Competitive and Strategic Model of Operating in a New Markets

Entry Strategy and Strategic Model of Operating in New Markets
Student’s Name
Institution
Entry Strategy and Strategic Model of Operating in New Markets
Companies usually have plans to grow their business within the local market and beyond. Therefore, companies need to formulate and implement a growth strategy that will allow them to identify and develop new markets at local and global levels. This growth strategy ensures that companies can overcome any barriers when expanding into new markets, especially internationally (Motohashi, 2015). Such barriers are a result of differences as a result of physical distance, cultural distance, administrative elements, and economic gaps. The growth strategy should also encompass an entry strategy that can allow the company to expand into a new market seamlessly. This is especially important because often, companies that are venturing into a new market internationally must meet certain requirements (Motohashi, 2015). These requirements can be complex and companies prefer working with local partners to make the process easier and economically sound. Thus, having a strategic plan on the mode of entry is a crucial part of business expansion. As indicated by (Mas-Ruiz, Ruiz-Conde, & Calderon-Martinez, 2018), many companies usually use their past strategic model of operation when venturing into new markets. In some cases, they also copy what their competitors have done to successfully expand into a new market. This shows that expansion into new markets is filled with uncertainties due to the risks involved. Companies are always looking for ways to cushion themselves while pursuing growth opportunities in international markets. This paper will explore KFC Corp (Kentucky Fried Chicken), an American multinational fast-food company operating in the hospitality industry, which is currently engaged in international markets and is still pursuing new international market opportunities. Also, the paper will explore Finland as a new international market opportunity for KFC. A business environment analysis will be conducted and a viable entry strategy will be recommended.
KFC: Company Overview
KCF Corporation is an American multinational fast-food chain of restaurants with its headquarters in Louisville, Kentucky. KFC was founded over 70 years ago by Colonel Harland Sanders, who wrote KFC’s famous recipe on the back of his Kitchen door (KFC, n.d.). Over the years, KFC grew from that small kitchen and is now one of the largest fast-food chains in the world. It has more than 23, 000 outlets and is operational in over 140 countries. Yet, KFC continues to expand and grow by establishing more outlets in new markets and by also adding more outlets in existing markets.
Vision and Values
KFC’s vision is to “serve finger-lickin' good food (KFC, n.d.a).” This vision shows that KFC not only wants to serve food but also to offer good, tasty foods to its customers. This vision is supported by very important values and house rules that guide KFC’s day-to-day operations. The values include passion, pride, betterment, and friendship. KFC has “ a passion for food” which is served with “pride” (KFC, n.d.a). Also, KFC requires employees to be their “best-version” and to bring that best-version to work. Every guest (customer) is also treated as a “friend (KFC, n.d.a).” KFC also has three house rules as follows; (1) Be your best self, (2) make a difference, and (3) have fun. These house rules and values show that KFC not only wants what is best for its guests but also its employees.
Services and Products
KFC offers a range of foods and drinks to its guests. The foods include chicken, big bucket meals, and sandwiches. These are served with green beans, cole slaw, whole kernel corn, mashed potatoes, and potato wedges, among other side dishes (KFC, n.d.b). Also, these foods are accompanied by desserts in the form of cookies and cakes. KFC offers soft drinks, iced teas, and lemonades as its core drinks.
Customers
KFC serves a global target market. Given that its vision is to serve finger-lickin' good food, KFC has a hold on almost every member of society because generally, people want to eat tasty foods. KFC’s targeted customers are men, women, and children who need access to good, fast foods. Some of their meals are specifically made and served for children and are referred to as “kids’ meals”. In fact, under the kids’ meals, KFC states that “Children are the future… of eating (KFC, n.d.b)!” Basically, any individual who likes good chicken and other delicious offerings at KFC is a target customer.
Competitors
KFC’s main competitors also happen to be some of America’s largest multinationals in the hospitality industry. They include McDonald’s, Subway, and Burger King, among other fast-food restaurants. These competitors are operational in some of the international markets that KFC serves.
KFC Internal Business Environment Analysis
Through an internal analysis, companies are able to examine their core competencies, available resources, and competitive advantages, all of which are crucial in the performance of a company. As a result, the company’s strengths and weaknesses can be identified. The following is an analysis of KFC’s strengths and weaknesses.
Strengths
According to Hitt, Ireland, and Hoskisson (2017), the analysis of a company’s strengths involves a closer look at the company’s resources and capabilities, which are sources of competitive advantage. KFC has a number of strengths that have allowed it to outdo its competitors in both local and international markets. They include:
* A Secret Recipe
KFC prides itself in the way they make their chicken using a secret recipe that was discovered more than 70 years ago (KFC, n.d.). KFC chicken is rolled several times in the company's secret recipe which includes 11 spices and herbs. These secret ingredients make up the secret recipe that gives KFC chicken its unique, delicious taste that has become a global brand. KFC has kept these ingredients a secret for many years, giving it’s a competitive advantage over rivals in the industry. It is also KFC’s strength because many companies have tried different ways to make their chicken as delicious, crunchy, and tasty as KFC’s, but have failed.
* Strong Global Presence
KFC is a multinational company that has operations all over the world. It is operational in over 140 countries and has more than 23, 000 outlets (KFC, n.d.). This global presence has allowed KFC to grow its annual sales every year. In 2019, KFC had an annual growth of 6% in sales, according to Forbes (2019).
* Strong Parent Company
KFC is a subsidiary of Yum!Brand. Yum!Brand is a powerful parent company that also owns Pizza Hut and Taco Bell (Forbes, 2019). Having such a powerful parent company gives KFC a competitive advantage over rivals because of the immense support it receives from Yum!Brand which is also a well-recognized global brand.
* Menu Variety Offering
While KFC is famous for its chicken offering, it has also incorporated other offerings on their menu as a way of being more inclusive, especially to its vegetarian customers. KFC’s menu now includes vegetarian burgers as part of its offerings to India’s vegetarian customers (KFC, n.d.c). However, the menu variety changes depending on the region, which is also an added strength.
* Strong Brand
Over the years, KFC has been able to grow its brand and it has become one of the strongest brands in the world. KFC is a well-recognized brand all over the world due to its tasty chicken and other offerings. It was ranked at number 86 by Forbes as one of the most valuable brands in 2019, globally (Forbes, 2019). The graph below shows how KFC’s brand has grown over the years to become an international brand.
KFC’s growth in terms of outlets since 2010
Source: (Statista, 2020)
Weaknesses
As much as firms have strengths, they also have weaknesses. Characteristics and aspects of a company that gives it a competitive disadvantage are termed as weaknesses (Hitt, Ireland, & Hoskisson, 2017). Below are KFC’s main weaknesses:
* Difficulties in Managing Franchisees
KFC relies heavily on franchisees. In fact, about 99% of its global outlets are franchised, as revealed by Forbes (2019). Managing franchisees can be affected by differences in operations between KFC and its franchisees, as well as other volatile issues, depending on the area of operation. While KFC’s franchise management system works most of the time, it has also resulted in the closure of some of the outlets. For instance, one of its outlets in Zimbabwe was closed due to management issues and economic issues in the country (Shumba, Zindiye, & Donga, 2017). Such challenges can result in the closure of more outlets, which affects the success of the KFC and gives its rivals a competitive advantage, especially competitors who depend on acquisitions and have more control of their outlets.
* Unhealthy Offerings
KFC offers chicken and other fast foods as part of their core offerings (KFC, n.d.b). These foods are sometimes considered unhealthy due to their high amount of calories. At a time when customers have become more conscious of their heal...