Kentucky Fried Chicken in China
Essay by Priya Bansal • August 16, 2016 • Case Study • 560 Words (3 Pages) • 1,837 Views
Case Study Analysis:
Kentucky Fried Chicken in China (A)
Date: 22.08.2015
SITUATION ANALYSIS
The case studies about the attempts to establish the Western-style fast food, Kentucky Fried Chicken (KFC) in China. It provides an insight on the Chinese market and challenges KFC would face in the Chinese market. The case focuses on the strategic decision making for selecting an apt location for its first store which would eventually estimate whether the investment would lead to for a huge gain or a huge loss.
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PROBLEM DEFINITION:
The intended geographic location KFC should select for its first store in China.
OPTIONS:
Location of the first store could mitigate the obvious risk of moving into China, Tony Wang had the following options for the location of their first store:
- Tianjin
- Shanghai
- Guangzhou
- Beijing
EVALUATION CRITERIA:
- Proximity of chicken suppliers and poultry processing farms
- Frequency of western tourists
- Providing profile for national market penetration
- Proximity to customers
- Relations with the Government
- Total costs- Minimal transportation costs, land, labor
EVALUATION CRITERIA AND ASSESSMENT OF OPTIONS:
OPTIONS | EVALUATION CRITERIA | ASSESSMENT OF OPTIONS |
1. Tianjin | Proximity of chicken suppliers and poultry processing farms | Lacked a convenient supply of chickens |
Population and potential customers | Less frequented by tourists | |
Providing profile for national market penetration | Couldn’t provide the necessary profile | |
Relations with the Government | Excellent contacts with Tianjin municipal government | |
Total costs- Minimal transportation costs, land, labor | Not very high costs | |
2. Shanghai | Proximity of chicken suppliers and poultry processing farms | Easy access to ample supply of chickens |
Population and potential customers | Noise and pollution discouraged tourists Population-11,739,000 | |
Providing profile for national market penetration | Yes- but need to promise an adequate return in FEC before making an investment | |
Relations with the Government | one of the three self-administered municipalities | |
Total costs- Minimal transportation costs, land, labor | busiest harbor, transpor tation costs low | |
3. Guangzhou | Proximity of chicken suppliers and poultry processing farms | Little difficulty in locating adequate supplier of chicken |
Population and and potential customers | Frequented by business people and tourists from Hong Kong on one day excursions Population- 3,135,000 people in 1980 | |
Providing profile for national market penetration | Less probable than Beijing | |
Relations with the Government | Had greater autonomy in approving foreign investment projects, reduced tax rates | |
Total costs- Minimal transportation costs, land, labor | Increased costs if chicken has to be bought from some far off location | |
4. Beijing | Proximity of chicken suppliers and poultry processing farms | Several poultry producers just outside the city |
Population and potential customers | Capital city- large customer base (9,029,000 people in 1980s), high economic development- low chances of failure Frequented by Western tourists | |
Providing profile for national market penetration | Grab people’s attention and facilitate future expansion outside the city Penetration here can test the market and macro environment | |
Relations with the Government | Autonomous municipal government, helps in building good terms with government and local suppliers | |
Total costs- Minimal transportation costs, land, labor | Education capital- Lot of students- hire students part time- less labor cost |
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