{"id":174,"date":"2015-07-30T00:41:58","date_gmt":"2015-07-30T00:41:58","guid":{"rendered":"https:\/\/courses.candelalearning.com\/intlbusx1xmaster\/?post_type=chapter&#038;p=174"},"modified":"2017-01-09T19:13:19","modified_gmt":"2017-01-09T19:13:19","slug":"chapter-14-competing-effectively-through-global-marketing-distribution-and-supply-chain-management","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/chapter\/chapter-14-competing-effectively-through-global-marketing-distribution-and-supply-chain-management\/","title":{"raw":"Reading: Chapter 14 Competing Effectively through Global Marketing, Distribution, and Supply-Chain Management","rendered":"Reading: Chapter 14 Competing Effectively through Global Marketing, Distribution, and Supply-Chain Management"},"content":{"raw":"<div class=\"im_section\">\r\n<div id=\"fwk-168388-ch14_f01\" class=\"im_informalfigure im_large im_large-height im_block\">\r\n\r\n[caption id=\"\" align=\"aligncenter\" width=\"500\"]<a href=\"https:\/\/textimgs.s3.amazonaws.com\/intlbus\/section_18\/ec9e3b7ea5f51f67ef95282d34c3757e.jpg\" target=\"_blank\"><img src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/789\/2015\/07\/23113824\/sm_ec9e3b7ea5f51f67ef95282d34c3757e.jpg\" alt=\"Best global brands 2009 rankings\" width=\"500\" height=\"325\" \/><\/a> Source: Interbrand[\/caption]\r\n\r\n<\/div>\r\n<div class=\"bcc-box bcc-highlight\">\r\n<h3 class=\"im_title\">What\u2019s in It for Me?<\/h3>\r\n<ol id=\"fwk-168388-ch14_l01\" class=\"im_orderedlist\">\r\n\t<li>What are the fundamentals of global marketing?<\/li>\r\n\t<li>What are the trade-offs between standardized and customized products and promotions?<\/li>\r\n\t<li>What are the fundamentals of distribution?<\/li>\r\n\t<li>How does international distribution differ from purely domestic distribution?<\/li>\r\n\t<li>What are the international aspects of supply-chain management?<\/li>\r\n<\/ol>\r\n<\/div>\r\nIn this chapter, you\u2019ll learn the \u201chows\u201d of global marketing, distribution, and supply-chain management. Specifically, you\u2019ll see how companies decide which products to market internationally, how to source and distribute those products, and how to manage operations for smooth operation throughout the company\u2019s supply chain.\r\n\r\nThe chapter opens with a case study on Yum! Brands\u2019 entry into China with KFC restaurants. After initial missteps, Yum! Brands and KFC have had great success and are now pondering ways to sustain that success. In the section\u00a0\"Fundamentals of Global Marketing,\" you\u2019ll learn the fundamentals of marketing in an international context. If the world were truly flat, then it would be easy to sell a product or service that is popular in one setting in another country setting with little additional work. However, because the world is <em class=\"im_emphasis\">not<\/em> truly flat in terms of culture, administration, geography, and economics (i.e., CAGE), firms must make choices as to how they adapt to or avoid international markets. You\u2019ll see how companies like Starbucks adapt and innovate in different markets, how integrated-circuit maker Intel deals with the difficulties of counterfeit markets, and how entertainment giant Bertelsmann makes decisions in emerging markets. You\u2019ll also get a glimpse of how consumers in BRIC countries (i.e., Brazil, Russia, India, and China) differ and the special challenges of marketing products to countries where incomes are low.\r\n\r\nYou\u2019ll be following along as companies like Nokia make decisions about whether to adapt products to specific markets. You\u2019ll see the innovations that Procter &amp; Gamble and General Electric create as they develop products for BRIC countries and how these innovations earn them additional benefits back home in developed markets. You\u2019ll learn how to avoid the pitfalls that trapped Ford Motor Company, and you\u2019ll see the entrepreneurial approaches to distribution management that Unilever created. The section\u00a0\"Global Sourcing and Distribution\" will highlight the difference between outsourcing and offshoring and the advantages and disadvantages they bring. Finally, \"Global Production and Supply-Chain Management\" will demonstrate the value of an integrated approach to supply-chain management.\r\n<div id=\"fwk-168388-ch14_s00_n01\" class=\"im_callout im_block\">\r\n<h2 class=\"im_title\">Opening Case: Colonel Sanders Is No Chicken!<\/h2>\r\nKentucky Fried Chicken (KFC) was the first American fast-food restaurant to enter China, opening its first outline there in 1987 in Beijing.<span id=\"fwk-carpibus-fn14_001\" class=\"im_footnote\">[footnote]The Gale Group Inc., \u201cKFC Corporation,\u201d <em class=\"im_emphasis\">International Directory of Company Histories<\/em>, accessed December 19, 2010, <a class=\"im_link\" href=\"http:\/\/www.answers.com\/topic\/kfc-corporation\" target=\"_blank\">http:\/\/www.answers.com\/topic\/kfc-corporation<\/a>.[\/footnote]<\/span> KFC\u2019s US archrival, McDonald\u2019s, didn\u2019t open a restaurant in China until 1990.<span id=\"fwk-carpibus-fn14_002\" class=\"im_footnote\">[footnote]Jennifer Lawinski, \u201cKFC, Taco Bell a Hit for YUM! in China,\u201d <em class=\"im_emphasis\">Slashfood<\/em>, July 15, 2010, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.slashfood.com\/2010\/07\/15\/kfc-taco-bell-a-hit-for-yum-in-china\/#ixzz16JzYnIBS\" target=\"_blank\">http:\/\/www.slashfood.com\/2010\/07\/15\/kfc-taco-bell-a-hit-for-yum-in-china\/#ixzz16JzYnIBS<\/a>.[\/footnote]<\/span> Despite initial marketing mistakes\u2014like its \u201cfinger lickin\u2019 good\u201d slogan being mistranslated into Chinese characters that meant \u201ceat your fingers off\u201d\u2014the company grew and thrived.<span id=\"fwk-carpibus-fn14_003\" class=\"im_footnote\">[footnote]Carlye Adler, \u201cColonel Sanders\u2019 March on China,\u201d <em class=\"im_emphasis\">Time<\/em>, November 17, 2003, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.time.com\/time\/magazine\/article\/0,9171,543845,00.html\" target=\"_blank\">http:\/\/www.time.com\/time\/magazine\/article\/0,9171,543845,00.html<\/a>.[\/footnote]<\/span> Today, KFC has 2,872 restaurants in China, which generate over $2 billion in sales for its parent company, Yum! Brands.<span id=\"fwk-carpibus-fn14_004\" class=\"im_footnote\">[footnote]\u201cRestaurant Counts: 2009 Q4 Restaurant Units Activity Summary,\u201d Yum! Brands, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.yum.com\/investors\/restcounts.asp\" target=\"_blank\">http:\/\/www.yum.com\/investors\/restcounts.asp<\/a>.[\/footnote]<\/span>\r\n\r\nThe main factor contributing to KFC\u2019s success in China is its localization strategy. Let\u2019s see how KFC did it.\r\n\r\nWhen KFC first entered the Chinese market, Chinese law stipulated that foreign companies could only operate in China if they had a local partner. KFC selected partners who had connections to government, so that it could benefit from their resources and contacts.<span id=\"fwk-carpibus-fn14_005\" class=\"im_footnote\">[footnote]Karen Cho, \u201cKFC China\u2019s Recipe for Success,\u201d INSEAD, July 1, 2009, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/knowledge.insead.edu\/KFCinChina090323.cfm?vid=195\" target=\"_blank\">http:\/\/knowledge.insead.edu\/KFCinChina090323.cfm?vid=195<\/a>.[\/footnote]<\/span> KFC learned a lot from its local partners, and once joint ventures were no longer required, KFC chose a leadership team that knew Chinese culture intimately. Rather than sending expatriates to China to lead the expansion, for example, KFC selected people who had \u201can understanding of China and the Chinese cultural context \u2018so deep that it is intuitive,\u2019 to understand the Chinese people\u2019s \u2018mixed feelings, of love and hate about the West, to understand Chinese history, language, the influence of Confucianism, Buddhism and Taoism, this is especially important if you are in the consumer goods industry,\u2019\u201d said Warren Liu, former vice president of development at KFC China and author of the book <em class=\"im_emphasis\">KFC in China: Secret Recipe for Success<\/em>.<span id=\"fwk-carpibus-fn14_006\" class=\"im_footnote\">[footnote]John Sexton, \u201cKFC\u2014\u2018A Foreign Brand with Chinese Characteristics,\u2019\u201d China.org.cn, September 22, 2008, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.china.org.cn\/business\/2008-09\/22\/content_16515747.htm\" target=\"_blank\">http:\/\/www.china.org.cn\/business\/2008-09\/22\/content_16515747.htm<\/a>.[\/footnote]<\/span> This leadership team recommended that KFC follow a strategy of localization: offering local Chinese food options on the menu to appeal to local tastes. For example, instead of serving coleslaw, KFC offers bamboo shoots and lotus roots. Likewise, it sells a sandwich in the style that Peking duck is served, simply substituting fried chicken for the duck.<span id=\"fwk-carpibus-fn14_007\" class=\"im_footnote\">[footnote]\u201cKentucky Fried China,\u201d <em class=\"im_emphasis\">MSNBC<\/em>, January17, 2005, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.msnbc.msn.com\/id\/6833233\/ns\/business-world_business\" target=\"_blank\">http:\/\/www.msnbc.msn.com\/id\/6833233\/ns\/business-world_business<\/a>.[\/footnote]<\/span> The extent of KFC\u2019s product localization is extensive, from preserved Sichuan pickle and shredded pork soup to a Chinese-style porridge called congee for breakfast.<span id=\"fwk-carpibus-fn14_008\" class=\"im_footnote\">[footnote]Aaron Hotfelder, \u201cWhy Does China Love KFC More Than McDonald\u2019s?,\u201d <em class=\"im_emphasis\">Gadling<\/em> (blog), June 5, 2010, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.gadling.com\/2010\/06\/05\/why-does-china-love-kfc-more-than-mcdonalds\" target=\"_blank\">http:\/\/www.gadling.com\/2010\/06\/05\/why-does-china-love-kfc-more-than-mcdonalds<\/a>.[\/footnote]<\/span>\r\n\r\nKFC\u2019s promotional marketing is similarly steep in Chinese culture. As Yu Cui and Zhang Ting explain, \u201cChina is a society with relatively high collectivism, where people have a high sense of identity to the traditional culture and traditional food. Since the family members in China often share the similar value and most Chinese people consider that it is necessary to keep on the wonderful family traditions, such as respecting, loving and supporting the elderly, helping others, friendship between individuals and so on. Thus, many advertisements of KFC in recent years try to reveal the background of common Chinese families.\u201d<span id=\"fwk-carpibus-fn14_009\" class=\"im_footnote\">[footnote]Yu Cui and Zhang Ting, \u201cAmerican Fast Food in Chinese Market: A Cross-Cultural Perspective\u2014The Case of KFC and McDonald\u2019s\u201d (master\u2019s diss. in international marketing, University of Halmstad, Halmstad, Sweden, 2009), 41, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/hh.diva-portal.org\/smash\/get\/diva2:286121\/FULLTEXT01\" target=\"_blank\">http:\/\/hh.diva-portal.org\/smash\/get\/diva2:286121\/FULLTEXT01<\/a>.[\/footnote]<\/span>\r\n\r\nKFC emphasizes speed and convenience rather than chicken. \u201cChoosing to eat at fast food restaurants like KFC doesn\u2019t necessarily indicate a desire for Western flavors,\u201d said Sun Min, a local government official who eats at KFC because speed and convenience are his top priorities when choosing a place to eat.<span id=\"fwk-carpibus-fn14_010\" class=\"im_footnote\">[footnote]\u201cWestern Fast Food Giants Meet the Challenges of Local Culinary Preferences,\u201d <em class=\"im_emphasis\">Alibaba<\/em>, June 9, 2009, accessed December 15, 2010, <a class=\"im_link\" href=\"http:\/\/resources.alibaba.com\/topic\/531563\/KFC_s_localization_strategy_in_China_.htm\" target=\"_blank\">http:\/\/resources.alibaba.com\/topic\/531563\/KFC_s_localization_strategy_in_China_.htm<\/a>.[\/footnote]<\/span>\r\n\r\nSelecting the right place or location for its outlets is also important for convenience, and KFC is opening stores at a pace of nearly one a day in China, to be close to wherever its customers are.<span id=\"fwk-carpibus-fn14_011\" class=\"im_footnote\">[footnote]Ben Rooney, \u201cChina: The New Fast Food Nation,\u201d <em class=\"im_emphasis\">CNN Money<\/em>, July 14, 2010, accessed December 15, 2010, <a class=\"im_link\" href=\"http:\/\/money.cnn.com\/2010\/07\/13\/news\/companies\/Yum_Brands\/index.htm\" target=\"_blank\">http:\/\/money.cnn.com\/2010\/07\/13\/news\/companies\/Yum_Brands\/index.htm<\/a>.[\/footnote]<\/span> KFC also developed its distribution system quickly, right from the start, and its parent, Yum! Brands, owns those distribution centers. Owning its own distribution centers lets Yum! Brands grow it restaurants efficiently as it expands into 402 cities in China.<span id=\"fwk-carpibus-fn14_012\" class=\"im_footnote\">[footnote]\u201cYum! Execs Discuss China Strategy, Franchising and the Recent Minimum Wage Uproar,\u201d <em class=\"im_emphasis\">Seeking Alpha<\/em>, May 6, 2007, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/seekingalpha.com\/article\/34612-yum-execs-discuss-china-strategy-franchising-and-the-recent-minimum-wage-uproar\" target=\"_blank\">http:\/\/seekingalpha.com\/article\/34612-yum-execs-discuss-china-strategy-franchising-and-the-recent-minimum- wage-uproar<\/a>.[\/footnote]<\/span>\r\n\r\nFor the future, David Novak, CEO of Yum! Brands (which owns Pizza Hut and Taco Bell in addition to KFC), said he envisions eventually having more than twenty thousand restaurants in China. \u201cWe\u2019re in the first inning of a nine-inning ball game in China,\u201d Novak told investors in a conference call in February 2010.<span id=\"fwk-carpibus-fn14_013\" class=\"im_footnote\">[footnote]Samuel Shen, \u201cKentucky Fried Chicken Banks on China,\u201d <em class=\"im_emphasis\">New York Times<\/em>, May 5, 2008, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.nytimes.com\/2008\/05\/05\/business\/worldbusiness\/05iht-kfc.1.12567957.html?_r=1\" target=\"_blank\">http:\/\/www.nytimes.com\/2008\/05\/05\/business\/worldbusiness\/05iht-kfc.1.12567957.html?_r=1<\/a>.[\/footnote]<\/span>\r\n\r\n<\/div>\r\n<div class=\"bcc-box bcc-info\">\r\n<h3 class=\"im_title\">Opening Case Exercises[footnote](AACSB: Ethical Reasoning, Multiculturalism, Reflective Thinking, Analytical Skills)[\/footnote]<\/h3>\r\n<ol id=\"fwk-168388-ch14_s00_l01\" class=\"im_orderedlist\">\r\n\t<li>Do you think that Yum\u2019s other restaurants\u2014Pizza Hut and Taco Bell\u2014would be successful in China? Why or why not? What would help them be more successful?<\/li>\r\n\t<li>What advice would you give KFC about how to continue its growth in China?<\/li>\r\n\t<li>How might KFC\u2019s presence in China help the restaurant in other markets?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>","rendered":"<div class=\"im_section\">\n<div id=\"fwk-168388-ch14_f01\" class=\"im_informalfigure im_large im_large-height im_block\">\n<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/textimgs.s3.amazonaws.com\/intlbus\/section_18\/ec9e3b7ea5f51f67ef95282d34c3757e.jpg\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/789\/2015\/07\/23113824\/sm_ec9e3b7ea5f51f67ef95282d34c3757e.jpg\" alt=\"Best global brands 2009 rankings\" width=\"500\" height=\"325\" \/><\/a><\/p>\n<p class=\"wp-caption-text\">Source: Interbrand<\/p>\n<\/div>\n<\/div>\n<div class=\"bcc-box bcc-highlight\">\n<h3 class=\"im_title\">What\u2019s in It for Me?<\/h3>\n<ol id=\"fwk-168388-ch14_l01\" class=\"im_orderedlist\">\n<li>What are the fundamentals of global marketing?<\/li>\n<li>What are the trade-offs between standardized and customized products and promotions?<\/li>\n<li>What are the fundamentals of distribution?<\/li>\n<li>How does international distribution differ from purely domestic distribution?<\/li>\n<li>What are the international aspects of supply-chain management?<\/li>\n<\/ol>\n<\/div>\n<p>In this chapter, you\u2019ll learn the \u201chows\u201d of global marketing, distribution, and supply-chain management. Specifically, you\u2019ll see how companies decide which products to market internationally, how to source and distribute those products, and how to manage operations for smooth operation throughout the company\u2019s supply chain.<\/p>\n<p>The chapter opens with a case study on Yum! Brands\u2019 entry into China with KFC restaurants. After initial missteps, Yum! Brands and KFC have had great success and are now pondering ways to sustain that success. In the section\u00a0&#8220;Fundamentals of Global Marketing,&#8221; you\u2019ll learn the fundamentals of marketing in an international context. If the world were truly flat, then it would be easy to sell a product or service that is popular in one setting in another country setting with little additional work. However, because the world is <em class=\"im_emphasis\">not<\/em> truly flat in terms of culture, administration, geography, and economics (i.e., CAGE), firms must make choices as to how they adapt to or avoid international markets. You\u2019ll see how companies like Starbucks adapt and innovate in different markets, how integrated-circuit maker Intel deals with the difficulties of counterfeit markets, and how entertainment giant Bertelsmann makes decisions in emerging markets. You\u2019ll also get a glimpse of how consumers in BRIC countries (i.e., Brazil, Russia, India, and China) differ and the special challenges of marketing products to countries where incomes are low.<\/p>\n<p>You\u2019ll be following along as companies like Nokia make decisions about whether to adapt products to specific markets. You\u2019ll see the innovations that Procter &amp; Gamble and General Electric create as they develop products for BRIC countries and how these innovations earn them additional benefits back home in developed markets. You\u2019ll learn how to avoid the pitfalls that trapped Ford Motor Company, and you\u2019ll see the entrepreneurial approaches to distribution management that Unilever created. The section\u00a0&#8220;Global Sourcing and Distribution&#8221; will highlight the difference between outsourcing and offshoring and the advantages and disadvantages they bring. Finally, &#8220;Global Production and Supply-Chain Management&#8221; will demonstrate the value of an integrated approach to supply-chain management.<\/p>\n<div id=\"fwk-168388-ch14_s00_n01\" class=\"im_callout im_block\">\n<h2 class=\"im_title\">Opening Case: Colonel Sanders Is No Chicken!<\/h2>\n<p>Kentucky Fried Chicken (KFC) was the first American fast-food restaurant to enter China, opening its first outline there in 1987 in Beijing.<span id=\"fwk-carpibus-fn14_001\" class=\"im_footnote\"><a class=\"footnote\" title=\"The Gale Group Inc., \u201cKFC Corporation,\u201d International Directory of Company Histories, accessed December 19, 2010, http:\/\/www.answers.com\/topic\/kfc-corporation.\" id=\"return-footnote-174-1\" href=\"#footnote-174-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a><\/span> KFC\u2019s US archrival, McDonald\u2019s, didn\u2019t open a restaurant in China until 1990.<span id=\"fwk-carpibus-fn14_002\" class=\"im_footnote\"><a class=\"footnote\" title=\"Jennifer Lawinski, \u201cKFC, Taco Bell a Hit for YUM! in China,\u201d Slashfood, July 15, 2010, accessed December 14, 2010, http:\/\/www.slashfood.com\/2010\/07\/15\/kfc-taco-bell-a-hit-for-yum-in-china\/#ixzz16JzYnIBS.\" id=\"return-footnote-174-2\" href=\"#footnote-174-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a><\/span> Despite initial marketing mistakes\u2014like its \u201cfinger lickin\u2019 good\u201d slogan being mistranslated into Chinese characters that meant \u201ceat your fingers off\u201d\u2014the company grew and thrived.<span id=\"fwk-carpibus-fn14_003\" class=\"im_footnote\"><a class=\"footnote\" title=\"Carlye Adler, \u201cColonel Sanders\u2019 March on China,\u201d Time, November 17, 2003, accessed December 14, 2010, http:\/\/www.time.com\/time\/magazine\/article\/0,9171,543845,00.html.\" id=\"return-footnote-174-3\" href=\"#footnote-174-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a><\/span> Today, KFC has 2,872 restaurants in China, which generate over $2 billion in sales for its parent company, Yum! Brands.<span id=\"fwk-carpibus-fn14_004\" class=\"im_footnote\"><a class=\"footnote\" title=\"\u201cRestaurant Counts: 2009 Q4 Restaurant Units Activity Summary,\u201d Yum! Brands, accessed December 14, 2010, http:\/\/www.yum.com\/investors\/restcounts.asp.\" id=\"return-footnote-174-4\" href=\"#footnote-174-4\" aria-label=\"Footnote 4\"><sup class=\"footnote\">[4]<\/sup><\/a><\/span><\/p>\n<p>The main factor contributing to KFC\u2019s success in China is its localization strategy. Let\u2019s see how KFC did it.<\/p>\n<p>When KFC first entered the Chinese market, Chinese law stipulated that foreign companies could only operate in China if they had a local partner. KFC selected partners who had connections to government, so that it could benefit from their resources and contacts.<span id=\"fwk-carpibus-fn14_005\" class=\"im_footnote\"><a class=\"footnote\" title=\"Karen Cho, \u201cKFC China\u2019s Recipe for Success,\u201d INSEAD, July 1, 2009, accessed December 14, 2010, http:\/\/knowledge.insead.edu\/KFCinChina090323.cfm?vid=195.\" id=\"return-footnote-174-5\" href=\"#footnote-174-5\" aria-label=\"Footnote 5\"><sup class=\"footnote\">[5]<\/sup><\/a><\/span> KFC learned a lot from its local partners, and once joint ventures were no longer required, KFC chose a leadership team that knew Chinese culture intimately. Rather than sending expatriates to China to lead the expansion, for example, KFC selected people who had \u201can understanding of China and the Chinese cultural context \u2018so deep that it is intuitive,\u2019 to understand the Chinese people\u2019s \u2018mixed feelings, of love and hate about the West, to understand Chinese history, language, the influence of Confucianism, Buddhism and Taoism, this is especially important if you are in the consumer goods industry,\u2019\u201d said Warren Liu, former vice president of development at KFC China and author of the book <em class=\"im_emphasis\">KFC in China: Secret Recipe for Success<\/em>.<span id=\"fwk-carpibus-fn14_006\" class=\"im_footnote\"><a class=\"footnote\" title=\"John Sexton, \u201cKFC\u2014\u2018A Foreign Brand with Chinese Characteristics,\u2019\u201d China.org.cn, September 22, 2008, accessed December 14, 2010, http:\/\/www.china.org.cn\/business\/2008-09\/22\/content_16515747.htm.\" id=\"return-footnote-174-6\" href=\"#footnote-174-6\" aria-label=\"Footnote 6\"><sup class=\"footnote\">[6]<\/sup><\/a><\/span> This leadership team recommended that KFC follow a strategy of localization: offering local Chinese food options on the menu to appeal to local tastes. For example, instead of serving coleslaw, KFC offers bamboo shoots and lotus roots. Likewise, it sells a sandwich in the style that Peking duck is served, simply substituting fried chicken for the duck.<span id=\"fwk-carpibus-fn14_007\" class=\"im_footnote\"><a class=\"footnote\" title=\"\u201cKentucky Fried China,\u201d MSNBC, January17, 2005, accessed December 14, 2010, http:\/\/www.msnbc.msn.com\/id\/6833233\/ns\/business-world_business.\" id=\"return-footnote-174-7\" href=\"#footnote-174-7\" aria-label=\"Footnote 7\"><sup class=\"footnote\">[7]<\/sup><\/a><\/span> The extent of KFC\u2019s product localization is extensive, from preserved Sichuan pickle and shredded pork soup to a Chinese-style porridge called congee for breakfast.<span id=\"fwk-carpibus-fn14_008\" class=\"im_footnote\"><a class=\"footnote\" title=\"Aaron Hotfelder, \u201cWhy Does China Love KFC More Than McDonald\u2019s?,\u201d Gadling (blog), June 5, 2010, accessed December 14, 2010, http:\/\/www.gadling.com\/2010\/06\/05\/why-does-china-love-kfc-more-than-mcdonalds.\" id=\"return-footnote-174-8\" href=\"#footnote-174-8\" aria-label=\"Footnote 8\"><sup class=\"footnote\">[8]<\/sup><\/a><\/span><\/p>\n<p>KFC\u2019s promotional marketing is similarly steep in Chinese culture. As Yu Cui and Zhang Ting explain, \u201cChina is a society with relatively high collectivism, where people have a high sense of identity to the traditional culture and traditional food. Since the family members in China often share the similar value and most Chinese people consider that it is necessary to keep on the wonderful family traditions, such as respecting, loving and supporting the elderly, helping others, friendship between individuals and so on. Thus, many advertisements of KFC in recent years try to reveal the background of common Chinese families.\u201d<span id=\"fwk-carpibus-fn14_009\" class=\"im_footnote\"><a class=\"footnote\" title=\"Yu Cui and Zhang Ting, \u201cAmerican Fast Food in Chinese Market: A Cross-Cultural Perspective\u2014The Case of KFC and McDonald\u2019s\u201d (master\u2019s diss. in international marketing, University of Halmstad, Halmstad, Sweden, 2009), 41, accessed December 14, 2010, http:\/\/hh.diva-portal.org\/smash\/get\/diva2:286121\/FULLTEXT01.\" id=\"return-footnote-174-9\" href=\"#footnote-174-9\" aria-label=\"Footnote 9\"><sup class=\"footnote\">[9]<\/sup><\/a><\/span><\/p>\n<p>KFC emphasizes speed and convenience rather than chicken. \u201cChoosing to eat at fast food restaurants like KFC doesn\u2019t necessarily indicate a desire for Western flavors,\u201d said Sun Min, a local government official who eats at KFC because speed and convenience are his top priorities when choosing a place to eat.<span id=\"fwk-carpibus-fn14_010\" class=\"im_footnote\"><a class=\"footnote\" title=\"\u201cWestern Fast Food Giants Meet the Challenges of Local Culinary Preferences,\u201d Alibaba, June 9, 2009, accessed December 15, 2010, http:\/\/resources.alibaba.com\/topic\/531563\/KFC_s_localization_strategy_in_China_.htm.\" id=\"return-footnote-174-10\" href=\"#footnote-174-10\" aria-label=\"Footnote 10\"><sup class=\"footnote\">[10]<\/sup><\/a><\/span><\/p>\n<p>Selecting the right place or location for its outlets is also important for convenience, and KFC is opening stores at a pace of nearly one a day in China, to be close to wherever its customers are.<span id=\"fwk-carpibus-fn14_011\" class=\"im_footnote\"><a class=\"footnote\" title=\"Ben Rooney, \u201cChina: The New Fast Food Nation,\u201d CNN Money, July 14, 2010, accessed December 15, 2010, http:\/\/money.cnn.com\/2010\/07\/13\/news\/companies\/Yum_Brands\/index.htm.\" id=\"return-footnote-174-11\" href=\"#footnote-174-11\" aria-label=\"Footnote 11\"><sup class=\"footnote\">[11]<\/sup><\/a><\/span> KFC also developed its distribution system quickly, right from the start, and its parent, Yum! Brands, owns those distribution centers. Owning its own distribution centers lets Yum! Brands grow it restaurants efficiently as it expands into 402 cities in China.<span id=\"fwk-carpibus-fn14_012\" class=\"im_footnote\"><a class=\"footnote\" title=\"\u201cYum! Execs Discuss China Strategy, Franchising and the Recent Minimum Wage Uproar,\u201d Seeking Alpha, May 6, 2007, accessed December 14, 2010, http:\/\/seekingalpha.com\/article\/34612-yum-execs-discuss-china-strategy-franchising-and-the-recent-minimum- wage-uproar.\" id=\"return-footnote-174-12\" href=\"#footnote-174-12\" aria-label=\"Footnote 12\"><sup class=\"footnote\">[12]<\/sup><\/a><\/span><\/p>\n<p>For the future, David Novak, CEO of Yum! Brands (which owns Pizza Hut and Taco Bell in addition to KFC), said he envisions eventually having more than twenty thousand restaurants in China. \u201cWe\u2019re in the first inning of a nine-inning ball game in China,\u201d Novak told investors in a conference call in February 2010.<span id=\"fwk-carpibus-fn14_013\" class=\"im_footnote\"><a class=\"footnote\" title=\"Samuel Shen, \u201cKentucky Fried Chicken Banks on China,\u201d New York Times, May 5, 2008, accessed December 14, 2010, http:\/\/www.nytimes.com\/2008\/05\/05\/business\/worldbusiness\/05iht-kfc.1.12567957.html?_r=1.\" id=\"return-footnote-174-13\" href=\"#footnote-174-13\" aria-label=\"Footnote 13\"><sup class=\"footnote\">[13]<\/sup><\/a><\/span><\/p>\n<\/div>\n<div class=\"bcc-box bcc-info\">\n<h3 class=\"im_title\">Opening Case Exercises<a class=\"footnote\" title=\"(AACSB: Ethical Reasoning, Multiculturalism, Reflective Thinking, Analytical Skills)\" id=\"return-footnote-174-14\" href=\"#footnote-174-14\" aria-label=\"Footnote 14\"><sup class=\"footnote\">[14]<\/sup><\/a><\/h3>\n<ol id=\"fwk-168388-ch14_s00_l01\" class=\"im_orderedlist\">\n<li>Do you think that Yum\u2019s other restaurants\u2014Pizza Hut and Taco Bell\u2014would be successful in China? Why or why not? What would help them be more successful?<\/li>\n<li>What advice would you give KFC about how to continue its growth in China?<\/li>\n<li>How might KFC\u2019s presence in China help the restaurant in other markets?<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-174-1\">The Gale Group Inc., \u201cKFC Corporation,\u201d <em class=\"im_emphasis\">International Directory of Company Histories<\/em>, accessed December 19, 2010, <a class=\"im_link\" href=\"http:\/\/www.answers.com\/topic\/kfc-corporation\" target=\"_blank\">http:\/\/www.answers.com\/topic\/kfc-corporation<\/a>. <a href=\"#return-footnote-174-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-174-2\">Jennifer Lawinski, \u201cKFC, Taco Bell a Hit for YUM! in China,\u201d <em class=\"im_emphasis\">Slashfood<\/em>, July 15, 2010, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.slashfood.com\/2010\/07\/15\/kfc-taco-bell-a-hit-for-yum-in-china\/#ixzz16JzYnIBS\" target=\"_blank\">http:\/\/www.slashfood.com\/2010\/07\/15\/kfc-taco-bell-a-hit-for-yum-in-china\/#ixzz16JzYnIBS<\/a>. <a href=\"#return-footnote-174-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-174-3\">Carlye Adler, \u201cColonel Sanders\u2019 March on China,\u201d <em class=\"im_emphasis\">Time<\/em>, November 17, 2003, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.time.com\/time\/magazine\/article\/0,9171,543845,00.html\" target=\"_blank\">http:\/\/www.time.com\/time\/magazine\/article\/0,9171,543845,00.html<\/a>. <a href=\"#return-footnote-174-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><li id=\"footnote-174-4\">\u201cRestaurant Counts: 2009 Q4 Restaurant Units Activity Summary,\u201d Yum! Brands, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.yum.com\/investors\/restcounts.asp\" target=\"_blank\">http:\/\/www.yum.com\/investors\/restcounts.asp<\/a>. <a href=\"#return-footnote-174-4\" class=\"return-footnote\" aria-label=\"Return to footnote 4\">&crarr;<\/a><\/li><li id=\"footnote-174-5\">Karen Cho, \u201cKFC China\u2019s Recipe for Success,\u201d INSEAD, July 1, 2009, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/knowledge.insead.edu\/KFCinChina090323.cfm?vid=195\" target=\"_blank\">http:\/\/knowledge.insead.edu\/KFCinChina090323.cfm?vid=195<\/a>. <a href=\"#return-footnote-174-5\" class=\"return-footnote\" aria-label=\"Return to footnote 5\">&crarr;<\/a><\/li><li id=\"footnote-174-6\">John Sexton, \u201cKFC\u2014\u2018A Foreign Brand with Chinese Characteristics,\u2019\u201d China.org.cn, September 22, 2008, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.china.org.cn\/business\/2008-09\/22\/content_16515747.htm\" target=\"_blank\">http:\/\/www.china.org.cn\/business\/2008-09\/22\/content_16515747.htm<\/a>. <a href=\"#return-footnote-174-6\" class=\"return-footnote\" aria-label=\"Return to footnote 6\">&crarr;<\/a><\/li><li id=\"footnote-174-7\">\u201cKentucky Fried China,\u201d <em class=\"im_emphasis\">MSNBC<\/em>, January17, 2005, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.msnbc.msn.com\/id\/6833233\/ns\/business-world_business\" target=\"_blank\">http:\/\/www.msnbc.msn.com\/id\/6833233\/ns\/business-world_business<\/a>. <a href=\"#return-footnote-174-7\" class=\"return-footnote\" aria-label=\"Return to footnote 7\">&crarr;<\/a><\/li><li id=\"footnote-174-8\">Aaron Hotfelder, \u201cWhy Does China Love KFC More Than McDonald\u2019s?,\u201d <em class=\"im_emphasis\">Gadling<\/em> (blog), June 5, 2010, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.gadling.com\/2010\/06\/05\/why-does-china-love-kfc-more-than-mcdonalds\" target=\"_blank\">http:\/\/www.gadling.com\/2010\/06\/05\/why-does-china-love-kfc-more-than-mcdonalds<\/a>. <a href=\"#return-footnote-174-8\" class=\"return-footnote\" aria-label=\"Return to footnote 8\">&crarr;<\/a><\/li><li id=\"footnote-174-9\">Yu Cui and Zhang Ting, \u201cAmerican Fast Food in Chinese Market: A Cross-Cultural Perspective\u2014The Case of KFC and McDonald\u2019s\u201d (master\u2019s diss. in international marketing, University of Halmstad, Halmstad, Sweden, 2009), 41, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/hh.diva-portal.org\/smash\/get\/diva2:286121\/FULLTEXT01\" target=\"_blank\">http:\/\/hh.diva-portal.org\/smash\/get\/diva2:286121\/FULLTEXT01<\/a>. <a href=\"#return-footnote-174-9\" class=\"return-footnote\" aria-label=\"Return to footnote 9\">&crarr;<\/a><\/li><li id=\"footnote-174-10\">\u201cWestern Fast Food Giants Meet the Challenges of Local Culinary Preferences,\u201d <em class=\"im_emphasis\">Alibaba<\/em>, June 9, 2009, accessed December 15, 2010, <a class=\"im_link\" href=\"http:\/\/resources.alibaba.com\/topic\/531563\/KFC_s_localization_strategy_in_China_.htm\" target=\"_blank\">http:\/\/resources.alibaba.com\/topic\/531563\/KFC_s_localization_strategy_in_China_.htm<\/a>. <a href=\"#return-footnote-174-10\" class=\"return-footnote\" aria-label=\"Return to footnote 10\">&crarr;<\/a><\/li><li id=\"footnote-174-11\">Ben Rooney, \u201cChina: The New Fast Food Nation,\u201d <em class=\"im_emphasis\">CNN Money<\/em>, July 14, 2010, accessed December 15, 2010, <a class=\"im_link\" href=\"http:\/\/money.cnn.com\/2010\/07\/13\/news\/companies\/Yum_Brands\/index.htm\" target=\"_blank\">http:\/\/money.cnn.com\/2010\/07\/13\/news\/companies\/Yum_Brands\/index.htm<\/a>. <a href=\"#return-footnote-174-11\" class=\"return-footnote\" aria-label=\"Return to footnote 11\">&crarr;<\/a><\/li><li id=\"footnote-174-12\">\u201cYum! Execs Discuss China Strategy, Franchising and the Recent Minimum Wage Uproar,\u201d <em class=\"im_emphasis\">Seeking Alpha<\/em>, May 6, 2007, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/seekingalpha.com\/article\/34612-yum-execs-discuss-china-strategy-franchising-and-the-recent-minimum-wage-uproar\" target=\"_blank\">http:\/\/seekingalpha.com\/article\/34612-yum-execs-discuss-china-strategy-franchising-and-the-recent-minimum- wage-uproar<\/a>. <a href=\"#return-footnote-174-12\" class=\"return-footnote\" aria-label=\"Return to footnote 12\">&crarr;<\/a><\/li><li id=\"footnote-174-13\">Samuel Shen, \u201cKentucky Fried Chicken Banks on China,\u201d <em class=\"im_emphasis\">New York Times<\/em>, May 5, 2008, accessed December 14, 2010, <a class=\"im_link\" href=\"http:\/\/www.nytimes.com\/2008\/05\/05\/business\/worldbusiness\/05iht-kfc.1.12567957.html?_r=1\" target=\"_blank\">http:\/\/www.nytimes.com\/2008\/05\/05\/business\/worldbusiness\/05iht-kfc.1.12567957.html?_r=1<\/a>. <a href=\"#return-footnote-174-13\" class=\"return-footnote\" aria-label=\"Return to footnote 13\">&crarr;<\/a><\/li><li id=\"footnote-174-14\">(AACSB: Ethical Reasoning, Multiculturalism, Reflective Thinking, Analytical Skills) <a href=\"#return-footnote-174-14\" class=\"return-footnote\" aria-label=\"Return to footnote 14\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":9,"menu_order":1,"template":"","meta":{"_candela_citation":"[]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-174","chapter","type-chapter","status-publish","hentry"],"part":172,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/pressbooks\/v2\/chapters\/174","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":3,"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/pressbooks\/v2\/chapters\/174\/revisions"}],"predecessor-version":[{"id":477,"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/pressbooks\/v2\/chapters\/174\/revisions\/477"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/pressbooks\/v2\/parts\/172"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/pressbooks\/v2\/chapters\/174\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/wp\/v2\/media?parent=174"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/pressbooks\/v2\/chapter-type?post=174"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/wp\/v2\/contributor?post=174"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/wp-json\/wp\/v2\/license?post=174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}