Case Study Description of Yum! Brands, Inc: A Corporate Do-Over
Used in the second module of a Harvard Business School course on Managing Service Operations, which addresses the design of sustainable service models (606-031).Describes the successful turnaround of the restaurant company Yum! Brands after its spin off from PepsiCo and covers how the company's leadership planned and executed on virtually every dimension of the employee experience. The main dilemma centers on what the company should do in terms of multibranding--housing two brands in one physical location.
Authors :: Frances X. Frei, Amy C. Edmondson, James Weber, Eliot Sherman
Swot Analysis of "Yum! Brands, Inc: A Corporate Do-Over" written by Frances X. Frei, Amy C. Edmondson, James Weber, Eliot Sherman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Yum Brands facing as an external strategic factors. Some of the topics covered in Yum! Brands, Inc: A Corporate Do-Over case study are - Strategic Management Strategies, Growth strategy, International business, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Yum! Brands, Inc: A Corporate Do-Over casestudy better are - – there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing commodity prices, challanges to central banks by blockchain based private currencies, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy,
geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Yum! Brands, Inc: A Corporate Do-Over
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Yum! Brands, Inc: A Corporate Do-Over case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yum Brands, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yum Brands operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Yum! Brands, Inc: A Corporate Do-Over can be done for the following purposes –
1. Strategic planning using facts provided in Yum! Brands, Inc: A Corporate Do-Over case study
2. Improving business portfolio management of Yum Brands
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Yum Brands
Strengths Yum! Brands, Inc: A Corporate Do-Over | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yum Brands in Yum! Brands, Inc: A Corporate Do-Over Harvard Business Review case study are -
Highly skilled collaborators
– Yum Brands has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Yum! Brands, Inc: A Corporate Do-Over HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Technology & Operations industry
– Yum! Brands, Inc: A Corporate Do-Over firm has clearly differentiated products in the market place. This has enabled Yum Brands to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Yum Brands to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Yum Brands has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Yum! Brands, Inc: A Corporate Do-Over - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Yum Brands are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Yum Brands is one of the leading recruiters in the industry. Managers in the Yum! Brands, Inc: A Corporate Do-Over are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Yum Brands has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Yum Brands in the sector have low bargaining power. Yum! Brands, Inc: A Corporate Do-Over has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Yum Brands to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Yum Brands is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Frances X. Frei, Amy C. Edmondson, James Weber, Eliot Sherman can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Technology & Operations field
– Yum Brands is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Yum Brands in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Yum Brands has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Yum! Brands, Inc: A Corporate Do-Over Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Yum Brands is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Yum Brands is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Yum Brands is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Yum! Brands, Inc: A Corporate Do-Over Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Yum! Brands, Inc: A Corporate Do-Over | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yum! Brands, Inc: A Corporate Do-Over are -
Lack of clear differentiation of Yum Brands products
– To increase the profitability and margins on the products, Yum Brands needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Yum! Brands, Inc: A Corporate Do-Over that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Yum! Brands, Inc: A Corporate Do-Over can leverage the sales team experience to cultivate customer relationships as Yum Brands is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Yum! Brands, Inc: A Corporate Do-Over, in the dynamic environment Yum Brands has struggled to respond to the nimble upstart competition. Yum Brands has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Yum! Brands, Inc: A Corporate Do-Over, is just above the industry average. Yum Brands needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Skills based hiring
– The stress on hiring functional specialists at Yum Brands has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Yum Brands supply chain. Even after few cautionary changes mentioned in the HBR case study - Yum! Brands, Inc: A Corporate Do-Over, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Yum Brands vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Yum Brands is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Yum Brands needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Yum Brands to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Frances X. Frei, Amy C. Edmondson, James Weber, Eliot Sherman suggests that, Yum Brands is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High operating costs
– Compare to the competitors, firm in the HBR case study Yum! Brands, Inc: A Corporate Do-Over has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Yum Brands 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Yum! Brands, Inc: A Corporate Do-Over, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Yum Brands has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Yum! Brands, Inc: A Corporate Do-Over should strive to include more intangible value offerings along with its core products and services.
Opportunities Yum! Brands, Inc: A Corporate Do-Over | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Yum! Brands, Inc: A Corporate Do-Over are -
Buying journey improvements
– Yum Brands can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Yum! Brands, Inc: A Corporate Do-Over suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Yum Brands can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Yum Brands can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Yum Brands in the consumer business. Now Yum Brands can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Yum Brands has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Yum Brands to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Yum Brands in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Yum Brands can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Yum! Brands, Inc: A Corporate Do-Over, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Yum Brands can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Yum Brands has opened avenues for new revenue streams for the organization in the industry. This can help Yum Brands to build a more holistic ecosystem as suggested in the Yum! Brands, Inc: A Corporate Do-Over case study. Yum Brands can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Yum Brands to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Yum Brands can use these opportunities to build new business models that can help the communities that Yum Brands operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Yum Brands can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Yum Brands can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Yum! Brands, Inc: A Corporate Do-Over External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Yum! Brands, Inc: A Corporate Do-Over are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Yum Brands with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Yum Brands can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Yum! Brands, Inc: A Corporate Do-Over .
Stagnating economy with rate increase
– Yum Brands can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Yum Brands
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Yum Brands.
Regulatory challenges
– Yum Brands needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Yum Brands business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Yum! Brands, Inc: A Corporate Do-Over, Yum Brands may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Yum Brands has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Yum Brands needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Yum Brands is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Yum Brands will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Yum Brands in the Technology & Operations sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Yum Brands needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Yum! Brands, Inc: A Corporate Do-Over Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Yum! Brands, Inc: A Corporate Do-Over needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Yum! Brands, Inc: A Corporate Do-Over is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Yum! Brands, Inc: A Corporate Do-Over is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Yum! Brands, Inc: A Corporate Do-Over is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Yum Brands needs to make to build a sustainable competitive advantage.
