Buyer power to some extent there is buyer power in

Buyer Power
To some extent, there is buyer power in the fast food industry. The consumers targeted by Yum! Brands can easily switch between
quick service restaurants (i.e. McDonald’s), especially in the U.S., where there is an extensive variety for them to choose from.
The switching cost for the buyer is almost non-existent, especially in regards to the number of fast food units that are readily
available in any given location. One aspect that must be taken into consideration is that in international markets, Yum! Brands
must approach its buyers with greater care than in more well established U.S. markets. As it is attempting to establish its brand
name in many international markets, Yum! Brands must be careful not to influence its consumers to substitute back to the foods
that they are accustomed to eating.10 There could be some loyalty among consumers regarding each brand name (KFC, Taco
Bell, etc.). However, charging higher prices may still cause the consumer to substitute away from the product if the cost to them
is too high. One aspect that helps Yum! April 14, 2010 9

Yum! Brands Brands is that in most of its individual brands, it remains a clear leader in each quick service segment that it belongs
to (i.e. chicken, Mexican, etc.). On the other hand, there is limited buyer power because there is little buyer concentration. There
is a very large number of buyers. Thus, Yum! Brands does not necessarily have to target individual consumers as long as it can
capture a large group of people to purchase its products. Each sole buyer’s purchase does not greatly affect the profit of the
company, and the fast food corporation has the power to capture the attention of many different individual buyers.
Entry and Exit
Entry and exit are not very difficult in the quick service restaurant industry. In terms of barriers, the greatest costs of starting a
restaurant unit are relatively limited. Capital is needed to build each restaurant, and additional costs come from purchasing food
and labor. Considering this, as Yum! Brands is attempting to refranchise a large number of its domestic units, the costs can be
diffused onto its individual franchisees. In terms of supply, as a large corporation, Yum! Brands can also take advantage of
economies of scale in supply, advertising, and its standardized business model. In addition to this, over the years, Yum! Brands
has developed a solid leading reputation for almost all of its brands. Thus, entering the U.S. market in any given location will not
prove to be a difficult task. With consumers expecting a certain level of quality, as long as Yum! Brands is able to maintain this
standard across both company-owned stores and franchises, it can easily enter into any market. In terms of the international
divisions, Yum! Brands may have some trouble entering without an established reputation in these new growth markets. The
tastes of consumers can serve as a barrier for Yum! Brands restaurants. In China, Yum! Brands is attempting to establish a leading