ObjectiveBe the best in the world at building great
restaurant brands.
Defining a global company that feeds the
world.
How Differentiation
Growth Strategies
• Build leading brands in China in Every Significant
category.
• Drive aggressive, international expansion and build
strong brands everywhere.
• Dramatically improve US brand positions,
consistencies and returns.
• Drive industry leading, long term shareholder and
franchise value.
First Strategy “Build leading brands in China in every significant
category.”
Main goal is to expand and grow regardless of all weaknesses and threats.
The strategy will accomplish the expectation because it is
specific to China. Since, it is transitioning to a consumer based economy thus giving rise to the middle class segment which is the company’s main customer base.
How? by opening more branches in China.
Second Strategy “Drive aggressive, international expansion and build
strong brands everywhere.”
4 divisions: YRI (Yum Restaurants International), China Division, US Division, India Division.
To establish a strong brand recognition along with even more branches.
Implementation: India: Treated as a separate division due to expected future forecasts of India being the largest consumer market in 2030.Russia: Bought Rostik’s business (Russia’s leading chicken chain)Africa: First-mover advantage.
Third Strategy “Dramatically improve US brand positions,
consistencies and returns.”
Reversed negative same-store sales of KFC by
investing in product innovation and Improving
franchise relations.
Implementation:
Expand Taco Bell branches from 5,000 to 8,000
units and Pizza Hut from 6,000 to 8,000 units.
Fourth Strategy “Drive industry leading, long term shareholder and franchise value.”
High Cash from operationsHigh returnConsistent dividend yield
Implementation:Reducing ownership in highly penetrated markets (UK & US) and increasing their ownership in international markets.Maintain strong social responsibility.
Management Key Assumptions
India will be the highest consumption
country in the world by 2030
Applying the same strategy followed for the
past 10 years will increase sales
More branches means more profit
Getting back on their feet under any
external threats such as disease from poultry.
Policy Alternative
Fast Grow:
Aggressive growth strategy, pursue larger
market share or a stronger position in
untapped markets
StrengthsManagement
Adapted favorable cost structure
Efficient same-store sales.
Geographic diversification
Quick responds to shifts in demand
Strong brand recognition
Pending litigation, lawsuits
Underperformance and slowing of U.S. sales specifically with KFC and Pizza Hut brands
Suffer a setback in China following an investigation into KFC China’s poultry supply which resulted in a sharp decline in sales.
Relatively small market share in oversaturated U.S. fast food industry
Older U.S. restaurant units losing sales annually
Weaknesses
Increase and maintain growth in rapidly expanding China market
Invest in India market
food options coinciding with religious beliefs
Penetrate other new growth markets before competitors Target international youth consumer to build up brand
awareness
Increase number of health conscious menu options
Opportunities
Food safety- animal diseases arising
Nutritional value concerns
High reliance on China allows the company to be subject to any relevant changes in the Chinese market
Changes in foreign currency exchange rates affect sales and profit
Modifications in foreign government regulation
Farmers raising prices
Threats
Abell Model
How? (Approaches):
•Quick service restaurant
•Menu customized to countries
Who?(Customers):
Non-health conscious
Middle-class segmentWhat?(Needs):
•Hunger
•Open appetite •Quick food
Porter Model
Rivalry among competitors • Large number of
competitors• Industry growth rate• Product
differentiation• Prices
Buyers• Cleanlines
s• Speed of
delivery • Hospitality• Customizat
ion• Price
sensitivity
Suppliers• Raw
material• Labor • Delivery
cars• Gas• Equipment
Barriers to Entry:Government regulations to control health standards
Initial capital requirements
Threat of Substitutes:• Healthier alternative • Ready made food• Street booths
Strategic Position
Emerging
Growth
Mature Aging
DominantStrong
FavorableTenable
Weak
Basis of Competition
McDonald’s
Burger King
Papa Johns
Price 0 0 +
Cleanliness - - -
Location 0 + +
Depth of Line 0 + +
Speed - 0 +
Delivery - 0 0
Industry MaturityEmerging
Growth Mature Aging
Growth rate *
Industry Potential
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Product line *
Number of competitors
*
Market share stability
*
Purchasing patterns
*
Ease of entry *
Technology *
Overall ***
Risk Assessment of Strategy
Low Medium High
Industry *
Maturity *
Competitive position *
Strategy *
Assumptions *
Past Performance-of unit-of management
**
Level of future performance *
Conclusion
Looking forward, Yum! Brands is in a strong
position to maintain foreign expansion and
capture a large share of the international
market. Despite certain challenges it faces in
the domestic market, the company is
financially healthy and should be able to
sustain a
stable position within the global fast
food industry.