037