EXECUTIVE SUMMARY

Established in 1952, KFC has become one of the most well-known brands in the
food industry until now. During the development process, the company has
encountered many difficulties as well as strong competitors namely Lotteria,
Mcdonald's, or Jollibee. KFC has applied variety of smart strategies, and
focused on SWOT analysis, which figures out what strategy is suitable for its
business. SWOT analysis examining internal and external factors assists the
company in developing famous brand on its path. Therefore, this study will
mainly analyze the effects of inside and outside environment; it also indicates
several effective suggestions about strategic management for the company.
The report including three main parts emphasizes the way that KFC makes out
its special strategies. The first one will investigate the mission, goals and
strategies of this company. The other two parts will analyze the internal and
external factors, which discuss about strengths, weaknesses, opportunities, and
threats of KFC. With limited knowledge, conditions, and abilities, we cannot
avoid shortcomings in our research. However, benefits of our study about
SWOT of KFC in Vietnam will be very valuable for the development of the
company in the future.
1. Introduction
KFC is a big company which is mainly known for fried chicken and many fast-
food products. The company has developed around the world with a high selling
rate and becoming the largest fast-food chicken operator, developer in the
world.
KFC which is known as Kentucky Fried Chicken, was founded by Colonel
Harland Sanders in 1952. KFC has been wholly owned subsidiary of Yum!
Brands, Inc since 2002. The smiling Colonel is probably the most memorable
logo in the food industry. They serve food in a clean and sanitary environment,
and the process of making the product is also guarantee. Their menu is diverse,
for example they have product for kid, for vegetarian, and many desserts. Their
customer target in Vietnamese market is young people, who are mainly around
18 to 24. There is about 86% of the customers is young people. The brand value
of KFC is over 15 million of US dollars. They expand their business at
approximately 21,00 locations in 109 different nations around the world, while
140 restaurants located in Vietnam.
They run the business partly bases on the SWOT analysis, for they can evaluate
the negative and positive factors of internal and external environments.
According to Stipp (2018), there were over 21000 worldwide KFC restaurants
in 2017, and over 140 of them are locate in Vietnam. To accomplish such great
achievements, the company must have encountered many difficulties. Bearing
this in mind, our report aims to make a SWOT analysis of KFC based on data
which we collected.
2. Literature review
Strategic management is a branch of management involving all the basic
management functions (planning, organizing, leading, and controlling) that
managers do to lead and develop the organization’s strategies. This is a
fundamental task since it can make the different performance between different
companies even if they have the same environmental conditions. Moreover, this
process is considered as a guide helping organizations to survive the
unpredictable changes in dynamic environment that can affect business. They
can be the changes introduced by the managers in the internal environment such
as business policies, procedures and changes in the external environment
including changes in the government regulations, competitors’ plans,
customers’ tastes and preferences. Another reason making strategic
management essential to managers is that organizations are complex entities
with several parts and hundreds of employees taking charge of different tasks.
Therefore, strategic management helps to link the whole organization together
to run smoothly and achieve the general goals. Strategic management process
contains five steps including identifying the current mission, goals, and
strategies of the organization; doing external analysis and internal analysis;
formulating, implementing strategies, and evaluating results. However, in the
scope of this report, just the first three steps are discussed in in-depth study,
which are the specification of company’s mission, goals, and strategies and the
combination of external and internal environment analysis called SWOT
analysis. SWOT analysis is used to evaluate a company's competitive position
by identifying its strengths, weaknesses, opportunities and threats.. One tool that
is used to illustrate these opportunities and threats is Five-Force analysis by
Michael Porter. These five competitive forces namely threats of new entrants
and substitutes, bargaining power of buyers and suppliers, and current rivalry
determine industry attractiveness and profitability. Specifically, understanding
the company’s strengths lets managers focus their efforts into appropriate parts
which get the most gains and cope with weaknesses to improve the overall
outcomes. While strengths and weaknesses are the internal factors creating a
company's foundation, managers’ ability to capitalize on the external
opportunities and threats happening outside the organization determines
businesses' long term successful directions.
3. Mission, goals, and strategies
3.1. Mission
KFC’s mission is to provide the product to all types of people, and that is how
they expand their reach. As Jurevicius has mentioned (2013), the company
wants to sell food in a fast, and friendly environment. Therefore, the company
need to hire responsible employees and train them to be professional. In
Vietnam’s environment, KFC aims at people in age between 18 to 24, since that
group of customers they are more interested in fast food as compared to the
middle-age people, also the company can sell more products. Saving time for
customers is crucial, so KFC must satisfy the buyer’s needs in a short time but
will not affect the working efficiency.

3.2. Goals
The main goal of KFC is to provide food for the customers that satisfy them and
makes them want to come back for more. The company has reached over
21,000 restaurants in 2017, and it will not stop for they have planned to
continue to expand the KFC empire, and they also want to attract more market
shares. KFC will become the biggest company in the fast-food industry, and
they sell the products to people all around the world.

3.3. Strategies
At first, it was difficult for KFC to develop in Vietnam’s environment, so they
need to come up with plan that suitable with the market. They applied the cost
leadership strategy as they lower the price to attract large market share and
number of customers. According to Nguyen (2016), to expand their network,
the company mainly aims at large cities such as Hanoi, Sai Gon, and Da Nang.
The structure of Vietnam’s young population is an important factor that KFC
pay attention to. They have changed the taste and design to suit with
Vietnamese cuisines. Their smart strategies have help them to succeed in
Vietnamese market and to improve their business.

4. SWOT analysis
4.1. Strengths
KFC owns a unique recipe, the Sanders’ Original Recipe, which makes KFC
become one of the most famous fast food brand worldwide. KFC chicken is
seasoned with a secret mixture of eleven herbs and spices and then prepared by
a professional chef to create a boom of flavor in customers’ mouth. Chicken is
cooked at a low temperature to provide customers with a great taste of chicken.
In addition to fried chicken, KFC also diversified products in order to make the
menu extremely plentiful for consumers around the world. Apart from the non-
veg items, it has also included vegetarian items in its menu to lure more
customers. Consumers now can enjoy more than 300 different dishes from
grilled chicken in Vietnamese market to the salmon sandwich in Japanese
market. Beside the traditional dishes such as fried chicken and burger, in
Vietnamese market, KFC has processed a number of dishes to serve Vietnamese
taste included Chicken Big'n Juicy, Chicken Crispy Bones, KFC Chicken Rice,
and Salad. Many new dishes have been developed and introduced in the
Vietnamese market, contributing to increase the variety in the menu, such as
Shrimp Burger, Lipton, and Egg Tart. Fortunately, almost all of them have
gained the popularity among customers.
Moreover the parent company of KFC is Yum! Brands, which also owns Pizza
Hut and Taco Bell, is one of the world’s largest fast food restaurant companies
with more than 41,000 restaurants around the world in over 125 countries.
Yum! Brands’ financial background and strong influence helped individual
brands in effectively optimizing its resource usage and quickly expand its
popularity in new markets. According to Nguyen (2015), the MarCom Manager
of Buzzmetrics, one of the most comprehensive social research and analysis
solution in Vietnam, KFC, Lotteria and McDonald's are three of the most
popular brands in social media (excluding pizza brands); however, KFC
dominates the Vietnamese market with nearly 50%.

4.2. Weaknesses
Food quality has always been a major issue for food industry and the usage of
unhealthy fats and unhygienic calories has been creating problem for the fast
food chains to which KFC is not exception. KFC has faced significant criticism
over its use of trans fats in the cooking of non-veg items. Trans fat is made
when hydrogen is added to vegetable oil to help lengthen the shelf life of food
products and make frying oil last longer. Marion Nestle, the author of What to
Eat and a professor in the nutrition department at New York University, said
that using trans fats to cook can increase the bad blood cholesterol while impede
the development the good cholesterol (as cited in Aubrey, 2006). Food hygiene
is a fundamental priority when consumers choose a restaurant to enjoy their
meals, consequently, they are always looking for products cooked in safe and
hygienic oils without any trans-fats. The fats in its fast food items, still
continues to trouble KFC. Since its typical dish is fried chicken, which is fried
deeply in hot oil to make it crispy, KFC’s food contains high calorie, salt, fat
and they are often eaten with carbonated drinks. Clients who are losing weight
or fight against obesity are not likely to prefer this menu, hence, it decreases
KFC’s popularity and causes consumers to seek for healthier choices.
Moreover, workers in KFC are a low paid and nearly unskillful. Most of the
employees working as cashiers, waiters, and cleaning staff at KFC in Vietnam
consider their jobs as a part-time job, hence, they have low willingness for
personal developments and put less effort to work. These problems results in
low performance and high employee turnover, which cause KFC to spend more
on training staff and the overall costs of this brand is consequently increased.

4.3 Opportunities
In 1997, Kentucky Fried Chicken (KFC) opened the first store in Ho Chi Minh
City in Vietnam, which attracted several customers enjoying delicious fast
foods. These days, this global brand is still believed by a number of Vietnamese
consumers thanks to its fast food quality. According to Wilson (2016), because
of opened-market policy, KFC has extended to over 140 restaurants in different
cities of Vietnam along with providing work for more than 3,000 people in
country. KFC is known as “fresh chicken products” brand with unique flavor
followed its own standards so that it provides a large amount of fast food like
fried chicken, hamburger, potato chips to Vietnamese market that makes this
market turn into more competitive industry. In fact, this fast-food system
corporates with other countries to gain experiences as well as develops its
productions much enjoyable and appealing to clients. In addition, eating fast-
food has become a popular trend of teenagers in the busy lifestyle, this will be
an opportunity for KFC to express its potential market share in fast-food of
Vietnam. Taking advantages of bargaining power of buyer about fast food, KFC
offers them qualified-productions based on their daily needs. Therefore, this
company reaches a high profit with rapid growth in Vietnamese market. On the
other hand, Bidvest, a giant supplier of KFC, provides fresh input with low cost,
KFC makes use of bargaining power of supplier in order to reduce fast food
price of production attracting more Vietnamese customers. As stated by Nguyen
Hoang Long (2017), about 37% of people use junk food regularly, the ratio is
higher among 16-24 years old because Vietnamese lifestyle has been affected
by the culture of Western nations which is the original hometown of fast-food.
Apart from providing reasonable price, KFC continually creates food delivery
apps for serving client’s need as fast as possible. Another report also considers
that KFC has the highest satisfaction rate from its taste compared to different
brands in Vietnam. Thanks to the diversity of its productions, this fast-food
restaurants chain still appeals consumers by offering a diverse menu like Big ‘n
Juicy, Crispy Strips, KFC Chicken Rice, Coleslaw together with launching new
dishes to Vietnamese market such as Shrimp Burger, Lipton. Therefore, the
special business strategies can bring a lucky chance for KFC achievement in
Vietnamese fast-food market.

4.4. Threats
Besides attaining huge success for KFC in Vietnam, this fast-food restaurant
chain also faces big challenges with a number of international opponents.
Lotteria and Jollibee, which have similarly followed fast-food serving in general
and fried chicken production in specific, are two main competitors of KFC until
now in Vietnamese market. Lotteria increased its restaurants to 80 outlets in
2010 (Nha Trang, 2011) to attract many clients in different regions in order to
compete with the giant food chain – KFC. Additionally, based on Vietnamese
characteristics, Jollibee has applied “cheap price with high quality” approach to
obtain much more profit compared to KFC system. Due to current rivalry
among three opponents, it will make KFC’s grow rate falls, demand of food
also decreases and production prices descend. Recently, ignoring slow growth
of fast-food in Vietnam, McDonald’s – the new entrant opened fast-food
restaurants first in Ho Chi Minh City with high expectation of dominating
Vietnamese market. Appearing several stores with the similar productions,
Vietnam, an intense commerce to KFC, makes revenue of KFC decrease
continuously in first seven years foundation from 1997 to 2004. Furthermore,
the cost of renting the wonderful space, which makes up almost 60% cost of
production is quite high in modern cities corresponding to other rural areas.
Another challenge for KFC that is difficult to deal with is threats of substitutes
in Vietnam. People at the age of above 30 usually cook the daily meal for their
family or celebrate a special occasions in luxury restaurants instead of using
fast-food for convenience. The people could enjoy happiness and make close-
knit relationship among members while cooking together in little hearth.
Additionally, fast-food is not always comfortable for students at schools
because they will choose other substitutes of KFC such as chips, fried fish ball,
and usual foods like Pho, noodle, sweet cakes to save their time for buying KFC
products which are far from there.

5. Conclusion
In conclusion, realizing own strategic management plays a significant role in
KFC success in Vietnam market. For Kentucky Fried Chicken, increasing
awareness of its goal, vision and mission supports the whole enterprise to
emphasis its strengths in long term and perfect its weaknesses in short time.
Although Vietnamese market has numerous threats of KFC competitors as well
as slow demand rate, it brings many opportunities to KFC in order to develop
better its famous brand name not only in Vietnam but also in world market.

6. Recommendation
In general, based on analysis above, the purpose of this section is giving several
solutions that illustrate the goals, missions and strategies of KFC company
along with verify its strengths, weaknesses, opportunities and threats in order to
conduct different changes in this enterprise. Firstly, it is suggested that KFC
should maintain its distribution network in the metropolis namely Hanoi, Sai
Gon, and Da Nang. KFC should remain its striking competitive advantages in
order to keep its loyal customer as well as attract more consumers. Moreover,
this company utilizes its opportunities to elevate itself in high level in the long-
term. Secondly, it would be rational for KFC to expand its scope by opening
more retail outlets in several rural areas in Vietnam such as Lao Cai, Yen Bai.
In order to sustain its reputation, the hygienic problems in manufacturing
process should be taken into consideration for the sake of customers’ health by
using fresh input without preservatives, replace animal fat by vegetable oil, and
lower oil-reusing rate during producing procedure. Additionally, the firm had
better provide its employees with beneficial policies including increasing salary
and bonus for effective workers so that KFC will construct a professional staff.
Through SWOT analysis, KFC ought to make differences as compared to other
competitors by offering sale-off programs in special occasions such as Moon
festival, Christmas, and New Year Eve along with fast delivery regardless of
time and places. It is essential for the whole company to cooperate with other
companies in variety of aspects, study and gain experience to enhance KFC’s
performance in Vietnamese market. Conducting all these recommendations can
not improve all weak aspects of the company but it can partly strengthen its
future performance.
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