International Strategic Management Global Strategies Yum! Brands Inc.

Company Overview Yum! which was created in May 20, 1997 was previously known as Tricon Global Restaurants Inc. Yum! currently overlooks the management of several brands such as KFC, Pizza Hut and Taco bell and recently East Dawning and WingStreet. They have previously acquired A&W and Long John Silver chain of restaurants from a company called Yorkshire Global restaurants which was based out of Lexington, Kentucky, but recently chose to divest their interest in these two chains due to the lack of prospective growth in the international fast food industry and now only focuses on its core companies

Case Study Analysis The ability of Yum! brands to position itself in the eastern emerging markets such as China requires a lot of focus on the specificity of the Chinese market and their taste palette. Yum! Brand excelled in this which led them to become industry leaders in the eastern fast food industry and made them highly profitable. Its market entry approach into china began with them quantifying the market demographics that would lead to a successful market penetration by a western fast food company, they targeted markets with a growing middle class which were receptive to western brands. China was the top of the handful of countries that caught the eye of Yum! as it was a unexplored market with extremely high potential for growth. They penetrated into the Chinese food market in 1987 by opening the their first store in Tiananmen Square which marked the introduction of western styled fast food in china, during that period of time the Chinese regulations required Yum! to enter the Chinese market with a joint venture which they had to establish with a Chinese company. This strategic alliance also had to be approved by the Chinese government. This was a political risk that had to be undertaken by Yum! The political uncertainty of the communist country was extremely high because at the time it didnt have much exposure to the foreign company investments and were trying to maintain a very conservative culture which limits its exposure to influences from the western world. But the prospects of profitability in the Chinese markets outweighed the risks. Specific strategies were created for the Chinese market which were multi domestic strategies, were tailored exactly to the needs and trends in China. Using the successful business model from its North American operations as a foundation in China, they implemented several ideas which were highly successful in China, such as the Tea Time menu at pizza which attracted customers between lunch and dinner. And the creation of a 40 page menu because research has shown that Chinese people enjoy variety on their table so by offering a large variety they attracted and satisfied the Chinese consumer wants.

The other idea they implemented was also unique to china in which they added more traditional Chinese dishes to the menu at KFC. One of the more popular ones were congee, which is a porridge, made from rice that majority of Chinese people enjoy as breakfast therefore it was added to the breakfast menu at the KFC stores which was extremely popular in the urban and hectic lifestyles of the locals who lived away from home. Another major step that was taken by Yumm! Brands was the launch of East Dawning. This strategy was implemented to increase its market size and what differentiated East Dawning from KFC was that East Dawning exclusively served Chinese food. This separate entity was launched to target the consumers of traditional Chinese food which was an untapped market by any other foreign company.

Now that Yumm! Brands has been extremely successful in the Chinese market they wanted to start focusing their attention elsewhere. China has long been known as the leader in economic growth and development in Asia, followed closely by India which geographically neighbored China. Yum! has been using its franchise approach over the last several years to gain presence in India due to several similarities between the two markets which made the Chairman and CEO, David Novak feel that there would be a huge potential of success as there was in china.

India, much like China, has a huge population which means that the unsatisfied demand for fast food there once awareness is built could be phenomenal. India is also showing growth in its technology and economy. But the risks of entering the fast food market in India are far greater. The political risks, such as instability, corruption, government changes etc can harshly affect the successful market entry of Yum! Brand into India. When entering India, Yum! would reapply the same strategies previously used in China with some cultural diversification, for instance, preference in flavors of the Indians are spicy and hot and the best brand suited for this would be Taco Bell opposed to Pizza Hut and KFC. Another challenged faced by Yum! is demographics. The level of low income individuals in India are relatively higher and the ages of 60% of the population was under 60 years of age. Another major issue that Yum! had to face that differed from China was religion. China doesnt have religious restraints like India. Indias majority is Hindu, and under this religion the consumption of Beef is not permitted. Hence, the challenge for Yum! is to create a special menu in all their food chains which excludes beef, and is all replaced by Chicken or Pork or Fish.

Another emerging economy that falls in the Yum! Brands Inc. Radar is Africa. Yum! faces rivalry from competitors such as McDonalds in the region and has to bring in investment into Africa to gain more market share to drive out competition. Yum! has planned to invest up to $500 Million by the year 2015 but its not all positive in Africa, there are several major challenges that Yum! will have to face as well, such as the cross-border trade regulations which is political risk.

The strategy that Yum! Brands Inc. has learnt from its expansion out of North America is the customization of its menu for each individual country has been successful, like in China and India and

Africa so far, and if they continue to customize their menu according to each market I believe that they will be successful in every market because they will satisfy the needs of all the consumers in every market segment.