CMU GRADUATE SCHOOL

KENTUCKY FRIED CHICKEN (KFC)

An Assignment
Submitted in Partial Fulfillment of
the Requirements for the Subject

INTERNATIONAL BUSINESS (MN512)

SUBMITTED TO
LECTURER: Mr. SUON VICHEA

1.

Mr. HONG SAMPHORS

ID:20140601

2.

22 AUGUST 2015
ACADEMIC YEAR: 2014-2015

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Kentucky Fried Chicken (KFC)

I.

Overview
1. Company Profile
a. KFC Globally
KFC is a corporation based in Louisville, Kentucky, which is the world's most popular

chicken restaurant chain, specializing in Original Recipe, Extra Crispy, Twister and
Colonels Crispy Strips chicken with home-style sides. It is one of the worlds most popular
fast food restaurant chains in the world founded by Colonel Harland Sanders in 1930.
Every day, more than 12 million customers are served at KFC restaurants in 109
countries and territories around the worldfrom a Chunky Chicken Pot Pie in the United States
to a salmon sandwich in Japan. KFC operates more than 15,000 restaurants around the world
today, and it is part of Yum! Brands, Inc., which is the worlds largest restaurant system with
over 32,500 KFC, A&W All-American Food, Taco Bell, Long John Silver's, and Pizza Hut
restaurants in more than 100 countries and territories.
Within the YUM! Brand, Inc., which is the parent company of KFC, their future back
vision is to be THE DEFINING GLOBAL COMPANY THAT FEEDS THE WORLD. This is a
goal that reflects their intentionality to lead the way in defining how to truly build a superlative
global company, a company that sets the example others want to emulate (2010 Annual Report,
David C. Novak).
To lead its global brands, there are 1.4 million system wide team members around the
world, who powered by a powerful financial capability, working to make it happen. Their intent
is to continue to drive shareholder value and as they do, make the world a better place by
building their company around three principles:

Creating a famous recognition culture where everyone counts.

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Building dynamic, vibrant brands everywhere with one system operational

excellence as our foundation.

Being a company with a huge heart.

b. KFC Cambodia

KFC was established in Cambodia in March 2008, and the first restaurant has been
situated along Monivong Boulevard, Phnom Penh. It is one of Royal Group of Campanies Ltd
(The Royal Group) business, a partnership with the Malaysian QSR brands and Rightlink
Corporation.
The Royal Group, on the other hand, is one of the largest conglomerates in Cambodia
with substantial investments in media, telecommunications, banking, education, property
development and trading.
In Cambodia, there are 10 KFC outlets to-date:
1) Monivong Boulevard
2) Sovanna
3) Norodom Boulevard
4) City Mall
5) Kampuchea Krom
6) Riverside
7) ChbarAmpov
8) Attwood business Center
9) ToulTompoung (Russian Market)
10) Siem Reap

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According to the official website of KFC Cambodia, other outlets in the city will be
rolled out in stages to increase accessibility and convenient to our customer. It emphasizes that
KFC will be available in other populous cities such as Battambang, KomPong Cham and
Sihanoukville in the future.
Moreover, the contemporary and vibrant design, layout and presentation of KFC are
specially designed to appeal to all families, children, teens and adults alike. By now, the
company has over 200 staffs with some personnel holding key positions in the company such as
marketing, purchasing, and many more.

2. Products and Services

a. Products
1) Chicken
2) Burger
3) Rice Combo
4) Side order
5) Add-on
6) Drink
b. Services
1) Delivery:
Delivery hours are from 10am to 9pm, and it is free when customers order is more than
USD 4. However, it is limited to KFC delivery areas only.
On the other hand, all payment must be in cash. Customers can assist KFC staff for
correct changes. Moreover, they have to wait 30 minutes to allow the staff to prepare and deliver.

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All the price and information are effective immediately after charge and cannot refund.
And the choice of chicken parts is subjected to its availability.
2) Catering:
In Cambodia, KFC can cater meals for all occasions. Get-together, After Exam
Celebration, Celebration of Khmer New Year, Chinese New Year, Teachers Day, Sports Day,
Company Anniversary, Birthday Party, Company Party, and so on.
Customers will experience KFCs so good food at an affordable price, and the chicken
can be made available to meet and greet upon availability.
Moreover, customers can call to KFC if they plan to organize outdoors functions and
require meals to be served. They will feel free to contact KFCs hotline 023 996 000 to assist
them to make the event.

3. Entry Mode:
As a KFC franchisee, we are with you every step of the way and it all starts with your
completed application. Once weve received your application, well assist you through each step
of the application process.
Each stage in the approval timeline to learn what we currently do at KFC and what you
do as a franchisee candidate:

KFC

Review application

Issue Franchise Disclosure Document (FDD)

Verify assets and geographic interests

Conduct and review credit check and franchise profile

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Overview training requirements

Overview Operating Plan outline

Conduct franchising background check

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Franchisee Prospect

Sign and return Franchise Disclosure Document (FDD) receipt

Review FDD and prepare questions

Complete franchising profile

Begin creating operating plan

KFC

Conduct Interview(s)

Discuss Operating Plan to ensure business understanding

Explain site selection

Identify and discuss issues

Conduct operations interview

Set up one and a half day store experience

If Franchise Prospect meets all qualification standards, they are approved as a Franchisee
Candidate

Franchisee Prospect

Attend one and a half day store experience (if necessary)

Complete operations plan

Interview as needed

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KFC

Determine best site selection strategy

Review KFC Development Service options

Discuss scale requirements and future development

Franchisee Prospect

Outline development vision

Identify focus trade area(s)

Align next steps

KFC

Determine best site selection strategy

Review KFC Development Service options

Discuss scale requirements and future development

Franchisee Prospect

Outline development vision

Identify focus trade area(s)

Align next steps

KFC

Complete site registration workbook

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Provide Franchise Site Analysis Survey (FSAS) and deposit form

Submit site registration to Brand desk

Determine if proposed site can be cleared for development

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Franchisee Prospect

Complete site deposit form

Remit funds

Sign, date and remit site analysis survey form

KFC

Provide onboarding support via regular calls

Schedule/conduct appropriate training

Provide development expertise

Provide countdown to opening checklist

Support Grand Opening

Franchisee Prospect

Finance your restaurant

Build your restaurant

Hire your team

Attend appropriate training

Grand Opening

KFC

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Provide business support

Develop marketing calendar

Provide brand leadership

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Franchisee Prospect

Run a great restaurant be certified "growth ready"

Execute marketing programs

Build team capability

Create a growth vision

Register and build additional sites

II.

Physical Characteristics
From what we have observed in the contexts of Cambodia, KFC is usually situated on

any building where many people live around or like to go. For example, 10 KFC outlets are
located on very good areas or roads where many people pass by. However, it rarely puts its
location in shopping centers, markets, or the like.
Painted with red color, the KFC is likely a convenient place to eat and even easy to park.
And this makes customers feel more comfortable since the building is mostly equipped with airconditions, and it is well-decorated with neat chairs and tables for customers to eat on and enjoy
dating or talking with their friends, families, special people, and so on.
Once, the contemporary and vibrant design, layout and presentation of KFC are specially
designed to appeal to all families, children, teens and adults alike. By now, the company has over
200 staffs with some personnel holding key positions in the company such as marketing,
purchasing, and many more.
Moreover, it is very important to choose the right place to display its products and
services of KFC since customers can buy from the visual physical areas (restaurants) only, in
addition to ordering from its hotlines.
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III.

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Workforce Characteristics
1. Suppliers
Suppliers are required to abide by all applicable laws, codes or regulations including, but

not limited to, any local, state or federal laws regarding wages and benefits, workmens
compensation, working hours, equal opportunity, worker and product safety. Yum! Brands, also
expects that Suppliers will confirm their practices to the published standards for their industry.
Working Hours & Conditions: In compliance with applicable laws, regulations, codes and
industry standards, Suppliers are expected to ensure that their employees have safe and healthy
working conditions and reasonable daily and weekly work schedules. Employees should not be
required to work more than the number of hours allowed for regular and overtime work periods
under applicable local, state and federal law.
Non-Discrimination: Suppliers should implement a policy to effectuate all applicable
local and federal laws prohibiting discrimination in hiring and employment on the grounds of
race, color, religion, sex, age, physical disability, national origin, creed or any other basis
prohibited by law.
Child Labor: Suppliers should not use workers under the legal age for employment for
the type of work being performed in any facility in which the Supplier is doing work for Yum. In
no event should Suppliers use employees younger than 14 years of age.
Forced and Indentured Labor: In accordance with applicable law, no Supplier should
perform work or produce goods for Yum using labor under any form of indentured servitude, nor
should threats of violence, physical punishment, confinement, or other form of physical, sexual,
psychological, or verbal harassment or abuse be used as a method of discipline or control.
Notification to Employees: To the extent required by law, Suppliers should establish
company-wide policies implementing the standards outlined in this Code and post notices of
those policies for their employees. The notices should be in all languages necessary to fully
communicate the policy to its employees.

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2. Employees
Yum! Brands, the parent company of KFC, recognizes that one of its greatest strengths
lies in the talent and ability of its employees. Employees are expected to hold themselves
accountable to the highest professional standards, with mutual respect being the basis of all
professional relationships. Human resource goals have been established to guide the company
activities in employee relations, and it is the companys policy:

to deal fairly with employees;

to provide equal opportunity for all in recruiting, hiring, developing, promoting

and compensating without regard to race, religion, color, age, gender, disability,
veteran status, sexual orientation, citizenship or national origin;

to maintain a professional, safe and discrimination-free work environment;

to recognize and compensate employees based on their performance; and

to provide a competitive array of benefits.

Sexual, racial, ethnic, and religious or any other type of harassment has no place in the
Yum! work environment. Racial, ethnic and religious harassment includes such conduct as slurs,
jokes, intimidation or any other verbal or physical attack upon a person because of race, religion
or national origin. Sexual harassment includes unwelcome sexual advances or other verbal or
physical conduct of a sexual nature.

IV.

Core Strategies
Yum! Brands, the parent company of KFC, commits to continuing the success realized

during our first ten years. Their success has only just begun as they look forward to the future,
one which promises a long runway for growth, especially on an international level. It is building
a vibrant global business by focusing on four key growth strategies:
1. Build Leading Brands across CHINA in Every Significant Category

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Under the YUM! Brands, KFC business has been absolutely rock solid, and now there are
over 3,200 restaurants in over 700 cities, with $1.4 million average unit volumes. KFC added
414 new locations in 2010, and the franchisees continue to see cash paybacks in less than 3 years
on new restaurants.
The good news is that business growth and results were driven by increased traffic as
KFC made good progress leveraging its assets with 24-hour operations, delivery services and
continuing to build a solid breakfast business. They are even creating their own Chinese quick
service restaurant chain, East Dawning, tailored to the local favorites based on the amazing
insight that Chinese peoples favorite cuisine is, believe it or not, Chinese food!
The way we look at it, KFC can be every bit as big as McDonalds is in the US,
ultimately reaching 15,000+ units. And East Dawning is attacking the Chinese equivalent to the
hamburger category in the US, will likely go up as a results of the strong economic growth in
China. China operating profit has more than doubled in the last 3 years to $755 million, making
it our Number 1 profit-producing Division in Yum! 500New Restaurants in 2010
2. Drive Aggressive International Expansion and Build Strong Brands Everywhere
Yum! Restaurants International, which operates in over 109 countries and territories
outside the US and China, continues to deliver on this strategy as it delivered 11% full year
operating profit growth prior to foreign currency translation. The company treasures YRIs highreturn franchising model with over 90% of new restaurants built by franchisees who generate
over $740 million in franchise fees, requiring little capital on our part.
Meanwhile, the company is off and running, widening its competitive advantage and
getting stronger and more diversified every year. As a result, theres no doubt the calculated
investments in high potential markets is paying off. This made major progress creating new
growth vehicles by investing in emerging markets like India, Russia and Africa into a truly
global brand. 2010 was a milestone year for their business in India, particularly with the KFC
brand.
KFC in India surpassed 100 units, had terrific sales growth and now has very good unit
economics. This gives us the infrastructure and scale to fuel aggressive growth going forward.
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Besides, the company made an acquisition that gave us full management control of the RostiksKFC brand, giving us 150 restaurants in total in Russia.
In Africa, on the other hand, it already have been a dominant market position in South
Africa with over 600 KFCs. The company is now leveraging that powerhouse infrastructure to
build new restaurants in Nigeria, Ghana and East Africa. And it is extremely happy for the
company with how well consumers have taken to the KFC brand and how enthused their
franchisees are about the opportunity ahead. Overall, there will be 3,000 new KFCs added by
2020 in the emerging markets of India, Vietnam, Russia, Pakistan and the African continent.
3. Dramatically Improve US Brand Positions, Consistency and Returns
The biggest challenge in the US is KFC, which given our explosive international growth,
represents just 3 percent of our YUM! Brands overall profits. The company has a very high
intentionality to turn the US business to other parts of the world, and it is believed that it is
possible. In the UK, for example, KFC have been transformed over the last decade with product
innovation, insight-driven marketing and improved operations. As a result, the average unit
volumes rose from about $1 million (where we are in the US today), to $1.5 million.
The Company, however, thinks that it is a big job ahead of them in the US, and its going
to take time to execute these plans. They are determined to fix their operations, and leverage
their core business, chicken on the bone, by offering both fried and non-fried options. Equally
important, they will dramatically improve their value proposition to become more portable and
upgrade their assets.
4. Drive Industry-Leading Long-Term Shareholder and Franchisee Value
The YUM!s share price increased 40% in 2010, rewarding shareholders for their
performance in the marketplace. The company is proud to continue as being a leader among
consumer companies with Return On Invested Capital (ROIC) at 20%+. That makes the
company be a global cash machine, with each of their divisions generating free cash flow and
effectively funding their own capital investments.

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As this capital is deployed to high-growth emerging markets such as China, India and
Russia, the company expects total returns to remain strong. These returns will further improve as
they continue to refranchise restaurants as what they have in the US, Mexico and Taiwan, which
will increase our franchise fees with minimal capital investment.
All in all, it is one of the unique companies that can continue to make significant capital
investments year after year (about $800 million), and pay a meaningful dividend (2.4% yield)
with growth of EPS in double digits (17%), and as a result this makes investments in share
repurchases exceed cash flows. Bottom line, any way you it is looked, Yum! Brands is in strong
financial shape.

V.

Human Resource Management

1. International Staffing Policy
KFC believes that quality training and support are the foundation to building every

franchise business. As one enters the KFC franchise system, he or she will have four primary
areas of emphasis:

Establishing key contacts

Building restaurant

Building team

Setting the restaurant up to start strong

KFC has assembled a comprehensive onboarding program to support in each of these

areas. KFC Brand training and a variety of KFC franchise information are part of that program.
Working with a National Training Leader and several Territory Training Leaders, the franchisee
will complete an eight- to 10-week Brand training program, which covers centralized orientation
training in Louisville, KY, online training using the KFC Learning Zone and in-store skill
practice which the company seeks to organize at existing restaurants near the franchisees home
base.

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Fourteen weeks before the restaurant opening (around ground break if a new store is
being built), three key holders will begin a comprehensive training program. Required attendees
include an Above Store Leader (ASL), a Restaurant General Manager (RGM) and an Assistant
Unit Manager (AUM).

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The training program covers the following:

Week 1

Overview/Building a Great Restaurant

Centralized Louisville, KY

Week 2
Weeks 3-4
Week 5
Week 6
Week 7-8

Roadmap
Learning Zone - Team Member Tracks
KFC Perfect Product Training
Learning Zone - Shift Supervisor Tracks
Restaurant Supervisor In-Store Training
Restaurant Proficiency Practice

Home Office
Certified Training Store
Home Office
Centralized Louisville, KY
Certified Training Store

There will be a cost for the training that runs between $3000-10,000. These costs are
outlined in the Franchise Disclosure Document (FDD). The franchisee must also pay for
uniforms, transportation costs, meals, lodging and any other living expenses of their trainees in
connection with the training program.
KFC also believes that ongoing support is necessary for the restaurant and does so with a
team of people to provide coaching, recognition and continuous backing for the franchisee. This
team, consisting of a Territory General Manager, a Territory Operations Manager, a Territory
Human Resources Manager and a Territory Training Leader, also coordinates product and
procedure rollouts during the course of the year.

2. Methods of Culture Training

Two of their major strengths as a company are their employees and their culture. YUM!
believes in treating each other with respect and fostering an atmosphere of caring, open
communications and candor. Their How We Win Together principles define the culture and
how they manage their business.
a. Believe in All People
They trust in positive intentions and believe everyone has the potential to make a difference.
They actively seek diversity in others to expand our thinking and make the best decision, and
they coach and support every individual to grow with their full capability.
b. Be Restaurant and Customer Maniacs

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They love running great restaurants and their customers rule. They act with urgency to
ensure every customer sees it and feels it in every restaurant. They make sure they have great
RGMs who build great teams, and they are maniacal about rigorous execution of our core
processes to deliver our Brand Standards as our #1 brand building initiative. Its the foundation
for making customer mania come alive.
c. Go for Breakthrough
They always begin by asking ourselves, "What can I do NOW to get breakthrough results
in my piece of Yum!?" and their intentionality drives step change thinking. They imagine how
big something can be and work future-back, going full out with positive energy and personal
accountability to make it happen.
d. Build Know How
They grow by being avid learners, pursuing knowledge and best practices inside and
outside the company. They seek truth over harmony every step of the way and consistently drive
outstanding execution by scaling their learnings into process with tools around what matters
most. Breakthroughs come when they get people with knowledge thinking creatively.
e. Take the Hill Teamwork
They team together to drive action versus activity. Also, they discuss the undiscussable,
always promoting healthy debate and healthy decisions. These relationships allow them to ask
the earth of each other, and it makes specific verbal contracts to get big things done with urgency
and excellence.
f. Recognize! Recognize! Recognize!
The last but not least, they attract and retain the best people and inspire greatness by
being world famous for recognition because they love celebrating the achievement of others, and
they have lots of fun doing it!

VI.

Finance

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1. Capital

2. Shareholders

Selected Financial Data YUM! Brands, Inc. and Subsidiaries (in millions, except per
share and unit amounts).
Fiscal years 2010, 2009, 2008, 2007 and 2006 all include 52 weeks.
(a) Fiscal year 2009 included non-cash charges of $26 million and $12 million to writeoff goodwill related to our LJS/A&W U.S. and Pizza Hut South Korea businesses, respectively.
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See Note 4 to the Consolidated Financial Statements for a description of our store closures and
store impairment expenses in 2010, 2009 and 2008. Additionally, see Note 9 describing our
goodwill impairment expense recognized in 2009.
(b) Fiscal year 2010 included U.S. refranchising losses of $18 million, a loss upon
refranchising our Mexico market of $52 million and a loss upon refranchising our Taiwan market
of $7 million. Fiscal year 2009 included U.S. refranchising gains of $34 million and a loss of $10
million as a result of our decision to offer to refranchise our Taiwan market. These items are
discussed further within our MD&A.
(c) Fiscal year 2010 included a loss of $18 million related to U.S. business transformation
measures, including the 2010 U.S. refranchising losses, and the 2010 Mexico and Taiwan
refranchising losses described in (b). Fiscal year 2009 included a gain of $68 million related to
the consolidation of a former unconsolidated affiliate in China, a loss of $40 million related to
U.S. business transformation measures, including the $26 million goodwill charge described in
(a) and the 2009 U.S. refranchising gains described in (b), and the 2009 Taiwan refranchising
loss described in (b). Fiscal year 2008 included a gain of $100 million related to the sale of our
interest in our unconsolidated affiliate in Japan and a loss of $61 million related to U.S. business
transformation measures. These items are discussed further within our MD&A.
(d) Adjusted for the two for one stock split on June 26, 2007.
(e) In addition to the results provided in accordance with U.S. Generally Accepted
Accounting Principles (GAAP) throughout this document, the Company has provided non
GAAP measurements which present operating results on a basis before Special Items. The
Company uses earnings before Special Items as a key performance measure of results of
operations for the purpose of evaluating performance internally. This non-GAAP measurement is
not intended to replace the presentation of our financial results in accordance with GAAP.
Rather, the Company believes that the presentation of earnings before Special Items provides
additional information to investors to facilitate the comparison of past and present operations,
excluding items that the Company does not believe are indicative of our ongoing operations due
to their size and/or nature. The gains and charges described in (c), above, are considered Special
Items. The 2010, 2009 and 2008 Special Items are discussed in further detail within the MD&A.
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(f) System sales growth includes the results of all restaurants regardless of ownership,
including Company owned, franchise, unconsolidated affiliate and license restaurants. Sales of
franchise, unconsolidated affiliate and license restaurants generate franchise and license fees for
the Company (typically at a rate of 4% to 6% of sales). Franchise, unconsolidated affiliate and
license restaurant sales are not included in Company sales on the Consolidated Statements of
Income; however, the franchise and license fees are included in the Companys revenues. We
believe system sales growth is useful to investors as a significant indicator of the overall strength
of our business as it incorporates all our revenue drivers, Company and franchise same store
sales as well as net unit development. Same store sales growth includes the results of all
restaurants that have been open one year or more.
(g) Local currency represents the percentage change excluding the impact of foreign
currency translation. These amounts are derived by translating current year results at prior year
average exchange rates. We believe the elimination of the foreign currency translation impact
provides better year-to-year comparability without the distortion of foreign currency fluctuations.

2. Shareholders:
Who are our largest shareholders?
This table shows ownership information for the only YUM shareholder known by their
management to be the owner of 5% or more of YUM common stock. This information is
presented as of December 31, 2010, and is based on a stock ownership report on Schedule 13G
filed by such shareholder with the SEC and provided to them.

Note: The filing indicates sole voting power for 16,227,100 shares, shared voting power for
10,300,483 shares, no voting power for 3,703,687 shares, and sole dispositive power for
19,930,787 shares and shared dispositive power for 10,300,483 shares.

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How much YUM common stock is owned by our directors and executive officers?
The table shows the beneficial ownership of YUM common stock as of December 31,
2010 by each of our nominees for election as directors, each of the executive officers named in
the Summary Compensation Table (below), and all directors and executive officers as a group.
Unless we note otherwise, each of the following persons and their family members has
sole voting and investment power with respect to the shares of common stock beneficially owned
by him or her. None of the persons in this table hold in excess of one percent of the outstanding
YUM common stock. Directors and executive officers as a group beneficially own
approximately 2%. Our internal stock ownership guidelines call for the Chairman to own
336,000 shares of YUM common stock or stock equivalents. Guidelines for our other named
executive officers call for them to own 50,000 shares of YUM common stock or stock
equivalents within five years following their appointment to their current position. Other
executive officers are required to own 24,000 shares of YUM common stock or stock
equivalents.
The table shows the number of shares of common stock and common stock equivalents
beneficially owned as of December 31, 2010. Included are shares that could have been acquired
within 60 days of December 31, 2010 through the exercise of stock options, stock appreciation
rights or distributions from the Companys deferred compensation plans, together with additional
underlying stock units as described in footnote 4 to the table. Under SEC rules, beneficial
ownership includes any shares as to which the individual has either sole or shared voting power
or investment power and also any shares that the individual has the right to acquire within 60
days through the exercise of any stock option or other right

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(1) Shares owned outright. These amounts include the following shares held pursuant to YUMs
401(k) Plan as to which each named person has sole voting power: Mr. Novak, 30,999 shares and
all directors and executive officers as a group, 33,923 shares
(2) The amounts shown include beneficial ownership of shares that may be acquired within 60
days pursuant to stock options and stock appreciation rights awarded under our employee or
director incentive compensation plans. For stock options, we report shares equal to the number of
options exercisable within 60 days. For SARs we report the shares that would be delivered upon
exercise (which is equal to the number of SARs multiplied by the difference between the fair
market value of our common stock at year-end and the exercise price divided by the fair market
value of the stock).
(3) These amounts reflect units denominated as common stock equivalents held in deferred
compensation accounts for each of the named persons under our Directors Deferred
Compensation Plan or our Executive Income Deferral Program. Amounts payable under these
plans will be paid in shares of YUM common stock at termination of employment/directorship or
within 60 days if so elected.

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(4) Amounts include units denominated as common stock equivalents held in deferred
compensation accounts which become payable in shares of YUM common stock at a time (a)
other than at termination of employment or (b) after March 1, 2010. For Messrs. Novak and Su,
amounts also include restricted stock units awarded in 2008 and 2010, respectively.
(5) This amount includes 26,000 shares held in IRA accounts.
(6) All shares are held in a margin account.

VII.

Social Responsibility
There are several programs arranged by KFC Cambodia to get involved with

society and to make fun to their customers in order to improve their life quality. Those
program are including Key Kids, Chicky Carnival, Coloring Contest, KFC Concert, and so
on.

1. Hey Kids!
Chicky goes to school is to provide new out-of-class fun & learn experience with
Chicky. The program are: Chicky dance, Contest & awardGame to win a lot of prizes

2. Chicky Carnival

2011

In conjunction with Chicky Club's new recruitment launch, Kids Marketing organized a
surprise Chicky Carnival bash for the first time to reward members and also invite non-members
to come join in the fun. One day carnival was held on Sunday 25th July 2011 at Night Market.
This event has about 3,000kids & parents. There were 10 game booths, stage game, groups game
encouraged participation from family members which made it a very family oriented event as
well as for kids.
.
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3. Chicky Carnival 2012

This year also not different from last year, Chicky Club's member and non-members are
invite to Chicky Carnival Event on Sunday 15th January 2012 at Night Market is about
3,500kids & parents. There were 10 game booths, stage game, groups game encouraged
participation from family members which made it a very family oriented event as well as for
kids.

4. Coloring contest
Coloring contest most of the time we do it in KFCs outlets. On International Childrens
Day or Store coloring contest. Kids need to purchase ticket for participate the event, ticket can
redeem food, drink, colour pen on event day. Award : Hampers, Candy, balloon, KFC toy and
KFC bags

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5. KFC Concert
At KFC, we always made it simple for customers to enjoy rewards and great promotions.
KFC was organized a concert 2010 with the chance to win a grand priz-Yamaha Fino and other a
lot of prizes. Event: Koh Pich Island, on 2 & 3 October 2010.

VIII.

Culture and Value

Our values are what we like to call our "How We Work Together" principles. Outlined for

you below, they are what we incorporate into everything we do.

Customer Mania: We listen and respond to our customers and are obsessed about going
the extra mile to make them happy.
Belief in People: We believe in people, trust in positive actions, encourage ideas from
everyone and fashion a workforce that is different in style and background.
Recognition: We find reasons to celebrate the achievements of others and have fun doing
it.
Coaching & Support: We learn from each other and always help each other out.
Accountability: We do what we say and take responsibility for our actions. We act like
owners.
Executional Excellence: No matter which restaurant you work in, you'll notice similarity
in the quality of our service. This is the power of the KFC brand.

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Positive Energy: We work with passion and energy. We're not interested in hierarchy and
all the nonsense that comes with it.
Teamwork: We work together as one team, always. No matter how busy we are, we
make sure we get together to talk things through.

IX.

Political and Legal System

1. Political System
Cambodia's political system is a product both of the country's troubled and oftentimes

turbulent modern history and of factors rooted deeply in its premier development. This article
examines the political and governmental units that constitute Cambodia's political system and
explores the political system in terms of its current structures and its historical development.
Era

Political System

11/Aug/1863 - 9/Nov/1953

French Colonial

9/Nov/1953 - 18/Mar/1970

Social of People Monarchy

18/Mar/1970 - 17/Apr/1975

Khmer Republic (LunNol)

17/Apr/1975 - 07/Jan/1979

Khmer Rouge Regime (Pol Pot)

07/Jan/1979 1989

Peoples Republic Of Kampuchea

1989 - 23/May/1993

Republic Of Kampuchea

23/May/1993 Now

Constitutional Monarchy

2. Political Risk
Cambodia has met a lot of war over two decades from 1970s. It made people in the country
dead. And until 1997, Cambodia still meet problem because some parties didnt get along with
each other, so it made the Country to be turmoil, unsafe and so on. So all investors not only

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international investors but also national investors dont want to invest in Cambodia, but now
there are many investors come to invest in Cambodia such as Metfone Company because
nowadays Cambodias political risk is better than before, safety, and government controlling is
better. All of these reasons can attract investors to invest in Cambodia more and more.
3. Law System
For the Law system that related to investment in Cambodia that all the investors must
follow:
Article1 This Law governs all investments projects made by investors who are
Cambodian citizens and/or foreigners within the Kingdom of Cambodia.
Article 16 In accordance with the Constitution and relevant laws and regulations
pertaining to the ownership and use of land:
1. Ownership of land for the purpose of carrying on promoted investment activities shall be
vested only in natural persons holding Cambodian citizenship or in legal entities in which
more than 51% of the equity capital are directly owned by natural persons or legal entities
holding Cambodian citizenship.
2. Use of land shall be permitted to investors, including long-term leases of up to a period of
70 years, renewable upon request. Upon such use may include the right of ownership of real
and personal property situated on the land as may be permitted by the law.
Article 17 Investors in the Kingdom of Cambodia shall be free to hire Cambodian
nationals and foreign nationals of their choosing in compliance with the labor and immigration
law.
Article 18 The investors shall be allowed to hire foreign employees who are listed in
Article 14 (6) provided that:
1. The qualification and expertise are not available in the Kingdom of Cambodia among the
Cambodian populace. In the event of such hiring, appropriate documentation including the

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photocopies of the employee's passport, certificate and/or degree, and a curriculum vitae shall
be submitted to the Council;
2. Investors shall have the obligation to provide adequate and consistent training to
Cambodian employees,
3. Promotion of Cambodian staff to senior positions will be made over time;
Article 21 In the event a promoted company intend to end its activity in the Kingdom
of Cambodia, it will have to inform the Council through either a registered letter or a hand
delivered letter stating the reasons of such a decision, which letter shall be signed by the
investor or his attorney-in fact.
Article 22 In the event of a proposal for a dissolution of a company without judicial
procedures, the investor shall provide proofs to the Council that the company has properly
settled its potential creditors, complainants and claims from the Ministry of Economy and
Finance before the investor is allowed to officially dissolve his company or enterprise
according to the applicable commercial law.
Article 23 Once the investor is allowed to officially dissolve his company or enterprise
either within the judicial procedures or not, the investor can transfer the remaining proceeds of
its assets overseas or use them in the Kingdom of Cambodia. However, in the event that the
dissolving company had used machineries and equipment which were imported duty free for
less than five years, the company will have the obligations to pay the duties applicable to those
machineries and equipment.
Article 24 Investments authorized under the previous Law on Investment of the State
of Cambodia and its Sub-Decrees shall be subject to the same benefits and obligations as stated
under this Law. This law is not retroactive.
Article 25 In the case where the promoted company violates or fails to comply with the
conditions stipulated by the Council, the Council shall have the power to withdraw the rights
and benefits granted to him, in whole or in part.

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X.

MN512

Economic Condition
1. Level of Development
Mining also is attracting significant investor interest, particularly in the northern parts of

the country. In 2006, a US-Cambodia bilateral Trade and Investment Framework Agreement
(TIFA) was signed, and several rounds of discussions have been held since 2007. Rubber exports
increased about 25% in 2009 due to rising global demand. The long-term development of the
economy remains a daunting challenge. The Cambodian government is working with bilateral
and multilateral donors, including the World Bank and IMF, to address the country's many
pressing needs. The major economic challenge for Cambodia over the next decade will be
fashioning an economic environment in which the private sector can create enough jobs to
handle Cambodia's demographic imbalance. A nation's GDP at purchasing power parity (PPP)
exchange rates is the sum value of all goods and services produced in the country valued at
prices prevailing in the United States. For many developing countries, PPP-based GDP measures
are multiples of the official exchange rate (OER) measure. The differences between the OERand PPP-denominated GDP values for most of the wealthy industrialized countries are generally
much smaller.

2. Inflation
The inflation in Cambodia is not constant.

XI.

Government Trade Policy

The Royal Government of Cambodia (RGC) is in the process of developing a trade sector

strategy, and preparing for WTO accession, as a key component of the overall national socioeconomic development and poverty reduction strategy. The roadmap being used to plan the trade
strategy is Pro-Poor Trade Development Strategy endorsed by the Council of Ministers and
presented to the international community at the Tokyo CG meetings in June 2001. The study
provides a preliminary analysis of Cambodias competitive position with respect to trade, as an
early contribution to the policy development process.

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Trade policies under consideration by government and donors promote an export-led

growth approach through rapid liberalization and further integration into the global economy.
These trade policy development processes are intended to be pro-poor, but the supporting
documentation has yet to clearly demonstrate a positive correlation between the type of trade
strategy suggested and the actual reduction of poverty in the Cambodian context The NGO
community strongly recommends that in order to effectively realize poverty reduction, the type
of growth and trade strategy to pursue should be based on clearly demonstrable links between
various trade policy alternatives and poverty reduction indicators.
The current global trade system is biased against developing countries and in particular
poor producers and net consumers or subsistence farmers and fishers within these countries.
Integration through trade is creating new opportunities but these are available only to economic
actors (whether countries, enterprises, or individuals) with access to productive assets,
infrastructure and education. However, given the appropriate international regulatory framework,
trade can play an important role in poverty reduction. The RGCs future trade policy should
consider the pace, sequencing and distributional aspects of trade and economic policy reform.
Development strategies which put a premium on aggregate growth targets, emphasizing
investment in specific profitable economic sectors, must be prefaced by comprehensive
poverty impact analysis, to identify policy instruments and sector specific strategies which will
most effectively target poverty reduction to ensure broad-based development with equity.
Strengthening human capabilities and the domestic economy, through robust social and
economic structures at the national and community levels, is a necessary prerequisite to a
reduction in trade barriers as part of international integration. Increases in income gained by
better-off sectors of society and foreign companies can only contribute to poverty reduction if
part of this income returns to the government budget for redistribution into spending targeted at
poorer segments of Cambodian society (through spending on improving access to services or
increasing productivity).
Thus there is a crucial link between trade policies and other macroeconomic and fiscal
policies, and their implementation. Impact analysis of trade policy reforms must take place in the
context of overall poverty reduction policy formulation and implementation. Pro-poor trade
strategy development requires sufficient time for participatory poverty impact analysis and
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stakeholder consultation. Small-scale producers, farmers, fishers, and factory workers are
amongst those most heavily affected by trade strategy.

XII.

Government Foreign Investment Policy

In order to attract FDI, the government has strengthened the country's legal framework,

bolstered its institutions and liberalized the relevant regulations, in ways that are conducive to
private sector investment and business activities in Cambodia. Investors can set up 100%
foreign-owned investment projects and employ skilled workers from overseas, in cases where
these workers cannot be found in the domestic labor force.
In addition, the Law on Investment and its related Sub-Decree grant generous incentives
to investors, especially those concerned in investment projects geared towards exports. Attention
is also accorded to private investment in Build-Operate-Transfer (BOT) projects, and private
investment in infrastructure, including public utilities such as electricity, water supply and
telecommunications. In order to facilitate investors in their applications for investment approval,
the government has established an institution to oversee investment policy and strategy called the
Council for the Development of Cambodia (CDC). It has also signed agreements with the ADB,
providing private sector investors with the opportunity to obtain funding for their investment
projects from this international financing institution.

XIII.

Foreign Policy Relations

Cambodia has established diplomatic relations with most countries, including the United

States. The country is a member of most major international organizations, including the UN and
its specialized agencies, and became a member of the Association of Southeast Asian Nations
(ASEAN) in 1998.Cambodia is a member of the World Bank, the International Monetary Fund,
and the Asian Development Bank (ADB). On October 13, 2004, Cambodia became the 148th
member of the World Trade Organization (WTO).

XIV.

Business Environment and Recommendation

1. Environmental variable impacts to KFC operations

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Council for the Development of Cambodia provides investors can set up 100% foreignowned investment projects and employ skilled workers from overseas, in cases where these
workers cannot be found in the domestic labor force. In this case, KFC take advantages to take
its skilled workers from the parent company to help in its production.
However, the location is still the barrier to KFC. There are some places where KFC
cannot reach to its customers; KFC in Cambodia faces the payment issues ask all payment must
be in cash. Customers can assist KFC staff for correct changes. Moreover, they have to wait 30
minutes to allow the staff to prepare and deliver.
The political is not the barrier to the KFC since it is own by Cambodian business group_
Royal Group Companies Ltd,.; Not only KFC, but almost all businesses in Cambodia are much
less impact from political, however, to launch the business in Cambodia, investor must apply for
business registration at the ministry of commerce. The complicated processes of the application
form of business registration might be the barriers to investors. Moreover, any outside expenses
to the officers at where investors can apply legal to their businesses is also the big barriers, which
known ask the corruption.
Cambodia as a whole right now is much improved in businesses investment both local
and foreign investment while government takes intention to participate in helps to any new
businesses.

2. Recommendations
As the franchise business model, KFC is so successful in Cambodia is the last few years.
KFC believes that quality training and support are the foundation to building every franchise
business. As one enters the KFC franchise system, franchisee will have four primary areas of
emphasis:
Establishing key contacts

Building restaurant

Building team

Setting the restaurant up to start strong

These strategies would help to improve its company core competencies. KFC can build
up culture with all the regions where it is located. In Cambodia, it has staff training program on
production chain, services, and team building it makes up to show to the public. KFCs
Corporate Social Responsibility is the key matric uses to attract its customers and attack its
competitors.
However, in production chain, KFC mostly imports from the franchiser in Malaysia where this
made KFC a week point.
In consumption chain, KFC is still limited in delivery service. It take 30 minutes to
deliver its product to order point that is a waiting service customers might dissatisfy. KFC must
reconsider its consumption chain so that it can gain advantages over the competitors. The service
in house is the barrier to grow, as the manager of KFC, he has to recheck its staff on daily service
to the customers in the restaurants. In reality as we have observed in place, KFC customer
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service on-board where customers order food was not so good, they have to wait or re-order so
that they can get food.
Finally, all the mentions points above have to take action in so that KFC can improve its
business throughout Cambodia.

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References
Yum! brands, Inc. 2010 annual customer mania report
Restated Articles of Incorporation of YUM, which is incorporated herein by reference from
Exhibit 3.1 to YUMs Annual Report on Form 10-K for the fiscal year ended December 27,
2008.
Amended and restated Bylaws of YUM, which are incorporated herein by reference from Exhibit
3.1 on Form 8-K filed on November 23, 2009.
www.kfc.com.kh
www.kfc.com