The catering industry is one of the important industries and providers of employment in Hong Kong. It is one of the sectors that are dominated by multinational companies, such as Kentucky’s Fast-food chain’s (KFC) and McDonald’s. The purpose of this analysis is to show how KFC presents a good strategic fit for its business to be sustainable in the dynamic marketplace in Hong Kong. It shows that KFC has made an effort to align its menu, stores, and supply chain with the local needs in Hong Kong.
Organizational resources are assets that an organization can use to develop and sustain its competitive advantages (Lecture 5). One of the resources that KFC depends for create a competitive advantage in Hong Kong is the human resources. It depends on local managers and employees to not only execute its strategies but also come up with new innovations for the local market. Their skills have been valuable to KFC’s capacity to introduce new menu items for the locals. The polycentric approach to staffing assists the company to understand the needs of locals and maneuver the market without much difficulties. It also trains people so that they understand its strategy so that they can adapt it well to meet the needs of customers. As a result, human resources are important in KFC’s strategic alignment in Hong Kong.
Another organizational resource that is suited to the Hong Kong market is its stores. One of the reasons is because stores are an important point of contact between the firm and local customers. The ability of stores to appeal to them can have an impact on store traffic, sales, and profits. That is the reason KFC is keen on ensuring that the design of its stores is aligned with the local tastes and preferences. People in the region have certain cultural norms and values that the company should be aware of. An example is the collectivist culture where people like to socialize in areas outside their homes. As a result, stores can form an important setting where families, friends, and groups can meet to socialize.
Another organizational resource that KFC has and that is applicable to Hong Kong market is capabilities related to marketing and organizational management. Its brand reputation as a quality fast food brand is an important selling point for the firm in the region. Locals in the region have certain cultural norms and values that the company should be aware of. It can use its marketing capabilities to adjust its marketing mix to fit with the conditions in the local market (Lecture 11). Specifically, it can adjust its menu, pricing, promotion, and distribution strategies as per the conditions in Hong Kong. The organizational management, mainly the management of the supply chain has an important impact on the acceptability of KFC to the people and the local government. The firm can succeed in this market by ensuring proper alignment between the resources above and the needs of customers.
One of the strategies that KFC has used to fit with the needs locals in Hong Kong is infusion of a western brand with local characteristics. The main goal of managers was to position the restaurant chain in ways that locals would perceive it as part of their community instead of a fast-food chain offering inexpensive western-style foods. One of the strategies that they used to achieve this goal is the launch of traditional dishes that appeal to the local customers. For example, the company introduced spice chicken and nuts mooncake to appeal to the young adults and Millennials in Hong Kong (Lighthouse Independent Media). Others include congee, chicken roll, and Sichuan-style spicy diced chicken. Overall, KFC has made an effort to produce a highly localized menu to complement its U.S. menu and fit with local customers’ taste preferences.
The other strategy that the firm used is the design bigger floor space where customers can linger. Unlike in the US where customers pick fast foods to dine at home, locals in Hong Kong choose to stay where to socialize with family and groups. KFC restaurants in the U.S. are designed mostly for takeout while those in Hong Kong are designed to encourage customers to stay and socialize. In 2019, the firm introduced a new concept store format intended to improve the traditional dining experience with a chic style. It can accommodate up to 150 people at a time and is situated in Causeway, Hong Kong (Global Retail Alliance). This concept creates a trendy socializing environment where customers can create valuable moments. It is another example of how KFC has adapted its strategy to the local needs.
Another strategy that KFC has adopted in Hong Kong is offering customer services that are aligned with the needs of customers. One of the strategies that the firm has used is to source most of its products in the region (Lighthouse Independent Media). This approach not only enables it to reduce costs but also build relationships with locals and the Hong Kong government. KFC continues to work with local suppliers to build their capacity and abilities, including working with them to introduce some U.S. product varieties. The company has also trained its employees to offer exceptional, but locally appropriate customer services. Its program trains employees on how to interact with customers and work with colleagues to achieve the organization’s goals. These strategies have also enabled KFC to create a strategic fit with the Hong Kong market.
Resources for Implementation of Strategies
Implementation of strategies needs effective utilization of an organization’s resources in ways that will create a sustainable competitive advantage. One of the resources that the company needs to succeed in Hong Kong is the human resources. The employees’ knowledge, skills, and capacities are critical to KFC’s continuous innovation. It is through these intangible elements that workers can create new menu items that can appeal to the locals. Moreover, the analysis above shows that the company needs an effective management system that can enable it to align its store design with the local tastes and preferences. In addition, these aspect is associated with the marketing capabilities since markets should perform ample research to understand the needs of customers. Overall, KFC should coordinate all these strategies so as to create a comprehensive strategy that will enable it to succeed in Hong Kong.
The analysis above shows the importance of a strategic fit between an organization and foreign markets. It is evident that KFC has made an effort to align its menu, stores, and supply chain with the local needs in Hong Kong. It has achieved this goal by coordinating its resources, especially human resources, stores, and management and marketing capabilities with the local needs. The firm is recommended to continue studying the market and adjust its strategies to align with the changes.
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Global Retail Alliance. “KFC Hong Kong Tests New Concept Store Format”. GRA, 2019, https://www.gra.world/kfc-hong-kong-tests-new-concept-store-format/. Accessed 22 May 2020.
Lecture 11. Marketing Mix strategies.
Lecture 5. Company Analysis.
Lighthouse Independent Media. “KFC HK: Innovation Is The Key To Capturing Diner Hearts”. Marketing Interactive, 2019, https://www.marketing-interactive.com/kfc-hk-innovation-is-the-key-to-capturing-diner-hearts. Accessed 22 May 2020.