assignment mn 512

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:201406012.

22 AUGUST 2015

ACADEMIC YEAR: 2014-2015

Cambodian Mekong University MN512

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

Colonel’s Crispy Strips® chicken with home-style sides. It is one of the world’s 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 world—from 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 world’s 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.

Lecturer: Mr. Suon Vichea


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

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.

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, Teacher’s Day, Sport’s Day,

Company Anniversary, Birthday Party, Company Party, and so on.

Customers will experience KFC’s “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 KFC’s 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 we’ve received your application, we’ll 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 Overview training requirements Overview Operating Plan outline Conduct franchising background check

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


Attend one and a half day store experience (if necessary) Complete operations plan Interview as needed

KFC –

Determine best site selection strategy Review KFC Development Service options Discuss scale requirements and future development


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


Outline development vision Identify focus trade area(s) Align next steps



KFC –

Complete site registration workbook Provide Franchise Site Analysis Survey (FSAS) and deposit form Submit site registration to Brand desk Determine if proposed site can be cleared for development


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


Finance your restaurant Build your restaurant Hire your team Attend appropriate training Grand Opening

KFC –

Provide business support Develop marketing calendar Provide brand leadership




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 air-

conditions, 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.

III. 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, workmen’s



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.

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 company’s 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

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 people’s favorite cuisine is, believe it or not, Chinese food!

The way we look at it, KFC can be every bit as big as McDonald’s 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 YRI’s high-

return 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, there’s 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.

Besides, the company made an acquisition that gave us full management control of the Rostiks-

KFC 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 it’s 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.

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 franchisee’s home

base.

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).



The training program covers the following:

Week 1 Overview/Building a Great Restaurant

Roadmap

Centralized – Louisville, KY

Week 2 Learning Zone - Team Member Tracks Home Office

Weeks 3-4 KFC Perfect Product Training Certified Training Store

Week 5 Learning Zone - Shift Supervisor Tracks Home Office

Week 6 Restaurant Supervisor In-Store Training Centralized – Louisville, KY

Week 7-8 Restaurant Proficiency Practice 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

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. It’s 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

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 write-

off goodwill related to our LJS/A&W U.S. and Pizza Hut South Korea businesses, respectively.

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.

(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 Company’s 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.

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 Company’s 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



(1) Shares owned outright. These amounts include the following shares held pursuant to YUM’s

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.

(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


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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.

.

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.


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4. Coloring contest

Coloring contest most of the time we do it in KFC’s outlets. On International Children’s

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

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.


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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.

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 People’s 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 didn’t get along with

each other, so it made the Country to be turmoil, unsafe and so on. So all investors not only

international investors but also national investors don’t want to invest in Cambodia, but now

there are many investors come to invest in Cambodia such as Metfone Company because

nowadays Cambodia’s 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

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.

X. 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 OER-

and 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 socio-

economic 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 Cambodia’s competitive position with respect to trade, as an

early contribution to the policy development process.

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 RGC’s 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

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

Council for the Development of Cambodia provides 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 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. KFC’s 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 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.


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 YUM’s 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

http://www.kfc.com/

http://www.kfc.com.kh/

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Documents

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kfc outlets

parent company of kfc

presentation of kfc

kfc globallykfc

kfc cambodiakfc

defining global company

company profilea