TABLE OF CONTENT

INTRODUCTION

It is necessary for any business to concentrate on improving total quality management (TQM)
to quickly cope with changes that appear in the internal and external environment. According
to Anand et al (2009), innovating and improving the quality of products or services and
processes is considered a decisive factor for the success of businesses because continuous
quality improvement may meet the needs of customers and then gain more competitive
advantages. However, when implementing any project, the company may face many risks.
And if the company does not promptly provide solutions to cope with those risks, the
company may get failures.

Despite being one of the giants in the fast food industry with huge marketing experience and
possessing many competitive advantages, the well-known fast-food restaurant chain KFC is
still facing substantial risks when implementing its projects. Important projects such as
scaling, product line development, etc., can cause KFC to face dilemmas; more seriously,
risks may affect their finances.

To extend our understanding of the use of total quality management and strategic risk
analysis in firms’ operations; this report first explores the definition of Total quality
management (TQM); and then, based upon a systematic literature review of a variety of
approaches to continuous quality improvement, an insight of three popular methods is
developed by investigating their application through some detailed rational. Next, the writer
will execute a continuous quality improvement plan by applying a PDCA approach. The
report then studies the responsibility of strategic risk analysis in organizations and explore
why it plays a pivotal role in business operation. In addition, the writer will find out the
potential risks of KFC while they want to launch a new product line through two popular
platforms: PESTLE and SWOT analysis. When understanding what constitutes the potential
risks to KFC’s new product launch project, it is essential to implement an appropriate risk
response plan.

A wide range of approaches for KFC to continuously improve quality

According to Chen et al (2010), continuous improvement (the abbreviated name is CI) is the
process of continuously identifying, analyzing and improving the quality of products or
services, systems, and processes in a planned, organized manner. Moreover, continuous
improvement is considered as the goal of the organization's improvement projects to meet
customer needs and adapt to changes in the internal and external environment (Furterer and
Elshennawy 2005, Green 2006). Currently, there is a wide range of approaches to continuous
quality improvement including the PDCA method, KAIZEN, Six Sigma, LEAN system, The
5S's, etc. In this report, we will explore three well-known approaches that most businesses
use for continuous improvement in their operation.

KAIZEN Approach

KAIZEN is one of the philosophies of the continuous improvement approach that originated
in Japan. KAIZEN is derived from two Japanese words: Kai - change, and Zen - good, which
means improvement. In daily life, Kaizen can be understood as the improvement in personal
life, home life, social life, and work life (Slack, et al., 2013). However, in the business
context, Kaizen is defined as the process of continuously improving business activities. To be
more specific, the Kaizen process consists of 6 steps, starting with defining the problem,
determining the best solution to the problem, implementing the solution, and then analyzing
the results after implementing the solution, followed by normalization and optimization of the
solution, finally iterating the standardized Kaizen cycle. The improvement process in Kaizen
often starts with small-scale ideas, but the results are impressive. This concept is different
from the innovation that Western businesses often apply, which is to create big changes,
prioritizing immediate breakthroughs. Some benefits recorded when businesses apply Kaizen
methods include: reducing waste, and increasing productivity in production and business
operations such as reducing inventory or goods that do not meet quality standards, In
addition, applying Kaizen also helps businesses promote teamwork, increase internal
cohesion, and build a culture. businesses with thrifty habits and efficiency in every detail.

Toyota company is one of the excellent exemplifies of a very successful business in applying
Kaizen. In the history of its formation and development, Toyota has experienced many events
and difficulties faced many times. But since starting to apply Kaizen in the business, Toyota
has made amazing innovation steps. A typical innovation of Toyota is the production of cargo
vehicles at its factory. Before knowing about Kaizen, Toyota spent a large amount of money
buying cargo cars. But then the company discovered a way to build the vehicle by adding
engines to existing components on the factory production line. Since then, Toyota has been
able to save the cost of buying a cargo vehicle by more than half compared to the original,
which is estimated to save nearly $3,000 per vehicle.

Six Sigma Approach

Six Sigma is a method of improving business processes and quality management by relying
on statistics to find errors, determine the cause of errors, and handle errors to increase process
accuracy. Six Sigma uses statistical methods to count the number of errors that arise in a
process, then figure out how to fix it, bringing it as close to the "zero error" level as possible.
Only when a process does not contain more than 3.4 defects per million products does it
reach the standard Six Sigma, or to put it another way, a 99.99966% success rate.

There are 5 steps while conducting the Six Sigma approach which is known by the acronym
DMAIC.
● D - Define: identifying the problem of the product
● M - Measure is the stage of data collection, assessment and identification of problems
to find the root cause of defects.
● A - Analyze: determine the gap between the planned goals and the current
performance results, and identify opportunities for the business.
● I – Improve: start implementing the improvement solution.
● C – Control: monitor and control the initial set of goals, avoid going back to the old
path or going in the wrong direction.

Similar to other continuous improvement methods, Sig Sixma also has great contributions to
businesses such as helping businesses eliminate waste, and redundancy in processes or
dynamics, leading to increased efficiency and productivity. capacity. Moreover, by
continuously improving the quality of products or services, businesses can ensure to provide
the best products to customers and limit mistakes when customers use products or services,
which enhances customer loyalty.

Samsung is a typical success in applying the Six Sigma methodology. Specifically, Samsung's
plan to enter the global mobile phone market collapsed because the Samsung SH-700 mobile
phone had a too high error rate, up to 11.8%, making a total of 150,000 products forced to be
recovered and destroyed. From this sad ending, Samsung decided to change its operating
motto from mass production in large numbers to focus on improving product quality.
Samsung has chosen the Six Sigma methodology to implement across all levels of
management as well as employees in all departments. After obtaining the first results in
production, Samsung expanded the scope of the application of Six Sigma to marketing, sales,
and even indirect service departments such as accounting, human resources, supply, and
ultimately to the entire supply chain. All of their employees are trained in the theory and
application of Six Sigma. And as a result, Samsung has recovered and risen very quickly
thanks to that process improvement. Later phone models are continuously innovated
compared to previous products, helping Samsung become one of the leading brands in the
smartphone market today with best-selling products such as Samsung Galaxy S7, and
Samsung J7 Prime.

PDCA Cycle Approach

PDCA works through a cycle of 4 steps equivalent to 4 abbreviations and 4 steps in a circle
PDCA is arranged and works in a closed cycle. Thereby, Enterprises will carry out planning,
implementation, and evaluation, then change and improve the plan and start a new loop
during the operation of this tool.
● P - Plan: establishes the company's goals and strategies that need to be accomplished
● D - Do: experiment and standardize the process. The most important thing when
taking this step is that members must be disseminated as well as trained on the content
outlined in the previous plan.
● C - Check: Enterprises need to build a system of objective and quantitative
parameters. These will be the basis for evaluating the quality standard of the improved
process, as well as comparing the effectiveness with previous cycles. Moreover,
businesses will recognize the problems they are facing and offer reasonable solutions
for the next stage of the PDCA cycle.
● A - Act: the adjustment phase to make the activities of the corporate governance
system synchronized, overcome the remaining shortcomings and implement the set
quality standards.
The PDCA cycle enables continuous improvement through the cyclical principle of
operation. Each part of the Enterprise project will go through the same phase over and over
again, ensuring that issues are reviewed, corrected, and adapted to the needs and
circumstances of the company. Besides, PDCA also allows breaking the project into small
steps. Thereby, enterprises will easily manage and improve step by step in the most thorough
manner.

One of the hospitals that have successfully applied the PDCA method is the Mayo Clinic, a
non-profit hospital established in 1889 and ranked as the number 1 hospital in the US for
many years. Mayo Clinic has used Kaizen and PDCA in tandem to refine treatments, manage
patient records, and cut customer wait times. Thanks to the application of method p, the time
to examine and test patients is reduced from 7.3 hours to 3 hours after more than 1 year of
applying the two methods above. In addition, the hospital's total inventory of medical
supplies also decreased by 31%.

Useful tools utilized in Continuous quality improvement

There are 7 main tools that organizations can use for continuous improvements such as cause
and effect diagrams, control charts, flow charts, scatter diagrams, checklists, and histograms.
In this report, the writer will investigate 2 popular tools that are used frequently in some
global companies.

Cause and effect diagram

The Cause and Effect Diagram, also known as the Fishbone diagram, is a tool used to analyze
the possible causes for a particular problem or result and to represent the relationship between
the result and the cause by a detailed diagram shaped like a fishbone. By using this type of
diagram, businesses can easily find and discover the causes affecting the quality of products,
services, or processes to promptly offer improvement methods.
This report will describe an example of applying the Cause and Effect diagram by identifying
the main causes of "Car cannot start". With this example, the writer identified there are 6
main factors that can cause the car to not start including People, material, machine,
environment, measurement, and method. The specific causes have been described in the
figure below. Thanks to the Cause and Effect diagram, we can easily identify the cause of the
problem for timely elimination. Furthermore, using this tool helps employees form the habit
of investigating, focusing their attention on the problem, and identifying the cause of the
problem in a structured and systematic way.

Checklist

The checklist is one of the main tools used to collect and record data easily, quickly, and
timely, in order to provide important information in quality management. This form is
designed and customized by the user to visually record quality-related metrics and capture the
issue and status quo clearly. From there, make the assessment of the quality situation and
appropriate treatment decisions. There are a few common reasons that businesses often apply
the Checklist tool such as Checking the reason for the returned product, Finding the cause of
the error, Checking the frequency of defects in the product, etc.

An example where a motorcycle manufacturing company used the Checklist tool to check the
frequency of possible problems with a new shipment of the company. The problems that can
be encountered are mentioned such as paint defects, weld defects, electrical parts, motors, etc.
Thanks to this way of analysis and testing, businesses can easily see how the company's
products are of good quality and what errors need to be fixed, as well as what to prioritize to
improve. product quality to bring finished products to customers.

Defect No. of defects Total

Faded paint layer ///// ///// ///// 15

Solder joint mismatch /// 3

Wheels are not installed properly ///// /// 8

Missing electrical parts ///// ///// ///// ///// / 21

The motor is installed incorrectly // 2

 Continuous Improvement Plan for KFC
Maintaining client satisfaction through quality management is crucial for effectively
managing business operations. And of course, ensuring product quality and prompt service
are prerequisites in KFC's business strategy. And to improve the customer service process at
KFC's stores, this report will apply the PDCA model to implement a plan to improve
customer service speed from 7 minutes to 5 minutes.
Project: Improve the speed of serving meals to customers at KFC Vietnam stores
Project SMART aim: Enhance customer satisfaction by decreasing waiting time from 7
minutes to 5 minutes.
● PLAN:
Service delivery time management is a complex and challenging task that requires
commitment, discipline, and urgent effort from everyone involved in the preparation process.
To begin this improvement plan, the manager conducts a check on how long it takes to
complete an order and explores what increases the time in preparation. Once the cause is
known, start optimizing the preparation process by looking at the steps that can be eliminated
from order receipt, and processing to packaging. It is predicted that when applying this
improvement, there will still be many cases where employees complete more than 5 minutes,
but will consider depending on the case that the number of items is high, so it takes more
time to prepare. But the training is thorough so that the staff can grasp the new
implementation process and ensure it can be completed within a maximum of 5 minutes. In
this planning process, all employees are required to perform to standards and act properly,
which will help the organization's management achieve its objectives effectively. According
to the above objective, the writer prepared a plan and the details of the plan are mentioned in
the table below:

Task to be completed Person Responsible Due date

Measure the maximum time to complete an order Managers 4 days

Find out the reason why the order preparation time is long Managers 1 week

Find ways to change the preparation process to reduce time Managers 1 week

Training staff HR department 1 week

Trial Implementation Staff + Managers 1 month

 ● DO:
In this step, management and employees will begin to follow the work as outlined in the plan.
After the trial implementation step, managers will synthesize customer reviews by surveying
customer satisfaction in a direct or indirect way. After summarizing the data, the management
begins to use tools to analyze the results, such as control charts, scatter diagrams, etc.

● CHECK:
The check phase is performed by collecting customer and employee feedback and monitoring
employee activities to conduct evaluation analysis. In this case, the manager will compare
whether the application of the preparation process has been properly applied by the employee
according to the principle of a maximum of 5 minutes or not, cases exceeding 5 minutes
occur many times in a month. past experience and whether customer satisfaction has
improved.

● ACT:
The last stage involves evaluating the success of the remedial measures. The remedial
measures may be enhanced based on data collected from the consumers. Making sure that the
corrective measures turn into a long-term fix is crucial after a few cycles of corrective action
implementation. Therefore, according to the original plan in the planning step, in reality,
there will still be cases where employees exceed the time expected by management by up to 5
minutes. But this does not affect too much because due to objective reasons such as the
number of orders being too large, the number of customers coming at the same time is too
crowded, causing staff to be overloaded. Therefore, in the future, there should be an
additional plan on how many minutes if the number of orders is larger, the maximum service
time for customers.

The responsibility of strategic risk analysis (SRA) and why it is important in an

organization

According to Roberts, Wallace, and McClure (2003), strategic risk is defined as a business
risk that influences how an organization develops and implements its strategy. However,
Deloitte (2013) argued that a company's business strategy and strategic objectives can
potentially generate strategic risk. Overall, it can be understood that strategic risk arises from
factors inside or outside the business that may make it difficult, or even impossible for an
enterprise to accomplish its objectives and strategic goals. Furthermore, besides affecting the
organization's ability to achieve its goals, strategic risks can also arise from the strategic
decisions of the business itself. Whether the source of strategic risk is from inside or outside
the organization, it can have serious consequences for the development of the business in the
short term or long term.

In order for businesses to limit the types of risks mentioned above, the identification of
strategic risk management is really crucial. According to Marquette University (2015),
strategic risk management is a continuous process for recognizing, analyzing, assessing, and
treating loss exposures as well as monitoring risk management and financial resources to
lessen the negative consequences. In addition, strategic risk management also focuses on the
right balance between making the most of opportunities for the company to achieve its
strategic goals and providing solutions to prevent possible consequences. (Aven & Vinnem,
2007). In fact, if an organization does not implement strategic risk management measures
well, it will face a wide range of threats. For example, photography pioneer Kodak succeeded
in inventing one of the first digital cameras but ultimately lost to the invention of the next
generation of cameras with more features. Or MySpace was once known as one of the most
influential social networks, but until Facebook appeared, MySpace had to surrender because
it could not keep its users. Through the two examples above, it can be seen that the failure in
the operation of the two brands above comes from the failure to hedge against the
development of competitors, namely the failure to innovate in their product. Therefore, every
aspect of a business can present risks, so understanding the importance of strategic risk
management is seen as the key to the success of businesses. In this report, the writer will
investigate three main advantages of strategic risk management in business.

● Objective assessment of future strategies

When the business implements the policy of strategic risk management in the process of
operation, senior managers will always be in the mood to think about the next strategies in
the future instead of just sticking to the current business plan. That means without applying
strategic risk management, the organization only focuses on making decisions to solve the
current problems without looking beyond the risks that may be faced in the future. Therefore,
strategic risk management creates opportunities for businesses to better understand potential
barriers that may prevent strategic goals and helps businesses prepare strategies to deal with
risks to ensure the implementation of the projects is carried out smoothly and is always in line
with the vision of the organization.

● Creating a decision-making framework

When successfully applying strategic risk management, businesses can more easily make
future decisions because they can already analyze the risks that may be encountered. More
specifically, with a clear risk management strategy, businesses will understand which factors
are likely to cause them to fail, which factors are their chances of succeeding with future
strategies, etc. From there, managers can make smart and informed decisions to help
businesses be more proactive in avoiding risks.

● Efficient Use of Resources

The utilization of the framework and tools required to consistently carry out essential risk
management activities may be enhanced by a corporate risk management program that is
connected with day-to-day risk management. Efficiency is increased by eliminating
redundant procedures since resources may be used more wisely.

Apple is a prime example of a business that has successfully applied strategic risk
management. Faced with the risk of fierce competition in the smartphone sector and
counterfeit companies continuously offer products at more affordable prices. As a result,
Apple faces the danger of losing customers every day. Apple uses branding as its initial tactic
to mitigate the danger of ongoing rivalry. Additionally, by strengthening the connection
between its products and customers, the company's innovation process helps them win the
trust and loyalty of clients. The company will release a new product in three months with
added features that will surprise the customers. Hence, customer loyalty will be a valuable
weapon in managing issues that can jeopardize their place in the market.
 A comprehensive strategic risk analysis of KFC’s new product launch

KFC has announced that it has launched a new product "Potato Cinnamon Snail Chicken
Topped With Cream Cheese Sauce". Therefore, in this report, the writer will execute a
strategic risk analysis for this new product launch by using PESTLE and SWOT platforms. In
this section, the risks that KFC is likely to face will be identified and analyzed.

External Environment Analysis (PESTLE model)

PESTLE Problems Influence on KFC

Factors

Political Inflation is constantly Vietnam is trying to control inflation. Up to this point,

fluctuating although inflation has been controlled quite well, it is not
without the risk of high commodity prices. Therefore,
KFC is likely to face the situation that the price of input
materials will be higher. Since then, sales and profits of
new products are also affected.

Economical Vietnam's GDP is Based on the growth results in the first quarter of 2023,
increasing international organizations have made new forecasts for
Vietnam's GDP growth in 2023. According to the World
Bank's (WB) Review report published on the 13 March,
Vietnam's economic growth is forecast to reach 6.3% in
2023. With such growth, the income of Vietnamese
people also improves, so they can afford to pay for a
new product of KFC. On the other hand, they also tend
to find products of higher value, more luxury to
experience, making KFC's products lose the number of
 potential customers.

Social The public perception KFC's main products are dishes that are known to be
of the fast-food high in calories, salty and greasy. And those are the
industry problems that people who are especially concerned about
health are very afraid of because they easily cause
obesity, blood pressure, or other diseases. Worryingly,
followers of this school tend to believe that fast-food
restaurants are the cause of the health problems
mentioned above. So, as the culture of healthy eating
becomes more and more popular, it means that many
people are starting to think of fast food chains like KFC
as the place to provide unhealthy food. From there, the
number of customers of KFC stores will decrease rapidly
and KFC's reputation will also be damaged. In addition,
marketing for a brand or new product will also be more
difficult.

Legal Food safety laws are In 2023, Vietnam has made many adjustments in the
getting stricter food safety law to ensure that food will not cause harm
to human health and life. Therefore, KFC is under
pressure when launching new products, which is to
always ensure the quality of its products is uniform and
meets safety standards in all stores.

Technological Incorporating New With the increasing speed of industrialization and

technology into product modernization, the regular application of new
technologies to the product production line will
sometimes be a difficulty for KFC because it is likely
that their employees will encounter some barriers in the
process of absorbing new technologies with many causes
such as lack of experience, diversified advanced
technologies, slow application compared to competitors,
etc.
 Cybersecurity is Most KFC stores in Vietnam share information, operate
increasingly insecure businesses from many devices in many locations,
connect to multiple networks and access the same cloud.
With a large amount of confidential information related
to this business, it created a challenge for the managers
of KFC to avoid being hacked by bad guys.

Most customers KFC has to pay attention to environmental protection,

Environmental diligently follow especially following 17 sustainable development goals.
eco-friendly trends

The potential outbreak Information about the Covid epidemic has reappeared in
of the Covid-19 a few countries, this is a top concern not only for the fast
pandemic food sector but also for the entire industry. If the
Covid-19 epidemic breaks out again, KFC's supply chain
will be disrupted, affecting the production process of
new products. Moreover, the outbreak will make
customers afraid to go out to eat, so the number of sales
orders may drop sharply, affecting the sales of KFC's
new product line.

Internal Environment Analysis (SWOT model)

SWOT analysis

Strength Have a good Brand Image

KFC is one of the largest fast-food restaurant chains and the second-largest global
brand in the fast-food industry in terms of value. With a traditional layout in red
and white tones, the space at the store is beautifully decorated to create comfort for
customers. KFC's stores are often located in convenient locations such as right at
intersections, shopping centers, supermarkets, etc., so they can easily access many
potential customers.
 Product Uniqueness
KFC is known as a fast food restaurant that offers a menu with a variety of dishes,
in which the highlight is the chicken flavor made from the "11 herbs and spices
original recipe" that other stores do not have. Thanks to this unique taste along with
the constant development in innovation of product lines suitable for each country,
KFC's revenue is maintained stable and customers are always satisfied with its
dishes. KFC.

The brand of a large and powerful corporation

KFC is one of the brands of YUM! corporation and this helps KFC have abundant
financial resources to be able to develop more stores around the world and facilitate
product research. Thanks to this great support, KFC can also easily compete with
other competitors.

Weakness Trademarks are confusing

Although KFC's store is beautifully designed with two prominent colors, white and
red, it is easy for customers to confuse KFC with competitors such as Lotteria,
Jollibee, McDonald’s,...

Unstable human resources

KFC's resources are not to the extent that there is a shortage of human resources;
however, the staff changes frequently so most of the staff are inexperienced. This
makes it easy to spend a lot of money on recruiting and training employees, but the
employee's time to work is not long. Moreover, when employees do not have
enough work experience, it is easy to make mistakes in serving customers and in
food processing. This easily causes KFC to lose customer satisfaction and leads to a
decrease in store revenue.

Opportunities Attract more customers thanks to government policies

Currently, the government is strengthening the cleaning of sidewalk restaurants to
limit unsanitary and unsafe food restaurants. In addition, the government
recommended not to use food made from chickens of unknown origin because of
the fear of prolonged widespread bird flu waves. Therefore, customers pay great
attention to the quality of the product, and the source of clean chicken is KFC's
 advantage, so customers will feel more secure when using KFC's dishes.

People's income tends to increase

Consumers' income tends to increase and Vietnam's economy is on a stable and
developing momentum, so it will be an opportunity for KFC to quickly attract
customers to develop products and increase sales.

Threat Market Competitors

The fast food sector in Vietnam is witnessing fierce competition between
international and domestic brands. Therefore, KFC is always in front of strong
competitors such as Lotteria, Jollibee, McDonald's, Popeyes, Mr. Thinh,...

Customers are more conscious about health than ever

Customers are tending to eat healthy and limit the use of high-calorie foods, but the
downside of the food that KFC provides is high in fat, high in protein, but low in
fiber and vitamins. Moreover, the media often talk about the bad sides of fast food,
accompanied by a series of news that reflect the overweight rate of urban children,
which makes consumers even more concerned, and actively looking for nutritious,
beneficial foods.

Pressure from Substitute Products

Vietnam is an agricultural country and has a very rich culinary culture, so KFC may
have difficulty when some products can be substituted as many as rice, pho,
porridge, and vermicelli. ... More importantly, Vietnamese people love these dishes
because of their convenience, ease to find, deliciousness, and cheap. It can be seen
that the pressure of substitute products for KFC's fast food products is not small.
REFERENCES