Competitive Advantage Case Study

Yum Brands in China

OR

Abstract:

In 2005, Kentucky, US based YUM! Brands, Inc. was the world’s largest quick service restaurant (QSR) company based on the number of system units. Yum developed, operated, franchised and licensed nearly 34,000 restaurants in more than 100 countries. Four of its restaurant brands KFC, Pizza Hut, Taco Bell and Long John Silver’s were the global leaders of the chicken, pizza, Mexican food, and quick-service seafood categories, respectively. Outside the US, Yum opened three new restaurants every day including one restaurant per day in China where it was the market leader

The case provides the basis for analysing the sunrise Chinese fast food industry with Yum as the focus. The successful strategies adopted by Yum such as localization, owning its supply chain management, effective human resource management etc contributed to its evolution as the market leader in China. The challenges Yum faced in China were stiff competition from McDonald’s and other international and local players, growing concerns related to lack of healthy nutrition values of fast food and outbreak of bird flu epidemics. Yum had plans to introduce its two other fast food brands, Long John Silver’s and A&W All American Food in China. How successful would these be with Chinese consumers and would Yum be successful in sustaining its competitive position remains to be seen

Pedagogical Objectives:

• To analyse the Chinese fast food industry
• To discuss the growth strategies and competitive strategies adopted by Yum Brands in China in evolving as the market leader
• To identify the challenges that Yum Brands needs to overcome to continue its dominance and stay ahead of competitors like McDonald’s and other local favorites

Keywords : Yum; China; Core Competency & Competitive Advantage Case Study; KFC; Pizza Hut Taco Bells; Long John Silver’s; A&W All-American foods; McDonald’s; Quick Service Restaurants; franchisees; strategy; localisation; supply chain management; human resource management; competitive strategy; market leader; new product introduction; healthy nutrition value; multi-branding; bird-flu