Case study : KFC - A success in China

In 1987, KFC was the first western fast food restaurant chain  in China. These branches has been expanding rapidly, which are the most profitable market. In total, the firm has more than 4400 outlets in China that is far more than the Mcdonald which is more than 1400. In this numerical data, we can see that the KFC do very well in China by comparing with Mcdonald.  The Irish Times describe as 'by far the most pervasive symbol of Western culture in China.^' 

^Video:

Why you'll see a lot more KFC in China

The most common strategy is the direct investment. Nearly 95% restaurant is belong to the enterprise.They control the employees ,food quality , style , food types ,management skills and advertisement. The centralisation and integration style are the key to success. The business has a clear goal to achieve and has a stable condition to run the business. The mechanistic structure is good for KFC because it is the easy way to manage different resources and has a similar standard.

In fact, people not like  fast food culture at all especially in Asia Countries. Many researches and media (Super size me ) indicated that those fast food shop may contain
Hazardous Chemicals ,These foods is not good for our health. But, the example of KFC in the Greater China regions( China ,Taiwan ,Hong kong) is different. KFC provide more health diet for the mFenu. It also has adapted its menu to suit local tastes, by offering the chicken rice ,congee ,salad ... 

KFC managing international business has paid attention to the different features of the global and local environment. By reference of PESTEL analysis, KFC solved the legal,political, economic and technological issues at the beginning. When it is developing, it knows what is the differences in consumer habits and preferences. In China, The chicken is more spicy than other countries. Therefore, the ingredient of the prosperous because of the Socio-Cultural  method.

Mcdonald's branch is far more larger than KFC.  The outlets of the Mcdonald's
 is the double of KFC in the world. But in China,  KFC is triple of Mcdonald's. It is a strange phenomenon. They are similar fast food restaurant but distinct market share.
Because of the opportunity (SWOT analysis). The KFC strategy fit between internal capabilities and external changes.

KFC knows the potential market and develops it. At frist, KFC can be a dominant position on the fast food market since the first firms in China. They got the great chance to develop the new market. They not only planning but also learning ,they can use many analytical tools on their business.  More than ten  local specialist help the KFC. Their plans always influences with changing market condition. Different country has different type of foods.

Thus , as an excellent enterprise, reaction and proaction with the environment is extremely important. Every company should have connection with the modern society and include up-to-date structure. KFC can adapt the trend of the outer circumstances. Actually, They can modify and amend the organisation structure and the management stragey according to the situation and the need.   They started from one type (direct investment) ,but evolve into another type such as Franchise. 

So, focusing on contingency and situational method is vital. A model of a business should fit an outer environment. Any firm must to concern the tendency so that they can realize and adapt the difference and environment. Do concern on the opportunity and the customers, there are the key points to reach the goals.

International business and globalisation

International business is very common in the nowadays situation. By the development of the transportation, the limit of the country boundary has blurring. The trend of the globalisation has a most important affect on our daily life. When we buy a product, the brand in one but made in another.  In fact, the globalisation can be a challenge or opportunity as for the decision and management methods.

Actually, the international market is different  from the local market. The obvious thing is about legal, social , political and cultural. In some country,  they are reluctant to allow foreign business. Also, the international business should concern the subsidies, taxes and regulation. Then, An enterprise may notice the policies of working conditions and job protection such as minimum wages and the longest working hours.

Familiar with the local policies and political background is just a good beginning. The main points is the social and the cultural elements. For example : the well-known brand name called (Ferrero Rocher) which is a chocolate and food company , get a huge success in the Hong Kong ,Taiwan and Mainland China.  In the market research ,we can notice that nearly more that 30% of the chocolate market share in those regions for this company. In the main festival such as Chinese new year ,people always like to buy this  as a present. 

In fact, this company focuses on the cultural and social culture. It gets a huge success because of the knowledge for the local behavior. People in China always like to buy some decent present to give their relatives and friends. So, it is vital to concern their need and provide a change for them. Actually, the market gain in the greater China region is far more bigger and better than the European market. The enterprise gain more profit in Asia rather than their own market. 

To go to the international business, the following methods can be used : Foreign direct investment, licensing ,joint ventures, wholly owned subsidiary , E-commerce...  
Starbucks is as an example , it has different methods around the world.  In the UK or USA,the methods mainly focus on the foreign direct investment and wholly owned subsidiary. But in the Asia, the methods concern about Licensing and joint ventures.
So, different regions may include distinct strategies.

Besides, the globalisation is a dilemma issue. For the point of economics, it can get a benefit on it and provides a better life for all people.But ,for the other hand , Globalisation do include some drawbacks, The most vital one is inequality. In the news, We know that Primark do not do very well in the labor protection. So, it is not good for their image and may affect their process. As a business, when doing a international business, they should also pay attention for the image such as fair trade for starbucks so that the enterprise can get a long-term success.

Organisational strategy

Kay (1996) defined strategy as the match between the organisation's external relationship and its internal capability. For some extent, it focuses on the decision of the resources so that an organisation can cultivate their performance.  To achieve long run goals and objectives, allocation of resources is extremely important for the long term direction.
There are lots of elements : people, decide, organise ,Major , resources , enhance performance ,enterprise.

Two major perspectives on the strategy process are very common - Planning and Learning.
The majority of companies would like to use these strategy on their business. The first one - Planning- is the most common one which is used in many firms. Planning is easier than other strategy because a company only need to identify the organisation's current mission.
and then,  By utilizing the analytical tools ,  an enterprise predict the external environment and evaluate the internal features. This method is mainly for the stable environment and the future can be easily be predicted. After the goals and the external and internal issues, an organisation  formulate and implement the strategies. So, in this perspective , it is the most
common and simple one for many companies.

For example, the company called TVB (Television Broadcasts Limited, Hong Kong) has a great planning about the future. Since the changing society and the limited market on the local, the company has a plan to adapt  the changes. Nowadays ,people intent to watch a soap operas and TV programmes on the mobile phone or the internet rather than television.
Thus, TVB will like to set up a internet television to deal with the trend. Also, because of the limited market, the company develop their business around the world such as China , Taiwan , Malaysia and so on.



Besides, the newest one is the learning strategy which is an emergent or adaptive process.
Because of the changing situation, a intended strategy may not fulfill the real world. Therefore, after the operation , an unrealised strategy will be cancelled and a realised strategy will be applied when having a deliberating. The learning process is contingency or situational structure ,the business have a change according to the environment.

Besides, when developing a strategy, the company has more assumptions and broad scenario planning. The meeting will also become more informal than before.  The running process become more flexible. In the modern time , SWOT analysis has a great concern which including Strengths , weaknesses , opportunities and threats.




Also, I learned about the corporate level and business level. For example ,with business units of cost leadership, the travel company (Ctrip) is the famous brand in China. They provide a lower cost about the hotel , ticket . . . for traveler. In fact, They has a lower cost and Broad target which let them can be Asia's 200 Best Under A Billion.  The company Ctrip include distinct services and markets compared with other. Traveler could buy a cheaper ticket on the internet easily. It also a innovation of the travel method. It provides a more convenient way to travel.A company should keep in touch with the environment and develop their own specific strategy.

Placing organisations in context- part 2- the macro environment (PESTEL) and stakeholders

The macro environment focuses on the external elements,such as overall conditions and factors. It is a variable item affecting the business operation. A company should  pay attention on it since it may change the profit and efficiency of a firm. To overcome the challenges caused by the outer world, Managers need to realize and prevent the potential
risks and chances.

For one thing,understanding The PESTEL analysis is helpful for decision-making.
The PESTEL stands for political, economic ,socio-cultural, technological and legal should
be concerned in a company , No one can survive without  interaction with the environment. An organisation is a series of group behavior ,so which is affected by the human activities. The changes of society should be learned and solved by the manager.

Take Mcdonald as an example: Although it is the most famous fast food shop around the world, people tend to eat less on such junk foods and the net income of its decreases to the
US$5.46 billion  (2012). The mainly reason is for socio-cultural factors and Legal factors , Many of research indicated that the fast food shops is not health for ourselves especially Mcdonald.The junk foods include many toxic chemical materials, fat. As a result, The obesity rate has became more and more high than before and leads to be a serious issues for many countries.

Consumer tastes and preferences change a lot. They like the healthier products more rather than the unhealthier products.People begin to concern their health and nutrition. So,
people are far less likely to spend money on the fast food shops. And also,to strike the obesity issues,the government will do some legal regulations. For instance: the most
well-known Act called 'Fat Tax'  was implemented   in some countries (UK and USA).
Since this legal factor and the customers'  preferences, the gross profit of those unhealthy foods will be decreased correspondingly.

Apart from that, after the macro environment ,we cannot ignore the also vital part of
the stakeholders which contain different type of group and affect the business.
Managers need to satisfy their expectations and gain a positive views. Each stakeholder
should use different way to fulfill their need.

stakeholders is defined  "those groups without whose support the organization would cease to exist." An organisation has a tight relationship with stakeholders. Managers need to
notice their desire and gain a stable business environment.

The latest affair, teachers went out on strike over pay, pensions and jobs, can be a deduction of the relationship between stakeholders and organisation. The mission of it
is for the additional  salary and welfare. Obviously, If the educational institution had a more good pay and benefits ,and improved the working condition , the strike would not happen
at all. In fact,the strike always cause a loss in whole. So, if company have a balance between the company's benefit and the employees needs , the condition of their relationship will more stable and the unwilling and unhappy action will not occur any more.

Therefore, Stakeholders is also a prerequisite element. Without it ,the company cannot run smoothly. Then, manager also need to control and realise the macro environment to adapt
the business to the outer circumstances. After these two components, a business organisation could gain a great success.