KFC-JAPAN Written Case # 2 Prepared By: Dana Pearson (906927) Prepared For: Dr. Colin Boyd Date: Nov 7, 1999 Class: MBA 828. 3 Dick Mayer, the CEO of KFC is faced with making some tough decisions. KFC is in the midst of change. Faltering U. S operations in the late 1970’s lead to the implementation of strategic planning processes.
These processes proved to be very effective in turning around a potentially disastrous situation. Mayer is currently wondering if and how these strategies should be adapted to KFC’s international operations, in particular KFC-Japan. Loy Weston has built KFC-Japan from the ground up. Weston is an entrepreneur by nature. This is clearly evident by his forte into airplane leasing, coffee machine sales and various other ventures. Having the characteristics of an entrepreneur, Weston savors autonomy.
Accordingly, he has built KFC-Japan while playing by his own rules. Weston has taken the liberty to change layouts, product offerings and marketing styles; all without consulting head office. Opposing management philosophies have caused Weston to develop a “we-they” mindset. He is very resentful and aloof towards corporate head office.
This is evident in his obvious disdain for head office visits, required reporting style and advertising styles. This has resulting in a communication breakdown between Weston and corporate headquarters. Weston views headquarters attempt to introduce a strategic planning process to the Japanese market as unnecessary. He feels that corporate headquarters has no feel for the Japanese culture or business environment, yet are trying to impose their management philosophies. Management on the other hand does not want to impose a ridged system. They want to use strategic planning to provide a set of guidelines.
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Since its inception, KFC has evolved through several different organizational changes. These changes were brought about due to the changes of ownership that followed since Colonel Sanders first sold KFC in 1964. In 1964, KFC was sold to a small group of investors that eventually took it public. Heublein, Inc, purchased KFC in 1971 and was highly involved in the day to day operations. R.J. Reynolds ...
Management is flexible in that they want a system that is adapted to best fit what was needed for the Japanese market place. They wanted a system that would ensure consistency in terms of product quality and performance measures. These differences in opinion are due to Weston’s perception of the situation as a power struggle. Weston is concerned that he will be reduced to the position of an order-taker, something that is very hard for an entrepreneurial spirit to accept. Weston has made no effort in developing a working relationship with head office. He has segregated himself and this has lead to the defensive position that he is currently in.
I believe that headquarters and Weston have irreconcilable differences. Weston has lost sight of the fact that he is part of a larger organization. He has developed animosity towards corporate leaders and their ideals. As well, Weston has not been able to effectively expand into the Taiwan, Korean, Thailand, and Hong Kong market places. All these areas had been rated as high priority counties by market potential analysis. Accordingly, I would recommend that Weston be forced into “early retirement.” Changes should also be made at headquarters.
An open and effective communication network should be established. This must start with top management and permeate down throughout the organization. Management must clearly and explicitly outline responsibilities and expectations. They must create an environment of trust, and accountability.
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Much of our knowledge of human resource management involves large organizations with dedicated human resource departments and staff, but what about small organizations? Small organizations recruit, compensate, do performance management, and many of the same tasks as large organizations. There are certain things that can be mapped effectively from large to small organizations, but what happens to ...
Emphasis on multidisciplinary teamwork should be the cornerstone of KFC’s corporate culture. This mindset should improve the communication and accountability between all facets of the organization. Simultaneously, headquarters should also closely examine their recruiting criteria. It is quite evident that Loy Weston was not a good fit with the current management style. KFC should work on recruiting people who are free thinkers, yet team players; people who can think “outside the box”, yet are accountable for what is expected of them. Continued growth in Japan is a concern for Dick Mayer.
Mayer realizes that a dogmatic approach to managing Japan’s operations is going to prove ineffective. However, he does want to work within a semi-flexible strategic planning framework. He wants to develop a level of product and quality which is consistent across KFC’s global operations. Accordingly, Loy Weston’s replacement should be someone who has been exposed to KFC’s new management philosophies.
The new person must be a good communicator, flexible and comfortable with the concept of structured and researched growth. Mayer realizes that it is going to take culturally sensitive analytical research in order to decide where and how to expand the Japanese operations. Expansion into Korea, Taiwan, Thailand, and Hong Kong are also concerns for Mayer. These areas have been identified as areas of high potential growth.
I suggest that Mayer hold off on making any expansions into these countries. Correcting the situation in Japan is going to consume a lot of time and resources. As well, lessons learned form Japan could possibly be extrapolated to these other markets. In the meantime, Mayer should commit resources to exploring the markets of these countries. Solid analytical research will provide insight into the competitive environment that KFC will face in these countries.
In addition to performing an environmental analysis, Mayer could use this time to select and groom managers to run these various operations. This would allow him to select individuals who are consistent with his management style, and who will fit well into KFC’s corporate culture. Effective leadership, as well as deliberate and researched growth should position KFC well for the future. Loy Weston, although described as a real go-getter, is more trouble than he is worth.
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Kentucky fried Chicken (KFC) has achieved another milestone in delivery. The explosive growth in Asian region most particularly in their current trends in China that KFC fried chicken, burger and fries is gaining its way to superstardom. In China, Yum! Brands is opening a KFC store every day. But this is not the KFC you know in America. A recent case study written by professor David Bell and ...
As such, it is in KFC’s best interest to let him go. I believe that this could be the first step towards KFC developing a progressive corporate culture. Executive management must take a leading role in guiding this new organization. They must effectively communicate the vision and goal of the organization throughout. This will create a unified mindset among KFC employees with respect to future expectations. As well, the need for effective communication cannot be understated.
Lack of communication is what got KFC into trouble in the first place. Goals and expectations were not being communicated. Effective communication systems will allow for the timely dissemination of information throughout KFC. It is time for change at KFC.
I believe that the suggested changes will propel KFC to future success.
