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Culture is the collective programming of the mind that distinguishes the member of one category of people from those off another-Geert Hofstede Different countries have different cultures. Knowing the various culture helps a business to gain competitive advantage in future and become market leader. Different cultures influence thinking, consumption standard of living pattern of an Individual and behavior. Therefore understanding of cultures across countries will help business remove all the barriers. Core areas in which culture effect International business are:
In India people are ready to learn English for faster communication but country like China, promote their own language. Therefore for effective business understanding this barrier is important
High cost will lead
It has eventually become the IT hub in the world.
KFC adopted local country strategy where it ensures following the menu and prices as per the country which is not same with other places and country. KFC entered global market initially using price skimming method where target customer was upper class and upper middle class people. Later on KFC focused on understanding the needs of local customers and created menu which served the interests of lower class people too. In India large segment of people are middle class people so people have options here at Rs69 and also high priced product too. In India combo cost Rs 299 but in Malaysia pricing of combo is 659 ringgit. So we can see a great difference in pricing strategy of KFC around the globe.
Different factors affecting pricing decisions of KFC are:
KFC across different countries are different because it have adopted local country strategy where it tries to adopt strategy depending on the consumption pattern of that country. Points on which KFC is different across globe
The increased competition amongst the independent owned restaurants has made them purchase most of their stocks from cheap and unsanitary dealers which in turn reduces the cost of operation which gets reflected on the final price presented to the customers. As a result price have become a key competition aspect in the industry which is making the marketing cost of the franchised restaurants go up as they aim at securing and expanding their customer base. It was also realized that customer service is a key factor in securing a competitive advantage in the fast food industry, therefore after sale service are set in place to secure customer loyalty, customer comfort ability is also set on place by refurbishing restaurants to the taste of customers.
We see that there is adequate justification for franchising by KFC. This is because a greater proportion of the respondents (86%) indicated that they prefer franchising to all other joint ventures, 90% reported that they were involved in all decision making processes of the franchise. With the efforts of service and retailing enterprise Franchising Strategy is used for global expansion. The benefits of Franchising Strategy includes less cost incurred as compared to licensing, no compromise on product quality, goodwill and the franchiser just has to expend only the resources to recruit, train, and support franchisees. But there are challenges which the companied should keep in mind which includes not maintaining quality control, do not exhibit strong commitment to consistency and standardization leading to loss of company’s goodwill.
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Effects Of Cultural Differences in International Business And Price Negotiation. (2024, Feb 16). Retrieved from https://studymoose.com/effects-of-cultural-differences-in-international-business-and-price-negotiation-essay
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