In this section, we first apply Five Pushes model to research all types of competition facing western fast food industry in China which has competition between traditional western fast food corporations and Chinese fast food enterprises.
The market segments of tableware and drink are both competitive, and the purchasing rate of raw materials is relatively low weighed against other materials, therefore these suppliers are poor at capability of pricing. For other raw materials like poultry and potatoes and so forth, since that the prices of agricultural products have been increasing in recent years, suppliers of the materials gain more vitality on costs.
(2)Competitors: the other european fast food brands in China are McDonald's etc. Each one of these brands enjoy their own reputation, and are controlled in chain. The food and service they offer are of high quality. Specifically, each of them expect huge potentials in junk food industry in China, so they are willing to invest bigger amount money starting more restaurants in China. Therefore the competition between them is commonly more intensive in the future.
(3)Consumers: at present, if one Chinese consumer is happy to buy american fast food this means that he (or she) has recently accepted the price. Generally, the bargaining ability of one solo consumer in american fast food industry is weak. But it does not carry for those group consumers. For the present time, most western junk food enterprises give attention to discrete consumer, and if indeed they want to take up a small percentage of group consumers market,
They should also apply flexible prices strategies and enhance their bargaining electric power with consumers.
(4)Substitution: lately, more and more Chinese begin to pay attention on diet health, which encourages the development of Chinese fast food. The affordable price and wealthy varieties of Chinese junk food has press the growth of western junk food in China.
(5)Potential entrants: relatively speaking, the admittance barriers of traditional western junk food are high. Because these traditional western fast food requires large cash insight, great brands reputation, economies of level etc. But we ought to also forecast that with capacity for making an investment strengthened and management improved for Chinese corporations, they probably enter into western fast food market and enjoy great success in it.
Through Five Makes mode we can find that western fast food industry in China continues to be of great profitable potential, and the competition between western fast food enterprises and Chinese fast food companies will intensify, which means that both of american fast food corporations and Chinese junk food enterprises should cultivate their own competitiveness
As one of the very most popular european style fast food brands, KFC(Kentucky Fried Chicken breast) belongs to the world's greatest food group -Yum food group. This most significant food group includes about 30, 000 KFC Dining-room, pizza hut and TacoBell restaurants which can be distributed in more than 100 countries and regions of the globe. On November12, 1987, KFC came into into Beijing, which is the administrative centre city of China. After that, more KFC chain restaurants have been founded in more metropolitan areas such as Shanghai, Guangzhou, Hangzhou, Nanjing, Xiamen etc. And even people who live in those small towns can also have the access to western style junk food. As yet, there are about two thousand one hundred KFC string stores distributed around almost hour hundred and fifty towns except Tibet. KFC has been the greatest fast food string restaurant in China at the greatest speed of development(www. kfc. com. cn).
During over two decades development in China, KFC has been always and constantly integrated and taken advantage of limited resources and ability in China, and also have gradually cultivated its unique abilities through the business operation, which are not easily imitated by its competitors but also could bring it extra profits. Expertise like this are named center competitiveness of KFC by our research workers. This sort of competitiveness can make one or several business functions are of high quality on the planet or of higher advantages over its competitors(Aaker, 1989).
(1) Standardization of management.
The research by KFC on the standardization management is amazing. In order to ensure that people around the whole world can enjoy the food of exactly same flavor, KFC investigated at length into every single processing program to obtain corresponding quantitative standard. There is absolutely no question that standardization is KFC's central knowledge competitive ability(Stephen, 1992).
KFC's franchise function is quite special, with original Chinese language characteristics. Its "not beginning with zero" joining way is satisfactory by those Chinese language investors. In addition, KFC applied material resources integration into its management. From the very day when it inserted into China, KFC has been determined to provide food which is right for Chinese' taste. For the present time, KFC purchase the raw material fully from local providers.
(3). Great brand vitality. These days, the internet is highly developed and information is often shared by people surrounding the world, which makes it a good way to publicize KFC's brand more easily and efficiently. Based on parent company's terrific and strong brand reputation, KFC in China are as popular by almost each household, even for individuals who have not gone to KFC.
(4). Acceptable Location of restaurant. Identical to McDonalds' location, each time, KFC restaurant's location is successful. No wonder that these two famous and popular american style junk food restaurants are usually located besides one another.
Enterprises usually choose those strategies which may bring them competitive advantages. Matching to Potter theory(Porte, 1997), one's competitive gain is either from less cost than competition or from obvious differentiations from its competitors. So competitive strategies are the pursuing three types: cost leadership strategy, the differentiation strategy and centralization strategy. If corporations through their innovative design, technical potential potential or excellent brand image and so on seek to provide different products, unique services, this plan is called differentiation strategy which is based on a broader market looking at with centralization strategy (Prahalad, Hamel, 1990). Here, we point out the differentiation strategy as it is the major and most important strategy not only for KFC but also for other successful european style junk food restaurants such as McDonald's. By its explanation, this means that according with their own product setting, one develops its new products and establishes its competitive strategies in terms of supplier management strategy, brand strategy, skill strategy and so on.
(1) Product strategy: product localization.
On KFC's menu, there are some main kinds which not only in China, and even round the world are standardized and unified. But, in aspect of product innovation and uniqueness, KFC spares no work to meet the several needs of customers in China. Because the middle 1990s, it was driven to make KFC as an influent brand which fulfills Chinese demands. To guarantee the execution of the thinking and working way, In 2000, KFC sincerely invited 40 national food nutrition experts to determine "the Chinese language KFC health consulting committee"(www. kfc. com. cn). In 2004, scheduled to KFC products advancement and localization strategy, it broke the limitations between the western style fast food and traditional Chinese fast food, resulting in more new consumer market. At present, of more than 30 new products in China's regional market launched by KFC, at least 50 percent of these are of the Chinese language characteristic. Some varieties even hit the consumer market given that they discovered from eight famous Chinese cuisines. For all those products aiming at Chinese language people, such as fresh vegetarian soup, frigid grain, corn salad, old Beijing rooster and etc enjoy a wide recognition among people for its deep Chinese flavor. On summer of 2004, Guangdong province, the original old cool tea called WangLaoji, which really is a traditional drink brand originated from Guangdong province, officially made an appearance on KFC's counter. This is actually the first-time for KFC to introduce completely and directly traditional Chinese language product into its food menu alternatively than indirectly improve these traditional food. Aside from the deepening of localization strategies, KFC is now learning on consumers' choices within an area, in order to market the regional localization strategy in the future. It has been over twenty years since KFC came into China. Now, KFC rates first in junk food industry in China, largely due to its localization strategy. Inside the Chinese market, KFC launches 1. 5 services per month averagely, and the turnover from KFC in China already is the powerful and main support for the headquarters' income.
(2)Aim for strategies: focusing on families
For junk food industry, the most commonly used way for target market setting is to split the buyer market based on demographic factors. Other factors such as region factors, customer internal factors and customer use action factors are less considered(Emerson, 1990). Of demographic factors, european junk food industry mainly considers get older as market setting variables. KFC's concentrate on markets are individuals, which mainly include utilization of "young people and young parents using their children(Gould, 2002). Eating out environment is aimed at providing family reunion, warm dinner atmosphere. And because of its product diversification and the localization of preference, KFC managed to attract more folks of all age groups, particularly, with elders included. A few years ago, KFC launched the family meals, which is quite enough for a whole family to eat. In addition, being not the same as McDonald's publicity and vibrant advertising, or appealing stars to become listed on the advertising campaign, the feature of the image of KFC is its straightforwardness and implicative style, the heat and love.
(3)Brand image strategy: localization
With more attention is paid to brand image individuation by the companies, KFC in China have paid more focus on Chinese consumers' psychology. Not only the information "into life" they would like to multiply, but also the concept "change for China to make a new fast food". In each brand image details, KFC is characterized by obvious Chinese language culture features. KFC restaurants in China use a fresh draw and adornment idea. Not only a very smart appearance, all visible elements like dining-room design, advertising, food packaging, staff uniforms, general public goods have been armed with new visible marks. Even the KFC grandpa also changed into traditional Chinese costumes on Chinese language traditional festivals. Using this method, KFC publicized its brand and marketing. Since people prefer to focus on changes or "fresh things", while invariable things easily cause aesthetic fatigue, failing rousing people' sensory and becoming the concentrating centre obviously. Hence, from the tactical height, KFC directed signals of changing to the media as well as consumers. KFC effectively made itself the cultural attention centre by gathering the public attentions, eventually efficiently propagate its brand strategy and strategies to the public. SuJingShi, China local President of Yum KFC once said: "Since the admittance into China in 1987, KFC is definitely able to insist on the concept of Chinese language brand building, and spend every effort to make it. " Under this localization idea, the distance between KFC and Chinese customers is continually getting closer. Building Chinese brand means placing Chinese flavour into its brand building. In this way, it'll definitely leave a far more obvious trace of localization.
(4)Skill strategy: localization.
KFC's ability localization, not only embodies in grass-roots employees, but moreover, in the high-level management. From your first store in China until now, KFC's expertise localization strategy have never been transformed and even increased. KFC cultivate and promote and use local skills, offering full play to their comparative advantages because of their more familiarity with plan environment and local market features. At the moment, KFC has utilized eight general professionals from Mainland China's total professionals who are responsible sixteen markets in China respectively. Those senior management staff who are straight in charge of the operation of restaurant such as "operation manager", "regional supervisor" and "Hall manager" are recruited locally. Those local management workers can better understand the neighborhood demand, master the local consumer mindset and consumption habits, quickly discover local market' growth point, more effectively grasp the marketplace pulse and timely make strategic adjustment(Caudron, 1991), which helps KFC to get out rivalling against others. To be able to better implement skill localization strategy, KFC artistically submit the construction with great Chinese language characteristics of two times departments: the procedure team, HR and training division. This platform has a nickname "two HR departments". ChenYaqing, the operating training older supervisor of Yum China introduced: "the truth that a special independent team is set up from human source training operations section is not common in the world. The importance of the Chinese language market determines the necessity to do so. " We are able to see out of this the great dedication of ability strategy of KFC.
(5)Company management strategy: humanization
KFC's recycleables are all provided by local enterprises, so KFC's immediate development also stimulates the development of varied related raw material supply companies in China. Currently, about 95% of food and packaging materials are provided by suppliers in China. Based on process of common passions, KFC introduces local suppliers completely new management principles and advanced technologies, and offers them effective training programs and generous help specifically for those suppliers who are occasionally in difficulty. Through this, KFC has developed strategic partners with local suppliers in China. First of all, expanding the scale of the domestic suppliers. KFC required active steps to make its 25 local suppliers who are allocated in the twenty seven cities and regions are actually the most excellent in industry. For example, Zhucheng Foreign Trade Company in Shandong province, being in marriage with KFC for more than five years is among the most largest county overseas trade corporation. Secondly, localization of international suppliers. KFC has been positively encouraging international suppliers to enter China to establish local factories. For recent years, KFC have succeed in promoting seventeen products' localization which actually have to be imported from international suppliers. KFC Continuously integrated suppliers around itself, and founded a strategic cooperation partnership with them. The attitude KFC treated with suppliers mirrored the humanistic matter and Chinese heroes.
Taking KFC as a typical example of western style fast food enterprises, we've proved the competitiveness and competitive strategies they adopt. To compete successfully against with them, what strategies should our China fast food venture adopt? To answer this question, an S. W. O. T evaluation may succeed.
And when it comes to analysis on exterior opportunities and threatens, we could also apply PEST analysis.
5. 1 External Opportunities (O)
5. 1. 1 Cost-effective factors:
(1) Economy of China develops at higher rate.
Since the policy of Reform and Opening-up in 1978, China's federal has constantly taken economic development as the center, persisting in Reform and Opening up. For a recent decade, China's overall economy increased at the average rate over 10%. (www. stats. gov. cn) Even through the Southeast Asian FINANCIAL MELTDOWN in 1998 and financial meltdown recently, under the impact of world financial shock, China's economic performance is the foremost among the world.
(1)Industry has a huge prospect of development.
Although with people's living standards improving, the proportion of the third industry's output to GDP is increasing, but compared with the traditional western developed countries, China continues to be low in percentage of the third industry to GDP. While the third industry is an excellent way to increase job, social prosperity as well as people's effective living standard, so there should be a huge potential for development of third industry in China. As part of the third industry, the end result of the fast food industry in China has increased at average rate of 16%, even during bad times like the Southeast Asian FINANCIAL MELTDOWN, it enjoyed the pace over 16% (www. stats. gov. cn). In fact, the countrywide bureau of statistics in China considered the junk food industry among the industries with the best economic progress, which uncovered that the fast food in China would turn into a promising industry in the foreseeable future.
5. 1. 2 Political factors:
(1)Great plan support.
In order to aid China's fast expansion, in march of 1997, Foreign Trade Section in China granted Ј the String Stores Operating NormsЈ№, later Ј Development Program of JUNK FOOD Industry in ChinaЈ№in September of 1997, and Ј The Commercial Franchising Management MeasuresЈ№(for trial implementation) in November of 1997. All these documents pointed out the guiding guidelines, development target, the primary task, organization in the execution and options.
(2) Political stability
The good investment environment, huge market and numerous tourism resources, attracted a large number of investors and tourists, thus making junk food become a essential need for businessman, tourists and other people who are occupied by outside the house activities.
(4)China's getting into WTO promotes development of fast food industry.
Firstly, the fast food industry's raw materials costs would decline and the product quality would be increased. According to the agreements between China and American, China would start part of its grain market after getting into WTO. China would import 30million tons grain with high-quality, accounting for about 6% of China's whole grain market. These imported grain included One thousand tons of whole wheat, seven hundred loads corn six hundreds tons of rice, 500 a great deal of soybean meal, 500 a great deal of soybean and 3 hundred and thirty tons of soybean oil, in the meantime some special breeds of certain super fruit and meat. Due to the reduced price and good quality of transfer products, this will thrust domestic enterprises to lessen costs and improve quality.
Secondly, it is effective to expand the use of international capital and improve developing processing equipment's scientific level. Matching the principle of nationwide treatment, foreign buyers will be cured as identical to Chinese domestic corporations. In addition, the China's legal procedures are becoming more translucent, it is easier for foreign buyers to well anticipate market risk and profit condition. We've great self confidence that foreign investors will spend money on junk food industry. This may solve local capital insufficient contradiction, also can improve food Industry handling technology and management level, to produce medical and modern Chinese language food.
Thirdly, it is advantageous for China's fast food enterprises to remain competitive in the international market. Under the framework of WTO, each users of WTO reduce tariff rate and eliminate barriers, and open up services trade market. Our home fast food corporations can enjoy countrywide treatment, which helps to create opportunities for them to walk on the world. Chinese language food, especially the various cuisines, enjoy high reputation and consumer's big welcome. If the original crafts with modern medical technology can be correctly merged, with good quality and reasonable price, Chinese junk food will be bound to achieve the international market.
Fourthly, it is helpful to speed up the tactical reorganization of Chinese fast food companies. The large restaurant brand business categories, with the establishment of good market competition system, the competition among domestic junk food enterprises and between local fast food corporations and foreign ones will tend to be more intense. From then on, however, some large restaurant brand enterprise group, with the correct scale and local across, will be developed.
5. 1. 3 Public factors:
Although more teenagers wish to enjoy american style fast food, most of individuals still prefer Chinese fast food. It really is without doubt that in the future, people will definitely pay more attention on diet health. And since Chinese language people are rooted on their deep diet culture, it is not easy for these to shift from tradition. Furthermore, this advantages over traditional western style fast food can be improved so long as Chinese junk food enterprises develop suitable ways of assure the product quality, flavor, service as well as to increase the management.
5. 1. 4 Technological factors:
In reality, a great of the success of american style fast food should related to technological progress which also do good to China fast food businesses. Owing to more complex and sophisticated cooking equipments, it costs less time to provide and offer Chinese food. Additionally, the food preparation process can be split into small items and each part can be handled, which ensures the finest quality of food and make standardization possible.
(1) Fast growth of western style junk food in China.
In 1987 on November 12, the first KFC restaurant was set up in Beijing. about 20years later in 2007, the string stores of Yum KFC group in China has amounted about two thousand and one hundred. During the period of time, McDonald's, pizza hut, Japanese, Italian pizza all moved into into China In succession, in order to share the huge Chinese language intake. not only did these european style fast food occupied intake market, they also changed gradually the dietary plan concept of Chinese language people.
(2) The competitive benefits of western style fast food businesses are strengthened.
Based on competition concepts of fairness, openness, justification, the overseas businesses in China usually put into action localization strategy to reduce the cost. In China, however, there a wide range of and serious problems in talent motivation device and income syndication system, therefore the foreign businesses with good training system, and competitive payment And scientific staff management method, will attract large levels of exceptional management and professional skills. Before end of 2000, the full total KFC staff in China is 2. 4 million, of these, A lot more than 5, 000 members are restaurants managers or function managers. During the early period time after KFC's coming into directly into China, the raw materials were fully imported overseas. But nowadays, being totally provided locally, leading to KFC's operating costs further reduced, the competitive advantages further strengthen.
(3) Competition between business is strong.
In the past, hotels and restaurants confined their use market to people with median or high income level. Because the forex market has been saturated, now the restaurants transfer their attentions to a broader need of the general public. Usually, in order to catch the attention of more consumers, the restaurants nowadays provide the food at an extremely reasonable price. In addition, to satisfy different preferences of different sorts of consumers, more varieties and flavours of food have been developed. Increasingly more restaurants begin to use their business in a chain and systematic way, which reduces the operation costs quite a lot.
(4) A large number of potential entrants
From the point of view of investment finance, the general financing volume is not so high. According to the Ј Chinese Fast Food Industry Research ArticleЈ№, to invest one junk food store, the minimum investment finance requires 100 thousand Yuan, and the maximum investment finance is 1million Yuan. Usually, the past which need a smaller quantity money are Chinese language fast food string enterprises, while the latter which desire a larger volume of money tend to be western junk food chain companies. Investment above includes training cost and decoration expenses and so forth. From view of technology, the technologic obstacles of fast food industry are not high neither. From your view of the market situation, diet is an important competent of communal activities for individuals and also functions as a main way for intercourse among people. Especially, the long background of thousands of years of the dietary plan culture determines that the utilization market of junk food industry is huge. Factors like high return on investment, stable utilization market make fast food industry the investing hot, with a sizable number of traders in.
(5) Diet culture changing.
Over the earth, it is impossible that the meals demand structure of 1 country keep invariant, without being influenced by overseas food culture. This even pertains to countries like China, France and Italy which all have a proud diet culture. It is inevitable that new types of food and preparing methods from other countries or parts will impact another nation' food demand structure(Shone, Nobuhiro, Kaiser, 2000). The more open of one nation, the easier the food demand framework of itself tends to be affected by overseas food culture. Not merely have Western junk food culture promoted the development of Chinese junk food, but also have cultivated a certain group who've a inclination for western junk food(Jussaume, 2001). Because the youth will be the target use market for KFC, the young ones are mostly influenced by western junk food culture. They think of eating traditional western style junk food as a new and fashionable life style rather than fulfilling their appetites.
There are a big number of Chinese language fast food varieties such as rice, noodles, dumplings, pancakes etc, which are characterized by traditional countrywide characteristics. It is rather difficulty for american junk food restaurants to offer such rich varieties of food. The dietary plan culture with the history of five thousand years impresses every Chinese language profound affect, which is the greatest advantage over western style fast food.
(2) Flavours of diversification
Due to China's great place and 56 cultural groups in various regions, consumers in several parts have different diets. Even within the same region, the likes differ across individuals. Although European style junk food restaurants make some adjustment on tastes in several countries to satisfy the local taste, generally, the tastes with their food havent changed a great deal because of their slogan "tastes the same around the world".
(3) Medium price
China is still a expanding country, in 2001, throw-away income of urban residents per capita is 6860 Yuan. Price continues to be the major considering factor when they are planning to consume. The cost of western-style food ingestion per capita each and every time is between 20yuan to 50yuan, which is still on the high area for general consumers. Based on the statistical analysis, the average cost of China fast food per capita each time is approximately 10yuan which is the usage level that a lot of Chinese people can reach. As a matter of fact, these folks are the primary consumption of junk food industry.
(4) Loyal customers
It is the social top features of food utilization that ensures the Chinese fast food enterprises steady and devoted customers. Food use isn't just a mean which satisfies people' the most basic physiological needs, but also cultural features by which a land is recognized from other countries. Whether you are one of the elders who are deeply rooted by prominent feature and traditional culture or of new trend-spotting era, and whether you are one of the abundant who pursuit life quality or of the low-income receivers who are mainly contented with physiological needs. As long as you are created in China, the diet culture is rather hard to change. Although other cultural features, such as the use idea, clothing, lifestyle is really changing with the further development of Globalization, modernization. The "Local" feature makes the entry of the foreign enterprise into Chinese language market more difficult than the entry into marketplaces like financial market, insurance market, Consulting and other services industry market. Weighed against the corporations into China, China fast food enterprises have a objective gain namely customer commitment.
(1)The poor sanitary conditions in restaurants and instability of food quality
The sanitary conditions of fast food industry is immediately related to the health of customers. They are reflected in three aspects: sanitary conditions of the development of food control, sanitary conditions of tableware and dinnerware and sanitary conditions of eating out restaurant environment. The sanitary situation of all fast food corporations' inside our country health situation is being concerned, even if Built with the disinfection equipment matching relevant regulations, the task of disinfection is often omitted whenever there are insufficient dish plates. Chef and Personnel are incredibly in sanitation, especially during summer time. Such horrendous sanitary conditions discouraged many customers from dining. KFC especially emphasis on internal cleansing, the business set rules about how exactly to check on the store's sanitation. Items like food quality, baking, cooking time and temp and so on have to be evaluated by the next analysis: quality, service, health and value. the scores of the four assessments would decide whether you are eligible to join to use for new stores. China fast food restaurants are lack of quantitative standards, because the chef cooks by his / her experience. It really is difficult to ensure quality of even expectations, and food quality is not exhibiting a great deal of stability, that includes a negative influence on the inheritance of the traditional cooking and Chinese language fast food' track of modernization. Western-style fast food businesses use advanced creation equipment and technology, and firmly control the food-processing time, heat, flavour, which can avoid the food from the impact of real human factors to ensure the quality stableness.
(3)Being Poor to provide food
Summary of the key features of fast food is to provide wedding caterers services in the shortest possible time(Jekanowski, Binkley, 2001), thereby keeping consumers time. For junk food enterprises, if they can not improve the service speed, it means they are probably to reduce their customers and market. It is estimated that the waiting time of Chinese language junk food enterprises customers is an interval of 15 minutes for 10, while KFC's is less than two minutes.
(4) Marketing concepts left behind
Food products include three parts: a primary product to meet up with the appetite; the form of products of your scrumptious food, excellent environment, clean items; extension product of a satisfactory service. Chinese fast food companies are in the quest for food's "colour, Smell and taste" too much, and ignore the image of the restaurant, service norms, the waiting time, cleanliness of environment and expansion of the proper execution of products(Liu, 2003). Therefore the overall product will not meet consumers' prospects, resulting in failing in competition with Western-style fast food. The Chinese junk food enterprises are poor at brand understanding, people are more acquainted with KFC and McDonalds. Western-style fast food companies do quite proficient at its unique design of corporate id system (CIS). For example, McDonald's M -type red and yellowish is very eye-catching, departing people memorable image. At the same time, Western style fast food businesses through the public public welfare undertakings to improve corporate presence and reputation. Due to the insufficient advertising, no unique corporate logo design or image, the China fast food corporations failed in marketing.
(5) Single function of operation
The adoption of chain operations enables Western-style fast food enterprises to optimize the allocation of resources, increase market share and strengthen the organization Image and boost economic efficiency. Due to the lack of a reasonable management system in almost all of Chinese junk food enterprises, there is no strong binding on chain applicants. Therefore, the choice operation mode particularly direct chain has to be taken which however takes a lot of money to run. Chinese fast food businesses are of small size and in short supply of funds, which has seriously hampered the development of enterprises.
(6)The lack of recruiting management
Human needs can be split into five levels: physiological needs, safe practices needs, interpersonal need, self-esteem Needs and the needs of self-realization, so money is not the whole of the needs of employees. Nowadays, employees pay more attention the improvement of their own functions and business development prospects. During the years of development of KFC in China, they have been putting into Cash and manpower to carry out various areas of training in any way levels. Such training not only helps employees to improve work skills, also improves the staff's own knowledge framework and persona development. Many managers of Chinese fast food enterprises, in particular, senior managers refer to the staff as a production tool, hardly any staff training programs are completed in the management.
(6)Insufficient logistics centre
Most of the local fast food businesses lack knowing of the logistics, and the level of development of logistics and management level are also lower. Almost all enterprises neglect to form a network management system. Chain restaurants often come across problems such as inaccurate forecast of consumers' demand, which bring about the happening of out-of-stocks,
Slow-moving and Food deterioration.
(7)Selection of restaurants location to be optimized
There exist too many problems on choice of Chinese fast food restaurant location. They too focus on factors like traffic, commercial success. Such criterions are up against the investment decision-making of the present day junk food, because work at home opportunities are manufactured by both providers and consumers. The quantity of people, commercial prosperity does not necessarily assure a big amount of the intake and corporate income. For instance, the Yangtze River Plaza Shopping Center in Wuhan province will not perform very well, even averagely there are 1 million people coming and heading everyday. The explanation for that is that this shopping centre is the only one in the neighbourhood, and there are neither commercial areas close by nor communities. A lot of people log off to changeЇјso generally they'll not eat here, not to mention driving here to dinner. Such place is not very suitable to open an easy food restaurant.
Based on the exploration on exterior and internal weakness, durability, threaten, opportunity, we are able to choose ideal competitive strategy for Chinese fast food enterprises. As reviewed above, there are three basic competitive strategies, and which is the perfect strategy depends upon the results in our S. W. O. T research in ex - section.
6. 1 The limitations of overall cost management competitive strategy and differentiation competitive strategy of Chinese language fast food companies.
According to this is of overall cost leadership competitive strategy, we can list some basic guidelines if Chinese fast food enterprises want to achieve success based on this type of competitive strategy.
(1)Sustained capital investment and fine financing capacity, which ensures the funds for the purchase of advanced equipment in the pre-investment period and the Growing the scale of the business enterprise.
(2)Strict standardized management system and strict supervision of employees to ensure cost control.
(3)Clear organizational structure to meet up with the basic objectives of sales incentives based on benchmarks.
(4) Larger market share or other advantages, like a good way to obtain raw materials.
At present, however, the execution of overall cost authority competitive strategy in the united states is not ideal for the Chinese junk food enterprises for the following reasons:
(1) Among all the Chinese language fast food businesses in Asia, only the XINYA junk food enterprise, so far, successfully introduced proper shareholders into its business. The vast majority of Chinese junk food enterprises cannot find the money for to buy advanced equipment, more personnel training, store re-design and decor because of insufficient capital.
(2) Cost control competitive strategy requires the franchising procedure to attain economies of size. However, many China fast food companies are not trained to apply franchising operation because they are unsuccessful in meeting the basic requirement that the amount of the direct stores of the candidate is no less than eleven.
(3) Lowering operating costs is the key of overall cost command competitive strategy. It's been only over a decade since the Chinese language fast food industry began to develop, and the related business lag considerably behind the development of Chinese junk food industry, which restricts the expense of Chinese fast food from decline. For example, the food machinery industry provides China fast food corporations with very few cooking equipment; the study by Food Research on Chinese junk food kinds is not good. Third-party logistics in China is on its way to efficiency.
(4) The marketplace share of China fast food in China is much significantly less than that of American style junk food enterprises. After almost sixty years of development, Western-style junk food businesses are superior in conditions of institution, scientific management, the grade of personnel etc. Thus Chinese fast food enterprises don't have scale economy gain, which is difficult to reduce the expense of management.
(5) In the same industry, only 1 enterprise can do well by adoption overall cost management competitive strategy, which encounters with the large number of existing Chinese junk food enterprises.
Differentiation competitive strategy can be carried out through channels such as product characteristics, individualization of management strategy, complete and considerate service, advanced development technology and management methods, and fantastic quality. The normal good examples are McDonald's and KFC. But might know about be clear about is that this kind of competitive strategy succeeds at the trouble of high cost, that actually is exactly what most Chinese fast food enterprises are worried about. and through the next items we might see more obviously why at present it isn't appropriate to implement differentiation competitive strategy nation widely.
(l) The type of fast food is the small earnings but large turnover. However, China continues to be a developing country, people are sensitive to price. They'll choose restaurants, hotels alternatively than fast food restaurants at the same cost. For McDonald's, KFC in China, The reason why to choose differentiation competitive strategy is the fact their marketplace consists with young people, and the meals they offer demonstrates the culture of the West Cultures.
(2) Since it is quite easy to imitate in food and beverage industry, it is difficult to acquire competitive benefits through products. Even if a new varieties is developed, the competitive advantages due to it can only last for a short time due to imitation.
(3) The differentiations between junk food enterprises mainly lay in general management, which is precisely the weakest capability of Chinese fast food enterprises
(4) differentiation competitive strategy takes a lot of cash, but because the profits of junk food industry is far Lower than the restaurants, hotels and other departments, so some large food venture groups are unwilling to get large amounts of funds into fast food business. Other small and medium-sized businesses which even if indeed they wish to extend the scale of business, face the challenge of insufficient cash.
6. 3. The essentials of execution of centralization competitive strategy of Chinese fast food businesses.
Overall cost competitive strategy and differential competitive strategy both achieve their goals predicated on a whole selection of junk food industry, while centralization competitive strategy was created to achieve goals predicated on specific target market(Bresnahan, Reisse etc, 1991). The idea of centralization competitive strategy is the fact enterprises can serve a specific thin marketplace more proficiently and effectively.
(1)The prospective consumers of traditional western style fast food enterprises are those who find themselves under age twenty-five. American style junk food enterprises are precisely alert to the needs of these, so they enjoy a high reputation included in this. Because the overall capability of Chinese fast food businesses are much poorer to that of traditional western style junk food enterprises, so that it is more appropriate to choose another marketplace different from that of western style fast food enterprises somewhat than fight them in person.
(2)The near future society can be an aging society, because the Western-style fast food enterprises can catch the attention of the consumption of parents through children, Chinese fast food enterprises can also draw in children's consumption by giving delicious, wholesome food to meet the needs of parents.
(3) It has not been quite a while for the introduction of Chinese junk food industry. scheduled to limited financial resources, they cannot provide for population all together with a full selection of services, but purchasing a particular market segment. At present, a lot of the Chinese fast food enterprises' market position is not yet determined, and markets such as workers in offices, students, leisure masses with an enormous market potential are often ignored. Therefore, China fast food corporations should designate these markets and cover people that have huge business opportunities.
(4) Varieties of Chinese food are extremely rich, especially those with local characteristics, and diets vary a whole lot throughout different locations. It is impossible to meet the various needs by giving only limited varieties across the country. At the same time, people have different tastes all over the country, so that it is hard to unify the preferences into one. Those factors considered, joining specific region for success and development is an inevitable choice for Chinese fast food corporations.
(5)Under the centralization competitive strategy, enterprises don not compete with each other face to face, which can avoid extreme competition and being stuck in "price fight". All the Chinese fast food enterprises can are in tranquility, and cultivate the fast food industry jointly.
7. Conclusions and advice for implementation of centralization competitive strategy of China fast food businesses.
In conclusion, the competition between European style junk food enterprises and Chinese fast food companies tends to be more intensive. To get competitiveness, European style fast food companies such as McDonald's, KFC have a tendency to adopt differentiation competitive strategy. Based on evaluation on their own internal and exterior strengths, resources and features, they usually implement differentiated strategies through stations such as the characteristics of products, customized business viewpoint, considerate services, the advanced production lines and management, fantastic quality that can be reflected in the enterprise's product strategy, talent strategy, supplier management strategy, marketplace setting strategy, enterprises' location strategy etc. However, the implementation of differentiation competitive strategy objectively requires advanced development equipment and technology, considerable high-level human resources, rigid and effective management system and a big amount of capital investment, which are precisely the weaknesses of Chinese language fast food companies. Based on S. W. O. T research on both internal and external environment of the China fast food businesses and their own capabilities and weaknesses, we claim that your best option for Chinese fast food businesses is to centralization competitive strategy. We claim that Chinese junk food businesses should under this basic strategy to cultivate and improve other detailed strategy like product strategy, expertise strategy, company management strategy and brand strategy and so on, gradually increasing their central competitiveness in a particular segment of the whole market. The following recommendations for China fast food enterprises are some strategies of implementations of centralization competitive strategy.
Tactics are followed to echo the execution of strategies. Learning from the strategies of KFC in China, Chinese fast food businesses can perform their strategies through the following methods, under the premise of centralization competitive strategy
1. The concept of innovation
Managers of Chinese fast food businesses should transfer their perspectives from the traditional maximization of the benefits to under the premise of attentiveness competitive strategy, maximization of the passions of the community as a whole, including customers' interests and traders' hobbies, the passions of employees, suppliers' passions, the interests of the city. Here, take the passions of customers as an example, it is embodied of the eating out environment, food safety, fast service, food and culture etc.
2. A reasonable location
One should firstly subdivide marketplace into items, and then combine the specific characteristics of the marketing environment with its own features to build up its own market. Places here include places such as the kitchen, eating out rooms, but also places which provide customers with the convenience, including the parking great deal. So enterprises should consider through all factors, particularly with factors like volume of customers, convenience and the image of the site, to identify their best business areas.
(3)Expanding market and brand through franchising procedure.
Chinese fast food enterprises must at the same time develop a quantity of franchiser over the areas to overcome the shortage of funds(Geng, 2003). Through the unification of arranging and centralized purchasing, businesses can decrease the purchase cost of individual corporations and operating expenses (Agarwal, Ramaswami, 1992). Along with the unification of environment design, color design, trademarks, mascots, advertising will increase brand consciousness.
(4)Mingling food diversification with low priced by mass customization.
Mass customization means that companies produce large number of products which can be needed by specific varieties of people (Emerson, 1990). In addition to chain procedures, Chinese junk food enterprises should apply standardization creation in to the common parts across products. First of all, use standardized, modern Production equipments. Modern junk food creation equipment and technology have superiority over traditional development equipment and techniques because they may take control of food-processing time, temps, taste, shape etc preventing them from the impact of individuals factors, also, they can improve labor production. Secondly, the execution of standardized steps. In short, Mass customization can not only low the costs but also in accordance with different diet habits of consumers in various areas, provide unique food and individualized services.