KENTUCKY FRIED CHICKEN IN JAPAN-

A CASE STUDY
There are two critical questions which are important to the case. These are:

 What should Dick Mayer do about Loy Weston?

 What do you think of Dick Mayer's "Stages Theory" of country management responsibilities?

What should Dick Mayer do about Loy Weston?

Dick Mayer has to be very careful while evaluating his options of what to do with Loy Weston.
There are several actions that Dick Mayer can implement against Mr. Weston. I would like to
evaluate the effectiveness of each one of the actions and finally recommend the best solution. We
have to realize that Mr. Weston is a very competent person, who has been exposed in a wide
array of entrepreneurial situations and his business instincts and knowledge should be
appreciated.

First, Mr. Mayer can terminate Loy Weston. If he chooses to do so, he will get rid of an
"organizational nightmare" and the problem is solved. Furthermore, he does not have to spend
time and energy worrying about whether Mr. Weston is obeying company policies and
headquarters decisions. The negative aspects of terminating Mr. Weston are all of the following:
He may start working for one of Kentucky Fried Chicken's (KFC's) close competitors and with
his knowledge about the company's strategic mission and his skills, he may become a significant
rival to KFC. Furthermore, KFC-International will surely loose an excellent worker with plenty
of valuable experience in starting-up new business enterprises. Also, terminating a senior
manager such as Mr. Weston could be very expensive. If Dick Mayer would chose this approach,
he has to be able to back-up his decision with relevant evidence and he must have the full
support from KFC's top-management. If Mr. Weston is terminated, he may ask for a significant
financial compensation.

Second, Dick Mayer can chose to relocate Mr. Weston within the organization. By this approach,
Mr. Weston will have less authority and top-management control can be enhanced (centralized
control over international subsidiaries). It is important, however, that Dick Mayer will be able to
find an area in the KFC organization where the corporation can utilize his great entrepreneurial
skills. Mr. Weston must understand that he is important to the company and that the reason
behind the transfer is to better utilize his skills and experience. However, there are some negative
aspects to this approach. Mr. Weston may not accept the new position, and bitterness may
interfere in the quality of his work. Even if he is transferred to a new position, he will still be an
organizational nightmare in the organization. In addition, if more stringent control is placed on
his operations, he may become more "cocky" and stubborn.

Third, Dick Mayer can send somebody from headquarters to work closely with Mr. Weston on a
horizontal control level. Such a parallel managerial relationship between Mr. Weston and another
person would result in a team consisting of a bureaucrat and an entrepreneur. By combining the
skills of the two, KFC's headquarters can utilize Mr. Weston's entrepreneurial skills under
corporate control over operations. It is crucial that the headquarters manages to find a person
who is able to complement Mr. Weston's weak areas, such as following corporate policy and
making use of the proper channels of command. There are however some risks associated with
this approach. Mr. Weston may not accept such a coworker. It may be impossible for the person
to work with him, and Mr. Weston may even turn the new manager into another "organizational
night-mare". It is therefore very important that a potential senior manager is assigned to work
with Mr. Weston.

The final action, which could be implemented against Loy Weston would be to apply the no-
action theory and simply leave him alone. After all, he did a decent job in Japan. By applying
this theory, there is no need for complicated organizational changes. Furthermore, Mr. Weston
may compromise, and begin to work more closely with headquarters. However, some people
would probably say that "old animals cannot be tamed", and Mr. Weston may cause a disaster in
the four potential markets for which he is responsible today (the North-Pacific). If that is the
case, leaving him alone will not solve any of the existing problems.

Of the four possible solutions described, I believe that Mr. Dick Mayer should assign somebody
from the headquarters to work on a horizontal level with Mr. Weston. We can all agree upon the
fact that KFC does not want to loose Mr. Weston, since he has experience, knowledge, and
international exposure. I believe that a combination between a spirited entrepreneur, such as Mr.
Weston, and a bureaucrat could be a possible combination, since the two personalities
compliment each other. Such a combination of skills can form a very dynamic and powerful
managerial team. Furthermore, this solution is of a compromising nature, and it gives both Mr.
Weston and the top-management a chance to overcome present obstacles. In addition,
headquarters would be able to keep more control over the North-Pacific market segment.

What do you think of Dick Mayer's "Stages Theory" of country management

responsibilities?

Dick Mayer's "Stages Theory" of country management responsibilities consists of; The
Entrepreneurial stage, the development of local baronies and finally, implementation of
professional management who respond to planning, measurement and business development
ideas.

First, the entrepreneurial stage, which is identified with highly flexible top-management control
and a foreign operation where the country manager has complete responsibility. This is a highly
multinational approach, and requires a high level of decentralization of the organization.

In the second stage which is identified with the Development of local baronies, managers use
their local knowledge and "develop operating skills to build their autonomy". By acquiring
information, they build an organization on the basis of that knowledge. Skills are developed with
time.
The third stage is identified by the implementation of professional management who respond to
planning, measurement and business development ideas. This management consists of a mix of
local managers and managers from the headquarters.

I believe that professional managers can be innovative entrepreneurs in the fast-food business.
The country manager will deal with the franchisees who are generally entrepreneurial in nature.
KFC's professional managers should be there to guide and later control entrepreneurial
expansion. There should be very clear communication channels. However, it may be difficult to
combine managers from the headquarters with local successful country managers, since conflicts
would most certainly occur. I believe that such conflict could lead the way to possible solutions
to problems, since more opinions are assessed.

Dick Mayer's three stage theory does work as long as all participating parities are open-minded
and that there is a well balanced mix between local successful managers who have the
entrepreneurial spirit and managers trained and used to a corporate mentality of how a business
should be professionally run. Together, the two kinds of managers can complement each other
effectively. The professional management team mentioned in Mayer's third stage represents this
mix of managers.

In the long-term perspective, KFC's headquarters' will be able to increase its control over
overseas operations. The professional management, which will respond to planning, and business
developing ideas, will be able to effectively respond to local franchisees/operations and strategic
objectives outlined by the headquarters. Furthermore, the fast-food industry is quite different
from other industries, since the country/area manager has to deal with the individual franchises,
who are highly entrepreneurial in nature. "If you want to succeed in this business, you can't be a
pinstripe type." (Dick Mayer). You have to be highly flexible, and be an open-minded person.
You have to be open to new ideas and realize the fact that all international markets do not
directly resemble the domestic market (USA).

One of the negative aspect of the three stage theory of country management responsibilities is
that by letting entrepreneurs start-up business segments, it may be difficult to keep control over
the new venture. An entrepreneur requires a lot of freedom, thrust and flexibility from the
headquarters. Top-management must be prepared to accept a highly decentralized approach to
management in the early stages of operations. Furthermore, we have to realize that professional
managers are usually conservative in nature and they are not very venturesome nor
entrepreneurial.