Tuesday, June 26, 2012

Yum! Brands Emerging Market Strategy Flows to India

After reading a HBR article “Strategies That Fit Emerging Markets,” I was reminded of Yum! Brands recent attempts to take hold of the Indian market as strongly as it did in China. Yum! Brands, the owner/operator of KFC, Pizza Hut, and Taco Bell, have played their emerging market cards well in the last decade as it has taken advantage of consumer acceptance of its fast food dining model. Earlier this month, a writer for the Financial Times detailed this emerging market strategy and one can see that Yum! Brands is appropriately implementing the same effective tactics discussed by HBR writers regarding the entrance and strategy in markets outside of a company’s base.

Yum experienced wild success with its aggressive entrance into the China market in 1987, and the company now boasts a 3,400 outlet growth in the country since 2001. McDonald’s has seen slower growth than Yum, which means that Yum’s strategy team has done a better job at examining the forces that shape a solid emerging market strategy. The most important aspect involving Yum’s successful emerging market strategy is what HBR writers refer to as “Change the Contexts”. Yum realizes the importance of crafting its strategy to the local markets in which it operates. That is why it plans on implementing the same tactic of “changing the contexts” in India, in the hopes that the results will be similar to its China success. One example of Yum “changing the contexts” in India is its plan to tailor each menu by region, such as making its spicy chicken even spicier. This could cause some complex supply chain issues for the fast food chain because of the specific ingredients needed in the different localities, but Yum realizes this and is preempting this by investing heavily in its food sourcing within the regions.

In order for Yum’s India strategy to be successful, it will need to be increasingly cognizant of the external factors that can aid, or prevent, a company in its mission to enter global markets. Yum will surely recall its 1990’s failed attempt in India because of protests over its ingredients and treatment of chickens. The company is planning to take a more effective tactful approach this time around in regards to its localized strategy within India’s regions. Will “Changing the Contexts” tactic be enough for Yum to attract its targeted consumer in India, who is increasingly dining out and whose busy lifestyle demands Yum’s fast food? That will all depend on whether or not Yum’s strategy includes a focus on heavy market research within the specific markets it plans to serve, according to the HBR writers. Yum’s greatest challenge in its India endeavor will be to ensure that there exists no institutional void within the “Product Markets” aspect of its emerging markets strategy. 

Evan Morrison

HBR article: Strategies That Fit Emerging Markets, by Khanna, Palepu and Sinha

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