Cultural aspects affecting international business activities a case of kfc in india

Globalization, by which the interconnectedness of economies is created, has given rise to a multitude of opportunities for companies engaged in international business. In fact, in the realm of international business, the impact of cultural aspects cannot be understated. This introduction delves into the profound implications of cultural dynamics on international business, focusing on a renowned multinational corporation and its experiences in navigating diverse cultural landscapes. Therefore, our team has chosen the topic “Cultural aspects affecting international business activities: A case of KFC in India”. India, a country in South Asia, is a vibrant tapestry of diverse traditions, languages, and customs. With a population of over 1.3 billion people, its a distinctive cultural melting pot. From colorful festivals, where streets come alive with music and joy, to the tantalizing flavors of Indian cuisines, India is a sensory delight. With a deep sense of identity and tradition, Indias cultural landscape offers not only captivating experience but also obstalcles for any foreign businesses wanting to enter the country.

FOREIGN TRADE UNIVERSITY FALCUTY OF ECONOMICS & INTERNATIONAL BUSINESS

o0o

INTERNATIONAL BUSINESS

REPORT

CULTURAL ASPECTS AFFECTING

INTERNATIONAL BUSINESS ACTIVITIES:

TABLE OF CONTENTS

INTRODUCTION 3

CHAPTER 1 OVERVIEW OF F&B INDUSTRY IN INDIA MARKET 4

CHAPTER 2 OVERVIEW OF KFC 5

1 History & Internalization 5

1.1 History of KFC 5

1.2 Internalization of KFC 5

2 KFC’s current status 6

2.1 In the international market 6

2.2 In Indian market 7

CHAPTER 3 INDIAN CULTURAL CHARACTERISTICS & KFC ADAPTATION 9

1 Religions 9

1.1 Indian religions characteristics 9

1.2 KFC’s adaptation to Indian religions features 9

2 Festivals & Traditions 11

2.1 Country of festivals 11

2.2 KFC’s actions to keep up with festivals 13

3 Tastes & Cuisines 14

3.1 Indian tastes & cuisines characteristics 14

3.2 KFC’s adaptation to Indian tastes and cuisines features 14

4 Customer habit 16

4.1 Eating habits 16

4.2 Buying habits 19

CONCLUSION 21

REFERENCES 23

Globalization, by which the interconnectedness of economies is created, hasgiven rise to a multitude of opportunities for companies engaged in internationalbusiness In fact, in the realm of international business, the impact of cultural aspectscannot be understated This introduction delves into the profound implications ofcultural dynamics on international business, focusing on a renowned multinationalcorporation and its experiences in navigating diverse cultural landscapes Therefore,

our team has chosen the topic “Cultural aspects affecting international business

activities: A case of KFC in India”.

India, a country in South Asia, is a vibrant tapestry of diverse traditions,languages, and customs With a population of over 1.3 billion people, it's a distinctivecultural melting pot From colorful festivals, where streets come alive with music andjoy, to the tantalizing flavors of Indian cuisines, India is a sensory delight With a deepsense of identity and tradition, India's cultural landscape offers not only captivatingexperience but also obstalcles for any foreign businesses wanting to enter the country

The case study at hand focuses on the experiences of KFC, a prominentmultinational corporation, as it navigates the cultural intricacies of conductingbusiness in India The country, with its rich cultural heritage and traditions, presents aunique and dynamic market for companies seeking global expansion By examiningKFC's approach to understanding and adapting to the cultural nuances of the Indianmarket, we can gain valuable insights into the critical role of cultural awareness andadaptation in achieving success in international business endeavors

The report focuses on three chapters, including:

1 Chapter 1 Overview of F&B industry in India market

2 Chapter 2 Overview of KFC

3 Chapter 3 Indian cultural characteristics and KFC adaptation strategies

CHAPTER 1 OVERVIEW OF F&B INDUSTRY IN INDIA

MARKET

The food and beverage (F&B) industry in India is one of the largest and growing sectors of the economy It makes up around 3% of India’s GDP and nearly2/3 of its retail market It is predicted that the income in the food and beverage sectorwill expand at a CAGR (Compound annual growth rate) of 14.2% between 2020 and

fastest-2024 Among the F&B market, Indian fast-food or quick-service restaurant (QSR)marketplace as an emerging sector

India is a country of diversity Here food is not just considered as a form ofnutrition but is also collaborated with customs and traditions In India, the taste andflavors of food preparation keep changing from one state to another In the early age,people would mostly prefer home-cooked food in India But as urbanization is takingplace this scenario seems to be changing completely The concept of fast-food isprevailing since quite a few years now In this fastmoving world where the expensesare day by day inclining, it is a must for all the members of the family to work forliving Also many times lot of people shift to other regions away from the family inorder to earn a living This kind of a rush lifestyle gives a scope for consumption ofquick meals which are easily prepared and quickly served which we term as fast-food

Being the most largest population country in the world, with a population of1,4B (2021), India has become one of the most massive hubs for global fast foodchains to grow Whether it’s Indian fast-food chains or foreign fast-food companies inIndia, they all run very well The quick-service restaurants (QSR) market is expected

to clock a CAGR of 23% between now to the fiscal year 2025 as large food serviceschains such as McDonald’s, Burger King, and Domino’s, among others, deepen theirreach in India’s smaller cities and benefit from a younger demographic

However, to enter Indian market, international fast-food chains have to face alot of obstacles The biggest one, which has a massive impact on the F&B industry,must be culture India is a cultural hotbed, and business is more about buildingrelations than presenting figures and sums The polychronic culture can be verydifficult for international franchise businesses, which have the same model of businessall over the world, to adapt and earn market share

CHAPTER 2 OVERVIEW OF KFC

1 History & Internalization

1.1 History of KFC

Kentucky Fried Chicken, or KFC for short, is a global quick-service food

service system that serves over a billion meals annually in more than 80 countries.Founded by Colonel Harland Sanders in 1955, KFC faced challenges during itsjourney Through Colonel Sanders' culinary skills and franchising efforts, KFC grewrapidly to become one of the largest quick-service food service systems worldwide,offering its famous "finger lickin' good" chicken to delighted customers around theglobe

About Colonel Sanders, who was born in 1890, he opened a gas station in

Kentucky and cooked for his family and customers His pressure cooking method for chicken, along with his secret "Original Recipe" of 11 herbs and spices, gained

popularity Despite setbacks during World War II and the threat of a bypassinghighway, Sanders embarked on franchising his recipe across the U.S

Through franchising, KFC expanded rapidly, becoming one of the largestquick- service food service systems worldwide Colonel Sanders' culinary skills anddetermination to share his recipe played a crucial role in KFC's success

1.2 Internalization of KFC

Initially, the restaurant gained popularity for its unique blend of 11 herbs andspices in its fried chicken recipe With the success of the original restaurant, Sandersbegan franchising the KFC concept, leading to its rapid expansion

By 1964, there were over 600 KFC restaurants in the United States and Canada However, KFC's global expansion truly took off in the 1970s and 1980s.

The company began opening restaurants in international markets, starting with Canadaand Mexico in the late 1960s By the 1970s, KFC had established a presence invarious countries, including the United Kingdom, Australia, and Japan

Throughout the years, KFC continued to expand its global footprint By the

1990s, KFC had established a significant presence in Asia, particularly in China,

where it became immensely popular The company recognized the potential of theChinese

market and invested heavily in its expansion Today, China remains one of KFC'slargest markets, with thousands of restaurants across the country.

As of 2021, KFC has a vast global presence, with more than 24,000 restaurants in over 140 countries and territories These restaurants are operated

through a combination of company-owned locations and franchise partnerships KFC'sinternational growth has been fueled by its ability to adapt its menu, offerings, andmarketing strategies to suit local preferences and cultures

2 KFC’s current status

2.1 In the international market

KFC's commitment to international expansion is evident through its continuousefforts to penetrate new markets Through strategic partnerships and localizedapproaches, KFC aims to maintain its position as a global leader in the fast-foodindustry

KFC’s annual revenue:

According to statistics, KFC’s revenue is $6.8B annually Besides, KFC has achieved

an enormous growth in other aspects, such as:

 KFC's revenue growth from 2009 to 2022 is 36.86%

 KFC has 820,000 employees, and the revenue per employee ratio is $8,343

 KFC's peak quarterly revenue was $2.0B in 2022 (quarter 4)

 KFC peak revenue was $13.6B in 2012

 KFC annual revenue for 2021 was $6.6B, a 16.49% growth from 2020

 KFC annual revenue for 2022 was $6.8B, a 3.92% growth from 2021

In 2019, KFC reported its best growth in three years.

In the first quarter of the year, KFC, operated by YUM! Brands, continued itsglobal expansion, opening 372 new restaurants in 46 countries With a total of 22,886

locations worldwide (4,062 in the U.S.), KFC achieved a net new unit growth of 6 percent The brand's sales performance exceeded expectations, with a 5 percent year- over-year growth in systemwide same-store sales China, accounting for 27 percent

of KFC's total mix, experienced an 11 percent increase in system sales In the U.S.,system sales rose by 2 percent Noteworthy double-digit comps were also reported inJapan and

Indonesia KFC's investment in new menu board designs and delivery throughGrubhub contributed to its sales growth, with plans for a nationwide launch later in theyear.

KFC has seen heavy orders around dinner, big packs, and bone-in chicken.

In-store, KFC closed out Q1 with more than 1,500 “American Showman”designs in the U.S The package is known for its red color blocking, barn-likematerials, heritage accents, and test elements, like an open “kitchen theater,” retailstores, and delivery call-outs KFC remodeled 65 units in the period as it strives forpositive net unit growth in the U.S

Recently, KFC holds a significant market share in the global fast-food industry

By the end of 2018, KFC market share was 2.82% of the Fast Food market In fact,

KFC is consistently ranked among the top fast-food chains globally It competes withother major players in the industry, such as McDonald's, Subway, Burger King, andStarbucks

2.2 In Indian market

KFC, the renowned fast food chain famously known as Kentucky FriedChicken, entered the Indian market in the 1990s as the first foreign fast foodrestaurant chain after the country's economic liberalization Despite initial challenges,KFC persevered and successfully established a presence in India

In 1995, KFC inaugurated its first Indian outlet in Bangalore, catering to theevolving preferences of Indian consumers Contrary to misconceptions, KFCexpanded its menu to offer an array of vegetarian options, including Veg Zinger, VegRice Bowlz, and Veg Strips, in addition to its signature fried chicken

However, KFC faced protests and opposition in its early years, driven byconcerns over the encroachment of Western culture on Indian traditions TheBangalore outlet endured frequent acts of vandalism, prompting the management torequest police protection Although the combined revenue from outlets in Bangaloreand Delhi proved insufficient, KFC remained committed to the Indian market

Following a brief withdrawal, KFC returned in 1999, starting with a singleoutlet in Bangalore By diligently addressing concerns, dispelling misconceptions, andadapting its offerings to suit local tastes, KFC experienced exponential growth acrossvarious Indian cities Today, KFC boasts a network of 296 outlets in India

In fiscal year 2022, the annual sales revenue of KFC in India was over tenbillion Indian rupees, up from about five billion Indian rupees in fiscal year 2021 As

of 2022, there were 263 Kentucky Fried Chicken restaurants in this country

Figure 1: Annual sales revenue of KFC in India FY 2020 - 2022

Source: Statista.com

CHAPTER 3 INDIAN CULTURAL CHARACTERISTICS &

KFC ADAPTATION

1 Religions

1.1 Indian religions characteristics

Nearly one-sixth of the world's population, or 1.4 billion people, live in Indiaand represent a wide range of nationalities and religious beliefs India is home to 94%

of the world's Hindus, although there are also sizable numbers of Muslims, Christians,Sikhs, Buddhists, Jains, and others who practice folk faiths

Food holds significant cultural and religious importance in Indian traditions.Indian religions emphasize the concept of ahimsa, or non-violence, which extends tothe food choices of their followers Several religions practiced in India have strictdietary laws For instance, Islamic teachings provide guidelines for halal eating, whichprohibits the consumption of pork and other forbidden products Jains not only avoidmeat but also refrain from consuming root vegetables to prevent harm to the entire plant,

as it is considered violence according to Jain theology The issue of beef consumptionand cow slaughter, connected to the Hindu belief in cows as sacred animals, hasbecome a contentious topic in Indian politics

According to a survey, approximately 40% of Indian adults identify asvegetarian, and many others have some form of meat restriction in their diet This caninclude avoiding specific types of meat, refraining from meat on certain days, or both

In total, about 80% of Indian adults limit their meat consumption in some way, with amajority within all major religious groups adhering to these practices

1.2 KFC’s adaptation to Indian religions features

1.2.1 Halal dietary law

Halal dietary laws are guidelines followed by Muslims that determine what foodsare permissible for consumption All foods are considered halal, or lawful, except forpork and its by-products, animals improperly slaughtered or dead before slaughtering,animals slaughtered in the name of anyone but Allah (God) Halal food must meetspecific criteria and adhere to certain principles

When it comes to KFC, their adoption of halal practices varies depending onthe region and the customer demand In many predominantly Muslim countries orareas with a significant Muslim population, KFC outlets may offer halal-certifiedoptions to cater to the dietary needs of Muslim consumers.

1.2.2 Vegetarian & meat restriction diet

The most popular religions in India all have food customs and laws Forinstance, vegetarianism is frequently praised in Hindu writings, and as cows aretraditionally revered, some Hindus may also refrain from eating beef Islam forbidsthe consumption of pork

The majority of Indian people (81%) impose certain limits on their diet, such asnot eating meat on particular days or refraining from eating certain meats Themajority of Indians do not, however, completely refrain from meat; only 39% ofIndian people identify as "vegetarians," according to a recent Pew Research Centersurvey

Figure 2: Percentage of Indian following meat restriction in each religion

Source: Pewresearch

KFC has recognized the importance of providing vegetarian options to meet thedietary preferences and cultural sensitivities of its customers KFC has adapted itsmenu to cater to the vegetarian population in India.

In response to the demand for vegetarian choices, KFC India has introduced avegetarian menu that serves as alternatives to their signature non-vegetarian friedchicken offerings Paneer Zinger and Veg Twister, in addition to the hot-selling PotatoKrisper Burger, Veg Strips, Veg Rockin' Burger and Veg Rice Bowl will now vie forconsumer mind space along with their popular non-veg counterparts The companyhas not only introduced new products under its veg range, it has also tweaked itsglobal tagline "So good" to "So veg, so good" to show its commitment towards thecategory

Dhruv Kaul, Director Marketing, KFC India, said, “KFC has alwaysendeavoured to create innovative menu options to suit local and regional palettes Werecognised an opportunity to deliver a significant vegetarian range for the Indianconsumer base, and to reach out to a broader target audience We are thrilled about thelaunch of the Paneer Zinger and Veg Twister and are eager for our customers to relishthe new taste and range.”

To ensure the segregation of vegetarian and non-vegetarian food items, KFC Indiahas implemented specific kitchen processes This includes the use of separate cookingutensils, dedicated fryers for vegetarian products, and staff training to maintain strictseparation during food preparation These measures are crucial in preventing cross-contamination and preserving the integrity of vegetarian items

2 Festivals & Traditions

2.1 Country of festivals

India is well known for its cultural and traditional festivals all over the world

As it is a secular country full of diversity in religions, languages, cultures and castes,every month some festival celebration happens Among these festivals, some arereligious, some are based on the seasons and some are of national importance Eachand every festival is celebrated uniquely in different ways according to the variousrituals and beliefs Each festival has its own history, legend and significance ofcelebration Festivals bring bonding, love, cross-cultural exchange and happinessamong people

The economy of these festivals is inarticulate however it provides a strongfoundation for the socioeconomic development of the nation Festivals in India have asignificant impact on international business in the country.

Firstly, festivals in India have increased consumer spending: Festivals in Indiaare occasions of joy, celebration, and gift-giving During these festive seasons, there is

a significant surge in consumer spending across various sectors, including retail, commerce, consumer electronics, and hospitality International businesses operating inIndia strategically leverage these festivals to launch special offers, discounts, andpromotional campaigns to attract customers and boost sales

e-Secondly, festivals in India are often associated with specific products andgoods that hold cultural and religious significance For example, during Diwali, thefestival of lights, there is high demand for traditional Indian clothing, jewelry, sweets,and home decor items International businesses adapt their product offerings andmarketing strategies to align with the festive demands and preferences of Indianconsumers

Thirdly, festivals in India provide an excellent opportunity for internationalbusinesses to forge partnerships and collaborations with local companies Manyinternational brands use festivals as a platform to launch new products, engage withcustomers, and establish strategic alliances with Indian companies These partnershipshelp in leveraging local market knowledge, distribution networks, and consumerinsights

Finally, international businesses invest in festival-specific marketingcampaigns to create brand awareness, engage with customers, and drive sales Theyoften collaborate with popular Indian celebrities or influencers to endorse theirproducts during festivals, leveraging the cultural appeal and emotional connect withthe audience Festive campaigns incorporate local traditions, customs, and sentiments

to resonate with the target market

Festivals in India have a profound impact on international business activities.They drive consumer spending, shape product demands, foster partnerships, and createopportunities for global brands to connect with the Indian market Adapting to thefestive culture and incorporating festival-specific strategies is vital for international

businesses to succeed and thrive in India's dynamic and culturally diverse businessenvironment.

2.2 KFC’s actions to keep up with festivals

KFC recognizes the importance of festivals and special occasions in Indianculture and leverages these opportunities to engage with customers and enhance theirdining experience

Limited-Time Menu Items

During major festivals like Diwali, Eid, Christmas, or regional celebrations, KFCintroduces special menu items that are available for a limited time These menu itemsoften incorporate traditional flavors, local ingredients, or festive themes For example,KFC may introduce festive-themed burgers, wraps, or chicken bucket options thatreflect the spirit of the occasion These limited-time offerings create excitement andgive customers a unique dining experience during the festive season

Festive Meal Packages

KFC designs festive meal packages that cater to the needs of families andgroups during celebrations These packages typically include a variety of KFC'spopular chicken pieces, sides, beverages, and desserts By offering specially curatedmeal packages, KFC makes it convenient for customers to enjoy a complete andsatisfying meal during festive gatherings These packages may also include festive-themed packaging or accessories to enhance the overall experience

Promotions and Discounts

KFC introduces festive promotions and discounts to attract customers duringspecific festive periods These promotions may include special combo deals, discountcoupons, or loyalty rewards tied to festive purchases By offering value-addedincentives, KFC encourages customers to choose KFC as their preferred dining optionduring the festive season

By aligning its menu, packaging, promotions, and marketing efforts with the culturalsignificance of festivals, KFC strengthens its brand presence and builds strongerconnections with Indian consumers during these special occasions

3 Tastes & Cuisines

3.1 Indian tastes & cuisines characteristics

The food of India is as regionally specific and diverse as its population Indiancuisine is known for its variety of spices and flavors, which can be quite differentfrom the taste preferences of other regions Indian spice mixes often use upwards offive different spices, sometimes combining 10 or more One challenge for KFC hasbeen to stay true to its products yet still create a menu that appeals to a wide consumerbase in India As a consequence, KFC had to create taste-specific menus for localcustomers

Although Indian cuisine is highly regionally specific, there are certain commonthreads that unite the different culinary practices In particular, Indian cuisine ingeneral is also very dependent on rice, especially Southern Indian regions that use ricemore heavily than other areas Moreover, all regional cuisines are reliant on “pulses”

or legumes Indian cuisine uses perhaps a greater variety of pulses than any otherworld cuisine: red lentils, Bengal gram, pigeon peas or yellow gram, black gram, andgreen gram are used whole, split, or ground into flour in a diverse number of Indiandishes

3.2 KFC’s adaptation to Indian tastes and cuisines features

3.2.1 Localization in flavor

To begin with, the recipe in India is relatively different from the original.Outside India, for example, Singapore, there is an option of original one and variationslike hot and crispy one However, the original is still available in India but with a differentrecipe because the original is a bit mushy, meanwhile the chicken seems to be friedmore, with more coating and more spices in India

Furthermore, KFC also modified its menu to include more spicy and flavorfuloptions to cater to the Indian palate Indian people habitually use spice mixes such aschili pepper, black mustard seed, garam masala, mint leaves in various combinations

to offer their pungent and herby flavors to dishes Therefore, KFC has significantlyspiced up its recipes in India The hot and spicy wings it serves here are the spiciest inthe world, among KFC restaurants In 2011, it introduced Fiery Grill, which promised

a spicy hit for consumers’ taste buds Additionally, Indian cuisine throughout the