Yum! International’s Global Success

Yum! International has enjoyed a very positive expansion into the global market. Yum! International is a restaurant chain whose two major brands are the widely popular KFC and Pizza Hut. Another of Yum! International’s more popular brands is Taco Bell, although the list of restaurants owned by Yum! International continues. Yum! International is a multi-national corporation that has a physical presence in numerous countries around the globe. Based in Dallas, Texas, Yum! International has added over 700 stores abroad in each of the past four years; and they plan to meet this goal again this year as well, according to Graham Allan, President of Yum! International since November of 2003. (Ruggless, 2005, p. 52) There are Pizza Huts and KFC’s in more than 120 countries all over the world. (Ruggless, p. 52)

The first Pizza Hut to open outside of the United States debuted in Canada in 1968, while KFC appeared in Australia for the first time that same year. According to Allan, “We have a strong business internationally. We have infrastructure all around the world. Some of it, where we have equity operations, is country-specific. Some of it, in the franchise business, is based around a region.” (Ruggless, 2005, p.52)

Most of the international business taking place through Yum! International comes from franchises. Being one of the fastest forms of international business activities today, franchising allows businesses to cut costs and risks associated with global expansion, as well as get around some trade restrictions. According to Allan, “Equity operations are in a relatively few number of countries.” (Ruggless, 2005, p.52) In fact, around 85% of the 11,000 international restaurants are either franchises or joint ventures. (Ruggless, p. 52)

In June, Yum! International’s KFC entered into a strategic alliance with Russian chicken restaurant chain Rostik Restaurants, Ltd. (Ruggless, 2005, p. 80) A strategic alliance is “a long-term partnership between two or more companies to jointly develop, produce, or sell products in the global marketplace.” (Bovee, Thill, & Mescon, 2005, p. 67) The synergy gained from a strategic alliance can make a major impact on the success of a company that is attempting to expand into a foreign market. Rostik is the largest chicken restaurant chain in Russia and has a significant market in Moscow, especially. (Ruggless, p. 80) By teaming up with a local entrepreneur, KFC and Rostik both gained. They were able to merge together the local chain’s knowledge of the market and customer base along with KFC’s financial support, technology, and product. Both parties appear to be very satisfied with the partnership.

Although the process of international expansion seems to be going very well for Yum! International, there have been some setbacks in the ongoing process. Allan, however, remains optimistic about the company’s international success, despite the problems. He seems to have been prepared for many of the problems with international expansion, giving him extra credibility for doing his homework ahead of time. One example