Business Strategy by Usman Khan

Table of contentsMission and vision statement………………………………….....................................1

PESTLE analysis, Porter’s five force analysis, Boston Matrix, Market analysis and SWOT analysis…………………………………………………………………………………………….2

Segmentation.............................................................................................5

Swot of KFC……………………………………………………………………………………………..…7

BCG Matrix KFC………………………………………………………………………………………….11

Suggest an overall business-level strategy. Include necessary information about all the elements of marketing mix for the new strategy……………………………………………………………………………………………………..13

Identify important roles and responsibilities required for implementing the new suggested strategy and compare them with any competitor firm………….…..16

Identify and evaluate different resources required to implement the new strategy (i.e. human resource, finance, information etc………………………………….………18

KFC VISION STATEMENT:

Food, Fun & Festival, this is what KFC is all about. Leading the market since its inception, KFC provides the ultimate chicken meals for a Chicken Loving Nation. Be it Colonel Sanders secret original Recipe Chicken or the Hot & Spicy Version, every bite brings a YUM on our face. At KFC we can proudly say, “We Do Chicken right”.

KFC MISSION STATEMENT:

We are committed to customer satisfaction through offering high quality with excellent services and good value.

We take great pride in serving each other, our customer and our communities.

We seek continuous improvement in all that we do.

Conduct an environmental and internal analysis of the organization using PESTLE analysis, Porter’s five force analysis, Boston Matrix, Market analysis and SWOT analysis.

Market analysis:

It is defined as: “Study designed to define a company's current or potential markets, forecast their directions, and decide how to expand the company's share and exploit any new trends.”

(http://www.answers.com/topic/market-analysis)

Market Analysis of KFC:

The Micro environmental Forces: This environment includes the factors that are close to the company and are controllable by the organization. These factors are,

Company:

KFC is the multinational company that has chain of fast food restaurants all over the world. In Pakistan it has 40 outlets out of which, 22 are based in Lahore, 19 are in Karachi and the remaining 8 are located in the other cities of Pakistan. KFC is growing rapidly, by having their strong relationship with their customers and the trust, which they have developed, in the past years, employees are the main assets of the company, and so they are very much concerned. The company has very organized check and balance system, which is used for the evaluation of the employee and the individual outlet as well.

Customers:

It includes five categories.

Consumer Markets:

KFC has large chain of consumers. According to KFC, “We are growing only with our customer.” KFC has great environment for their consumers and families. They are concerned about the comfort and satisfaction of their customers. That is why 40 million on a single outlet. Midnight deals are there for the consumers with 50 % discount, which is being appreciated by the individuals.

Business Market:

Business markets buy good and services for further processing or for use in their production process. In case of KFC there is no such business market.

Resellers:KFC is dealing in fast food, and so they don’t have any resellers as such.

Government Customers:As such no government customer exist so far. KFC is not expecting any government customer as such.

International CustomersKFC is multinational company. They have outlets, almost in every country. So they have international customers all over the world.

Competitors:

They are classified into direct and indirect competitors.

Direct Competitors:

It includes like chief, pizza hut etc.

Indirect Competitors:

It includes all other restaurants, like small restaurants albiak, Italian pizza, and other local small fast food restaurants.

The Macro Environmental Forces:

These are not controlled by the company and are environmental forces. It includes;

Demographic Factor:

KFC has designed its menu according to taste of population. People of each age like to visit KFC. It has deals for families as well as deals for the children. They also visit their competitors to have better idea about changing trends and taste of people as well as their competitors. KFC reconsider its menu and taste after every three months. KFC always encourages feedback and suggestions from its customers.

Natural Factors:

KFC always produces fresh food. The supply houses are well prepared and well maintained for changing factors of weather. So it is not affected by natural factors.

Technological Factor:

Their machines and boilers are according to latest technology and standards. After every six months, technical checkup is conducted and that equipment is replaced which becomes useless. Efficient billing system is implemented, to eliminate the redundancy and maintain the daily ledger account.

Political Factors:

It consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society. But KFC has its own strong links and politics, it is not been influenced by any external factors. No pressure groups are there inside and outside organization to pressurize in any aspect.

Ethically there might be certain forces that have been impact on the overall sale of KFC, for that; it has also made certain strategies and road-maps to overcome them.

Cultural Factors:

KFC is always concerned about the culture and ethical values of the community. As, the customer are from the same community that they are serving in, KFC takes care of ethical and moral values of the society. As Pakistan is an Islam based country, so KFC serves Halaal food here.

Segmentation:

KFC has divided the market of Pakistan into distinct groups of customers with different demands, tastes and behavior who require separate products or marketing mix.

In Pakistan the niche marketing is being used for particular classes of people.

They have made segments of the market on the following bases.

Demographical Behavior Geographical

By using these three bases they segmented the market as under.

Demographical basis:

In demographics their first segment is consisted of the income factor i.e. high income, average income and low income.

Behavior:

In behavioral aspect they segmented the market on the basis of quality, taste and price. Following are the different possible segments in this regard.

Taste conscious Quality conscious Class conscious Combination of price and quality

Geographical basis:

On the basis of the geographical factor we have divided our market in three main segments.

Urban areas Sub urban areas

SWOT analysis:

SWOT stands for strengths, weakness, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. It is one of the most important tools for marketing audit. It helps in auditing an organization and its environment. It helps the marketers and is used in the beginning of marketing audit.

SWOT analysis of KFC:

As KFC is in one of well known restaurant providing its services all over the world so the SWOT analysis is defined as for KFC;

Strengths:

The following are some of the strengths of KFC

The outlet of KFC is very attractive. Employee Loyalty is one of the major strengths of KFC. The turnover rate in

the company is amongst the lowest in the industry. The company certainly has earned a good name and reputation by its

previous products and services in the market. KFC is the only best fast food restaurant in Pakistan with great recipes

which is providing round about 30 products. They always choose a very good location in the busy area of Peshawar city.

Due to its chicken products KFC has no competitors in the market. In every branch of KFC there is an entertainment area for kids. They have well educated staff and they all are very skilled and handle all

the situation very well and satisfy there customers. KFC has a hold at the market and through customer satisfaction they have

higher profits rates. KFC adopted very different market concept then other companies that help

KFC to be strong in market.Weakness:

They only focus higher income level people. They have much higher price as compare to the other fast food restaurants. They do not have the facility of home delivery to hayatabad area which is a

big weakness of KFC because all other fast food restaurant is doing it like Pizza hut, etc.

They have same type of menu it means that their product is only related with chicken.

Opportunities: They have the opportunity to expand their product with other taste. Company can also come up with new variety in the menu like Pizzas, sweets

to attract more customers. They can open more branches to get maximum market share. Globalization has opened doors for new markets for the company.

Threats: Some uncertain situation like bomb blasts is also the big threat for KFC

before few months the sales of KFC decrease more then 25%. People wrong perception created by some our religious people or Molvies

that the chicken products of KFC are not Halal that effect the KFC market very much.

Diseases of chickens like as before bird flu was a big threat for KFC.

Pestle analysis: Political factors:The operations of KFC are affected by the government policies on the regulations of fast food operation. Currently 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.Economic factors:Though for last 1 year their 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 Pakistan there is a mixed economy so private organization easily perform their tasks within any given economic system of course, organization are influenced by a variety of economic features over which they have little independent control, such as inflation, interest rates and recession

Socio culture element:

Socio culture element includes the attitudes, values, norms behaviors and associated demographic trends that are features of a given geographic area. Multinational company faces the challenge to understand about the culture of that country where they work. To solve these problems KFC hire all employee of local area and now it is easy for them to understand about the culture ofPakistan.KFC management knows about that Pakistan is a Muslim country; therefore they use 100% Halaal chicken.KFC start their branches in those cities which are famous for food eating. Pakistani people like spicy foods, therefore KFC also provide spicy foods inPakistan.KFC open its branches in advance cities of Pakistan like Lahore, Karachi, and Islamabad/Rawalpindi etc. In these cities mostly come out with their family because KFC mainly focus family.

Technological elements:New techniques which affect the quality of products and services in better way. Technology is very important to compete with their competitors. Organizations have an eye on their competitors and also new techniques which their competitors used. Today the world going fast and market is globalize, new techniques comes in production and services departments. Although KFC and Chief has same cooking machinery..KFC purchase machinery from Hanney Penny company, they are main suppliers of machinery through out the world.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.Legal factors:

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 must followed. Other legal requirement that the business owner should follow as fixed 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.

Poster five forces:

Entry:

In currently Pakistan market for fast food, it is not difficult for fast food restaurant to enter the market. However its is extremely difficult to take over already running major fast food chain dominancy in Pakistan or even make a significant amount of profit. While there are enough people in urban Pakistan for

any restaurant to survive, KFC holds the first mover advantage. Customers especially children who are used to going KFC as a treat from their parents are not going to want other restaurants’ they have never heard of. The brand name is already established. Also, there is already a large variety in numerous western style dinning places in Pakistan, such as pizza hut, chief in Peshawar, etc and any new fast food entrants would be just presenting something very similar to what’s already there. While neighborhood restaurants generally have low barriers to entry, these are the barriers to entry for similar restaurants businesses to enter the fast food chain market.

Competitors (Rivalry):

KFC has a little rivalry with similar fast food restaurants in Pakistan. The reason is that their core products are different as in they sells different kinds of food with very different taste and style. For example the price of chicken is raised by a small amount in Pakistan those people who loves chicken not accept pizza so they may not go for pizza hut for such a little increase in price of chicken. In addition these restaurants have different target customers that the fluctuation of price for one restaurant not affects the other. For example a full deal in KFC is about Rs 250 while at pizza hut it cost Rs 300. This shows the competition between to different organization.

Substitutes:

There are some competitors in fast food like, KFC, Pizza hut, chief etc. The substitute’s products in such case would be burgers, pizza, and other fries. As they are competitors their primary products are greatly different from each other. All other fast foods serve as a substitute for KFC they can also serve as complement for fast food as a whole. If the general price of fast food becomes high KFC’s price also goes up the same can be said for the quantity sold of these products which make complements to each other.

Buyer and Supplier bargaining power:

The customers of KFC, especially as individual buyers, have almost no bargaining power because if only one customer threatens to no longer eat at KFC, the store

is not going to lower its price because the cost of losing one customer is not very great. The suppliers like buyers have very little bargaining power.

In terms of food, KFC, upon its move into Pakistan many of its U.S suppliers to extend its branches in Pakistan. KFC also began helping local suppliers by giving them technological support to improve their products. This is a brilliant strategy because that KFC would otherwise need to improve from the U.S can now be obtained domestically, and if U.S suppliers decide to raise their prices, KFC can easily switch to local suppliers. This is a good strategy. With is strategy, KFC created competition among its suppliers, lowering the suppliers bargaining power. In term of human resources, labor cost is extremely low because the supply of non skilled workers great exceeds the demand for them. With so little buyer and supplier bargaining powers, KFC is able to have a very tight control over its prices and expeditors.

BCG Matrix of KFC:

The need for strategy, in order to expand its existing product in very promising markets for KFC is very essential. KFC, along with chief, and other major fast food chains have dominated. Nowadays, KFC, still dominates the chicken fast food industry while has stores in more than 100 countries operating vast profits. Although, due to increased conditions of life, and differentiation of the life style of the population around the world, there is still a lots of room for expansion, especially in countries with large population, and high development rate. KFC using the BCG matrix and SWOT analysis to analyze what is the current position of the company and identify that the company has the potentials to growth in fast food market.

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Star: (high growth, high market share)

The star product of KFC is fried boneless chicken, zinger and zinger xtreme. It has a high market share and brings in high revenue. But it also has high developmental expenditure involved. The profit therefore is generally not very high brought in by this product. The company is trying making this product a cow as well, by reducing the expenditure.

Cash Cows: (low growth, high market share)

KFC’s Chicken Bucket is the most successful product. It has the highest market share amongst all the other products. It has good demand in the market and brings in huge sales revenue. The development and other expenses are also low and thus this product is a CASH cow for the company.

Dogs: (low growth, low market share)

KFC’s Fruit Salad and Rice Spice comes under this category. Although company had launched this product much earlier, it has still failed to become a success. As KFC is known more for its chicken made products this also results in low demand for this item. It has a low market share and although low on expenditure (as company does not spend on its promotion), it does not bring in much revenue as demand is low.

Question Marks: (high growth, low market share)

Currently KFC has launched a new product in the market. They have also tried to come into the beverages market by launching its new brand of shakes called KRUSHERS. As it is a fairly new product it comes in the category of the Question Mark in the BCG Matrix. KFC is advertising a lot to popularize this product so there is a lot of expenditure on it. This product is individually not bringing any profits and is a cash drain for the company. Company may decide to completely remove this product from the market if it does not do well soon and start bringing in revenue.

Suggest an overall business-level strategy. Include necessary information about all the elements of marketing mix for the new strategy.

There are different strategies adopted by KFC. After studying the SWOT analysis, Pest analysis and BCG model of KFC I recommend the following strategies for KFC;

KFC should introduce a new product like pizza etc because its competitor is doing it like chief which has a lot of variety of food.

KFC can increase its sales by providing the facilities of home delivery. KFC is doing it but it cannot cover big area like they are doing home delivery to Town and by doing to hayatabad as we know that hayatabad is a place where high income people are living so it will be better for KFC to start home delivery facility to increase its sales and attract more customers.

They can open temporary outlets in peak season in the hill stations like Murree, Naran, and Kaghan etc. Information about all the elements of marketing mix:

Product: As I have suggested the strategy for KFC to introduce new product like pizza etc as its competitor chief is offering so for this purpose KFC should need to offer this product in such a way that it is much better from its competitors. Therefore KFC should hire a well experienced cook and use fresh materials like chicken, vegetables etc that it attracts more customers and for outlets in muree, naran etc I will offers the some of the product for KFC menu because its to difficult to have all those products at other branches.Price: The price should be settled by KFC less than its competitors and the other strategy for home delivery KFC must deliver product free because now a days many restaurants provide free facility of home delivery. For the last strategy KFC need some finance for installing Outlets at those areas which I have mention.

Promotion:

As KFC is using mainly billboards for the advertising purpose so they should also advertise the new suggested product and also write on that the facility of free home delivery because billboards are cheap as compare to electronic media and people can get clear information from it.

Placement:

As for new product and for old products through delivery KFC should distribute the products so it will cover hayatabad region.

Recommendations

KFC is market leader in providing Fried Chicken. As KFC is addressing Fast Food, so it is competing with the prominent market signs, like Pizza Hut and McDonalds.

Product:

KFC is doing well so far. It needs improvement in their Hot-Menu. They should make their menu dynamic, by introducing new meals after certain period of time. New items should be introduced, by varying the taste. Like, pizza hut has come up with "Chapli Kabab Pizza" addressing the local taste; KFC should go for such innovation, in order to increase their market share.

Price:

Price of KFC is reasonable, if compared with other fast food restaurants. But as, price is always the primary concern for consumers; so KFC should adopt certain strategy to attract the consumers. It’s not only by lowering their prices. It could be by, introducing discount packages, for families, employees, students and regular customers. The membership cards can be used to, provide certain extra value to the consumers.

Placement:

Placement is very important factor, for a company to increase its market share, by targeting the right consumers. KFC need to have more outlets, at commercial areas. It will help in targeting the actual customers and potential customers as well. Mobile outlets can be effective addition as well.

Promotion:

KFC has a large customer equity, but being a market symbol, a company should strive for having more actual customers. KFC should work for, having a solid marketing department. They should organize and run advertisement campaigns. It would certainly be incremental factor for their sale. Different modes of advertisements can be used for, triggering the community. KFC could use brand promoters. KFC can setup, promotional campaigns. All what is needed is a well established marketing department, in order to facilitate effective, promotions.

Identify important roles and responsibilities required for implementing the new suggested strategy and compare them with any competitor firm.

Finance Department:

Meaningful and insightful analysis of KFC performance is central to ensuring our continued business success. In the first instance this requires accurate and timely accounting. Whether it is paying our suppliers, billing our franchisees, managing our cash and asset purchases or paying our people, each member of the Financial Control team is dedicated to ensuring all business transactions are accurately and efficiently recorded. This provides a strong platform for the Business Control and Commercial teams to analyze results and partner with key stakeholders to set and drive the strategic direction of the business. As I have suggested the strategy for home delivery and a new product like pizza to introduce so the responsibility of finance department is to provide all raw materials like for home delivery they should provide motor cycle or a bus like in Karachi they having a small bus for delivery of product and for introducing new product the finance department should provide a budget for raw materials necessary for new product

Human Resources:

As there are a lot of employees working in KFC. The role of HR is key to success and finding the right people who will thrive in the job they do is paramount. A team of HR specialists is on hand through every activity recruitment, training & development and compensating fairly for a great job. KFC HR Practices are second to none and we thrive on giving employees the opportunity to grow and develop within our business.

The KFC vision is “To Build a World Class Organization”, which will be achieved through: Managing Talent, Building People Capability, Creating Engagement and Driving Organization Effectiveness. The role of HR is that they should hire experienced and skilled chiefs for making of new product and also hiring new staff for home delivery service.

Marketing Department:

The driving force behind the KFC Marketing team is a shared passion to deliver a constant pipeline of irresistible tasting meals. The process starts with defining consumer needs and exploring new ways to deliver consumer led innovation. The role of marketing department is that as I have given the suggestion of new product and home delivery service so they should advertise the new product in such a way that it attracts customers and people know that now KFC is also providing the facility of home delivery.

The Marketing team work cross functionally with Product Excellence and Operations to develop and implement new ideas and with Finance to measure their contribution to the business. The Marketing team is also the heart of communication, both within the business and most importantly to our consumers. The marketing Department of KFC is also responsible for its advertising.

Competitor chief analysis:

As like KFC strategies the Chief its competitor is also adopting the same strategies like they told me that customers are main assets for us, if a customers do not like our product we bring improvement in that product. The role and responsibilities of its competitor chief is like that the whole strategies are made by the management department like change in product, price and introducing a new product. The main purpose of marketing department is advertising for chief and the financial department has to control all finance matter like giving salaries, daily transaction etc. by my limited study I concluded that there was not too difference in the strategies adopted by KFC and its competitor. Both of organization managers told me that me but there was not too difference.

Identify and evaluate different resources required to implement the new strategy (i.e. human resource, finance, information etc.)

Resources required: As we know that with out resources we cannot start any business how small it is? Because resources are the tools that help us to start our business. The strategies which I have mentioned above need some resources for its implementation.

Finance: As a business mainly depends on finance so no business can exist without finance. So for implementation of suggested strategies finance is playing a role of heart. As for implementation of suggested strategies KFC should need to strong its financial position because they would need to pay salary to the new hired staff like chief and drivers and the also need to buy other materials like for making of new product (pizza) etc.Human resources: As HR is concerned with hiring of new employees so it is also playing a vital role in implementing the strategies.Other necessary equipments: As for implementation of these strategies KFC should also need other necessary equipments like they have to buy motor cycles for home delivery, cooking materials etc.Information: Information is also playing a vital role in implementation of a strategy because if we get information of its competitors like about their pricing and product etc we can get competitive advantage.

Data collection:As for data collection for this assignment I used the following techniques for data collection;Personal interview: First of all I visited both KFC and chief and met the manager of both organization and other staff and collect the data.Books: I studied the following books a little bit to get some knowledge.Strategy: Create and Implement the Best Strategy for Your Business by Harvard Business School Press.

Understanding Business Strategy: Concepts and Cases by R. Duane Ireland, Robert E. Hoskisson and Michael A. Hitt

Strategies for Business and Technical Writing (7th Edition)

World Wide Web:

The following are some of the links through which I get some of the data;

www.google.com

www.answar.com

www. Netmba.com

The most and important source for collection is questionnaire through which I collect data about KFC product price, etc which helped me a lot.

Reference List:

www.google.com

www.netmba.com

www.answar.com