PART A: CASE STUDY: COMPULSORY QUESTIONS

KFCs Explosive Growth in China

In its home market, the U.S., KFC is struggling, an also- ran to McDonalds Corp., the worlds biggest restaurant company. In China, KFC has achieved such dominance over McDonalds and local rivals that Colonel Harland Sanderss image is a far more common sight in many Chinese cities than that of Mao. That accomplishment is striking in a country where foreign companies often stumbled and ran into roadblocks in the past.

KFC, owned by Kentucky-based Yum! Brands, started out as the quintessential American fast food company, originally being named Kentucky Fried Chicken. What could be more patriotic than deep-fried chicken wings with special roots in the U.S. South?

In 1973, the company opened 11 restaurants in the British colony of Hong Kong but closed them within two years because it couldnt win over local consumers. Decades later, KFC returned, opening up stores in Beijing and slowly adapting its model to the Chinese system.

Since the first piece of fried chicken (available in dark meat only, to the disappointment of many an American tourist) was served at a Beijing KFC in 1987, the number of KFCs in China has grown to over 3,000, in 650 cities, with one new restaurant opened a day.

What happened in China with Yum! Brands, and with KFC in particular, had a lot to do with China division chairman and CEO Sam Su. "He really flexed the model," says Shelman. This was in part due to KFC being owned by PepsiCo when it first came to China. PepsiCo was not a fast-food company, so Su was given more managerial freedom.

Along with being lucky, Su is smart, driven, and visionarya classic entrepreneur. But he's also humble. "There's no room for ego," Su explained in the case. "China doesn't have the same culture of individualism that is present in the United States."

Su's strategy was that KFC "would not be seen as a foreign presence but as part of the local community Our opportunity was to take the best ideas from the US fast-food model and adapt them to serve the needs of the Chinese consumer."

Initially this involved hiring the right people. For Su this meant Chinese managers who read and spoke the language, who understood the restaurant business and the Chinese consumer, but who also had experience in the Western way of doing business. "It was a foot in both worlds," Shelman says. "They knew first-hand the Western model but they also understood the challenges of operating in this Chinese, very traditional, very evolving market."

KFCs Chinese manager staff is young and hip. College-aged employees are encouraged to socialize over company-provided video games on their breaks. The goal is to create lifelong Yum! Brand customers. These practices helped to make the individual restaurant feel localized, even family oriented.

Besides serving some American fare like dark-meat chicken and corn on the cob, KFC sells more Chinese-styled fast food to appeal to local tastes. Offerings include Dragon Twister, a chicken wrap in Peking duck-type sauce, spicy tofu chicken rice based on the cuisine of Sichuan province, home of Chinas hottest dishes, as well as fried dough sticks, egg tarts, shrimp burgers, and soymilk drinks.

KFC also actively advertises to appeal to Chinese culture. For example, in Urumqi, capital of the Xinjiang province, a Muslim region of China, KFC advertises parties for family boys who have just undergone the religious ritual of circumcision, instead of just birthday parties like they do in the United States.

Some claim that every day KFC in China moves further away from its U.S. roots. They believe that Chinese customers eating in a KFC establishment really want the U.S. experience with the Colonel watching over them. Others think that adapting to local preferences means KFC needs to drop forks for chopsticks. KFC-China, with a focus on a consistent appreciation for the culture and unique needs of its consumers, might even become the birthplace of a new cuisine all together.

Source: Adapted from Czinkota, M., and Ronkainen, I., (2013), International Marketing, 10th ed, South-Western; Starvish, M. (2011) KFCs Explosive Growth in China [Online]. 17 JUN 2011. Available from: http://hbswk.hbs.edu/item/6704.html; Mellor, W. (2011) McDonalds No Match for KFC in China as Colonel Rules Fast Food [Online] Jan 27, 2011. Available from: http://www.bloomberg.com/news/2011-01-26/mcdonald-s-no-match-for-kfc-in-china-where-colonel-sanders-rules-fast-food.html.

PART A: CASE STUDY: COMPULSORY QUESTIONS

Answer ALL the compulsory questions.

(1)	Using theories learned during the semester, explain product adaptation. Besides, by using appropriate examples, analyse KFCs adaptation of their product offerings in the Chinese market.
(2)	Analyse the appropriateness of KFCs adaptation in its promotional message in the Chinese market.
(3)	Every day KFC in China moves further away from its U.S. roots. Critically discuss the implications of this statement with regards to international marketing.