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Lecture

ADMS 1000 Lecture Notes - Quality Management, Pizza Hut, Value Chain


Department
Administrative Studies
Course Code
ADMS 1000
Professor
Hernan Humana

Page:
of 3
SWOT Analysis – notes for Will
Strengths:
- Designed menus to suit the local public tastes
- The CEO has hired the right people in the company (previous restaurant experience,
write and speak Chinese, understand Chinese consumer, had experience in the Western
way of doing business)
- would not be seen as a foreign presence but as part of the local community
- Pizza Hut wants to capture more students to consume: offer discount cars given to
college students and lower price snack items
- The CEO is able to combine Chinese and Western characteristics to operate the
company
- Offer Western culture into China: organized activities such as teaching English songs
and Western dance
- Having the most advanced and integrated cold-chain system and distribution system in
China
- developed “New Fast Food” concept that focuses on variety, quality, taste, cooking
platform and eating occasion that involved in Chinese characters
Weaknesses:
- Hard to find vertical integrated suppliers to work with
- Innovation is difficult to apply in China
Opportunities:
- Take the best ideas from the US fast-food model and adapt them to serve the needs of
the Chinese consumer
- Persuade parents to let their young children to work for Yum as part-time employees
Threats:
- Food safety
PEST
Political
- As a foreign company, Yum China has to operate with a local partner before
entering into China. Therefore, the first KFC and Pizza Hut had to own through
local joint venture partners.
- In concerning the issue of children’s health, Yum China lobbied Chinese
government to take obesity seriously and pushed them in promoting education;
moreover, the marketing group worked on nutrition campaigns through the Ministry
of Health
Economic
- Yum opened 300 stores in 1999, and estimated that over 2 million Chinese
consumed in its stores every day
Social
- Chinese consumers are willing to try Western food, and they enjoy and expect more
variety on the menu
- Chinese consumers also concern more about health problem; this led Yum began to
introduce more vegetable dishes on the menus; developed youth basketball
competitions and sponsored gymnastic dance programs in schools
Technological
- Yum China has developed a quality management process and supplier rating
system: Supplier Tracking Assessment and Recognition (STAR). This allowed
Yum China to identify and acquire the best performing suppliers in order to
improve the quality and lower the cost of goods
Value chain and sources of competitive advantage
Primary activity
Inbound logistic
Yum had eleven logistics centres in 2010. These logistics centres received restaurant
orders through email. Trucks were divided by three categories: dry products, refrigerated
product and frozen products.
Operation
Yum’s general managers managed the store’s front end and back end: serving customers
and making safe and fresh food). All staffs were trained in Western service standards and
the way restaurant operate in order to bring Western style customer service to China
Outbound logistic
Marketing and Sales
Families are the focus for KFC in the first ten years of operation. Most of the restaurant
had a play area and hostesses organized activities. KFC also started serving breakfast in
2002 in order to match the Chinese consumers’ eating habits and introduced Chinese
traditional food on the menu.
Service
Secondary activity
Firm Infrastructure
Yum has its own new product development team. Each committee has their own
functions such as marketing, supply chain and product safety in order to understand more
about Chinese consumer tastes. Moreover, Yum has a team of formal training, coaching
and cross-functional committees for management development in order to make better
operational decision and learn from each other
Human Resource Management
Yum’s CEO Sam Su opened the first KFC in China in 1987. He hired Angela Loh as the
chief marketing officer for Yum China in 1992 until now; and he hired Mark Chu as the
president and the chief operating officer of Yum China until now as well.
Technology Development
Yum China has developed a quality management process and supplier rating system:
Supplier Tracking Assessment and Recognition (STAR). This allowed Yum China to
identify and acquire the best performing suppliers in order to improve the quality and
lower the cost of goods.
Procurement