yum! brands

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Page 1: Yum! Brands
Page 3: Yum! Brands

Growth Strategies

• Build leading brands in China in Every Significant

category.

• Drive aggressive, international expansion and build

strong brands everywhere.

• Dramatically improve US brand positions,

consistencies and returns.

• Drive industry leading, long term shareholder and

franchise value.

Page 4: Yum! Brands

First Strategy “Build leading brands in China in every significant

category.”

Main goal is to expand and grow regardless of all weaknesses and threats.

The strategy will accomplish the expectation because it is

specific to China. Since, it is transitioning to a consumer based economy thus giving rise to the middle class segment which is the company’s main customer base.

How? by opening more branches in China.

Page 5: Yum! Brands

Second Strategy “Drive aggressive, international expansion and build

strong brands everywhere.”

4 divisions: YRI (Yum Restaurants International), China Division, US Division, 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 of India being the largest consumer market in 2030.Russia: Bought Rostik’s business (Russia’s leading chicken chain)Africa: First-mover advantage.

Page 6: Yum! Brands

Third Strategy “Dramatically improve US brand positions,

consistencies and returns.”

Reversed negative same-store sales of KFC by

investing in product innovation and Improving

franchise relations.

Implementation:

Expand Taco Bell branches from 5,000 to 8,000

units and Pizza Hut from 6,000 to 8,000 units.

Page 7: Yum! Brands

Fourth Strategy “Drive industry leading, long term shareholder and franchise value.”

High Cash from operationsHigh returnConsistent dividend yield

Implementation:Reducing ownership in highly penetrated markets (UK & US) and increasing their ownership in international markets.Maintain strong social responsibility.

Page 8: Yum! Brands

Management Key Assumptions

India will be the highest consumption

country in the world by 2030

Applying the same strategy followed for the

past 10 years will increase sales

More branches means more profit

Getting back on their feet under any

external threats such as disease from poultry.

Page 9: Yum! Brands

Policy Alternative

Fast Grow:

Aggressive growth strategy, pursue larger

market share or a stronger position in

untapped markets

Page 11: Yum! Brands

StrengthsManagement

Adapted favorable cost structure

Efficient same-store sales.

Geographic diversification

Quick responds to shifts in demand

Strong brand recognition

Page 12: Yum! Brands

Pending litigation, lawsuits

Underperformance and slowing of U.S. sales specifically with KFC and Pizza Hut brands

Suffer a setback in China following an investigation into KFC China’s poultry supply which resulted in a sharp decline in sales.

Relatively small market share in oversaturated U.S. fast food industry

Older U.S. restaurant units losing sales annually

Weaknesses

Page 13: Yum! Brands

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 options

Opportunities

Page 14: Yum! Brands

Food safety- animal diseases arising

Nutritional value concerns

High reliance on China allows the company to be subject to any relevant changes in the Chinese market

Changes in foreign currency exchange rates affect sales and profit

Modifications in foreign government regulation

Farmers raising prices

Threats

Page 15: Yum! Brands

Abell Model

How? (Approaches):

•Quick service restaurant

•Menu customized to countries

Who?(Customers):

Non-health conscious

Middle-class segmentWhat?(Needs):

•Hunger

•Open appetite •Quick food

Page 16: Yum! Brands

Porter Model

Rivalry among competitors • Large number of

competitors• Industry growth rate• Product

differentiation• Prices

Buyers• Cleanlines

s• Speed of

delivery • Hospitality• Customizat

ion• Price

sensitivity

Suppliers• Raw

material• Labor • Delivery

cars• Gas• Equipment

Barriers to Entry:Government regulations to control health standards

Initial capital requirements

Threat of Substitutes:• Healthier alternative • Ready made food• Street booths

Page 17: Yum! Brands

Strategic Position

Emerging

Growth

Mature Aging

DominantStrong

FavorableTenable

Weak

Page 18: Yum! Brands

Basis of Competition

McDonald’s

Burger King

Papa Johns

Price 0 0 +

Cleanliness - - -

Location 0 + +

Depth of Line 0 + +

Speed - 0 +

Delivery - 0 0

Page 19: Yum! Brands

Industry MaturityEmerging

Growth Mature Aging

Growth rate *

Industry Potential

*

Product line *

Number of competitors

*

Market share stability

*

Purchasing patterns

*

Ease of entry *

Technology *

Overall ***

Page 20: Yum! Brands

Risk Assessment of Strategy

Low Medium High

Industry *

Maturity *

Competitive position *

Strategy *

Assumptions *

Past Performance-of unit-of management

**

Level of future performance *

Page 21: Yum! Brands

Conclusion

Looking forward, Yum! Brands is in a strong

position to maintain foreign expansion and

capture a large share of the international

market. Despite certain challenges it faces in

the domestic market, the company is

financially healthy and should be able to

sustain a

stable position within the global fast

food industry.