Strategic Management

Portfolio 3

Table of Contents
Table of Contents
Table of Contents............................................................................................................. 2
List of Figures................................................................................................................. 2
Introduction to Kentucky Fried Chicken (KFC)........................................................................3
3.1 International Strategy Implemented by KFC.......................................................................4
3.1.1 Transnational Strategy............................................................................................ 4
3.2 Mode of International Market Entry of KFC.......................................................................5
3.2.1 Franchising.......................................................................................................... 6
3.2.2 Recommended market entry strategy for KFC...............................................................6
Strategic Alliance (Joint Venture)...................................................................................... 6
Conclusion..................................................................................................................... 7
References..................................................................................................................... 8

List of Figures
Figure 1 Modes of International Entry.........................................................................5

Individual

Page 2

Strategic Management

Portfolio 3

Introduction to Kentucky Fried Chicken (KFC)

KFC Corporation, based in Louisville, Kentucky, is one of the
few brands in America that can boast a rich, decades-long
history of success and innovation. There are more than 18,000
KFC outlets in 115 countries and territories around the world.
Vission:- To be the leading integrated food services group in
the Asian region delivering consistent quality products and
excellent customer-focused service.
Mission:- To maximse profitability, improve shareholders value and deliver sustainable growth year by
year.

(KFC: Finger Lickin Good, 2015).

Individual

Page 3

Strategic Management

Portfolio 3

3.1 International Strategy Implemented by KFC.

Kfc is using the transnational strategy which has a high pressure for lower costs and a high
pressure for local adaptation.

3.1.1 Transnational Strategy

A transnational business conducts operations in several countries with varying degrees of
coordination and integration of strategy and operations. (Stonehouse,2004). Professor
Stonehouse also defines transnational strategic management as iterations of organizational
learning and performance improvements. The basis of a transnational strategy is a global vision,
but with personalized implementations for local markets. Transnational strategy allows for the
accomplishment of benefits inbuilt in both global and multi domestic strategies.
Organizations for example like KFC, which follow the transnational strategy have a central
corporate capability but give decision-making, combines global reach, market share and profit
growth and also invest in foreign operations. They involves in establishing value-added activities
that exploit national similarities and differences, operating in different world markets and
designing responsive organizational structures. KFC tries to balance the need for effectiveness
with the need to adjust to local preferences within various countries and also to rely on the same
brand name and the same core menu item around the globe. KFC make some concessions to
local tastes too. For KFC, brand is their gadget to create and extend customer value. Also it has
top restaurant superiority and quality to improve its brand value, and they have an abbreviation
called CHAMPS.
C- Cleanliness
H-Hospitality
A- Accuracy
M- Maintenance
P- Product Quality
Individual

Page 4

Strategic Management

Portfolio 3

S- Speed of Service.

Individual

Page 5

Strategic Management

Portfolio 3

KFC promoted the CHAMPS strategy to its global market because KFCs managerial goal is to
convince all customer needs in the world. The CHAMPS strategy incorporates very firm guiding
principles that are compulsory for the restaurants to apply in their day by day operations. The
integrated rule helps KFC easily manage and enter the global market.

3.2 Mode of International Market Entry of KFC

Figure 1 Modes of International Entry

Tradability
Low

Broad
Narrow

LwEJ
hxoi
neop
Vnlo
reso
/wn
un
re
d
s
u
b
s
d
a
r
y

Competitive Advantage

High

i
l

t
e

i
i

Individual

Page 6

Strategic Management

Portfolio 3

A market entry mode is the intended method of delivering products to a new target market and
distributing them there. The above matrix shows the most common market entry modes.

Individual

Page 7

Strategic Management

Portfolio 3

3.2.1 Franchising
Under franchising an independent company called the franchisee operates the business under the
name of another company called the franchisor under this agreement the franchisee pays a fee to
the franchisor. KFC's has an established franchising strategy, which has a narrow competitive
advantage and a high tradability. Franchising is also reducing financial risk and emphasizing
equality on the expense of cultural understanding and control. The door for to KFC franchising
was opened in 1952, and now there are over 4,300 franchised stores in the United States and
more than 7,150 franchises in foreign countries. An additional 3,300 stores are owned by the
company.
3.2.2 Recommended market entry strategy for KFC
Strategic Alliance (Joint Venture)
The essence of a Strategic Alliance is the synergy effect of two different entities merging. It is
recommended that a partner is found by backwards integration. Therefore, KFC can joint venture
with chicken farms or any other supplier. This strategy will attempt to; solve many problems
such as access to good quality chicken and supplies. But the probable the partner should be large,
have a good management record, well established, provide superb distribution channels and it
should be a good domestic poultry supplier.
By building on each partner's core competencies, efficiencies and knowledge a commonly
valuable synergy effect could be achieved as a result of Strategic alliance activities. For
example, the local partner can learn from KFC how to produce a better product at a lower
cost. KFC, also it can maintain quality supply which is beneficial to its success.
Furthermore, a joint venture agreement commonly produces commitment and goodwill between
the host government and the foreign investor of the particular country. In such a relationship, the
foreign investor is not seen as trying to take advantage of the nation for profit purposes, but
rather show keenness to share. Maintaining good relations with the host government is a vital
factor as government policy impacts strongly upon business actions.

Individual

Page 8

Strategic Management

Portfolio 3

Conclusion
According to a SWOT analysis of COMSATS Institute of Information technology, Sahiwal, there
are mainly two weaknesses for KFC. One of them is KFC concentrates on only one single
market and the other one is financial problem. For its strength, it has its own inimitable skill in
fried chicken and it has reputable a good brand name.
Nowadays, people are more concerned with the healthiness in food and their demand for
high quality of food is increasing. On the other hand, it still has an opportunity in its market, it is
because KFC is the market leader in fried chicken market. The early entry into international
markets placed KFC in a strong position to benefit from international expansion. Most of KFC's
international growth was through franchises, they were owned and operated by local
entrepreneurs with a deep understanding of local culture, customs, law, language, and marketing
characteristics.
In a competitive market, companies are not only dependent on their strategy but also on
the strategy of their competitors. To playing safe, KFC can follow the competition into
the new markets. That way the chance of all loosing or all winning is quite the same.

Individual

Page 9

Strategic Management

Portfolio 3

References
1. KFC: Finger Lickin Good, (2015). About - KFC.com. [online] Available at:
http://www.kfc.com/about [Accessed 23 Jun. 2015].

2.

KFC Marketing Strategies. 2015. KFC Marketing Strategies. [ONLINE] Available

at: http://www.scribd.com/doc/20825158/KFC-Marketing-Strategies. [Accessed 23 June
2015].

3.

Kentucky Fried Chicken Franchise Business | KFC Franchise Opportunity. 2015. Kentucky
Fried Chicken Franchise Business | KFC Franchise Opportunity. [ONLINE] Available
at: http://www.jobmonkey.com/franchise/kfc-franchise/. [Accessed 25 June 2015].

4. Lumpkin, G. and Dess, G. (1996). Clarifying the Entrepreneurial Orientation Construct

and Linking It to Performance. The Academy of Management Review, 21(1), p.135.

5.

Stonehouse, G. (2004). Global and transnational business. Chichester, West Sussex, and England:
Wiley.

Individual

Page 10