Vous êtes sur la page 1sur 87

Group-J

HRM 370.1

BACKGROUND:
When Tony Wang, the President of Franchise Investment Corporation of Asia (FICA) returned to Hong Kong from Beijing from a one -week visit, it was the mid-October 1995. The franchise rights for Kenny Rogers Roasters (KRR), a rotisserie chicken restaurant concept, was granted by FICA for both Beijing and Shanghai earlier that year. Serious concerns had emerged over the challenges of doing business in China, while Wang wanted to mov e forward. Wang then began joint venture discussions with three companies, just as most foreign companies had looked to local partners to help rearrange some of these concerns. Each of the potential partners appeared to be eager to work with FICA. However, Wang was unsure about the right time to proceed. His biggest challenge was to choose the right company to proceed with to become partners.

THE FOUNDATION OF KKRJohn Y. Brown, who was an entrepreneur with a long history in the food service industry, was the driving force behind KRR. Brown, who was a 29 year-old Kentucky lawyer and his 60-year-old partner Jack Massey, purchased Kentucky Fried Chicken (KFC) from 74-year-old Harland Sanders for US $2 million in the year 1964. 1,000 new stores were added by the partners and sales grew by an average of 96% per year over the next five years. Observers credited this growth to two main factors: The companys reliance on less costly franchise expansion over company-owned stores. The ability of John Y. Brown's to select hard-charging and entrepreneurial franchisees.

Page - 1 -

Group-J

HRM 370.1

In 1971 KFC was sold to Heublen Inc. US $275 million, making both partners (John Y. Brown and Jack Massey) very wealthy men.

John Y. Brown, the Entrepreneur & his Rotisserie Chicken Business


Brown went on to become Governor of the State of Kentucky in the 1970s. He also became the owner of three professional basketball teams, including the Boston Celtics. In 1971 Brown married Miss America, Phyllis George in the year 1979. He helped to launch Miami Subs and Roadhouse Grill franchises in early 1980s. Chicken by George, which was a chain of prepared chickens sold in grocery stores owned by his wife was also financed by Brown. Brown became progressively certain of the enormous market potential for roasted chicken by the late 1980s. During that time a health craze swept the whole US drastically increasing the demand for lighter, non -fried food options. Including the poultry industry, the impact of such demand was seen in many segments of the food industry. Many of the restaurant owners began introducing more healthy menus and investing more in rotisserie ovens. To find a new way to draw the customers interest Brown decided to team with long-time friend Kenny Rogers.

Kenny Rogers the most popular singer in America


Kenny Rogers was once depicted as the most popular singer in America. He had a career that lasted for three decades and half of that was as a solo artist. Rogers's fame was distinctive with a number of awards and honors that he had achieved over the years. 3 Grammies, 11 People's Choice Awards, 18 American Music Awards, 5 Country Music Association Awards, 8 Academy of Country Music Awards, 4 platinum albums, 5 multi-platinum, 1 platinum single, and numerous gold albums and singles was achieved by him. He was also engaged in several businesses including a partnership in Silver Dollar City in Branson, Missouri, which was considered as the capital of country music.

Page - 2 -

Group-J

HRM 370.1

The joint venture of Kenny Rogers & John Y. BrownRogers was very excited when Brown came up with the concept of a rotisserie chicken restaurant chain. He stated that the concept was so outstanding that it made him very optimistic to link his reputation with it. According to Rogers, it encouraged him to link himself as owner and partner of the concept , not just as an endorser. Rogers also believed that non -fried chicken was the wave of 80s.and working with the people who made it a b illion dollar business was definitely a right thing to do . THE ORIGIN OF KKRKenny Rogers Roasters (KRR) began its operations in Louisville, Kentucky, and opened its first restaurant in August of that year in Coral Gables, Florida in January 17 of 1991.The menu was citrus and herb-marinated wood-roasted chicken and about a dozen side dishes such as mashed potatoes and gravy, corn-on-the-cob, baked beans, and pasta salad. The growth of KRR was rapid. KRR grew to include a corporate staff of more than 100 from an original group of five people. The company then moved headquarters to Ft. Lauderdale, Florida, and it had over 310 stores. By that time, KRR operated in approximately 35 US states, had more than a dozen stores in Canada, and had at least one store each in Greece, Cyprus, Israel, Malaysia, Korea, the Philippines, Japan, Jordan, and Singapore by late 1995. By the year 2002, company called for opening of the addition of almost 1,200 new stores in the US and 240 stores internationally.

Competition in Rotisserie Chicken Business


The existing businesses did not escape the markets competition by switching to rotisserie chicken. KFC had to spend $100 million to roll out its Colonel's Rotisserie Gold in all 5,100 of its stores in the United States in 1993. By the end of 1995, Rotisserie chicken constituted about 25% of KFC sales in

Page - 3 -

Group-J

HRM 370.1

company-owned stores. KFC enjoyed a 58% share of the retail chicken industry, with the gross sales of over $3.5 billion. Other fast -food restaurants also attempted to expand into the non-fried market. For instance, Popeye's Famous Chicken entered the non-fried market despite its lack of capital; it featured a roasted chicken that could be cooked in the same ovens as its biscuits. Boston Market (formerly known as Boston Chicken) was another upand-coming competitor in the rotisserie chicken segment. Boston Market opened its first store in 1985. By the year 1993, it had 166 stores in approximately 25 states, and sales of $154 million, which was more than triple its 1992 sales. It became a public company with over 825 stores operating in US and was opening a new store each business day by the end of 1995.

Growth of Rotisserie Chicken Business


The sales of rotisserie chicken were still considerably smaller i.e. $700 million vs. $6 billion for fried chicken in the year 1993. Promoters of non -fried chicken firmly claimed that the gap would close within ten years. Figures confirmed the growing popularity of non -fried chicken in the US. The sales of fried chicken consumed outside the home grew an average of 3.5% from 1989 to 1995, while the sales of non -fried chicken grew an average of 10.75% in the same period. However, between 1984 and 1994, annual growth in per capita chicken consumption was to be 38.5%.

Drawbacks
Rotisserie chicken had several drawbacks, regardless of its rapid growth. Raw rotisserie chicken had a shorter shelf life than fried chicken. Compared to 30 minutes for fried chicken the rotisserie chicken took 75 to 90 minutes to cook. Cooked rotisserie chickens are needed moisture; otherwise, it could get spoil if kept under a heat lamp for too long. This was not any problem for fried chickens. Moreover, in peak hours customer demands were often greater than the supply, which was difficult to meet for rotisserie chicken vendors as rotisserie chicken took longer cooking times.

Page - 4 -

Group-J

HRM 370.1

Formation of KRR
The KRR was a privately held company and it had no immediate plans to go public by the year 1995. The equity breakdown was approximately John Y. Brown, Jr. 28%; Kenny Rogers 14.5%; and a group of Malaysian investors 35%; various friends of Brown and Rogers held the remaining 22.5%. Rogers was on the board of directors and Brown served as the company's CEO and Chairman of the Board. Even if Rogers was not directly involved in running the co mpany, he attended many meetings while assisting in promoting the company. Several people who were recruited had worked earlier at KFC with Brown to build his management team. Additional management talents were recruited from fast food chains such as Wendy's, Burger King, Pizza Hut, Arby's, and McDonalds.

Set-Up of KRR
The KRR restaurants averaged 2800 square feet in size, with seating capacity for 80 to 100 people, which were in US. The stores were decorated with memorabilia from Rogers's career. All The stores had the interior decoration theme after a country-western motif. Throughout the restaurant, television monitors were located. They all showed customized music videos featuring performances by Rogers and other country-western entertainers. In the stores, advertising and promotional messages were interspersed with the music videos. A signature wood-fire rotisserie with surrounding woodpiles was placed in full view of the customer. Inside the cafeteria, all the parts were done in style. The service counter was done in a unique fashion along with a wide range of wide range of side dishes kept warm in a glass display case. The other side of the

Page - 5 -

Group-J

HRM 370.1

counter put together plates for customers. They served the customers based on their choice of entree and side dishes. In all KRR restaurants, the menus were prepared on-site. They cooked the chicken after it was marinated overnight and then roasted the next day over a hardwood fire to an internal temperature of about 180. Despite the fact that a few items were p repared from mixes developed at the company's training and development center near the corporate headquarters. Most of the side dishes were made from scratch in the restaurants. The labor costs averaged between 26 and 27% of sales, food costs ran just under 30% and the labor-intense nature of KRR was not without its downside.

KRR doing Business


The average estimation of business for the freestanding Kenny Rogers restaurant with a drive-through window went through 1,800 chickens a week. Which generated approximately $1 million in annual sales .The take-out orders comprised about 45% to 50% of sales; the company's goal was to increase this to around 60% by the time of 1995. In the year 1995, total KRR revenues were estimated to be $321 million. This had increased from $68.7 million in 1993 and $150 million in 1994.

Franchisees Selection
In the company's expansion Franchising had played a big part from the very beginning. Franchise stores accounted for about 85% of KRR's 310 stores by the period of 1995. Franchisees used to own all of KRR's international stores. Despite the fact that the company had solicited a few of its franchisees, most franchisees had approached KRR. The screening process for the franchisees included previous restaurant experience, espec ially multi-unit operations experience, references, credit rating and net worth. KRR wanted the franchisees that knew and liked the restaurant business, who appreciated the difference the company was trying to make with customer service and product quality and who were or had been in it.

Page - 6 -

Group-J

HRM 370.1

CONTRACTS with Franchise KRR typically had twenty years contract of set up franchise and development. A franchise agreement was for a single store, while a development agreement was for a specified number of restaurants, within a set period, in a designated area. KRR typically awarded territories in small clusters of five to 50 restaurants while signing the development agreement. Depending on the size and experience of the group or individual involved, as well as availability within the region requested, the boundaries of the territory varied.

Costs -Franchise Agreements


A franchise agreement involved costs that included the initial franchise payment of $29,500; a royalty fee of 4.5% of gross sales; the contrib utions to the company advertising production fund, the national advertising fund, as well as a local or regional advertising fund of 0.75%, 2%, and (a minimum of) 3% of gross sales, respectively. All other fees were due monthly once the store was in operation with the initial franchise fees that was due upon signing the franchise agreement. Fees associated to a development agreement were similar to those of a franchise agreement. A developer was typically required to pay a development fee of $10,000 for each restaurant covered under the agreement with the addition to normal franchise fees. The fee was non refundable. The fee was due (along with the full $29,500 for the first store to be built) upon signing the development agreement. The development fee was to be applied in equal portions. According to the development schedule, the balance of each additional store's (within a development area) franchise fee was due as each store went into construction.

Costs of Building New Restaurant


The average costs that were showed by the company research to build a new restaurant in the U.S. ranged from $560,000 to $672,000 and the costs to convert an existing site ranged from $405,000 to $545,000. Expenses as property rental or payments, architectural and engineering fe es, insurance, business licenses, equipment, furniture, signs, office supplies, opening inventory were included in the costs.

Training & Development of KRR


Enormous emphasis was put on training by the KRR .The KRR provided franchisees and operators with three training courses. The training courses took place at the company's training and development center located near corporate headquarters in Ft. Lauderdale, Florida. The franchisee took care of

Page - 7 -

Group-J

HRM 370.1

all expenses (travel, living, etc.) incurred in the traini ng process. An optional three-day executive orientation program for all first -time franchisees and partners was the first of those courses. The enduring courses were not optional like the first one. All franchisees were required to certify and maintain a minimum of two managers for each store. For all managers the company's level one course was an intense four-week program held four to six weeks prior to the store opening. Management -trainees essentially lived with their trainer, learning all aspects of dai ly operations dubbed as KRRs version of boot camp. It was possible to apply for accreditation, that is, to set up its own level-one management training program, after a developer had opened a substantial number of stores within the designated territory. A ny manger required the second level of management training to be promoted as a general store manager. The six-day program focused not so much on operational procedures, but rather on how to deal with the more sensitive issues of management, i.e., how to de al with staff members and customers, especially when there were problems.

Opening of a new store


For each new store opening, franchisees were offered with an opening team to assist in the initial training of hourly -employees. The team size and the duration of stay depended on the number of stores the franchisee already had in operation. Once KRR had received a Certificate of Occupancy and a completed Pre-Opening Checklist from the franchisee, the opening team would be sent. The opening date of the stor e could be pushed back if the store was not ready. The franchisee was responsible for making sure that the store was ready for pre-opening training.

Training Program
On average 60 to 65 hourly employees were hired for each new store in the U.S. Just about 60% would quit within the first few months out of those that were initially hired. A twelve -part video training program which demonstrated proper operating procedures for equipment and preparation of food items were designed by the KRRs training and development center. To train new employees in all stores both domestic and international, those videos were used.

Page - 8 -

Group-J

HRM 370.1

Control Issues concerning Menu


A particular concern for international stores was Menu adjustments. Not all the side dishes were preferred globally. Some of them did not do well in various parts of the world. For example, baked beans with bacon were not served in Jordan and other Muslim countries. Other alternative side dishes that would better receive in their country or region of the world were encouraged by the franchisees. From time to time recipes of existing dishes had to be altered for regional tastes. Most particularly sugar content had to be reduced for dishes served in the Asia-Pacific region where people had less of a sweet tooth than Americans. The new menu items or variations in recipes had to pre-approve by corporate headquarters.

Control Issues concerning Food Products & Equipment


KRR took some steps to improve the business. With the addition of an improved menu, KRR also developed standards and specifications for most of its food products and equipment. Consistency was guaranteed in each territory or country where the company operated, as KRR approved suppliers of chickens, breads, spices, mixes, marinades, plastic products, packaging, and so on. It was never a major problem to find approved local suppliers for chickens and other major food products. On the other hand, many overseas franchisees ordered from KRR's contracted U.S. distributor for such specialized products as marinades and packaging materials.

Control Issues concerning Computer System


Franchisees were required to install computer systems in each store, in order to keep up constant communication among KRR's corporate office and any given store. This structure permitted KRR to instantly receive information concerning sales of each restaurant. The system also provided franchisees with information necessary to prepare financial statements and better management of the restaurant. The company had standard forms, which were use in such areas as inventory control, profit -and-loss control, and monitoring daily and weekly sales.

Tony Wang the former KFC executive


Ta-Tung (Tony) Wang, a former KFC executive, used to lead all the KRRs efforts in China. He was born in 1944 in Sic huan province in the Peoples Republic of China, and was raised in Taiwan. Wang moved to the United States to complete graduate work in the late 1960s. After graduation, he took a management position with KFC in Louisville, Kentucky. After a series of promotions, in 1986, Wang was appointed as KFC Vice President for Southeast Asia. The position was based in Singapore where he was charged with the duty to uncompromisingly expand KFC throughout the Asia Pacific region. He focused his efforts primarily on Chin a, a country of 1.2 billion

Page - 9 -

Group-J

HRM 370.1

people with an undeveloped food service industry. Wang gained considerable international notoriety by opening the first Western style fast food restaurant in China in 1987 which was located just opposite Mao's mausoleum off Tiananmen Square, and was the largest KFC store in the world.

Joint Venture of KFCs


The careful selection of joint venture partners were credited by Wang as key in securing the store's prime location and in expediting the opening of the store. Each of the partners played a special role in the start -up and on-going operation of the store. The three Chinese partners were: Beijing Animal Production Bureau that owned 10% of the joint venture, and accessed locally grown chickens Beijing Tourist Bureau, which had a 14% ownership position, and helped with site selection, permits, lease issues and hiring Bank of China, having a 25% ownership position assisted in converting soft currency renmimbi profits to hard currency. Regardless of high chicken prices, where KFC approved wholesale cost of chicken in China over $1 per pound, which was well over twice U.S. levels, the operation was a major success. In reflecting back on that time, Wang noted that KFC was the first Western quick service restaurant in any communist country, which was very thrilling situation. Crowds used to line up outside the store in the morning even before the store was opened. To control the crowds, often the police had to be called.

Tony Wang and Agreement with Foodmaker International


Tony Wang left KFC to become president of CP Food Services Co. after opening additional restaurants in China for KFC in September 1989. Then Wang moved back to the United States to become president of Grace Food Services, a subsidiary of W.R. Grace & Co in September 1991. However, Wang left Grace to become president of Foodmaker International after one year which was the $1.2 billion parent company of Jack -in-the-Box and ChiChis restaurants. Wang was then authorized to open 800 new restaurants over an eight-year period, primarily in the Pacific Rim. However, the disaster stroked when contaminated hamburgers were served at a Seattle Jack -in-the Box restaurant. Even though the tainted hamburger was traced to a California-based supplier, Foodmaker was hit with a ser ies of costly lawsuits and devastating publicity. In order to conserve finances, the company's international expansion plan was shelved and the sales got nose -dived. Sensing an important win-win opportunity for all, Wang offered to carry on the Foodmakers companys expansion using his own money. An agreement was made whereby Wang's own company QSR (Quick Service Restaurant)

Page - 10 -

Group-J

HRM 370.1

became a Jack-in-the-Box Master Licensee with franchise and development rights for 20 countries in the Middle East and Asia including China but not Japan. The agreement with Foodmaker that lasted 10 years came into effect on January 1, 1994. The agreement gave QSR complete control over the selection and development of all franchises within these 20 countries. QSR had the right to select stand-alone franchisees, establish joint ventures with franchisees, or set itself up as a franchisee within any or all of the designated countries. Foodmaker and QSR split all franchise fees for Jack -in-the-Box restaurants under the Master License agreemen t. Evaluating Foodmakers rationale in setting up the Master License agreement, Wang commented that this was a mutually beneficial concept for both parties as they Foodmaker had the expertise but not the money. To become successful they had implement the concept internationally.

FICA
After leaving Foodmaker Wang began to explore other franchise investment opportunities in Asia turning American International Group, Inc. (AIG), as one of the largest US based insurance companies for assistance. He discussed franchise investment concepts with several senior AIG (Asia) managers since the late 1980s and formed FICA as a subsidiary company designed to pursue multiple franchise options in 1990. Wang was requested to serve as its first president but declined the offe r. Wang thought that it was premature at the time. As a result, Franchise Investment Corporation of Asia (FICA) was put on hold. Wang reopened discussions with AIG in early 1994 and he joined FICA as its president and co-owner in 1995. FICA's ownership was split between AIG (60%) and QSR (40%). Wang served as the president of the company and was the primary decision-maker in an office, which was established by FICA in Hong Kong. His reflection was that he was the president because of his skills and contacts, and his financial contribution was based on his 40% ownership.

FICAs Mandate
FICA had a three-fold mandate. Investing in established franchise concepts was the primary emphasis. The mandates were: To develop and invest in franchise concepts in Asia To act as a consultant to franchisees in the region To establish food processing and other franchise support/commissary functions.

Franchise Agreements of FICAs


FICA signed far-reaching franchise agreements with Circle - K for both the Philippines and Thaila nd and with Carvel Ice Cream for China after considerable effort. The company was continuing negotiations with these

Page - 11 -

Group-J

HRM 370.1

companies for additional franchise territories within Asia Pacific by the fall of 1995. In the year 1994, FICA also began investigating KRR in the context of a broader China strategy. Among the identified franchises, only one of them was chicken. Wang also pointed out the fact that he knew many people who worked at the KFC such as John Brown and Loy Weston, who were managers of KFC, now working for KRR. Wang's negotiations focused on gaining the franchise rights for KRR for both Shanghai and Beijing. He argued that both Shanghai and Beijing were on the leading point of china and he could do better there. He was fully confident that KRR did not need a partner other than FICA, as FICA was capable of doing business efficiently in both Shanghai and Beijing. FICA was granted the KRR rights for both Beijing and Shanghai in the spring of 1995. FICA did not pay a fee for the KRR rights to these two ci ties, but it did agreed to pay an up-front franchise fee for each store based on opening 15 stores in total. The up -front franchise fees were consistent with US per store fees discounted by an allowance for new market development.

Recognition by Wang about the Cost needed-

Page - 12 -

Group-J

HRM 370.1

Wang recognized that considerable money would be required to build the first KRR store beyond the franchise fees. The Costs were not directly comparable with U.S. levels. The costs were affected by location of the store, terms and conditions of the lease and size of the store etc. Wang did not even ask what a U.S. store cost. He knew it would be irrelevant. U.S. stores are 90% free standing. They also involve a lot of real estate. None in China is or will be free standing. In addition, one cannot buy real estate in China. In deciding on a Beijing or Shanghai as location for the first store, Wang did not take any predetermined decision about the location of the store. He suggested for the most opportunist and supportive option available. To find high-quality workers Beijing was chosen.

Discovering a Potential Partner


Wang began the process of finding an appropriate local partner once the decision had been made to focus on Beijing. In the face of years of open door economic policies, Chinese investment regulations remained complex and cumbersome. There were also legal issues to be considered and Wang commented that the law of china was both clear and uncertain regarding the area of ownership. 100% foreign ownership was not allowed according to the regulation stated. However, beyond that point nothing was cleared. Therefo re, Wang went for one or more then one partners. However, his preference was to find a partner who would bring him some skills and organizational strength. Wang thought of getting in touch with his old KFC partners, but this was ruled out because of strict non-compete agreements that Wang had forced upon each partner when the original KFC joint venture was established in 1987. Wang then turned to East City Food Services and Distribution Co.

East City
Wang had some familiarity East City Food Services and Distribution Co. It was a city-government owned enterprise. It owned 30 different Chinese style sit-down restaurants and over 100 retail food outlets in the greater Beijing area. Groundwork discussions with East City's management indicated substantial excitement at collaborating with KRR. East City promised access to its extensive labor pool. The members could either be transferred to KRR or hired through the company's normal channels. East City also had extensive local market knowledge and could be useful i n marketing efforts and pricing issues. The company promised to assist in accessing chickens and various food ingredients that would be essential in the smooth running of KRR restaurants from beginning to end their up -stream contacts. In assessing their potential contributions, Wang shared that they would save some groundwork by collaborating with them. They would represent a small option given to the other FICA commitments. Although East City was seriously worthy, they had a drawback. That was they could not help much in the way of finances.

The second option for Potential Partner

Page - 13 -

Group-J

HRM 370.1

Considering the Beijing Branch of the China Great Wall Trading Co., a major investor-owned international trading company as a partner was a second option for Wang. China Great Wa ll had extensive international contacts and was very familiar with Western business practices. Great Wall was also very entrepreneurial and was seeking new investment opportunities with multinational corporations in Beijing. Wang sized up the option that G reat wall had a lot of appeal as it could provide bridge between china and America. He was impressed by entrepreneurial skills of Mr.Lu.Hong Jun. Wang also suggested that China Great Wall had plenty of money including access to hard currency.

The third option of Potential Partner


Wang considered D&D Realty Co. as a third option. D&D was a Hong Kong based real estate development and leasing company, which had revenues in excess of $U.S. 1.8 billion. It began a major push into China and in 1994, and opened its first office in Beijing in the year 1993. It signed a contract as leasing agent for a new 14 -story office complex being built by Hong Kong investors in a commercial area in central Beijing in early 1995. The company was interested in filling ground floo r space with a signature store. In September 1995, it approached FICA with an offer to form a partnership with KRR. D&D communicated its plans for aggressive expansion in Beijing and promised Wang that as a partner it could provide relatively easy access t o prime retail space within the city. Wang was clearly intrigued by the potential. He saw it as a very interesting concept. Nevertheless, Wang was worried that they are still new and do not have mature contacts and he wanted to give them a careful consideration.

KRR- The Future Direction


To move KRR forward was clearly committed by Wang. He was interested in Beijing and as expeditious an approach as possible. Wang realized KRR's approach to the Beijing market would set a clear precedent for the expansion of other FICA retailing concepts in China, while he clearly had other responsibilities as President of FICA. Wang was also aware of the competition with other brands. McDonald's had 17 restaurants running in Beijing by the fall of 1995. KFC was operating 10 . Other restaurant companies including Hard Rock Caf, Pizza Hut, and TGI Friday's, either had established operations or had broken ground for new stores in the Beijing area.

Leasing issues faced in China


In spite of the obvious popularity of Western food and the enormous potential of the Chinese market, the Chinese food service industry remained poorly developed and at risk. McDonald's and KFC were both involved in difficult lease negotiations in 1995. McDonald's management was informed that its flagship restaurant in Beijing (and McDonald's largest in the world) would be

Page - 14 -

Group-J

HRM 370.1

raised to accommodate the construction of an enormous shopping, office, and residential complex being developed by Hong Kong billionaire Li Ka -Shing . McDonald's refused to vacate its building arguing that it had a valid long -term lease. Demolition of the surrounding area continued and by October 1995 the restaurant was still operating, but in what appeared to be a war zone. A spokesperson for the developer emphasized that McDonald's never had a clean lease on the property. Report that McDonalds had cut a special deal with Li Ka-Shings group was circulating among Western business people in Beijing. One other rumor circulating was that KFC would not renew its 10 -year lease on its flagship Tiananmen Square store because of soaring rent costs.

Challenges regarding Trade in China


Leasing issues were not the only problem regarding business in china. Wang learned that import duties for equipment and materials would average 50 to 100%. The estimation showed that each KRR store would necessitate a minimum of US $150,000 in imported equipment (not including lease -hold improvements).

Lack of HR Management
Wang lacked the staff to manage the development of 15 new stores in a short period, while import permits were relatively straightforward. An additional concern was hiring and training the new workers. With 15 restaurants, over 1,000 new employees required over the next few years the greatest challenge would be with managing them. They would face p roblem for making a system for interviewing, hiring, and training them as no one in KRR's training group could speak Mandarin and Chinese language training materials were not available.

Climbing up of the Wage Rate


Wang also gain knowledge of that wage ra tes had climbed significantly over the past decade. Multinational companies were paying from a low 1,500 RMB per month for office clerks who spoke some English to as high as 10,000 RMB per month for senior managers who spoke fluent English. Over 95% of employees in Beijing worked for state -owned enterprises where salaries averaged between 500 to 700 RMB per month. Government subsidies reduced rent costs to less than 80 RMB per month. The cheapest unsubsidized apartments started at over 1,000 RMB per month a nd increased sharply according to location, size and quality.

Concerns with Menu


By October 1995, none of the local food suppliers had been either identified or approved by KRR's head office. Wang was aware of the fact. This was a real concern over the menu. KRR's menu had never been tested in Beijing. As

Page - 15 -

Group-J

HRM 370.1

chicken was commonly eaten in China, the question was that would the Chinese people be attracted to a premium product that was promoted in the U.S. as a healthy alternative to fried chicken. Additionally , there was a doubt about developing new menu items for KRR China and the problem was finding the right person who would actually develop the concepts. Even if tasty new concepts could be developed, how long would they take to get corporate approval and could they be produced economically without costly new equipment was another main concern.

The questions occupied in Wangs Mind


Wangs mind was occupied by all these questions and they were weighing heavily on Wang's mind. It was clear was that whoever was selected as FICA's local partner would have a major impact on the success or failure of KRR in China. With so many unresolved issues, Wang was wondering whether the time was right to formalize a partnership or not.

Opinion on Joint Venture


None of the joint venture partners could be considered appropriate, Tony Wang had concluded by the end of 1995. As a replacement, he determined FICA to go alone in setting up KRRs first franchise restaurant in China as he thought that they would not need partner in Beijing except for helping them find good locations for KRR restaurants. They also had to take consideration at the government regulations of China. There is no regulation about having a local partner; rather the regulations say that as a foreign company the y cannot have 100% ownership of a food service business. They decided to form a cooperative alliance with a local firm instead of a full -fledged equity alliance. The company they chose to work with was a small, local real estate company. Moreover, they planned to put money into this company to the point of eventually buying them out.

Three Potential Locations


With the assistance of the new real estate partner, Wang began to search for locations for the first KRR store. Three potential locations had been identified by early November 1995. The locations were: Central Commercial Location University District High-Rise Location The locations are described below:

Central Commercial Location


Across the street from the Beijing Railroad Station, which was one of the busiest transportation centers in China was considered as first potential site. It was estimated that nearly 300,000 people would pass by the front of the store every day. The location contained about 500 square meters of usable space,

Page - 16 -

Group-J

HRM 370.1

all on the ground floor with large windows facing the street. The building was approximately 40 years old, and was owned by a city agency. It had most recently been used as a department store. The locat ion was also near a major subway station and was within a kilometer of the Friendship Department Store and two kilometers of the diplomatic quarter. However, in preliminary discussion it was indicated that the site could be available on condition that FICA sign a 10-year lease with a fixed rent payment of approximately 1 million RMB per year with five years paid up-front, in advance. The exchange rate of RMB and US currency was as in October 1995, 1 $U.S. = 8.11 RMB.

University District
A second location was found near the university district in north -central Beijing. The site, which had previously been a retail store, had 684 square meters of floor space, all at street level. There were very heavy foot traffic throughout the day as the areas high concentra tion of computer and other high-tech stores were located there. It was believed that a relatively high percentage of Chinese professors had experience overseas including the United States. And the residents in the neighborhood included mostly students, university professors and administrators as well as other professionals. Although most students had had little exposure to Country Western music a fall 1995 radio special on Kenny Rogers was very popular among young people in Beijing. However, the store being considered would require a 15 year lease with annual payments of approximately 850,000 RMB per year.

High-Rise Location
The third option that was considered was a 400 -square-meter store on the ground floor of a 25-story high-rise building under construction. The high-rise was designed for additional stores on the ground floor and a mixture of offices and residential apartments on the other floors. The apartments would be privately managed with rent starting at 5,000 RMB per month for a 60 square meter unit near street level and climbing to 15,000 RMB per month for a 120 square meter penthouse apartment. An upscale department store was being constructed across the street. Another finding of the preliminary research was that over 200 small to medium-sized Chinese companies had offices within easy walking distance of the new high -rise building. Wang also learned that both Kentucky Fried Chicken and McDonald have planned to open stores in separate buildings within a few hundred meters of the site being considere d. Moreover, Wang believed that because the building was still undergoing construction, he could largely control the size and configuration of the store. Furthermore, it was anticipated that rent charges per square meter would be perhaps 20% lower than for residential units in the same building. However, with annual payments possible, a 15 -year lease had to be signed for the site

Page - 17 -

Group-J

HRM 370.1

Need Assessment:
A methodical study of the way things are and the way they should be is knows as a needs assessment. The things refer to the things which are associated with organizational and individual performance. . We have to remember that actual needs are not always the same as supposed needs, or "wants". We must look for what the organization and people really need; they ma y not know what they need, but they may have well-built opinions about what they want. Associated Employers may assist by conducting an audit of a specific area or the entire function by interviewing key personnel and reviewing files, policies and procedures. Some important points we point out for the development needs we have assessed are mentioned below: There needs to be more integration and interaction within the consulting team: A hands-on Human Resource Department is needed to make sure the expansion as well as to make proper decision eventually: An effective recruitment program is needed to make sure the recruitment and selection of an effectual and competent group of workforce in short time: New menu needs to be developed and offered in the Chinese market: A local food supplier needs to be selected so that FICA is able to provide best quality chicken to consumers: An interactive training and development program needs to be conducted for both existing and new workf orce : Monetarily well-built and well-experienced partner needs to be chosen to get assistance in conducting business efficiently in a new market: KRR Needs to be more insistent in with competitors in order to sustain in the new market for a long time: The labor cost needs to be reduced in order to produce more profit as well as to reduce the cost of offered items: A market research needs to be conducted so that FICA has a apparent idea about possible response of Chinese people about KRR products: A lease deed agreement needs to be conducted by the following strategies and methods to stay away from future complexities: Adequate budget fund needs to be distributed to enter the new market in a prompt manner: A suitable position needs to be chosen for re staurant in Beijing to ensure maximum business: .

Page - 18 -

Group-J

HRM 370.1

Main Issue:
What type of training and development (T&D) and strategic approaches should Kenny Rogers Roasters takes in order to continue its smooth acceleration to success and meet up its objectives to establish the leading position in China and enhances the companys economic conditions?

Page - 19 -

Group-J

HRM 370.1

Internal/ External needs assessment:

ISSUE: 01
TO DETERMINE PREDICAMENTS REGARDING ROTISSERIE CHICKEN KRR MIGHT BUILD AN ADVANCED R&D DEPARTMENT:
KRR needs to construct R & D department in order to solve some major problems regarding rotisserie chicken. Compared to fry chicken processing and selling rotisseries chicken is much more complicated. So by advanced research it might be possible KRR to come up with such recipe of their food item which could overcome these problems. Research and development is very much essential for KRR.

Does a performance discrepancy exist?


This R & D department can work as a competitive advantage if KR R is able to establish and build it up according to the need and demands of the present time. It took really long time to cook rotisserie chicken compared to fried chicken. Rotisserie chicken needed 75 to 90 minutes to cook while fried chicken took only 30 minutes. More over small shelf life and sensitivity to heat lamp for long time are also two major drawbacks of KRR products.

Is it important to the organization?


Having a well-established R & D department will also help KRR to develop a positive image among the market. That will help them to expand the market share. Moreover, R & D is an integrated part of any projects. From the research the company can have the idea how to solve problem regar ding excessive time to cook and problem with heat lamp and need for moisture. In return this will surely benefit the company with an increased profitable level as KRR suffers from this problem.

Is it correctable through employee development?


Employees will be more willing to come up with new ideas on different aspect that will help to solve the problem of KRR products, if they kept under this R & D plan. They can be trained on find out new technique for processing food and come up with new recipes, for better profitability of the company, for identify the proper target markets, to find strategies in convincing the final customer so that they consume more food from KRR restaurants.

Page - 20 -

Group-J

HRM 370.1

Is employee development the most cost effective solution that can be applied?
Although to train up the employee for the Research & Development plan demand for huge budget and that will increase the overall cost of the organization but working with untrained cost much more as there is high chance of accidents. Such planning program is quite time consuming. Moreover, there is also a good possibility of hinders in the productivity, as employees and supervisors are busy in training process.

ISSUE: 02
A HANDS-ON HUMAN RESOURCE DEPARTMENT IS NEEDED TO MAKE SURE THE EXPANSION AS WELL AS TO MAKE PROPER DECISION
Many problems FICA faced in the time of opening new restaurant of KRR in China but in the whole discussion with the management authority, there was no source of information, which can give evidence that they have a formal Human Resource Department or if the y have it, it is not efficient enough, or simply, it is not working perfectly. It is a huge business and no existence of Human Resource Department indicates that line staff handles human resource policies which are very complicated and at the same time important too. More over FICA faced many problems which they could not able to solve on time which indicate the absence of a proactive human resource department.

Does a performance discrepancy exist?


In the case there was no mention of a formal human resources department or representative at FICA, described that it was a huge business and that line staff handles human resource policies. The company faced many problems in time of entering in China with KRR restaurants but most of time it failed to solve it in an efficient manner which indicates the absence of human resource department in FICA. The company did not able to take decision about finding a local partner in China. More over confusion rises in the time of choosing appropriate space for KRR restaurants. The company also face problem in developing an appropriate menu for Chinese people. Without a specific HR department, though having a proper planning, ev erything becomes useless, because human resources are the main contributor to make those plans successful.

Page - 21 -

Group-J

HRM 370.1

Is it important to the organization?


For FICA human resources are the main contributor to make all plans successful. All of these need an efficient and expertise human resource department to control them efficiently. Skills and characteristics, which are required for playing Management games, are especially relevant for managers of all levels. According few senior managers, skills and habits they acquired in playing games give them an extra edge in business and in management. As from whole case it was quite obvious that FICA faced serious problems in the time of making major decision regarding entering in the whole new market of China and it becam e in a bad situation in the time of handling these issues. If FICA had a proactive human resource department it would analyze all possible problems before facing it by prediction and took corrective action before. So a proactive HR department is very impor tant for FICA to solve these problems.

Is it correctable through employee development?


Although Human Resource Department was essential for FICA but sometimes HR department tries to dominate the decision making process. As they have the employees support it is easy for them to go against the management. It is difficult to handle such situation. But to train and develop employees efficiency, FICA need to establish a proactive HR department to take strategic decisions on proper time. Employee development wo uld help them to solve these problems in an effective and efficient manner.

Is employee development the most cost effective solution that can be applied?
With the help of the proactive HR department, it would be easy for FICA to identify problems before it emerges and also to adopt appropriate solution to solve it. HR department can take the advisors role for FICA that would suggest the how the company would enter in Chinese market, what would be their menu, how to select and recruit efficient employees w ith in short period of time as well as acceptability of management among the new Chinese employees and based on this the company can develop its operating plan as well as the budgeting.

Page - 22 -

Group-J

HRM 370.1

ISSUE: 03
A LOCAL FOOD SUPPLIER NEEDS TO BE SELECTED SO THAT FICA IS ABLE TO PROVIDE BEST QUALITY CHICKEN TO CONSUMERS:
Kenny Rogers Roaster is an international brand name for roaster chicken which FICA was going to promote in China for the first time ever. To start a new business in total new environment seemed so difficult for FICA and the condition became worse with complicated rules and regulations of China. Although the firm was able to find some gap in foreign ownership in food industry but due to excessive import duties the firm had to contact with local food suppliers.

Does a performance discrepancy exist?


In spring 1995 FICA got the approval to start business in China by the name of KRR but till the company failed to identify any local food supplier by October 1995. More over importing materials was very costly in China as government demand for heavy import du ties which would average 50 to 100%. So, better option for FICA was to rely on local firm. Moreover, company need to approve the local firm from KRR head quarter but they did not able to did it after a long time as top management did not able to make decis ion by that time.

Is it important to the organization?


Import permit was quite straight forward in China at it was impossible to avoid those burden was to depend on local firms for food supply. Because if the firm tried import these it would be very cost ly and at the same time consuming and it would also increase the overall cost of end product. It was estimated that each KRR store would require a minimum $ U.S. 150,000 in imported equipments and materials with out lease - hold improvements. More over for chicken it was wise to depend on local food supplier as it would help KRR restaurants to offer consumers items at a cheap rate.

Is it correctable through employee development?


FICA employees could not able to find an efficient local food supplier although they had plenty of time available to solve this issue. So proving adequate managerial tanning to all level of management worker specially in top level management as they were the ultimate decision makers so that they might able to find some solution with in fixed and quick time frame. It would also

Page - 23 -

Group-J

HRM 370.1

help the firm strategically as well as financia lly because local food supplier might able to help the firm to provide best quality chicken to end consumers.

Is employee development the most cost effective solution that can be applied?
Employee development was at the same time costly and cost effecti ve process in this regard. As FICA was new in China it was taking long time to find local food suppliers. Providing training to employees might solve this problems and it would be the most cost effective solution for FICA as to remove the burden of import duties the company had to depend on local firms. By using this company can create good amount of money and thus the company established themselves in a good stable financial position.

ISSUE: 04
AN INTERACTIVE TRAINING AND DEVELOPMENT PROGRAM NEEDS TO BE CONDUCTED FOR BOTH EXISTING AND NEW WORKFORCE:
As Tom Wang was thinking about opening 15 new stores within a short period of time in China after FCIA was approved the right of opening KRR restaurants in China it was really essential to provide adequate training to employees in order to ensue constant f low of operation. More over providing appropriate training is really very important as KRR serve their products directly to end consumers and it became urgent for FCIA as they were about to start new business in new environment in China.

Does a performance discrepancy exist?


When FICA got approval to enter the huge Chinese market with the very well known brand name of KRR the organization decided to start KRR forward in Beijing as prompt manner as possible as it believe that KRR's approach to the Beijing market would set a clear precedent for the expansion of other FICA retailing concepts in China. But unfortunately Wang had really short period of time to manage and develop over 1000 employees for 15 stores. Moreover, these new employees really need train ing it is very important to provide them with adequate training. So it is really important to hire appropriate employees with in short time period.

Page - 24 -

Group-J

HRM 370.1

Is it important to the organization?


As FICA wanted to enter the market of China in a prompt manner it was very important for them to provide adequate training to existing pool of employee in order to ensure success. If existing pool of employees are provided with appropriate training so that they would able to recruit and select efficient employees within a short period of time which was very badly needed to ensure success for KRR in China. More over cost of labor in China is very high. So to get benefit from these costly employees it is very important to make maximum utilization from them and only effective training program could ensure this.

Is it correctable through employee development?


As main success of KRR in China depends mainly on how the organization able to manage an overall Training and development program for managers and specialists in their organization so that they able to hire a very efficient and intelligent as well as skilled pool of employees. Increasingly, management of FICA recognized that training offers a way of developing skills, enhancing productivity and quality of work, and building worker loyalty to the firm. Training is widely accepted as a method of improving employee morale, but this is only one of the reasons for its growing importance.

Is employee development the most cost effective solution that can be applied?
Operating operation in China demanded for very well trained pool of employees and definitely, employee development program is the most cost effective solution that can be applied in order to sustain in China. Making delivery, serve and bills the customers and behave them with appropriate manner as China is a oriental country and mannerism matter much for Chinese people. More over some other factors include the complexity of the work environment, the rapid pace of cultural change and diversified management demand for training. Although top level management might be consist of FICA employees but for working level they have to hire local Chinese people so ultimately the management might become div erse and to manage a diverse workforce employee development was the most cost effective solution for KRR in China.

Page - 25 -

Group-J

HRM 370.1

ISSUE: 05
MONETARILY WELL-BUILT AND WELL-EXPERIENCED PARTNER NEEDS TO BE CHOSEN TO GET ASSISTANCE IN CONDUCTING
FICA was approved the right of KRR in 1995s spring for two leading edge of China-Beijing and Shanghai but along with this approval FICA needed one important thing badly a local partner because as per the law of China a company cant own 100% ownership in food service. So to start Kenny Rogers Roasters restaurants in China FICA had to be come up with an ownership with any local Chinese partner so that they got the legal right to start their business.

Does a performance discrepancy exist?


Although FICA seriously analyzed three local Chinese companies as their local partner in China but it failed to come up with any better solution as the company ultimately choose to go along in setting up first franchise rest aurant in China. They decided to form a cooperative alliance with a local firm. So the company rejected all three options which were available to come up with FICA to create a full-fledged alliance.

Is it important to the organization?


To conduct a new business in a perfectly new region obviously demand for a strong local partner which have enough experience about the local environmental factors which can influence the over all business environments. All three companies was very good option for FICA. Eas t Service Food Services and Distribution Co. promised to accessing in extensive labor pool as well as sharing knowledge about marketing and pricing strategies. China Great Wall Trading Co. promised really easy access to prime retail space with in the city. All this three options were very lucrative for FICA but the company failed to come up with any solution. Alliance with a local firm was really important as it ensured the overall success of a new firm in a new market to come up with a new product.

Is it correctable through employee development?


Employees of FICA failed to take any effective and efficient decision to choose a financially strong new partner while it was planning to enter a new market. This incident indicated that FICA had some lacking in top

Page - 26 -

Group-J

HRM 370.1

management level as they unable to take any efficient decision in time. So proving adequate managerial tanning to top level management as well as middle level management as they have the responsibly to analyze the feasibility of any sort of proposal for the organization will help FICA to increase the quality of employees so that they became able to take correct decision.

Is employee development the most cost effective solution that can be applied?
As FICA was entering a whole new market other factors which include the complexity of the work environment in a new work environment, the rapid pace of organizational and cultural changes, and the diversity of work force which company was going to experience demands for employee development program as it is the most cost effective solution for the organization. In addition, KRR in China was a company which deals directly with end consumers so training is most essential for its employee to offer best products to its customers. And this can be done with the ben efit generated from training programs.

ISSUE: 06
KRR NEEDS TO BE MORE INSISTENT IN WITH COMPETITORS IN ORDER TO SUSTAIN IN THE NEW MARKET FOR A LONG TIME:

Kenny Rogers Roasters begin its operation by opening a restaurant in Coral Gables, Florida and fortunately the concept of KRR gain enormous response so the company experienced vast growth within a short period of time. Moreover to continue the growth scale upward the company takes many strategies like increasing budget, making items avai lable. But with success the company faced threat from some outside competitors and which was a matter of concern.

Does a performance discrepancy exist?


KRR joined in the food industry with the name of Kenny Rogers who was once described as the most popular singer of America and he put his reputation on the line not as endorser but as an owner and partner and the company. The company became so successful that KRR start facing massive threat from other fast food restaurants like Popeyes Famous chicken,

Page - 27 -

Group-J

HRM 370.1

although the company was suffering from lack of capital, Boston Market etc and all these companies can became major threat for KRR as they stated offering new items like Popeyes Chicken offered roosted chicken that could be cooked in the same oven as its biscuits. So the market may become interested about new and interesting product like this and it can reduce KRRs market share.

Is it important to the organization?


It is very important for KRR to fight back with competitors in order to sustain in existing market of non-fried chicken. The company owned 310 stores only in 4 years of operation as well as it gain major market share of non fried chicken. So KFC decided to expand its business and it was ready to spend $100 million dollars to compress its Colonels Rotisserie Gold in a ll its stores in United States. But along with success the company it confronts threat from some other companies who offer the market with some new items. So it is very important for KRR to fight back with competitors in order to sustain in market.

Is it correctable through employee development?


But to train and develop employees efficiency, KRR need to conduct a training and development program so that the employee become able to take strategic decisions like how to fight back against competitors on proper time. Providing existing as well as new employees with appropriate training might help KRR to confront this situation.

Is employee development the most cost effective solution that can be applied?
Other factors include the complexity of the work environment, the rapid pace of competition in the existing market of no fried chicken which KRR recently faced call a demand for employee development and training as it is the most cost effective solution for a company. Fighting with competitors needs for constantly generate new knowledge in employees. In addition, KRR is totally a chain restaurant based company which provides its product directly to consumers so training is most essential for its employee to offer best products to its customers. And this can be done with the benefit generated from training programs.

Page - 28 -

Group-J

HRM 370.1

ISSUE: 07
THE LABOR COST NEEDS TO BE REDUCED IN ORDER TO PRODUCE MORE PROFIT AS WELL AS TO REDUCE THE COST OF OFFERED ITEMS:
KRR restaurants became very successful chain restaurants by a short period of time which was a very remarkable thing for the company but along with this the company had a labor intense nature which is increasing their overall cost of operation. KRR had such an overall operating procedures which demands for more labor and cost of this labor was a major part of companys total sales.

Does a performance discrepancy exist?


As KRR is a restaurant it served their product to end consumers and it is very important for them to serve the customer perfectly which is mandatory for growth. But in KRR labor cost is very high relative to other costs. It was between 26 and 27% of sales and a matter of concern is food cost was run just under 30%. The labor intense nature of KRR increased companys cost of labor to a significant level.

Is it important to the organization?


Labor cost is very competitive sector of restaurant business. Converting a simple restaurant to inexpensive family restaurant is very important for any sort of chain restaurants as it is an advantage over competitors. Inexpensive family restaurants can even survive in the time of recession. More over it help to increase the profit of KRR to a significant level.

Is it correctable through employee development?


Chain restaurants like KRR when experience a downturn in their projected sales with actual sales they immediately try to cut labor cost first of all. But if they made employee efficient by providing them adequate training level of productivity will rise along with creativity. Employee development ensures the best use of organizations resources as well as best management of organization. So by employee developmen t it is easily correctable.

Page - 29 -

Group-J

HRM 370.1

Is employee development the most cost effective solution that can be applied?
Employee development is the most cost effective solution here as if employees ability and capacity is increased so that they can increase their level of productivity. As employees of KRR have firsthand experience in working environment they can enhance the level of productivity. Furthermore, skilled employees are the key success factor for an organization and this would be proved cost effective for the organization.

ISSUE: 08
A MARKET RESEARCH NEEDS TO BE CONDUCTED SO THAT FICA HAS A APPARENT IDEA ABOUT POSSIBLE RESPONSE OF CHINESE PEOPLE ABOUT KRR PRODUCTS:

In spring 1995 FICA was approved to open KRR restaurants in China. But China was a whole new market for FICA as KRR menu was never ever experienced by Chinese people. So how the response to roasted chicken would was a matter of concern for the company. More over as China was a total different market and taste also vary from USA people there was a growing need to introduce some new item exclusive for this market only.

Does a performance discrepancy exist?


KRR restaurants special menu was roasted chicken and chicken was already quite popular in China. As FICA did not conduct any market research it was growing concern for the company whether Chinese people accept it or not. The situation became more confusing as FICA did not conduct any market research so that the company came to know about the expected response of end customers. More confusion raised about new menu which FICA might developed for Chinese market specially. Another uncertainty was Chinese future attractiveness for premium product which was promoted in as healthy product in USA. As FICA did not conduct any market research they still did not have any idea about these questions.

Is it important to the organization?


For any kind of organization specially before entering a new market conducting a market research is very important as by researching the market the company come to know about future response of consumers. For FICA it was more important as China was a totally new market for them. More over

Page - 30 -

Group-J

HRM 370.1

Chinese people never experienced roasted chicken before. So how would the response to this product which was already very successful in USA where it was promoted as a healthy product and alternative of fried chicken. A well designed step by step market research would help the company to find answer of these important questions. More over it would help company to make decision on some related topics like what the new product would be for Chinese market an d how that new concept would be developed.

Is it correctable through employee development?


Conducting a market research is very costly and time consuming and at the same time it is a job of trained people. To come up with a conclusion from market research information is also a hard task. So if FIC A decided to conduct a market research by its employees it was mandatory to develop their capabilities so that they able to do it in a effective manner and come up with a solution of some questions like the future popularity of roasted chicken in China, what sort of new products would gain maximum popularity in this market and more over what the firm would develop exclusively for this new market.

Is employee development the most cost effective solution that can be applied?
Conducting a research is very costly as it is a long term process and lots of people related in to this procedure. If FICA able to conduct it by their own employees it would be cost effective for them. Although making employee suitable is very costly as they had to be provided with adequate training so that they would able conduct market research effectively. Hiring outside firm to conduct market research would be very costly. Employees are asset for organization if the can be developed. Through employee de velopment process they became familiar about collecting adequate data, sorting them, represent them in correct format and if necessary do graphical presentation. So employee development the most cost effective solution that can be applied

ISSUE: 09
A LEASE DEED AGREEMENT NEEDS TO BE CONDUCTED BY THE FOLLOWING STRATEGIES AND METHODS TO STAY AWAY FROM FUTURE COMPLEXITIES:

Although western food were very popular in China and it had enormous potential in that giant market but food service industry in China confronted some hazard which is also a matter of concern for FICA as it is going to

Page - 31 -

Group-J

HRM 370.1

explore Chinese food market for the very first time with a new product. Lease
negotiation was very difficult in China and some giant food service company like McDonald and KFC already faced much harassment due to this problem.

Does a performance discrepancy exist?


None in China was free standing and getting access into real state in china is really difficult as it is a communist country. Some existing competitors of KRR in China already faced these issues. For example McDonalds and KFC were both involved in difficult lease negotiations. In February 1995 McDonald got the vacate notice and when they refused to vacate in October 1995 in time of demolition of restaurant the place became a war zone. More over excessive rent cost prevented KFC to renew contact for farther time period.

Is it important to the organization?


For any Restaurant getting access to real state specially in prime location is very important as success of a firm depend on this issues. But in China it was really very difficult to find a suitable location for restaurants as none in China was free standing. More over in food industry 100% foreign ownership is not allowed. Many giant companies like McDonald and KFC had to face many difficulties confronting such problems. So it is very important for KRR in China to make a full proof, legally perfect contact with government in the time of opening restaurants in China in order to avoid future problems.

Is it correctable through employee development?


In this existing situation employee development is a perfect way to solve the problem. Because if the employee work more together they will be able to solve out the problem and they will come to know about government rules and regulation in China more appropriately and come up with a contact which will protect them from future harassments that they might face in the time of operating KRR restaurants in China. .

Is employee development the most cost effective solution that can be applied?
To bring approval for suitable place for KRR restaurants for FICA Employee development would be an appropriate solution. Employee development is the most cost effective solution for FICA which can be applied as employees are the most valuable assets for any type of organization especially for companies which deals directly with end consumes like FICA. A strong, knowledgeable and efficient pool of employees can carry out companys mission, vision as well as the system and day to day operations. Well trained employees are like asset of any kind of organization as

Page - 32 -

Group-J

HRM 370.1

they return much more they cost. They can run FICA more efficiently and effectively than ever before and more over although employee development is a costly process but the return from it is much higher than the cost. As a result of employee development process employees will become more motiv ated and at the same time productive as well. As a result of this the company will become more successful and effective in maintaining business in a totally new and complicated environment in China.

ISSUE: 10
ADEQUATE BUDGET FUND NEEDS TO BE DISTRIBUTED TO ENTER THE NEW MARKET IN A PROMPT MANNER:
Entering a whole new market like China demanded for lot of budget at the beginning demand for huge amount of budget so that the company able to make a market position in the competitive market as early as possible. Entering a new market is really costly. The companys capability to enter the market in a prompt manner was of supreme importance because there were already some of their strong global (McDonald, KFC) as well as local competitors exist. So, they should increase the sufficient fund to make their entrance swift and quick.

Does a performance discrepancy exist?


The company need big amount of budget so that it could able to conduct its operation effectively. FICA wanted an aggressive expansion budget is mandatory for them. Although FICA though about three company as their local partner and all this three options were very lucrative for FICA but the company failed to come up with any solution. More over the company faced problem in hiring new employees as it was very costly to conduct. More over to develop new menu the company need more budget but due to lack of it the company did not able to do any thing. Excessive lease cost and import duty demands for more budgets.

Is it important to the organization?


To offer consumers of China KRR products FICA needed to import advance machineries and materials which was essential. But import duties were really high which would average about 50 to 100%. Hiring and proving training to 1000 employees in 15 new stores need more money. Along with these hiring new employees was very costly as wage rate had climbed substantially over the past decade in China. To develop new item menu in China FICA need more budget. So, they should increase the sufficient fund to design and effective flexible system.

Page - 33 -

Group-J

HRM 370.1

Is it correctable through employee development?


KRR is totally a firm that provides services to end consumers firm so training is most essential for its employee to offer best products to its customers. And this can be done with the benefit generated from training programs. If employees were developed they would able to make an effective budget which could allocate the resources in an appropriate manner so all operation would conduct in a perfect manner. Efficient budget implementation depends on over all and willingly participation of employees of an organization.

Is employee development the most cost effective solution that can be applied?
As company was suffering from adequate budget to conduct their operation employees development is the most cost effective solution that invests in their own organizations. Although it cost really high to ensure training for every level employees but budget inefficiency and poor alloca tion of resources cost much more than it. No doubt that trained employees are stronger and better equipped to carry out a perfect budget. If it becomes possible along with costs it will save time in making decision and it will at the same time increase validity and quality of decisions. Because of poor quality employees even an effective budget may fail so employee development is the most appropriate solution in this regard.

ISSUE: 11
A SUITABLE POSITION NEEDS TO BE CHOSEN FOR RESTAURANT IN BEIJING TO ENSURE MAXIMUM BUSINESS:

For opening a new restaurant location of it matters a lot on future business. FICA should choose a prime location for opening the first KRR franchise restaurant as location matter much for a restaurant. In deciding on a Beijing or Shanghai as location for the first store, Wang did not take any predetermined decision about the location of the store. When he choose Beijing confusion raised about the location and for starting business quickly it was very important to make decision.

Page - 34 -

Group-J

HRM 370.1

Does a performance discrepancy exist?


FICA chose three prime locations in Beijing for opening first franchise restaurant of KRR. Tony Wang realized that all the three sites (Central Commercial Location, University District, High-Rise Location) would be lost if he waited much more than a couple of weeks. He understood that he had little time to make a decision. However, he was confused on whether he was pushing a little too fast that if a lease should be signed immediately, or they should wait a little longer for the finalization of the concepts.

Is it important to the organization?


While opening KRR restaurants in China for the first time Wang suggested for the most opportunist and supportive option available. His first concer n was to find high-quality workers. Therefore, Beijing was chosen. Then with the assistance of the new real estate partner, Wang began to search for locations for the first KRR store. Three potential locations had been identified by early

November 1995. The locations were: Central Commercial Location, University District, and High-Rise Location. Among three potential locations the most suitable location has to be chosen quickly as location matters a lot for the success of a new restaurant.

Is it correctable through employee development?


In such a situation where FICA was in a dilemma about what option to choose as the place for restaurants Tony Wang realized that all the three sites

Page - 35 -

Group-J

HRM 370.1

(Central Commercial Location, University District, High-Rise Location) would be lost if he waited much more than a couple of weeks. He understood that he had little time to make a decision. However, he was confused on whether he was pushing a little too fast that if a lease should be signed immediately, or they should wait a little longer for the finalization of the concepts.

Is employee development the most cost effective solution that can be applied?
Employee Development is the most cost effective solution for FICA in this regards as there is no other option to ensure a perfect decision making regarding location issues of first KRR franchise restaurant in China. Welldeveloped employees return a lot; more than the cost they required to be developed. At the same time preparing existing employees fo r cultural change was the most cost effective solution for FICA as it did not call for overall orientation program to break ice of a new environment.

Page - 36 -

Group-J

HRM 370.1

EXISTING ARRANGEMENT
Existing arrangements of any company is an important factor for any company. In this factor we are analyzing the ongoing process of companys and also the current arrangements existing in the company or organization or industry. We also analyze the current existing organizational development. And also the pros and cons of those existing developmental arrangements.

Existing Arrangements

Pros Cons

At the beginning of their business fried chicken sales and profits was high. As a first people catch the entire offer. As time processing they want to establish their business in China which may be very profitable for th e company. Some few years this situation was not remain the same as some new competitor entered in to the market. Kenny Rogers Roasters in China faced a tough completion during those times. Their first two competitors were KFC and McDonalds. In many cases, both KFC and McDonalds did top business that time. KFCs growing market share was generally well. The reason of success was that came up with the food quality and good customer service. A combination of both design talent and an eye for ever -changing market demands was essential in developing winning customer satisfaction. Other restaurant a company including Hard Rock Caf, Pizza Hut, and TGI Fridays, had either established operations or had broken ground for new stores in the Beijing area. So, it was tough task for Kenny Rogers Roasters. Kenny Rogers Roasters in China was also having some internal and production problem. The big and major pr oblem was finding a partner. They want some thing new. This problem affects Kenny Rogers Roasters numerously. One other rumor circulating was that KFC would not renew its 10-year lease on its flagship Tiananmen Square store because of soaring rent costs. As in with different business strategies Kenny Rogers Roasters was very much concerned or aware of keeping cost down on the other hand making Kenny Rogers Roasters competitive and make the operations like make the departments such as Marketing, Manufacturing, Operations,

Page - 37 -

Group-J

HRM 370.1

Accounting, Sales and distribution, Commercial Linked and more efficient as much as possible.

For having a rapid growth Kenny Rogers Roasters (KRR) expanded its restaurant worldwide.
Kenny Rogers Roasters (KRR) instigated its operation on January 17, 1991, in Louisville, Kentucky. It opened its first restaurant in August of that year in Coral Gables, Florida. In that time, the menu was citrus and herb marinated wood-roasted chicken and about a dozen side dishes such as mashed potatoes and gravy, corn-on-the-cob, baked beans, and pasta salad. They were having rapid growth at the beginning of its journey to run business. Thats why; they decided to prolong their business and opened several stores as well. For prolonging their business they expand their work group additionally. From an original group of five people, the company grew to include a corporate staff of more than 100. By late 1995, the company had moved headquarters to Ft. Lauderdale, Florida, and had over 310 stores. By this time, KRR operated in approximately 35 U.S. states, had more than a dozen stores in Canada, and had at least one store each in Greece, Cyprus, Israel, Malaysia, Korea, the Philippines, Japan, Jordan, and Sin gapore. Company plans called for the addition of almost 1,200 new stores in the U.S. and 240 stores internationally by 2002.

PROS:
Rapid growth: KRR lengthened its business worldwide to capture the world market. For their rapid growth they have stret ched out their store in everywhere from 1991 to 1995 and they have prolong their plan as well. They were intentioned that by 2002 they will open additional 1200 new stores in U.S and 240 stores internationally. Increase KRRs profit margin: KRR was prolonging their stores with enlarging the number of corporate staff. As a result, they can produce more. They have also improvised their food menu which enhances their popularity. All these reason are behind their rapid growth and ultimately they are able to increase their profit margin which means they were having profit.

Page - 38 -

Group-J

HRM 370.1

Well establish reputation: As KRR was increasing their number of stores worldwide, they were able to how the world market was going on. They were able to fight with them and stand still in their position. But, the noticeable thing was they were having success in a very short time as well which establish their reputation into the market. Stable position in market: By expanding KRRs business with increasing their contacts internationally they were proficient to set up an unwavering position in the competitive market.

CONS:
Increase competition: Prolonging KRR stores means they were entering into many other new markets. They had to defeat lots of local competitors in that new location. Those competitors as well tried to capture their business through making non fried chicken which was the wave of the 90s. For example: there was KFC, Popeye's Famous Chicken, and Boston Market. Lack of control: Enlarging KRRs stores can cause lack of control over all the stores globally if KRR did not have proper strategy and management people to handle those stores. This was affecting their overall services. Expensive: KRR had to maintain numerous strategies for controlling their globally expanded stores and they grew their corporate staff from group of five people to more than 100. All these things were very much expensive for them. Getting bigger and bigger can be threat for them in business bad time.

John Y. Brown recruited several people with management talent for KRR for building his management team.
KRR was still a privately held company by 1995. He had no immediate plans to go publicly. The equity breakdown was approximately John Y. Brown, Jr.

Page - 39 -

Group-J

HRM 370.1

28%; Kenny Rogers 14.5%; and a group of Malaysian investors 35%; various friends of Brown and Rogers held the remaining 22.5%. Brown served as the company's CEO and Chairman of the Board. Rogers sat on the board of directors. Though he was not directly involved in running the company but he attended many meetings and assisted in promoting the company. In building his management team, Brown recruited several people with whom he had worked in his days at KFC for KRR. He had recruited other management talent from fast-food chains such as Wendy's, Burger King, Pizza Hut, Arby's, and McDonald's.

PROS
Transformation of knowledge: Brown was recruiting several management talents from KFC, Wendy's, Burger King, Pizza Hut, Arby's, and McDonald's. These peoples were very much experienced. They can teach KRR many things that they had leant in their experience. The techniques can be learnt by KRR which can be used by the employees in their own company. From these thing employee gets knowledge about ways of tracing problem in the very short time, which way is more effective for the organization or which way is harmful for the organization. By these ways, there was a possibility of transforming the knowledge. Provide Proper Solution: Management talent from all those well establish food-chains such as KFC, Wendy's, Burger King, Pizza Hut, Arby's, and McDonalds provided the proper solution about their systematic problem by assessing or analyzing the related issues and so on. They also do lots of research and other things to provide proper and effective solution. Solve the Problem in a Practical Way: KRRs management team solved the entire problem in a practical way because they are trained before to solve the problem in this way. So that hiring people from different food-chain was a good decision to some extent.

Page - 40 -

Group-J

HRM 370.1

CONS:
Leakage of Companys Information: Outflow of information is possible while hiring other food -chain talents if they were not reliable. Though KRR hired other food -chain talents, there is possibility to leak the information of the organization. It can be occurred, if those people work in the other places or other organization the information of KRR can be leak in that specific organization. Expensive: KRR hired other food-chain talents as constructing their management team which is more expensive. If the organization trains own employee for consulting then it can be cost effective. KRR improved their external and internal arrangements of stores and the approach of preparing and presenting of food items. In the U.S, KRR's restaurants averaged 2800 square feet in size, with seating capacity for 80 to 100 people. The stores had a country -western motif and were decorated with memorabilia from Rogers's career. Television monitors were also located throughout t he restaurant showing customized music videos featuring performances by Rogers and other country -western entertainers. Advertising and promotional messages were interspersed with the music videos. A signature wood-fire rotisserie with surrounding wood pile s was placed in full view of the customer. The serving counter was cafeteria in style, with a wide range of side dishes kept warm in a glass display case. Servers on the other side of the counter put together plates for customers based on their choice of entree and side dishes. All menu items at KRR restaurants were prepared on -site. The chicken was marinated overnight and roasted the next day over a hardwood fire to an internal temperature of about 180. Most side dishes were made from scratch, though a few items were prepared from mixes developed at the company's training and development center near the corporate headquarters.

PROS
Achieving the esteem desire by changing the environment: The soothing environment increases KRR total revenue. A free-standing Kenny

Page - 41 -

Group-J

HRM 370.1

Rogers restaurant with a drive -through window generally went through 1,800 chickens a week and generated approximately $1 million in annual sales. By 1995, take-out orders comprised about 45 to 50% of sales; the company's goal was to increase this to around 60%. Total KRR revenues in 1995 were estimated at $321 million, up from $68.7 million in 1993 and $150 million in 1994. Satisfied the customers need: In a restaurant if any customer gets a homely, friendly, welcomed environments then they are more attracted towards it. As KRR restaurants were providing all source of refreshment, customers demand increase for KRR day by day. Suitable for employees: This environment is suitable for the employees because employees feel good to work in such a friendly environment. Thats why; they work willingly and work more which increase the productivity of KRR.

CONS:
Expensive: The whole change in decoration cost, television monitors throughout the restaurant, signature wood-fire rotisserie with surrounding wood plies can cost KRR more money. Rotisserie chicken had a shorter shelf life: Uncooked rotisserie chicken had a shorter shelf life than fried chicken. So, there is a high probability that those chickens can be rotten which cause KRR more cost. Time consuming: Rotisserie chicken took 75 to 90 minutes to cook compared to 30 minutes for fried chicken. Consumer has to be more patients as KRR prepare the w hole thing on-site. Most side dishes were made from scratch, though a few items were prepared from mixes developed at the company's training and development center near the corporate headquarters.

Page - 42 -

Group-J

HRM 370.1

Franchising played a significant role in KRRs expansi on for accomplishing vigorous augmentation. From the very beginning, franchising played a big part in the company's expansion. By 1995, franchise stores accounted for about 85% of KRR's 310 stores. All of KRR's international stores were owned by franchisees. Though the company had solicited a few of its franchisees, most franchisees had approached KRR. The company carefully screened all franchisees for previous restaurant experience, especially multi-unit operations experience, references, credit rating, and net worth. KRR wanted franchisees that knew and liked the restaurant business, who were or had been in it, and who appreciated the difference the company was trying to make with customer service and product quality.

PROS
Work like partner: If KRRs one franchisee is in trouble another one helps that franchisee and solve the problem as one. They act as partner. Similar to licensing: The entry mode of franchising is similar to licensing which works as advantage for KRR restaurant. The restaurant is relieved of many of the costs and risks of opening a foreign market on its own. Profitable operation can be built quickly: The franchisee of KRR typically assumed those cost and risks that they incur while opening a foreign market for their o wn. This creates a good incentive for the franchisee to build a profitable operation as quickly as possible. Built global presence: KRR used franchisee for the expansion of the company. Its plays a major role in KRR. Using a franchisee strategy, KRR can build a global presence quickly and at a relatively low cost and risk.

Page - 43 -

Group-J

HRM 370.1

CONS:
Coordination of manufacturing: If different franchisees of KRR do not consider the need for coordination of manufacturing, then KRR cannot achieve the experience curve and location economy. Lost sales and reputation: The foundation of franchising arrangements is that the firms bra nd name conveys a message to consumers about the quality of the firms product. In any franchisee of KRR serves the poor quality extends beyond the lost sales in a particular KRR restaurant to a decline in the restaurants worldwide reputation. Difficult to control quality: Because of geographical distance, it is tough for KRR to control the quality and detect the poor quality products over its foreign franchisee. Thus, quality problem may persist.

KRR set up franchise contract for single store and development contract for a specified number of restaurants for having better control over their stores worldwide. KRR set up franchise and development contracts both typically had duration of twenty years. A franchise agreement was for a single store; a development agreement was for a specified number of restaurants, within a set time frame, in a designated area. When signing development agreements, KRR typically awarded territories in small clusters of five to 50 restaurants. The boundaries of the territory varied depending on the size and experience of the group or individual involved, as well as availability within the region requested.

Page - 44 -

Group-J

HRM 370.1

PROS
Strict control over all international restaurants: KRR not only sales their intangible product such as trade mark, brand name but also insists that the franchisee agree to abide by strict rules as to how it does business. So, it can control the international stores as well through the franchisee contract. Maintain equilibrium: KRR maintain equilibrium through its development agreements which is provided for a specified number of restaurants, within a set time frame, in a designated area. For example - KRR typically awarded territories in small clusters of five to 50 restaurants in case of signing development agreements. It preserves symmetry to all the restaurants within one region. Get royalty payments: As KRR is a franchiser; it typically receives the royalty payment which amounts to some percentage of the franchisees revenue. The costs involved in a franchise agreement included the initial franchise payment of $29,500; a royalty fee of 4.5% of gross sales; and contributions to the company advertising production fund, the national advertising fund, as w ell as a local or regional advertising fund of 0.75%, 2%, and (a minimum of) 3% of gross sales, respectively. Get development fee: KRR also gets development fees which was profitable for them. Fees related to a development agreement were similar to fra nchise agreement. A developer was typically required to pay a development fee of $10,000 for each restaurant covered to KRR under the agreement.

CONS:
Building new restaurant is expensive: Company research showed that the average costs to build a new restaurant in the U.S. ranged from $560,000 to $672,000; the costs to convert an existing site ranged from $405,000 to $545,000. These costs included such expenses as property rental or payments, architectural and engineering fees, insurance, business licenses, equipment, furniture, signs, office supplies, opening inventory,

Page - 45 -

Group-J

HRM 370.1

and so forth. Harassment from many legal formalities: Under franchise and development contracts, both franchiser and fra nchisee faced many legal obligations to fulfill the formalities which are very much hazy for them. Demotivation of franchisee: The development fee was non-refundable which can be the reason of franchisees stepping back from contracts. It was due (along with the full $29,500 for the first store to be built) upon signing the development agreement. The development fee was to be applied in equal portions as a credit against the initial franchise fee for each restaurant to be developed under the development agreement. The balance of each additional stores (within a development area) franchise fee was due as each store went into construction, according to the development schedule. These rigid processes can make franchisee unsecured. KRR put great emphasis on training and provided franchises and operators with three training courses which took place at the companys training and development center. KRR put great emphasis on training. It also provided franchisees and operators with three training courses which took place at the company's training and development center located near corporate headquarters in Ft. Lauderdale, Florida. All expenses (travel, living, etc.) incurred in the training process were the responsibility of the franchisee. Discretionary first course: The first course was an optional three -day executive orientation program for all first-time franchisees and partners. Other mandatory two courses: Remaining two courses are obligatory for all. All franchisees were required to certify and maintain a minimum of two managers for each store. The companys level one course for all managers was an intense four -week program held four to six weeks prior to t he stores opening. Dubbed as KRRs version of boot camp, management-trainees essentially lived with their trainer,

Page - 46 -

Group-J

HRM 370.1

learning all aspects of daily operations. Once a developer had opened a substantial number of stores within the designated territory, it was possible to apply for accreditation, that is, to set up its own level -one management training program. The second level of management training was required for any manager before being promoted to a general store manager. Held either before or after a store opening, this six day program focused not so much on operational procedures, but rather on how to deal with the more sensitive issues of management, i.e., how to deal with staff members and customers, especially when there were problems. Enhance employees performance on work: Because of the training program that KRR provided to franchisee, employees can increase their potential and work properly. They can maintain the standard of quality that parent company (KRR) maintains. Manage diversified workforce: Through the training program KRR managed diversified workforce by training them. Franchisees and operators get help in order to deal with cultural diversification among different countries. Work efficiently: As all employees are being trained properly they work in an appropriate way. This efficiency leads to profit in future.

CONS:
Time Consuming: KRRs training program with three training course is time consuming. The companys level one course for all managers was an intense fourweek program held four to six weeks prior to the stores opening. The second level of management training was required this six day program for manager.

Page - 47 -

Group-J

HRM 370.1

Expensive: Organizing a training program is expensive. KRR has to invest lots of money in order to organize such programs and monitor them properly time to time. KRRs franchises provided an opening team to assist the initial training and their training and development center has designed a 12 part video training programs as well. In addition, KRRs franchisees were provided an opening team for each new store opening to assist in the initial training of hourly -employees. The size of the team and the duration of its stay depended on the number of stores the franchisee already had in operation. Th e opening team would be sent once KRR had received a Certificate of Occupancy and a completed Pre Opening Checklist from the franchisee. The franchisee was responsible for making sure that the store was ready for preopening training, though the opening date of the store could be pushed back if the store was not ready.

PROS
Train new employees domestic and internationally: KRR's training and development center designed a twelve -part video training program which demonstrated proper operating procedure s for equipment and preparation of food items. These videos were used to train new employees in all stores, both domestic and international.

More appropriation in training program: Opening team was helpful in order to start the training program while opening a new store. The size of the team and the duration of its stay depended on the number of stores the franchisee already had in operation. It makes the training program more appropriate. Inventory managed in an effective way: Training makes employees efficient and they can manage KRR inventory in an efficient way because excess inventory is harmful for any company.

Page - 48 -

Group-J

HRM 370.1

CONS:
Need more specialization: This technique needs more specialization in matching the opening team with the required training program. Though, it is a very effective way to operate whole works in a good way, but it always demanding more specialization. Create problems with KRRs training courses: Opening team can create problem with KRRs proposed training program and also with franchisee and operators. Cost ineffective: All of these programs cost more than the other systems or programs. So this is the negative side of these programs. No standard process: Like other systems these programs doesnt have any standardization process, so its face so many difficulties to solve the problem.

KRR developed standards and specification for most of its food products and equipment in approving menus. KRR developed standards and specifications for most of its food p roducts and equipment in regards to approving menus. To ensure consistency, KRR approved suppliers of chickens, breads, spices, mixes, marinades, plastic products, packaging, and so forth, in each territory or country where the company operated. Generally, finding approved local suppliers for chickens and other major food products was not a problem. However, many overseas franchisees ordered such specialized products as marinades and packaging materials from KRR's contracted U.S. distributor.

PROS
Ensure consistency: KRR approved suppliers of chickens, breads, spices, mixes, marinades, plastic products, packaging, and so forth, in each territory or country where the company operated which ensure consistency. Availability of local supplier:

Page - 49 -

Group-J

HRM 370.1

Finding approved local suppliers for chickens and other major food products was not a problem. The availability of supplier makes the whole process easier. Proper menu adjustments: Menu adjustments were a particular concern for international stores. Some side dishes did not go over well in various parts of the world. For example, baked beans with bacon were not served in Jordan and other Muslim countries. Franchisees were encouraged to offer alternative side dishes that would be better received in their country or region of the world, while still meeting the company's quality standards. Sometimes recipes of existing dishes had to be altered for regional tastes. Most notably sugar content had to be reduced for dishes served in the Asia -Pacific region where people had less of a sweet tooth than Americans. All new menu items or variations in recipes had to pre -approve by corporate headquarters. All these work can be done by developing standards and specifications.

CONS:
Dependency upon supplier: For maintaining the consistency KRR had to depend on supplier for their supplied products. Specialized products are cost inefficient: Many overseas franchisees ordered such specialized products as marinades and packaging materials from KRR's contracted U.S. distributor.

Wang decided to form a corporate alliance with a local firm instead of a full-fledged equity alliance.
By late October 1995, Tony Wang had concluded that none of the joint venture partners being considered would be appropriate. Instead, he determined that FICA would essentially go it alone in setting up KRRs first franchise restaurant in China. According to him, there was only need to have any partner to

Page - 50 -

Group-J

HRM 370.1

find good locations for KRR restaurants. The government regulation specifies that as a foreign company KRR cannot have 100% ownership of a food service business. This is an important distinction because KRR actuall y does not need to form a joint venture company. So Wang decided to form a cooperative alliance with a local firm instead of a full -fledged equity alliance. Wang had chosen to work with the company which was a small, local real estate company not D&D. He planned to put money into this company to the point of eventually buying them out in future.

PROS:
Quick decision process: As Wang decided to form a corporate alliance, it will be able to take decision very quickly regarding the companys success. Achieve the whole profit: Because of corporate alliance the whole profit remains to the owner, no share is given to anybody.

CONS
No sharing of financial problem: The owner has to deal whole finance process. In case of liquidation the company faces lots of trouble.

Page - 51 -

Group-J

HRM 370.1

TRAINING AND DEVELOPMENT PLAN


Training and development is a process dealing principally with transferring or getting hold of knowledge, attitudes, and skills needed to carry out an organizational purpose. Training and Development are often come close to a slowly, imprudent fashion. Proper employee development is a complex issue but it considerably improves organizational performance. Here in this section we are asked to prepare a training and development plan which will be unyielding and feasible development plan but for this it is necessary to focus on the industry over which we are working. Here the case is all about restaurant business of KKR. There is no substitute for Experience, Knowledge and Skills as an essential criterion to operate Restaurant and Cafe business successfully and to enhance it proper training and development program is always needed and mandatory. Based on the understanding of the various dimension of the industry, here we are presenting possible types of train ing possibilities which are friendly enough to implement. Here we anticipated different methods after imminent problems and hoping that the problem solution will be effective enough. After identifying all the imminent problems that any average restaurant C ompany might encounter, we have used the state of the art process and methods to develop a road map that will provide the most effective solution to the problems.

Page - 52 -

Group-J

HRM 370.1

1) Training the existing employees in a continuous basis to cope up with the changing environment and new technologies. Employee Development Needs Training is recognized as being vital to the success of any organization and its employees. Having an effective training and development plan ensures that employees are adequately trained for their jobs while maintaining a high morale within the workplace. It plays a significant role in service oriented job. The Sales people, who face the customer daily basis, should be equipped with proper training. In other words, companies need to be adapted with the changing global market and its technological advancement. Therefore, to be with the same pace of global changes, Kenny Rogers Roasters (KRR) needs to develop its employees through integrated training policies on a routine basis. Reasons In general, it is a very fluctuating industry where business operations, methods changes time to time with diversified features. Since KRR is in extremely competitive market where everything is changing within a blink of eyes as per the needs and dema nds of the clients, the company should make their employees eligible to respond according to the market demand. Even though KRR is in leading position in its industry, it is heading for an alarming situation of falling behind other companies due to the la ck in utilization of advanced technology. According to the case content, KRR spends huge amount of money in technology but they couldnt use the full potential of it that they could have. In other words, Chinese market is growing like anything with lots of opportunities, risks and competition for the local companies. Moreover, franchisees of KRR are not expertise enough in using the latest technological means to develop their ideas and planning. If the employees were give proper training in advanced technology, they would have been skilled to deal with any uncertainty and changing environment successfully. China has already been flooded with FDIs that makes the country as a global workshop after joining the WTO and other strong communities. Therefore, the buying power and market condition is on the customers control, companies need to shape themselves into more advanced and developed form, which can be predicted and utilized by training the in -house employees.

Page - 53 -

Group-J

HRM 370.1

Potential Outcome Obviously, this training will help the franchises to a great extent in managing and controlling the customers by providing complete satisfaction. As the employees will gain proper knowledge about the utilization of technology in the changing and dynamic environment like Chinese market, they would be capable of representing the diversified nature of their new and innovative training program and its importance at this competitive edge of the global economy. To be more precise, it will help the company to establish a strong communication network among the employees and the firm as a whole. In fact, sharing of knowledge will aid the firm to take effective and efficient decision that possesses less risk and maximum benefit for them. As a result, in either way it will be helpful to retain KRRs premium position in the market. PROS If they implement this policy, it will aid the employees by increasing efficiency and reducing the same mistake or error done by other employees previously. Indeed, the employees would be competent in their specialized area, which will bring success to the organization as a whole and definitely, sales would be generated to the utmost level. More importantly, employees of KRR would be empowered to take decisions in their area of operation, which will hel p to give an instant response to the clients and the environment as well in an effective and efficient manner. CONS However, the drawbacks of this initiative cannot be ignored even though its very little compared to the benefits. First of all, the found er of the company might have different reaction regarding this plan, as we know from the case that each founder has different planning, thoughts about the changing the organizational aspects. Finally, this may lead to a conflict and misman agement within the organization

Page - 54 -

Group-J

HRM 370.1

2) As Kenny Roger Roaster needs at least 1000 new employees to run the business in china for 15 stores so here it is mandatory to provide them with a basic training. Training method: Case study Method Action learning Behavioral training

y y y

Case Study Method: Case Studies try to simulate decision-making situation that trainees may find at their work place. It reflects the situations and complex problems faced by managers, staff, HR, CEO, etc. The objective of the case study method is to get trainees to apply known concepts and ideologies and ascertain new ones. This is a written description of an actual situation in business which provokes, in the reader, the need to decide what is going on, what the situation really is or what the problems are, and what can and should be done. Taken from the actual experiences of organizations, these cases represent to describe, as accurately as possible, real problems that managers have faced. Trainee studies the cases to determine problems, analyses causes, develop alternative solutions, select the best one, and implement it. Case study can provide stimulating discussions among participants as well as excellent opportunities for individuals to defend their analytical and judgment abilities. It appears to be an ideal method to promote decision making abilities within the constraints of limited data. Here in case of KRR, this method of training can be proved as very profitable. Because if the new employees analysis the cases like that where company has to established business fully in a new atmosphere, they will be able to generate

Page - 55 -

Group-J

HRM 370.1

ideas correctly which they can apply in the real business.

Case Study method focuses on: Building decision making skills Assessing and developing Knowledge, Skills and Attitudes (KSAs) Developing communication and interpersonal skills Developing management skills Developing procedural and strategic knowledge Case study has following steps or elements that are essential to establish an effective training method

Identifying the facts of the case Defining the legal and/or constitutional question For ulating argu ents for both sides of the question Explaining the court's decision and the reasons of the ajority and the dissent Evaluating the court's decision and predicting the i pact of the court's decision.

Action learning: Action learning is a structured method that enables small groups to work regularly and collectively on complicated problems, take action, and learn as individuals and as a team while doing so.

Page - 56 -

Group-J

HRM 370.1

Action Learning (AL) involves working on real problems, focusing on learning and actually implementing solutions. It is a form of learning by doing. AL is a process of inquiry, beginning with the experience of not knowing 'what to do next', and finding that answers are not available through current expertise. When expertise fails to provide an answer, collaborative inquiry with fellow learners who are undergoing the same questioning experience is always available. To be effective, this partnership in learning needs to be both supportive and at the same time challenging, deeply caring yet questioning. Such partnerships actually create themselves when different people with different ideas engage whole -heartedly with each other to resolve each others' problems. Behavioral training: Behavioral training is always must for the employees of restaurant business because here employees have to deal with the coming customers in the restaurant all the time. It is to develop managers into successful leaders by improving their behavior skills. It uses the innate inclination for people to observe others to discover how to do something new. It is more often used in combination with some other techniques. Games and stimulation section is also included because once the trainees see the videotape, they practice the behav ior through role plays or other kind of simulation techniques. The trainee first observes the behavior modeled in the video and then reproduces the behavior on the job. PROS All the training techniques are good source of ideas and also good methods to challenges for ideas. These techniques can help to transfer corporate culture and produces tangible outcome and lastly can help to solve the problem KRR may face in future. By studying case of different organizations as well as various situations, managers can gather experience to handle diverse situation in different ways and apportion fund as per need.

Page - 57 -

Group-J

HRM 370.1

CONS It becomes necessary to organize multiple learning events to make it effective. Good and objective facilitators are needed and may cause risk of poor follow up on project output. The design and content of the action learning training may prove as crucial. Hard to draw definite cause-effect conclusions and also hard to generalize from single case.

3) Redesigning the selection and recruitment process to en sure an intensifying success to persuade more customers by the expert and efficient employees. Employee Development Needs The Recruitment and Selection process promotes successful hiring decisions that can truly impact the success of a department or the organization as a whole. In a word, it can be successful in terms of reducing costs, failure to perform any job and many more. In order to enjoy the premium position in the market, the organization should think of long term objective and its the human ca pital that can lead the company to reach its objectives. Therefore, recruitment and selection process has a significant contribution to lead the company towards the success at a faster pace than that of others in the industry. Reasons As per the case content, the hiring process is extremely poor in quality and standard. The candidates only need a Bachelor of Arts degree, an outgoing personality and motivation. Definitely, this can never be sufficient to manage the job of a sales representative in a firm like KRR where always the need to be prepared to handle any circumstance.

Page - 58 -

Group-J

HRM 370.1

The sales representatives need to have educational qualification on the area of job content. In fact, there should be an appropriate job description and specification for each job area . However, it is mentioned in the case that KRR emphasizes highly on the hiring a good trainer to ensure its success of the training program (according to Yang), the firm is not being able to assure this aspect properly. Moreover, the firm is heading for minimizing costs and while doing so, they are ignoring this important key issue of generating sales to KRR. Potential employees will be capable of adapting themselves with any changes in the environment and contributing to the organizational success. The selection of a candidate with the right combination of education, work experience, attitude, and creativity will not only increase the quality and stability of the workforce, it will also play a large role in bringing management strategies and planning to f ruition. Therefore, redesigning the recruitment and selection process has become vital element for KRR in order to survive in the competitive market and retain its position in the training industry. Potential Outcome At the end of the day, KRR will be successfully capable to retain the one of the most effective and efficient employees through designing the hiring process in an organized and systematic way. Moreover, it will reduce the cost of training the new employees by investing enormously to prepare them from the very beginning. In short, it will help to deal with consumers more confidently, as the hired employees will have strong background and expertise in their specialized area. Pros Revamping the entire hiring and selection process will benefit KRR a lot in several ways. At first, it would help to reduce the cost of training at the very initial stage. In addition to that, it will help to have more employees in future, if KRR practices an appropriate hiring process with specific job description and specification. In short, more clients would like to get service from, as a strong reference of the trainers

Page - 59 -

Group-J

HRM 370.1

would be represented and everyone wants the best out of everything. Cons On the other hand, it has some cons as well. One of them is the increased cost of hiring process along with the process of examining other aspects of relevant issues. Furthermore, existing employees will have a perception of inferior complexion about themselves compared to the newly hired employees. These might lead to further conflict in the company.

4) KRR is an international brand name and Beijing is becoming a multicultural city day by day so English language skill training is essential to deal with the international customers. Here also training of proper Chinese language is necessary to deal the local customers properly.

Training method
Language Training Behavioral Skill training On the Job Training Language Training:
It is always mandatory for restaurant employees to have the proper language training which is true in of the KRR because the FICA is trying to establish KRR in china. So here it is very much important for the employees to know Chinese as well as good English because its for sure that the brand name of KRR will surely graft many people. Many food service operations have employee s who speak little or no English. These employee s are almost always relegated to the least skilled positions because of the difficulty they have in interacting with customers,

Page - 60 -

Group-J

HRM 370.1

employees, or managers. This limited communication inevitably leads to frustration for both management and employees. It allows the manager and the employee to have only the most superficial conversations. It will be a very wise decision for FICA to drive employees to become more productive by improving their ability to report correspond present and communicate in business English as well as Chinese using a highly flexible internationally recognized training.

Reading and underst anding writtin g Speaking and listening

To develop the learning skill of employees different approach can be used. A holistic approach to develop effective communication in English as well as Chinese language.

Behavioral Skill training:


Behavioral skills training is a psychological practice which allows authority figures to teach others (typically humans) skills. There are four components of behavioral skills training (BST): Modeling, Instructions, Rehearsal, and Feedback. Modeling involves showing the subject how the skill is done. It is important that when the model engages in the skill, it is obviously reinforced with something which would reinforce the subject. The model needs to resemble the subject in some way, same color hair, age, circumstances, etc. The model also needs to exhibit the behavior in a number of different circumstances to increase the chances of generalization later down the road. Instructions should be given after modeling in order for the subje ct to thoroughly understand the process which they are expected to engage in. It is

Page - 61 -

Group-J

HRM 370.1

important that the instructions are not too complicated for the individual to understand, nor too simple, or else the subject will feel as if they are being patronized. The subject needs to be paying attention when the instructions are given and be able to repeat the instructions to ensure understanding. Rehearsal is the stage which shows the trainer that the learner thoroughly understand the process. It is important that the learner is reinforced the first few times that they rehearse the behavior in order for the behavior to be repeated in the future. The rehearsal should also take place in the proper circumstances, similar to those which will typically be employed when the behavior is desired. Giving feedback is the last and most important component of BST. The positive comments should be given first, and they should be detailed, and additional reinforces should also be supplied. Negative comments which allow for improvement should be given gently and in moderation. Only reprimand one portion at a time per rehearsal, or else the subject will feel overwhelmed.

On the Job Training:


Employee training is at the place where worker is doing the actual job. Usually a professional trainer (or sometimes an experienced employee) serves as the course instructor, and employs the principles of learning (participation, repetition, relevance, transference, and feedback) often supported by formal classroom training. This term is also known as behavior modeling. This theory is mainly based on social learning theory, which asserts that most behaviors are learned by observation and modeling. PROS In a restaurant customer always want good behavior which attracts them to visit the restaurant again and again. So by the behavioral training employees will be able to modify their behavior which will help KRR attract more customers.

Page - 62 -

Group-J

HRM 370.1

As theses training and development plans are for KRRs business in china so that in this case language training will help the employees to deal in a right way with the customers. By the on the job training higher level authorities will be able to training the employees according to the need. CONS Training is always a time consuming and costly process so here it will be really costly as well as time consuming for FICA to apply those training techniques. Sometimes these training techniques create pressure on the employees. So that as a result they make mistake in case of applying those techniques. Continuous training process sometimes negatively affects employee efficiency. 5) Building, Developing and maintaining good customer relationship through broadening the service range, making remarkable customer relation, giving the customers dimensio nal experiences. Employee Development Needs If a company wants to become successful to build a good and durable long-term customer relationship, people get loyal enough to get service from that firm for the rest of ones life. According to the case if they serve the customers very well, customers will always remain loyal and bring more customers to the firm. Reasons According to the philosophy of KRR, the founders have been successful up to now in maintaining successful customer relationship with custo mers by providing effective training program. Recently, they are not being able to maintain the relationship, as customers are not satisfied enough with their offerings and associated benefits regarding the training program. Each customer has different needs and preferences but the offerings are very limited and constrained to their area. To be more specific, KRR has not offered any customized training program regarding the new topics, like- supply chain management others.

Page - 63 -

Group-J

HRM 370.1

Since the market is getting more and more competitive in nature, KRR should be more concerned in dealing with customers through building a positive relationship with them. The firm should offer according to the needs of the customers rather than emphasizing on reducing costs of training p rogram. In addition, the representation of any training offer is not sufficient enough to persuade the clients that are found from the conversation between Wang and other organizations. If this situation continues, competitors will get the opportunity to take KRRs position within a short while. Being successful is much easier than retain that success in the market for a long time. Unfortunately, KRR is ahead to loose this position due to being limited with the offers given to the customers in an attractiv e and effective way as the customers want it to be. Supply chain management is the hot topic to offer to the clients by the firm but KRR is not ready yet to give enough information to the customers. In addition, they are stuck with the initial offering and facilities rather than generating something new and innovative, which would persuade the customers to have the service from KRR and remain loyal to them for a long run. Potential Outcome The potential outcome may include the expansion of business to the highest level. As customers always expect something cost effective and beneficial to them, so, KRR would be capable of having largest number of customers to it. As the restaurant has been dominating in Chinese market for the long time, it has got the possibility to be successful by offering something beneficial to the clients as well as to KRR in the long run. In other words, it will help the company to maintain the premium brand equity of KRR in the market. Different varieties of items with lots of benefi ts will ultimately reduce their operational cost, as they would reach to the economies of scale generated by larger number of clients at the end of the day. According to Yung, the salvage value of an existing franchisee is very low. This can be reduced through maintaining good relationship with them and this can be done through continuously providing effective training program and providing other benefits. Pros Pros of this plan refers that providing excellent service implied building and maintaining a close relationship with customers. KRR would be successful in

Page - 64 -

Group-J

HRM 370.1

increasing the number of loyal customers and bring new customers as well. As a result of this customer-focused strategy, customers and employees felt like part of a family or a separate unit. Cons Cons include the initial cost of maintaining the relationship with the clients. Since customers want the things at a cheap rate, meeting their expectation will somehow increase their cost at the beginning stage. As a result, profit might be reduced at that pace of business.

6) Kerry Roger Roaster is new in Beijing and KRRs menu

had never been tasted in Beijing. So it is suggested to the higher level management to arrange effective training program for the restaurant employees. As a result they will able to deal with the local test successfully.
Training method: Cultural Training Transfer and Rotation Coaching and counseling Cultural Training: There are different kinds of cultural awareness training program: Cross cultural team building training It improves awareness of each other culturally in order to foster mutual trust, respect and understanding. The result of which will be clearer lines of communication. Cross cultural management training This methods aim is to equip management staff with the knowledge and skills to effectively supervise a multi-cultural staff. Cross cultural awareness training results in a more convivial and understanding work environment. Cross cultural negotiation training It assists negotiators involved with foreign clients or customers with whom they are discussing possible terms and conditions.

Page - 65 -

Group-J

HRM 370.1

Cultural diversity training This training method offers HR staff support in helping them understand their responsibilities to ethnic minority staff and/or look at ways of nurturing harmonious inter-personal relationships at work. Transfer and Rotation: Transfer and Job rotation entails moving employees from one job \ function to another (that requires similar skill sets) at specific intervals. It is gaining immense popularity as companies are trying to break the monotony and add variety to its employees daily responsibilities while allowing them to imbibe new skills on a continual basis. Thus, it helps retaining employees interest in their work.

Job rotation and transfer helps employers create a pool of talent with wholesome experience. It is a structured initiative that helps individuals gain experience across various functions and broaden their perspective. This also ensures employee satisfaction since they get to learn from a variety of experiences and acquire new skills. Since job rotation is normally offered to employees with high potential, it works towards grooming leaders with cross functional knowledge and experience. There are different approache s to job rotation practiced by different organizations. While some use it right from the grass root level, others tend to focus on the executive cadre. The management has to visualize the method that would suit their individual organizational requirements and decide on the course of action. A lot of thought has to go in before selecting the candidate as it may create a few ripples if a deserving person is left out. Moreover it is important to have clarity in terms of the possibility of the candidate getti ng relocated. Job rotation is an excellent retention tool. As is the case with any change in routine, the employee brings a new approach to the job. There is an increased level of motivation and innovation which leads to job satisfaction.

Page - 66 -

Group-J

HRM 370.1

A satisfied and engaged workforce ensures better retention and provides for better performance as there is ample scope for learning. Additionally, this also ensures higher productivity and a pool of qualified for succession. Culture country specific training: It is generally aimed at individuals or teams that regularly visit a foreign country or who frequently interact with overseas clients or colleagues. Such training usually focuses on areas such as values, morals, ethics, business practices, etiquette, protocol o r negotiation styles with reference to one country. This better equips participants with the key skills that will help in building successful business relationships.

Coaching and counseling: Improve performance and make knowing employees different issues through effective communications with all members of an organization. Provide counseling and coaching to employees. This method covers the relationship between effective communication and coaching and counseling to employee relations. The course uses an interactive case study simulation to address many of the topics. Coaching and Counseling may lope side by side. Based on the employees need this two can be implied. However, skills of the coach and the counselor are the same. They each listen, ask questions and offer observations in the spirit of helping the employees to find out their own solutions. Here the role of coach is very significant. Coached help employees to identify their goals, needs and duties toward the company. On the other hand, counselors are concerned with identifying root causes. They will guide us on a journey through our

Page - 67 -

Group-J

HRM 370.1

history to identify critical incidents and problems that hav e left a mark and cause us problems still. With such issues identified, the work of the counselor develops into one of exploring ways of dealing with those problems and making changes. We can easily see that relationship counselors, substance abuse counselors, bereavement counselors, etc. focus on dealing with what has happened. Participants will examine the ways communication occurs in an organization, communication styles, and techniques for gathering information. The second part of the course explores appropriate uses of coaching and counseling, and also addresses workplace violence, a related topic that must be addressed by HR professionals. PROS Cultural Training will help KRR a lot to attract customer. Because of their behavior and other positive attitudes will help them to set lots of permanent customer. This will obviously increase the profitability. Coaching & Job rotation has become an excellent tool to increase business and work effectively towards the all round development of employees. Cultural Training Can Prevent Costly Mistakes. Ignorance, misunderstandings, wrongly held assumptions and miscommunications could arise all too easily when cultural differences are not taken into account. Cohesiveness will increase between employees and customer. When everybody will be motivation and giving support to each other, trust will also increase. Greater trust means less monitoring will be required and employees can devote their attention to other areas. This results to a great success. CONS When everyone will want to be trained, less number of employees will be interested in their current level of proficiency which is vital for keeping the firm running. So there is a chance the firm might become stagnant. Employees may lose the innovative attitude if everybody starts relying too much on training and development. Sometime KRR may face

Page - 68 -

Group-J

HRM 370.1

mismanagement because of rotating employees to much.

7) Developing and maintaining an innovative environment through TQM, E-commerce team, Automation team, Marketing Strategic team, Distribution team, MIS team and so on. Employee Development Needs As we know that the new management concepts are very powerful to aid a company to achiever it destination. It should strive to achieve such concept in wide range. Reasons According to the case content, the competitors are coming up with lots of innovative and highly advanced technological changes and benefits for the customers. In contrast, KRR is still in the old system of hiring external trainers to provid e new training service to its clients. Since the firm is not organized with the new managerial concepts and ideas that can give a new shape to its features. As supply chain management is a new concept in the current perspective, clients are also quite unaware, unfamiliar with the concept; however, they want to train their employees in this concept. At this situation, KRR doesnt have any proper planning or team to develop the idea in a sophisticated and understandable way to its customers. KRR doesnt have any HR department, which is a drawback of the firm. Because of this they dont have any proper design and planning of how to make the internal part of the organization much more developed with new managerial concept and ideas in order to be in the str ong competitive position in the market. Indeed, it doesnt have any proper integration of the team management, strategic development process and many more so that a proper communication flow can be maintained through effective knowledge sharing process that can lead to the organizational success in the long run through assessing the needs and taking steps accordingly to generate sales.

Page - 69 -

Group-J

HRM 370.1

Potential Outcome KRR would become able to utilize its resources effectively and efficiently in applying the concepts at the right place in the right time by the right people of the organization. Whenever the company shares the experience of the front line employees with the lower line employees then the total system of the company become much more efficient because new employees can be able to share their views with the views of the experienced employees and those top line employees can show the lower line employees whether they make any kind of mistakes or not and if they make any then the top level employees.

Pros By adopting this policy, it would be capable to aid the employees by increasing efficiency and reducing the same mistake or error done by other employees previously. Moreover, the employees will be enriched more through sharing their views, knowledge, ideas a nd concepts. As a result, the culture of the firm will integrated with complete and effective values, intellectual capital and advanced technology. Cons In terms of the cons, it would more likely increase the cost of the firm. As a result, the revenue will go down for the time being. Since there would be a huge change in the management, chaos can be a common issue in that circumstance. More importantly, a change in the notion of the employees can create confusion and dissatisfaction, if its not communicated properly

Page - 70 -

Group-J

HRM 370.1

Training & Development Realization


1. Training the existing employees in a continuous basis to cope up with the changing environment and new technologies. Priority of Development Needs Need to Adjust to the Improved Conditions Since KRR is in extremely competitive market where everything is changing within a blink of eyes as per the needs and demands of the clients, the company should make their employees eligible to respond according to the market demand. Even though KRR is in leading positio n in its industry, it is heading for an alarming situation of falling behind other companies due to the lack in utilization of advanced technology. According to the case content, KRR spends huge amount of money in technology but they couldnt use the full potential of it that they could have. Allocation of Resources Whom to Train The decision makers of the company have to be sent for training to learn to adjust to improved economic conditions. All the employees in the performance process have to be trained to use new software tools. The aim is to increase productivity. The training has to be tailored to fit the employees level of understanding and the companys need. The persons who will be sent for training have to have the basic eligibility to understand the training content. Type of Training the decision makers can be sent to off -the-job training by classes. These classes can be only technical or both technical and theoretical. There can also be on-the-job training through Job rotation, coaching, modelin g etc for the performance workers. The management has to choose the type of training is most effective. Performance Appraisal and Feedback A small group can be sent for training at first. After completion of the training, management has to check on the progress through supervisors. It can also be a 360degree one that involves peers, self and subordinates also. With both upward and peer appraisal, the management can realize the effectiveness of the training program. The company will decide whether to contin ue or not on the basis of the appraisal

Page - 71 -

Group-J

HRM 370.1

Cost This company surely has enough monetary resources to provide these two small trainings to its employees. Here, the better the company performs in a given year, the easier it becomes for them to send employees for training. Time When training is done through off the job training, then it is best to do the training after work, during weekends or during work consisting of a small amount of time. This way there will be minimal reduction in the performance level. On-the-job trainings will also require minimum time as the employee learns while he/she works also. If the training program is properly planned, time will not be a problem. Working Plan More Efficient Workers When employees are trained to use new techno logy to meet the demands of a healthier economy, they will be more efficient. Time and motion analysis can tell them where they are wasting time and effort. Then they have to adapt to the new and improved ways to perform the tasks. The company has to bring major changes in the performance process, operation procedures and employee skills inventory. Increased productivity through training of workers on new equipment and new technology can give them an edge in the industry to be more competitive. Time and motion analysis can tell them where they are wasting time and effort. Then they have to adapt to the new and improved ways to perform the tasks. More Insightful Consultants and Decision Makers After training the consultants and decision makers, the company w ill have specialist decisions tailored exclusively for the company. Having effective economists who can predict the aftermath of a change in policy and suggest possible courses of action to adjust to the rapidly changing technology, can give KRR a competitive edge. If these economists are outsiders, the training that makes them aware of the internal factors at KRR will make them able to make the right decisions exclusively for the company. KRR needs to have effective economists who can predict the aftermath of a change in policy and suggest possible courses of action to adjust to the rapidly changing economy. If these consultants are outsiders, then they need to be given the training that makes them aware of the internal factors at KRR to make better decisio ns.

Page - 72 -

Group-J

HRM 370.1

Reducing Time and Cost of training Trainings are usually time-consuming. The company can avoid it by training a smaller number at a time so that the performance is not badly hampered and provide incentives for training after work. Otherwise, it would be costly to shut off performance for a couple of days to train the workers for a big company like KRR. Training all the employees will be expensive. If it is done through off the job training, then it is best to do the training after work, during we ekends or during work consisting of a small amount of time. This way there will be minimal reduction in the performance level. Overcoming Resistance to Change There are a lot of workers who are reluctant to learn new skills at KRR. They might want to leave the company instead of adapting to a new environment. There can also be increased turnover of employees who dont want to or dont believe that they can learn new skills. The company has to make the employees realize how important it is for the company that the employees take the training. Then they have to be given incentives to give extra effort to make the company perform better. This can be done by tying a part of their compensation to the companys performance. If employees are given a goal to accomplish and given bonus only if it is accomplished, then they will be willing to give extra effort to make the company perform better. The compensation also has to be more attractive than the competitors ones to retain the trained employees. As Kenny Roger Roaster needs at least 1000 new employees to run the business in china for 15 stores so here it is mandatory to provide them with a basic training. Priority of the Development This skill development could be given a secondary priority because we are seeing that even without it Kenny Rogers has been doing fine. But KRR have to decide whether they would like to increase their efficiency. If they are working at fifty percent efficiency then, this type of managerial training for the employees could easily boost that efficiency up closer to hundred percent. All sorts of employees are also required to be good managers as they have to manage work teams. Especially the food business where KRR are big players, at least big enough to buy out competitors at five percent of the return on completion, it is mandatory that employee work in teams rather than individually. Construction and preparation of any food only happens when a group of people will come together and contribute their effort, intelligence and expe rtise to create something. So where ever there is a concept of team, the related notion of

Page - 73 -

Group-J

HRM 370.1

leadership comes up and yes, a good leadership always makes the difference. Therefore, KRR can swing benefits in their direction by thinking one step ahead of the competitors by training their lead employees in simple managerial concepts, especially leadership, so that they can better manage their work group. Allocation of resources until exhaustion Method of training: Off the job University Training, Executive MBA. There are universities that have developed a managerial skills development department called the Executive MBA especially keeping this type of professionals desiring to become cross functional. It is usually a one and a half year course and the classes are taken in the afternoon which is very convenience for the working employees. Kenny Rogers must be selective while deciding which employees to be sent to the training program that might take somewhere from around a year and a half. Creating the environment: It is true that every employee must maintain a healthy work life balance and that any sort of imbalance might affect productivity. But on the other hand, since this type of training would be the good and extensive for Kenny Rogers, it is safer bet that the first batch is the seniors so that they do not have to worry about the employees shifting the job after getting trained, which is a very common practice in the contemporary job markets. The seniors are the loyalist of the company and can be trusted more than the juniors. In later bathes they could be included. There has to be a very lucrative compensation package that will be offered to the senior engineers to be willing to do the trai ning. The addition of the extra skills to the already existing engineering skills must be recognized properly to maintain internal equity. This type of Executive MBA is very expensive and the selection has to be perfect. The top management might want to so cialize with the potential engineers to find out what is it that they require and promise to give that to them upon completion of the training and implementation of the knowledge to turn up results. Evaluating the training The evaluation of the trai ning as always will by taken care of by the universities as they will be going through a lot of examinations, case studies and project works that are sure to make them into experts on the completion of the development period. They can straight away

Page - 74 -

Group-J

HRM 370.1

start to implement their knowledge in the organization. The top management could keep a close eye on the decisions that the trainee takes regarding the daily work when work begins. The top executives could be asked to explain the underlying mechanics of certain decisions so that they know and understand that the applications of the skills are justified. They could also hold the productivity from the tie the employees started to get trained as benchmark and then compare the productivity level after they came bask to work. Any increase could be taken to be caused by the training and development that the employee got at the training institutes.

Integration of existing programs Even though there are existing programs in the industry and the companies that would train the employees in the field of management, KRR must consider new strategies each time. SO, training like this would be absolutely nothing new for KKR. In addition to approving menus, KRR should develop standards and specifications for most of its food products and equipment. To ensure consistency, KRR should approve suppliers of chickens, breads, spices, mixes, marinades, plastic products, packaging, and so forth, in each territory or country where the company operated. Generally, finding approved local

Page - 75 -

Group-J

HRM 370.1

suppliers for chickens and other major food products must not be a problem. Overseas franchisees may order such specialized products as marinades and packaging materials from KRR's contracted U.S. distributor. Redesigning the selection and recruitment process to ensure an intensifying success to persuade more customers by the expert and efficient employees. Allocation of Resources Whom to Train All the employee have to be sent for training to develop better leadership skills. The aim is to guide the company through these tough times. The persons who will be sent for training have to have the basic eligibility to understand the training content. The training has to be tailored to fit the employees level of understanding and the companys need. The con sultant has to be sent for training to understand current systems of supply chain management. Through this training, he will be able to provide better suggestions. Type of Training This can be done through off -the-job training by classes. This type of training is most effective. Although leadership isnt something that can be taught, classes nonetheless provide the theoretical framework on which to build. It can also assign the trainees with debates, role -playing etc that helps them develop their leadership skills. The trainees will have to practice to develop their leadership qualities. Performance Appraisal and Feedback This is a very important phase that follows the training. A small group can be sent for training at first. After completion of the tra ining, management has to check on the progress through supervisors. It can also be a 360degree one that involves peers, self and subordinates also. With both upward and peer appraisal, the management can realize the effectiveness of the training program. On its basis, the company will decide whether to continue or not. Cost KRR is a growing company with huge investment. This company surely has enough monetary resources to provide these two small trainings to its employees. Here, the better the company perf orms in a given year, the easier it becomes for them to send employees for training. Time

Page - 76 -

Group-J

HRM 370.1

If it is done through off the job training, then it is best to do the training after work, during weekends or during work consisting of a small amount of time. This way there will be minimal reduction in the performance level. On -the-job trainings will also require minimum time as the employee learns while he/she works also. So, the time will not create mishaps if the training program is properly planned. Working Plan Achieving Effective Leadership client -convincing The employee will be given training on improving their leadership skills so that they are able to play key roles in order to bring the necessary changes in the company. The major concerns regarding their leadership styles and capabilities will be resolved. These employees will be leading the company through a tough time. More effective leadership skills will be an asset for the company. If the employees are given training on improving their leadership skills, they will be able to play key roles in order to bring the necessary changes in the company. The major concerns regarding their leadership styles and capabilities will be resolved. These employees will be leading the company through a tough time. The major concerns regarding their leadership styles and capabilities can be resolved through training. Enabling Employees to Change as Needed The workers at KRR have to be trained sometimes to adjust to the new and improved trends. Reducing Time and Cost associated with the trainings There is always some cost of time and money associated with training programs. Training all the employees is expensive for a big company like KRR. Then there comes the fact that there are three types of training involved here. It will also be time-consuming to train all the employees. They can avoid it by training a smaller number at a time so that the performance is not badly hampered and provide incentives for training after work. Otherwise, it would be costly to shut off performance for a couple of days to train the workers for a big company like Tosco every now and then. If it is done through off the job training, then it is best to do the training after work, during weekends or during work consisting of a small amount of time. This way there will be minimal reduction in the performance level. Reluctance to accept new possibilities There are a lot of workers who are unaware to accept new possibilities at KRR. They might want to leave the company instead of adapting to a new

Page - 77 -

Group-J

HRM 370.1

environment. There can also be increased turnover of employees who dont want to change. The company has to make the employees realize how important it is for the company that the employees take the training. Then they have to be given incentives to give extra effort to make the company perform better. This can be done by tying a part of their compensation to the companys performance. If employees are given a goal to accomplish and given bonus only if it is accomplished, then they will be willing to give extra effort to make the company perform better. The compensation also has to be more attractive than the competitors ones to retain the trained employees. This way, the employees will be willing to accept new responsibilities. KRR is an international brand name and Beijing is becoming a multicultural city day by day so English language skill training is essential to deal with the international customers. Here also training of proper Chinese language is necessary to deal the local customers properly. Priority of the Development This skill development could be given a secondary priority because we are seeing that even without it Kenny Rogers has been doing fine. But KRR have to decide whether they would like to increase their efficiency. If they are working at fifty percent efficiency then, this type of managerial training for the employees could easily boost that efficiency up closer to hundred percent. All sorts of employees are also required to be good managers as they have to manage work teams.

Especially the food business where KRR are big players, at least big enough to buy out competitors at five percent of the return on completion, it is mandatory that employee work in teams rather than individually. Construction and preparation of any food only happens when a group of people will come together and contribute their effort, intelligence and expertise to create something. So where ever there is a concept of team, the related notion of leadership comes up and yes, a good leadership always makes t he difference. Therefore, KRR can swing benefits in their direction by thinking one step ahead of the competitors by training their lead employees in simple

Page - 78 -

Group-J

HRM 370.1

managerial concepts, especially leadership, so that they can better manage their work group.

Allocation of resources until exhaustion Method of training: Off the job University Training, Executive MBA. There are universities that have developed a managerial skills development department called the Executive MBA especially keeping this type of professionals desiring to become cross functional. It is usually a one and a half year course and the classes are taken in the afternoon which is very convenience for the working employees. Kenny Rogers must be selective while deciding which employees to be sent to the training program that might take somewhere from around a year and a half. Creating the environment: It is true that every employee must maintain a healthy work life balance and that any sort of imbalance might affect productivity. But on the othe r hand, since this type of training would be the good and extensive for Kenny Rogers, it is safer bet that the first batch is the seniors so that they do not have to worry about the employees shifting the job after getting trained, which is a very common practice in the contemporary job markets. The seniors are the loyalist of the company and can be trusted more than the juniors. In later bathes they could be included. There has to be a very lucrative compensation package that will be offered to the senior engineers to be willing to do the training. The addition of the extra skills to the already existing engineering skills must be recognized properly to maintain internal equity. This type of Executive MBA is very expensive and the selection has to be perfe ct. The top management might want to socialize with the potential engineers to find out what is it that they require and promise to give that to them upon completion of the training and implementation of the knowledge to turn up results. Evaluating the training The evaluation of the training as always will by taken care of by the universities as they will be going

Page - 79 -

Group-J

HRM 370.1

through a lot of examinations, case studies and project works that are sure to make them into experts on the completion of the development period. They can straight away start to implement their knowledge in the organization. The top management could keep a close eye on the decisions that the trainee takes regarding the daily work when work begins. The top executives could be asked to expla in the underlying mechanics of certain decisions so that they know and understand that the applications of the skills are justified. They could also hold the productivity from the tie the employees started to get trained as benchmark and then compare the productivity level after they came bask to work. Any increase could be taken to be caused by the training and development that the employee got at the training institutes. Integration of existing programs Even though there are existing programs in the ind ustry and the companies that would train the employees in the field of management, KRR must consider new strategies each time. So, training like this would be absolutely nothing new for KKR. In addition to approving menus, KRR should develop standards and specifications for most of its food products and equipment. To ensure consistency, KRR should approve suppliers of chickens, breads, spices, mixes, marinades, plastic products, packaging, and so forth, in each territory or country where the company operated. Generally, finding approved local suppliers for chickens and other major food products must not be a problem. Overseas franchisees may order such specialized products as marinades and packaging materials from KRR's contracted U.S. distributor. Kenny Rogers must focus on specializing through country rituals and tastes concerning the side dishes they offered. This area focused on training and educating the employees on culture, tastes and distastes

Priority of the development This training is of a high range priority because the Menu adjustments were a particular concern for international stores. Some side dishes did not go over well in various parts of the world. For example, baked beans with bacon were not served in Jordan and other Muslim countries. Franchisees should be encouraged to offer alternative side dishes that would be

Page - 80 -

Group-J

HRM 370.1

better received in their country or region of the world, while still meeting the company's quality standards. Sometimes recipes of existing dishes h ad to be altered for regional tastes. Most notably sugar content had to be reduced for dishes served in the Asia-Pacific region where people had less of a sweet tooth than Americans. All new menu items or variations in recipes should be approved by corporate headquarters.

Allocating the resources until exhaustion On the job method of training: Apprenticeship training The experienced employee who is an expert in the formal dealing of the construction business could take some of the trainees under his supe rvision and both in the job or in a more relaxed and informal conversation fill them in on the procedures of what goes in the measurement book and how to check whether the measurement book is accurate of has been meddled with. The Apprenticeship training i s particularly the choice for this type of training is the reason that a lot goes on in the shadows. A formal training institute will teach the trainee the functions of the measurement book but wont tell them how to use the back door or whether there is a ctually a back door. Creating the environment An environment that conveys the message of the level of importance that the ability to understand any corrections in the measurement book, being on of the most vital prerequisites for an early promotion is su re to get a lot of employees to undergo the training. Every one wants to climb the corporate ladder and the understanding of the fact that every one stands a fighting chance for the promotion is motivation for training directed in a constructive direction. There must also be a lot of top management involvement in the drive to create the suitable learning environment that will be good for transferring the learned skills to be implemented into the work environment. Evaluating the training The effectiveness of training could be evaluated by the coaches, trainers or the top management asking the trainees some technical questions about the process. Actually to be able to detect something wrong in the measurement book, an employee has to fall into the dire situation when actually something does go bad in the book. In that type of situations the level of effectiveness of the training

Page - 81 -

Group-J

HRM 370.1

could be actually measured of realized. In other situations, the top management has to rely upon the good faith of the trainers or the experienced senior employees while they trained the trainees.

Integrating the existing programs At present what Kenny Rogers realize that this training seems to be one of the most important characteristic of a successfully running company? So, keeping the objective of the training to be able to detect any defects in the book, the training program must be developed. Building, Developing and maintaining good customer relationship through broadening the service range, making remarkable c ustomer relation, giving the customers dimensional experiences. Priority of Development Needs Campaigns have to bear company Values In order to generate enough revenues from the customer and led the company to grow the corporation should promote more advertisement and campaign. They need to affiliate with groups of companies to play as an important entity in the market. The movie and television production must be made stronger to attract more customers followed by growth in the Corporation. The corporation should promote more advertisement and campaign so as to generate enough revenues. Allocation of Resources Whom to Train The top management has to be trained to make more feasible decisions. They have to know the new techniques of making more approp riate decisions. There are many sophisticated software that helps to understand the impact of different variables in decision -making. The top management has to be well trained on these to take more feasible strategies. When to Train The training would have been best done before making the decision to create a service in supply chain management. As it has already finished its first phase of service- sales management, the second best time to train the decision-makers is right now as soon as possible.

Page - 82 -

Group-J

HRM 370.1

Type of Training These trainings will be both technical and theoretical to get the advantages of both conceptual framework and practical implications. The decision -makers have to know the new techniques of making more appropriate decisions. There are many sophisticated software that helps to understand the impact of different variables in decision -making. The top management has to be well trained on these to make winning decisions. Cost Affording the money for training is not a problem for them. KRR is a huge company. Working Plan Sc eening Through screening process, they should find out the strengths, weaknesses, opportunities and threats regarding the business environment. They will determine the benefits and cost of running the business and depending on that should decide what should be done. The screening process should include both objective and subjective tests all around the corporate to bring out the true value of business and then set a master plan to overcome its shortcomings. Performance Appraisal and Feedback Here also after completion of the training, management has to check on the progress. A small number of mangers have to be trained first. It can also be a 360degree one that involves peers, self and subordinates also. With both upward and peer appraisal, the management can realize the effectiveness of the training program. Then they can decide whether they will send more managers to training or not. Developing and maintaining an innovative environment through TQM, E-commerce team, Automation team, Marketing Strategic team, Distribution team, MIS team and so on. Priority of Development Needs Replacing Manual Work with Modern Equipment The competitors are coming up with lots of innovative and highly advanced technological changes and benefits for the clients. In contrast, KRR is still in the old system of hiring external trainers to provide new training service to its clients. Since the firm is not organized with the new managerial concepts and ideas that can give a new shape to its features , clients are showing

Page - 83 -

Group-J

HRM 370.1

dissatisfaction and reluctance to get service from them. KRR is in the leading position in oil market area for last six years along with handsome revenue. However, the situation and demand has changed so far than that of in six years back. KRR hasnt changed its internal system so much adjustable with the changing environment of the global economy. In fact, the founders are still directing and managing within the same organizational structure and older technology. Reducing Errors of the Sales Representatives through Training them Better Communication Skill Quick response to customer orders was extremely difficult as everything was done manually. This situation cant be tolerated any longer. Allocation of Resources Whom to Train All employees who handle the services have to be sent for training to appreciate each others work. The persons who will be sent for training have to have the basic eligibility to understand the training content. The training has to be tailored to fit the empl oyees level of understanding and the companys need. The Commercial Representatives have to be trained to improve their communication skill to the extent that they dont make the mistakes that they do for lack of knowledge in that area. Type of Training Off-the-job training can do this by classes. These classes will be technical in nature. The trainings on the new equipment have to be done by giving demonstration on how to work with those equipments. The instructor will demonstrate and the workers will f ollow. The instructor has to be one who is expert in handling those and also an effective teacher. English has to be taught in a class to give the employees better hold of the language to not make mistakes further. Performance Appraisal And Feedback Here also, after completion of the training, management has to check on the progress through supervisors. A small number of employees have to be trained first. It can also be a 360degree one that involves peers, self and subordinates also. With both upward an d peer appraisal, the management can realize the effectiveness of the training program. Then they can decide whether they will send more employees to training.

Page - 84 -

Group-J

HRM 370.1

Cost There are huge profits at the end of the year at KRR. This company surely has enough monetary resources to provide these two small trainings to its employees. Here, the better the company performs in a given year, the easier it becomes for them to train the employees. Cost is not a huge barrier for this company. Time Off the job training is best to do after work, during weekends or during work consisting of a small amount of time. This way there will be minimal reduction in the performance level. Time will not create mishaps if the training program is properly planned. Working Plan Reducing Waste and Error through New Technology After workers are trained to use modern equipment, the dependence on manual work will be reduced. Thus, the performance goes up to meet the increased demand in the improved economy. The waste level is substantially reduced. This will make the company more revenue. The cost of new equipments and training will be overcome by the increased amount of profit. Dependence on manual work has to be reduced by training workers to use modern equipment. This will lessen the amo unt failure dramatically. This way, the performance goes up to meet the increased demand in the improved economy. The waste level is substantially reduced. This will make the company more revenue. At the end of the day, the profit it will make will surplus the cost of new equipments and training. Improving Efficiency Reducing errors of the Sales Representatives will lessen substantially the wrong deliveries. When a wrong product is delivered, the customer demands the right product to be delivered free of further charge. This takes time, as they have to wait for the next batch to be produced. This again takes time, as they have to wait for the next batch to be produced. This could delay the delivery time by a month. Minimizing the errors can reduce it. When the employees at KRR are trained to learn to use new equipment and new technology, the company can show better performance. There are other benefits here also. The errors of the sales representatives will also be reduced. It will make KRR a more competitive company. It will cause higher efficiency, reduced time and waste and errors. Dealing with Time and Cost of Training It will be costly and time-consuming Training all the employees at the performance level of the sales department. For a big company like KRR it would be costly to shut off performance for a couple of days to train the

Page - 85 -

Group-J

HRM 370.1

workers. They can choose a safer path and train a smaller number at a time so that the performance is not badly hampered. They can also provide incentives for night schooling that will minimize the damage. Training all the employees at all the level especially, the sales department will be expensive. The company has to buy new equipment to deduce waste from manual work. Without training the employees, these equipments cannot be utilized. So, all the employees of the relevant departments have to be trained. It will be very costly for the company. Dealing with the Resistance to change After receiving good training, employees usually become more loyal to the company, but the opposite is also quite common. When the employee is multi skilled, then they have wider job opportunities. Any opportunity seeking person will go for a better job offer leaving the company that trained them into a desirable person to hire. Although it is a negative side of almost any training, Performance Appraisal and Feedback A small number of mangers have to be trained first. It can also be a 360degree one that involves peers, self and subordinates also. With both upward and peer appraisal, the management can realize the effectiveness of the training program. Then they can decide whether they will send more managers to training or not.

Page - 86 -

Group-J

HRM 370.1

APPENDIX:

Page - 87 -