Table of Contents
Inauguration
Original: The introduction of a new idea
Paraphrased: The inception of a fresh concept
The Colonel’s fried chicken
KFC India’s business model
This is an introduction.
Geert-Hofstede. Different countries are characterized by different cultures. Knowledge of different cultures can help a company gain a competitive advantage and be able to lead the market. Different cultures have a profound impact on the way an individual thinks, their consumption patterns and their behavior. Understanding cultures in different countries will remove barriers to business. Culture has a major impact on international business in the following areas:
Communication: Different languages are spoken in different countries. China for instance, is encouraging their language in India while India promotes English as a faster way of communication. It is therefore important for businesses to understand the language barrier.
Etiquette: Each country has different norms for their workforce. In other countries, it is not necessary to use titles or names. It is disrespectful in India to use names titles such as sir and madam. It is therefore important to strike a balance between the two cultures.
Hierarchy in organizational structure: Maintaining a horizontal or flat structure is a crucial business decision.
Costs are important for countries such as India. Cost is a factor that will affect sales. Before entering the market, a good strategy must be developed.
Beliefs and Values are different in each country. Businesses must respect each country’s values. For businesses, not looking at cultural differences is a huge mistake. Nike discovered that their Air logo in Arabic was mistaken for Allah because of which their product failed.
Mc Donald is adapted according to the culture and traditions of each country. There are vegan options available on the menu in India only. MC Donald’s success is attributed to the fact that it has adapted to different consumer patterns.
Coke: Coca-cola is an American multinational corporation. Coca cola is an emotional drink that people love and it’s a market leader today. As an example, let’s take Kentucky Fried Chicken and analyze its impact on the price negotiations as well as cultural differences.
KFC is also known as Kentucky Fried Chicken. This American fast food chain specializes in fried chicken. The company is headquartered at Louisville, Kentucky. It has more than 20,000 restaurants in 123 countries and domains. Colonel Harland S. Sanders was a visionary businessman who opened a roadside restaurant in Corbin, Kentucky during the Great Depression. He began serving fricasseed chicken. Sanders realized that he could diversify his business and opened the first “Kentucky Fried Chicken”, in Salt Lake City in Utah, in 1952. KFC became one of first drive-thru restaurants to go global, opening stores in England and Jamaica.
KFC had mixed success locally throughout the 1980s as its corporate ownership changed, but it was almost completely removed from the restaurant business. KFC’s ownership changed in the mid-1970s when it was acquired by Heublein. R. J. Reynolds tobacco and food company then took over the business. PepsiCo later bought the KFC franchise.
Bangalore, India opened the first KFC outlet on June 25, 1995. The first KFC outlet in India faced a number of challenges, including protests over globalisation and local farmer protests. In August 1995, the Bangalore outlet suffered multiple attacks. Local authorities shut down the outlet on September 13, 1995, claiming that it contained excessive amounts of monosodium glutamate (MSG). KFC’s interest in the Karnataka High Court led to a re-opening of this outlet several hours afterward. There are currently 350 KFC outlets across India. The company has customized its delivery menu and adapted KFC to Indian taste.
KFC entered India in 1990, following the Indian government’s liberalization of economic policy. KFC has been granted permission to expand its business in India by 30 outlets. KFC launched its first fast-food outlet in June 1995, targeting the upper middle class. PepsiCo planned on opening 60 KFCs, Pizza Huts and other fast food outlets in India in the 7 years following its acquisition. KFC India mainly used the Franchise Model for entry.
KFC PESTEL Analysis – India
India has liberally opened its doors to international fast food chains. FDI helps MNCs and international companies enter India.
Economic: India is attracting global investors and companies to expand their operations due to its growing middle-class population.
Social: Working women are taking over the home and moving away from the kitchen. Since many Indians eat vegetarian food, the menu needed to be changed drastically.
India has enough technologies. India is the IT center of the world.
Legal: There are many franchising models that are available in India and they are working successfully. KFC follows this trend.
Environmental: PETA and other activists who are anti-killing of animals can cause problems. This is a serious problem that will negatively impact the KFC operations.
KFC’s business model
KFC has the same business model around the globe. Eleven percent are owned and operated by the company. The rest are franchised. KFC is a franchise business model. KFC Corporation is the franchisor. Its parent company is YUM! Brands, Inc. KFC Outlets sell and prepare chicken, snackables, as well as other approved menu items, using certain KFC trademarks. Franchise Agreements grant franchisees licenses to:
The franchisor may periodically authorize certain KFC trademarks including “Kentucky Fried Chicken”, “KFC”, and trade names.
The franchisor’s exclusive proprietary formats, methods, procedures and designs.
Porter’s Five Forces Model looks at the level of competition in a market.
Porter’s Five Forces Model is a powerful tool for systematically assessing the strength and importance of a competitive market. Michael E. Porter’s Five Forces Model is essential for determining the level of competition and the attractiveness or market. This model also shows how the five-forces affect the competitive landscape of a firm.
In a situation where the competition is low, firms will be able increase their prices to gain more profit. Prices would increase if the competition was fierce, resulting in price wars. This would limit or reduce profitability because of the decrease in sales margins. Rivalry between existing competitors-
Undifferentiated products are subject to price increases
Number of competitors, size and number of competitors
Requirements for Obtaining
New Competitors Threaten Entry
The existing barriers to entry and the reaction of the players will determine the outcome. Existing entry barriers are
Economies de scale – Most established companies within the industry enjoy economies of scope. This can reduce the threat of newcomers. PepsiCo’s dual-branding strategy has helped it achieve economies of scope within its operations. By increasing the menu options, KFC will be able to increase its customer base. It will also help KFC reduce the threat from new competitors, as they won’t be able compete on the market due to their high costs and will have a disadvantage compared to established firms.
Government regulations- This prevents new competitors from entering the market.
Brand Loyalty. The only way that the fast-food sector can exist is through brand loyalty. Customers are loyal to all fast-food brands, such as KFC and McDonalds. In the fast-food business, the taste is also important. It is something that is habitual. It is natural to be loyal to a brand based on its taste. Brand loyalty is therefore high.
Buyers’ bargaining power:
Suppliers of raw materials are also known as buyers.
End users (users)At first, KFC and other industries will have a high bargaining strength. KFC being a large company with fewer employees allows them to negotiate lower prices from their suppliers. KFC has an extensive internal cash flow, which allows it to invest cheaply in countries with lower risks, such as Asia or Latin America. Due to the increased pressure on suppliers, they would reduce prices in order to gain a competitive advantage and increase market share. The power to force fast food companies to lower their prices is left with individual customers.
The bargaining Power of the Supplier
If we assume that buying companies don’t matter to the supplier, as their business success doesn’t depend upon them, then the bargaining power could be strong. So, he can offer his own terms. If the buying companies refuse, then the suppliers may go to McDonalds or other buyers in the market. According to the above, the buyer can’t force the seller to lower the price or improve quality.
Substitute products are a threat
In addition to limiting the ability of companies to raise their prices, substitute products also limit their revenue. If a company’s products are less competitive, they can increase their prices and make more money. What makes KFC different? KFC’s USP states that KFC makes life taste better. KFC has a unique product taste. They don’t only sell fried food, they also offer customer satisfaction.
KFC adjusted its new store because consumers want more than just quick and tasty food. They want an experience. The KFC restaurant at Central World’s Floor 6 was remodeled with a modern store and an image that is friendly and welcoming. Opening music by Beyonce was bought copyright. It should show the global brand KFC. Design for different customer groups. The emphasis is on the diversity of customers. Customers can relax in a quiet zone.
Dining Zones are for customers that require formal dining. Dining zone is a set of white lounge chairs and a square dining table.
Snacking Zone offers customers a way to get a snack or eat while waiting for a meeting. This zone is a chair version of the Red Lounge Chair, which feels comfortable and relaxed.
Big Group Dine Zone divided in 2 types by Consumer Insight students to support their clients, who often find a seat on the table with bag or book. First, it created a white table and chair Satun to look like a Canton table. A small table with Satun is another option. Brown positioned next to counter.
Outdoor Zone, a zone not listed in the Global Manual is one that Thais feel compelled to have. It is made up of a chair with stainless steel frame and a seat on a wood table. Furthermore, the combination of wood floors with potted hazel tree trees makes us feel comfortable and warm. He created a bell-shaped square that can be seen outside.
Booth Zone seats are the perfect train bogies for students and teens who want to have their own Private Space. Material made of a beautiful floor, a table as well as chairs is also aimed at focusing on durability.
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