Yum Company Organizational Structure and Leadership

The global fast food industry is bound to continue growing into the foreseeable future given consumer’s preferences to align with western models of fast food restaurants as well as increasing number of middle-income earners. Yum Brands previously TRICON Global Restaurants has been in the industry since 1997 (Ghanawi, 2013). The super brand now operates under three flagship subsidiaries namely the KFC division, the Taco Bell Division, the Pizza Hut Division and the new YUM China subsidiary. The new subsidiary was formed to accommodate the unique cultural perspectives of Chinese consumers in a market that stills bears huge growth capacity into the long term.

This is an indication that the Yum Company leadership has embraced an organizational strategy that seeks to thrive on greater globalization outcomes. As such, to execute such a mandate, the super brand will project a largely nomadic workforce, extended supply chains, greater workforce diversity, and larger and specialized technology application to reach out to its growing global consumer base. This paper seeks to present an analysis of Yum Company’s present form, its organizational structure, consumer and market diversity, workforce diversity and the adopted communication technology to inform its Workforce 2020 executive report.

Leadership Models, Trends, and Actions

Transformational leadership has been the cornerstone of Yum Company’s global expansion and more so, adherence to a culture of inclusivity and multiplicity, not only amongst its workforce but more importantly, the global consumer (Born & Kang, 2015). Under the leadership of present CEO Greg Creed, this particular organization has embraced a leadership mantra that accommodates diversity and inclusiviness as stepping stone towards informed decision-making within a market with a rich diversity of human cultures. For instance, the recent decision to embrace YUM China as an independent subsidiary was informed by the fact that the Chinese market has a number of diverse cultures, which total to over 1.2 billion consumers (Yang, 2014). Having an independent China subsidiary that is financially independent of the other three core divisions could enable it to progressively expand within Mainland China. At the same time, this will limit instances of management conflict as the independent China unit will package services and products that appeal to different Chinese subgroups in different parts of the vast nation.

Yum Company has come to understand that its unique global presence has been successful due to extended food chains heavily reliant on stable communication channels (Canato & Ravasi, 2015). This implies that this entity has put it a vast amount of resources into information technology. The leadership continuously seeks to improve output from its investments in communication and has very recently indicated that physical communication amongst its leadership could improve attainment of organizational objectives (Born & Kang, 2015). The organization has recently communicated the intent to localize its leadership to the Texas headquarters. This move is envisaged to champion greater face-to-face interactions among leaders and senior employees and by so doing, optimize teamwork potentials. These more traditional ways of communication are perceived as pivotal for creating a workplace atmosphere that is fun and keen on recognizing and appreciating the cultural diversity of its customers.

The organization’s hierarchy is top-down in nature. It operates its expansive global business from its US headquarters with the three main subsidiaries also have distinct locations for their main offices (Yang, 2014). The three subsidiaries oversee operations within the US and internationally from the different main offices in accordance with the identified growth and transformation strategy which is more efficient, franchised and focused (Mylonakis & Evripiotis, 2016).

The entity’s Workforce 2020 executive report points out that four critical growth drivers are set to continue into the near future. It is envisaged that the already tried and tested repeatable business model, as well as, strategic plans will be adhered to towards accelerating restaurant development and retail sales growth. The entity will heavily rely on its leadership towards the creation of relevant and distinctive brands, unique franchise operating competencies, valiant restaurant development, as well as, cross-cultural talent development (Canato & Ravasi, 2015).

Workforce Diversity

There have been notable changes in workforce generations within the US for some time now. Many companies have had to grapple with the issue of generational diversity and in an attempt to develop and meet specific needs (Yang, 2014). At Yum Company, such challenges served to inform its longer-term HR policy to one that indeed appreciates and thrives on workforce diversity (Born & Kang, 2015). It is important to point out that the restaurant business is at ties faced with challenges in retaining talents especially when younger restaurant personnel have to report to educational institutions. This has resulted in a situation where the workforce is relatively transient in some instances.

For the Yum Company, workforce diversity has been instrumental in its ability to expand global operations. The diversity within the US as its home country has created a great avenue through which to source talented staff, train and retain a diverse workforce to progress its globalization agenda (Born & Kang, 2015). This labor pool has allowed the organization to source from within and specifically train staff on cultural and social aspects of different regions. As such, the company boasts a nomadic workforce that is sufficiently exposed to different cultures and have the capacity to profess it’s ‘we win together principle. The organization continues to profess a unique culture founded on cultural diversity as a platform towards ensuring customer satisfaction to global consumers in line with the numerous cultural preferences (Canato & Ravasi, 2015). It is projected that this unique organizational culture will continue to inform medium term, as well as, long-term strategies going forward to 2020.

Extended Supply Chain

Yum Company brands are essentially high-speed food production entities that can only translate to high customer satisfaction if catered for by an extremely efficient supply chain. Given that this entity is bound to continue with its global expansion stratagem, it is critical that one delves into its recent successes in its China unit (Mylonakis & Evripiotis, 2016). In China, Yum operates under the guidance of its localization strategy. Prior to its foray into the vast Chinese restaurant business market, Yum had to qualify under the country’s law by identifying with a Chinese partner. In 2009, it deemed it fit to associate with a local partner with strong government connection and resources (Mylonakis & Evripiotis, 2016).

Through its localization strategy, it chose to rely on a Chinese supply chain to satisfy the high-speed food production lines. Through its strategic partner, the Yum Company has been able to fully own all its distribution centers. An interesting aspect of the Chinese market is that its consumers strongly embrace traditional cultures such that restaurant brands have been careful to substitute products to account for speed and more so efficiency (Mylonakis & Evripiotis, 2016). The company’s expansion in the country is unrivaled and as such, it would impossible to open a couple of retail outlets a week while dependent on an outsourced distributor. Having its distribution centers at its core of operations has enabled the company to continue unrivaled expansion while also remaining very successful.

However, the company has indeed suffered some setbacks, which had the potential of crippling the organization’s growing reputation. Media reports voiced concerns over possibilities of consumers being offered expired meat products, as well as, antibiotic laced meat products (Mylonakis & Evripiotis, 2016). The health scare was indeed significant but having a centralized distribution leveraged the company to adequately comply with requirements by Chinese regulators. As such, having a centralized distribution center in accordance with its localized strategy has served to support its quality service delivery, food safety, and expansion efforts.

The firm’s supply chain is no different in the domestic US market. Reliance on centralized distribution centers has served to enhance efficiencies and effectiveness in its supply chain. American consumers have also decried being offered food products laced with unacceptable levels of animal antibiotics (Mylonakis & Evripiotis, 2016). Such antibiotics are thought to induce resistance in humans to readily available antibiotics leading to adverse health outcomes. Having centralized distribution centers, therefore, worked well to quickly act to avert crisis stemming from media speculations as well as combat arising management conflicts. Yum Company’s supply chain is in a strong position to progressively appraise food safety standards while sustaining its highly efficient and speedy food production centers well into 2020.

Recommendations

The entity’s Workforce 2020 executive report points out that four critical growth drivers are set to continue into the near future. It is envisaged that the already tried and tested repeatable business model, as well as, strategic plans will be adhered to towards accelerating restaurant development and retail sales growth. It is recommended that this entity consistently continues to prudently rely on its leadership towards the creation of relevant and distinctive brands, unique franchise operating competencies, valiant restaurant development, as well as, cross-cultural talent development (Canato & Ravasi, 2015).

Its exceptional people first culture has realized commendable results and has indeed recognized as well as rewarded exceptional talent (Canato & Ravasi, 2015). This is no small feet for such a large multinational but its organizational structure has worked to exhibit this as a competitive advantage over its close competitors. In line with this particular culture, this 2020 Workforce executive report is of the view that it continues to encourage the development of a nomadic workforce that is able to propagate its vision and strategic objectives in western as well as predominantly non-western societies.

Away from the firm’s Chinese business, the company is looking forward to continuing franchising its brands. It is strongly suggested it continues to partner with development oriented franchisees to enable more than 90% of restaurant ownership to be franchisee held (Ghanawi, 2013). In turn, the parent company along with its brand flagships will concentrate operations with a focus on technology adoption, recruitment and equip restaurant operators to ensure cultural completeness for heightened brand growth and more importantly, customer experiences.

Summary and Conclusion

Achieving breakthroughs has enabled Yum Company to excel in markets where others are seeking to downscale operations. By uniquely positioning itself as a people oriented entity, it has appealed to a wide and richly diverse customer base buoyed by an equally diverse workforce. Yum’s employee development and learning platform have allowed customers from existing and new regions to appreciate its mantra. Its organizational structure has allowed division leadership in different societies to fully appreciate indigenous cultures in an effort to appraise customer satisfaction by adapting to unique consumer preferences. It transformation leadership has therefore been successful and is expected to continue on the same trend towards 2020. As such, its leadership development strategy is focused on functionality on an international scale. It has also maintained critical business portfolios like its distribution centers towards ascertaining consumer safety, efficiency in productivity and adherence to regulations by regional authorities. However, it is critical to note that it has to activate its achieving breakthroughs further given the recent change in US political leadership. The present leadership has clearly intimidated against engagement, which may result in a trickle-down effect to American businesses such that inclusivity, as well as, diversity may be compromised.

References

Born, N., & Kang, S. K. (2015). What are best practices in the space of employer branding that enable organizations attract and retain the best talent? Retrieved 12 February 2017 from http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1078&context=student

Canato, A., & Ravasi, D. (2015). Managing long-lasting cultural changes. Organizational Dynamics, 44(1), 75-82.

Ghanawi, N. (2013). The Internationalization of KFC (p. 1). Munich, Germany: GRIN Verlag.

Mylonakis, J., & Evripiotis, M. (2016). Towards an assessment of globalization and localization of western east-food chains in China: the case of KFC. European Journal of Business and Innovation Research, 4(3), 17-28.

Yang, H. P. S. (2014). Case study 2: KFC in China. In Marketing Cases from Emerging Markets (pp. 17-23). Heidelberg, Germany: Springer.