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 - – increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, there is backlash against globalization, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing,
supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, 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 -
Organizational Resilience of Yum Brands
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Yum Brands does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Yum Brands is one of the most innovative firm in sector. Manager in Yum! Brands, Inc: A Corporate Do-Over Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
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.
Superior customer experience
– The customer experience strategy of Yum Brands in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Yum! Brands, Inc: A Corporate Do-Over Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
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.
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.
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.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Yum! Brands, Inc: A Corporate Do-Over HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Yum Brands has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Yum Brands has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Yum Brands needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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.
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.
Low market penetration in new markets
– Outside its home market of Yum Brands, firm in the HBR case study Yum! Brands, Inc: A Corporate Do-Over needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Yum Brands has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Yum Brands even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Yum Brands has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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 -
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.
Leveraging digital technologies
– Yum Brands can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Yum Brands can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Yum Brands has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Yum! Brands, Inc: A Corporate Do-Over - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Yum Brands to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Yum Brands is facing challenges because of the dominance of functional experts in the organization. Yum! Brands, Inc: A Corporate Do-Over case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Yum Brands can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
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.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Yum Brands in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Yum Brands needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Yum Brands can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
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 .
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Yum Brands.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
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.
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 .
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.
High dependence on third party suppliers
– Yum Brands high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.