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KFC multinational enterprise

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by

Peachaya Wongpiya

on 22 June 2013

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Transcript of KFC multinational enterprise

September 9, 1890 in Indiana, USA.

He had many jobs but eventually became a business man owning a petrol service station in Kentucky, USA.

The Colonel saw this as a business opportunity and decided to offer food to these customers.

His food and service was so good that he was mentioned in several newspapers around the country.

This 'Customer Mania' experience made people drive from far away just to visit the Colonel's restaurant.

The Original Recipe of 11 Herbs and Spices is one of the biggest secrets in the world - “the Finger Lickin' Taste” of KFC!

The Colonel also introduced the idea of using a pressure cooker to cook the chicken. This ensured that the product cooked faster and produced the best results ever.

At the age of 66, he started selling his idea of Kentucky Fried Chicken by traveling from town to town, preparing his famous chicken recipe for restaurants and their employees. Soon everybody wanted to try it
Colonel Sanders
Factors affecting the success and failure
Success
7Ps
Promotion
Process
Physical
Business Strategy
Price
KFC uses skimming pricing in its early stage of business operation.
The skimming pricing is one of the pricing strategies where firm set the price at high in early stage of business, then low when the competitors enter into the markets. this strategy will help firm cover the costs quicker and most of the target customers are upper class.


Place


KFC uses localized strategy where it expands into local area and in different zones in each country.

To provide the ease for customers to go to KFC branches. KFC choose crowded area or main center to the local area where people can travel to their easily.

KFC promote itself by doing the advertisements which are on television, radio, roadside and other media.
Use social network as a place where the customers are able to get the update news about KFC or customers can make a comment or feedback to KFC.
Create events that bring the customers to be part of KFC activities.
Giving coupons or flyers that can be discount whenever customer buy the set of food at KFC.
People
KFC provide the training for all of their staffs to teach the process and techniques.
Not only training those specific skills for employees, but also receive comprehensive training e.g. fire safety, leadership, and first aid training.
KFC has a very hygienic process for their product line.

They track the chickens from the farm to restaurants for quality assurance - Each chicken has a unique supplier code and batch number so they know where the chickens are from.

They have many branches all over the world which means they have to sell in a Muslim countries and because of their though of customers all the chickens from KFC are killed by Halal.

All of the chickens are not allow using growth promoters or preventative antibiotics so customers can be sure of chickens being uncontaminated.
KFC gets chicken from various high quality suppliers but all those suppliers need to pass the standard of EU and UK for welfare and quality, and KFC standards. There is also a check for KFC that the chickens aren’t contaminated by FSA (Food Standards Agency).
Relative PPP

It is use to forecast and creates strategy.
the exchange rate is one of the most important concerning issue to determine the return from global and making decision for investment.
Intense competition

Low Switching Cost

Healthiness

Local Competitors

Franchisees Problems


Failure
Location

Speed of service

Adaptation of localization

Quality of food

New Product

Environment
PEST

For example, if annual return from Thailand was 1 million THB and the exchange rate is 0.032USD/THB, then KFC’s headquarter would gain 32,000 USD.
However, if the USD appreciate to 0.031USD/THB, headquarter would gain only 31,000 USD which directly affect its total revenue. We can conclude that the depreciation of USD
comparing to foreign country will increase KFC’s revenue (in case of ceteris paribus)
















According to figure 1, it shows 8 major countries of KFC franchise and there are 2 currencies that appreciated and make USD depreciated, meaning that KFC will gain more revenue
from those 2 countries. In addition, it also represent that it will be more worth to invest there.
Product
KFC has its own secret recipe.
KFC product also tends to be ready all the time
KFC are not mainly focus at providing fried chicken anymore-Nowadays, KFC also focus more on KFC beverages, dessert (egg tart), nugget, fried chicken hamburger and others.
KFC make the special recipes for each country that will fit to the local tastes.
KFC also try to be able to sell to most of the people who have difference religions by doing in the correct way of processing the food.

STRENGTH

Second best global brand in fast food industry( number1 is McDonald's)
Famous for fried chicken recipe
Variety of menu(local food in local area e.g. spicy chicken wing called "Wing Zab" in Thailand)

WEAKNESS

Unhealthy menu
Lack of R&D
Don't know much about their customers
Weak management risk, reduce profit
OPPORTUNITY

Home meal delivery
New service, technology
Globalization
International market (new opportunities to expand business and increase sales)


THREAT

Customer behavior, trend change due to promote in healthy eating
Competitive
Substitution
People are more educated that KFC provide unhealthy food, this has long term negative impact
Farmers and supplier raise price of raw material like chicken, wheat, cornflake. This can lower profit margin
Bird flu
SWOT Analysis
Bargaining power of buyers: medium to high (4)

Bargaining power of supplier: low (2)

Threat of new entrant : medium (3)

Threat of substitute product : high (5)

Existing rival: medium (3)

Five Forces Analysis
•Franchisor grants
•Master franchisee (subfranchisor) the right to sell
•Unit franchises (subfranchises)
•Within a defined territory
•Usually at a rate set by a development schedule during a defined period of time

What is Master Franchise?
KFC owners in Thailand are
CP group
YUM Restaurants International ( Thailand) Co.,Ltd
Central Restaurants Group Co., Ltd.

The brand now has more than 400 branches across the country.
In Thailand, KFC is not operate in franchising system. In contrast, the three official owners do expand the market by open new branches, Thus, it makes KFC holds market share up to 49% of fast food industry in Thailand.





Mr. Sran Smutkochorn, who operates the country’s largest fast food chains such as KFC and Pizza Hut.

Social responsibility
Sociological:

Age
Gender
Population
Culture

Technological:

Technological advancement
Research and development
Capital Formation
Political:

Government Policies
Price Policies
Animal right campaign


Economical:

Income
Consumption behavior
Low set up cost
Price versus Quantity
KFC considers its products as non-cyclical

Low profit margin per each product

Focus on sales volume
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