UNIVERSITI TEKNOLOGI MARA

MGT 657 : STRATEGIC MANAGEMENT

RBMHA
ASSIGNMENT 2
LECTURER : DR ISMALAILI BINTI ISMAIL

BIL NAMA NO PELAJAR

1 SITI DAHLIAH BINTI RAMLI 2018627706

2 SITI ZURAINA BINTI ISMAIL 2018619492

3 SITI NUR ALIAH BINTI SUHAIMI 2018825256

4 AINAA NASUHA BINTI MUHAMAD 2018497914

YAZID
5 NURDINI SHAFIRA BINTI MOHD 2016941795
SOFI
 ACKNOWLEDGEMENT

The success and final outcome if this assignment required a lot of guidance and assistance
from many people and we extremely fortunate to have got this all along the completion of our
assignment work. Whatever we have done is only due to such guidance and assistance and we
would not forget to thank them. I respect and thank Dr Ismalaili Ismail for giving us an
opportunity to do this assignment work and providing us all support and guidance which made
me complete the assignment on time. We extremely grateful for providing such a nice support
and guidance.

We felt really grateful because we managed to complete this assignment within the time given
by Dr Ismalaili Ismail. This assignment cannot be completed without the effort and co-operation
from our group members. Group member’s Siti Zuraina, Siti Dahliah, Siti Nur Aliah, Nur Dini
Shafini and Ainaa Nasuha. Last but not least, we would like to express our gratitude to our
friends and respondents for support and willingness to spend some time with us.

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TABLE CONTENTS

ACKNOWLEDGEMENT i
TABLE OF CONTENT ii

1.0 ANALYSIS CONDUCTED BY KFC

1.1 SWOT Analysis 1–5
1.2 BCG Matrix of KFC 6–7
1.3 PESTEL Analysis 8 – 10

2.0 STRATEGIES BY KFC TO SUSTAIN THEIR BUSINESS 11 – 13

3.0 IMPACT TOWARDS ORGANIZATION 14 – 15

REFERENCES 16

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 1.0 ANALYSIS CONDUCT BY KENTUCKY FRIED CHICKEN (KFC)

1.1 SWOT ANALYSIS

SWOT analysis is a strategic planning technique used to help an organization identify its
strengths, weakness, opportunities and threats related to business competition. It is designed
for use in the preliminary stages of decision-making processes and can be used as a tool for
evaluation of the strategic position of an organization. It is intended to specify the objectives of
the business project and identify the internal and external factors that are favorable and
unfavorable to achieving the objectives.

Strengths Weaknesses

 Second best global brand in fast food

 Supply chain and distribution issues
industry.
 Use original herbs and spices recipes  Negative publicity

 Loyal customer base  Unhealthy food menu

 Variety in menu  High employee turnover

 Market leader in the world among  Managing franchise

companies featuring chicken as their

primary product in business.

 Saturated fast food markets in the

 Increasing demand for healthier food developed economies

 Introducing new products to its only  Trend towards healthy rating

chicken range  Other local fast food restaurant

 Expanding to new Geographies  Currency fluctuations

 Food quality challenges
Opportunities Threats

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1.1.1 STRENGTHS

Strengths describe the factors that which organization is good at and what separates it from its
competitors.

 Second best global brand in fast food industry

KFC is known by many people and it is a trustworthy brand in many countries mainly due to its
early franchising and international expansion. Many country has their own strategies in
attracting their customers.

 Use original herbs and spices recipe

KFC original chicken recipe is a trade secret and a source of comparative advantage against
competitors. Sander’s original recipe of “11 herbs and spice” is one of the famous trade secrets
in the catering industry. A copy of recipe, signed by Sanders, is held inside a safe inside a vault
in KFC’s Headquarters, along with eleven vials containing the herbs and spices.

 Loyal customers base

KFC has its own loyal follower base and it all thanks to its secret recipe and spice. Their
consumers loved the taste and the crunchiness of KFC’s chicken.

 Variety in menu

One of the major strengths is the variety of food that offers by KFC to their customers. KFC
tweak’s its menu and food offerings, basis the region in which it operates. For example, in India
they offers vegetable food just to cater vegetarian customers along with chicken lovers.

 Market leader in the world among companies featuring chicken as their primary
product offering.

KFC has positioned itself clearly among other fast food chains bearing its famous slogan and
trademark chicken products.

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1.1.2 WEAKNESSES

Weaknesses stop an organization from performing at its optimum level. They are areas where
the business needs to improve their organization.

 Supply chain and distribution issues

KFC has faced a major distribution issue with the delivery of the chicken. This issue became so
big that it led to the closing of some of its stores in the UK. It took a KFC a lot of logistical and
marketing effort to overcome the issue. In order to avoid facing the same issue in future, KFC
needs to take extra care of its supply chain and distribution of its raw material like chicken,
spices etc.

 Negative publicity

KFC receives much criticism over the conditions chickens have been raised. There are many
more or less bad news from KFC which may damage their reputation significantly.

 Unhealthy food menu

KFC menu is largely formed of high calorie, salt and fat meals and drinks. Such menu offering
prompts protest by organizations that fight obesity and hence decreases KFC popularity.
Consumers also often options out for healthier choices.

 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.

 Managing franchisees

Franchisee management is one of the critical issues in the success of the fast food and due to
conflicting operational issues between KFC and many of its franchisee got closed since its
inception.

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1.1.3 OPPORTUNITIES

Opportunities refer to the factors which the organization can use to its favor to grow its market
share, sales, brand recognition.

 Increasing demand for healthier food

While demand for healthier food increases, KFC could introduce more healthy food choices in
its menu and reverse its weakness into strength. KFC has a big opportunity to introduce healthy
foods in their menu that are low in fats and calories.

 Introducing new products to its only chicken range

KFC could introduce new meals to its menu by offer other type of food which would target wider
consumer group and would result in more consumers.

 Expanding to new Geographies

Emerging economies, changing lifestyle of consumers and their increasing in buying propensity
is allowing fast food to explore new geographies to increase their market share and revenue.

1.1.4 THREATS

Threats refer to factors that have the potential to harm an organization in the future. It give the
brand a far-sighted view about the problems that the brand is likely to face in the future.

 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.

 Trend towards healthy eating

Various organizations attempt to fight obesity, people are becoming more conscious of eating
healthy food rather than what KFC has mainly to offer in its menu.

 Other local fast food restaurant

Local fast food restaurant can often offer a more local approach to serving food and menu that
exactly 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.

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  Currency fluctuations

KFC receives part of its income from foreign operations. That income has to be converted and
may affect the business profits especially when the dollar is appreciating against other
currencies.

 Food quality challenges

Food quality is an important challenge before KFC. KFC has faced criticism in the past as well
for the quality if oils it uses for cooking its food. Also, the laws related to food quality has
become quite stringent in different countries and is becoming major challenge for fast food
chains.

In conclusions, there are a number of challenges that KFC faces but still it’s
strong brand equity, current market position and the opportunities that pose a strong
growth in the future for the brand.

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1.2 BCG MATRIX FOR KFC

The BCG Matrix for KFC will help in implementing the business level strategies for its business
units. The analysis will first identify where the strategic business units of KFC fall within the BCG
Matrix for KFC.

1.2.1 STAR

The financial services strategic business unit is a star in BCG matrix for KFC. It operates in a
market that shows potential in the future. KFC earns a significant amount of its income from
SBU. KFC should vertically integrate by acquiring other firms in the supply chain. This will help
in earning more profit. This is also the product that generates the greatest sales amongst its
product portfolio. The potential within this market is also high as consumers are demanding this
and similar types of products. KFC should undergo a product development strategy where it
develops innovative features on this product through research and development.

1.2.2 CASH COWS

The supplier management service SBU is a cash cow in the BCG matrix. This has been in
operation for over decades and has earned KFC a significant amount in revenue. The market
share for KFC is high, but the overall market is declining as companies manage their supplier
themselves rather than outsourcing it. The recommended strategy of KFC is to stop further
investment in this business and keep operating this strategic business unit as long as it
profitable. This is an innovative product that has a market share of 25% in its category. KFC is
also the market leader in this category. The overall category has been declining slowly in the
past few years. KFC has the power to influence the market and development so that the brand
could be innovated, this will help the category grow and will turn this cash cow into a star, the
overall benefit would be an increase in sales of KFC. The international food SBU is also a cash
cow. This business unit has a high market share of 30% within its category, but people are now
inclined in the growth rate of the market. The recommended strategy for KFC is to invest
enough to keep this SBU under operations. If it no longer remains profitable and turn into a dog,
then KFC should divest this SBU.

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1.2.3 QUESTION MARKS

The local food SBU is a question mark. The recent trends within the market show that
consumers focusing more towards local foods. Therefore, this market is showing a high market
growth rate. However, KFC has a low market share in this segment. The recommended strategy
is to invest in research and development to come up with innovative features, this product
development strategy will ensure that this will turn into a cash cow and brings profits to
company in future. This strategic business unit is a part of a market that is rapidly growing.
However, this SBU has been incurring losses in the past few years. It has also failed in the
attempts made at innovation by research and development teams. The recommended is to
divest and prevent any future losses from occurring. The confectionery SBU is also a question
mark. The confectionery market is an attractive market that is growing over the years. However,
KFC has a low market share in its attractive market. The low sales are a result of low reach and
poor distribution of KFC in this segment. The recommended is to undergo market penetration
where it pushes to make its product present on more outlets. This will ensure increased sales
for KFC and convert this SBU into a cash cow.

1.2.4 DOGS

The plastic bags SBU is a dog. This strategic business unit has been in the loss for the last 5
years. It also operates in a market segment that is declining due to greater environmental
concerns. The recommended is to divest the SBU and minimize its losses. This is operating in a
market segment that is declining in the past 5 years. The company also has negative profits for
this SBU. However, it is expected that the market will grow in the future with environmental
changes that are occurring. The recommended is to invest in the business enough to convert
into a cash cow. This will ensure profits for KFC if the market starts growing again in the future.
The synthetic fibre product SBU is a dog. The market for such products has been declining and
as a result if this decline, KFC has been facing for it is also less than 5%. The recommended is
to divest this SBU to minimize any further losses. The artificially products is where launches
recently, with the prediction that this segment would grow. However, with increasing health
consciousness, people are now refraining from consumption of artificial flavours. The market is
shrinking and KFC has no significant market share and the recommended strategy is to call
back this product.

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1.3 PESTEL ANALYSIS BY KFC

1.3.1 POLITICAL FACTORS

One of the major political factors that influenced and shaped the fast-food franchise is its
association with unhealthy food with high-calorie diet. From Kentucky Fried Chicken, they
changed its name and identity to its abbreviation known as KFC. This was done with the intent
of dropping fried chicken from its name without having to undergo any major internal changes.
Though this was a clever move from the franchisee, it has gone under fire by various
nutritionists and campaigners as it capitalizes on the psychological vulnerability of most people.

One of the political issues is that over last couple of years, on the official Twitter page, KFC
mocked McDonald’s mascot while simultaneously parodying President Donald Trump’s tweet,
where he mentions having a ‘bigger and more powerful’ nuclear button than North Korea. Issues
by mocking the President ruffled the feathers of his supporters and even those who aren’t his
fans weren’t thrilled with KFC’s mocking tone in general. Some people see the tweet as
harmless humor but perhaps in poor taste.

1.3.2 ECONOMICAL FACTORS

Many fast-food restaurant chains are failing to generate sustainable profits. Again, one of the
reasons behind this is their association with an unhealthy lifestyle and diet. KFC has a menu
mostly comprising of fried chicken which has a high calorie content and unhealthy fats. The
health-conscious crowd isn’t interested in fatty, calories-dense foods. Since most of KFC menu
includes some form of fried chicken, these consumers don’t have many choices.

Luckily, KFC is creating vegan items to compensate for vegan and dieting consumers. They’ve
created tow vegan chicken which are essentially boneless wings and vegan nuggets. A lot of
people came running to the nearest KFC location just to try these new creations on their menu.
Clearly, these experiments were successful for the company.

1.3.3 SOCIAL FACTORS

Along with other popular fast food brands, they struggle with many social issues and problem.
Paying employees a minimum wage is one of the top issues. In spite of being a global brand
with a presence over 140 countries, employees in most outlets are paid minimum wage without
any benefits or perks. KFC is also under constant fire for using lucrative and suggestive
advertisements to lure children and masses to their restaurants while slickly hiding the obvious
health issues and risks that arise due to the consumption of fast food.

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Another issue is about the high-calorie food. KFC’s menu filled with these foods and with the
obesity crisis thriving in Western countries, restaurants like KFC are often blamed for the
epidemic. Offering vegan options is one way to appease people desiring healthier options. It
also introduces consumers who otherwise wouldn’t look twice at KFC’s offerings into the
restaurant.

1.3.4 TECHNOLOGICAL FACTORS

KFC has adopted many new technologies and changes to keep up with changing trends and
preferences of customers. Most outlets today have a click and carry option where they can
order their food before even reach at the store thus helping to save time in queues and lines.
Additionally, self-order kiosks, voice automated machines and online platforms are some of the
changes they have adopted to increase profits and sales. KFC also increased its digital
presence through better social media management and promotions.

Besides, KFC also are adopting newest technology for workers. They believe that by improving
the environment for employees, customer service may improve too. It’s a rather normal move
likely to accept and understand new forms of technology in the workplace, such as voice-
activated tests for trainees. A KFC located in Australia is introducing communication for
employees through social media. Employees are encouraged to ask questions and share ideas
on this platform with each other.

1.3.5 ENVIRONMENTAL FACTORS

Being a giant in the fast-food restaurant industry with over 22,000 locations, it is no surprise that
KFC is a major contributor to the environment. KFC’s paper supplier is linked in many cases
with deforestation, destruction of wildlife and endangering the environment. Again, an increasing
number of health-conscious individuals option to turn away from KFC due to reasons like this.
The restaurant needs to adopt more environmentally friendly practices to reduce waste and
consumption.

1.3.6 LEGAL FACTORS

As KFC operates in over 140 countries, complying with the local laws and regulations is one of
the key factors in continuous success and operation. They have to adhere to the food and
health quality guidelines and laws in order to avoid lawsuits and penalties. There are numerous
cases around the world where KFC has served low-quality or rotting foods to the customers that
have invited a lot of negative publicity.

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 In conclusion, though these factors constantly change along with current trends, they
each play a crucial role in development and growth of KFC. KFC remains a staple fast-food
restaurant in today’s world. Despite the latest political stunts and debacles, the company is
focusing on adopting new menu items and technology to improve customer satisfaction. Profits
in certain locations are already on the rise. If the company can step away from questionable
corporate relationships and adhere to laws and regulations, it’ll likely continue to flourish in the
fast-food industry.

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 2.0 STRATEGIES BY KFC TO SUSTAIN THEIR BUSINESS

2.1 FRANCHISING

KFC generates its revenue through different franchisees that had opened up in different
countries. Each franchise will pay a fee based on a turnover to the master franchisor. In other
words, franchise is actually an independent business but follows the method of operation of the
franchise. The franchisor will provide the model help and other items as they deem necessary.
KFC has set certain guardrails for all its franchisees covering the degree of food quality and
store cleanliness they have to maintain so as to run their store under their brand name. Below is
a diagram of KFC business model canvas explaining different blocks which from KFC Business
Model.

2.2 MARKET SEGMENTATION

Geographic segmentation divides markets according to geographic criteria. KFC breaks its
business into different geographical segments like America, Europe, Asia Pacific, Middle East,
Africa and other countries. KFC optimizes its menu and food offerings to suit the regional tastes
and needs. For example, in India, KFC offers Veg Rice Bowl just to cater to the vegetarian
customers there. Meanwhile in USA, KFC offers different types of chicken sandwiches which is
not available in other countries.

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2.3 KFC TARGET MARKET

KFC target market includes both Non-vegetarian and Vegetarian customer. KFC has items in its
menu that cater to adults as well as the young audience. Over the years the brand wanted itself
to be perceives as a family restaurant and has been running campaigns communicating the
same. There are three factors that are essential for evaluating a KFC target market :

 Segment size and growth

 Segment structural attractiveness
 Company objectives and resources

2.4 4P’s USE BY KFC

2.4.1 Products

KFC has variety product in their menu list that suitable for every age.

 Streetwise : Veg snacker, Chicken snacker, Snack Box, Rizo Rice, Rico Gravy
 Snacks : Popcorn chicken, Hit wings, Boneless chicken strips
 Toasted wraps
 Burger : Veg zinger, Chicken zinger, Tower zinger
 Box meal
 Chicken delight : Fiery grilled, Hot and Crispy, Original recipe
 Bucket chicken
 Signature sides : Corn, Coleslaw, Fries

2.4.2 Price

There are different pricing strategies that KFC uses for its products and its variants.

Optional Pricing : Basically used to increase the amount customers spend once they start to
buy. Optional ‘extras’ increase the overall price of the product and service. In KFC, customers
can buy the main items present in their menu and can option for extras or sides like drinks or
dessert which will go well with the main item they had purchased. The end result is that
customer ends up paying for the main item that they wanted to buy and also pay for the add-ons
item.

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Bundle Pricing : KFC bundles different products together and offers it to customers at a slightly
lower price. KFC provides different combo offers to its customers and also provide an option to
its customer to make the combo of their own choice.

2.4.3 Place

KFC initially opened its outlet in many countries. The outlets is mostly placed in metros and Tier
l cities where now has gradually moved to Tier ll cities where the buying power is one the rise
due to rapid urbanization.

2.4.4 Promotion

KFC does promotional activities by offering add-ons to the existing menu, gift coupons, T-shirt,
kids meal etc. KFC promotes its product through LCD displays kept inside its outlets which
promote their products and kindles desires among consumer. India being the country with
largest youth population has favored the growth of KFC and it has become the fastest growing
fast food chain.

2.5 DISTRIBUTION STRATEGY

With 18000 restaurant delivering finger licking delicious fast food across the world, KFC has
evolved itself through the years and having strong tie-ups or strategic partnership with the
supply chain partners is helping them in serving its customers in a better way. KFC always
believes in keeping its outlet in premium areas as well as in malls and shopping complex. These
KFC outlets can also carry out delivery for online orders. As a result, KFC cover both online and
offline deliveries.

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 3.0 IMPACT TOWARDS ORGANIZATION

The core is what makes a company unique and is the root of its competitive advantage in the
marketplace. KFC’s core factors are graved in its brand identity ensuring a successful franchise
in both the local and international market. According to Schmitt and Simonson (1997), corporate
and brand identity consist of four major elements. They are properties, products, presentations
and publications - which all together strengthens and increases KFC’s equity.

3.1 PROPERTIES

There are the actual tangible materials that make the building together which include things like
the facade, color schemes, and decor, arrangement of indoor ordering and dining areas, lighting
levels, restroom facilities. As a result, these tend to be essential in putting the restaurant ahead
of the competition. With colors across all the restaurant home and abroad, it becomes easy for
consumers to identify KFC outlet everywhere they see one.

3.2 PRODUCTS

There are the menu items they sell including names and descriptions for each of their products,
Across the globe, size, food appearance, smell and taste, food ingredient, nutrition, balance,
and assortment all tend to be uniform across except some side dishes which is customize to the
taste and preference of the local. Similar product make identification easy for this world of
migration.

3.3 PRESENTATIONS

In-store settings including (trays, tableware, napkin etc), take-out packaging, employee
appearance, efficiency, and courtesy appears tend to be uniform across their outlets as well.
Furthermore, proper management of experience and aesthetics enhance both corporate
identity, an organization’s overall public face, and brand identity, a product’s top of mind
awareness or recall.

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3.4 PUBLICATIONS

This include advertising; web pages; outdoor signage; trade characters. All publication tends to
be same across board no matter where they are located. Ordinary service interactions become
experiences when customers are engaged in a personal, memorable way. Content that good
aesthetics management also creates customer loyalty, allows for premium pricing, cuts through
information clutter, affords protection from competitive attacks, saves costs through information
clutter , affords protection from competitive attacks, saves costs through standardization, and,
as an internal marketing tool, motivates employees.

References
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KFC INFORMATION MANAGEMENT ANALYSIS. (n.d.). Retrieved from
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KFC, M. S. (n.d.). Marketing Strategy of KFC. Retrieved from https://www.marketing91.com/marketing-

strategy-of-kfc/#:~:text=Distribution%20strategy%20in%20the%20Marketing%20strategy%20of
%20KFC,-With%2018000%20restaurants&text=KFC%20always%20believes%20in
%20keeping,both%20%E2%80%93%20online%20and%20offline%20deliver

Strategy, K. M. (n.d.). Retrieved from http://heartofcodes.com/kfc-marketing-strategy/

SWOT ANALYSIS. (n.d.). Retrieved from https://strategicmanagementinsight.com/swot-analyses/kfc-

swot-analysis.html

http://www.aabri.com/

https://books.google.com.my/

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