GIPIT JR., JOB M.

CASE STUDY 3: KFC

BUSINESS POLICY

I. TIME CONTEXT: 2012

II. VIEW POINT: KFC Quality Management

III. CENTRAL PROBLEM: Criticisms of injecting excessive amount of antibiotics that resulted in
public distrust.

IV. OBJECTIVES:
a. Must
 Eliminate “public distrust”.
 Develop an action regarding the problem in its suppliers.
b. Want
 Recovery from the profit-declination
 Rebuild its reputation
V. AREAS OF CONSIDERATION:

Internal Factor

a. Strengths:
 KFC is the second largest fast food chain
 Originality in terms of its recipe
 Number of units are continuously increasing
 Decade-long reputation
 Investment in social media programs, retraining employees and arranging
consumers visit to chicken farms

b. Weaknesses:
 Some of its suppliers were not trusted
 Lack of marketing efforts
 Negative publicity

External Factor

a. Opportunities:
 Subordinates or sister companies.
 Popularity boosted in US
b. Threats:
 Increase in competition in the fast food category from competitors
 Allegations that some of KFC suppliers injected antiviral drugs and growth hormones
in the poultry that violated safety regulations
 Criticism for animal welfare record
  KFC Europe was accused of clearing large swathes of the Amazon rainforest in order
to grow the crop
 Greenpeace accused KFC of sourcing paper pulp for its food packaging from
Indonesian rainforest wood
 KFC China accusation that its suppliers had been using growth hormones and an
excessive amount of antibiotics on its poultry in ways that violated Chinese law
 Bird flu scare
 Struggle to restore diner’s trust

VI. ALTERNATIVE COURSES OF ACTION:

 KFC shall disconnect its transaction to its untrusted suppliers.

Advantages:
- By this, KFC is able to remove the threats of antibiotic injections.

Disadvantages:

- KFC difficulty for replacement of suppliers.

- KFC will be facing difficulties on identifying untrusted suppliers

 KFC must provide its own poultry for safety and health assurance.
Advantages:
- KFC can assure the safeness of its chicken
- KFC can estimate the number of chicken to be slaughtered.

Disadvantages:

- It will accumulate another expenses for the company

- Not all places are available for building poultry structures.

 KFC together with the Government shall conduct several test to prove that accusations are
null.

Advantages:

- It will serve as a proof or evidence for the innocence of KFC.

- It shows to the public that KFC is not hiding something.

Disadvantages:

- It requires a lot of time, money and efforts.

- According to some customers, there’s no point for KFC to prove its innocence
because it only reminds recent accusations.

VII. RECOMMENDATION:

- KFC must provide its own poultry for safety and health assurance.
VIII. PLAN OF ACTION:

- KFC will search for appropriate poultry farms. After finding the appropriate one,
they will start several construction in the location. Eventually, it will be the starting
point of their reproduction of chicken. The location will become the distributing
point of KFC branches near to it. By this, KFC can eliminate the threats that scare the
customers because they produce by their own style of preservation.