Question

READREAD THE ARTICLE BELOWBELOW. FROM THE WALL STREET.

describe all relevant informationinformation. telling the main thing you take away from the articlearticle and how it applies to globalization.

HANGZHOU, China -- When Michelle Xian wandered into one of the fast-food restaurants at a shopping mall here on a recent weekday, she didn't realize it was a KFC.

The modern décor featured an open kitchen and hanging plants, and the menu included tuna-and-pesto paninis and quinoa-and-corn salads. Customers were busy placing orders via smartphone, using QR codes printed on tables, or through a facial-recognition system that matches their images to their Alipay digital wallets.

"I don't normally go to KFC because it's not that healthy," said Ms. Xian, 30 years old, who ordered a chicken sandwich before being told where she was. "This is more aligned with new trends."

The KFC concept store, known as KPRO, is a testing ground for owner Yum China Holdings as it tries to capture a new audience and drive growth in the wake of its spinoff from U.S. parent Yum Brands Inc. a year ago last week. In a strategic break from its American counterpart, which is going back to finger-lickin' basics in the U.S., Yum China is pushing healthier offerings and technology.

Since the spinoff, China's biggest fast-food chain, with more than 7,700 KFC and Pizza Hut stores, has bought a controlling stake in an online food-delivery company, partnered with China's most-popular digital wallet service and improved its smartphone apps.

Yum China's 63-year-old chief executive, Muktesh "Micky" Pant, concedes he was skeptical of the emphasis on apps at first, telling his team they were too complicated.

"They very politely told me to just hang on, and I'm glad I didn't interfere," he said in a recent interview. "People have far more apps on their phones, and they are able to navigate them effectively."

Mobile payments at Yum China's restaurants represented 45% of sales in the quarter ended Aug. 31, up from 17% in all of 2016. Delivery orders, most of which come from online apps, were 14% of sales in the same period, up from 10% last year. Its two-year-old loyalty program, meanwhile, has become one of the largest in the world, with more than 127 million members -- dwarfing industry leader Panera Bread Co. in the U.S., which has about 25 million members.

Net income in the first eight months of this year rose 19% over the same period a year earlier, while system sales, which include revenue from franchises and joint ventures, grew 10% in the latest quarter.

"To the U.S. investor, the numbers look meteoric," said Sara Senatore, an analyst at Sanford Bernstein. Shares in Yum China are up more than 65% since the company was listed on the New York Stock Exchange in November 2016.

"But Yum, broadly speaking, is holding its own," she added, keeping pace with Chinese chain restaurant sales.

One not-so-bright spot for Yum China is Pizza Hut. Sales at its stores open at least a year were flat in the most recent quarter, compared with 7% sales growth at KFC.

Yum Brands was the first major Western fast-food company to enter China, beating McDonald's Corp. by three years when it opened a KFC near Tiananmen Square in 1987. Its long success was dimmed in recent years by food-safety scares and stronger competition, leading the parent company to spin it off and instead collect a percentage of sales.

"Food safety and nutrition is a greater consideration for Chinese consumers, while speed of service and authenticity is more important to U.S. consumers," said Morningstar analyst R.J. Hottovy in an email. Technology also figures heavily in Yum China's strategy. The company has partnered with Alibaba Group Holding Ltd. affiliate Ant Financial to offer its "smile to pay" system at the KPRO in Hangzhou, Alibaba's headquarters city.

Customers go to a self-serve kiosk to choose items on a video screen, then pay by looking at a camera, provided they've enabled facial-recognition on their Alipay app. For security, they must also enter their phone number.

Answer 1

Key Takeaways from the article

1. The most important take away from this article is how companies are making changes in their offering according to the requirements of the customer. Yum brand makes a significant research about the China population that they are more concerned towards food safety and nutrition so they made their menu more nutritious value in food. They introduced the KPRO concept in the restaurants for the urbaner young generation which are more tech-savvy and more attracted towards the use of technology. And the company can see the drastic results straightaway. Their sales share of mobile payments is 45%, delivery notes have increased to 14% and ultimately the net revenue has increased by 19%.

2. The branding of the company has well shifted to nutritious food and technology and we can see that from the words of Michale Xian that she does not go to KFC for health reasons but now she is giving an order there and also happy that it is more aligned with the new trends. This is the brand positioning that the company wants to do for their audience. They have well understood the need and wants of the customer, changed the product according to the customer and now wants to position their product in the minds of the customer.

The strategic way of doing business has positive impacts on the globalization as it gives valuable inputs for other companies who are willing to enter the new market. They give important insights as to how to culturally analyse the new market before entering it. Like Yum, brands made the detailed analysis of the Chinese population concern with food safety and nutrition and the love of younger generation which is their main target audience for the technology. The company has well incorporated both the concern and happiness factor in their product and now working in the positioning of the product. The same analysis needs to be done by other global companies to enter the new market. They need to understand their new audience culture, needs and then design the product accordingly. But this is only 50% job because the positioning of the product is as important as the making of the product. And positioning a new perception of the product which is already having a different perception in the audience is a difficult task but is very vital for success