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Memorandum Week 4
KFC
Date: 20/3/2013
TO: Mr. Ilro Lee, CEO of KFC Asia
FROM: Mr. Hong Andy, Senior Manager of Marketing at KFC Thailand
SUBJECT: Strategic correspondence to Thai political unrest on business

Mr. Lee, I recommend that our company proceed with the investment and operation in Thailand, in spite of the political unrest outbreak, considering the foreseeable profit in this advantageous market.
As we have discussed in the previous meeting, our company has been suffering a challenging moment that natural disaster and political unrest experienced in 2010 and 2011 had significantly deteriorated our profits. Road closures, arson attacks and a government-declared state of emergency and curfew in Bangkok and other major provinces resulted in a major decline in the number of customers. A new government is in place, but long-term stability is not guaranteed, as some conflicts still continue in key business areas (Market Indicator Report 2012). Micro-political risks including worker-strikes also upset the daily business operation.
Nonetheless, the foreseeable benefits in Thailand outweigh the minor factors in terms of political risk, and there are a number of alternatives to cope with.
Firstly, Thailand government has been adopting a welcoming attitude towards foreign investment (ASEAN 1967); Thailand is a member of the Association of Southeast Asian Nations (ASEAN). In 1992, leaders of ASEAN governments approved a Thai proposal to establish the ASEAN Free Trade Area (AFTA), which aimed to reduce tariffs on most processed agricultural and industrial products traded among ASEAN countries. Thereby, leveraging international trade and investment agreements would be an effective approach which can enhance our bargaining power with the host government (Hill, Cronk, Wickramasekera 2011). With treaties uphold, Thailand is legally safe that there are adequate...

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