FOREIGN DIRECT INVESTMENT

Foreign Direct Investment

Foreign Direct Investment

The major problems of KFC exist in China

When the KFC enters Chinese market for the huge profits, there are huge problem and challenging waiting for them.

First of all, the period which KFC decided investing to the Chinese market, the Chinese government just opens the business opportunities to all around the world. But there is still some planned economy policy left in China. According to the foreign investor, although there is huge potential market waiting for them in China, but it also has some unstable problem or essential from many factors. Although China is a huge, high-level profits market, but at the beginning it still needs the resource of the management, and cannot guarantee if the foreign investor can get the money back to the pocket. At that time which Tony Wang want to involve in to China market, the income of the Chinese is lower than other countries around the world, and the Chinese market is controlled by the government by the law called “limiting the foreign business policy”.

Second, the beginning of entering china market, there is no previous experience as the example. Everything starts with zero. And there is also human resource problem existing in the southern Asia area of the KFC-lacking of the management people. Tony Wang does not have enough people to adjust around the Asia area, the backup resource of the HR is not enough.

Then, KFC is known as the “western fast food”, is different from the Chinese traditional food custom. So he also wonders if the Chinese consumers can accept the KFC. If they can, it still needs a long time to achieve that. And the culture of the China is different from US, so the KFC franchise store model is not fit for Chinese market.

The quality of the chicken is very important for the KFC: the cooking method for the KFC is different from others, it needs 11 plants and chicken which is just born 7 weeks. As KFC just entered China, it's really hard to reach that. And all the potatoes for the KFC is hard to find in China, they need to import from US, so to find a good partner and can provide the chicken and potato in china became the most important thing to do.

Major concern financing for expansion into China

From the case, we can see that, there are 2 major problems that Chief Financial Officer has to face. The first one is the training of the employees and the managers.

For the short term strategy, I suggest giving all the employees an orientation meeting, we have to let all the employees know, what we have to do in the store. Like mentioned in the case, “a staff does not know when to mop the floor,” we must make all the employees motivated themselves. And for the short term plan, a disciplinary program and a mystery shopper plan must be added to the day-to-day work. These 2 plans will make the employees motivated themselves really ...