Please see the attached file. Document Preview: Sunderland Business School SIM336 (Off Campus) Strategic Management - April 2013 - Individual Assignment Case Study – Kentucky Fried Chicken & The...

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Strategic Analysis
Of
Kentucky Fried Chicken
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Executive Summary
Kentucky Fried Chicken (KFC) is a fast food chain of restaurants and is based in Kentucky,
United States (U.S.). KFC enjoys world‟s leader in serving chicken to more than 12 million
customers in more than 109countries. The basic business model followed by KFC is
franchising option to enter the international markets. It has franchisee over 16200, outlets in
more than 100 countries.
The main menu consists of fried chicken in original recipe as well as extra crispy
varieties, chicken sandwiches, crispy chicken strips, chicken pot pipes, potato wedges,
mashed potato with gravy, salads, wraps, and sandwiches. In the year 2007, KFC introduced
new recipe with 11 herbs and spices and finger licking favor with zero grams of Trans fat.
During 2009, KFC introduced Kentucky Grilled Chicken that has less calories, fats and
sodium without sacrificing tastes of KFC. Further, KFC offer beef based products like
kebabs, hamburgers, pork based menus, and other regional products outside U.S.
With the exponential rise in the global fast food industry, it is necessary to formulate
strategic plan for expanding business across the globe. For entering into international market,
it is essential to understand various political, social, legal, technological, and cultural factors
that are affecting organizations‟ performance as well as presenting opportunities and threats
for the organization. In addition to this, it is also essential to recognize firm‟s own strength
and weaknesses. Furthermore, it is essential to identify the value-adding activities within the
organization as well as supporting activities. Therefore, this paper presents PESTEL analysis,
SWOT analysis, and Value analysis of KFC.
In addition to this, various schools of thoughts will be considered, in order to choose a
specific framework for developing strategies for KFC. Finally, cultural analysis will be
presented with the help Hofstede cultural analysis framework for KFC. This is essential for
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KFC in successfully expanding its business into international market as each market is having
distinct culture, social values, norms, attitudes, and other factors. So, cultural analysis will be
done on the basis of four dimensions – power distance, individualism and collectivism,
masculine and feminine, and uncertainty avoidance.
Keywords: KFC, PESTEL, SWOT, Value Chain, Porter Framework, Hofstede, Whittington
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Question One:
Macro-Environmental Analysis
Macro-environmental analysis is carried out for the purpose of environmental analysis
that is carried out by analyzing political, social, technological, ecological, economical, and
legal environment (PESTEL Analysis). PESTEL analysis for KFC is as under:
 Political factors – political system at Hong Kong is under the rule of the mainland for
many years after it has been handed over by British Government. Further, the country
is having friendly legislation towards business, political stability, no minimum
compensation policy, no tax related to product or services, and others.
 Economic factors – economics of Honk Kong is hugely affected by the economic
crisis and that in turn has resulted in downturn of the Hong Kong economy. The
population within Hong Kong comprises of 7 million people that offers more
opportunity for the fast food industry. The economy within Hong Kong is
experiencing high rate of inflation, has free market having nearly zero tariffs for
imports; affluent economy, and a market that presents huge opportunity for the fast
food market (DPI, 2007, p. 9).
 Cultural and social factors – the culture at Hong Kong is categorized as the eastern
culture that denotes very collective, powerful standards, low degree related to
uncertainty avoidance, and masculine society. The consumers are not having plan for
the purchases and are having strong orientation towards long-term objectives.
Consumers tend to be health conscious and are used to the westernized foods.
 Technological factors – technological factors includes new discoveries, the rate of
obsolescence, speed of transfer regarding technology, and others. Consumers within
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Hong Kong are capable of utilizing compute based technologies that means. majority
of population is technology savvy and more inclined towards enjoying convenience.
 Environmental factors– the organization within the fast food industry must remain
committed to environment conservation else civic groups normally takes actions
against the company.
 Legal factors – these factors relates to legal environment and law where
organizations‟ operate their business. Hong Kong fast food industry is faced with
continuation litigation.
SWOT Analysis
SWOT analysis for KFC is illustrated in the following section:
Strength
 High experience in the fast food industry as KFC is enjoying market leadership in
chicken food for more than 50 years. For the reason, KFC enjoys strong brand equity,
brand image, and brand loyalty.
 KFC outlets are globally located through the franchise, company owned restaurants
and license. This increases market share, profitability, and business of KFC.
 Innovative nature by launching new recipes in the market. This is the reason why
KFC is having strong trademark for their original recipes that prove to be competitive
advantage for KFC.
 Offering healthier foods that are less in fat to deal with issues of obesity and
nutritional values.
 Mass production and ability to create identical products thereby increasing customer
loyalty. Moreover, the product offer by KFC is convenient, easy to handle and quick
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delivery. So, KFC can easily satisfy the needs the youth, working professional and
changing consumer needs that give more stress to convenience, and time.
 Strong distribution network, solid store management, franchises that are covering
outlets in shopping malls, airports, universities, offices, and others.
 Human capital which is highly motivated, committed, and qualified.
Weaknesses
 KFC tends to offer and attract food menu that is basically for the chicken loving
consumers.
 Merger with Pepsi co. fostered differences in cultural values and business operating
style. This resulted in resistance within the organization, layoff of the employees, loss
of research and development, cultural differences, and others.
 The franchising model of KFC is not appropriate for expanding business globally.
The franchising approach is not appropriate within diverse culture as well as it leads
to loss of quality and control.
 They unhygienic food standards have resulted in charges from various countries. For
instance, in the year 2007, KFC outlet was reported to be rat infected, 13 food hygiene
fines were charged in London in the year 2009.
 Due to international expansion, KFC was faced with challenges related to controlling
of quality, service as well as support problems, high transportation cost, and others.
Opportunity
 Huge growth opportunity in developing countries like China and India due to their
growing population. In addition to this, huge demand within the domestic market due
to affluent economy, zero tariffs for imports, and free market.
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 The increase in the trend of working parents and growing female participation in the
work force has resulted in growing demand for fast food industry.
 Continuous research & development efforts for innovative present additional
opportunity for the KFC to maintain their food offering, quality and speed of service.
Threats
 The company is...