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KFC - Essay Example

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1. KFC's success in the United States can be attributed to a lot of factors which are both internal to the business operation and to its environment. The first and perhaps most significant factor is KFC's utilization of franchising to expand its business operations…
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1. KFC's success in the United s can be attributed to a lot of factors which are both internal to the business operation and to its environment. The first and perhaps most significant factor is KFC's utilization of franchising to expand its business operations. Through this scheme, it is able to cut costs through operating economies in advertising and raw materials purchasing. Strategic locations where there is high traffic also propel its success by effectively reaping the cost advantages of scale economies. Other operational strategies included efficient store management to boost profitability as well as "ensuring short-term profits", "building local public relations," "maintaining employee morale," "developing customer goodwill," and "keeping tab on competing chains." KFC recognizes the importance of building an overall market image to succeed. This is essential in the company's operation as consistency and reliability of its products are at stake. Consistent processes across the company's outlets ensured that each of the branches is operating at a predefined standard. Also, the image of the company which is already instilled in the company's market should be met by all the outlets. All of the above measures are instrumental to KFC's success.
2. At first, Loy made a mistake in the strategies that he employed to conquer the Japanese market. This was evidenced by the huge losses he incurred during KFC's operation of its first restaurant in Osaka. However, as he got to know the Japanese market, he proved to be effective. Loy was able to identify a target market which is the group of trendy Japanese. This new market required fresh marketing strategies. It called for the modification of the product line, place, promotion and pricing. Fortunately, Loy had essentially adopted strategies which were just appropriate for his target market. Loy's strategies involved offering products which appealed more to the Japanese market. He modified KFC's menu to take into consideration the different needs of the local customers. In addition, he broadened the menu to give place to new additions like fish and smoked chicken. To minimize cost, he designed the company's kitchen and equipment which was more space-economic. He also aggressively competed with competitors through price wars. These strategies were pursued by Loy through its association with its parent company. The headquarters' silence on Loy's management became an advantage to push through the aforementioned strategies. Another significant competitive advantage earned was the strong brand equity of the KFC headquarters. This enabled them to gain a strong partner like Mitsubishi which was very helpful in pushing the company's strategies.
3. It is recommended that Loy's strategies in conquering the Japanese market be adopted
in other countries where KFC wants to diversify into. The headquarter should let Loy and other managers to independently handle the issues faced in each country.
In trying to offer products to new markets, KFC should take into consideration the local taste of the market in order to succeed. Since customers typically determine the profitability of a business entity, their preferences should be addressed above the company's considerations. KFC must be more market driven and customer oriented by being attuned to their needs. Offering a menu which is not well accepted in the local market could be fatal to the company's operation. KFC should not strive to maintain a global image blindly. It has to understand that different markets in the world have different preferences. Instead, it should try to position itself in a certain market by tailoring to the customer's needs. Loy and team should be given the freedom to focus and autonomy to manage. Empowering managers often yield a better performance than imposing a strict set of rules upon them. A more general guideline should be drafted, yet it should give room for the managers to implement their own decisions. Read More
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