A

ASSIGNMENT
On

COUNTRY STUDY .
IN PARTIAL FULFILLMENT OF REQUIREMENT OF TWO YEARS MBA PROGRAMME
SUBMITTED TO:
DR.MADHU MEHTA
DR.RAJESH KHAJURIA
SUBMITTED BY:
RAVAL PAREEN - 13
MBA - 2 (4TH - SEMESTER)

C.K.SHAH.VIJAPURWALA INSTITUTE OF MANAGEMENT

MBA PROGRAMME
VADODARA.

Brief introduction about Yum! Brands

Yum! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant company in
terms of system restaurants with nearly 38,000 restaurants in over 110 countries and territories
and more than 1 million associates. Yum! is ranked #216 on the Fortune 500 List and generated
more than $11 billion in revenue in 2010. The Company's brands - KFC, Pizza Hut and Taco
Bell are the global leaders of the chicken, pizza and Mexican-style food categories.
The Yum! System includes three operating segments: U.S., International (Yum!
Restaurants International) and China Division. Outside the United States in 2010, the Yum!
System opened approximately four new restaurants each day of the year, making it a leader in
international retail development.
At Yum! Were building a vibrant global business by focusing on four key business
strategies:

Build leading brands across China in every significant category

Drive aggressive international expansion and build strong brands everywhere
Dramatically improve U.S. brand positions, consistency and returns
Drive industry-leading, long-term shareholder and franchisee value

Results for 2010 once again affirmed our consistent record of success with 17% Earnings Per
Share (EPS) growth, which marks the ninth straight year we delivered at least 13% growth and
exceeded our 10% EPS growth target. For the full year 2010, we opened nearly 1,400 new
restaurants outside the U.S. Importantly; we maintained our Return on Investment Capital

(ROIC) of 20%+ and continued to be an industry leader.

Two products of Yum!

Two countries other than home country (Existing Product Country) :

PIZZA HUT- PAKISTAN & AUSTRALIA
KFC- CHINA AND AUSTRALIA
Two Potential countries for Yum!
PIZZA HUT ARGENTINA AND SWITZERLAND
KFC- ARGENTINA AND MONGOLIA

FAVORABLE CONDITIONS FOR PIZZA HUT IN PAKISTAN

Pizza hut has done their positioning in the target market by keeping in view two basic factors:
Quality
Frequency
o Pizza Hut was among the first multinational brands to enter the food retail sector
in Pakistan. When the first P i z z a H u t r e s t a u r a n t o p e n e d i n K a r a c h i
the quick service industry was at a nascent stage and the pizza
category was dominated by a sole regional player who had a marginal presence.
Pizza Hut went on to play significant role in pioneering and developing this
category in Pakistan

Worldwide and in Pakistan, Pizza Hut has come to become identical with the
Best pizzas under one roof
Worldwide and in Pakistan, Pizza Hut has come to become synonymous with the 'best
pizzas under one roof. This is because at Pizza Hut the belief is that every pizza
has its own magic, thus making it a destination product which everyone
seeks. It is this belief that has ignited the passion to create, innovate a nd
serve the finest product the industry has to offer, while setting standards for
others to strive to replicate. Pizza Hut is committed to providing uncompromising
product quality, offering customers the highest value for money and giving service that is
warm, friendly and personal.
Crew members 'customer mania which makes Customers Unique dining experience. A
critical factor in Pizza Hut's success has been its unique dining experience.
Crew members at Pizza Hut strive each day to provide 'CUSTOMER MANIA'
- the kind of service that ensures that every visit of the customer is a memorable
one. Pizza Hut's constant endeavor to provide extra value whether it is pizzas which are
available to suit every price range, new promotions or the introduction of innovative
product ranges - that puts a 'Yum' on every customer's face has allowed it to increase its
presence in Pakistan .

FAVORABLE CONDITIONS FOR PIZZA HUT IN INDIA

CONSUMER PULL FACTORS
A critical factor in Pizza Hut's success has been a menu that has constantly evolved and
expanded to cater to the changing needs and specific preferences of customers in different parts
of the world. In having understood the pulse of the customers in India, Pizza Hut has clearly
established itself as a brand with an Indian heart.
Besides offering an extensive range of vegetarian pizzas, it was the first pizza chain to open a
100% vegetarian restaurant in India in Surat and later in Ahmedabad and Chow patty, where it
offers a Jain menu sans all root-based ingredients.
Over the years Pizza Hut has also developed and successfully introduced a range of products
especially suited to the Indian palate. These products like Chicken Tikka, Spicy Korma, Spicy

Paneer and the Masala and Tandoori pizzas have been a tremendous success. What has also
given Pizza Hut a competitive edge is that in addition to an extensive range of internationally
renowned pizzas like The Italian, the proprietary Pan Pizza and Stuffed Crust, in India the menu
offers the option of a complete meal. It includes appetizers, a Salad Bar - where the customers
can make their own fresh salads, a range of soups, pastas and desserts.
Pizza Hut has a unique tradition. A bell hangs at each Pizza Hut restaurant, which is run by
customers who as they leave wish to thank the servers for yet another memorable visit.

FACTORS FOR SUCCESS

Offering value for money food
Employing economies of scale, Pizza Hut has made its offerings more affordable. Its
delivery offer of US$ 4.4 for four personal pan pizzas has been very successful, helping it grow
the business by 25 per cent. They have recently introduced a range of vegetarian personal pan
pizzas for US$ 1.1. Most Pizza Hut restaurants are located in the metros and smaller metros. In
taking long strides across the country, Pizza Hut is consolidating its position by opening more
restaurants in the metros where it already has a presence as well as opening outlets in new
markets.
Aggressive marketing and tie-ups with local and popular brands
Pizza Hut has increased its visibility by launching a well-received TV
campaign aimed at the young crowd. It has formed partnerships with recognized brands such as
Nestle and Pepsi. It also holds regular promotional campaigns targeted at children and uses these
alliances to offer packages during these campaigns.
Developing the local supply chain
The local supply chain for Pizza Hut was developed by Yum! and currently 95 per cent of
the ingredients they use are locally produced. They now import very few specialty items like
pepperoni.
Leveraging the India Advantage: International brand with an
Indian heart
Pizza Hut is one of the first international pizza chains with purely vegetarian dine-ins at Chow
patty (Mumbai), Ahmedabad and Surat, which also serve Jain menus. Pizza Hut has even opened
two all- vegetarian restaurants in the western state of Gujarat to cater to the Jain religious
community, whose members prefer not to eat at places where meat is served.
Offering more than the international menu

International food chains typically offer only a few localized products in other parts of the world.
However, Pizza Huts local menu is as large as the international one. According to Pizza Hut, the
Indian food heritage is very rich, and hence Indians like local flavors. The Tandoori range of
pizzas, which was developed locally, has a menu mix of over 20 per cent.
Indigenous sourcing of raw materials
Pizza Hut has reduced costs through indigenous sourcing of raw material. It has tied up with a
local company Dynamic Dairy Industries Ltd (DDIL) for sourcing mozzarella cheese. The
landed cost of imported mozzarella comes to US$ 3.3 - 3.5 per kilogram. The domestic price,
however, works out to US$ 2.99 - 3.1 per kilogram. Pizza Hut is adding to the bottom line by
localizing equipment as well as by paying attention to inventory replenishment, which has been
reduced from 60 to 30 days.

FAVORABLE CONDITIONS FOR KFC IN CHINA

Open China, New Opportunities
The economic reform opened China market to the outside world and improved the standard of
living of average Chinese people. In late 1978 China began implementing economic reforms to
develop and modernize its economy. The reforms have gradually rebuilt a new economic system,
which is referred as a socialist market economy, by lessening the governments control of the
economy, allowing some aspects of a market economy and encouraging foreign investment. As a
result of the reforms, Chinas economy grew at an average annual rate of 10.2% in the 1980s and
by 10% annually in the period of 1990-2001. This was among the highest growth rates in the
world.
The boost of national wealth and the consequent increase in individuals income has led to
steady changes in Chinese consumer patterns prevalent in pre-Mao era. Put in a concrete way,
the increase in disposable income (nearly tripled from 1985 to 1992) has awakened peoples
desires for consumption and material pleasure (Wang, 2000). Less staple food is consumed,
whereas more consumer goods and services are purchased. Unlike staple food, consumer taste
and the breadth of product assortments are important considerations when consumer goods and
services are purchased (Chow & Tsang, 1994). China, the worlds most populous country with a
population of more than 1.3 billion, has become the largest potential consumer market on
multinational companies blueprints for global expansion thus can never be ignored.
Responsively, the evolution of service industry would be the best example to examine the effect
of open-door policy. Before the economic reform movement, Chinas service sector was
mostly underdeveloped, and some services were even nonexistent. The downturn of service
industry can be reasoned by the stringent quota system in distribution of necessity of life, in
which distributing consumer goods and services was conducted by bureaucratic fiat rather than
through markets.(Davis, 2000) However, economic and social development in the 1980s and
1990s created a huge demand for services. Retail trade used to be conducted only in state-owned

shops, but today privately owned shops and vendors stalls line streets in cities and towns. Big
cities have huge department stores and shopping centers. Foreign investors also are entering
Chinas retail trade, and Western fast-food companies such as McDonalds, Pizza Hut, and
Kentucky Fried Chicken now have many restaurants in China.
As Davis (2000) points out in her investigation of the revolution in domestic consumption in
China, the gains attributed to the revolution in consumption can be summarized into four aspects:
food, spending for children, housing, family rituals and celebrations. Three of the four aspects
can be taken into account when analyzing the marketing strategies of KFC in China
Opportunities
One of the opportunities is, as what Ive presented in the preceding part, the growing economy in
China. With an average growth rate of 8 percent in GDP, an enormous buying force based on a
population of 1.3 billion, the scarcity of United States brand restaurant that only one restaurant
for every 5 million people made China the big cake for multinational food industries.
The other opportunity, more politically, is the Chinese government has welcomed investment by
western investors. Since the poultry industry is one of the top priorities of Chinas agricultural
modernization plans, KFC, as a poultry food chain company, gained a lot of support from the
government.
Strengths
In the mid of 1980, the acquisition of KFC by PepsiCo provides KFC with heavy financial
backing for further growth. In terms of the potential of market, chicken is already familiar in
China and much cheaper and more widely available than beef. Chicken has long been regarded
as a kind of nutritious food which is especially good for the patients, the elders and children. An
increase in health conscious consumers also raises the consumption of chicken.
KFC devised an additional incentive scheme to encourage worker productivity. KFCs control
mechanisms are designed to ensure standard levels of quality, service and cleanliness (QSC) at
all of the restaurants chain stores. This fits the positive image in Asia of American fast food
restaurants as famous, air-conditioned, and hygienic. Moreover, KFC has adapted its advertising
campaign to suit local preferences, including a Cantonese version of We do chicken right
advertisements. KFCs success in China can be partly attributed to Tony Wang, who has had a
long and productive history at KFC and a proven track record for successful negotiations with
the Chinese government. He laid the foundation for KFC to enter China.

Cultural Values in KFCs Campaigns in China

In recognition of the distinct nature of transitional markets (Arnold & Quelch 1998), many foreign
companies have sought other ways to compete with domestic offerings by clothing their brands
in local costumes (Belk, 2000). As Zhou and Hui (2003) state, localization of language, product

attributes, advertising content, and even product meanings is a common practice adopted by
multinational companies in most transitional economies, including in China.
Advertising is one visible aspect of the culture of consumption (Wang, 2000) and in Daniel
Bells characterization (1976), the mark of material goods, the exemplar of new styles of life,
the herald of new values. Perception of cultural differences and understanding of host culture
are critical elements in a firms international marketing strategy. This is because cultural values
influence and is influenced by advertising (Zhang and Neelankavil, 1997). The grow-up
processes of consumers in a particular culture are indeed the procedures in which they get
accustomed to that cultures values, beliefs, perceptions and norms. Their interpretation to
certain advertising is congruent with their mother cultures values and norms. Consequently, the
choice of advertising themes used in one particular culture might be limited by the social values
and cultural characteristics of the target audience. In this section, KFCs strategies would be
analyzed. A brief analysis of the 24 commercials downloaded from KFC Chinese website would
be conducted to examine the inherent cultural values and relevant studies would be discussed.
FAVORABLE CONDITIONS FOR KFC IN AUSTRALIA
key success factors:It is very important output of market analysis the identification of key success factors for
strategic groups. These are the assets and competencies that provide the basis for competing
successfully. There are two types. First is a strategic necessity does not necessarily provide an
advantage because others have them. But their absence will create a weakness. Second is
strategic strength those at which firms excels, the assets and competencies that are superior to
those of competitors and provide base of advantage. It happens many times that the key success
factors on which the organisation rely on become less effective in future. After management
change at KFC there have been many innovative change occurred at management levels and
strategic analysis that help a lot in growing of the organisation. It has all valid reason to compete
against its powerful competitor McDonalds. To maintain and improve service quality KFC work
with the frontline focus and follow the regular periodic CHAMPS. This CHAMS represents the
cleanliness, hospitality, accuracy, maintenance and speed of service of each store. In addition,
there are regular quarterly CER (CHAMPS excellent review) visit in store to ensure each store is
follow the standard procedure and techniques. Moreover, the stores location, effective store
management, key to continued growth was to find, motivate and retain hardworking and
entrepreneurial managers. Continuing cost savings, innovations and use of new technology for
work e efficiency are assessed here as a key success factors. It tries to compete by cost
differentiation by using the advantage of economies of scale.
Swot analysis:Strengths:

It has a brand equity

Second only to McDonald in foreign sales

Strong cash flows

Very strong internationally UK, Thailand, china, middle east

Strong franchisee and licensing and free revenue for cash flows

Interactive relationship marketing

Strong trademarks recipes

Ranks highest among all chicken restaurant chains for its convenience and service
standards

It has refocused international strategies to grow its company and franchise restaurants
base.

It has competitive marketing strategy by producing three types of chicken. Original

recipe chicken (pressure cooker), crispy chicken ( fried chicken) and roosted chicken (tender).

It has established 2 in 1 strategy that KFC with Teco bell or with Pizza Hut.

Opportunities:

Increase the income of the people.

Home meal replacement market will exceed an estimated $577 billion by 2020

Target to grow in ethnic market

New leadership

Updating restaurants

Balanced menu

Customer focus

Delivery system