Globalization: Opportunities and Challenges In Developing Countries Globalization is defined as the trend of the world economy toward becoming a more independent system. There are numerous factors that US financial institutions find lucrative about globalization, and foreign investments now contribute to a staggering 15% of our GDP. Within the past decade, the economic outlook in Africa has taken a major turn for the better. A result of the increased economic momentum has been the interest of foreign investors and the subsequent arrival of popular US chains in African countries.
In December of 2010, an article entitled ‘KFC Savors Potential in Africa’ was written by Julie Jargon and published in The Wall Street Journal. This piece delves into the massive undertaking KFC has recently decided upon. KFC is a popular US restaurant chain owned by Yum Brands Inc. , whose other chains also include Taco Bell and Pizza Hut. The first KFC to be introduced to Africa was in 1971, and since, about 600 have opened. Late last year, KFC announced a four-year plan to double their number of outlets to 1,200, and its revenue to $2 billion.
The two paramount factors leading Yum Inc. to expand KFC’s presence in Africa are initially noted to be an improved stability within African governments and a growing middle class. Furthermore, Africa has become an attractive brand expansion site because its resourcerich countries are adding infrastructure and at the same time increasing urbanized areas, subsequently creating opportunities for restaurant and retail development. Another interesting figure is the fact that the number of African households with discretionary income is projected to increase by 50% over the next decade.
An overwhelming amount of positive indicators does not mean that KFC will not also face challenges with African growth. Chicken importation has seen to be a sticky subject for parts of the country. In certain African countries, imports of chicken are banned. To overcome a challenge such as this one, KFC has been working with local supplies in order to ensure that their chicken meets specifications. The choice to expand KFC so rapidly in Africa is a prime example of proper strategic planning.
Planning, in terms of management, is the process of setting organizational goals and outlining the activities that are necessary to achieve those goals. The top levels of management do strategic planning—in this case, the head honchos at Yum Inc. , who have come up with the clear-cut objective for doubling the chains presence and revenue, and a date by which they would like to achieve this. Other significant managerial topics that lend themselves to this article include the organizations environment and planning. The factors that compose the general environment—for example, economic, technological, socio-cultural, etc. all play a huge part in the undertaking of this KFC expansion. Fortunately for KFC, it seems that pretty much all of the general environmental forces seem to be playing in their favor at the moment. Planning, and specifically “strategic” planning is another important aspect that has lead KFC to be in this positive position. One of the most important parts of planning is that an organization knows where they are going and how they will get there, and KFC has clearly done so. KFC is not the first company to capitalize on the opportunities that Africa has presented.
In 2010, Wal-Mart struck a $4 billion dollar deal, buying one of South Africa’s largest chains and overtaking a huge part of the African retail market. This choice has proven to be highly beneficial for Wal-Mart and possibly has created more motivation for the choice on Yum Inc. ’s part. Despite a few minor challenges to be faced, the decision on Yum Inc. ’s part is an overwhelmingly positive one. Following in the footsteps of companies such as Wal-Mart, KFC will not only benefit by creating revenue for themselves as an authentic US-originated chain, but it will also help the country of Africa on its new path of economic surge.
References Blackden, Richard. “Wal-Mart Expands into Africa with $4. 2bn Deal. ” The Telegraph. 27 Sept. 2010. Web. 25 Apr. 2011. . “‘Fast Economic Growth’ in Africa. ” BBC News. 14 Nov. 2007. Web. 25 Apr. 2011. . Kinicki, Angelo, and Brian K. Williams. Management. New York: McGraw-Hill Irwin, 2011. Print. Leke, Acha, Susan Lund, Charles Roxburgh, and Arend Van Wamelen. “What’s Driving Africa’s Growth. ” McKinsey Quarterly. June 2010. Web. 25 Apr. 2011. .