tricon strategy

7/25/2019 Tricon Strategy

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TRICON RESTAURANT

INTERNATIONAL

GLOBALIZATION RE-EXAMIN


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Tricon Global Restaurants

Headquarter in LouisvilleWorlds largest ensemble of fast food restaurants: KFC, i!!a Hut, a

"ell

#$un off from e$siCo in %&''


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T(e Fast Food Restaurant

Revenues of Fast Food industr) *orld*ide *ere estimated at +%- %&&.

/# *as accounted for over -0 of global fast food sales

#ales *ere increasing at about 10 onl) in /#

Level of local c(ains internationali!ation *as quite limited


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T(e #u$$l) #ide

/niformit) in offerings at ever) outlet in t(e c(ain23n average, 4-56-0 of store revenues *ere accounted for ra* mate

for labor, and 4157-0 for rent and utilities2

Rental costs varied considerabl)2

#ignificant semi5variable and fi8ed costs made volume a 9e) to $ro

Franc(ising *as $rominent in fast food2

Largest fast food c(ains relied on a mi8 of franc(ised and com$an)

units for t(eir o$erations2


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T(e emand #ide

Consumer s$ending on fast food *as increasing ra$idl)2Customers *ere attracted to*ards ;merican st)le and e8$erience af

/# fast food c(ains2

Customi!ation of $roduct lines *as essential given variations in loc

Consistenc) and standardi!ation limited abilit) of international c(a


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Ke) Conce$ts = Com$etitors

Four categories are accounted for t(e bul9 of mar9et:"urgers

i!!a

C(ic9en

>e8ican food


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"urgers


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"urgers

"urgers com$rised more t(an one5t(ird of total fast food industr)2Leader in "urgers is >conalds Cor$oration founded in %&11 b) R

conalds total ca$ital e8$enditures *ere earmar9ed outsi

in %&&.2

>conalds international o$erations accounted for 6&0 of com$an)

and 1'0 of its $rofits2

>conalds tried to ac(ieve consistenc) of e8$erience in 9e) $roce

; ma?or milestone *as a franc(isees innovation of "ig >ac in %&


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i!!a


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i!!a

i!!as com$rised of about %10 of total fast food industr), second largest after bi!!a mar9et *as muc( less concentrated t(an burger mar9et2

Ca$ital requirements *ere lo* in $i!!a business2

;lmost +7--,--- *ere required for a $i!!a $arlor and +%1-,---54--,--- for del

business2

T(e leader in $i!!a mar9et is i!!a Hut, o$ened b) an and Fran9 Carne) in %&Wic(ita, Kansas2


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C(ic9en


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C(ic9en

C(ic9en *as less /#5dominated and more internationali!ed2KFC accounted for 110 of mar9et, follo*ed b) o$5e)e *it( .0, and C(urc

02

Leader in quic9 service c(ic9en, KFC, *as o$ened in %&7& b) Colonel Harla

#andars in Corbin, Kentuc9)2

KFC (ad more t(an 1-- units in %&&2


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>e8ican Food


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>e8ican Food

>e8ican quic95service restaurant industr) *as estimated for 10 of mar9et2

ioneer *as Taco "ell, accounting '70 of mar9et s(are2

Taco "ell *as started b) Glen "ell in o*ne), California in %&42

eal2


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Tricon Global Restaurants =Trico

Restaurants


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Histor)

e$siCos restaurant businesses (ad not been successful2Customers s*itc(ed to Coca5cola from e$si2

T(ere *as minimal coordination in o$erations across different coun


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T(e #$in5off


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3$erations

3$erational im$rovement $rogram: CH;># A Cleanliness, Hos$i;ccurac), >aintenance, roduct qualit), and #$eed of service2

>)ster) s(o$$ing $rogram began in %&&2

CH;># also created a standard librar) for o$erating manuals *(i

consisted of four volume set: management, service, $roduct, and equ

;llo*ances (ad to be made for different tastes2


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>ar9eting

"efore s$in5off, t(ere (ad been a lac9 of standardi!ation and s(ared $r

bet*een brands2

#et standards and determined best $ractices2

W(ite $a$er

;nimated colonels *it( voice5overs

Local budgets su$$orted local mar9eting cam$aigns2

Buarterl) brand board meeting *as attended b) all mar9eting manage

s(aring best $ractices2


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Human Resources

TR< ado$ted a restaurant5focused culture2

Tricon em$(asi!ed o*ners(i$ and recognition to a greater e8tent t(an >conals b) encouraging

management to o*n com$an) stoc92

Recruiting and turn5over in ever) countr) *as focused2

evelo$ing countries (ad lo*er turn5over t(an /#2

TR< succeeded in filling its $osition *it(in its ran9s .-5&-0 of time2

m$(asis on local management de$t( made it difficult to move talent across borders2

T(ere *ere onl) %%-5%4- e8$atriates *it(in t(e organi!ation2

Com$ensation and qualit) of life c(allenges furt(er com$ilcated cross5border mobilit)2


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Finance

;llocation of funds across m)riad demands *as t(e main focus2

ac( countr) unit *as evaluated ever) t*o )ears2

#ome as$ects of financing *ere standardi!ed across countries, some varie

countr)2

ealing *it( currenc) fluctuations and determining countr) ris9 $remia *

biggest c(allenges2

Level of so$(istication of financial intermediaries *as im$roved2

Ta8ation issues *ere not standard across countries2

Ca$ital *as raised in /# *it( domestic ban9s in different countries2

#ome franc(isees *ere listed on domestic stoc9 e8c(ange2


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Franc(ising

TR< (ad o$ened franc(ise su$$ort centers in allas, London, and #*(ic( dealt *it( substantial international (eterogeneit) in franc(isi

arrangement2

T(e su$$ort t(at t(e franc(isor $rovided could be different from /#

;sian franc(isees (ad been more inde$endent t(an t(e ones in /#2


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roduct evelo$ment

roduct develo$ment (ad been bundled into R= and Bualit) ;ssude$artment *(ic( reflected t(at it (ad failed to come u$ *it( ne* $

Tricon s$ent almost +4- million )earl) on R=2

T(e resources t(at Tricon did not s$end on *ere earmar9ed for

roduct evelo$ment outside t(e /# *as com$arativel) limited2

TR< made some attem$ts to ta$ into franc(isees ideas about $roduc

innovation2

TR< $roduct develo$ment for KFC (ad been centrali!ed in ;sia2


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Com$arative Cost #tructures for #ele

Fast Food Categories


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>ar9et Dic(es


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>conalds #elected Financial ata

million


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>conalds


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Tricon Global Restaurants #elect

Financial ata E+ million


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Tricon 3rgani!ational #tructur


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Tricons Goals For T(e Future

"ecome reno*ned for an o*ners(i$ and recognition culture t(at deriv

results in t(e industr)2

rive su$erior same store gro*t( t(roug( differentiated brand $osition

innovation2

tricon strategy

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