Yum! Brands Food

Yum Brands FoodYum BrandsAmerica is not what it once was. Gone are the times of spending hours seated on the front porch while grandma snapped a pound of green beans for dinner. Instead, those times have been replaced with speeding through a drive-thru window to grab a quick bite to eat. Foods that were once referred to as slow-cooked, wholesome, and hearty, are now being described by words such as, fast, convenient, and fatty. We now live in an evolving world, where a single moment of free time is branded as wasted time for progress. The fast-food industry has emerged almost immediately.Yum Brands, Inc., was reported as the largest fast-food ac bon ton in 2004 (Krug (2004) pg. 627). This company is made up of many household brands such as KFC, Pizza Hut, Taco Bell, Long John Silvers, and AW restaurants. In the fast-food industry, they are the sell leader in the chicken, pizza, mexi crowd out, and seafood segments (Krug, 2004). Yum Brands goal is to be the market leader in the Un ited States, and also increase market share in high fruit areas around the world. iodin strategy that Yum Brands implemented to increase market share in the United States was to combine two of the companys franchises into one location to attract a spaciouser customer base. This has brought direful success to the company. Yum Brands has since shifted its focus to an international strategy to expand on their current market share.The rebellion of the fast-food industry is not confined to the United States alone. The world as we know it has evolved into a fast-paced no wait zone. Although establish on a demesnes nuance, the eat practices of the worlds countries are quite different. Some countries remain steadfast to their culture and have been reluctant to embrace the fast-food concept. This presents the strategic issue. How foundation Yum Brands embrace to expand on their international strategy while sustaining their leadership and war-ridden advantage in the United States a nd other countries? We will now address this issue by applying an analysis that will help Yum Brands decide which countries indispensability to be evaluated and when to expand their company into new markets.In order for Yum Brands to venture outside of the United States, they must first evaluate the markets in which they are planning to enter. This type of analysis requires a model that evaluates the economic conditions, political stability, cultural differences, resources, society conditions, and supporting industries associated within a given market. Michael Porter of Harvard University concluded that there are four broad attributes of nations that individually, and as a system, constitute what is termed the diamond of national advantage (Dess, Lumpkin, Eisner 2007 pg. 240). We will find this analysis to be the most beneficial to Yum Brands. In this analysis, we will be analyzing what issues Yum Brands should address before entering a market. These issues are factor conditions, subscribe to conditions, related and supporting industries, and firm strategy, structure, and rivalry.We begin the analysis with factor conditions. These conditions reflect separately nations factors of production and should be industry and firm specific. Yum Brands should be looking at what each country possesses, as far as firm-specific cognition and skills created within the country that are rare, valuable, difficult to imitate, and rapidly and efficiently deployed. If these factors do not hold up in a country, then Yum Brands will need to consider whether the firm place create these factors using their own intellectual assets. One factor advantage for expanding into the Latin American markets, for instance, is that the costs associated with labor and salaries will be significantly slight than in the United States. This is due to inflation rates, economies of scale, and unemployment rates. Yum Brands has been successful in other markets because almost all of their franchises outside of the United States are locally owned and operated. This reduces the lam-in barriers and allows a cultural perspective that might otherwise be a major concern. By allowing local business people to own the franchise, Yum Brands gains intellectual knowledge on the countrys culture and consumer demands in a given market.Analyzing demand conditions is important because without knowing what the customers wants and needs are, we cannot efficiently serve the market. In the United States, we know that the demand for fast-food is high, based on our lifestyle and growing population make outs. Although in Latin America, this may not be the case, due to consumer awareness and cultural differences. Yum Brands will need to rely on economic and trend analysts to predict the cultural and societal trends of that market. Among the things analyzed should be the ethnic and immigration trends of that country. In the United States, we have seen a growth in ethnic food, due to the recent grow th in immigration. Another thing to consider when analyzing demand conditions is the level of income individuals are receiving. A rise in income stimulates growth in the dine-in restaurant segment as consumers receive higher disposable incomes (Krug, 2004). Yum Brands may need to expand and improve on actual products in order to sustain competitive advantage.Related and keep Industries deal with countries managing inputs more efficiently. Close working relationships with suppliers is a key factor in gaining competitive advantage. In the United States, we have seen that distribution of products is highly correlated with production. Distribution between states within the country is non problematic, based on the free trade barriers that exist between them. This is also true of distribution to Canada and Mexico, due to the North American Free Trade Agreement that enabled free trade and tariffs between North American countries. Also, the geographic proximity of Latin America to the Uni ted States gives the firm an advantage towards supplier power. Yum Brands will need to assess the supplier power, as well as other related relationships relevant to success, in each market before entering. Also, it is important for Yum Brands to research trade laws and regulations between their home market and potential orthogonal markets.Firm strategy, structure, and rivalry is perhaps the most important segment in analyzing a foreign market. Rivalry is particularly intense in nations with conditions of absolute consumer demand, strong supplier bases, and high new entrant potential from related industries (Dess, Lumpkin, Eisner 2007 pg. 243). In the fast-food segment, we have seen that domestic rivalry is very high within the United States. Although, based on cultural differences in Latin America, the demand is low, because most Latin Americans have not yet acquired a taste for American food. Instead, Latin Americans continue to embrace dining at home. Economics are another fact or reflecting domestic rivalry. As we have already discussed, the pay rate in Latin American countries is significantly lower than in the United States. This results in lower consumer demand which reduces the competitive environment in Latin America. How a country is run can also influence domestic rivalry and strategy. With populations on the rise around the world, as well as in Latin America, a trend may soon be emerging that will shift all dining practices to a more American style of eating.As long as Yum Brands continues to innovate and make changes in its internal framework, they should be able to achieve their international strategic goals. It is imperative that Yum Brands does not venture into foreign markets without first analyzing the market in which they are entering. Also, if they try to expand too rapidly, they may experience limited resources and cash flow. Yum Brands will want to expand into areas with high economic growth potential, as well as, regions with rising pop ulation and political stability. Firms that succeed in global markets had first succeeded in intense competition in their home markets. We can conclude that competitive advantage for global firms typically grows out of relentless, continuing improvement, innovation, and change (Dess, Lumpkin, Eisner 2007 pg. 243). Based on the history of Yum Brands success in the United States, we can assume that the company is a prime candidate to venture into international markets.Works CitedKrug, Jeffrey A. (2004). Yum Brands, Pizza Hut, and KFC. Appalachian StateUniversity, 627-638.Dess, G. Gregory, Lumpkin, G.T, Eisner, B. Eisner (2007). Strategic Management 3e.Mcgraw-Hill.Diamond of discipline AdvantageDomestic Rivalryhigh in the U.S.based on cultural trendseconomicslow in Latin Americafast-food versus dining at homeFactor Conditions Demand Conditionsrequires high population low in Latin Americamodern technology high in U.S.communication systems dining practiceslanguage barriers immigra tion trendstariffs and trade regulations consumer awarenesslegal system growth in suburban areasbanking system unemployment rateslabor costsRelated and Supporting Industriesclose proximity to the suppliersupplier bases must be prevalent in an industrycan a supplier base be createdtrade barrierscan similar suppliers be substituted