KFC is one of the famous fast food restaurants in the world. They have many branches around the world and they are succeeding their business because of their preplanning strategy. They have unremarkable growth five last year's even economy crisis period also. This statement is evaluating their growth using of PESTLE, SWOT and Porters five force analysis. According to the analysis, their turnover has been increased past years.
KFC is a world famous chain of fast food restaurant. It was found in 1952 by Colonel Harland Sanders. KFC is also known as Kentucky Fried Chicken. KFC headquarters is located in Louisville, Kentucky, in the United States. KFC sells chicken pieces, salad, sandwich and wraps but there main food item is fried chicken. They have stores in 109 countries and KFC operates more than 5200 restaurants and 15000 units around the world. They have selling more than 300 products. Every day they are serving more than 12million customer in the world. KFC is part of Yum! Brands, Inc., the world's largest restaurant company in terms of system restaurants, with more than 36,000 locations around the world. The company is ranked 239 on the Fortune 500 List, with revenues in excess of $11 billion in 2008. So this report is evaluating their strategies, development and service by analytic methods for instance PESTLE, SWOT and Porters five forces analysis.
KFC'S STRATEGIC PLANNING
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KFC have perfect and many strategies planning for their growth. They introduce variety menu, desert menu and buffet to restaurant. They are aiming particular foods for certain area and they are trying to open small food count all over the area for their sales. They open small food count around hospital, university, stadium, shopping mall and airports.
They are trying to focus on customer satisfaction. So they are more customers friendly and faster so they can attract more customers in their sales. They are giving food which is healthier than others and they are offering some sort of promotion so these sort strategies are using for their growth
KFC-J, with its partner Mitsubisi, it is strongly placed to Japan, and growth can proceed. It is necessary to observe of any new participants, but more attention should be turned on KTTHK.
KTTHK - the various markets, but all - economic tigers with market segments to which KFC would address more from the firm point of view (fashion) than price prospect (fast food - not always the cheapest source of meal in foreign markets). Certain people in these markets could be indignant potentially at a Japanese head (Ohkawara) the American chain, entering into the market considering stories of the countries with Japan, thus, from the political point of view having Mayer, proceed within a year, or two it could be longer better from the point of view of public relation. Besides, as it was with KFC so long with a good track record, despite its lacks he is still valuable manager to keep. Mayer could find more politically convenient ways to inform requirement in KTTHK to show results, probably to spend some time personally with Uestonom in these countries and development of the strategic plan in a tandem so that Ueston felt that it is connected with the new plan. Purchase of having management - in in critical in relation to successful performance of strategy.
In addition, essential investigation of a site is important for Seoul, Bangkok, and Island/kouluna HK, as the basic marketing of a fast food (a product, the price, the PLACE, encouragement), requirement - high movement, fashionable trading area with a considerable quantity of young buyers. Probably Mayer could go on some boy scouts of a site w. All four of these city markets have a rich delivery of new repeated clients, in addition to tourist dollars. The site is key for expansion KFC in these areas with certain researches to and to young transport samples of workers of office/retail of students. The reference to their tastes is less important than a site in "hot" area, as these markets - all intention of emulation to the "American" culture.
I would like to see KFC, and all other establishments of fast food do the food information accessible to clients. Advanced in years that I and my family traveled in these Asian countries, we saw disgustingly obvious, fast deterioration of health of the young people (excess weight, spots). Taiwan and Hong Kong especially are guided by formation, thus, everyone in general considers these establishments as the filled students who chew on fast food, studying their plentiful homework. Business profitableness - good, responsible business and profitableness is better.
BUSINESS ENVIRONMENT OF KFC
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Macro environment of KFC analyze by PESTEL analysis, which are political, economical, social, technological, environmental and legal
The operations of KFC are affected by the government policies on the
regulations of fast food operation. Currently world countries government are controlling the
marketing of fast food restaurant because of health concern such as
cardiovascular and cholesterol issue and obesity among the young and
children in the country. Governments also control the license given for open
the fast food restaurant and other business regulation need to follow such as
for a franchise business. Good relationship with government in giving
mutual benefits such as employment and tax is a must for the company to
succeed in any foreign market. KFC is caring about animal rights and they are issuing labeled food product as government order.
Though for last 1 year there was economic slowdown all across the globe but the sales of KFC and other fast food chains did not slow down to that extent
that of other sectors in. The GDP (Purchasing Power Parity) is estimated at
2.965 trillion U.S. dollars in the year 2010. The GDP- per Capita (PPP) was
2700 U.S. dollars as estimated in 2008. The GDP- real growth rate in 2007
was 8.7%. India has the third highest GDP in terms of purchasing power
parity just ahead Japan and behind U.S. and China. They are getting support from their major suppliers so they can grow and withstand without any difficulty. They have perfect strategy so they have good strength in growing market.
There has also been a continuous increase in the consumption of fast food in
the world. The social trend toward fast good consumption is changing and UK
has seen an increase of 90% fast food consumption from the year 2002-
2007. This increase is far greater than the increase in the BRIC nations of
Brazil (20 per cent), Russia (50 per cent) and China (almost 60 per cent).
Thus this shows a positive trend for fast food industries in UK.
The UK fast food Industry is heating up with a lot of foreign players
entering the Indian market. The technological knowhow and expertise will
also enter the Indian market with an increase in competition. With the lower
rates and increase technology the fast food counters are attracting youth by
giving them attractive deals. For e.g. KFC and Domino's pizza. For a fast
food restaurant, technology does not give a very high impact on the
company and it is not a significant macro environment variables. However
KFC should be looking to competitors innovation and improve itself in term
of integrating technology in managing its operation. For example in
inventory system, supply chain management system to manage its supply,
easy payment and ordering systems for its customers and wireless internet
technology. Implementation of technology can make the management more
effective and cost saving in the long term. This will also make customer
happy if cost savings results in price reduction or promotional campaign
discount which will benefits them from time to time.
As one of world largest consumer of beef, potatoes and chicken, KFC
always had been critics for world environmentalist. This is because high
consumption of beef causing the green house effect by methane gasses
coming from the cow's ranch. Large-scale plantation has effect the
environment and lots of green forest opening for plantation activities.
Vegetarian environmentalist criticizes the fast-food giant for cruelty to
animals and slaughtering. In America, once KFC want to introduce whale
burger causing uproar because whales are endangered species. Before using
paper packaging, KFC once had been criticized for being insensitive to
pollution because of using ne based packaging for its food products. Imagine
millions of people purchase from fast food operator and how is the impact to
world environment by throwing away those hard to recycle packaging.
Our world is getting concern on environment issue and business operating
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here should not just care for profit, but careful usage of world resources for
sustainable development and care for environment safety and health for our
future generation. Critics and concern from all public or activist should be
review and support if necessary to ensure we play our social responsibility
As a certified fast food operator, there are many regulations and procedures
that KFC should follow. For example is the Halal certification that becomes
a concern to Muslim consumers. KFC should protect its integrity and
consumer confidence by ensuring all materials and process are as claimed or
Other legal requirement that the business owner should follow as stipulated
in laws are such as operating hours, business registration, tax requirement,
labor and employment laws and quality & environment certification (such as
ISO) in which the outlet has been certified. The legal requirement is
important because the offenders will be fined or have their business
prohibited from operating which can be disastrous.
Because the fast food market in India is highly competitive, KFC faces a wide number of direct and indirect competitors. KFC's main competitors are fast food chains such as McDonald's and Domino's, which are already well established throughout India.
McDonalds's in particular is a direct competitor, as they have already successfully introduced their Salads plus line (http://www.theage.co.in), which directly targets 'healthy food' conscious Indians. But, there are a number of other competitors that is also focusing on 'chicken' types products. All this competition makes it quite difficult for KFC to maintain or even broaden their customer base. However, with the introduction of a new and healthy product range, KFC can differentiate itself from most competitors and will gain a competitive advantage.
KFC's customer market consists solely of the consumer market (Kotler et al 2003). KFC's products are bought by individuals (males, females, singles, and families). Therefore, the product range KFC offer should appeal to as many people within this consumer market as possible, to ensure that the maximum amount of products can be sold. The characteristics of these individuals and a segmentation of them are discussed later in this report
KFC has perfect factor for their withstanding in the business world. They have brand equity so customers can believe food of KFC. According to the sales, they are the second largest fast food restaurant in the world and their income was about 1billion in each year which means KFC has strong cash flow. KFC is very strong internationally because they have branches around the world (china, Middle East, Thailand, Japan and Korea). They are highest rank with in the chicken restaurant because of convenient and menu variety.
KFC sales drop in the market that's why they failed to rank in top 20in growth in 2000. There is lot of misleading in the KFC. For example, employers dose not any knowledge about KFC product and same time does not have any knowledge about customer that's why KFC sales have been reducing. KFC has restaurant very closely means side by side this effect any of the shop sales and they are failed to make a relationship with customer, supplier and employers. KFC has lack of focus on R&D.
KFC is growing demographically 18 to 24 ages. Their income has been increasing in the USA market. There are lots of disease from cow meet and beef hoof and mouth disease. Home Meal Replacement Market will exceed an estimated $577 billion by 2020. They are targeting to growing ethnic market, Asian, American and Hispanic. KFC has new leadership they are trying to do domestic market. They are updating their restaurant and market in the world. According to the customer focus, they have the balanced menu and new promotion and trying to increase their delivery.
Fast food restaurant is a more competitive than other business like 85 out of 100 and increasing wages rates directly affect menu prizes. They have 85% annual employee turnover for fast food market. Super markets and new competitors threaten HMR market. KFC has been threatening by international exchange rate. People care about their health so they are away from fried chicken. Customer does not get interested in fast food and they like to eat in home. They are expecting new product and items. Small shop has been increased their quality of service.
PORTER'S FIVE FORCES ANALYSIS
1. Threats of New Entrants:
KFC is confident for own product because they are being specialist for fried chicken and so chicken products are hard to imitate their menu so hard to find a competitors for their menu. So according to the KFC, they are not doing much for supply and customer service
2. Bargain Power of Supplier
KFC has good arrangement with perfect suppliers. KFC has begun to sell halal chicken. They have good suppliers for halal chicken in the UK that's why they have stable prizes
3. Bargain Power of Customer
Bargain power of customer is maximum discount of 20% that is only on the references by managers or grants by managers for their customers still we would say this 20% even doesn't bother KFC much because of its profit margins.
4. Threats of Substitute Products
These threats are really there in the fast food market and few little restaurant chains have already tried to imitate their products and tried to create substitute till now such like AFC but now yet successful in doing that. Threats for KFC is Substitute by big chains of world as Hardees has recently launched in Pakistan and this can create substitute products of KFC and KFC is not prepared for that.
5. Rivalry among competitors
KFC has some sort of rivalry with Mc Donald's as where eve KFC has and outlet at any hot spot McDonald's starts its operations there KFC has no direct Share loss or Customer loss with that as both the companies earning on their own unique product range taste and their customers may vary according to the taste preferences. But they do try to attain by giving different deals at different occasions times.
This Analysis has made us conclude that KFC is not well prepared for a strong competitor though currently bargain power of customers, suppliers doesn't bother KFC much. Rivalry among competitor of KFC is not affecting it any way this we can say is the Opportunity for KFC as before its rivals or new entrants comes and threatens, it's the time KFC may apply strategic Leadership for this purpose and to fully understand and work in accordance with the opportunity.
THE PRODUCT LIFE CYCLE OF KFC
KFC say that "we are the best chicken experts in the world. We do not have any competitors for our product. KFC have difference menu and good promotion.
According to the analysis, KFC is best fast food restaurant in the world and they are growing rapidly because they have good strategy planning in competing business world. They introduce different menu so they can attract the customer and launching new fast food product as a part of their strategy planning and also they are using technology for their growth so KFC is looking forward for their business.
In order to solve the problem of high competition, the best solution is to expand into international market as explained in the above section. KFC may also want to differentiate its products and compete at non-price strategies, such as service and variety of menu. In this way, KFC escapes from potential price wars. On the other hand, KFC may want to reduce its cost so that it will survive in case of price wars.
For the second problem related to the reduction in market share and efficiency, the root cause comes mainly from the PepsiCo's centralization strategy, which also leads to high turnover and low employee morale. The suggestion for PepsiCo is to gradually decentralize KFC to semi-autonomy. This strategy benefits PepsiCo in three ways. First, as the operational decisions are delegated to KFC's existing managers, PepsiCo can spend more time on corporate strategic decisions. PepsiCo also can put more resources on its core soft drink business. Second, decentralization increases the flexibility of KFC's managers so that they become easier to cope with the diversity of the local situations and response to market changes. Third, it motivates managers and increases their productivity, effectiveness, and efficiency.
To avoid the potential threats associated with Mexico business, KFC is recommended to put more weight in franchising strategy combines with multidomestic strategy, instead of only 18.5%. These strategies increase local responsiveness and KFC can change its menu according to Mexican taste. For example, the Mexican style foods are a mix of chopped meats, so KFC may want to introduce fried chopped chicken. Additionally, the high costs and risks associated with business in Mexico can be shared. However, franchises strategy must build on the trust of the Mexican managers. As result, a wise strategy for KFC is to balance the pros and cons, and examine each strategy depending on the location and situation of the new restaurant.