2. Goodson
2
The Yum Brand is currently focusing on major strategic acquisition mergers expansion
along with cost pressure easement methods to adhere to economies of scale realization within
local responsiveness system pressures. Throughout the spectrum of globalization Yum has
predominantly kept prestige consumer surplus towards the strategic significance of providing
value with low cost mechanisms. The theory behind the realization to economies of scale has
effect in Yum Brand global web creation. The implementation of franchisees globally with
regard to Taco Bell’s operation establishment productivity motion is the concentration. The
theme for preferences to be advantageous with regard to comparative advantage is to license
franchises rather than to direct exports.
The approach to this kind of formula is the realization that the parent company Yum
would be experiencing lower cost pressures with a foreign exchange market. The kind of foreign
market exchange is an international stock that provides an insurance coverage toward total and
systematic risks. The inductive reasoning is broadening their global reach by opening more than
1,000 Taco Bell restaurants in 40 countries. A fine ideology strategy use to meet a broad demand
base within the next six years accordingly to consumer preference is the objective. Forces to be
reckoning with to competitively compete with the likes of Restaurant Brands International Inc.
and Dunkin Brands Group Inc., parent companies.
A perspective view on the design goal to accommodate is to first notice where Yum
Brand’s Taco Bell is forecasting to be in terms of establishment productivity. The Yum Brand
Company recently opens a new KFC establishment every 8 hours, however KFC has the ability to
open 1 every 5 hours going forward. Pizza Hut opens 2 restaurants a day currently in overseas
markets and plans to open 3 a day by 2020. A corporate responsibility embraced with
considerable appeasement with regards to Yum’s shareholders as well. An experience curve
realization due to the international expansion regime is to then increase company revenue while
consumer surplus is reasoned with value and relative low prices.
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The consolidation strategy which Yum Brand expresses as a leaner or slim concept while
realizing global reach is used from a shift or merging motion. The motion is transforming
restaurant ownership into license franchises. The theory behind the swift shift to franchises is
the volatile easement module that China faces relentlessly. The companies 10,000 restaurants
will fall to a narrow 3,000 once the China business becomes their own stand-alone establishment.
This strategic easement is how Yum deems fit to be a well-known establishment within the long-
term aspect of the economic specter.
We are going to view the wide range aspect of theories to why KFC China experience
volatility in sales in recent years. First, the concepts of the emergence of competitors tend to shift
real-time changes in strategy, which stem from local responsiveness and cost reduction pressures.
When competitors experience advantages with subsidiaries that aid Yum’s competitors drives
price and cost down shifting consumer taste and preference to Yum competitor or competitors.
Thus pushing Yum competitor further along the experience curve at a rapid advantage that Yum
cannot compete.
Second government regulation from WTO such as food safety has resulted to China’s
volatility. The increase to provide good standardized consummation products to consumers
increases the cost side to Yum Brands within China. The realization to subsidiary leveraging
and food safety regulation are the major causes to China’s volatility effect accordingly to their
history of data.
Establishments reason for a producer brand taste and preference to a theorized asset light
structure is the known advantage to remunerative realization. A maintainable stream to capital
inflows in the acts of dividends or other payment types with regard to foreign direct investments
appeals to establishments more than spot transactions. A kind of forward exchange market
brings a national security appeasement to the financials of restaurant establishments. A certain
4. Goodson
4
coverage that protects and gives a psychological advantage to be reassured that capital inflows
will be maintained. This capital inflow is in the concentration of “percentage franchisee sales.”
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Reference:
Jargon, Julie. (2016). “ Yum Extends Global Reach”. DOW Jones &
Company Inc,. Retrieved October 14, 2016 from
http://www. nasdaq.com/article/yum-extends-global-reach--wsj-
20161012-00037
