Group_6:

Kentucky Fried Chicken

(Japan) Ltd.

Rupanjali Shyam (D-214)

Rahul Tirmale (353)
Shiba Majhi (343)
Soumya Barman (348)
Jiji Auxilia (70)

Agenda

Case facts and time line

Integration responsiveness framework
Evaluation of KFC-I operations
KFC-I Change in strategy
Suggestions for Meyer
Roles in an international portfolio
KFC-J: A strategic leader?
Korea, Taiwan, Thailand and Hong Kong
Recommendations for expansion in Japan, Taiwan, Thailand, Korea and Hong
Kong

KFC: How did it all start?

Harland Sanders in his late forties developed chicken recipe
based on pressure cooking method
Sanders decided to franchise his recipe
Sold 700 franchises in less than 9 years
No management systems or strategic controls involved
Franchising proved to be better option
-Did away with high cost of opening new stores
-Allowed to capture economies of scale
-Less risk for your own business

KFC Timeline
M Miles appointed VP
14 new stores
opened in Japan
Brown and Massey
sold KFC to Heublein
Inc
Added 1000 stores a
year
Joint Venture with
Mitsubishi
in Japan
700 outlets
Brown and Massey
acquired KFC
Harland Sanders
started new
franchise

1956

1964

1970

1971

1972

KFC sales and store

-level profits declined
Back-to-basics
program
implemented
Sales per store
increased at 10% per
annum
Mike Miles appointed
Senior VP
RJ Reynolds acquired
KFC

1975

1976

1977

1979

1981

1982

Integration Responsiveness framework

Evaluation of the way KFC is managing its international operations

Late 1960s: Each
country manager was
on his own to make
success of his venture,
most had little expertise
and were given little
staff support. Colonel
Sanderss personal
efforts were utilized to
maintain quality

Early 1970: JV with

Mitsubishi (Japan). Little
change
in
KFC
products. Stores were
exact replica of US
take-out stores

Late
1970:
KFCs
international staff was
merged with Heubleins
international
group.
Integration
between
KFC-I and subsidiaries.
Each country manager
was using their funds
generated from their
existing operations for
expansion

Till 1973: Standard size

of stores reduced. Fried
fish
and
smoked
chicken added to menu.
Price was adjusted to
compete in local market.
Mini-barrel with 12
pieces was introduced.
Basic menu varied in
South Africa, Australia,
Japan and Brazil too

Late 1975: Need for change in strategy. Overseas subsidiaries needed control from
HQ. Despite resistance subsidiaries started adopting strategic planning approach.
KFC-J showed resistance for the increased control from HQ. KFC-J adapted it to
Japanese practice.

Evaluation of the way KFC is managing its international operations

Local responsiveness is
high

Business units are

independent

Evaluation of the way KFC is managing its international operations

Early 1980s:
KFC-I headquarters to be shifted to Louisville with the rest of KFC
Tried to reinforce planning, service and control functions
Aim was to achieve consistency of products, facilities and control of production
worldwide
Adopted a five year rolling plan process
KFC-I wanted to eliminate ribs in England and fish in Japan for cost savings
New operation control system introduced
New-Zealand accepted, Australia and Japan resisted.

Evaluation of the way KFC is managing its international operations

Bringing consistency in
products and facilities
Forcing standardization
(low local responsiveness)
Focusing on cost saving
using economies of scale
(High pressure for cost
reduction)

KFC-I trying to change from one strategy to another

Roles in an international portfolio

KFC-J: Strategic Leader??

Strategic Leader: Highly competent national subsidiary located in strategically
important market.
Highly competent national subsidiary

Japan is a strategically important market

KFC-J performance

KFC-J: Strategic Leader??

Highly competent national subsidiary
Japan is strategically important market

KFC-J is a Strategic Leader

What should Meyer do at HQ and at subsidiary to

implement the change effectively?
Implications from IR framework
As food habits of people in Japan are different adopting a global strategy wont work
KFC should follow Transnational strategy to achieve local market responsiveness

Implications from roles in international portfolio framework

HQ must be flexible enough for its control over subsidiaries
HQ must adopt a flexible stance which differentiates the way it manages one subsidiary
from another
HQ should support KFC-J by strategy leadership responsibility by giving them the
resources and freedom for innovation for entrepreneurial role
Slower approach in linking the center and local management capabilities by
implementing horizontal control level by sending additional person from HQ to work
closely with Mr. Weston

Korea, Taiwan, Thailand and Hong-Kong

Four of the highest priority countries identified by the new market potential analysis
Strategic importance is high
Local tastes and customs has high importance (high local responsiveness)

Potential to become a Strategic Leader

What specifically should Mayer do for expansion in Japan

and spread to Korea, Taiwan, Thailand and Hong Kong?
Japan
Use the joint venture partner Mitsubishi to take advantage of the Japanese companys
experience in the market and industry
Additional market research should be conducted ahead of time to determine the changes
necessary for the product
Strategic plan to be made on the basis of market research to determine the various roles
and responsibilities, financial performance expectations and types of reporting
Korea, Taiwan, Thailand and Hong Kong
Enter the market with a local leadership team trained by KFC so that KFC standards can
be maintained across
Local responsiveness of the country should be taken care of
Entrepreneurial stage Local baronies Professional management