Table of Contents

1. Introduction ................................................................................................................................. 2
2. External analysis of KFC............................................................................................................. 3
2.1. Macro environment .............................................................................................................. 3
2.1.1 PEST Analysis................................................................................................................ 4
2.2. Porters 5 forces Model Analysis on KFC............................................................................. 5
3. Internal analysis:.......................................................................................................................... 7
3.1. Core Competency of KFC .................................................................................................... 8
3.2. SWOT Analysis of KFC....................................................................................................... 8
4. Competitive Strategies and Implementation.............................................................................. 11
4.1. Corporate Strategy.............................................................................................................. 11
4.2. Implementation Strategy .................................................................................................... 11
4.3. CSR Policy ......................................................................................................................... 12
5. Recommendation and Future Challenges.................................................................................. 13
6. Conclusion................................................................................................................................. 14
References ..................................................................................................................................... 15

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1. Introduction

Kentucky Fried Chicken (KFC) stands for high-quality fast food in a popular array of
complete meals to enrich the consumer’s everyday life. KFC strives to serve great-
tasting, “finger lickin’ good” chicken meals that enable the whole family to share a fun,
uninhibited and thoroughly satisfying eating experience, with the same convenience and
affordability of an ordinary Quick Service Restaurant. TFL successfully launched the
flagship KFC on South Avenue, Gulshan in September 2006. It has already won over the
heart of the Dhaka crowd with its great tasting food, high standard of hygiene,
cleanliness, terrific interior and of course excellent and affordable pricing. Following its
enormous success in Gulshan, the second outlet was opened in Dhanmondi in November
2008, and yet another in Banani in December 2008. Most recently TFL has opened two
outlets at Eskaton on February 2010 and another one is in Paltan. Transcom Foods
Limited (TFL) started its journey in 2003 as a franchisee of Pizza Hut, the first
International Chain Restaurant in Bangladesh, and went on to sign the contract to become
the franchisee of Kentucky Fried Chicken (KFC) in the year 2006. Both Pizza Hut and
KFC are subsidiaries of the world’s largest restaurant company Yum! Restaurants
International. In a span of seven years, TFL has opened 4 Pizza Hut and 7 KFC outlets so
far throughout the country. Every day, nearly eight million customers are served around
the world. KFC’s menu everywhere includes Original Recipe chicken—made with the
same great taste Colonel Harland Sanders created more than a half-century ago.
Customers around the globe also enjoy more than 300 other products—from a Chunky
Chicken Pot Piein the United States to a salmon sandwich in Japan.KFC continues
reaching out to customers with home delivery in more than300 restaurants in the United
States and several other countries. And in quitea few U.S. cities, KFC is teaming up with
other restaurants, Taco Bell Hut, selling nearly fifty years ago; Colonel Sanders
invented what is now called “home meal replacement” – selling complete meals to
harried,time-strapped families. He called it, “Sunday Dinner, Seven Days a
Week.”Today, the Colonel’s spirit and heritage are reflected in KFC’s brand identity –
the logo features Colonel Harland Sanders, one of the best-recognized icons in the world.
In this report, I am trying to find the secret reason about the success of KFC.

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2. External analysis of KFC

An external analysis can be defined as “the process of scanning and evaluating an

organization’s different external environmental sectors to determine positive and negative
trends that could impact organizational performance”(p. 66, Coulter 2005). A company’s
strategic decisions can be predisposed by a number of factors. The external environment
can be one of those things and should be closely monitored. We should be aware of
changes and trends in the environment around you, know what your customers prefer and
what your competitors are up to. We should also be aware of the latest technological
developments and maybe even political changes that might affect your strategic plan.
Partly we are conversant about changes and trends through the media, there are however
large changes occurring that we notice first after a while if we do not try to imprison the
information earlier. Being able to see changes early and act accordingly is a vital
competitive factor. In order to do this an external analysis is appropriate to use. Why is
this so important? Changes in a company’s environment can radically change the
conditions for their operations. Additionally, the rate at which changes occur nowadays
has increased tremendously. The benefits of conducting an external analysis are that it
helps to generate profits, helps to support change, helps to cut costs, and increases
knowledge and supports learning.

2.1. Macro environment

KFC operates in a larger macro environment of forces that creates opportunities, but also
threats. (Kotler et al 2003). A company such as KFC usually cannot influence trends in
the macro environment, as they affect people and organizations on a larger scale.

However, KFC has to carefully examine macro environmental trends and must create
competitive responses to such trends. There are six major macro environmental forces
KFC has to take into account.

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2.1.1 PEST Analysis
PEST analysis is an analysis of the external macro-environment that affects all firms.
P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of
the external macro-environment. Such external factors usually are beyond the firm's
control and sometimes present themselves as threats. I’ll discuss the PEST analysis
starting with the political analysis, followed by economic, social and technology analysis.

i) Political Analysis: Though there is several political insatiability occurred in

Bangladesh, it has not any big impact on KFC. Hence, they might face some problems in
the last year when there were constantly strikes and hartals. Government is friendly to the
fast food industry so that this industry is growing up. Moreover Government is earning
huge revenue from this industry.

ii) Economy: Bangladeshis one of the growing economies in the world. Bangladesh is
developing from an agriculture based economy to an industrial manufacturing based
economy, though the country maintains strong manufacturing, service and agricultural
sectors.. Bangladesh is still surviving to be politically and economically stable and is
open to foreign investment.

iii)Social - Cultural Environment: Society's attitudes have changed in the past decade
toward eating healthier food selections, eating fewer fried foods, and eating more

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reduced-fat food selections. The majority of KFC's menu items are fried foods. Today,
KFC’s customers generally choose the restaurant they will eat at based on quality,
rapidity and variety of items. KFC’s customers are also really price sensitive and will go
elsewhere if they find that the value is not worth the price. The customers can also be
characterized by being people that want to be served fast and be out of the restaurant in
no time. This is due to the increasing. In, Bangladesh KFC is decorating their outlets in
different national and cultural events.

iv)Technological Environment: As the technology continues to improve, it creates

unlimited opportunities for innovation. Technology helped restaurant chains a bit by
increasing productivity and efficiency.

2.2. Porters 5 forces Model Analysis on KFC

Buyer Power

The factor of a lot of competitors such as Pizza Hut, BFC, Nandos, CP, the loyal and
potential customer are starting to decline and this caused a big loss to KFC. Customer can
go to any fast food restaurant that offered more affordable price especially to students
which requiring a lot of money to survived. To attract their consumers back, KFC start to
decrease their prices and give a discount of their products to the consumers. So, the buyer
power of KFC is high when this proved that the consumers able to influence the pricing
when they has many choices.

Supplier Power

There are a lot of suppliers available for KFC’s raw materials. KFC can easily switch
their supplier to another supplier since the materials need in the process of producing
KFC is easily to get such as chicken. In 2004, KFC has some internal problems and issue
regarding of their raw chicken supplier was found doing something horrible when
butchering the chicken. KFC decide to terminate the contract between them and find the
new supplier to replace them. So, chicken supplier can not easily increase the price for
chicken since their supplier power is low. Other than that, KFC also binding a contract

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with Pepsico for supplying carbonate water to KFC’s customer. But, Pepsi do supplies
their drinks to the competitors of KFC. This is lowering down the supplier power of
KFC.

The Threat of New Entrant

There lot of substitute’s product offered to the consumers. The barrier to entry in the
industry is very low. So, there are already so many competitors in the market such as
BFC, CFC etc. Yet McDonald does not come to Bangladesh. But if they will come here,
then KFC will face a tough competition.

The Threat of Substitute Product

Popeyes Louisiana Kitchen, CP, Nandos also sell the product/service almost same as
KFC. Popeyes serves chicken dishes in mild and spicy flavors. The price for both fast
foods is almost same. Moreover, there are new issues regarding health which deriving the
consumer to restrict their food habit from the fast food such as KFC. So they are
switching the other healthier foods which may hinder the business of KFC.

The Rivalry among the Existence Firm in the Industry

In Bangladesh fast food industry, BFC ranked as the most favorite fast food and follow
by KFC and Pizza hut. Yet McDonald does not come to Bangladesh, the competition is
too open here.KFC has implemented loyalty program to attract their consumer attention
to their brand. They have provided their customers a card to kids.

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3. Internal analysis:

In order for the strategic management process to begin, managers are required to conduct an
internal analysis. This involves identifying the business' strengths and weaknesses, by analyzing
its competencies. It also involves managers highlighting the business' competitive advantage. For
strategies to be effective, the organization must exploit and expand on its strengths, as well as
reduce or eliminate its weaknesses; thus furthering its competitive advantage, in order to achieve
profitability.

A business' competencies are its resources and capabilities that allow the business to differentiate
itself and its products and services, or reduce its costs, when compared with competitors. A
business' resources are its assets, which may be tangible assets, such as equipment or technology,
or intangible assets such as brands, knowledge and expertise. These resources become valuable
to your business, and thus a competence, when it adds value to your outputs, that is, customers
place a positive distinction with your business and its offerings, over those of competitors. This
is likewise for your business' capabilities, which are its' skills, processes and structures.

In order to analyze your internal assets, along with your external assets, managers may conduct a
SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. As
mentioned above, a business' strengths and weaknesses make up the internal analysis, identifying
its competencies, whilst the external analysis looks at the external environment of the business,
and any opportunities and threats that externalities pose to the business.

By effectively identifying the business' competencies when conducting an internal analysis,

managers are able to identify its strengths and weaknesses, such as process efficiencies, powerful
machinery, or outdated technology, and thus capitalize on these, as they are to be factored into
the strategy formulation process. By utilizing strengths and eliminating weaknesses, businesses
are able to gain competitive advantage, which will be reflected on its profitability. (Smallbiz
connect, 2014)

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3.1. Core Competency of KFC

The core competency of a company provides the consumers of its products with benefits while
not being easy for the competitors of the company to imitate and providing leveragability for
different products and markets. The core competencies of the KFC Corporation include its
capability to deliver a unique recipe based chicken which has a distinctive taste. This recipe is
shared with the franchises all over the world which results in a uniform product being disbursed
amongst the global markets. Moreover the KFC Corporation also has significant expertise in
managing and opening franchises and restaurants in the international markets. The company also
has bargaining power with its suppliers which enables the company to get supplies at lower costs
increasing its profit margins on the products sold. The company also can realize economies of
scale with its local, regional and international operations. This can be used to strengthen their
cots advantage with suppliers, however currently the strategy has not been employed. Ever since
KFC started, they have only emphasized on chicken, so people from all over the world take KFC
as Chicken expert.

3.2. SWOT Analysis of KFC

Strengths

i) Second best universal brand in fast food business in provisions of value ($ 6 billion): KFC
is known by many and is a reliable brand in many countries mainly due to its early on
franchising and global extension.

ii) Unique 11 herbs and spices formula: KFC original chicken recipe is a trade covert and a
basis of comparative advantage against firm’s competitors.

iii) Strong position in emerging China: KFC receives half of its revenue from China, where it
operates more than 4,000 outlets. KFC position in China is one of its main strengths as China’s
fast food market is growing steadily.

iv) Combination of KFC – Pizza Hut: KFC partnership with other Brands yields some benefit
as the restaurant can propose items from its partners it doesn’t have itself and gratify more
customers’ needs.

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Weaknesses

i) Unreliable suppliers: Over the years, KFC has been contracting suppliers, which supplied
contaminated poultry to KFC or were mistreating chicken, thus resulting in falling sales and
damaged reputation.

ii)Negative publicity: KFC receives much criticism from PETA over the conditions chickens
have been raised. Furthermore, it received bad publicity for selling chicken wing with kidney.
There are many more or less bad news from KFC, which damage firm’s reputation significantly.

iii) Unhealthy food menu: KFC menu is largely formed of high calorie, salt and fat meals and
drinks. Such menu offering prompts protests by organizations that fight obesity and hence,
decreases KFC popularity. Consumers also often opt out for healthier choices.

iv) High employee turnover: Employment in KFC is a low paid and low skilled job. It results in
low performance and high employee turnover, which increases training costs and add to overall
costs of KFC.

Opportunities

i) Increasing demand for healthier food: While demand for healthier food increases, KFC
could bring in more healthy food choices in its menu and reverse its weakness into strength.

ii) Home meal delivery: KFC could fully exploit (it test deliver services now) this opportunity
and reach more customers.

iii) Introducing new products to its only chicken range: KFC could introduce new meals to its
menu and offer pork, beef or only vegetarian meals, which would target wider consumer group
and would result in more costumers.

Threats

i)Saturated fast food markets in the developed economies: The fast food market in the
developed countries is already overcrowded by so many fast food restaurant chains and this
already proves to be a threat to KFC as it finds it hard to grow in the developed economies.
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ii) Trend towards healthy eating: Due to government and various organizations attempts to
fight fatness, people are becoming more aware of eating healthy food rather than what KFC has
mainly to offer in its menu.

iii) Local fast food restaurant chains: Local fast food restaurants can often offer a more local
approach to serving food and menu that precisely represents local tastes. Although KFC does a
great job in adapting its own menu to local tastes, the rising number of local fast food chains and
their lower meal prices is a threat to KFC.

iv) Economic Degradation: KFC receives part of its income from foreign operations. That
income has to be converted into dollars and may affect the business' profits, especially when the
dollar is appreciating against other currencies.

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4. Competitive Strategies and Implementation
4.1. Corporate Strategy
KFC is now following Growth strategy. The model of business expansion of KFC is franchising.
The components of KFC’s corporate level strategies are:

 Toggled from franchise to company owned in their bigger market

 Concentration in local Community.
 Combining the two concept in the same unit
 Changed name
 Introduced diverse menu items to stay up with local competitors.
 Switched to highly performance based administration strategies
 More responsibilities assigned to franchisees and marketing managers
 Pay closely aligned with customer service and restaurant performance.

The potential raise in other countries encouraged KFC to build a principal spot and have more
popularity. The practice of achievements saved a lot throughout R&D, creating and involving
technology in developing exertion. These strategies are the gate to reduce cost/changing
leadership, because it depended mainly on its brand name and unique taste and recipe to be finer
while at the same time benefits of cost saving from economies of scale remain them competing
on price.

4.2. Implementation Strategy

An implementation strategy that KFC utilized successfully was, once a decrease in earnings
occurred the restaurant was closed down. A horizontal discrepancy is implemented through style
options. KFC wants to meet the needs of local markets, they not only introduce neighborhood
programs but they also hire locally. KFC also help the cut out subsidiary products. KFC put
massive emphasis on having sanitary and update restaurants. They also knew if their products
were not reliable, customers would find other chicken providers. KFC pay close attention to
service and dedicate time to maintaining the reliability of their product provided to their
customers. The implementation level is including:

 Straight differential through different style options

 Stopped up unbeneficial restaurants
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  Struggle to fill the needs of local of local markets by hiring locally and offering menu
items that mirror the culture.
 Endeavor to fill the needs of local markets by hiring locally and offering menu items that
reflect the culture.
 Reestablish and maintain an emphasis on clean and updated restaurants paying close
attention to service while maintaining product consistency.
 Cutting out subsidiary products.

4.3. CSR Policy

Though KFC do not focus yet in the corporate social responsibilities in Bangladesh but globally
KFC has a very good CSR policy. The CSR activities are described below:

KFC FOUNDATION: KFC believe in a world where educational opportunities are available
to everyone; where they never give up on helping people achieve their dreams.

DIVERSITY: Diversity is more than a philosophy at KFC; it is part of our founding How they
Work Together principles. Their global culture is actively developing a workforce that is diverse
in style and background, where everyone can make a difference.

SUPPLIER CODE OF CONDUCT: Yum! Brands is committed to conducting business in an

ethical and responsible manner. To encourage compliance with all legal requirements and ethical
business practices, Yum has established a Supplier Code of Conduct for it's U.S. suppliers.

THE ENVIRONMENT: KFC is as committed to the environment as they are to their food and
customers. They have taken few steps to reduce our environmental footprint and plans for
improvement moving forward.

ANIMAL WELFARE PROGRAM: Yum! Brands, parent company of KFC, is committed to

the humane treatment of animals

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5. Recommendation and Future Challenges
To do the SWOT analysis I observe some challenges which KFc may face in the near future. So
there are some recommendations which KFC may follow for their continuous business growth.
The recommendations are given below:

i) Focus on healthy food: Currently, people become more conscious about their health. So they
start to stop the fast food items such as fried chicken. As a result KFC can lose their business. So
KFC can include some healthier menu such as vegetable food items.

ii) Expanding the business in every divisional city: KFC has a very good demand in the big
cities in Bangladesh. So, KFC may establish their outlets in the divisional cities to expand the
business.

iii) Set convenience pricing menu: KFC can introduce some convenience pricing menu so that
they can attract new consumers specially the students.

iv) Enhancing employee motivation: KFC may include and develop their motivation plan
towards their employees so that the turnover rate will be reduced and the employee can give
better services. As a result, the customer satisfaction rate will be boosting.

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6. Conclusion

To conclude I want to say that KFC has a strong brand value among the consumers. I get a nice
and practical experience by making this analysis on such a good brand KFC and succeed to
implement the knowledge what I have learnt from the course in the classroom. I wish that KFC
can successfully do their business and maintain the growth for a longer time

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References
o http://projects.bus.lsu.edu/independent_study/vdhing1/

o www.qsrbrands.com

o www.kfcholdings.com.my

o www.netmba.com

o http//wwwkfc.com/kitchen/nutrition.htm

o http://www.strategicmanagementinsight.com/index.html

o www.smallbizconnect.com

 KFC (2013). About us. Available at: http://www.kfc.com/about/

 Wikipedia (2013). KFC. Available at: http://en.wikipedia.org/wiki/KFC
 9WSYR (2013). Yum Brands: KFC sales will fall in China after probe. Available at:
http://www.9wsyr.com/business/story/Yum-Brands-KFC-sales-will-fall-in-China-
after/bcy0s-8mAUeqWoh6fnmpCw.cspx
 Interbrand (2013). Best Global Brands 2012. Available at:
http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx
o http://www.ukessays.com/
o http://www.kfc.com/
o https://www.scribd.com/

 The website of Transcom Bangladesh

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