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Chapter 3

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Chapter 3

Uploaded by

maduwanthipgs
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 3: Market Conditions Helping KFC China Win Globally

Using Porter's Diamond Model, we can analyze how KFC CHINA Corporation leverages
market conditions to achieve global success.

1. Firm Strategy, Structure, and Rivalry

 Firm Strategy and Structure: KFC operates using a decentralized franchise model globally,
but it has shown remarkable flexibility in tailoring its business model to local markets,
especially in emerging markets like China. KFC China has deviated from the U.S. strategy by
increasing menu variety, expanding outlet sizes, and making restaurants more family-
friendly. This ability to adapt its strategy to local market conditions has given it a competitive
edge.

 Rivalry: In global markets, KFC faces stiff competition from fast-food giants like McDonald’s,
Burger King, and local competitors. In China, KFC’s main rival, McDonald’s, has significantly
fewer outlets, and KFC has managed to dominate by being the first to move into smaller
cities, gaining both market share and visibility

2. Factor Conditions

 Skilled Labor: KFC emphasizes rigorous employee training, especially in customer service.
This was particularly important in China, where KFC introduced the concept of high-quality
customer service. KFC China’s operations are more complex than its U.S. counterparts,
requiring a larger and more skilled workforce to handle the increased menu offerings.

 Technology and Resources: KFC has invested in its supply chain logistics, particularly in
China, where it developed a cold-chain distribution system to maintain food quality and
safety. This infrastructure ensures timely delivery of products, even in remote locations, and
contributes to its Just-In-Time (JIT) operational efficiency

3. Demand Conditions

 KFC has effectively localized its menu to cater to the specific tastes of different markets. In
China, for example, KFC offers a broader range of dishes, including spicy chicken, rice dishes,
and traditional breakfast items like congee. This product diversification increases customer
visits and enhances brand loyalty. In many regions, KFC is not just viewed as an American
fast food chain, but as part of the local dining experience

4. Related and Supporting Industries

 KFC relies on a well-established network of local suppliers for its ingredients. In China, most
of its products are sourced locally, except for certain proprietary ingredients like the herbs
and spices used in its chicken recipe. This local sourcing strategy helps keep costs low and
strengthens relationships with governments and local businesses
Conclusion

KFC’s home market in the U.S. provides strong infrastructure, competitive pressures, and
demand conditions that push the company to innovate continuously and enhance its global
strategy. The company’s ability to balance central control with local flexibility has been a
major driver of its global success, particularly in emerging markets like China.

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