Yum Brands-China Business Strategy - Case Study Example

 Yum Brands-China Business Strategy Introduction Yum Brands Inc., being an international Corporation, has undertaken to put in place a global business strategy where strategies to enter and expand its operations in China have been focused upon. Yum Brands Inc. entered the Chinese market in 1987, considering the fact that during this period, the Chinese economy had rapidly grown after its liberalization. The company was one of the early players in the Chinese restaurants’ business, which has enabled it to establish its operations in the Chinese market firmly. The company’s entry into China has provided Chinese consumers with a new and unique dining experience, where they get customized and clean ambiance service. The Yum Brand Inc. business strategies have focused on menus that include both western and local consumables, with focus being directed towards offering customer preferences in each province. Business Strategies The business strategy of Yum Brand Inc. in China encompasses providing a variety of consumables, customer preferences, franchise relationships, and employing locals to key positions of the company. The company focused on strategies of employing locals in its key positions alongside delivering services according to customer preferences, which vary from one province to another. The company also has established franchise relationships and built its own logistics and distributions network. Moreover, the company has been keen on its business strategy of developing new markets through establishing widespread restaurant chains in China division to increase its market share. Apparently, mainland China is Yum Brands’ leading market according to worldwide restaurant development (Enz, 2010, p.945). Internationally, the company has built a vibrant global entity by focusing on key business strategies such as establishing leading brands all over the Chinese market, driving aggressive expansion of the international market, and building franchise value and long-term shareholders for industry needs. The Company has built a unique business culture that is filled with exciting opportunities and energy for both employees and customers. According to executives, the company believes in the people, encourages ideas from all and sundry, and trusts in positive intentions of its people. Through this, the company has been able to bring about diversity in style in its business operations and consumables, considering that customer needs and preferences can be best met through diversity. In a bid to establish a huge market for base in the Chinese market, Yum Brands Inc. in Beijing sought to take over the Little Sheep Group limited, which operates a popular chain in China. This move is among the many global business growth strategies, which have seen the company penetrating and establishing its groping in the largest Chinese market. The Chinese market of casual dining was seen to grow expansively, which befits the Yum Brands move to grow beyond the chicken and Pizza market being concentrated on by Pizza Hut outlets and KFC. The company’s stake holdings in the Little Sheep limited operations have enable massive growth on foodservice operators’ growth. Mergers and take over strategies being put in place by the company have propelled its market penetration in China to greater heights, although government regulatory measures have limited its international bid. The Little Sheep Company has contributed to Yum Brand Inc’s great leap forward in winning in China market due to its widespread operations of the cuisine where patrons are able to cook meat and vegetables themselves. China’s great market embraced such kind of an idea with enthusiasm, and thus enabling Yum Brand Inc. to take root into the market. The market has since grown tremendously, with the company adding up its popularity by introducing consumables such as seafood-topped pizza and fried shrimp that embrace the Chinese style. The company’s menu modification is among the most successful business strategies under implementation. The Yum brands have also broken into the Chinese market through its business strategy of customizing their consumer menus to fit local tastes in China. This strategy has enabled the company to penetrate into the market with ease, irrespective of the unique local needs. Moreover, the strategy has not only customized tastes, but also formats of its stores to fit consumer behavior and changes in consumer preferences (Harvard Business Review, 2011). Yum Brand Inc. has been able to tap into Little Sheep’s market network through diversification in Chinese and Asian cuisines that have been popular in the Chinese market for some time. However, the company needs to buy into the foreign market, considering that it faces localization challenges. This is essential if the company is to stabilize its operations in the Chinese market, given the fact that restaurant business in China is growing with increases in personal income. Yum Brands Inc. global business strategy has focused on conglomerates, which has enabled it to establish itself in huge market such as China through owning outlets and brands. Compared to the US and European markets, the Chinese market offers growth opportunities to international businesses. Yum brands have sought to build dominant brands of restaurants in china to pursue a global growth strategy through organizing Yum China into three divisions comprising KFC Taiwan, Thailand, and mainland China. The company is using divisional management structure strategy, where the international division and the China division operate as enterprises that are independent of each other (Enz, 2010, p.302). The company has also shifted its business strategy focus to hot pot restaurant, which has rapidly gained big time popularity, particularly among office workers in major cities in China being led by Beijing. More so, Yum Brand Inc. operates quick service restaurants, which are a major attraction to time conscious clients such as office workers. Yum Brands Inc. has put in place business strategy plans to focus on expansion and development of Taco Bell, Pizza Hut, and KFC chains in China. Franchise ownership and operations business strategy such as KFC has definitely been an effective strategy used by the company to penetrate the Chinese market. Conclusion Yum Brands Inc. stability of operations in China has been supported and made possible by the company’s global business strategies used both in the past and currently. The company focuses on quick service restaurant over widespread outlets through various concepts such as the KFC Taco Bell and Pizza Hut restaurant chains. In addition, the company also puts in place other concepts such as LJS and A&W in the Chinese market. The Company also operates licenses and franchises of widespread restaurant systems that prepare, package, and sell food consumables according to customer needs and preferences. More so, the Company undertook to own non-controlling interests of companies running their operations in the Chinese markets. Such non-controlling interests include the Little Sheep Ltd and the Hot Pot restaurants. More importantly, the Yum Brand Inc. used division strategies, with particular emphasis on the China division, among other divisions such as International division. References Enz, C.A. (2010). Hospitality Strategic Management: Concepts and Cases. NJ: John Wiley and Sons. Enz, C.A. (2010). The Cornell School of Hotel Administration Handbook of Applied Hospitality. NY: SAGE Publications, Inc. Harvard Business Review. (2011). Harvard Business Review on Thriving in Emerging Markets. Boston: Harvard Business School Publishing Corporation. Read More