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Published by Ramit Madan

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Published by: Ramit Madan on Jun 13, 2011
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KFC Corporation (KFC), founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based inLouisville, Kentucky, in the United States. KFC has been a brand and operating segment, termed a concept[2] of Yum!Brands since 1997 when that company was spun off from PepsiCo as Tricon Global Restaurants Inc.KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers aline of grilled and roasted chicken products, side dishes and desserts. Outside North America, KFC offers beef basedproducts such as hamburgers or kebabs, pork based products such as ribs and other regional fare.[citation needed]The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952, though the idea of KFC's friedchicken actually goes back to 1930. The company adopted the abbreviated form of its name in 1991.[3] Starting in April2007, the company began using its original name, Kentucky Fried Chicken, for its signage, packaging and advertisementsin the U.S. as part of a new corporate re-branding program;[4][5] newer and remodeled restaurants will have the newlogo and name while older stores will continue to use the 1980s signage. Additionally, Yum! continues to use theabbreviated name freely in its advertising.Born and raised in Henryville, Indiana, Sanders passed through several professions in his lifetime.[6] Sanders first servedhis fried chicken in 1930 in the midst of the Great Depression at a gas station he owned in North Corbin, Kentucky. Thedining area was named "Sanders Court & Café" and was so successful that in 1936 Kentucky Governor Ruby Laffoongranted Sanders the title of honorary Kentucky Colonel in recognition of his contribution to the state's cuisine. Thefollowing year Sanders expanded his restaurant to 142 seats, and added a motel he bought across the street.[7] WhenSanders prepared his chicken in his original restaurant in North Corbin, he prepared the chicken in an iron skillet, whichtook about 30 minutes to do, too long for a restaurant operation. In 1939, Sanders altered the cooking process for his friedchicken to use a pressure fryer, resulting in a greatly reduced cooking time comparable to that of deep frying.[8] In 1940Sanders devised what came to be known as his Original Recipe.[9]The Sanders Court & Café generally served travelers, often those headed to Florida, so when the route planned in the1950s for what would become Interstate 75 bypassed Corbin, he sold his properties and traveled the U.S. to sell hischicken to restaurant owners. The first to take him up on the offer was Pete Harman in South Salt Lake, Utah; together,they opened the first "Kentucky Fried Chicken" outlet in 1952.[10] By the early 1960s, Kentucky Fried Chicken was sold inover 600 franchised outlets in both the United States and Canada. One of the longest-lived franchisees of the older Col.Sanders' chicken concept, as opposed to the KFC chain, was the Kenny Kings chain. The company owned many NorthernOhio diner-style restaurants, the last of which closed in 2004.Sanders sold the entire KFC franchising operation in 1964 for $2 million USD, equal to $14,161,464 today[11] Since thattime, the chain has been sold three more times: to Heublein in 1971, to R.J. Reynolds in 1982 and most recently toPepsiCo in 1986, which made it part of its Tricon Global Restaurants division, which in turn was spun off in 1997, and hasnow been renamed to Yum! Brands. Additionally, Colonel Sanders' nephew, Lee Cummings, took his own Kentucky FriedChicken franchiseLong Run Growth/ DeclineFast food franchising was still in its infancy in 1954 when Harland Sandlers begun his travels across the United States tospeak with prospective franchises about his “colonel” sanders recipe Kentucky fried chicken”. By 1960 “colonel” Sandlershad granted KFC franchise to over 200 take home retail outlets and restaurants across the unite states. They had alsosucceeded in establishing a number of franchises in Canada by 1963, the number of KFC franchises had risen to over 300and revenues had reached $500,000 per unit, on average.By 1964, the colonel had tired of running the day to day operations of the business and was eager to concentrate on publicrelations issue. He sold the business to two Louisville business people Jack Massey and John Young Brown, Jr. for $2million.During the next five years, Massey and Brown concentrated on growing KFC’s franchise system across the U.S. in 1966they took KFC public, and the company was listed on the New York Stock Exchange. By late1960’s a strong foothold hadbeen established in the United States, and Massey and Brown turned their attention to international markets. In 1969, a joint venture was signed with Initsubishi shoji kaisha, Ltd., in Japan, and the right to operate 14 existing KFC franchises inEngland were acquired. Subsidiaries were also established in Hong Kong, South Africa, Australia, New Zealand, andMexico. By 1971, KFC had 2,450 franchises and 600 company owned restaurants worldwide, and was operating in 48countries.2. Stability of Demand for ProductsMany KFC’s problems during the late 1980’s surrounded its limited menu and its inability to quickly bring new products tomarket. As KFC entered 1996, it grappled with a number of important issues. During the 1980’s, consumers began todemand healthier foods, and KFC was faced with a limited menu consisting mainly of fried foods. In order to reduce KFC’simage as a fried-chicken chain, it change its logo from Kentucky Fried Chicken to KFC in 1991. It responded to consumerdemands for greater variety by introducing a variety of new products. The increased popularity of healthier foods andconsumers-increasing demand for better variety led to a number of changes in KFC’s menu offerings.
3. Stage in Product Life CycleKFC is on its Maturity Stage; KFC’s products have survived the earlier stages. KFC’s early entry into the fast-food industryin 1954 had allowed it to strong brand name recognition and a strong foothold in the industry.During the 1990’s and 1970’s, KFC pursued an aggressive strategy of restaurant expansion quickly establishing itself asone of the largest fast-food restaurant chains in the United States. By 1990, restaurants located outside of the UnitedStates were generating over 50 percent of KFC’s total profits. By 1995, KFC was one of the three largest fast-foodrestaurant chains operating outside of the United States.A.
1. Capacity of the IndustryKFC, being the world’s largest chicken restaurant chain and third largest fast-food chain, with over 9,000 in both franchiseand company-owned restaurants worldwide and was operating in 68 countries, simply shows that KFC has the capacity toaddress the needs of its customers no matter how old their facilities and product form was. However KFC’s significantservice problem will probably push their customers away from them, thus KFC must have to imply ways on how to meetthere customers expectations. KFC ought to think that customer goes to their establishment not just because of theirproduct but also their service, because nothing bits a quality service.The continuous opening of new restaurants in 1995, approximately two restaurants in every three days is one way of proving their competence when it comes to business expansion, thereby providing a wide market segment not just localbut worldwide.2. Availability of Needed ResourcesKFC has several problems when it comes to its resources, specially on the needed materials, because there system is olderwhen it comes to their facilities and product forms and it’s one thing that needs an attention, since this is the key tosuccess in terms of production and it would be there competitive edge in the wide array of fast food chain industry. KFCDespite of the rivalries of employees and managers, KFC had surpassed this incident. KFC’s culture was built largely as theemployees enjoyed relatively good employment stability and security. Over the years, a strong loyalty had been createdamong KFC employees, because of the benefits and pensions and other non-income needs. Thereby, KFC has the ability toretain and manage its manpower.As to the company’s money, KFC has the enough profit on its recent operations as of 1994, worldwide on both company-owned and franchised restaurants. Whereby it reaches $1.7 million in this regard KFC has the capacity to innovate their oldsystem or how to transform the old KFC into new one.3. Volatility of TechnologyBasically KFC’s past technologies still existed at present, which means that their families were durable enough because itworks for years. However the main issue now is how they could transform the existing facilities for them to be morecompetitive.4. Social ConstraintsKFC encountered several factors constraining KFC’s international expansion plans such as the social unrest, increasingtrade and current account deficits and the uncertainty surrounding the economic policy. Some incidents were directlyattack of nationalist against KFC and closure of the first restaurant in India by local authorities are to protest of localfarmers group allied with a campaign across India against foreign investment which was occurring as part of the countriesfour year old program of economic liberalization.5. Inflation VulnerabilityAs KFC entered business in Mexico. High tariff and other trades barriers restricted imports in to Mexico, and foreignownership of assets in Mexico was largely prohibited or heavily restricted. After 1982, the Mexican government battledhigh inflation, high interest rates, labor unrest, and lost consumers power. When Carlos Salinas de Gortari seated asPresident, Mexico improved, top marginal tax rates were lowered, and the new legislation eliminated many restriction forforeign investment.President Salinas institutes a policy of allowing the peso to depreciate against the dollar by one peso per day, it result agrossly overvalued peso, and this lowered price of imports & led to an increase in imports of over 23 percent in 1989.KFC’s primary concern was the stability of Mexico labor markets. Labor was really cheap in Mexico. While KFC benefitsfrom lower labor costs, labor unrest, low job absenteeism, & punctuality continued to be significant problems. Theseproblems with worker retention and labor unrest were mainly the result of workers frustration over the loss of theirpurchasing power. Due to inflation & to past government controls on wages increases. A slowdown in business activitybrought about by higher interest rates & lower government spending, lead many businesses to lay-off workers.C. COMPETITIVE CONDITIONS IN THE INDUSTRY

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