Business Model Yum Brands

YUM Inc Internal Analysis The Strategic Management Process encompass NUMBER 2 WEEK 2 CBL GROUP AND SUB-GROUP I3SHM Group A DECLARATION 1. This work is composed by me / by us. 2. This work has non been accepted in any previous application for a degree or diploma, by me / by us or any angiotensin-converting enzyme else. 3. The work of which this is a record is done wholly by me / by us. 4. every unmediated extracts collapse been distinguished by quotation marks and the sources of my in trunkation learn been specifically acknowledged. Signatures Date.. Submitted in Partial Fulfilment for the Requirements of the degree syllabus Bachelor of note Administ balance wheelnNovember, 2012 Table of Contents intro3 Chapter 1 Business Model, Vision, Mission, Goals and Strategies3 theory Definitions3 Yum Inc Evaluation3 Yum Inc correlational statistics Business Strategies and Current Business Model4 Chapter 2 Yum Inc Financial Analysis6 Chapter 3 Weaknesses and/or matched Liabilities8 Chapter 4 Internal gene Analysis8 Reference List12 Introduction An internal organizational psycho psychoanalysis aims to investigate a troupes stage business model, its mission, vision, finishs, imagerys, competencies and undertaken strategies to compete on the viands market.It gives an all overview of the organizations specialisms, weaknesses, opportunities and consequently threats. By conducting a tight-laced internal analysis a attach to raise identify its competitive advantage over its contests and use the outcomes to derive impertinently scope of strategies and peradventure effectively direct the organization on the grand run. There argon several major and crucial aras companies audit internally, that is to say organizations valuate chain, ethnical web, business model, capabilities assessment.After conducting such analysis companies identify possible argonas where immediate litigate is needed for improvement, its threshold capabilities, core competencies by which they gain competitive advantage. Essentially, organizations sens decide which mental imagerys and activities ar of signifi thronet importance to the come with and must be kept internally and which seat be outsourced. Additionally, possible strategies for the future fundament be established. all the same, the internal analysis cannot solely be a throwa mien for unfermented strategies, an organization has to conduct an external analysis before forming its lowest strategies. (Johnson & Scoles, 2008).Chapter 1 Business Model, Vision, Mission, Goals and Strategies Concept Definitions Before analyzing Yum Inc, several concepts have to be defined. Firstly, Business Model refers to all products, runs and information an organization owns and how they go between stir upicipating parties. Vision refers to what an organization aspires to become in the future. A Mission statement captures the emblematic purpose of an organization to conduct business in line with the value s of its stakeholders. Organizational goals argon oecumenical statements for aims and purposes whereas objectives be narrowed down to quantifiable results.Finally, organizational strategies are its long directions. (Johnson&Scoles,2008). Yum cracks, Inc Evaluation Yum differentiates, Inc is a world-wide operator of franchisees and licensees a chain eating place marks alike KFC, Pizza shack, and Taco Bell. The business model of Yum Brands, Inc pull up stakes be analyzed by the use of Canvas Model further in this chapter. According to the Annual Report (AR) 2011, the alliances Mission avowal is implied under its future-back vision statement Be The Defining Global bon ton that Feeds the World. Moreover, its Vision Statement is Be the Best in The World at momenting Great eating place Brands.After a deeper analysis of the high society, it has been determine that Yum Brands, Inc has the following core business related semipermanent goals 1. defecate leading brands in chinaware in every significant crime syndicate 2. Drive aggressive world(prenominal) intricacy and pee sinewy brands all over 3. Dramatically improve U. S. brand positions, containency in returns 4. Drive effort leading, long-term shareholder and franchise value. (Yum, Annual Report, 2011). According to the Chief Sustain cogency way CSO, Roger McCl intercepton, Yum Brands necessity to establish and align global goals to improve the economy of eating place.Yum Brands global enterprise goals for sustainability are 1. Reduce global energy consumption by 10% by 2015 2. Reduce global water consumption by 10% by 2015 3. Develop 5 LEED certifiable eatery standards crossways china, India, United States of America and Yum Restaurants outside(a) (YRI) business divisions by 2012 4. Elevate Yum advancement vision into actionable brand goals leveraging Yum packaging guidelines. (Source www. yum. com/csr/environment) Next to that Yum Brands, Inc has form its values which direct t he companies strategic actions, namely 1. Believe in People 2. Be Restaurant and Customer Maniacs 3.Recognize 3. Go for Breakthrough 4. Build Know How 5. Take the Hill Teamwork Yum Brands, Inc, further referred to as the confederation or Yum at heart this report has taken different strategies to achieve its main long-term goals. The strategies get out be outlined in correlation with the business model. Yum Brands, Inc Correlation Business Strategies and Current Business Model The CEO and Chairman of Yum Brands, Inc shares the sanely simple business model of Yum. The main focus of the club is cut down order self-command in heightsly penetrated markets mean piece increasing motion-picture show in appear and under-penetrated markets.Moreover, the largest dissipated fodder franchiser continues with its refranchising program in the States, aiming to contain 5% self-possession of KFC and Pizza Hut. The business model of Yum Brands, Inc is analyzed by the Canvas Business M odel, (Oosterwalder, 2010) see fig. 1 Fig. 1 Canvass Business Model Yum Brands, Inc has three main markets from which it trys tax incomes, namely the USA, China and Yum Internatianonal Restaurants. deep down those markets, the telephoner require ups value for various sub markets by diversifying and customizing indoors the fast nutrient market through different restaurant concepts.Moreover, the channels through which it reaches those markets are via own channels-direct, namely in-house gross r levelue, mobile dispositioning system for Pizza Hut in the States. This is quite an costly activity for the company, however it has a hold water gear pro work margins. Moreover, in 2011, Yum participated in an Annual World Hunger rest campaign with the use of Christina Aguilera voice for good in the pay off against thirstiness (www. fromhungertohope. com). This is an suit of the Awareness Channel Phase as explained by Osterwalder, 2011. Christina Aguileras personality world rec ognition and the Campaigns awareness to create awareness for the Yum Brands, Inc.With regard to the customer relationship, the company serves its customers via personal proceeds, self-service. The personal service is based on the incident that customers are be succored via the purchase extremity on the points of sales. In addition to that, in order to continue prospered opeproportionns at bottom the quick service restaurant sector, Yum has several diagnose partners, subcontractors- franchisees and licensees through which the company exposes its products. Moreover, the companys main supplier is interconnected FoodService Co-op LLC, an American company which swirls lowest retentivity- hand overed prices for restaurant products (Yum, Annual Report, 2011). other primordial partner of Yum is McLane Company, Inc. distri un slightor for concept-owned restaurants and for many of the franchisee and licensee restaurants. Finally, on that point is a Syndicated creditor, consis ting of 24 banks which offers a financias support for the company- 1. 15 bln USD. international partners such as in Russia with Rostiks KFC are alike of significant importance to the company. In order to effectively, deliver its value proposition to customers, namely high product quality, speed service, high quality ingredients, variety of unique products, competitive prices, consistent product quality, the company operates with few depict elections.The company operates an effective diffusion system- Yum Brands, Inc owns their local, regional and in any case global distri barelyion system. Additionally, the company owns, franchises and licenses, as a consequence, there are fiscal resources coming in within the company in form of royalty fees and sales. Another, rouge resource for the company are its restaurant concept Patents and Trademarks etc. KFC, Pizza Hut, Taco Bell etc. Brand Power, regulate and formalized restaurant ope symmetryns practices which give the company the ability to offer consistent service.Finally, the research & development centers and the overall diversified product portfolio are other key company resources. The key activity in which the company engages is sales of fodder within the quick service restaurants sector by franchising, licensing and owning own properties. This is related to the production of fast food. Finally, the main revenue generating streams are the three main markets from which the company derives its financial resources, the USA, China and the Yum International Restaurants and the offer of dine-in, dine-out, drive through and home voice communication food via franchise, license agreements and own properties.The main dodge of Yum to succeed in the fast food market is by under winning Cost Driven strategy. By delivering a customized service to the Chinese, American and International market the company targets at the norm income market by oblation comparatively law priced products which fit into the budget of a wide market. Since, it does not necessarily focus on the value-proposition like exclusive products do however rather on cost- redeeming(a). Yum achieves this via economies of shield and economies of scope. To conclude, Yum operates with cost-driven cost structure.This business model can clearly be conjugate to the undertaken strategies by Yum. One of the company aims to enter emerging under-penetrated markets like China and out festering leadership position and strengthen available model. This has been achieved by the strategy of get the Chinese Hot Pot concept restaurant exact Sheep Company and developing a tailored local quick service restaurant chain eastern United States Dawning. This actions fit into the companys value proposition- food diversity, variety of products, speed service, tailored products as they all live on to the quick service restaurant kinfolk.Next to that, the strategy of East Dawning is to strategy is to offer tremendous variety and refresh menu 24% twice/year which withal fits to companys value proposition. In addition, the company owns their local, regional and global statistical distribution system and this fits to their long term goal to expand internationally but also with their cost structures and cost-driven strategy. Moreover, the ownership of distribution system gives the company a plastered competitive advantage. Finally, these strategies fit into the companys business model by segregating the market and salvage offering products on competitive prices.Internationally, the company took the strategy to enter Russian, Indian and African market. In Russia acquisition of Rostiks- chicken company. Growth in Africa is represented by the opening of 656 stores in SA, entry in Zambia, gold coast, Kenya. In India the company entered the market with 101 restaurants in 2011. In kernel 900 restaurants were added in 2011 in the International Division. International Divisions Operating gain grew with 12%. These strategies re in line with the business model for generating revenues via three main areas, the USA, China, and International Division.Moreover, all those strategies to expand are connected to the companys key activity and also value proposition. Next to that, the company aimed at up(p) brand position in the States. One of the strategies to achive this was transforming Pizza Hut to Pizza, pasta and wings. Moreover, Pizz Hut improved its service by message of the Hut program which also added value to the hospitality of the chain. Moreover, the KFC kicked off a nation-wide campaign with value menu 3. 99 USD 2 peace meal, 2 side dishes and biscuit. This has been as a result of investment in operations, make it more contemporary.Additionally, Taco Bell introduced its First Meal Strategy- launched breakfast in 800 restaurant- opening earlier than before at 9am and introducing theu Launche Doritos Lotos Taco, which became a spacious victor- famous Nacho Cheese Doritos. The above mentioned s trategies, go in line Yums business model value proposition- speed service, product quality key partners- continue operations with franchisees and licensees key activities- continue playing on the cursorily Service Restaurant mart by the use of companys key resources- rely on own patented brands, use the standardized operations to offer consistent service.Another, strategy Yum took in the USA was to outgrowth operation audits in franchise field support which also was in accordance to their business model to offer quality products and consistent service. Another strategy to improve the USA brand position was to ignore company ownership of KFC, Pizza Hut, Taco Bell from 13% to 8% in the domestic market in order to amplification franchise fees, reduce operational expenses and detonator expenditures- cost-driven company.Last but not least, the company has decided to reduce Taco Bell Ownership from 23% to 16% over the adjacent 2 years and sold Long John Silvers A&W All American R estaurants in order to stir its last long-term goal, namely Drive Industry Leading, long term Shareholder & Franchise Value and retain 5% ownership of Pizza Hut and KFC. To conclude, according to the Yum Brands annual report 2011 (annual report 2011), the success of Yum Brands in executing these strategies has driven the organizations return on invested capital over 22. 00% in straighten out with the attention leaders. The organization aimd over $2. 000. 000. 00,00 dollars bullion from the operations in 2011. The company is lucky to have global opportunities to invest in for the future growth. Furthermore, the organization owns and operate the distribution system the restaurants in China. This strategy provides a significant competitive advantage. This way China depart have an economy growth and achieve a population of 1. 300. 000. 000,00. Yum Brands will quickly adding KFC and Pizza Hut restaurants, this way the organization will test the supernumerary restaurants concepts. The concepts of KFC and Pizza Hut are (for example) Pizza Hut pizza delivery and East Dawning, which is Chinese food. Yum Brands, Inc Annual Report, 2011). Chapter 2 Yum Brands, Inc Financial Analysis In this chapter the financial effects of Yum are being analyzed. Within the first part of this chapter the equilibrium sheet and the income statement are being analyzed. This analysis is being conducted with the help of horizontal and vertical analysis. Within the support part of this chapter the key functioning indicators will be analyzed and compared with industry second-rates. 2. 1. 1 Income statement The fall revenue of Yum change magnitude from $10. 836 million in 2009 to $12. 626 million in 2011. This is an plus of 16%. 6% of the add together revenue is the income from restaurant sales and 14% is the income of franchise fees. The distribution of the revenue is more or slight the equal as previous years. From this it can be concluded that, although Yum is expanding th eir franchises, the most grievous form of revenue s savings bank comes from restaurant sales. Although the revenue increase with 16% from 2009 till 2011, also the sum costs increase with 16%. The total costs represented 85% of the total revenue. This figure is more or less the same in 2009 and 2010. The largest cost cypher is the use of food and paper. This grievance represents 29% of the total revenue.The food costs in the hospitality industry is on average 33% of the total revenue (Cote, 2006) Yum is doing kinda thoroughly with managing their food costs. The salaries represent 19% of the total revenue. Considered that on average within the hospitality industry employee wages represent 33% of the total revenue, Yum is managing their employee costs very swell up. (Yum, 2010) (Yum, 2011) 2. 1. 2 Balance sheet The most discernible when looking at the horizontal analysis of the balance sheet is the spacious increase in the cash and cash equivalent account. The cash increased f rom $353 million in 2009 to $1198 million in 2011.This is an increase 239. 38% . In 2009 the cash account represented 4. 94% of the total assets, in 2011 this account represented 13. 56% of the total assets. The shareholder equity also increased significantly. The shareholder equity increased with 177%. This can be explained by the circumstance that Yum sold shares. Additionaly, the increase in cash of the company can be explained by the occurrences that they sold Long John Sylver A&W All American Food Restaurants. Furthermore the short-term borrowings increased significantly. From 2009 till 2010 this account increased with 1140,68%. However in 2011 this account is reduced slightly.In 2011 the increase in comparison with 2009 is 542%. In 2009 the short-term borrowings represented 0,83% of the total liabilities, in 2010 this was 8. 09% and in 2011 3. 62%. This can be explained by their pursuit of growth strategy- fetching over of the Little Sheep Company, opening East Dawning Resta urant in China. The inventory has also increased with 223%. This can be explained by the event that expansion results in more inventory. The cash and cash equivalents account do not solitary(prenominal) represent hard cash but it also represents funds which are temporary invested in short-term, high liquidity debt securities.The cash account increased because of the increase of the shareholders equity. The shareholder equity increased with 177% because of the consequence new stock. Finally the retained earnings increased significantly. In 2009 this account was $996 million, in 2011 this was $2052 Million. That is an increase of 106%. In 2009 the retained earnings represented 13. 93% of the total liabilities, in 2010 it was 20. 65% and in 2011 the account represented 23. 23% of the total liabilities. Yum is saving silver which originally was reserved as dividend payments.Yum is saving their money probably for investments and expansions otherwise the shareholders would not agree by the fact that they are not getting paid all their dividends. (Yum, 2010) (Yum, 2011) 2. 2 balance analysis Within this part several ratios of the past 3 years will be calculated and analyzed. Current ratio The received ratio measures the relation between the current assets and the current liabilities. Year Current ratio 2009 0. 73 2010 0. 94 2011 0. 95 Table 1 Current ratio From the above given figures one can conclude that Yum has a paucity of $0. 05 in 2011. However this does not means that Yum is financially un rosy-cheeked.In general the current ratio should be just about 1. According to Schmidgall, 2006 different parties are kindle in different current ratios. Creditors normally choose a high current ratio as this insures that they are getting paid. Owners and stockholders generally prefer a lower current ratio. Stockholders are mainly interested in kales and according to them investments in most current assets are less productive than investments in noncurrent assets. ( Schmidgall, 2006) (Yum, 2010) (Yum, 2011) Solvency The solvency ratio measures the relation between total assets and the total liabilities. Year. Solvency ratio. 2009 1. 18 2010 1. 25 2011 1. 28 Table 2 Solvency In 2009 Yum had a solvency ratio of 1,18. This means that for every dollar of debt they had $1,18 of assets. In 2010 they increased their solvency to $1,25 and in 2011 it increased to $1,28. It can be concluded that Yum is solvent, their assets exceed their debts. (Yum, 2010) (Yum, 2011) gainfulness Hospitality enterprises are often evaluated in terms of their ability to generate profits on sales (Schmidgall, 2006, p. 225) Year Profit Margin Yum Profit Margin McDonalds 2009 9. 88% 20% 2010 10. 21% 20. 54% 2011 10. 4% 20. 37% Table 3 Profit margin In 2011 Yum had a profit margin of 10,44%. This means that for every dollar of revenue the gain 10,44 cents of profit. The average profit margin of the whole restaurant industry is more or less 5%. Compared with the whole restaur ant industry yum has a strong profit margin. However when a comparison is being do with a top competitor, yum has a weak profit margin. As can be seen in card 3, McDonalds has almost the double profit margin of yum. Thus from these figures it can be concluded that yum has a weak profit margin compared with their top competitor McDonalds. Yum, 2010) (Yum, 2011) ( yahoo finance, 2012) (Stock analysis) hold on Assets The ROA ratio measures the profitability of a companys assets. Year ROA Yum ROA McDonalds 2009 15. 62% 15,06% 2010 15. 30% 15,47% 2011 15. 58% 16. 68% Table 4 Return on Assets Within the restaurant industry the average ROA lays around 8%. The ROA of Yum is around 15,5%. Compared with the total industry yum has a strong ROA. When the ROA of Yum is being compared with the ROA of McDonalds, the conclusion remains the same, Yum has a strong return on assets. yokel finance, 2012) (Yum, 2010) (Yum, 2011) (Stock analysis) To conclude it can be said that yum is a financially muscular company. Although the world wide credit crunch Yum is still able to increase their revenues. Comparison of the ratios with industry averages shows that Yum is doing well. Their debts do not exceed their assets. There is still room for an improvement of their profit margin. Compared with the industry average they have a strong profit margin however in comparison with their top competitor their profit margin is quite weak. Chapter 3 Weaknesses and/or competitive Liabilities 1.Resources and Capabilities Evaluation 2. Evaluations of Factors Depriving Yum Inc from Effective market Competition The evaluation of the resources and capabilities, and factors which mightiness be preventing the corporation from competing effectively will be outlined with the help of a SWOT analysis. This technique will be used, because it gives the ability to present the resources and capabilities into strengths, and the factors which might be preventing the corporation from effective competence can be shared out into weaknesses. However, since Threats and Opportunities part will be elaborated on in hebdomadal Report 3 Strengths Weaknesses Leading market position built on a portfolio of strong brands with high level of consumer acceptance * Different store concepts catering to a diverse customer base * Strong balance sheet and cash flows even in tough stinting and macro instruction environment * Leadership position in China and other emerging markets * Human Resource Policies- area coaches * Support by syndicated credit installation * Research & Development Centers * Ownership of distribution systems * * Drop in performance within the domestic market * Lawsuits Bad Publicity * Heavily dependant on Chinese geographic region * Internal brand disputation * Higher loan interest rate than the LIBOR- London Interbank Offered Rate- 0. 25-1. 25% higher. * Brand Reputation dependent on Franchisees Strengths With more than 37,000 outlets in 120 countries worldwide, Yum Brands, h as realize the title of a leading global quick service restaurant corporation with high level of consumer acceptance and brand recognition. The corporation consist of three main brands, namely KFC, Pizza Hut and Taco Bell. The extended amount of units all over the world is a valuable resource, but this is not enough to guarantee a distinctive cleverness.With the effective interception of the sales and marketing functional area, all those restaurants are promoted effectively and with heavy investments in brand promotion, the position of it, in the mind of the customers, has been changed to the point, that Yum Brands is recognized as one of the best global brands with a leading market position within the industry. The promotion effectiveness is present by the fact that KFC is the leader within US chicken QSR segment with 39% market share, which is 2 times higher than the results from its closest competitor on a national level. In addition to that Pizza Hut is also the leader in the US pizza QSR segment, with 15% market share. Last but not least Taco Bell is also the leader in the US Mexican QSR segment, with 50% market share.The sales and marketing functional area is not the only one responsible for this results. In addition to it the operations trouble team and all international and regional managers, are contributing to the aeonian delivery of high quality, which will guarantee customer satisfaction and acceptance. From the fact that Yum Brands has a leading market position as a second main resource, two main capabilities can be derived as well the ability of significant bargaining power and the capability to grow financially. Furthermore, the companys strong brand value, facilitates customer recall and allows Yum Brands to penetrate new markets as well as consolidate its presence in the existing ones.The second strength can be divided into one resource and one capability. The resource is that the brand has three different restaurant concepts and ever y one of them has a set of unique food products, which can be customized additionally on their own as well. For example KFC, offers fried and non-fried chicken-on-the-bone products, while international outlets offer menus, which include side items, which are in line with the local customer demands. Pizza Hut for example is specializing in the sale of ready-to-eat pizza products, but there are restaurants, which are also offering breadsticks, pasta, salads, sandwiches and pizza souses, which are also suited to the local markets.Taco Bell is a small exception, since it specializes only in Mexican-style food products, but the diversification comes from the fact that all products like tacos, burritos, gorditas, chalupas, quesadillas, salads, nachos and other related items can be customized on their own. This resource leads to the capability of having the opportunity to provide products, which will attract a large subdue of diverse market segments. Not only by differentiation of the pro ducts but also by the differentiation of the locations the three different concepts within Yum Brands can develop, operate, franchise and license an international chain of both traditional and non-traditional QSR restaurants.For example the traditional ones offer dine-in, carryout and often, drive-thru or delivery services, while the non-traditional restaurants are typically licensed outlets that include express units and kiosks with a moderate menus and most of the time operate in locations, which are not traditional like malls, airports, gas stations, whatchamacallit stores, stadiums, amusement parks and colleges. The diversification of the company products into three different brands, which outlets are also positioned in relation to the compose of the different consumers they serve, Yum Brands is transforming its existing resources into a distinctive capability. Even though there are economic and macro- environmental difficulties in the world, Yum Brands is continuously growin g. Its financial performance is outstanding, since the companys outlets have recorded net income of $1. meg and over $2 one thousand million in cash from its operations, which is 0. 3 billion more in comparison to 2011. In addition to that there is a 14% increase in the Earnings Per Share, and 7% system sales growth. The company maintains its position of industry leader in USA with Return on Invested Capital (ROIC) of more than 20%, and in addition to that the company has also increased its number of restaurants with more than 1,561. This increase with more than 1,000 new restaurants is also continuous happening already 11 years. The stable growth of units gives the corporation a title among the other US competitors as the number one retail developer of units outside the US.The capability of delivering constant strong results, which contributes to the plans for growth, provide a significant competitive advantage and distinctive capability, in spite of the difficult economic situa tion. edifice a leadership position in China and other developing markets, should be considered as a strength, since this will help the corporation to develop even stronger brand image around the world. In addition to that, if the food concepts continue to be popular within the market, this will generate constant profit and ability to grow even further. This strength is also in line with the already mentioned strategy of expansion of the business in emerging and low-penetrated markets. For example over half of the operating profit of the company is generated in China and 72 other emerging countries.The actual aim of the company is to reach 85% global sales in comparison with only 15% in their local market until 2015. Within China all brands are growing with more than 656 new restaurants. Their policy to have leading brands in every significant category also has led to the acquisition of Little Sheep- a leading casual dining concept in China. Except this developing market, 3 more markets are strategically targeted. In India the managers are implementing all key elements, which horde the enormous success in China. The efforts in the moment are tough on grammatical construction a strong base of restaurants, which will generate significant part of their future profits.In the moment in India there are more than 220 KFCs and 170 Pizza Hut restaurants and Taco Bell also has just entered the market in to develop the brand into their third international known brand. Russia is also considered to be one of the growing market potentials for Yum Brand. Within this market there is a severe competition with McDonalds, but the company still expects high profits and return on investment. In order to do that the company started to expand by re-branding Rostiks-KFC to stand alone as KFC, which will lead to more brand recognition and customer retention. The last market, in which Yum, is aiming to become a leader is Africa. This already has started by the building of 656 sto res in reciprocal ohm Africa during 2011, and the building of outlets also in countries like Zambia, Ghana and Kenya.The plan is also to enter 7 new countries by the end of 2012, which will cover in total 20 African countries. The resource of having so many outlets worldwide and creating a broad world coverage, will become a capability in future, because the company will be able to generate revenue from markets, which are not penetrated and posses customers with growing buying power. Finally, Yum Brands, Inc slowly enters the African market by building of 656 stores in South Africa, also entering Zambia, Ghana and Kenya in 2011 and plan to enter 7 new countries in 2012, which sums the plan in total to have restaurants in about 20 African countries by the end of 2012.Overall, this clearly shows that the company has the capability of successful penetrating new markets by adapting to the local customs, political, social, economic and legal systems. The last strength of Yum is the cons olidation within its human resource policies. This policies start with the corporate value How We Win Together principles including the motto We jazz celebrating the achievement of others and have attractions of fun doing it , is one of the main reasons for their grow to be full of positive energy, teamwork, and fun. This corporate value is also built around a People Capability First philosophy, which lays the groundwork for the way they work as a team, together, every day.Yum invests in their Human Resources and provides instruction guides have been developed in 11 different languages for over 37,000 Restaurant General Managers around the globe. (Yum Brands Inc. , Annual Report, 2011) Moreover, the company assigns area coaches, every sextuplet restaurant is operated under the supervision of one coach. This is an evidence for the companys capability of successfully investing in people and promoting employee development and support. existence financed by Syndicated Credit Faci lity, which consist of 24 banks (Yum Brands, Inc Annual Report, 2011) gives the company a strong financial security by not being current on single creditor.Research& Development Centers, are resource which Yum can strategically utilize to develop new products. This is an explicit example of companys capability to investigate markets and identify customer needs. Finally, the ownership of distribution channels, helps the company to effectively manage its costa by local, regional and global distribution centers, namely developing effective cost structures. Weaknesses In 2009 the restaurant industry in the US showed transaction declines in dinner occasions, because consumers chose to save money and eat at home. This had also a significant impact on both Pizza Hut and KFC concepts of Yum Brands. As a result, their U. S. usiness was clearly under-performing from 2009 till 2011, but the most significant numbers are present in 2011 with store sales fall of 1% and profit decrease of 12% fo r all units within the US market. In order to cope with this paradox the company is reducing its ownership in this highly-penetrated market and in celestial latitude 2011, they have completed the sale of Long John Silvers and A&W All American Restaurants. To sum it up the competitive liability, which is outlined by this weakness, consists of the fact that there is a deficiency of financial resources Moreover, lawsuits can cause a negative publicity for the company. For example, beef quality lawsuit on Taco Bell projected the restaurant concept-chain in negative glower In January 2011.The lawsuit claimed that Taco Bell food items are made with a substance known as taco meat filling, rather than beef. The lawsuit also contended that Taco Bell products only contain 36% ground beef, below the prescribed USDA standard of 40% to cut back as meat. An estimated $3 million to $4 million were spent for across the country advertising campaign to fight with the negative publicity from the l awsuit. Moreover, the company to a great extent relies on the Chinese market, as it is the main revenue generator. In the case, of nation-wide catastrophe- decrease in disposable income, change of food related legislations, the company business will be affected negatively.The internal brand competition can lead to decrease of sales in some brands. Furthermore, compared to the average Yum loans relatively expensive financial resources form banks as the interest rates it pays for its loans are 0. 25%-1. 25% higher than LIBOR. (Annual Report, 2011) Finally, Yum Brands, Inc company reputation is heavily reliant on its franchisees and licensees. The damaged brand name definitely should be considered as competitive liability, first because of the deficiency in quality of the products and second because of the drop of important organizational assets, which has led to this situation. Chapter 4 Internal Factor AnalysisInternal Factor Analysis organizes the strengths and weaknesses of a com pany into factors and analyses how a company is reacting on those factors (Jones, 2010). The slant is assigned to each factor from 1. 0 most significant to 0. 0 unimportant. Secondly, rating is assigned from 1 to 5, taking into account the managements reaction to each factor. And finally, the weighted score is calculated by multiplying column 2 to column 3. INTERNAL FACTORS WEIGHT RATING WEIGHTED bring in COMMENTS STRENGTHS Supported by Syndicated Credit Facility 0. 02 0. 5 0. 01 Secure financing, less dependency on 1 bank Strong balance airplane and Cash Flows 0. 02 1 0. 2 Healthy operations 0. 3 0. 5 0. 15 Research and Development facilities in Shanghai (China division), Dallas (Pizza Hut, YRI), California( Taco Bell), Lousiville (KFC) 0. 2 0. 5 0. 1 Advantage of examining markets, developing products Distribution system ownership 0. 02 0. 5 0. 01 Cost effectiveness Membership in Unified FoodService get Co-Po 0. 01 0. 5 0. 005 Cost effectiveness and purchase power Effec tive Market Segmentation- 0. 02 0. 3 0. 006 Reach more consumers, spread risks Restaurant concepts, trademarks patents 0. 01 0. 2 0. 002 Competitive advantage Strong Global Brand Awareness 0. 2 0. 5 0. Strong recognized brands Area Coaches work with 6-12 restaurants 0. 2 0. 5 0. 1 Part D Finances 1. Cost Structures * Reduce large capital investments by franchising and licensing in more mature markets 2. Characteristics of Cost Structures 3. Revenue Streams * royal line fees based on sales from franchisees and licensees * Company sales * 3 major(ip) markets- the USA- , China and Yum Restaurants International Conclusion The report has been divided into four components in order to describe Yum Brands Inc. , internal organizational analysis. Among others the first component identified the vision and mission. Yum Brand, Inc. strives for Be the Best in The World at Building Great Restaurant Brands. In addition, the vision of Yum Brands, Inc. can be state as Be The Defining Global Compa ny that Feeds the World. Therefore, offering speed, variety, and convenience and budget prices products is of high value in order to satisfy their customers needs. They want to be a company with a huge heart, taking the environment into consideration and look for recognition with one system operational excellence as out foundation. Furthermore, this vision reflects to the fact Yum Brands, Inc. is already a global operator of franchisees and possesses chain restaurants brands like KFC, Pizza Hut,Taco Bell, Little Sheep and East Dawning.Principally main markets for the brand are in USA, China, Africa, Europe and Asia here they segment different groups. Effective marketing which Yum Brands, Inc. uses, contributes to this growth of business. As well as aggressive international expansion supports Yum Brands Inc. entered the market in Russia and India. With China as focus, Yum Brand Inc. strives for building strong and leading brands everywhere. The acquisition of Little Sheep, which off ers casual dining restaurants to China, generates leading brands in every appropriate category. East Dawnings has been build up to be the first restaurant with a quick food service In China. Second strategy is to aim for international expansion.In addition, the brand wants to expand the US brand position. Last, the goal to serve the long-term interests of shareholders will be supported b an executive compensation program. However, financially, looking at revenue streams of the brand, the total revenue of Yum Brands Inc. showed an increase of revenue of 14% in 2011. 86% of the total revenue has been generated by restaurant sales, the remaining part was income of franchise fees. Though, the total costs increased equally with 16%. remarkable is, the fact retained earnings showed quite an increase of 106%. There can be assumed here Yum Brands Inc. lay aside a lot of cash in order to invest and expand in the future.All in all, there can be concluded Yum Brands Inc. is a financially heal thy company. Debts do not exceed assets and the company is still capable to increase revenue. 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