Yum! Brands

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    15-Dec-2014
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Transcript of Yum! Brands

  • 1. Objective Be the best in the world at building great restaurantbrands. Defining a global company that feeds the world. How Differentiation

2. Growth Strategies Build leading brands in China in Every Significant category. Drive aggressive, international expansion and build strong brandseverywhere. Dramatically improve US brand positions, consistencies andreturns. Drive industry leading, long term shareholder and franchise value. 3. First StrategyBuild leading brands in China in every significantcategory. Main goal is to expand and grow regardless of all weaknesses and threats. The strategy will accomplish the expectation because it is specific toChina. Since, it is transitioning to a consumer based economy thus givingrise to the middle class segment which is the companys main customerbase. How?by opening more branches in China. 4. Second StrategyDrive aggressive, international expansion and build strongbrands everywhere. 4 divisions: YRI (Yum Restaurants International), China Division, USDivision, India Division. To establish a strong brand recognition along with even more branches. Implementation:India: Treated as a separate division due to expected future forecasts ofIndia being the largest consumer market in 2030.Russia: Bought Rostiks business (Russias leading chicken chain)Africa: First-mover advantage. 5. Third StrategyDramatically improve US brand positions, consistencies andreturns.Reversed negative same-store sales of KFC by investing inproduct innovation and Improving franchise relations.Implementation:Expand Taco Bell branches from 5,000 to 8,000 units andPizza Hut from 6,000 to 8,000 units. 6. Fourth StrategyDrive industry leading, long term shareholder andfranchise value.High Cash from operationsHigh returnConsistent dividend yieldImplementation:Reducing ownership in highly penetrated markets (UK & US)and increasing their ownership in international markets.Maintain strong social responsibility. 7. Management KeyAssumptionsIndia will be the highest consumption country in theworld by 2030Applying the same strategy followed for the past 10years will increase salesMore branches means more profitGetting back on their feet under any external threatssuch as disease from poultry. 8. Policy Alternative Fast Grow:Aggressive growth strategy, pursue larger marketshare or a stronger position in untapped markets 9. SWOT Analysis 10. Strengths Management Adapted favorable cost structure Efficient same-store sales. Geographic diversification Quick responds to shifts in demand Strong brand recognition 11. Pending litigation, lawsuits Underperformance and slowing of U.S. sales specifically with KFCand Pizza Hut brands Suffer a setback in China following an investigation into KFCChinas poultry supply which resulted in a sharp decline in sales. Relatively small market share in oversaturated U.S. fast foodindustry Older U.S. restaurant units losing sales annuallyWeaknesses 12. Increase and maintain growth in rapidly expanding China market Invest in India market food options coinciding with religious beliefs Penetrate other new growth markets before competitors Target international youth consumer to build up brand awareness Increase number of health conscious menu optionsOpportunities 13. Food safety- animal diseases arising Nutritional value concerns High reliance on China allows the company to be subject to anyrelevant changes in the Chinese market Changes in foreign currency exchange rates affect sales andprofit Modifications in foreign government regulation Farmers raising pricesThreats 14. Abell ModelHow? (Approaches):Quick service restaurantMenu customized tocountriesWho?(Customers):Non-health consciousMiddle-class segmentWhat?(Needs):HungerOpen appetiteQuick food 15. Porter ModelRivalry amongcompetitors Large number ofcompetitors Industry growth rate Product differentiation PricesBuyers Cleanliness Speed ofdelivery Hospitality Customization PricesensitivitySuppliers Rawmaterial Labor Deliverycars Gas EquipmentBarriers to Entry:Government regulations tocontrol health standardsInitial capital requirementsThreat of Substitutes: Healthier alternative Ready made food Street booths 16. Strategic PositionEmerging Growth Mature AgingDominantStrongFavorableTenableWeak 17. Basis of CompetitionMcDonalds BurgerKingPapa JohnsPrice 0 0 +Cleanliness - - -Location 0 + +Depth of Line 0 + +Speed - 0 +Delivery - 0 0 18. Industry MaturityEmerging Growth Mature AgingGrowth rate *IndustryPotential*Product line *Number ofcompetitors*Market sharestability*Purchasingpatterns*Ease of entry *Technology *Overall *** 19. Risk Assessment ofStrategyLow Medium HighIndustry *Maturity *Competitiveposition*Strategy *Assumptions *Past Performance-of unit-of management**Level of futureperformance* 20. ConclusionLooking forward, Yum! Brands is in a strong position tomaintain foreign expansion and capture a large share ofthe international market. Despite certain challenges itfaces in the domestic market, the company is financiallyhealthy and should be able to sustain astable position within the global fastfood industry.