The Global Fast-food Industry

The Global Fast-food industry comprises of the food service sub-sector, with estimated total revenue of about $1.86 trillion in 2012. The industry is estimated to account for about 38% of the global food service sub-sector. Industry revenue is estimated to increase at an annualized 2.1% in the five years through 2012, with a 3.2% increase expected in 2012. Developed nations are estimated to account for about 83% of total global industry revenue in 2012, led by the USA at 58% of total industry revenue. The industry is deemed to have a low capital-intensity level and is labour intensive given the need for personal, face-to-face service (http://www.kfc.co.uk/; De Wit and Meyer, 2004, 2010).

Read the case study entitled “Kentucky Fried Chicken and the global fast-food industry” by Jeffrey A. Krug, cited in De Wit and Meyer (2004:909-927) Strategy Process, Content, Context; and carry out appropriate analyses of the global corporate strategies adopted by KFC and other world-class fast-food retailers such as McDonald’s and Pizza Hut, and answer the questions below. You are encouraged to use relevant data/information from company websites.

Question One: Globalisation versus Localisation in the Fast-food Industry

Using information from the case study, relevant literature and appropriate techniques for strategic analysis, critically evaluate the ‘pressures for global integration of activities’ and the ‘pressures for local responsiveness’ along the global fast-foods supply chain, since 2001 to date. You are expected to use appropriate examples from KFC, McDonald and Pizza Hut.
[30 % marks]

Question Two: Vertical Integration along the Fast-food Supply Chain

Critically evaluate the effectiveness of ‘strategic alliances’ (SAs) and ‘mergers and acquisitions’ (M&As) in the context of backward and forward vertical integration along the fast-food supply chain. Discuss how ‘demographic trends’ and ‘restaurant acquisitions’ have helped KFC to maximise its corporate profitability through low-cost leadership, product differentiation, or market focus.
[30 % marks]
Question Three: Creating a Culture for Organizational Excellence

“The KFC culture is an interesting one because it was dominated by a lot of KFC folks, many of whom have been around since the days of the Colonel. Many of those people were very intimated by the PepsiCo culture, which is a very high performance, high accountability, highly driven culture. People were concerned about whether they would succeed in the new culture.” (De Wit & Meyer, 2004: 911).
Using your understanding of organizational purpose and culture, critique the above statement, and critically evaluate the ability of KFC to create a culture for achieving organizational excellence in today’s rapidly changing fast-food industry.
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