McDonalds & KFCs Success in China Essay Example | Topics and Well Written Essays - 1000 words - 1

McDonalds & KFCs Success in China - Essay Example In 2004 KFC opened its 1000th restaurant in China, and enjoyed a great deal of success. KFC entered the Chinese market before McDonalds, that’s why the latter had to come up with a strategy to deal with this dilemma. McDonald used the same strategy as of KFC’s. They looked for partners when they entered China; chose Guy Russo as Greater China international relationship partner. International expansion of both the fast food giants lies in franchising. Successful franchising lowers expenses that they would otherwise have to bear and also increases brand loyalty. For instance, KFC entered Asia in 1970. The franchising strategy worked like this; they gave franchising rights to a joint venture company, including two Japanese and one local when they entered Taiwan in 1984. Many claim that KFC’s early entry into China is one of the major factors that contributed to their huge success in terms of revenues and expansion in China. On the other hand, McDonalds used a simila r strategy; in 1971, the first McDonalds restaurant opened in Tokyo’s Ginza district. It was a marketing strategy that was following the rival KFC’s. It seems like economics Game theory; one competitor opens an outlet somewhere, the other follows, strangling the hold on market share. The move into Asia of both the giants seems like a ball game; one makes the move, the other reacts. And reaction was what McDonalds needed in China. KFC was cashing in a lot more than McDonalds. McDonalds with its 1000 outlets in China compared to 2300 of KFCs was raking in less revenue per outlet. Some put it at $900,000 per outlet compared to KFC’s $1.2 Million per outlet. This was the dilemma that McDonald faced. So what was their strategy? One of the many problems that McDonalds faced was either go for replication or adaptation.