100%(1)1 out of 1 people found this document helpful
This preview shows page 8 - 11 out of 15 pages.
Vietnam, most people who come to eat KFC often have good income; meanwhile, in the US, KFC chicken dishes are very popular, suitable for low-income people.Production costsCost is one of the most important factors for every company, especially multinational companies when they want to enter the international market. Increasing the gap between cost andprice is something that every business should pay attention to because it is the profit that the 8
ECONOMIC ANALYSIS PROJECTbusiness has. Besides, in today's increasingly fierce business environment, price is one of the factors that help businesses compete. Depending on the market characteristics, the level of competition on price, the pressure to reduce costs is high or low. And this factor is also one of thefactors of concern, putting pressure on KFC when penetrating the market of more than 80 countries. Joining the world market, KFC wants to expand its profitability and develop the company scale to increase brand value. At the same time when entering the world market, KFC also faces the problem of increasing costs, pressure to reduce costs from all sides and especially when the main competitors in the food industry such as Mc. Donald always puts themselves in a better position in terms of cost and price (Vu, 2014). Therefore, KFC must seek for themselves the optimal ways to reduce costs and optimize production. They take advantage of places where there are continuous production capacities and potential places for large customers such as China, India and Vietnam... In addition, they optimize production by using available sources of materials from the country they infiltrated along side using their own know-how stored in the United States. By applying new technology in processing, KFC food preservation has improved its operational efficiency. In addition, with the market view, choosing a good business strategy, KFC has optimized costs to create a synchronization in its brand image. In December 2002, the difficult year of the fast food industry, if the boss McDonald suffered a loss of £ 212 million, closed hundreds of retail stores and noted a 20% drop in sales in 6 months 2002 in the UK (Teather, 2002), KFC is the opposite. By improving the image, performing the translation of "Soul Food", innovating its brand image with a series of re-planned stores, brings the same tone. It can be said that they took advantage of one of the advantages of franchising to cut costs, creating uniformity to increase their image value (Vu, 2014).Distribution needs9
ECONOMIC ANALYSIS PROJECTWithin the Contractual Channel System, KFC uses the Franchise system. This is a formal contract that ties the franchiser to franchisees. Once a Franchise system is established, the next step is to define the Distribution Intensity. The three types of distribution intensity are: Intensive distribution, Exclusive distribution and Selective distribution. KFC uses a selective distribution –this involves the use of several outlets per trade area. With the extraordinary estimation of a