KENTUCKY FRIED CHICKEN CASE STUDY OF KFC: ESTABLISHMENT OF A SUCCESSFUL GLOBAL BUSINESS MODEL By the mid 1950s, fast food franchising was still in its infancy when Harland Sanders began his cross-country travels to market “Colonel Sanders’ Recipe Kentucky Fried Chicken.” He had developed a secret chicken recipe with eleven herbs and spices. By 1963, the number of KFC franchises has crossed 300. Colonel Sanders, at 74 years of age, was tired of running the daily operations and sold the business in 1964 to two Louisville businessmen—Jack Massey and John Young Brown, Jr.—for $2 million. Brown, who later became the governor of Kentucky, was named president, and Massey was named chairman. Colonel Sanders stayed in a public relations capacity. In 1966, Massey and Brown made KFC public, and the company was enlisted on the New York Stock Exchange. During the late 1960s, Massey and Brown turned their attention to international markets and signed a joint venture with Mitsuoishi Shoji Kaisha Ltd. In Japan. Subsidiaries were also established in Great Britain, Hong Kong, South Africa, Australia, New Zealand, and Mexico in the late 1970s. Brown’s desire to seek a political career led him to seek a buyer for KFC. Soon after, KFC merged with Heublein, Inc., a producer of alcoholic beverages with little restaurant experience and conflicts quickly arose between the Heublein management and Colonel Sanders, who was quite concerned about the quality control issues in restaurant cleanliness. In 1977, Heublein sent in a new management team to redirect KFC’s strategy. New unit construction was discontinued until existing restaurants could be upgraded and operating problems eliminated. The overhaul emphasized cleanliness, service, profitability, and product consistency. By 1982, KFC was again aggressively building new restaurant units. In October 1986, KFC was sold to PepsiCo. PepsiCo had acquired Frito-Lay in 1965, Pizza Hut in 1977 with its 300 units, and Taco Bell in 1978. PepsiCo created one of the largest consumer companies in the United States. Marketing fast food complemented PepsiCo’s consumer product orientation and followed much the same pattern as marketing soft drinks and snack foods. Pepsi soft drinks and fast food products could be marketed together in the same restaurants and through coordinated national advertising. The Kentucky Fried Chicken acquisition gave PepsiCo the leading market share in three of the four largest and fastest growing segments in the U.S., quick-service industry. By the end of 1995, Pizza Hut held 28% of the $18.5 billion, U.S. pizza segment. Taco Bell held 75% of &5.7 billion Mexican food segment, and KFC held 49% of the $7.7 billion U.S. chicken fast food segment. Japan, Australia, and the United Kingdom accounted for the greatest share of the KFC’s international expansion during the 1970s and 1980s. During the 1990s, ot ...

1. KENTUCKY FRIED CHICKEN
CASE STUDY OF KFC:
ESTABLISHMENT OF A SUCCESSFUL GLOBAL BUSINESS
MODEL
By the mid 1950s, fast food franchising was still in its infancy
when Harland Sanders
began his cross-country travels to market “Colonel Sanders’
Recipe Kentucky Fried Chicken.”
He had developed a secret chicken recipe with eleven herbs and
spices. By 1963, the number
of KFC franchises has crossed 300. Colonel Sanders, at 74
years of age, was tired of running the

2. daily operations and sold the business in 1964 to two Louisville
businessmen—Jack Massey and
John Young Brown, Jr.—for $2 million. Brown, who later
became the governor of Kentucky,
was named president, and Massey was named chairman.
Colonel Sanders stayed in a public
relations capacity.
In 1966, Massey and Brown made KFC public, and the
company was enlisted on the New
York Stock Exchange. During the late 1960s, Massey and
Brown turned their attention to
international markets and signed a joint venture with Mitsuoishi
Shoji Kaisha Ltd. In Japan.
Subsidiaries were also established in Great Britain, Hong Kong,
South Africa, Australia, New
Zealand, and Mexico in the late 1970s. Brown’s desire to seek
a political career led him to seek
a buyer for KFC. Soon after, KFC merged with Heublein, Inc.,
a producer of alcoholic beverages
with little restaurant experience and conflicts quickly arose
between the Heublein management
and Colonel Sanders, who was quite concerned about the quality
control issues in restaurant

3. cleanliness. In 1977, Heublein sent in a new management team
to redirect KFC’s strategy. New
unit construction was discontinued until existing restaurants
could be upgraded and operating
problems eliminated. The overhaul emphasized cleanliness,
service, profitability, and product
consistency. By 1982, KFC was again aggressively building
new restaurant units.
In October 1986, KFC was sold to PepsiCo. PepsiCo had
acquired Frito-Lay in 1965, Pizza
Hut in 1977 with its 300 units, and Taco Bell in 1978. PepsiCo
created one of the largest
consumer companies in the United States. Marketing fast food
complemented PepsiCo’s
consumer product orientation and followed much the same
pattern as marketing soft drinks
and snack foods. Pepsi soft drinks and fast food products could
be marketed together in the
same restaurants and through coordinated national advertising.
The Kentucky Fried Chicken acquisition gave PepsiCo the
leading market share in three
of the four largest and fastest growing segments in the U.S.,
quick-service industry. By the end
of 1995, Pizza Hut held 28% of the $18.5 billion, U.S. pizza

4. segment. Taco Bell held 75% of &5.7
billion Mexican food segment, and KFC held 49% of the $7.7
billion U.S. chicken fast food
segment.
Japan, Australia, and the United Kingdom accounted for the
greatest share of the KFC’s
international expansion during the 1970s and 1980s. During the
1990s, other markets became
attractive. China with a population of over 1 billion, Europe
and Latin America offered
expansion opportunities. By 1996, KFC had established 158
company-owned restaurants and
franchises in Mexico. In addition to Mexico, KFC was
operating 220 restaurants in the
Caribbean, and in Central and South America.
Many cultures have strong culinary traditions and have not
been easy to penetrate. KFC
previously failed in German markets because Germans were not
accustomed to take-out food
or to ordering food over the counter. KFC has been more
successful in the Asian markets,
where chicken is a staple dish. Apart from the cultural factors,

5. international business carries
risks not present in the U.S. market. Long distances between
headquarters and foreign
franchises often make it difficult to control the quality of
individual franchises.
In some countries of the world, such as, Malaysia, Indonesia,
and some others, it is
illegal to import poultry, a situation that has led to product
shortages. Another challenge facing
KFC is to adapt to foreign cultures. The company has been
most successful in foreign markets
when local people operate restaurants. The purpose is to think
like a local, not like an
American company.
As KFC entered 1996, it grappled with a number of important
issues. During the 1980s,
consumers began demanding healthier foods, and KFC’s limited
menu consisting mainly of fried
foods was a difficult liability. In order to soften its fried
chicken chain image, the company in
1991, changed its name and logo from Kentucky Fried Chicken
to KFC. In addition, it responded
to consumer demands for greater variety by introducing several
new products, such as Oriental

6. Wings, Popcorn Chicken, and Honey BBQ Chicken as
alternatives to its Original Recipe fried
chicken. It also introduced a dessert menu that included a
variety of pies and cookies.
Soon after KFC entered India, it was greeted with protests of
farmers, customers,
doctors, and environmentalists. KFC had initially planned to
set up 30 restaurants by 1998, but
was not able to do so because its revenues did not pick up. In
early 1998, KFC began to
investigate the whole issue more closely. The findings revealed
that KFC was perceived as a
restaurant serving only chicken. Indian families wanted more
variety, and the impression that
KFC served only one item failed to enhance its appeal.
Moreover, KFC was also believed to be
expensive. KFC’s failure was also attributed to certain
drawbacks in the message it sent out to
consumers about it positioning. It wanted to position itself as a
family restaurant and not as a
teenage hangout. According to analysts, the ‘family restaurant’
positioning did not come out
clearly in its communications. Almost all consumers saw it as a
fast food joint specializing in a

7. chicken recipe.
KFC tried to revamp its menu in India. Cole slaw was replaced
with green fresh salads.
A fierier burger called Zinger Burger was also introduced.
During the Navaratri festival, KFC
offered a new range of nine vegetarian products, which included
Paneer burgers. Earlier, KFC
offered only individual meals, but now the offerings include six
individual meals, two meal
combos for two people, and one family meal in the non-
vegetarian category. For vegetarians,
there are three meal combos for individuals, along with meals
for couples, and for families.
KFC also changed its positioning. Now its messages seek to
attract families who look not
only for food, but also some recreation. Kids Fun Corner is a
recreational area within the
restaurant to serve the purpose. Games like ball pool and
Chicky Express have been introduced
for kids. The company also introduced meals for kids, which

8. was served with a free gift.
Over the years, KFC had learned that opening an American fast
food in many foreign
markets is not easy. Cultural differences between countries
result in different eating habits.
For instance, people eat their main meal of the day at different
times throughout the world.
Different menus must also be developed for specific cultures,
while still maintaining the core
product—fried chicken. One can always find original recipe
chicken, cole slaw, and fries at KFC
outlets, but restaurants in China feature all Chinese tea, and
French restaurants offer more
desserts. Overall, KFC emphasizes consistency and whether it
is Shanghai, Paris, or India, the
product basically tastes the same.
Questions to consider:
1. Analyze the case and determine the factors that have made
KFC a successful global
business.
2. Why are cultural factors so important to KFC’s sales success
in India and China?

9. 3. Spot the cultural factors in India that go against KFC’s
original recipe.
4. Why did Kentucky Fried Chicken change its name to KFC?
5. What PESTEL factors contributed to KFC’s positioning?
6. How does the SWOT analysis of KFC affect the future of
KFC?
KFC Case Study link
https://www.mbaknol.com/management-case-studies/case-study-
of-kfc-establishment-of-a-successful-
global-business-model/
Marketing Excellence IKEA
IKEA was founded in 1943 by a 17-year-old Swede named
Ingvar Kamprad who sold pens, Christmas cards, and seeds out
of a shed on his family’s farm. The name IKEA was derived
from Kamprad’s initials (IK) and the first letters of the
Elmtaryd farm and the village of Agunnaryd where he grew up
(EA). Over the years, the company grew into a retail titan in

10. home furnishings and a global cultural phenomenon, inspiring
BusinessWeek to call it a “one-stop sanctuary for coolness” and
“the quintessential cult brand.”
IKEA inspires remarkable levels of interest and devotion from
its customers. Each year more than 650 million visitors walk
through its stores all over the world. Most need to drive 50
miles round-trip but happily make the effort in order to
experience IKEA’s unique value proposition: leading-edge
design and functional home furnishings at extremely low prices.
IKEA’s Scandinavian-designed products are well made and
appeal to the masses. To stay relevant and fashionable, the
company replaces approximately one-third of its product lines
each year. Most have Swedish names, such as HEKTAR lamps,
BILLY bookcases, and LACK side tables. Kamprad, who was
dyslexic, believed it was easier to remember product names
rather than codes or numbers.
Besides featuring fashionable and good-quality products, IKEA
stands out in the industry because of its bargain prices. The
company’s vision is and always has been “to create a better
everyday life for the many people.” As Kamprad said, “People
have very thin wallets. We should take care of their interests.”
A high percentage of its customers are college students and
families with children.
IKEA continuously seeks out new ways to run its businesses
more efficiently and pass those cost savings on to the customer.
In fact, it reduces prices across its products by 1 percent to 3
percent annually. How can it do so? For starters, IKEA engages
the consumer on many levels, including having the customer do
all the shopping, shipping, and assembly.
IKEA’s floor plan is designed in a winding, one-way format
featuring different inspirational room settings, so consumers
experience the entire store. Next, they can grab a shopping cart,
pay for the items, visit the warehouse, and pick up their
purchases in flat boxes. Consumers load the items in their car,
take them home, and completely assemble the products
themselves. This strategy makes storage and transportation

11. easier and cheaper for the store.
IKEA has also implemented several company-wide strategies to
keep operational costs low. The company buys in bulk, controls
the supply chain, uses lighter packaging materials, and saves on
electricity through solar panels, low-wattage light bulbs, and
energy from its own wind farms in six different countries. Its
stores are located a good distance from most city centers, which
helps keep land costs down and taxes low.
When IKEA develops new products, its designers and product
developers start with a low price tag first and then work with
one of their 1,350 suppliers around the world to develop the
product within that price range. Designs are efficient, and waste
is kept to a minimum. Most stores resemble a large box with
few windows and doors and are painted bright yellow and
blue—Sweden’s national colors.
Many of IKEA’s products are sold uniformly throughout the
world, but the company also caters to local and regional tastes.
For example, stores in China stock specific items for each New
Year. During the Chinese Year of the Rooster, IKEA stocked
250,000 plastic placemats with rooster themes, which quickly
sold out. When employees realized U.S. shoppers were buying
vases as drinking glasses because they considered IKEA’s
regular glasses too small, the company developed larger glasses
for the U.S. market. After IKEA managers visited European and
U.S. consumers in their homes, they learned that Europeans
generally hang their clothes, whereas U.S. shoppers prefer to
store them folded. As a result, IKEA designed wardrobes for the
U.S. market with deeper drawers.
Showrooms in each country or region vary as well. For example,
managers learned that many U.S. consumers thought IKEA sold
only European-size beds. Beds are very important to U.S.
consumers, so IKEA quickly changed its U.S. showrooms to
feature king beds and a wide range of styles. After visiting
Hispanic households in California, IKEA added more seating
and dining space to its California stores, as well as brighter
color palettes and more picture frames on the showroom walls.

12. In China, IKEA set up its showrooms in small spaces to
accurately reflect the small size of apartments in that country.
As the company expands globally, it is learning that attitudes
towards its core DIY (do it yourself) delivery and assembly
business model vary. In China, for example, consumers do not
want to assemble products themselves and will pay a significant
amount for home delivery and assembly. As a result, IKEA has
added these services, and sales in Asia have taken off. The
company plans to implement the same strategy in India, where
DIY is also less common.
IKEA is known for its quirky marketing campaigns, which help
generate excitement and awareness of its stores and brand. It
ran a campaign inviting customers to be the “Ambassador of
Kul” (Swedish for “fun”), but in order to collect the prize, the
contestants had to live in an IKEA store for three full days
before it opened, which they happily did.
Thousands of people will line up for a chance to win prizes and
IKEA furniture. In Sweden, IKEA launched a Facebook page for
the manager of a new store. Anyone who could tag his or her
name to an IKEA product on the profile page won that item. The
promotion generated thousands of tags.
IKEA has evolved into the largest furniture retailer in the
world, with approximately 350 stores in 43 countries and
revenues topping €27.9 billion, or $36 billion, in 2013. The
majority of sales still come from Europe, but the company has
aggressive plans to expand the $11 billion brand further into
Asia, India, and the United States.
Sources: Kerry Capell, “IKEA: How the Swedish Retailer
Became a Global Cult Brand,” BusinessWeek, November 14,
2005, p. 96; “Need a Home to Go with That Sofa?,”
BusinessWeek, November 14, 2005, p. 106; Ellen Ruppel Shell,
“Buy to Last,” Atlantic, July/August 2009; Jon Henley, “Do
You Speak IKEA?,” Guardian, February 4, 2008; “Innovative
Retailers: IKEA,” Retailinsider.com/PCMS, March 29, 2012;
Jenna Goudreau, “How IKEA Leveraged the Art of Listening to

13. Global Dominance,” Forbes, January 30, 2013; IKEA,
www.ikea.com.
Marketing Excellence Microsoft
Microsoft is the world’s most successful software company. Bill
Gates and Paul Allen founded it in 1975 with the original
mission of having “a computer on every desk and in every
home, running Microsoft software.” Today, Microsoft is the
fifth most valuable company in the world and has a brand value
of $61.2 billion.
In the early 1980s, Microsoft developed the DOS operating
system for IBM computers. The company leveraged this ini tial
success to sell software to other manufacturers, quickly
becoming a major player in the industry. Initial advertising
efforts communicated the company’s range of products, from
DOS to Excel and Windows, and unified them under the
Microsoft brand.
Microsoft went public in 1986 and grew tremendously over the
next decade as the Windows operating system and Microsoft
Office took off. In 1990, Microsoft launched Windows 3.0, a
completely revamped version of its operating system, including
applications like File Manager and Program Manager that are
still used today. It was an instant success; Microsoft sold more
than 10 million copies of the software within two years, a
phenomenal accomplishment in those days. In addition,
Windows 3.0 became the first operating system to be
preinstalled on certain PCs, marking another major milestone
for the industry and for Microsoft.
Throughout the 1990s, Microsoft’s communication efforts
convinced businesses not only that its software was the best
choice but also that it should be upgraded frequently. Microsoft
spent millions in magazine advertising and received
endorsements from the top computer magazines in the industry,

14. making Microsoft Windows and Office the must-have software
of its time. The 1998 slogan “Where Do You Want to Go
Today?” promoted not individual Microsoft products like
Windows 98 but rather the company itself, communicating that
Microsoft could help empower companies and consumers alike.
During the mid-1990s, Microsoft entered the notorious “browser
wars” as companies struggled to find their place during the
Internet boom. Realizing what a good product Netscape had in
its 1995 Navigator browser, Microsoft launched its own,
Internet Explorer later the same year. By 1997, Explorer had
grabbed 18 percent of the market.
Over the next five years, Microsoft took three major steps to
overtake Netscape. First, it bundled Internet Explorer with its
Office product, which included Excel, Word, and PowerPoint.
This meant that consumers who wanted MS Office automaticall y
became Internet Explorer users as well. Second, Microsoft
partnered with AOL, which opened the doors to 5 million new
consumers almost overnight. Third, Microsoft used its deep
pockets to ensure that Internet Explorer was available free,
essentially “cutting off Netscape’s air supply.” By 2002,
Netscape’s market share had fallen to a meek 4 percent.
Microsoft’s fight to become the browser leader was not without
controversy; some perceived that the company was
monopolizing the industry. As a result, Microsoft faced antitrust
charges in 1998 and numerous lawsuits based on its marketing
tactics. Charges aside, the company’s stock took off, peaking in
1999 at $60 per share. Microsoft continued to release new
products, including Windows 2000 in 2000 and Windows XP in
2001. It also launched Xbox in 2001, marking its entrance into
the multibillion-dollar gaming industry.
Over the next several years, Microsoft’s stock price tumbled by
more than $40 a share as consumers waited for the next
operating system to be released. During this time, Apple made a
strong comeback with consumer-friendly products like Mac
computers, iPods, iPhones, and iTunes. Apple also launched a
successful marketing campaign titled “Get a Mac” that featured

15. a smart, creative, easygoing Mac character alongside a geeky,
virus-prone, uptight PC character. Apple’s campaign
successfully converted many consumers and tarnished
Microsoft’s brand image.
In 2007, Microsoft launched the Vista operating system to great
expectations; however, it was plagued by bugs and problems
and the company’s stock and image continued to slide, helped
by the worldwide recession of 2008–2009. In response,
Microsoft created a campaign titled “Windows. Life Without
Walls” to help turn its image around. Its new message—that
computers with Microsoft software were more cost-effective
than the competition—resonated well in the recession.
Microsoft also launched a series of commercials that boasted,
“I’m a PC” and featured a wide variety of individuals who
prided themselves on being PC owners, hoping to improve
employee morale and customer loyalty.
In 2009, Microsoft launched Windows 7, an improved operating
system, with the campaign “Windows 7 was my idea.” Four
years later, it was operating more than 30 stores like Apple’s
across the United States and Canada. Jonathan Adashek, general
manager of Communications Strategy, explained, “We’ve
welcomed more than 15 million customers and counting so far,
and have learned a lot from them. Having this direct connection
to our customers has really helped us better understand their
tech needs.” Travis Walter, general manager of Microsoft’s
International and New Store Formats, agreed, “In person, you
get a very different experience and it’s one we’ve been very
delighted to provide. When you see our technology in person—
when you can touch and feel it—a light goes off.”
After the recession came to an end, Microsoft’s image and stock
started to recover, thanks to the success of its retail stores,
effective marketing, and a wide range of new product launches.
Microsoft went after Google’s dominant position in the search
marketplace, for instance, with a search engine called Bing, and
it entered the growing mobile industry with its Windows Phone
mobile operating system. The company’s 2011 expansion into

16. smart phones surprised many analysts, but Microsoft hoped the
smart phone and Windows Phone mobile OS would forge a
strong connection with its consumers around the world. It
continued its innovation momentum in 2012 with the launch of
Windows 8, Windows 8 Phone, and a computer called Surface
Tablet. The tablet impressed consumers with a detachable
keyboard that also served as its protective cover.
Today, Microsoft offers a wide range of software, mobile, and
home entertainment products. Its most profitable products
continue to be Microsoft Windows and Microsoft Office, which
bring in approximately 80 percent of its $86 billion in annual
revenue.
Sources: Interbrand, “2014 Best Global Brands Report,”
www.interbrand.com; Stuart Elliot, “Microsoft Takes a User-
Friendly Approach to Selling Its Image in a New Global
Campaign,” New YorkTimes, November 11, 1994; “Todd
Bishop, “The Rest of the Motto,” Seattle Post Intelligencer,
September 23, 2004; Devin Leonard, “Hey PC, Who Taught You
to Fight Back?” New York Times, August 30, 2009; Suzanne
Vranica and Robert A. Guth, “Microsoft Enlists Jerry Seinfeld
in Its Ad Battle Against Apple,” Wall Street Journal, August 21,
2008, p. A1; Stuart Elliott, “Echoing the Campaign of aRival,
Microsoft Aims to Redefine ‘I’m a PC,’” New York Times,
September 18, 2008, p. C4; John Furguson, “From Cola Wars to
Computer Wars—Microsoft Misses Again,” BN Branding, April
4, 2009; Microsoft press release, “Microsoft Retail Stores
Maturation: Going Behind the Scenes,” November 8, 2012.
Marketing Excellence Tesco
Tesco hasn’t always had a reputation as a customer-friendly
retailer. Back in the early 1980s, it was a UK grocery store
chain that suffered from a reputation for “piling it high and
selling it cheap” and trailed behind Sainsbury’s, a more upscale

17. UK retailer. Only when the company came under the leadership
of Ian MacLaurin did it began to reinvent itself as a consumer -
friendly brand.
In 1983, Tesco began the long process of updating its stores and
improving its product selection. Over the next decade, it took
on Sainsbury’s head on with brighter stores, higher-quality
products, affordable prices, and more locations. Between 1990
and 1992, Tesco launched 114 separate initiatives to improve
the quality of its stores, including adding baby-changing rooms,
stocking specialty items such as French free-range chickens,
and introducing a value-priced line of products.
The company also developed a well-received marketing
campaign titled “Every Little Helps” that helped communicate
these improvements and enhance its brand image in the public
eye. The campaign included 20 ads, each focused on a different
aspect of its new approach: “Doing right by the customer.” As a
result, by 1995, Tesco had attracted 1.3 million new customers
and its market share surpassed Sainsbury’s for the first time,
making it the new market leader.
In 1996, Terry Leahy took over as CEO. During his tenure,
Tesco grew from the third-largest UK supermarket chain, with
$7 billion in sales, to the third-largest retailer in the world, with
more than $100 billion in sales.
Under Leahy’s guidance, Tesco introduced its Clubcard
frequent-shopper program, an initiative that helped make the
company a world-class example of how to build lasting
relationships with customers. The Clubcard not only offered
discounts and special offers tailored to individual shoppers but
also acted as a powerful data-gathering tool, enabling Tesco to
understand customers’ shopping patterns and preferences better
than any competitor.
Using Clubcard data, Tesco created a unique “DNA profile” for
each customer based on shopping habits. It classified each
product a customer purchased on as many as 40 dimensions,
including price, size, brand, eco-friendliness, convenience, and
healthiness. Based on these profiles, Tesco shoppers received

18. one of 4 million variations of the quarterly Clubcard statement,
containing targeted special offers and other promotions. The
company also installed kiosks in its stores where Clubcard
shoppers could get customized coupons.
The Clubcard data helped Tesco run its business more
efficiently too. Tracking Clubcard purchases uncovered each
product’s price elasticity and helped set promotional schedules,
which saved Tesco more than $500 million. Tesco used its
customer data to pick the range of products and type of
merchandising for each store and even to choose the location of
new stores. Within 15 months of introduction, more than 8
million Clubcards had been issued, of which 5 million were
used regularly.
Next, Tesco expanded its powerful private-label program with
three distinctive brands in various price ranges; “Finest” offered
the best-quality item at the highest price, “Mid-range” targeted
the middle range, and the “Value” product line offered the best
bargain prices available. Through this simple system, consumers
came to expect a certain quality at variable prices.
By 1999, the company’s market share in the United Kingdom
rose to 15 percent, and it was voted Britain’s most admired
company. In the following years, Tesco continued to apply its
winning formula of using private labels and customer data to
dominate the British retail landscape.
It also moved further into “big-box” retailing of general
merchandise, or nonfood products. This strategic growth plan
not only provided additional convenience to consumers who
preferred shopping under one roof but also improved overall
profitability. In 2003, the average profit margin for nonfood
products was 9 percent versus 5 percent for food products, and
nearly 20 percent of Tesco’s revenues came from nonfood
items. That year, the company sold more CDs than Virgin
Megastores, and its apparel line, Cherokee, was the fastest-
growing brand in the United Kingdom. By 2005, the company
had a 35 percent share of supermarket spending in the United
Kingdom, almost twice that of its nearest competitor, and a 14

19. percent share of total retail sales.
Tesco’s stores are now categorized into seven different formats,
depending on where they are located and whom they target:
Tesco Extra, Tesco Superstores, Tesco Metro, Tesco Express,
One Stop, Tesco Homeplus, and Dobbies. Tesco Extra is the
largest and offers a wide range of food and nonfood products
and services like optical centers. Tesco Superstores are standard
large supermarkets that offer some nonfood products. Tesco
Express stores are neighborhood convenience stores that stock
mostly higher-margin products and everyday essentials.
Tesco continues to diversify its product and service offerings to
reach more consumers. The company partnered with existing
telecoms to create Tesco Mobile and Tesco Home Phone and
launched Tesco Broadband to provide Internet access to homes
and businesses. In addition, it now offers insurance policies,
dental plans, music downloads, and financial services. In 2008,
Tesco joined forces with the Royal Bank of Scotland to create a
banking division, Tesco Bank.
Its aggressive expansion into nonfood items was a departure
from Tesco’s core focus on groceries. That, and its
determination to expand in Asia, India, and the United States,
led to troubled times during the recession and a 20 percent slide
in its stock price in 2010. Quality within the supermarkets
slipped significantly, and customers were turned off by the
abundance of nonfood items in their stores during a poor
economy. Tim Green, retail analyst at Brewin Dolphin Ltd.,
explained, “Tesco got a little bit distracted by thinking of
China, the U.S., wider Asia, Central Europe, Tesco Bank, Tesco
Telephony. But that is not acceptable, because U.K. food is the
main profit generator.”
In 2011, Tesco came under the leadership of a new CEO, Philip
Clarke, who set out to turn the company around immediately
and revive its focus on supermarkets and customer service.
First, he cut back on expansion programs, pulling out of Japan
completely and slowing growth in the United States, India, and
the rest of Europe. Next, he announced a major overhaul of the

20. supermarket chains. Tesco hired and trained tens of thousands
of employees who were dedicated to serving customers in the
produce and meat departments, which had recently been
deprived of sufficient staff.
The company relaunched its Tesco Value brand as Everyday
Value and invested significantly to improve the quality and
appearance of hundreds of Tesco products without raising the
price. It renovated many of its brick-and-mortar stores to give
them a homier feeling through better lighting, cleaner shelves,
new fixtures and signs, warmer colors, and more spacious
produce areas. Tony Hoggett, managing director of Tesco
Superstores, explained how small things added up to make a big
difference. “It really isn’t rocket science. We’ve improved the
look and feel of our stores to make them a much warmer,
friendlier place for our customers to shop in.”
In 2012, Tesco’s revenues topped $108 billion and before-tax
profits reached $5.7 billion. Today, Tesco is the largest British
retailer measured by both sales and market share (31 percent)
and the third-biggest company in the world after Walmart and
Carrefour.
Sources: Tesco Annual Report 2012; Richard Fletcher, “Leahy
Shrugs Off Talk of a ‘Brain Drain,’” Sunday Times (London),
January 29, 2006; Elizabeth Rigby, “Prosperous Tesco Takes
Retailing to a New Level,” Financial Times, September 21,
2005, p. 23; Hamish Pringle and Marjorie Thompson, Brand
Spirit (New York: John Wiley & Sons, 1999); Paul Sonne,
“Tesco Loses Its Appetite for Growth,” Wall Street Journal,
November 10, 2012, B.3; Renee Schultes, “U.K. Grocers
Locked in Coupon Warfare,” Wall Street Journal, August 29,
2012; Harry Wallop, “Tesco Ditches 1bn Value Range,” BST,
April 4, 2012; Peter Evans, “Britain’s Tesco Tries Out New
Retail Recipe,” Wall Street Journal, July 9, 2012, B.8; Julia
Werdigier, “Tesco to Invest Heavily in a Domestic Revival,”
New York Times, April 19, 2012; Terry Leahy, “Lessons from a
Retail Veteran,” Wall Street Journal, June 27, 2012.

21. points)
A Format
CASE STUDY PAPER RUBRIC
Campbellsville Unlversity School of Buliness and Economics
l. Compleæd in word
application, typed, double
spaced, on standard süc
paper with margins of one
iuch on all sides. Comolies
fi:lly with the assigrureut.
(10 poinrs)
2. Ruuing hoad and page
number ia upper right-haod
comer with five spaces
botween runaing head ard
page number. Complies
firlly with the assignmenr
(I0 poins)
3. On separate page, the
word "Abstract,' cente¡ed oD
paper followed by 75-100
word overvieu Comolies
fully with rhe assignnent.
( 10 points)
4. Major headiags oentered
on page. Every word
capiblized excspt articles,

22. short prepositions, and
coordinating conjuactions.
Complies fully with rhe
assiFment. (5 points)
Levels of Achievement
L Completed ia word
application, typed double
spaccd, on standard sizo
papor with margix of one
inch on all sides. Complios
mosdy with the assignmenl
(8-9 points)
2. Runniug hoad and page
nunber in upper right-hand
oomer wità five spaces
botween ruaning head and
page number. Complies
mosdy with the assigarnent.
(8-9 points)
3. On separate page, the
word "Abstracf' centered o¡
paper followed by 75- I 00
word overview. Complies
mostly ¡¡ith tàe assignment.
(8-9 points)
4. Major headings centered
on page. Every word
capiølizod oxcept artioles,
short prepositions, and
coordinating conjunctions.
Complies mostly with the

23. assigunent. (4 points)
l. Completed in word
application, typed, double
.spaced, on standard size
paper wit! margirc of one
iaoh on all sidos. Complies
adoqustely witl the
assigamenl (7 points)
2. Running head ald page
nunber in upper right-haad
corner with fivc spaoes
betweeu ruDljng head a¡d
page number. Complies
adequately with the
assigDment (7 points)
3. Oa separate page, the
word "Abstraof' centered oD
paper followed by 75-100
word overview. Complies
adequatcly wirh tbe
assigDmenL (7 poiats)
4. Major headings centered
on page. Every word
capitalized exccpt articles,
short prepositions, and
coordinating oorjunctions.
Complies adequately with
the assiguent. (3 points)
Unacceptable
l. Completed in word

24. applicatioo, t¡'ped, double
spaced, on sta:rdard size
paper with margias of one
inch on all sides. Does not
comply adequaæly with tbe
assignment (<7 points)
2. Runaing head and page
aumber in upper right-haad
comer with five spaces
between runaing head and
page number. Does rtot
comply adequaæly with the
assig xenL (<7 points)
3. On separate page, the
wo¡d "Abstract" centered
on paper followed by 75-
100 word overview. Does
not comply âdequately u¡it¡
the assig¡meût (<7 poinæ)
4. Major headings centered
on page. Every word
capitalizod excclrt articles,
short prepositions, and
coordinating conjunctions.
Does not comply with the
assignûrent (<3 points)
5. Visuals labeled with a¡
A¡abic nume¡al a¡d include
title on separate lines above
the visual flush left. Sou¡co

25. provided below the øble
flush left. Complies firlly
with the assiFrtrent.
(5 poiats)
6. References on sqlarate
(last) page, title conteröd
one inch from top, double
spaced, and alphabetized by
last name ofautho¡s. If
author is unkrow¡,
alphabotize by first word of
tbe tide (excluding A, An,
The). References properly
used in the text and on
roference page. Complies
firlly with the assignment
(10 points)
CASE STUDY PAPF'R RUBRIC
Campbellsville University School of Business and Economics
5. Visu¿ls labeled with an
A¡abic numeral and i¡clude
title on scparate lines above
tho visual flush left. Sou¡ce
provided below the table
flush leñ, Complios mostly
with the assignnent.
(4 poilts)
6. Reforences on se,parate
(last) page, title certered
oae inch ûom top, double
spaced aad alphabotÞed by
last nan¡e of autho¡s, If

26. autho¡ is u¡loo¡.¡,
alphabetiza by first word of
the tide (excluding A, An"
The). References properly
used in the text and on
reforence page. Complies
mostly with the assignment,
(8-9 points)
Content (50
points)
). V$uals labeled ¡¡ith, a¡
A¡abic ¡r¡mer¿l and i¡clude
tite on separaæ lines above
the visual flush left. Sou¡ce
provided below the table
flush left. Complies
adequately with the
assigDrnenl (3 poi*s)
6. Referenoes on scparate
(last) page, title coatered
one inch from top, double
spaced, and alpbabetized by
last name ofauthors. If
author is unknow4
alphabotize by first word of
the title (excluding , A.n,
The). Roferences properþ
usod in the æxt a¡d o¡
reference pagc. Complies
adoquately with the
assignment (7 points)
1. Provides oompelling

27. supporting a¡guments,
ovideace, ald exanplos
presented in the case study.
(10 points)
2. Is free oferro¡s in
gramrnar, punctuation, word
choioe, spellhg and format.
(15 points)
5. Visuals labeled with an
Ar¿bic numeral and include
tidé on separate lines above
the visual flush left. Sou¡ce
provided below the table
flush left. Does not comply
with the assignnenr
(<3 poins)
6, R€feretrces on separ¿te
(last) page, title c€nt€red
one inch from top, double
spaccd and alpbabetÈed by
last ¡ame ofautho¡s. If
author is unhowa,
alphabetize by first word of
the title (exclu¡ing 4 4q
The). References properþ
used in the text and o¡
reference pago, Docs not
comply with the
assignment (<7 points)
l. Providcs adequate
zupporting arguments,
evideuce, and examples

28. presented in t¡.o case study.
(8-9 poi¡ts)
2. Contai¡S mi¡imal crrorS
in gnmmar, punctuation,
word choice, spelling and
formar (12-14 poinb)
¡. ,Prol'ldes med.iosre
supporting a¡gumcDts,
evidenoe, aad examples
preseatcd ir the case study.
(7 pôiots)
2. Co¡tai¡s numorous srro¡s
in grammar, puactuation,
word choice, çelling aud
format which are distracting
to tåc readc¡. (9-1 1 points)
i. Providas inadequate
supportingargumcnts,
evideacc, aad cxanples
presented iD the case study.
(<7 points)
2. Cont¿ins numerous errors
il g¡amroar, punctuation"
word choice, spelling and
format which confi¡se the
rcader. (<7 poiDts)
rtent Cont'd
chart, table, or map to

29. illusûate something in the
pape¡. (10 poi¡rs)
4. Recognize an ethical
issue from the case study or
Êom ¡ese¿¡ch ofthe
company. Evalu¿te this
issue &om a Christiar point
of view. Coraplies fi.rlly
with tåe assignmenl
(5 poi¡ts)
5. The introduotio¡, body
and conclusion ofthe paper
a¡e sound.
( l0 poiats)
CASE STIIDY PAPER RUBRTC
Campbellsville University Schoot of Busi¡ress and Economics
cha:t, lable, or map to
illusn-ato soo.ethi.ng in the
paper. (8-9 points)
4. Reoognize an ethical
issue Êom the case study or
from resea¡ch of the
oompany. Evaluate tlis
issue from a Christian point
of view. Complies mostly
with the assignment,
(4 points)
5. The intoductioq body
and conclusion ofthe paper
aro adequate.

30. (8-9 points)
not adequately illustate the
htent intended pu+ose.
(7 points)
4. Recognize an ethical
iszue Êom the case study or
Êom resea¡ch ofthe
company. Evaluate this
issue ûom a Christian point
of view. Complies
adequaæly with the
assigûnoDL (3 poiats)
5. Has partial or inadequaæ
iatoduction, bod¡ or
conclusion.
7 points)
t¿ble, or map to illustrate
something in the paper.
(<7 poinæ)
4. Recognize an ethical
issue Êom the case study or
from resea¡ch ofthe
Company. Evaluate this
issue from a Christian point
ofview. Does not conply
wilh the assiguent. (<3
points)
5. The introduction, body
and conclusion of the paper
a¡€ iDadequate. (<? points)

31. Ðoes Dot include a