The fast-food market in the United States was highly competitive and the declining margins in the fast-food chains reflected the increasing maturity in the US fast-food industry. As an alternative to domestic expansion, many restaurants began to expand into international markets. The early entry into international markets placed KFC in a strong position to benefit from international expansion. Latin America was one of the international markets KFC focused on. After 1990 it took a very aggressive strategy by opening company-owned restaurants and by expanding its franchise operations. Mexico is the strongest presence of KFC in Latin America, where most of them are company-owned, mainly because of the lack of a law protecting patents, information, and technology before 1990. Another market of great importance is Brazil - Latin America's largest economy and mainly unexplored by KFC.
This case begins by analyzing the strategic changes that took place in Kentucky Fried Chicken Corporation (KFC) as it moved through a variety of ownership changes from the 1950s through the 1980s: (1) KFC's founding by "Colonel" Harland Sanders in 1954; (2) the sale of KFC to Jack Massey and John Young Brown, Jr., in 1964; (3) Heublein's acquisition of KFC in 1971; (4) the acquisition of Heublein by R.
J. Reynolds in 1982; and (5) PepsiCo's acquisition of KFC in 1986. The case examines issues related to international strategy context with a particular focus on Mexico, providing a vehicle for discussion of risks and opportunities of doing business in a foreign country.
The case study highlighted an analysis of the fast-food industry from a domestic and international point of view and a presentation of KFC's business strategy from the early 1990s through 2000, particularly the development of KFC's Latin American strategy and the company's situation and challenges in Mexico. The...