Capstone Project Final

Nicole Jensen

Grantham University

2/14/2020

Capstone Project Part 3

Internal Environment

A company’s internal environment comprises of the components within the entity which affects the company. Business managers and owners usually have control over the internal environment. One internal element that influences how Yum Brands operates is the company’s mission statement. A mission statement usually describes what a company stand for and why it exists. Yum Brands mission statement “is to build the world’s most loved, trusted, and fastest-growing restaurant brands” (comparably.com). The statement reveals the company’s purpose and its philosophy. The declaration provides inspiration and information for the members of the company.

Another element is organizational culture. Just as every individual has a distinctive character, so does every entity. Organizational cultures are the behaviours and beliefs that govern how the members of a company act and handle businesses. Yum Brands has built an excellent culture that is filled with fun, opportunity, and energy. This culture differentiates the company from others and guides the activities of its members.

The other element that makes up the internal environment of the company is resources. A company’s resources include information, people, infrastructures, facilities, equipment, finances, supplies, and many others. People are a vital resource for every organization. A company cannot survive without employees. Facilities, information, equipment, supplies, finances, and materials are supporting, non-human resources which compliment employees in their quests to achieve the organization’s objectives and goals. The availability of resources in Yum Brands and the way management value the non-human and the human resource will influence the organization’s environment.

External Environment

A business cannot function in a vacuum but instead in a dynamic environment which has a direct impact on how they function. The external environment is comprised of several outside forces and elements that can affect a company. Economic influences are one of the external forces that can affect Yum Brands. Contributing elements such as fluctuation, interest rates, economic crisis, demand/supply, exchange rates, and many others, can directly and strongly influence consumers’ consumptions, and eventually, the overall profit of the company (Janković et al., 2016). The favourable economic situation will be good for the company. Adverse situations, on the contrary, can generate negative effects that can lead to a capital deficiency or even bankruptcy.

Another element is legal and political influences. The political climate in India will influence how Yum Brands will operate. The amount of government activity, the overall political stability, and the types of regulations the government passes constitute the political climate of a country that can influence how the company will operate. Local and state governments may also exert control over the company as they impose taxes, issue business licenses and corporate charters, and set zoning ordinances, to name a few.

Strengths

To operate successfully in a foreign market, entities need to plan their strategies and objectives around their strengths and weakness. Strengths are the entity’s distinctive competencies and competitive advantages. One of the Yum Brands’ strength is that it owns the big three. The company is different from the rest as it owns different brands such a Pizza Hut, Taco Bell, and KFC. These brands have strongly established themselves in the fast-food sector and are well-known in the world.

Yum Brands also has a leadership position in China. It has complete control in the Chinese food market where KFC is the main hit and has several turnovers because of the love for non-vegetarian foodstuff (Al-Shargie & Ahmed, 2019). The company has even decided to have two companies: Yum China and Yum brands. Besides that, Yum Brands has an unlimited opportunity for growth in other markets such as India. India is a populated country with a consistent and stable economy that can contribute a lot to the success of the country.

Problem Analysis

We can define problem analysis as the examination of the cause of an issue, failure, or incident. It is usually conducted to identify improvements to processes, procedures, systems, culture, and designs (Peerally et al., 2017). Just as any other company, Yum Brands usually faced with issues to define, analyse, and solve. When Yum Brands has staffs with skills in effective root cause analysis and problem-solving, it has the advantage of offering proof of cause and effects and appropriate solutions to problems.

Recommendations and Implementation Costs

Taking a brand internationally can be appealing. However, the expansion journey can be challenging. Before the expansion, it is, therefore, important for Yum Brands to conduct some research and analyse the internal and external factors that can affect the company’s operation in the country. The company should analyse factors such as competitive position, competitive structure, economic situations, political situation, rules and regulations, and availability of capital, just to name a few. For instance, the company needs to determine if the government is stable. It also needs to determine if regulations are strict before deciding to locate a restaurant in India. The main purpose of the analysis is to determine the threats and opportunities in a country that will influence growth, volatility, and profitability of the company. The average cost of conducting market research can be $15,000 to $35,000.

References

Al-Shargie, F., & Ahmed, E. (2019). Fast Food Industry Growth in China.