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Copy of McDonald's vs. KFC in China

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Transcript of Copy of McDonald's vs. KFC in China

McDonald's vs. KFC in China
McDonald's: facts and figures
KFC: facts and figures
Agenda
Introduction
Franchising in China
Business strategies
Marketing & communications strategies
Growth strategies
HR management
Competition strategies
Conclusion
Introduction
Franchising in China
Entry mode
Business Strategies
Service Philosophy
KFC
McDonald's
Marketing & Communication Strategies
Marketing Strategy & Targeting
Location targeting
The Logo: face of communication
Advertising (1)
Growth Strategies
HR management
Conclusion
Reference list
Images' URLs
Thank You !
Group 8:
Flaminia Papagni
Hailun Qian
Jeffrey Quek
Bradley Tan

KFC
Localise

Local training

100% local talent
Make use of
tacit local knowledge

McDonald's
Diversified
Trained abroad/by the American way

of doing business at Hamburger University
Training Programs

for managers

KFC
Shopping districts

McDonald's
Close to
tourist attractions

Drive-thrus

Delivery
available
Mainly in the
cities

KFC
Specialised

Focus on
development prospect
of the industry

McDonald's
KFC
Warm family dining atmosphere
Aims the young adults expanding to family
Target market positioning
Reunion dinner setting
Warmth

McDonald's
Familiar atmosphere, targeting especially children
Endorsement by
Yao Ming
using Big Mac
Free wifi
Delivery available

What about Porter's?
Cost leadership
– leading industry in cost savings (
low-cost producer
)
Differentiation
– distinguishing themselves from competitors (
broad market use
)
Focused
- centralised advantages (
narrow market use
)

Just in case you don't remember...
Both use mixture of cost leadership and differentiation to target broad base markets

Competition Strategies
KFC
McDonald's
Cooperate with Chinese local suppliers
More economies of scale
Differ in differentiation strategy – wide choice of food

Cooperate with American enterprises
Majority of menu is standard
partial localisation of menus from 2004
Moving into other markets
Drive thrus & delivery

McDonald's in China
Initially, none of these two brands franchised their outlets in China; they were company-owned and operated with a joint venture (JV) partner (
state owned enterprises
).
Entry mode
1987
Subsidiary of Yum! Brands
Beijing Corporation of Production and Processing/Beijing Travel and Tourism Corporation
Beijing(Capital)
KFC
McDonald's
1990
McDonald’s Corp.
Beijing Corporation of Farming Industry and Commerce
Shenzhen(Special Economic Zone)
Later, both KFC and McDonald’s started their market expansion in PRC through franchising.
Franchisor
Franchisees
Franchising in China
KFC
McDonald's
1992
Lower-tier Chinese cities (2nd and 3rd tier)
Millions of potential consumers
Lower labour and real estate costs
Encouraging local governments
Rapid market growth
“Not starting from scratch”
“Not starting from scratch”
Table 1. KFC’s Franchising Mode
2004
First-tier cities
Developed infrastructure
Business-friendly governments
A multitude of services
Internationally standard amenities
Strong supporting system
Franchise-leasing Model
Franchise-leasing Model
A guarantee of high-standard quality
Systematic
Rental income
Table 2. McDonald’s Franchise Mode
http://highfieldrealty.com/wp-content/uploads/2013/07/joint-venture-checklist1.jpg
http://www.friendlyplanet.com/media/gallery/asia/china/temple-of-heaven-beijing-big.jpg
http://totallystockholm.se/wp-content/uploads/2014/02/kfc.jpg
http://southfloridasavingsguy.com/wp-content/uploads/2013/03/McDonalds.jpg
http://www.sznews.com/zhuanti/images/attachement/jpg/site3/20081103/0014224766c60a7884ce03.jpg
http://bizwealthwiz.com/wp-content/uploads/2013/03/Franchise-Pyramid.gif
http://www.premiershutters.co.uk/media/29196/guarantee.jpg
http://matthartzell.blogspot.co.uk/2009/09/mcdonalds-in-china.html
http://ericyoungonline.wordpress.com/2011/02/05/mcdonalds-no-match-for-kfc-in-china/
http://www.tour-beijing.com/blog/tag/guanqian-walking-street/
http://adsofchina.files.wordpress.com/2010/09/kfc-vs-mcdonalds-chicken-fight.jpg
http://marktanner.com/blog/wp-content/uploads/2012/03/Chairman-Mao-KFC1.gif
http://adsofchina.files.wordpress.com/2010/09/mcdonalds-drive-thru-restaurant-china.jpg
KFC
McDonald's
Red: Good Fortune and Joy
Yellow: Prestigious; neutrality and good luck

Red: Good Fortune and Joy
White: Purity, although today it can be associated with death and mourning
Black: Neutral colour; Ancient China it was seen as the ‘King of Colours
What is the logo?
It has
3
main functions:
Identification
Distinction
Communication
“Advertising defines the early communication of a start-up, new service or product offering”
KFC embodies “Glocalisation”: think Global, Act Local.
First T.V advert did not appear until after end of 1994, they opted for advertising in publications to gain a better image in the eyes of the public.
KFC – Adverts have an emotional appeal: Feeling of joy and happiness.
Also adopts the “Glocalisation” (Yan, 1996). But Chicken is the main focus: China’s opinion is more suited to Chicken then beef.
Advertising (2)
Discounting:

Discounts are offered in both restaurants, however, not the same as in the UK. Such as in China, McDonalds introduced a ’Male-only discount’
Also introduced discounted combo meals to make meals more ”affordable”
KFC recently introduced an app, whereby they can receive coupons for better deals
Consumer Behavior
China sees KFC as more suited for their needs: Chicken vs. Beef.


KFC
McDonald's
KFC, due to the use of Chicken, has localised its menu to suit the needs of China more, such as the introduction of rice and different flavoured marinades.
Recently, KFC sales have plummeted due to news on Antibiotics fed to the Chickens, yet use of new marketing strategies has allowed them to regain their place in the Food market in China.

McDonald’s is seen as modern and clean: hygiene in China is regarded as very important especially when dealing with food. People would prefer McDonald’s to a local restaurant due to hygiene standards.

http://www.forbes.com/2010/08/26/advertising-social-media-old-spice-ibm-commercials-brand-loyalty-cmo-network.html
http://www.freewebs.com/fin-law/MGT%203905Y(5)%20-%20International%20Business/Globalisation%20and%20the%20Marketing%20mix.pdf
http://blog.lidan.net/kfcs-localization-strategies-in-china/
http://newsfeed.time.com/2011/05/20/chinas-mcdonalds-will-give-you-a-discount-just-for-being-male/
http://www.chinaknowledge.com/newswires/News_Detail.aspx?type=1&NewsID=20859
http://online.wsj.com/news/articles/SB10001424052702304451904579238073910948350
http://www.chinabusinessreview.com/the-pros-and-cons-of-franchising-in-china/
http://en.wikipedia.org/wiki/KFC
http://en.wikipedia.org/wiki/McDonald%27s
http://baike.baidu.com/view/4676.htm?fr=wordsearch#refIndex_1_4676
http://baike.baidu.com/view/16293.htm?fr=wordsearch
http://zh.wikipedia.org/wiki/%E8%82%AF%E5%BE%B7%E5%9F%BA#.E4.B8.AD.E5.9B.BD
http://www.kfc.com.cn/kfccda/index.aspx
http://www.mcdonalds.com.cn/
Hu, W. & Xie, Y. 2013.
Comparative Study of McDonald's and Kentucky Fried Chicken (KFC) Development in China
. Bachelor’s Thesis. Savonia University of Applied Sciences.
English, W. & Xau. C. 2001. Franchising in China: a 1994 look at Kfc and Mcdonald's. In I. Alon and D. H. B. Welsh (Eds.),
International Franchising in Emerging Markets: China, India, and Other Asian Countries
(pp. 37-47). Chicago, IL: CCH.
Wang. Z. J et al. 2008.The development of franchising in China.
Journal of Marketing Channels
15. Special Issue: Distribution in China. 167-184.
R. Titus, D. Sengupta, October 2011.
‘Custom-Standardization’ – Uncovering the basis for global
chaining strategy in prepared food retail.
Journal of Business and Retail Management Research (JBRMR). Vol 6, Issue 1 (pp.41-44).
J. Jenkins, March/April 2008.
Cooking up a recipe for effective leadership.
Leadership in Action, Volume 28, Number 1 (pp.16-17).
November 2011.
Original recipe, Spotlight: United States
, China Economic Review (pp. 51- 55).
Can McD steal Yum’s China crown?
, Asia’s Media & Marketing Newspaper, 1/13/2006, p.15-15.
McDonald’s Chinese Take-Out
, BusinessWeek Online, 6/7/2006, p.8-8
McDonald’s is loving it in Asia
, BusinessWeek Online. 1/25/2007, p24-24
G. Cebrzynski, August 20, 2007.
McDonald's seeks to 'enrich' kids with its Beijing Olympics initiative.
Nation's Restaurant News (pp. 4, 73).
J. L. Watson, 1997.
Golden Arches east : McDonald's in East Asia.
Stanford, Calif. : Stanford University Press (pp.1-38).
KFC
McDonald's
KFC in China
KFC advertisement on the streets of Beijing
KFC (strategies with strong Chinese characteristics) surpasses McDonald’s in the market of China because of:
Suggestions for fast food chains in Chinese market
1. Running more outlets by franchising is key point to expand the market at this stage.
2. Providing featured service with strong Chinese characteristics (e.g. food delivery and birthday party event) and localised menu.
3. Achieving standardization in each process (food safety).
4. Constructing a strong brand image and a positive public reputation.
Flexibleness on franchising mode (highly accessible to franchisees)
Integration into the Chinese culture: “love and loyalty”
Wide outlet-coverage
Diversification
Differentiation
"But instead of simply duplicating local favorites, we take what's familiar and put a McDonald's twist on it." (McDonald’s website)
Full transcript