KKR Case study
KERR has unique dining designs. D. KERR set up franchise and development contracts. E.
KERR has three months training program for franchises and operators. F. KERR is flexible about food control issues. Advantage: a. It is easy to gain reputations. B.
It is easy to earn profit from different countries. C. Cheap labor d. KERR can earn worldwide brand recognition. Disadvantage: a. High risk to franchise in different countries.
B. Currency fluctuation will cause damages to revenues. C. Culture differences may cause inconvenience about control issues like changing menus, Ingredients. D.
Higher food cost overseas. KERR has traditionally expanded by selling franchises. Discuss how the proposed expansion to China is being structured and financed. What are the benefits and risks to this model from the perspective of each of the three stakeholders? For China’s expansion, Kirk’s efforts were spearheaded by Tony Wang and KERR got investment from PICA. Because of the law in China is both clear and uncertain in the area of ownership; and the regulations state that there can’t be 100% foreign ownership in food services. So, KERR had to change the structure to find partners and they can share/transfer employees.
Benefits: it is easy to access in China’s market at the beginning with the help from other organization, partnership. Also, KERR can get Chinese marketing information, product pricing rates and regulations from partners. Large markets in Beijing and Shanghai can gain lots of profits. Risks: it is uncertain if the information is correct, in addition; there is a high risk about the currency changes like how to get soft currency or hard currencies. Besides, market status is different from United States, thus, KERR can’t ensure if the product can meet the needs of Chinese customers.
Equipment importing and language rankings are issues.
PICA Benefits: PICA can expand the market size to other countries, especially in Pacific Rim area. PICA can gain investment reputation and recognition through finding partners. Risks: Complex situations are easily leading to investment failures. Tony Wang Benefits: Expanding his social networks and gain personal achievements, reputations in his careers. Also, being a shareholder of KERR is a tool for manage PICA.
Risks: Investment failures. 3. Which of the 3 Joint venture partners would you choose and why?
I would like to choose PICA, East City and China Great Wall Trading Co. ) PICA is an experienced investment corporation and Wang commented that the 40% ownership is based on financial contributions. Additionally, PICA had three-fold mandate, which focused on investing in established franchise concepts. And PICA is successful structuring franchises in Pacific Rim and it is an advantage for KERR to develop their franchises and products.
2) East City is a city government owned enterprise with 30 different Chinese Style sit-down restaurants and over 100 food retail outlets in Beijing.
They know more about regulations and legislation about food service in China and they re willing to Join the partnership with KERR. Additionally, East City has access to its labor pool and can help KERR transfer or hire enough employees. The most important is that they have complete Chinese market knowledge which can be useful for pricing, marketing efforts, and food ingredients. 3) China Great Wall Trading Co.
Is a major investor-owned international trading companies and very familiar with Western business practices. Besides, they are seeking for new multinational corporations and they have a lot of money support which included hard currency. . Is the time right for Wang to formalize a new partnership? Why or why not? Yes, it is the right time to formalize a new partnership. The case heaped in 1995, during that time, China is lack of new food and beverage elements and everyone is really interested in fresh ideas, especially from western countries. KERR is successful in United States because of its unique products and promotion strategies.
Even though Wang NAS concerns auto winter KERR will De a cutlets enterprise In Canaan, out the fact is, fast food restaurant and fast service will be a popular trend in China after decades.
