Final Project

KFC (Kentucky Fried Chicken)

Submitted To: Muhammad Asim Awaan Developed By: Madiha khalid Hijab Ashraf Rizwan Khalil Sami Ullah
(07108118) (07108124) (07108125) (07108140)

BBA Fall 2007

Section B

Date of Submi ion: 15 06 2011

Final Project

KFC (Kentucky Fried Chicken)

1.

Final Project

KFC (Kentucky Fried Chicken)

Dedication

We dedicate our project to A !"i#hty A

A$ %ithout %ho&e #uidance

%e %ere una'(e to do &o and a(&o to our parent& %ho &upport and he(ped u& to co)p(ete thi& uphi(( ta&k in a 'etter and per*ect %ay+

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

Acknowledgement

We *ir&t(y thank A %ork to an end0

A$ A()i#hty the )o&t ,ene*icent and the "erci*u(- and the

"a&ter o* the .ay o* /ud#)ent- %ho 'e&to%ed upon u& the endurance to 'rin# thi&

We dee) it our ut)o&t p(ea&ure to a1ai( thi& opportunity to e2pre&& #ratitude and keep &en&e o* o'(i#ation o* our 3ir "uha))ad A*4aa( *or her 1a(ua'(e #uidance&cho(ar(y critici&)- untirin# he(p- co)pa&&ionate attitude and en(i#htened &uper1i&ion durin# the %ho(e project and )akin# o* the report0

a&t 'ut not the (ea&t- %e *ee( hi#h(y o'(i#ed and earne&t(y pay hu)'(e and heart*e(t thank& to )o&t a**ectionate *ather& and )other& *or their )ora( and *inancia( &upport and encoura#e)ent and &pecia((y our )other& 'ecau&e they a(%ay& re)e)'er u& in their prayer&0

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

Table of Contents
! "ntrod#ction of Com$an%$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$# #$# KFC in Pa%i tan$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$& #$& 'ature of t!e Bu ine $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$& #$( Current Product $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$(

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

&!

"ntrod#ction of Com$an%

KFC i t!e )orld lar"e t and mo t )ell %no)n c!ic%en re taurant$ *very day+ more t!an #&
million cu tomer are erved at KFC re taurant in #,- countrie and territorie around t!e )orld$ KFC operate more t!an .+&,, re taurant in t!e /nited State and more t!an #.+,,, unit around t!e )orld$ KFC i )orld famou for it 0ri"inal 1ecipe2 fried c!ic%en 33 made )it! t!e ame ecret blend of ## !erb and pice Colonel 4arland Sander perfected more t!an a !alf3century a"o$ Cu tomer around t!e "lobe al o enjoy more t!an (,, ot!er product 33 from Kentuc%y 5rilled C!ic%en in t!e /nited State to a almon and)ic! in 6apan$

6o!n 7 Bro)n and 6erry 8e y purc!a ed KFC for /S9 for :& million in #-;< t!at time KFC become a corporation$ 9fter five year + Colonel buy fir t #,, !are of KFC$ =n #->;+ Pep i Company purc!a ed KFC$ Pep i company c!an"ed t!e lo"o from Kentuc%y fried c!ic%en to KFC in #--# and t!en in #--& KFC #,,,t! re taurant opened in 6apan and in #--< -,,,t! re taurant in c!ina$ KFC i t!e part of Tricon "lobal re taurant$ Tricon "lobal re taurant i t!e )orld lar"e t re taurant "roup+ )it! in nearly #,, countrie around t!e )orld+ )!ic! in turn )a pun off in #--?+ and !a no) been renamed to 7um@ Brand $

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

1.1

KFC in Pakis an

=n #--?+ KFC franc!i ed )it! 5ray 8ecanAa =nternational and tarted )or% in Pa%i tan )it! it fir t branc! in 5ul !a3e3=Bbal+ Karac!i+ 1a)alpindi branc! tarted )or% in #--- and in = lamabad in 9u"u t &,,& and no) in Pa%i tan it currently !a ;- branc!e operatin" in #major citie $ =t i operated by a Dubai ba ed company+ Cupola+ )!ic! too% it over in #--- )it! < major outlet $ 8ajor competitor include 8cDonald + 'ando + 4ardee + 9FC+ 4FC+ Fri c!ic% + 5o c!ic% and DiCy C!ic% )!en tal%in" about imilar product $ 9 in indu try+ !o)ever+ KFCD competitor )ill include all fa t food c!ain : 8cDonald + PiAAa 4ut+ 5enoD + 4ardee + Coc% n Bull+ and Sub)ay etc$ KFC occupie a major po ition in t!e fa t food indu try+ bein" t!e lar"e t eller of c!ic%en product in Pa%i tan$ =t capture ., percent of t!e total fa t food mar%et in t!e country$ KFC )ore t!e title of bein" t!e mar%et leader in it indu try$ Servin" deliciou and !y"ienic food in a relaCin" environment made KFC everyoneD favorite$ Since t!en+ KFC !a been con tantly introducin" ne) product and openin" ne) re taurant for it cu tomer $ =n Pa%i tan totally C!ic%en buy from Pa%i tani P!ul "# F!"ms+ and al o t!i C!ic%en i #,,E 4alal$

1.2

$a u"% !& h% Busin%ss

(FSC) repre ent t!e mo t critical ucce to Con umer H$ factor to KFCG "lobal ucce $ =t i

Kentuc%y Fried C!ic%en (KFC) 3 one of t!e mo t %no)n fa t food c!ain in t!e )orld$ Fuality and cleanline =t bu ine t!e fa t food franc!i e o it nature of bu ine type i Bu ine i providin" t!e fa t food ervice $

KFC !a lar"e c!ain of con umer $ 9ccordin" to KFC+ Ie are "ro)in" only )it! our cu tomer$H KFC !a "reat environment for t!eir con umer and familie $ T!ey are concerned about t!e comfort and ati faction of t!eir cu tomer $ T!at i )!y <, million i need to open a in"le outlet$ KFC i multinational company$ T!ey !ave outlet + almo t in every country$ So t!ey !ave international cu tomer all over t!e )orld$

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

1.'

Cu""%n P"!du( s

8i"!ty Jin"er Jin"er bur"er Fi ! Ain"er bur"er Col$ Fillet bur"er Sal a t)i ter 8ac!oD bur"er C!ic%en bur"er C!ee e Sub ;, t)i ter 'u""et 4ot )in" Frie 8ilo Frot!e Corn on t!e cob 9rabian pice C!ic%en mania Dinner roll Cri py c!ic%en c!un% 4ot and cri py oup Soft Drin%

Cola la) Scope of )all Fruit alad 8ineral K)ater * pre o Cappuccino

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

KFC tand on t!e C!amp Pro"ramH

Th% C)AMP* P"!+"am

C!amp value$ C498PS tand for t!e iC univer al area of cu tomer eCpectation common to all culture and all re taurant concept $ T!e e are: tand for our belief t!at t!e mo t important t!in" eac! of u can do i to focu on t!e cu tomer$ =t tand for our commitment to provide t!e be t food and be t eCperience for t!e be t

Cleanline )o pitality Accuracy Maintenance of Facilitie Product Fuality *peed of Service

C)AMP* i t!e p!ilo op!y to en ure t!at t!e cu tomer !a t!e con i tent Buality eCperience in every re taurant+ everyday+ on every occa ion and you )ill be playin" role in deliverin" C498PS to our cu tomer $

1.,

*i-%

KFC i part of 7um@ Brand + =nc$+ t!e )orldG lar"e t re taurant company in term of y tem re taurant + )it! more t!an (;+,,, location around t!e )orld$ T!e company i ran%ed L&(- on

GIFT Bu ine

Sc!ool

Pa"e .

Final Project

KFC (Kentucky Fried Chicken) of :## billion$ KFC pecialiAe in C!ic%en Ba ed

t!e Fortune .,, Mi tN )it! revenue in eCce Product $

=n Pa%i tan+ =t currently !a ;- branc!e operatin" in #- major citie $ =t !a !i"! ale volume a t!ey !ave "reat turnover$ 'e) outlet are bein" opened becau e t!ey !ave "reater ale volume (a per day )ort! <$. million i bein" con umed)$ Pre ently KFC !a provided employment to over approCimately #&,, Pa%i tani + )!ic! add up to ;,,, individual directly dependent on KFC Pa%i tan$

Strategic "ss#es

T!rou"! an analy i of t!e tren"t! + )ea%ne e + opportunitie + and t!reat of KFC+ t!e follo)in" trate"ic i ue are identified: #$ )!w w!uld KFC main ain a ma"k% l%ad%"shi. in h% Pakis an &as &!!d indus "#/ Pa%i tanD fa t food franc!i e indu try i till un aturated and i in it "ro)t! p!a e$ T!ere i a lot of room for firm to enter and be profitable$ 9 barrier to entry to t!e indu try a a )!ole are lo)+ more and more firm a )ell individual are enterin" in t!i bu ine $ For pa t fe) year t!e indu try i "ro)in" at t!e rate of #,E annually$ For =n tance+ Sub)ay ucce fully entered t!e indu try a fe) year a"o and no) 4ardee !a al o follo)ed uit$ 9lt!ou"! KFC enjoy a mar%et leader po ition in t!e country but t!e i ue no) i t!at !o) can it maintain it mar%et leader !ip and !o) can it "ain a u tainable competitive advanta"e$ 2. C!nsum%" )%al h &!!d "%nd KFC face a lot of t!reat from it ub titute + e pecially )it! "ro)in" !ealt! concern amon" it cu tomer $ 4ealt! and obe ity i ue a ociated )it! KFC food !ave diluted t!e tru t people once !ad in t!em$ =t no) face an i ue of caterin" to t!e c!an"in" need of cu tomer demand $
GIFT Bu ine Sc!ool Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

'. 0((u.i%s a * "a %+i( P!si i!n KFC occupie a trate"ic po ition in t!e mar%et$ =t i in a profitable bu ine )it! maCimum return $ 4o)ever+ t!e entire po itionin" i ba ed upon one in"le ecret recipe )!ic! if eluded by one of t!e competitor can cau e eriou dama"e to t!e brand$ T!erefore+ t!e bu ine t!ou"! profitable i ri %y$

,. 1imi %d 2a"i% # !& m%nu i %ms KFC trie to project an ima"e of c!ic%en eCpertH in t!e fa t food indu try for differentiatin" it product )it! ot!er competitor $ 9 one of KFCD %ey competitor + 8cDonaldD al o introduce c!ic%en product $ =t i obviou t!at t!e competitive advanta"e of KFC may not be u tainable$ T!e limited menu may be one of t!e main i ue for KFC$ Mac% of variety of menu item + cu tomer may not be attracted for con umption$ Cu tomer may "o to ot!er fa t food re taurant )!ic! )it! more c!oice of KFC in t!e fa t food indu try$ and combination$ =t may affect t!e competitivene

5. 1a(k !& (!mmuni(a i!n 3% w%%n ma"k% in+ and !.%"a i!n 9ccordin" to ome of t!e KFC taff+ t!ey mentioned t!at t!ere i lac% of communication bet)een mar%etin" department and operation of KFC$ 8ar%etin" department may not "ive t!e detail of ne) promotion and ne) product to t!e KFC operation or not clearly eCplain about t!e campai"n$ T!i lead to many problem for t!e operation$ 0peration team may be confu ed about t!e ne) promotion or coupon $ T!ey may not be able to eCplain t!e detail to cu tomer )it! enBuirie $ =n addition+ it could affect t!e efficiency and effectivene
GIFT Bu ine Sc!ool

of operation a cre)member may not be familiar )it! t!e ne)

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

mar%etin" trate"ie $ T!ey may not be able to up ell t!e product a t!e corporate )ant $ 9 a re ult+ profit may be affected$ ;$ F%w%" !..!" uni i%s ! %4.and i s "%s au"an s 3as% 5du% ! &inan(ial "%as!ns6 KFC i not a li ted company becau e t!ey ay t!at t!ey donDt need inve tor yet t!ey ay t!at t!ey are not openin" up ne) franc!i e due to lac% of re ource and jut focu on maintainin" t!eir current franc!i e $ T!i can cau e t!em !arm becau e t!e mar%et i un aturated and t!ere i mar%et )!ic! i till till not bein" entertained$ T!ey need to open up

franc!i e t!ere to cater t!e demand of t!at mar%et and "ain mar%et !are )!ic! can be ta%en by competitor if it ma%e t!e move before KFC$

7. 1a(k !& (!mmuni(a i!n (hann%l &!" (us !m%"s T!e mi ion of KFC i people be t!e fir t+ cu tomer be t!e focu H$ =t i found t!at KFC did not ta%e a proactive approac! on li tenin" to cu tomer and employee $ T!ere i no y tematic cu tomer urvey for it product and ervice $ =t )!olly relie on t!e branc! mana"er and public relation officer to "et t!e cu tomer D opinion$ 9 cu tomer of KFC+ !o)ever+ t!ey )ould realiAe t!at it i not u ual t!at mana"er and public relation officer )ould ta%e t!e c!ance to a % for opinion$ 9lt!ou"! t!e )eb ite of KFC !a a cu tomer ervice comment boC for cu tomer to end u""e tion$ =t may i"nore t!o e cu tomer )!o are not computer u er $ =n addition+ it cu tomer ervice !otline i not !i"!ly promoted$ =t mean t!at it lac% communication c!annel bet)een KFC and cu tomer $

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

S'(T Anal%sis
.,E 8ar%et !are in Pa%i tan 5lobal pre ence in #,- countrie *Cten ive fa t food franc!i e net)or% )it! ;> outlet in Pa%i tan Fuality 9 uranceN KFC !a a product eCcellence y tem to en ure Buality ra) material + pac%a"in"+ eBuipment and ne) product t!at deli"!t cu tomer $ =n order to en ure con i tent Buality+ KFC al o eCecute in"redient and eBuipment pecification $ Food i fre !ly coo%ed and fried c!ic%en t!at are not old for more t!an <. minute )ould be )it!dra)n from ale to en ure t!e food Buality$ Fre ! in"redient are provided to t!e branc!e and !ence it )ould en ure t!e Buality of t!e food$ Oertical lin%a"e )it! value c!ain of upplier N upplier of KFC c!ic%en i KP'D and drin% are upplied by Pep i+ in Pa%i tan KFCG ecret 0ri"inal 1ecipe2 fried c!ic%en 33 made )it! t!e ame ecret blend of ## !erb and pice Colonel 4arland Sander perfected more t!an a !alf3century a"o$ Brand *Buity becau e of bein" olde t and fine t in Bu ine Doe not !ave any Core competitor =n c!ic%en ervin" 1an% !i"!e t amon" all c!ic%en re taurant C!ain for it convenience and menu variety Moyal cu tomer Face numerou advanta"e of bein" a 8ultinational 0r"aniAation e$"$ economie of cale$

* "%n+ hs

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

7%akn%ss%s
Mac% of focu on 1e earc! P Development =mported ra) material ri e t!eir prime co t =nfleCibility of price ma%e it unaffordable to middle cla 4i"! rate on t!e price a compared to t!e ot!er brand t!e cu tomerD !ift$ people$ ellin" ame item may cau e

0..!" uni i%s

=ncrea e con umption of fa t food !a increa ed t!e mar%et iAe Con umer prefer 9ll under one roofH in order to increa e t!eir ale turnover t!ey can increa e or add t!e erved item T!ey can open more outlet to "et maCimum mar%et$ T!ey can capture more cu tomer by decrea in" t!e price of t!eir product /pdatin" t!eir re taurant + Balanced menu+ cu tomer focu and =ncrea e delivery ervice

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

Th"%a s
Competition from ot!er international outlet Q li%e PiAAa 4ut+ 8cDonald + Sub)ay$ *ntrance of 'e) competitor into t!e mar%etN a barrier to entry to t!e indu try a a )!ole are lo)+ more and more firm a )ell individual are enterin" in t!i bu ine $ For pa t fe) year t!e indu try i "ro)in" at t!e rate of #,E annually$ For in tance+ Sub)ay ucce fully entered t!e indu try a fe) year a"o and no) 4ardee !a al o follo)ed uite$ 4i"! political in tabilityKuncertainty$ T!e deat! of political fi"ure or any ot!er uc! incident are a t!reat in a )ay t!at an"ry public burn t!e outlet $ Suc! incident !appened in Karac!i$ 4ealt! Trend a)ay from fried food N KFC face a lot of t!reat from it ub titute + e pecially )it! "ro)in" !ealt! concern amon" it cu tomer $ 4ealt! and obe ity i ue a ociated )it! KFC food !ave diluted t!e tru t people once !ad in t!em$ =t no) face an i ue of caterin" to t!e c!an"in" need of cu tomer demand $ C!an"in" cu tomer demand Some international event badly affected t!e mar%et of KFC in Pa%i tan li%e =19F and 9F549' )ar and )e %no) KFC i 9merican ba ed$ T!erefore+ it create a "reat impact on t!e performance of KFC$ Di ea e li%e bird flu cau e t!e decrea e in ale becau e cu tomer donDt buy c!ic%en or c!ic%en related product in fear of t!i di ea e$ =ncrea in" inflation rate directly affect menu price $ 5overnment !a al o increa ed t!e ale taC from#.E to &#E t!at !a rai ed t!e price of t!e e product $

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

'.1

C!m.% i i2% Anal#sis

ub titute a product

T!e major competition in Pa%i tan mar%et faced by KFC i 8cDonaldD $ 9 KFC and 8cDonaldD offer imilar type of product $ 9 product offered by KFC i offered by 8cDonaldD and vice ver a$ Factor& that contri'ute to%ard& a co)petition are5 P"i(% Q Oalue for money i a major factorN )!en one company c!an"e it price in any product t!e ot!er company !a follo) it to maintain it po ition$ 8uali # !& F!!d Q 9 bot! KFC and 8cDonaldD are follo)in" t!eir international tandard + t!erefore itD not a major concern Fla2!"s9 Q T!i i one major factor t!at contribute to)ard attractin" cu tomer $ Different cu tomer !ave different preference $ 0u l% s Q 'umber of outlet contribute to)ard mar%et !are )!ic! "ive KFC an ed"e$

Ma"k% *ha"%

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

'.2

BCG Ma "i4 * a"

9ccordin" to BC5 8atriC+ 8ana"ement ay t!at KFC i a tar$ T!e rea on for t!i i it !i"! mar%et "ro)t! and !i"! mar%et !are in t!e Pa%i tani mar%et$ 8u%s i!n Ma"k 9ccordin" to BC5 8atriC+ all mall outlet li%e 4FC+ 9FC fall in t!e Bue tion mar%+ becau e of lo) mar%et !are in t!e fa t food indu try of Pa%i tan$

Cash C!ws 0n t!e ot!er !and 8cDonaldD and PiAAa 4ut are t!e ca ! co) becau e of t!eir lo) "ro)t! rate and !i"! mar%et !are$ Durin" pa t ome year 8cDonaldD and PiAAa 4ut !ave lo t t!eir mar%et "ro)t! becau e of t!e fact t!at t!ey could not provide t!e ta te accordin" to t!e Pa%i tani culture$ :!+ 9not!er direct competitor of KFC i Sub)ay$ 9ccordin" to BC5 8atriC it i a do"$ Some of t!e rea on t!at are re pon ible for it lo) mar%et !are and lo) mar%et "ro)t! are t!e le eCpan ion trate"ie bein" follo)ed by t!e company$ Secondly t!ey are not focu in" at all on all t!e major citie $

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

'.'

C!m.% i i2% Ad2an a+%

T!e competitive advanta"e of KFC i it po ition a t!e a t!e dominant firm$ =t currently enjoy .,E mar%et !are in Pa%i tan$ Fir)6& co)petiti1e ad1anta#e can 'e di1ided into t%o cate#orie&5 ;Ad2an a+%s 3as%d !n (a.a3ili i%s. KFC !a po itional advanta"e from !etero"eneity )it!in t!e indu try$ 0t!er po itional advanta"e include KFCD brand name$ KFC !a a lar"e t number of outlet in Pa%i tan and t!ey al o enjoy economie of cale t!at i )!y t!ey are able to "enerate more profit $ =t al o enjoy tacit nature of capability ba ed %no)led"e becau e of it recipe of fried c!ic%en of even !erb by Colonel$ =t enjoy ome advanta"e in defendin" it elf uc! a reputation+ economie of cale+ to upplier and c!annel $ ecret ori"inal h% &i"m9s .!si i!n and ;Ad2an a+%s 3as%d !n h% &i"m9s

cumulative learnin"+ and preferred acce

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

'.,

*al%s Anal#sis
=n 1upee

&,#, Total C!ic%en Served in KFC 1e taurant 9nnually

&,,-

&,,>

#$-#< Billion

#$>&. Billion

#$?&- Billion

Total KFC C!ic%en Piece Sold 9nnually

.$>- Billion

.$;# Billion

.$(# Billion

Total 1etail Sale

>$- Billion

>$<- Billion

>$,< Billion

9bove table !o) t!at t!e total c!ic%en erved in KFC 1e taurant 9nnually in &,,> )a 1 K3 #$?&- billion+ and in &,,- it increa e from 1 K3 #$>&. Billion$ T!e increa in" ratio )a .$(.E$ 9nd in &,#, it jump up to 1 K3 #$-#< Billion )it! t!e increa e of <$;.E$ T!e total KFC c!ic%en Piece Sold 9nnually in &,,> )a 1 K3 .$(# Billion+ 1 K3.$;# Billion in &,,- and 1 K3 .$>Billion in &,#, )it! t!e increa e of .$(.E$ T!u + t!e total 1etail Sale of KFC in &,,> )a 1 K3 >$,< Billion+ >$<- Billion in &,,- and in &,#, it increa e from >$<- to 1 K3 >$- Billion )it! t!e increa in" percenta"e of .$(.E$ 9ccordin" to t!e mana"ement of KFC+ t!eir profit mar"in increa e year by year$

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

'.5

P<*T Anal#sis

T!e Pe t 9naly i include t!e political+ economical+ ocio3culture and tec!nolo"ical factor $ T!e e are de cribed in detail a under$

P!li i(al Fa( !"s

T!e political factor include t!e "overnment policie a KFC bein" a forei"n company+ but t!ey !ave to obey t!e policie of t!e 5overnment laid by t!e "overnment of Pa%i tan+ t!e country )!ere t!e bu ine activitie are bein" carried out$ KFC !a !andled t!i ituation very tactfully and !a obeyed t!e policie of t!e 5overnment a pre cribe by t!e "overnment in order to run t!i %ind of bu ine $ 9nd t!e mo t important factor i t!e political in tability$ 9 in Pa%i tan+ t!ere are political cri e faced by t!e "overnment+ t!e e "reatly affect t!e bu ine of KFC$ T!ere are certain "overnment re"ulation pertainin" to t!e fa t food franc!i e indu try in Pa%i tan$ Some of t!e reBuirement include 4alal food production and ellin"+ Corporate Social 1e pon ibility+ tandardiAation c!ec% + a te t to prove Buality before enterin" t!e mar%et+ renovation after every > to #, year a mentioned per contract+ taC duty and numerou ot!er certification + e pecially if operatin" on a lar"e cale$ $ KFC complie )it! bot! of t!e reBuirement and provide 4alal food and contribute to t!e local ale up to -.E$

<(!n!mi(al Fa( !"s

T!e economic factor include t!e income of t!e people+ KFC i "oin" to tar"et$ =ncome i an important economical factor of t!e KFC$ T!i factor decide )!ic! cla =n t!e early time of KFC+ t!ey )ere focu in" on t!e upper cla c!an"ed t!eir trate"ie and tarted to tar"et t!e ma KFC i "oin" to tar"et$ but t!ey after ome time

mar%et by introducin" ome different %ind

of meal and offer t!rou"! )!ic! )e can ay t!at t!ey tar"et t!e upper middle P t!e upper level a )ell$ =n Pa%i tan t!ere i a miCed economy o private or"aniAation ea ily perform t!eir ta % )it!in any "iven economic y tem of cour e+ or"aniAation are influenced by a variety of

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

economic feature over )!ic! t!ey !ave little independent control+ uc! a inflation+ intere t rate and rece ion$ 9not!er important input to t!e enterpri e i t!e nature of "overnment fi cal and policie $ KFC pay taC properly$ 8oreover+ t!e 5overnment of Pa%i tan receive over 1 $#, million per mont! from KFC Pa%i tan a direct taCe + and -.E of all food and pac%in" material u ed in KFC Pa%i tan i procured locally+ )!ic! um up to a purc!a e of over 1 $(. million per mont!$ So KFC play an inte"ral role in developin" t!e economy of Pa%i tan$

*!(i! Cul u"al Fa( !"s

Culture element include t!e attitude + value + norm + belief + be!avior and a ociated demo"rap!ic trend t!at are feature of a "iven "eo"rap!ic area$ 8ultinational company face t!e c!allen"e to under tand about t!e culture of t!at country )!ere t!ey )or%$ To olve t!e e problem KFC !ire all employee of local area and no) it i ea y for t!em to under tand about t!e culture of Pa%i tan$ KFC mana"ement %no) about t!at Pa%i tan i a 8u lim countryN t!erefore t!ey u e #,,E 4alal (Jibi!a) c!ic%en$ KFC tart t!eir branc!e in t!o e citie )!ic! are famou for food eatin"$ Pa%i tani people li%e picy food + t!erefore KFC al o provide picy food in Pa%i tan$ KFC open it branc!e in advance citie of Pa%i tan li%e Ma!ore+ Karac!i+ and = lamabadK1a)alpindi etc$ =n t!e e citie mo tly come out )it! t!eir family becau e KFC mainly focu family$

T%(hn!l!+i(al Fa( !"s

T!e tec!nolo"ical factor include t!e Pace of c!an"e at a fa t level$ Pace of c!an"e mean rate of c!an"e$ KFC !a trate"y to introduce ne) tec!nolo"y )!enever t!ey t!in% t!at it i a time to al o an important factor in t!e upport t!e )or% of re earc! P development in order to toc% of mac!inery$ KFC !a a toc% of activitie $ =n ot!er )ord KFC !a a "ood amount of introduce ne) tec!nolo"y$ 1e earc! P Development i Tec!nolo"ical factor$ KFC al)ay introduce t!e ne) tec!nolo"y$ Capital formation mean mac!inery in order to run it bu ine

Capital Formation$ 'e) tec!niBue affect t!e Buality of product and ervice in better )ay$ Tec!nolo"y i very important in order to compete )it! t!e competitor $ 0r"aniAation !ave an
GIFT Bu ine Sc!ool Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

eye on t!eir competitor and al o ne) tec!niBue )!ic! t!eir competitor u ed$ Today t!e )orld "oin" fa t and mar%et i department $ 9lt!ou"! KFC and 8cDonaldD !a ame coo%in" mac!inery but KFC !a efficient delivery y temN t!ey provide !ome delivery o Buic%ly$ KFC purc!a e mac!inery from 4anney Penny company+ t!ey are main upplier of mac!inery t!rou"!out t!e )orld$ "lobaliAe+ ne) tec!niBue come in production and ervice

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

'.6

P!" %"9s &i2% &!"(%s

determinin" an indu tryD

PorterD five force !elp to identify t!e %ey tructural factor

competitive po ition in t!e mar%et and it profitability$ T!ey !i"!li"!t t!e tren"t! + )ea%ne e opportunitie and t!reat alon" )it! t!eir i"nificance of t!e indu try$ 9naly i !elp to under tand t!e current competitive po ition t!e indu try occupie + animate po itionin" and clarifie area of improvement$ =t )ill al o !elp determine inten ity of indu try competition and t!e force impactin" trate"y formulation$

Pakis an &as &!!d Indus "# Anal#sis

KFC operate in t!e fa t food indu try$ 4o)ever+ for convenience of under tandin" and application t!e "roup !a carried out t!e analy i by con iderin" KFC to be in t)o major indu trie + t!e fir t bein" fa t food and t!e econd bein" franc!i e$ 4ence+ indu try analy i i carried out by ta%in" t!e indu try to be fa t food franc!i e$

'.6.1 =i2al"#
'umerou competitor operatin" a fa t food franc!i e eCi t in t!e mar%et$ Some of t!em are 'ando + 8cDonald + PiAAa 4ut+ 4FC+ 9FC+ 5o C!ic% + DiCy C!ic% + Coc% n Bull+ 4ardee + Salt and Pepper and Sub)ay$ T!e e continuou ly fi"!t a"ain t eac! ot!er for a better po ition in t!e mar%et$ 1ivalry amon" competitor ta%e place in t!e form of price competition + adverti in" battle + product differentiation and increa ed cu tomer ervice $ 1ivalry in fa t food indu try can be mea ured by analyAin" t!e follo)in": $um3%" !& (!m.% i !"s and si-% Fa t food franc!i e indu try in Pa%i tan con i t of lar"e number of firm !avin" lar"e variance in iAe and cale$ 9l o+ t!ey differ a lot in price + Buality and ervice$ So+ t!ey do not !ave to monitor all t!e firm for t!eir action and t!ey can ma%e move )it!out t!e ri % of evere retaliation$ 4o)ever+ fe) lar"e player t!at compete a"ain t eac! ot!er !ave re ource for vi"orou retaliation )!en ome clo e competitor ma%e an important move$ 4ence+ KFCD competition i re tricted to t!e iAe of t!e competitor$ KFC )ill u ually not con ider )!at Coc% n Bull or 9FC i doin" a important a to )!at
GIFT Bu ine Sc!ool Pa"e .

Final Project

KFC (Kentucky Fried Chicken)

8cDonald or PiAAa 4ut i doin"$ Fierce competition mi"!t re ult in t!e form of variou deal and price cut offered pecially in bur"er bet)een 8cDonald and KFC+ but on t!e )!ole rivalry in t!e indu try remain moderate due to t!e eCi tence of numerou player operatin" in variou Indus "# +"!w h Pa%i tanD fa t food franc!i e indu try i till un aturated and i in it "ro)t! p!a e$ T!ere i a lot of room for firm to enter and be profitable$ 9 barrier to entry to t!e indu try a a )!ole are lo)+ more and more firm a )ell individual are enterin" in t!i bu ine $ For pa t fe) year t!e indu try i "ro)in" at t!e rate of #,E annually$ For in tance+ Sub)ay ucce fully entered t!e indu try a fe) year a"o and no) 4ardee !a al o follo)ed uit$ Due to indu tryD ab orbent and un aturated nature competition for "ainin" mar%et !are i not bitter$ 9l o+ eCi tin" firm are increa in" t!eir number of outlet Buite fa t$ 8oreover+ firm continue to introduce product and eCpand t!eir product line + !ence+ enterin" t!e ne) mar%et and tar"etin" t!e ne) et of buyer $ 4ence+ becau e t!e overall profitability from t!e indu try i !i"!+ t!e rivalry i not very bitter and everyone "et it influenced by eac! ot!erD !are of profit )it!out diver"in" into evere price3)ar and trate"ie and imitate Buic%ly but t!at u ually doe not re ult adverti in" battle $ 4o)ever+ major player in t!e mar%et+ mo tly eBual in iAe+ do "et in price )ar $ T!e rivalry t!u remain moderate$ )i+h &i4%d and s !"a+% (!s s For t!e fa t food franc!i e indu trie t!e fiCed co t are u ually !i"! due to t!e royalty c!ar"e t!ey !ave to pay to operate a a franc!i e$ 9 for KFC+ it ta%e t!e cooperation approCimately <, million to open a ne) outlet$ Similarly+ for it clo e competitor t!e co t are imilar+ a t!ey are about eBual in cale+ iAe and operation $ 4i"! ale + !o)ever+ !elp t!e e firm to earn u tainable profit $ Stora"e co t are al o !i"! due to eCpiry and Buality i ue $ T!i al o place pre ure to increa e ale !ence increa in" mar%etin" effort and cuttin" price )!ic! can drive profit lo)$ T!erefore+ )it! t!e
GIFT Bu ine Sc!ool Pa"e &

iAe $

Final Project

KFC (Kentucky Fried Chicken)

fiCed and tora"e co t bein" !i"!+ t!e firm compete a"ain t eac! ot!er vi"orou ly )!en tora"e and eCpiry i ue ari e$ =n t!e e ca e t!ey mi"!t even indul"e in evere adverti in" battle $ T!erefore+ t!e rivalry increa e $ 4o)ever+ t!i i only t!e ca e )it! mall franc!i e bu ine e $ T!e firm follo)in" Buality tandardiAe do not u ually face t!e problem of over capacity and !ence do not !ave to incur co t of )a ta"e of tora"e material $ T!e rivalry overall remain moderate$ :i&&%"%n ia i!n and swi (hin+ (!s s Product differentiation in t!e fa t food indu try eCi t but i not Buite !i"! and "enerally t!e product are perceived a commoditie o t!eir c!oice lar"ely depend on price and ervice o t!e pre ure to en ure competitive price and ervice e calate$ 9l o+ )itc!in" co t are Buite lo)+ a cu tomer do not !ave to incur any co t for not buyin" from a firm$ T!i indu tryD cu tomer are c!aracteriAed a !i"!ly price en itive o t!ey can ea ily )itc! to a product t!at i li%e in Buality and ervice but offered at lo)er price$ T!erefore+ rivalry can become !i"!$ Competitor !ave to enter into price and adverti in" )ar to attract cu tomer $ 4o)ever+ t!i u ually !appen in mall franc!i e )!o are unable to differentiate t!eir product eit!er on price or Buality or t!e by increa in" t!e product line$ Mar"er firm includin" KFC+ 8cDonald + 4ardee + do "et influenced by eac! ot!erD tec!niBue to attract cu tomer but al)ay try to differentiate rat!er en"a"e into bitter rivalry for a !i"!er !are+ but+ ince competition i t!ere+ rivalry doe eCi t$ 0n t!e )!ole+ t!e indu try operate in condition )!ere rivalry i moderate$ In("%asin+ (a.a(i # in la"+% in("%m%n s =n t!e mentioned indu try+ t!ere are eCpiry i ue !a o ra) material i not purc!a ed in bul%$ KFC never purc!a e in lar"e Buantity t!at )ould re ult in overcapacity+ becau e it et Buality tandard and KFC never compromi e on t!at$ 0vercapacity can re ult in !u"e )a ta"e of ra) material becau e mo t of t!e ra) material are peri !able$ 4ence+ KFC do not face t!i i ue o price cuttin" or c!ronic overcapacity i not a problem$ Small firm li%e 4FC mi"!t increa e capacity+ but in t!e lon" run t!ey may uffer due to
GIFT Bu ine Sc!ool Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

Buality+ !ealt! and accountability i ue $ Firm follo)in" trict Buality tandard )!ic! t!e multinational in particular do+ u ually do not face t!e problem+ t!u t!e rivalry in t!e indu try re ultin" from overcapacity remain moderate to lo)$

:i2%"s% (!m.% i !"s and hi+h s "a %+i( s ak%s T!ere eCi t diver e competitor in t!e fa t food indu try a it con i t of local franc!i e to !u"e multinational $ 4o)ever+ t!ey are operatin" for a primary "oal of ma%in" profit $ So+ no firm )ill ma%e a move t!at mi"!t !arm profitability$ 9nd almo t all firm operatin" in t!e indu try are profitable and no one )ould be )illin" to acrifice !i"! return for ome ot!er rea on$ 9pparently+ no one i operatin" for ome ot!er trate"ic ta%e$ T!i ma%e rival to operate for in"le "oal of profitability and !ence t!eir action are not de tructive for eCi tin" rival $ T!erefore+ KFC can ea ily ma%e profitable deci ion $ KFC compete directly )it! companie li%e 8cDonald on product li%e bur"er and c!ic%en variant $ T!e product are t!e ame+ bot! provide fun meal and play place for c!ildren+ bot! provide !ome delivery and bot! occupy prominent location t!rou"!out t!e country$ 1ivalry t!u amon" competitor i not bitter$ 4o)ever+ bot! !ave differentiated t!e e product on t!e ba i of Buality+ ta te+ efficiency etc to po ition t!em elve $ T!e trate"ie be!ind are different$ T!u + t!e rivalry amon" t!em tay moderate$ <4i 3a""i%"s *Cit barrier are economic+ trate"ic+ and emotional factor t!at %eep companie competin" even in time of lo) profit $ T!e eCit barrier for a firm in t!e indu try remain moderate and o doe t!e rivalry$ *Cit barrier can be eCplained a follo)in": *.%(iali-%d ass% s > &i4%d (!s !& <4i

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

KFC doe not !ave !i"!ly pecialiAed a et and t!e nature of a et are uc! t!at t!ey can ea ily be old in t!e mar%et$ T!erefore+ it can ea ily ell it a et + a it purc!a e it fiCed a et from 4anny Penny from out ide Pa%i tan+ and a buyer )ill ea ily pay t!e price to "et t!e e$ Same i t!e ca e )it! ot!er firm N a et u ually do not create an eCit barrier$

* "a %+i( in %""%la i!nshi.s =t !a !i"! trate"ic importance a apart from fulfillin" commitment of ervin" deliciou + fre ! and !y"ienic food and at t!e ame time provide cu tomer )it! t!e ultimate entertainmentN KFC al o play in t!e economic development of Pa%i tan$ 9l o+ it !a relation !ip )it! ot!er companie li%e KP' and Cupola$ For KP' + a KP' claim + KFC ma%e it product more acceptable to people becau e of KFCD brand name and ima"e$ Cupola run KFCD franc!i e in Pa%i tan$ T!erefore+ t!e e trate"ic relation !ip mi"!t ma%e it difficult for KFC to leave t!e indu try$ Firm in t!e franc!i e indu try+ !ence+ do face an eCit barrier a per trate"ic inter relation !ip are concerned$ <m! i!nal Ba""i%"s KFC !a !i"! emotional barrier a pre ently it !a provided employment to approCimately ?,,, individual )!o )ill lo e job in t!e ca e of KFCD eCit from t!e indu try$ So+ mana"ement of KFC+ or any ot!er firm for t!at matter+ mi"!t !o) un)illin"ne to ma%e economically ju tified deci ion due to loyalty to employee and fear for t!eir o)n career $ KFC Pa%i tan i !elpin" t!e people ufferin" from impaired !earin"$ =t i !elpin" t!em accelerate t!eir career development+ per onal and profe ional "ro)t!$ Cupola doe it by empo)erin" t!e pecial per on creatin" role model for t!e re t$ KFC i providin" a platform for t!e di abled youn" ter of Pa%i tan$ =t trive to

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

"ive eBual trainin" and promotion opportunitie to t!e di abled ba ed on merit and )or% performance$ So+ all t!e e emotional tie can ma%e it difficult for KFC to leave$ G!2%"nm%n and *!(ial =%s "i( i!ns T!i i a forei"n country o "overnment cannot impo e any %ind of eCit re triction on KFC and mo t of t!e multi national in bu ine $ 4o)ever+ economic effect )ill be ne"ative and people )ill lo e job $ 8oreover+ t!e 5overnment of Pa%i tan receive over 1 $#, million per mont! from KFC Pa%i tan a direct taCe + and -.E of all food and pac%in" material u ed in K)C *akistan i procured locally+ )!ic! um up to a purc!a e of over 1 $(. million per mont!$ So+ it mi"!t be di coura"ed to leave$ 4o)ever+ t!ere are no re triction a uc! for KFC or any ot!er franc!i e to eCit t!e indu try a far a it doe not !ave any loan it need to pay bac%$

'.6.1 Th"%a !& <n "#

'e) entrant )ill impo e a t!reat to t!e eCi tin" player in t!e indu try$ T!e e entrant may be potential entrant of acBui ition and )ill brin" ne) capacity and re ource and )ill lay foundation for en!anced competition for mar%et !are$ T!e e t!reat to entry are determined by barrier to entry alon" )it! eCpected reaction of t!e eCi tin" competitor $ 9 t!e barrier t!e eCi tin" player increa e+ t!e t!reat of ne) comer to enter t!e mar%et )ill decrea e$ Ba""i%"s ! %n "# =f t!e barrier to entry are !i"! t!e t!reat of entry i lo)$ 4ere+ )e )ill be focu in" on t!e barrier to entry in fa t food indu try to )!ic! KFC belon" $ <(!n!mi%s !& *(al% *conomie of cale refer to reduction in unit price due to lar"e volume produced )!ic! can be a re ult of efficient production+ mar%etin"+ purc!a in" etc$ 9lt!ou"!+ )!en food product are produced at lar"e cale economie of cale occur a fiCed co t i pread over lar"e volume of product + !o)ever+ due to t!e nature of t!e indu try product t!e e economie are con trained by t!e volume of ale $ T!erefore+ t!e e economie of cale are no incentive for eCi tin" firm to %eep ne) entrant a)ay$ 9l o+ t!ere are no by
GIFT Bu ine Sc!ool Pa"e &

et by

Final Project

KFC (Kentucky Fried Chicken)

product t!at are produced to earn incremental revenue t!at mean ne) entrant )ould not !ave to face a co t di advanta"e on t!i account$ 4o)ever+ patent and e tabli !ed brand name provide lar"e economie of cale a t!e e can be !ared acro all company product $ T!at mean t!at ne) entry )ill only !ave to face di advanta"e+ if it )ant to enter in direct competition )it! t!e e tabli !ed firm )!ic! are Buite fe) in Pa%i tan$ T!ere eCi t no vertical inte"ration acro t!e indu try but only fe) e tabli !ed firm li%e KFC it elf$ 4o)ever+ t!i )ould not %eep t!e entrant a)ay a t!e indu try allo) a lot of fleCibility for iAe and cale )it! )!ic! ne) entrie can et up bu ine $ =n conclu ion+ economie of cale in fa t food indu try for e tabli !ed franc!i e bu ine eCi t and may erve a an entry barrier+ and o contribute to)ard buildin" a t!reat to potential entrant $

P"!du( :i&&%"%n ia i!n Product differentiation mean t!at e tabli !ed firm !ave brand identification and cu tomer loyalty$ =n Pa%i tanD fa t3food franc!i e indu try+ product differentiation doe play a role in t!e "ro)t! of a bu ine $ Potential entrant )ill !ave to differentiate li"!tly to capture t!e attention of t!e cu tomer $ =t i !ence not very ea y to enter and operate profitably$ KFC !a differentiated it product on t!e ba i of Food+ fun P Fe tivityH+ providin" numerou variant of it pecial recipe in t!e form of c!ic%en meal $ =t al o offer variou deal to differentiate it product from it competitor $ 9part from t!e product it offer + KFC differentiate it elf on t!e ba i of t!e eCperience it provide : t!e ri"!t c!ic%en+ t!e ri"!t place and t!e ri"!t celebration@ 4ence t!e emp!a i on +we do chicken right,$ Sea onal di count (1amadan deal )+ ale promotion (/fone+ Standard C!artered+ and BareeAe)+ birt!day partie + c!ic%y area and event or"aniAed for ocial re pon ibility (donation for S0S and F9179D) are all )ay of differentiatin" )!at it offer $ KFC al o differentiate ervice in t!e form of t!e dine3in eCperience+ ta%e a)ay and KFC on I!eel $ T!u product differentiation i a tool utiliAed by mo t bu ine e
GIFT Bu ine Sc!ool Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

but not to an eCtent to enter a blue ocean$ T!e core product offered by all remain more or le t!e ameN !ence do not po e a !i"! barrier to entry$ T!erefore+ t!ere i not a !i"! t!reat to entry into t!e indu try$ Firm come in+ differentiate li"!tly and run bu ine e )it!out competin" on product differentiation$ Ca.i al =%?ui"%m%n s Capital reBuirement are t!e financial re ource needed for inve tment to et3up t!e bu ine and to compete$ =t may al o include 1PD+ !uman re ource and mar%etin" co t to differentiate and overcome brand loyalty of competitor $ =n t!i indu try+ capital reBuirement for entry are !i"! becau e franc!i e u ually reBuire a lot of et up co t+ pecially t!e royalty t!ey !ave to pay on land$ Furt!ermore+ for penetration in t!e mar%et+ it mi"!t !ave to incur ome amount on mar%etin" and adverti ement for not only a)arene but differentiation$ T!u + t!e capital reBuirement are !u"e: etup+ plant and eBuipment+ mana"ement and employee + upplier + production+ mar%etin" and promotion etc$ T!erefore+ t!e capital for enterin" t!e indu try i a barrier to entry and po e a t!reat to ne) comer $ A((%ss ! dis "i3u i!n (hann%ls Di tribution c!annel include retail and )!ole ale firm t!at )ould !elp di tribute product to end u er $ =n t!e franc!i e indu try findin" an appropriate place for t!e re taurant+ ometime become an i ue+ but mo tly it remain at a lo) cale$ 9ll ne) entrant if t!ey !ave t!e reBuired capital and re ource do find a place to et t!eir bu ine up$ So+ acce to di tribution c!annel co t for ne) entrant i lo)+ !o)ever+ urely impo ible+ but to find a place in t!e mar%et e tabli !ed firm "o to an eCtent of buildin" t!eir trate"y on t!eir di tribution net)or%$ To come and "ro) a lar"e a t!em i a a ne)comer i not very !ard$ 4ence+ t!e barrier remain lo) ad t!e t!reat !i"!$ C!s disad2an a+%s ind%.%nd%n !& *(al% Competitor mi"!t !ave co t advanta"e ba ed on everal ot!er factor independent of t!eir iAe and economie of cale:
GIFT Bu ine Sc!ool Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

P"!."i% a"# ."!du(

%(hn!l!+#@ 0n t!e )!ole+ t!e indu try !a "ot no product

tec!nolo"y t!at )ould ma%e a real difference in product offered or t!e )ay t!ey offer$ 4o)ever+ t!ere eCi t ome e tabli !ed firm t!at !ave patent for ome recipe $ For in tance+ KFC !a a ecret recipe$ Fa2!"a3l% A((%ss ! "aw ma %"ials@ 1a) material for t!i indu try include bun + bread+ c!ic%en+ oil+ flour+ pice + ve"etable etc$ T!e e material are ea ily available locally$ T!eir procurement i not a !ard ta %$ Fa2!"a3l% 1!(a i!ns@ Fa t food franc!i e mar%et in Pa%i tan i till muc!

un aturated and room for findin" favorable location i !i"!$ 9 "lance at urban area of Pa%i tan and fa t food re taurant located t!ere !o) t!at a lot of mar%et are till not erved$ =n ot!er )ord t!ere are enou"! people in urban Pa%i tan for any re taurant to urvive$ 'e) entrant can ea ily ecure for t!em a favorable location a !oppin" mall and mar%et continue to eCpand$ T!erefore+ t!i barrier doe not nece arily erve a !ield a"ain t ne) entrant $ *ntrant can ea ily enter t!e mar%et and find a favorable location for t!em$ 1%a"nin+ !" <4.%"i%n(% Cu"2%@ Becau e t!i i food3ba ed indu try+ t!e more you coo% t!e more you ma ter it$ 8oreover+ t!o e )!o are ervin" in t!e indu try for o lon" !ave more eCperience about cu tomer ta te+ buyin" be!avior+ )itc!in" option etc$ t!an ne) entrant $ For t!em+ efficient production i ea yN !ence+ unit co t al o decrea e $ KFC !a eCperience of #( year of ervin" in Pa%i tan and more t!an even decade in bu ine $ 8oreover+ it i t!e mo t eCperienced firm in c!ic%en production$ T!erefore+ eCperience curve mi"!t provide ome barrier to entry and decrea e t!reat of entrant $ G!2%"nm%n P!li(#

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

T!ere are certain "overnment re"ulation pertainin" to t!e fa t food franc!i e indu try in Pa%i tan$ Some of t!e reBuirement include 4alal food production and ellin"+ Corporate Social 1e pon ibility+ tandardiAation c!ec% + a te t to prove Buality before enterin" t!e mar%et+ renovation after every > to #, year a mentioned per contract+ taC duty and numerou ot!er certification + e pecially if operatin" on a lar"e cale$ =n "eneral+ t!i barrier i moderate+ ince nearly all t!e companie in Pa%i tan produce 4alal food and contribute to ome eCtent to t!e local ale N t!ey al o fulfill ot!er reBuirement ince enterin" t!e franc!i e indu try$ T!erefore+ entry i not !i"!ly difficult+ and ne) firm can enter t!e indu try ma%in" t!e competition fierce and increa in" t!e t!reat of entry$ KFC complie )it! bot! of t!e reBuirement and provide 4alal food and contribute to t!e local ale up to -.E$ Food and pac%in" material u ed in K)C *akistan i procured locally+ )!ic! um up to a purc!a e of over 1 $(. million per mont!$ <4.%( %d "% alia i!n =n pa t+ retaliation !o)n by e tabli !ed firm !a been Buite lo)$ For in tance+ recent entrie li%e 4FC+ 9FC+ Sub)ay and 4ardee !o) t!e ea e )it! )!ic! t!ey entered$ 9l o+ no major move a"ain t t!em !ave been ob erved from eCi tin" firm + becau e t!ey are already )ell e tabli !ed or reapin" profit $ 'o doubt+ all firm )ill compete a"ain t eac! ot!er to "rab t!e better !are in t!e mar%et+ but ever retaliation !a not been u ually ob erved$ 4ence+ eCpected retaliation i lo) and t!reat of entry i !i"!$ <n "#Ad% %""in+ ."i(% T!e prevailin" price tructure of !u"e companie li%e KFC i a balance of t!e value provided )it! t!e a ociated co t$ *ntrant )ill eit!er !ave to come up )it! a imilar tructure+ )!ic! u""e t providin" Buality product for a !i"! price$ 4o)ever+ mo t product already eCi t in t!e mar%et and o anyt!in" provided by t!e entrant )ould !ave to be )ell differentiated to motivate cu tomer to pay t!e !i"! price$ Since KFC !ad in !ou e ba%in" facility and an efficient value c!ain net)or%+ it can afford to offer product at a rea onable priceN no) tar"etin" t!e middle cla
GIFT Bu ine Sc!ool

a )ell$ =n contra t a developin"

Pa"e (

Final Project

KFC (Kentucky Fried Chicken) cannot afford to offer imilar price for eBually "ood product + !ence )ill uffer

bu ine

a lo $ T!e entry deterrin" price i t!u !i"! and impo e a major barrier to entry$ T!e t!reat of entry !ence become lo)$

'.6.' Ba"+ainin+ P!w%" !& Bu#%"s

KFC a a buyer or t!e cu tomer of KFC can compete in t!e indu try by forcin" do)n price or demandin" !i"!er Buality and more incentive $ T!e follo)in" factor determine t!e bar"ainin" po)er !ou ed by t!e buyer : C!n(%n "a i!n !& 3u#%"s KFC !a a lar"e cu tomer ba e$ =t revenue are not dependent upon t!e buyin" po)er of a in"le cu tomer$ 4ence+ t!e cu tomer buyin" po)er i lo) unle company cau e di tre a major action of t!e to a "roup of buyer li%e t!e incident of opera coupon + )!ere

t!e cu tomer "ot up et by t!e non3functionin" of t!e coupon and KFC !a to reimbur e t!em alon" )it! a public apolo"y$ Buyer al)ay !old ufficient po)er to bar"ain )it! t!e firm$ 4o)ever+ if t!e cu tomer ba e in lar"e+ t!e ale and profitability i not affected by retaliation by a mall "roup$ =f t!e "roup i lar"e !o)ever+ t!e bar"ainin" po)er increa e $ P"i(% s%nsi i2i # T!e population in Pa%i tan i price en itiveN people )ould rat!er "o for imilar product ellin" for fe)er price t!an buyin" an eCpen ive one$ 9l o+ t!ere are lot of alternative to )it!in and out ide t!e fa t food indu try a a )!ole$ I!ile a brand loyal cu tomer may pay )!atever price KFC a % for a cu tomer loo%in" for ju t "ood fa t food )ould "o to a place )!ere !i need i ati fied )it! t!e lea t amount of co t incurred$ 4ence+ price en itivity "ive a lot of po)er in t!e !and of t!e buyer $ P"!du( s a"% undi&&%"%n ia %d Product in t!e fa t food remain undifferentiated+ a di cu ed before$ 8ar%etin" effort !elp differentiate t!e product a bit and build brand a)arene N it doe not !elp cu tomer
GIFT Bu ine Sc!ool Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

loc% up )it! t!e firm a t!ey can find imilar product el e)!ere$ T!ere are ome firm offerin" a different ran"e of product + li%e Sub)ay+ )!o !ave mana"ed to differentiate t!eir product from t!e re t of t!e indu try+ tar"etin" t!e !ealt! con ciou people$ 4o)ever+ if )e tal% only about KFC and ot!er c!ic%en peciali t + t!e product remain more or le t!e ame$ Ta te+ in t!e Pa%i tani mar%et doe matter+ but t!e pro pect i not tron" enou"! to top people from )itc!in"$ *veryone i )illin" to "o and try food from a ne) comer$ T!erefore+ a t!e differentiation it elf+ t!e bar"ainin" po)er al o remain moderate$ *wi (hin+ (!s s !" su3s i u i!n (!s s T!ere i no monetary co t a ociated )it! )itc!in" from KFC$ 9 di cu ed earlier+ )itc!in" co t depend upon buyer be!avior@ t!eir eCtent of price en itivity or inclination to)ard preferred ta te etc$ T!o e emotionally connected )it! it mi"!t uffer )itc!in" co t of p yc!olo"ical nature concernin" t!eir emotional attac!ment )it! t!e brand$ 4o)ever+ t!at doe not nece arily decrea e t!eir bar"ainin" po)er a t!ey till can )itc! to ot!er brand at t!eir di cretion$ T!erefore+ t!e bar"ainin" po)er of a in"le buyer i not muc!+ but on t!e )!ole t!ey !ave "ot bar"ainin" po)er ba ed on t!eir buyin" be!avior+ price en itivity and lo) )itc!in" co t

'.6., P"%ssu"% &"!m *u3s i u %s

Sub titute are t!e product t!at can perform t!e ame function a t!e indu try product$ For fa t food t!e ub titute are !ome3made3meal + ready3 to 3coo% meal offered by Knorr+ 8on Sal)a+ K P 'D C!ic%en and local vendor + ot!er re taurant a t!ey could c!oo e anyone of t!e e food over fa t3food$ 8oreover+ increa ed !ealt! con ciou ne *wi (hin+ (!s s I!en a cu tomer )itc!e from a product to it ub titute+ t!en !e !a to bear a )itc!in" co t$ =f t!e co t i !i"! t!en t!e probability of cu tomer to )itc! )ill be lo)$ =n t!e indu try+ t!ere i lo) )itc!in" co t a cu tomer do not !ave to incur any
GIFT Bu ine Sc!ool Pa"e &

!a lead people to )itc! from

fa t food to !ealt! oriented food a offered by Sub)ay or made at !ome$

Final Project

KFC (Kentucky Fried Chicken)

additional co t to )itc! from a product$ T!erefore+ t!ere i increa ed pre ure of ub titute becau e cu tomer can ea ily )itc! from product on t!e ba i of lo) price $ =n t!e mar%et t!ere are numerou ub titute available for fa t food$ Firm li%e KP'D and 8enu offer 1eady3to3Coo% meal $ T!e lon" ran"e of product offered by t!e e firm provide be t ub titute for KFC$ =n price en itive mar%et li%e Pa%i tan+ product of comparable Buality )it! lo) price attract cu tomer $ Same i t!e ca e )it! KFCN t!e ub titute available !ave lo) price+ comparable Buality and lon" eCpiry life t!an t!e product of KFC$ 8oreover+ local re taurant and cafR al o deal a ub titute of KFC$ 4ealt! and obe ity i ue %eep ri in" )!ic! a"ain pu ! people to)ard !ealt!y eatin" and fa t food i not con idered to be one$ 0n t!e )!ole+ t!e )itc!in" co t remain lo) and pre ure from ub titute !i"!$ Bu#%" in(lina i!n ! su3s i u %s Buyer !ave "reater inclination to)ard ub titute becau e t!ey are con idered !ealt!ier and obe ity i ue and more !ealt! con ciou people )ould rat!er move to ot!er ub titute $ KFC face t!i t!reat+ becau e it can lo e it loyal cu tomer a !ealt! con ciou ne lo) fat content$ 'evert!ele + fa t food remain a increa e$ =t !a made effort by adverti in" and launc!in" it tran 3fat meal )!ic! !ave uc! and people refrain from eatin" it ub titute t!u e pecially if advi ed by a doctor$ T!e buyer inclination to)ard increa e + increa in" t!e pre ure from ub titute too$ *u3s i u %9s ."i(%A?uali # "ad%A!&& 9naly i of ub titute !o) t!at mo t of t!e product !ave attractive price3Buality combination$ 9l o+ ran"e of product at different price i available$ 4ence+ price3Buality combination offered by ub titute may tend to motivate cu tomer to !ift+ e pecially )it! increa in" !ealt! concern $ So+ KFC !a to face t!e pre ure from t!e ub titute available in t!e indu try it belon" to$ 9lt!ou"!+ KFC claim t!at it provide Buality c!ic%en ba ed on ecret recipe t!at no el e !a it+ !a already been replicated to an eCtent+

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

by it competitor $ So+ it can increa in"ly lo e it cu tomer due to above mentioned factor $ T!e pre ure from ub titute !ence ri e $

'.6.5 Ba"+ainin+ P!w%" !& *u..li%"s

Supplier of KFC include K P ' + Pep i Co+ 4ilal+ 'e cafe and bread and bun are produced internally$ 8arination i imported from California+ =ndia and Dubai$ T!e upplier )it!in Pa%i tan can compete in t!e indu try by rai in" price or reducin" Buality of produced "ood or ervice $ *u..li%" (!n(%n "a i!n =n Fa t food indu try t!ere are lot of upplier available a t!e ra) material needed for t!e end product are )idely available acro Pa%i tan$ Firm can ea ily )itc! upplier $ upplier are different vendor indu try$ 4o)ever+ uc! a 0verall+ upplier concentration of c!ic%en in Pa%i tan i lo)+ but drin% concentrated$ So+ t!e bar"ainin" po)er differ acro

KFC produce ba%ery product in3!ou e$ 4o)ever+ Supplier of KFC c!ic%en i KP'D and drin% are upplied by Pep i+ in Pa%i tan$ 9 for c!ic%en ot!er alternative Jenit! and 8enu are t!ere$ KFC !a to rely olely on Pep i for drin% becau e t!ere i no ot!er Buality upplier eCcept Coca3cola t!at i t!e major upplier to 8cDonald $ 4ence+ t!e bar"ainin" po)er of Pep i i !i"!$ =t i difficult for KFC to find an eBuivalent upplier$ 4o)ever+ bot! bein" multinational benefit from eac! ot!er$ K P 'D too+ bein" certified for Buality and 4alal food po e e ome bar"ainin" po)er but option are available and in t!e ca e K P 'D i t!e beneficiaryN to be a ociated )it! a !u"e company li%e KFC$ 9mon" t all t!e upplier + maCimum bar"ainin" po)er i )it! Pep i+ al o it i tron"e t multinational$ K n 'D come econd$ 1ecently+ a firm i aid to launc! )!ic! )ill provide c!ic%en to t!e re taurant at a muc! convenient price t!an K n ' + and at t!e ame Buality$ =f t!e firm i )!ic! K n ' po e e $ ucce ful+ it mi"!t !urt t!e bar"ainin" po)er

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

*i-% !& su..li%" =n indu try t!ere are upplier of different iAe $ Smaller t!e iAe of certain upplier lo)er t!e bar"ainin" po)er of t!e upplier$ Pep i i !u"e and )onDt be affected if KFC topped buyin"$ KFC on t!e ot!er !and cannot afford to let "o of Pep i+ e pecially )!en Co%e i already ervin" 8cDonald and variou ot!er competitor $ 'ot t!at Co%e )ill refu e to upply to KFC+ t!e firm it elf )ill prefer to be different from it major competition$ KFC i major buyer of KP' )!ic! )ould not )ant to lo e partner !ip )it! KFC+ e pecially )!en ne) c!ain li%e Jenit! and 8enu are comin" up$ 9l o+ affiliation )it! KFC ma%e it more acceptable to people$ 0n t!e ot!er !and+ KFC doe not !ave an option to buy from a )ell %no)n and certified c!ic%en upplier$ Jenit! i ne) and 8enu i al o not a lar"e and popular a K n ' $ T!u + upplier overall do po e bar"ainin" po)er$

Bni?u%n%ss !& s%"2i(%CP"!du( T!e product and ervice offered by t!e upplier are ali%e a t!e product t!ey upply are naturally produced t!at t!ey do not produce artificially$ So+ t!e uniBuene of t!e product and ervice i not t!ere$ 4o)ever+ KFC !ave c!oice to buy from bi" c!ic%en upplier li%e Jenit!+ 8enu and Knorr+ t!ey are not perfect alternative for KFC upplier + becau e KP' !ave better tandard and it i 49CCP+ it !elp build KFCD ima"e a 4alal+ and it al o "ot brand of t!e year a)ard in &,,-$ 9ll t!e e factor ma%e it be t for KFCD brand ima"e$ T!e e factor can ma%e KP' !and !a no uniBuene ot!er $ *wi (hin+ (!s s ! KFC tand apart and "ive it ome bar"ainin" po)er$ Pep i too+ of cour e+ i uniBue in )!at it offer $ 4alal on t!e ot!er in ervice$ KFC could ea ily !ift it for Knorr or 'ational$ !ave more ri"!t to bar"ain t!an t!e 4ence+ t!e upplier providin" ome uniBuene

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

KFC faced t!e i ue of not providin" !alal c!ic%en ome year bac%+ )!ic! deteriorated it ima"e$ But due to it pre ent upplier+ K P 'D + )!ic! i lar"e t Pa%i tan3ba ed company and %no)n for be t practice for lau"!terin" but al o follo) trin"ent Buality tandard !a re"ained t!e tru t of public$ =ndirectly KFC !a ba ed it !alal c!ic%en on K P 'D brand name$ So+ )itc!in" co t for KFC can be !i"!er if it )itc!e from KP' and even Pep i+ for bot! brand complement eac! ot!er$ T!e e factor rai e bar"ainin" po)er of it upplier $

Th"%a !& &!"wa"d in %+"a i!n For)ard inte"ration by upplier can po e a major t!reat to t!e company to )!ic! it i upplyin"+ e pecially )!en not many alternative are available$ K P ' can tart t!eir o)n re taurant and fa t food c!ain$ T!i may po e a t!reat to KFCD Pa%i tan and t!u "ive ome bar"ainin" po)er to t!e upplier$ upply of c!ic%en in

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

'.7

Dalu% Chain Anal#sis

Primary activitie are t!e eBuence of activitie t!rou"! )!ic! ra) material are tran ferred into benefit enjoyed by cu tomer $ I!ile upport activitie provide input t!at allo) t!e primary activitie to ta%e place )!ic! in turn improve coordination acro t!e firm (4ill and 6one + #-->)$ C$4$9$8$P$S$ tand for cleanline + !o pitality+ accuracy+ maintenance+ product Buality and peed of ervice$ =t i found t!at KFC !a it core competence in it C$4$9$8$P$S$ operatin" y tem to en ure food Buality+ ervice tandard to earn cu tomer mile )it! more value+ improved ervice and better facilitie $ =n addition+ by u in" Colonel 4arland Sander to build up it di tinctive brand ima"e ma%e KFC be one of t!e )ell3reco"niAed brand in fa t food indu try$ and ac!ieve efficiency )it!in

P"ima"# a( i2i i%s

In3!und 1!+is i(s =n Pa%i tan to en ure t!e Buality of product + mo t of in"redient of KFC are imported from ot!er countrie in tead of Pa%i tan$ I!en t!e c!ic%en !ave been ea oned+ t!ey )ould be tran ported to t!e branc!e in a daily ba i $ Fre ! in"redient are provided to t!e branc!e and !ence it )ould en ure t!e Buality of t!e food$ 4o)ever+ out ourcin" of lo"i tic ervice+ it may increa e t!e tran portation co t and in turn )ould be added into t!e co t of food$ =t lead to an increa e of t!e food co t$ 0.%"a i!n T!e foundation of KFC relation !ip )it! franc!i ee i built up by t!e partner !ip pact$ =t tate t!at it "et franc!i ee input and involvement before deci ion are made$ =t i al)ay mindful of franc!i ee economic in all it recommend by e tabli !in" clear+ cu tomer3ba ed y tem performance tandard and providin" opportunitie fir t and foremo t to it current partner $ =n order to en ure t!e con i tent food Buality and ervice tandard+ it al o build a one y tem mentality at it re taurant upport center $
GIFT Bu ine Sc!ool Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

KFC !a a product eCcellence y tem to en ure Buality ra) material + pac%a"in"+ eBuipment and ne) product t!at deli"!t cu tomer $ =n order to en ure con i tent Buality+ KFC al o eCecute in"redient and eBuipment pecification $ Food i fre !ly coo%ed and fried c!ic%en t!at are not old for more t!an <. minute )ould be )it!dra)n from ale to en ure t!e food Buality$ =t al o !a it brand tandard product de i"n + uc! a di tinctive pac%a"in" of t!e Buc%etH of c!ic%en$ T!e y tem )it! clear in tructed procedure )ould effectively "uide t!e taff to do operational )or%+ !ence it en ure Buality con i tence in eac! KFCD branc!e $ Ma"k% in+ and *al%s Brand eCcellence y tem of KFC !elp to en ure continuin" !i"! 7um@ Brand monitor and promote t!e value of it brand in t!e mar%et by clearly communicatin" t!e per onality of KFC$ By u in" animated Colonel Sander to mar%et t!e brand+ it build up a brand ima"e of 9merican tyle c!ic%en eCpert in 4on" Kon" and ad!ere to it primary concept )it! friend c!ic%en a core product $ T!e lo"an u ed i no) Ie do c!ic%en ri"!tH and appear on po ter adverti in" in ne) paper and ma"aAine $ T!e )eb ite provide KFC )it! an additional mar%etin" avenue to promote KFCD eCten ive product and pecial on offer$ T!e ite )ill allo) KFC to furt!er tren"t!en it icon and continue Colonel Sander and t!e companyD pirit and !erita"e$ KFC al o create a di ciplined po itionin" trate"y$ =t po ition it elf a an up3 cale+ eat3in and Buic% ervice re taurant t!at tar"et cu tomer from #; to (- year old )it! emp!a i on youn" a"e "roup includin" office )or%er and youn" eCecutive $ KFC u ually adverti e pecific product )it! con i tent campai"n to pull t!o e product to"et!er$ =nte"rated mar%etin" trate"ie )ould en!ance effectivene *%"2i(% KFC commit to deli"!t every cu tomer on every vi it in every re taurant$ For it cu tomer + it i ob e ed to "o t!e eCtra mile to ma%e t!em !appy$ =n order to develop re taurant eCcellence y tem+ 7um@ Brand provide upportin" pro"ramme needed to run a re taurant and ati fy cu tomer $ KFC !a to follo) "lobal operatin" tandard + C$4$9$8$P$S$ to define t!e re taurant eCcellence$
GIFT Bu ine Sc!ool Pa"e (

of promotion$

Final Project

KFC (Kentucky Fried Chicken)

*u..!" a( i2i i%s

P"!(u"%m%n T!e franc!i e a"reement provide for buyin" approved eBuipment+ ervice )are and t!e coo%in" pice from KFC approved upplier $ Iit! CentraliAed di tribution of food purc!a in" and )are provider+ t!i "ive KFC "reat tren"t! a Buality could be en ured$ Co t control could al o be ac!ieved a KFC purc!a e t!eir upplie in bul% directly$ )uman "%s!u"(%s mana+%m%n 9lt!ou"! !uman re ource mana"ement i carried out on a decentraliAed ba i for recruitment and !irin" operational taff+ KFC doe provide trainin" for t!e mana"ement team$ T!ey )ould be !ired in a centraliAed ba i by t!e 4ead 0ffice in Karac!i and Ma!ore$ KFC train mana"ement for people plannin" proce to identify and plan taffin" and development need $ 1e taurant !uman re ource tool %it a i t mana"er for !uman re ource i ue at re taurant level$ T!e trainin" pro"ram )ould provide practical practice and u eful information to taff$ =t could en ure Buality taff to provide Buality ervice $ =n it mi ion+ KFC believe in people+ tru t in po itive intention + encoura"e idea from everyone and actively develop a )or%force t!at i diver e in tyle and bac%"round$ =t celebrate t!e ac!ievement of ot!er + coac! and upport employee $ =t al o eCecute )it! po itive ener"y and inten ity )it!in t!e company and tay a)ay from bureaucracy$ Team to"et!er+ team apartH indicate t!at it practice team)or% after collaborative debate$ =n eac! branc!+ t!ere i In&"as "u( u"% a C$4$9$8$P$S board to reco"niAe employee )!o are able to perform up3to3 tandard ervice $

GIFT Bu ine

Sc!ool

Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

=n order to a i t t!e re taurant plannin" and mana"ement practice + KFC tart )it! a trate"ic analy i of t!e opportunity by mar%et development trate"ic plan$ KFC map demo"rap!ic to determine )!ere to develop and identify re taurant location and provide a et mana"ement to determine t!e optimum concept miC and number of location $ Con truction and project mana"ement by 7um@ Brand !elp to de i"n and build individual re taurant $ Iit! mar%et development y tem of 7um@ Brand+ t!at KFC )ould try to locate in convenient location (Steele+ #--;)$

!
1.1

Stakeholder Anal%sis
In %"nal * ak%h!ld%"s !& KFC
Mana+%"s 8ana"er of KFC )ant t!e company to ucceed Better c!ance of promotion$ T!ey %no) t!at Succe ful Company may re)ard t!em by payin" t!em !i"!er alarie + "ivin" t!em a bonu + Better frin"e benefit and if company fail t!ey could lo e t!eir job$ <m.l!#%%s *mployee of KFC )ant t!e company to ucceed more li%ely to "et better pay+ c!ance of promotion+ Better facilitie $ Becau e t!ey %no) if t!e KFC fail + t!en company )ill t!reaten t!eir job + FreeAe t!eir pay+ and po ibly cut t!eir )a"e $ *u..li%"s KFC !a numerou upplier amon" )!ic! K P 'D upplie t!e major c!ic%en to KFC and t!o e c!ic%en are furt!er proce ed to erve into t!eir c!ain of re taurant all over t!e Pa%i tan$ Proper tep and met!od are applied to evaluate t!e upplier and t!eir product a upplier lar"ely affect t!e overall operation and bu ine of KFC$ Supplier

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken) for t!eir

mu t )ant t!e company to ucceed to "et more order for t!em and more ucce bu ine + a KFC i t!e upplierD main buyer of t!eir c!ic%en in !u"e ma $

1.1 <4 %"nal * ak%h!ld%"s !& KFC

Cus !m%"s Cu tomer do !ave a ay in t!e )or%in" of t!e brand t!ey are o loyal to$ 'o company can afford to lo e it cu tomer $ 9lt!ou"!+ t!e cu tomer ba e i !u"e and one in"le cu tomer doe not !ave muc! bar"ainin" po)er+ KFC trie to li ten to eac! and every buyer via feedbac% and opinion card $ 8a cu tomiAation i )!at KFC i tryin" to do to ma%e all cu tomer !appy t!u it ma%e it a point to do )!atever i po ible to cater to t!e need of t!e cu tomer $ Cu tomer continue to return to t!e KFC becau e of t!e "ood Buality and ame ta te of t!eir food product $ KFC !a many fan and continue to "o to provide better cu tomer ervice $ KFC provide t!eir cu tomer be t Buality+ "ood ervice and t!ey al)ay introduce innovative product to attract t!eir cu tomer $ T!atD )!y cu tomer of KFC are loyal$ KFC !a !i"! emotional barrier a pre ently it !a provided employment to approCimately ?,,, individual )!o )ill lo e job in t!e ca e of KFCD eCit from t!e indu try$

GIFT Bu ine

Sc!ool

Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

G!2%"nm%n 5overnment i t!e eCternal ta%e!older of t!e KFC i$e$ )!en a KFC bu ine t!e more profit t!e bu ine bu ine ucceed N ma%e t!e more taCe it pay $ T!e 5overnment of Pa%i tan

receive over 1 $#, to ## million per mont! from KFC Pa%i tan a direct taCe $ But if t!e of KFC drop off t!en )or%er are made unemployed$ Pre ently KFC !a provided employment to over #&,, Pa%i tani + )!ic! add up to approCimately ;,,, individual directly dependent on KFC Pa%i tan$

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

Recommendations
P"!du( :i&&%"%n ia i!n
KFC face a lot of t!reat from it ub titute + e pecially )it! "ro)in" !ealt! concern amon" it cu tomer $ 4ealt! and obe ity i ue a ociated )it! KFC food !ave diluted t!e tru t people once !ad in t!em$ 4ence+ t!e rea on+ ub titute pre ure i t!ere$ KFC !a tried launc!in" alad and promoted production u in" ve"etable oil in t!e pa t in forei"n companie $ =t !ould eCpand it product line and add variety into it to cater t!e demand of t!i mar%et in Pa%i tan$ KFC c!oo e differentiation trate"y by emp!a iAin" t!e preparation of food )it! !i"! Buality in"redient a )ell a uniBue recipe and pecial ea onin" to provide appealin"+ ta ty and attractive food at competitive price $ 9 t!e diver ity of product of it competitor + it i u""e ted t!at KFC !ould provide more innovative food product in in t!e fa t food indu try$ =t may increa e t!e variety of order to "ain it competitivene al o increa e t!e variety of menu$ So+ KFC !ould try and differentiate it product on ot!er line t!an only c!ic%en to capture ot!er e"ment in t!e fa t food indu try$ Product differentiation in t!e fa t food indu try eCi t but i not Buite !i"! and "enerally t!e product are perceived a commoditie o t!eir c!oice lar"ely depend on price and ervice o t!e pre ure to en ure competitive price and ervice e calate$ 9l o+ )itc!in" co t are Buite lo)+ a cu tomer do not !ave to incur any co t for not buyin" from a firm$ T!i indu tryD cu tomer are c!aracteriAed a !i"!ly price en itive o t!ey can ea ily )itc! to a product t!at i li%e in Buality and ervice but offered at lo)er price$ Product differentiation mean t!at e tabli !ed firm !ave brand identification and cu tomer loyalty$ =n Pa%i tanD fa t3food franc!i e indu try+ product differentiation doe play a role in t!e "ro)t! of a bu ine $ Potential entrant )ill !ave to differentiate li"!tly to capture erved item

menu product and "ive cu tomer more c!oice $ Different pac%a"in" of it menu may

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

t!e attention of t!e cu tomer $ =t i !ence not very ea y to enter and operate profitably$ KFC !a differentiated it product on t!e ba i of Food+ fun P Fe tivityH+ providin" numerou variant of it pecial recipe in t!e form of c!ic%en meal $ =t al o offer variou deal to differentiate it product from it competitor $ 9part from t!e product it offer + KFC differentiate it elf on t!e ba i of t!e eCperience it provide : t!e ri"!t c!ic%en+ t!e ri"!t place and t!e ri"!t celebration@ 4ence t!e emp!a i on S)e do c!ic%en ri"!tD$ 4o)ever+ t!e entire po itionin" i ba ed upon one in"le ecret recipe )!ic! if eluded by one of t!e competitor can cau e eriou dama"e to t!e brand$ T!erefore+ t!e bu ine t!ou"! profitable i ri %y$ Product in t!e fa t food remain undifferentiated+ a di cu ed before$ 8ar%etin" effort !elp differentiate t!e product a bit and build brand a)arene N it doe not !elp cu tomer loc% up )it! t!e firm a t!ey can find imilar product el e)!ere$ T!ere are ome firm offerin" a different ran"e of product + li%e Sub)ay+ )!o !ave mana"ed to differentiate t!eir product from t!e re t of t!e indu try+ tar"etin" t!e !ealt! con ciou people$ 4o)ever+ if )e tal% only about KFC and ot!er c!ic%en peciali t + t!e product remain more or le t!e ame$ Ta te+ in t!e Pa%i tani mar%et doe matter+ but t!e pro pect i not tron" enou"! to top people from )itc!in"$ *veryone i )illin" to "o and try food from a ne) comer$ So KFC !ould do differentiation$ T!ey !ould al o try t!e local de i ta te addre in" t!e de i food lover + t!u it )ill !elp to increa e t!eir mar%et !are$

B% %" (!mmuni(a i!n (hann%l

Mac% of communication in t!e operation )ould lead to many problem $ =ncon i tency of product and ervice may occur due to mi under tandin" of different internal department $ =t i t!erefore recommended t!at KFC !ould provide more communication c!annel for "at!erin" opinion o a to improve t!e ervice Buality$ Daily briefin" may be !eld by branc! mana"er in order to %eep cre)member %no)in" up3to3date information in a timely manner about t!e operation+ promotion and direction of KFC$ =t may !elp to improve t!e communication bet)een mar%etin" and operation and !ence minimiAe incon i tency of ervice in t!e re taurant c!ain$ =nformal ta tin" of ne)
GIFT Bu ine Sc!ool Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

product for employee may al o !elp to "at!er opinion on !o) to promote t!e product a cre)member directly contact )it! cu tomer $ T!ey may be t!e direct ource to "at!er cu tomer D opinion about product $ =t t!erefore may ave mar%etin" bud"et to promote on unpopular menu item and concentrate on public accepted food product and in turn en!ance ale $

<nhan(%m%n !n 2alu% !& ."!du( and s%"2i(%s

9 !o)n in t!e trate"ie of KFC+ it trie to minimiAe t!e co t + t!e decentraliAed trainin" for cre)member + t!e bul% purc!a e of production in"redient and material and o fort!$ 4o)ever+ a t!e co t of food product are !i"!+ KFC may not be able to decrea e price of it food product to maintain it competitivene mar%et$ =n t!e ot!er )ord + co t leader !ip i not a bu ine =n tead of competin" on price+ it i in t!e fa t food trate"y t!at it mainly ta%e $

u""e ted t!at KFC !ould en!ance t!e value and omet!in" t!at cu tomer

maintain t!e Buality of it product and ervice $ Bi""er portion of food may eliminate t!e eCpen ive impre ion for it product $ Fuality i al)ay KFC may !ave more u tainable competitivene loo% for$ Iit! uniBue recipe and ta ty c!ic%en a )ell a ot!er innovative menu item + ac!ieved by it differentiation trate"y$

Ad!. di&&%"%n ."i(in+ s "a %+# ! a "a( h% (us !m%"s

Price i al)ay a primary concern for t!e cu tomerN t!erefore+ t!ey !ould adopt certain trate"y to attract t!e cu tomer $ 9nd it can only be done by lo)erin" t!e price $ =t could be by introducin" ome di count pac%a"e for familie + employee + tudent or re"ular cu tomer $ T!e member !ip card can be u ed to provide certain eCtra value to t!e cu tomer$ =t can "ain u tainable competitive advanta"e by eit!er co t or differentiation$ =f you !ave co t advanta"e you can cut your price )!ic! )ill "enerate !i"! ale volume and t!i )ill ultimately re ult in !i"!er profit $ 7ou can "et co t advanta"e becau e of economie of cale$ =f firm ac!ieve differentiation+ it can c!ar"e premium price and "ain !i"!er mar"in $
GIFT Bu ine Sc!ool Pa"e &

Final Project

KFC (Kentucky Fried Chicken)

<n2i"!nm%n &"i%ndlin%ss
=t can develop a competitive advanta"e for it elf by introducin" environment friendline concept a it !a been introduced in 'ort!ampton /S9$ T!e re taurant i de i"ned to environmental "oal t!at include cuttin" ener"y and )ater con umption by (,E and reducin" C0& emi ion$ 0t!er t!an t!i i an effort to reduce it pac%a"in" by #<,, ton + KFC i no) )itc!in" from cardboard to recyclable and biode"radable paper )rappin" for ome it product $ =t can tart producin" it o)n biode"radable paper and reduce co t due to economie of cale$

G%!+"a.hi( In(um3%n(#
9 far a placement of t!e product i concerned+ it i an important factor+ for a company to increa e it mar%et !are+ by tar"etin" t!e ri"!t cu tomer$ KFC need to !ave more outlet + at commercial area $ =t )ill !elp to tar"et t!e actual a )ell a t!e potential cu tomer $ 8obile outlet may be an effective addition a )ell$ 5eo"rap!ic incumbency can be anot!er trate"y by )!ic! it can "ain advanta"e$ Pa%i tani fa t food mar%et i till un aturated and t!ere are ome urban an mo t of rural area )!ere t!ere i no outlet to erve t!i need o KFC can u e "eo"rap!ic incumbency advanta"e !ere and open up outlet in t!e e area + fulfill t!e demand of t!i mar%et and increa e it mar%et !are$

P"!m! i!nal Cam.ai+ns

KFC !a lar"e cu tomer eBuity+ but bein" a mar%et ymbol+ a company !ould trive for !avin" more actual cu tomer $ KFC !ould )or% for !avin" more olid mar%etin" department $ T!ey !ould or"aniAe and run t!e proper adverti ement campai"n$ =t )ould definitely be an incremental factor for t!eir ale $ T!ey can al o u e t!e brand promotion $ T!ey can et up t!e promotional campai"n $ 9ll t!ey need i an effective mar%etin" department to facilitate t !e promotional activitie $

7a#s &!" +a h%"in+ (us !m%" &%%d3a(k

GIFT Bu ine Sc!ool Pa"e (

Final Project

KFC (Kentucky Fried Chicken)

9 mentioned in mar%etin" trate"y+ mar%etin" team relie on cu tomer D feedbac% for c!oo in" t!eir mar%etin" promotion$ Cu tomer D feedbac% mean !i"! ale volume and po itive ale revenue$ =t+ !o)ever+ may not reflect t!e po itive cu tomer D feedbac% on ale $ I!enever a ne) product i out in t!e mar%et+ it may lead to udden ale increa e of t!at particular product a cu tomer may )ant to try omet!in" ne)$ 4o)ever+ it may not mean t!at t!e product i popular becau e product may be a fad$ =t t!erefore i u""e ted t!at mar%etin" team in KFC !ould carry out more compre!en ive mar%et re earc!e on product development$ Branc! mana"er or public relation officer could ta%e a c!ance to communicate )it! cu tomer in t!e re taurant and collect t!eir feedbac% on t!e product a )ell a ervice $ To increa e t!e re pon e rate+ coupon or ot!er ouvenir could be "iven to cu tomer $ *mployee are al)ay one of t!e ource to "at!er cu tomer D feedbac%$ =nformal meetin" may be !eld for operation team in order to "at!er t!e cu tomer D re pon e on ne) product and ervice $ =t )ould lead to a muc! more clear direction for product development rat!er t!an %eep introducin" ne) product )it! uncertain popularity$

1a(k !& <m.l!#%% T"ainin+

Proper Trainin" of Staff en"a"ed in maintenance of ervice Buality !ould be provided to deal all uc! i ue at local level$ 9ccordin" to t!e mana"er+ ometime an i ue re"ardin" t!e ervice !appen $ 9t pre ent t!ey are not focu in" on t!e trainin" in t!eir ome outlet + o t!ey !ould provide proper trainin" to t!eir employee becau e in fa t food: the &er1ice i& %ithin the )inute$

:%&%nsi2% Ta( i(s

Mi%e every company KFC i al o vulnerable to competitor of defen ive tactic : 1ai in" tructural Barrier =ncrea in" eCpected retaliation Mo)erin" t!e inducement to attac%
GIFT Bu ine Sc!ool Pa"e (

o it can adopt t!e t!ree type

Final Project

KFC (Kentucky Fried Chicken)

=t can t!e rai e t!e tructural barrier by #$ Fill product or Po itionin" 5ap : T!ey can fill t!e e product "ap by introducin" a variety in t!eir menu$ T!ey !ould include !ealt!y food a con umer no) a day are becomin" !ealt! con ciou $ T!ey can po ition t!eir product t!rou"! adverti ement by carefully electin" t!eir tar"et mar%et and u in" inte"rative mar%etin" to fill t!e po itionin" "ap$ &$ Defen ively increa e t!e cale of economie : T!ey can increa e t!eir cale of economie o t!at t!ey can c!ar"e fe)er price to increa e t!eir ale volume and ac!ieve !i"!er mar"in $ *conomie of cale !elp to ta%e co t advanta"e$ ($ Defen ively increa e t!e Capital reBuirement: T!ey can brin" in more inve tor and up"rade t!eir outlet $ 0pen outlet in mar%et )!ic! !ave yet not been approac!ed and ta%e incumbency advanta"e t!ere$ <$ Foreclo e alternative tec!nolo"ie : =tD a tec!nolo"ical era and tec!nolo"y can !elp you "ain competitive advanta"e$ T!ey !ould find and implement alternative tec!nolo"ie to "et co t advanta"e and do differentiation $

In("%asin+ <4.%( %d =% alia i!n 3# <s a3lish 3l!(kin+ .!si i!ns. (e$"$
Price cut ) Price cut can be done )!en you !ave co t advanta"e )!ic! can come from economie of cale+ Oertical lin%a"e )it! t!e value c!ain of upplier and c!annel + "eo"rap!ic location and di cretionary policie %eepin" in mind KFC$

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

-.hibits
<4hi3i 1

*70T Anal#sis 0..!" 7%akn%ss%s * Th"%a "%n+ uni s hsi%s

Competition Mac% C!eap of and focu ea from on y availability 1e ot!er earc! international P ofDevelopment labor outlet KFCG ecret recipe =mported =ncrea *ntrance e con of ra) 'e) umption material competitor of fa t food Brand *Buity =nfleCibility Con 4i"! umer political prefer of in price tabilityKuncertainty 9ll under ma%e oneitroofH unaffordable to 0lde t and fine t in Bu ine middle in" *Cpand =ncrea cla t!eir inflation people$ )eet product rate 4i"! 5ood)ill 4i"! rate 0pen 4ealt! more Trend on outlet a)ay t!e price from fried a compared food to t!e ot!er Doe not !ave any Core competitor =n c!ic%en brand more Capture C!an"in" cu tomer cu tomer demand by decrea in" t!e price of ervin" t!eir product event badly affected =nternational 1an% !i"!e t amon" all c!ic%en re taurant /pdatin" Di ea e li%e t!eir bird flu re taurant + Balanced menu+ C!ain for it convenience and menu variety cu tomer focu and =ncrea e delivery ervice Moyal cu tomer =nteractive relation !ip mar%etin" 9dvanta"e of bein" a 8ultinational 0r"aniAation

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

<4hi3i 2

Mi(ha%l P!" %"9s &i2% &!"(%s

Highswitching Low economies of concentration scale to small size concentration costs Large Moderate High Uniqueness priceproduct buyer of differentiation sensitivity inclination product high to Moderate High low capital requirements product sensitivity High switching High access differentiation towards costs price to distribution Low quality High switching threat trade of Moderate costs off forward integration government policies

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

<4hi3i '

GIFT Bu ine

Sc!ool

Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

1.

References
!ttp:KK)))$planetfeedbac%$comK%entuc%yTfriedTc!ic%enKmenuTc!oice KinfuriatedTbyTc ommunicationTproblem TatT%fcK(#;(&!ttp:KK)))$au trade$"ov$auKFood3to3Pa%i tanKdefault$a pC !ttp:KKt!efinancialdaily$comK'e) Searc!1e ultK'e) Searc!Detail$a pCU'e) =dV-&,<> !ttp:KKpa%net$netKeCpendin"3in3pa%i tani3food3 ectorK

!ttp:KK)))$%fc$comKmenuK alad $a p !ttp:KK)))$%fcpa%i tan$comK !ttp:KK)))$jan"$com$p%Kt!ene) Kinve tor Kfeb&,,(Kif$!tm !ttp:KK)))$p op%$comKmediaKne) Wdetail$p!pUnidV-; !ttp:KK)))$onepa%i tan$comKne) KlocalK%arac!iK((><>3KFC3Teac!er 3Convention$!tml =ntervie) )it! t!e 8ar%etin" 8ana"er: Muhammad Kal%%m )))$%fc$com
GIFT Bu ine Sc!ool Pa"e #

Final Project

KFC (Kentucky Fried Chicken)

Competin" on t!e *d"e+ Strate"y a t!e Structured C!ao by S!ona M$ Bro)n and Kat!leen 8$ *i en!ardt X333333333333333333333X

GIFT Bu ine

Sc!ool

Pa"e (