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AustraliaBackground of KFC in China 代寫

Introduction

 AustraliaBackground of KFC in China  代寫

Background of KFC in China

 
KFC, whose full name is Kentucky Fried Chicken, was a restaurant selling fried chickens and chicken-related products, and it was founded by Colonel Harland Sanders in 1952. Thanks to Colonel Harland’s years of efforts, a secret recipe to fry chicken, which consists of 11 spices and a special cooking method was invented. Because of that famous, magic and secret recipe, fried chicken from KFC are more and more popular around the world and now it is the second largest fast-food company and the largest fried chicken producer in the world, and the image of Colonel Harland dressed in a sparking military uniform, wearing the goatee penetrates into people’s mind as the most representative symbol of KFC.( Dana, 1999)
As an big international enterprise,KFC is certainly to expand its power to China. KFC opened its very first Chinese chain store in 1987 in Beijing after many years of Asian experimental operation in Singapore, and through 6 years of exploration in China, KFC’s total branches reached 10 in number by 1993. More significantly, the June of 1996 marked a milestone of KFC’s 100th branch’s build-up in its initial battle field, Beijing, which revealed KFC’s new advance trend in China——developed in a speed of 25 increased branches per month from 2002 to 2003 and even faster after 2003. As a result, with its 1200th branch ‘s coming into operation in Hainan in 2004, KFC had beaten its opponent Macdonald who is the world No.1 fast-food company with an advantage of twice branches as many as Macdonald’s in Chinese fast-food market. Now, there are over 3000 KFC outlets in China and with no doubt, KFC has become the real and biggest tycoon in Chinese fast-food industry.
Actually, KFC’s success in China owes to its strategic strategies. The strategies of KFC are to attract more customers to consume in its place so it sets lower prices to increase the target customers. KFC’s market position is to become the leader of fast food industry in Chinese market.  The mission of McDonald’s is to become Chinese customers’ favourite place to eat. In order to achieve its mission, KFC set up a series of promotion and advertising plans, released the ‘CHAMPS’ plan around the world  and conducts localization thoroughly. Now in China, KFC is not simply a western fast-food chain restaurant any more in Chinese’s mind, but a place of joy and happiness and feel of home, because you can find the taste of home there, which Macdonald has not reached yet.(Broyles, 2009)
The internationalization process of KFC in China and its impact of international context will be analyzed in this essay. The essay will discuss the environmental forces of KFC in China and entry mode in which involves different actors and their impacts on KFC in China, competitors and broad community and the experience learned by KFC.

 

Environmental Analysis

 

Political Environment

 
Vrontis and Pavlou (2008) stated that political factors contains the law, groups and agencies that control and affects organization and community. These factors include the government attitudes towards organization and financial policies. The government policies which are from Department of the Environment and the Department of Trade and Industry influence organizations. The operation of McDonald’s in Malaysia is directly controlled by its government. In China, government authorities provides license for franchisees of KFC, and ensures employees’ right by establishing the regulations which consist of training, compensation, hiring and repatriation that are based on Chinese Labor Law. And KFC enjoys the same tax policy as domestic enterprises and also undertakes the same or even more responsibilities than domestic companies in catering industry in China. With the recent exposals of problems among domestic food industry and KFC’s misconduct in its human resources, Chinese customers urge KFC to provide the detail information about the nutritional materials of its products.

Economic Environment

 
Chinese economic condition is a vital factor in KFC’s operation performance. Chinese GDP keeps increasing these years in a rate of about 8% and before 2009 this economic condition is even better. Chinese people’s life are getting better and better due to the economic increase. This  increases the consumer spending and their purchasing powers which, would improve the turnover of KFC in China so that KFC could achieve its initial target of entering Chinese market.  When it comes to Chinese import duties, KFC contributes a lot to it because many of its materials are imported from other countries. Moreover, KFC creates more tax for Chinese government. On these two bases, KFC is welcomed by Chinese leaders of laws, and it can get its profit as it wanted initially.

Cultural environment

 
There are 56 ethnic groups in China, apart from Moslem groups are forbidden for pork, others are not restricted to food, what’s more important is that Chinese all like chickens which, is a good aspect of KFC’s market expansion in China. However, there are still some differences between western and eastern dining culture including kinds of food and manners of dining. For example, Chinese are not used to eat bread and raw meat. Consequently, KFC needs to make improvements in its products and its restaurants’ inner environment to cater Chinese tradition of dining.
According to a Chinese Analysis, Chinese are a nation who are hospitable and like to treat their guests. So, it is common to a group of people sitting at KFC to eat.
 
Entry Mode
 
KFC’s entry mode in China is franchising which is included in contractual entry mode. As a matter of fact, franchising is an operation style that the multinational company sells the limited rights to franchisees to utilize the company’s brand effect and in return, the company gets the franchisee’s lump sum payment and a share of franchisee’s profits. Besides, the franchisees have to obey the rules and procedures of the company. That’s to say, KFC would transfer an operating and profiting outlet to the franchisee at a cost of at least 8,000,000RMB per restaurant. This kind of operation style benefits both the individual and KFC. For individual franchisee, there are no needs to work on the previous work like site picking and recruiting and staff training; and they don’t need to worry about risks for their stores are already profiting; what’s more, individuals have no worries about publicizing which KFC is responsible for. And for KFC itself, this kind of franchise operation would avoid its potential risks efficiently for KFC can’t afford to risk risks brought by misconduct of individual restaurant. By franchise, the risk is transferred, and the whole image of KFC is able to be maintained in a better way, what’s more, by collecting the franchising entry fee,  high profitability is brought at the cost of the least investment level (Hong, Noh & Hwang, 2006)

Impact of political and economic factors on broad community

 
The economic development of China plays an important role in KFC of China. With this economic development, the standard of people’s life has been improved a lot, thus health issues and life quality have become an important consideration for Chinese people. KFC has performed its duty in terms of providing people with cleanness, hospitableness, accuracy, maintenance, quality and speed customers. It sets lower prices according to the economic development in the country. But, people become worried about the fast food of KFC which, could leads to bad health. This issue has been proposed by the World Health Organization stating that KFC’s fast food will lead to obesity of children and cause cancer afterwards (Han 2008). However, the critics arrow was also towards Macdonald for it is the world No.1 fast-food provider, so the critics for KFC was relatively less. So when Macdonald transferred its strategy core to products’ nutrition elements and lost part of its customers, KFC got enough time and capital to carry out its localization plan while it was improving its product quality so that KFC attracted more customers than KFC in China.
Corporate social responsibility has played an important role in this issue, that is how KFC develops its brand image and maintains consumer loyalty on their products in order to gain profits (Fortunato 2011).
 
Impact of culture on children
 
KFC’s localization plan adjusts its menu to local taste and contributes more options to satisfy the customers. For example, in the traditional festivals of China, KFC would carry out different kinds of promotion and it often give out small gifts for children to attract more and more children to eat, it also offers adults KFC’s coffee and Family Box. This leads to increase of profits as well as attracts existing and new customers (Talpau & Boscor 2011). The great impact of KFC in China has been its focusing on children. By construct the children centra, KFC provides the brand culture of ‘happiness’ to children in China such as happy land, happy meals including toys for them as well as a computer games to stimulate their imagination as well as characteristics. Now, many children in China grows up eating KFC and when they grow up, they accept the culture and atmosphere brought by KFC and they would be still be royal to KFC which, is a kind of free advertisement that KFC carries out.

Impact of entry on competitors

 
Chinese KFC has been considered the largest fast food chain restaurant in China and it would no doubt leads to larger numbers of franchisees over the countries. Apart from this, the entry modes of KFC’s competitors in China have increased over the years for their intension to compete with KFC in China. The strongest local competitors are Macdonald, the world No.1 in fast-food industry. Through franchise operation mode, KFC gained the benefit of funds which provided the powerful capital turnover for it and security. On the contrary, long-time regular chain mode trapped Macdonald into a capital scarcity circle, since more risks and expense is bared when a regular chain management mode is adopted.( Dana & Vignali, 1998) Not until 2008 did Macdonald started to apply franchise mode to its operation system. But at that time KFC had already established its fast-food kingdom in China.
Apart from Macdonald, many local competitors tend to use the same strategies as KFC  in order to attract customers to purchase their products in great quantities so a fierce competition situation occurred under this circumstance. For instances, when KFC offers a kind of low prices products, the local competitors will follow the same method as well (Talpau & Boscor 2011). However, none of them are as powerful as KFC in terms of capital and strategy and market occupation rate.

Conclusion

 

Experience learned by KFC in China

 
As globalization is the main part in international business context, KFC has achieved its globalization purpose which, is mainly about expanding its business in various countries. Most of all, KFC’s expanding its business in China gains itself lots of lessons in terms of  various aspects of internationalization process.
We get a further understanding of international business’s overseas management strategy and the importance of the localization.(Nunes et al. 2010) An international business ought to get a full understanding of itself’s strategic position first and then set a long-term management goal to follow with in its globalization process just like KFC’s Chinese CEO, a Chinese-American who positioned KFC as China’s number one fast-food company. Apart from that, a far-sighted company also ought to make the appropriate strategic decision and plan, which is proved vitally important while operating a international enterprise when Macdonald failed to react to its lack of money and its lose of customers while KFC has already operated successfully adopting franchise and making good use of localization. What’s more, an ambitious enterprise ought to attach enough importance and enough brainpower into its oversea businesses, after all, no one is sure where the success hides. Take Macdonald for example, obviously it did not give its Chinese market enough attention so that not enough innovation was brainstormed. Take a look at KFC again, it’s easy to draw the conclusion that whatever business you are in when you manage an oversea enterprise, localization is the thing that must be executed firmly and fully because in a different country, culture is different, policy is different, and most of all, people are different, in this condition, change and transform are essential. And that’s the essence of KFC’s success.
 

Insights

 
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 AustraliaBackground of KFC in China  代寫
 
 
 
 
 
 
Reference
 
Fortunato, J.A. 2011, ‘Confronting obesity: A case study of the Corporate Social Responsibility of McDonald’s’, Advances in Management, November, Vol. 4, Issue 11, pp. 20-23, viewed 23rd April 2012, EBSCOhost.
 
Han, J 2008, ‘The business strategy of McDonald’s’, International Journal of Business and Management, November, Vol. 3, No. 11, pp. 72-74.
 
Leo Dana, Claudio Vignali, 1998, ‘Introductory cases’, , Vol.100, No.2
 
Leo Paul Dana, 1999, ‘Kentucky Fried Chicken’, ,Vol. 101, No.6
Paul Hong, Jungbae Noh, Woosang Hwang, 2006, ‘Global supply chain strategy: a Chinese market perspective’, , Vol.19, No.3
 
S. Allen Broyles, 2009, ‘Loyalty's influence on satisfaction in cross-cultural settings’,  , Vol.18, No.6
 
Talpau, A & Boscor, D 2011, ‘Customer-oriented marketing - a strategy that guarantees      success: Starbucks and McDonald’s’, Bulletin of the Transilvania University of Brasov, Vol. 4, No. 1, pp. 51-58, viewed 19th April 2012, EBSCOhost.
 
Vrontis, D & Pavlou, P 2008, ‘The external environment and its effect on strategic marketing planning: a case study for McDonald’s’, Journal of International Business and Entrepreneurship Development, Vol. 3, No. 3/4, pp. 289-307.
 
 
 AustraliaBackground of KFC in China  代寫
 
 




 

 

 

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