Analysis of Kentucky Fried Chicken-Free-Samples for Students

Question: Analyse and evaluate the strategy, operations and performance of the Multinational Enterprise. Answer: Introduction KFC founded by Colonel Harland Sanders, also known as Kentucky Fried Chicken, is an American fast food chain popular for their fried chicken items. They have their headquarters in Louisville, Kentucky. It is the worlds second largest chain of restaurant after McDonalds with its presence in almost 20,000 locations globally in 123 countries (Alviola IV et al.,2014). KFC was one of the foremost American restaurants to expand internationally in Canada, Mexico and United Kingdom in the mid 1960s. The KFC chain is a subsidiary of the Yum brands, a brand that also owns pizza hut and taco bell chains (Kelly Swinburn, 2015). KFCs original product was the fried chicken piece that was seasoned by Sanders secret recipe of 11 herbs and spices. However, since the 1990s they expanded their menu to include chicken fillet burgers, wraps, salads, side dishes like French fries and soft drinks. A PESTEL analysis is a method used to analyze and monitor the external marketing environment that has its impact on an organization, which is used to identify threats and weaknesses of the firm. PESTEL stands for political, economic, social, technological, environmental and legal. Political factors Political factors study how and to what extent the government intervenes into the functioning of the economy. This includes the policies of the government, the political stability or instability in the market, tax policy, foreign trade policy, environmental law, legal law and trade restrictions. India has a steady government. The labor force is expensive and the companies have to pay high taxes, which reduces the profit rate in the country. The government has given freedom to the companies to do their business there way (Samnani, 2014). KFC designs the pricing structure keeping in mind the income of the people that way KFC can cater to all the classes. The political climate of India is friendly towards international businesses, which is an advantage for KFC. The operation of KFC is affected by the government rules and policies regarding the fast food industry. Currently government is controlling the fast food restaurants because of the various health issues and obesity related proble ms attached to it. KFC maintains a good relation with the government by paying taxes properly and increasing employment opportunities for the masses and follows the legal rules and restriction. Economical factors Economic factors have important impact on how an organization work and how profitable they are. Economic factors include the rate of economic growth, interest rates, inflation, income of the consumers, exchange rates and so on. KFC is struggling in many economies like china where their sales are declining due to its health factors (Schrder McEachern, 2005). With the growing health consciousness among the people, the sale of KFC is declining in many economies. Every outlet of KFC gives employment to around 10-15 people in a way it curbs unemployment ("Home | KFC", 2018). Indias economic condition is extremely good and per capita is high. Population being low resources is abundant. Though earlier the target of KFC was the upper classes, later on they changed their target market to include the middle-income group. The economic condition of India is an advantage for the company as this increases its sales. Social factors This area involves the social and cultural beliefs of the consumers. This includes population growth, age distribution, career attitudes and so on. These factors are extremely important because this directly affects how marketers understand their consumers. In the social issues KFC luring of children to their unhealthy food, unethical treatment of animals and low wages to employees are widely criticized (Shoyemi, 2014). It is rumored that the chicken used by KFC are genetically modified to store more fat, which makes the chicken incapable to carry its own body weight. Many animal welfare organizations like PETA condemn KFC for such heinous issues. The social system in India is beneficial for the further growth of the company. The banking system is also strong and literacy rates are high. India being a capitalistic economy the income of the people are high, and the busy schedule of the people makes them resort to these fast food restaurants. KFC very tactfully adapts to the culture of the country they operate in. the busy lifestyle of the masses makes them resort to these unhealthy fast foods. The growing awareness about the harmful effects of fast food is proving to be a threat for KFC. Technological factors The technological progression of the country affects the organizations marketing and daily operations India has a very high per capita income and literacy rate. There technological development is also very advanced (Kelsey, 2015). Thus internet usages and exposure to advanced technology is high. KFC uses strategy to introduce new technology when they feel it is needed. In the technological era KFC has started mobile apps with the help of which ordering and payment online is made possible. In a developing country like India this acts as an opportunity because this increases its sales and growth. Environmental factors With the growing concern on environment, this factor has come to the forefront in the recent years. It has become extremely important due to the scarcity of raw materials. KFC buys their packaging materials from companies that contribute to deforestation (Tiwari, 2017) This particular company also uses underage children to work for them in order to pay fewer wages to them. KFCs treatment of the chickens used for the meal is said to be injected to make them obese. This harms the chicken and makes them extremely toxic for human consumption. This also poses several difficulties for the chickens that sometimes die because of the injections. The educated people condemn these various factors since they pose as a threat for the KFC chain. Legal factors This includes the health and safety factors, advertising standards, equal opportunities, consumer laws and rights, product safety and product labeling. Every company need to know what is legal and what is not in the economy they are operating. For organizations that are global this is a difficult area to act because every country has different rules and laws (Smith et al.,2014). The government in India changes after every five years, corruption level is low. International companies are invited to start their business but their profit is low because of the high taxes. The government gives enough freedom to the firms to conduct their business and does not intervene unnecessary in the daily workings. KFC has to abide by the legal rules and regulations laid down by the government of India for the smooth operations. The above analysis clearly provides an overview of the external environmental conditions faced by the company KFC. The external environmental conditions form an important part of the company and often it is seen that they are beyond the control of the company. The company however, can utilize the external environmental conditions by turning the risks or threats faced by it into future opportunities. Global Diversity Global diversity can be defined as the process by means of which one company can distinguish itself from another not only on the basis of the services provided by them but also on the basis of the strategies as well as the global plan followed by them. This is an important process by means of which the various companies can adapt themselves to the global market and it also allows them to work as per the needs and the requirements of the customers. The company Kentucky Fried Chicken uses the various aspects of global diversity to market its products in more than 198 different countries of the world ("Home | KFC", 2018). The company KFC, in India itself has more than 350 outlets, thereby making India as one the largest center of its business ("Home | KFC", 2018). America is another country where the products of the company KFC are in much demand ("Home | KFC", 2018). The company KFC, as a matter of fact has its headquarters in Kentucky, United States of America ("Home | KFC", 2018). The cultural characteristics of the country India on the basis of the Hofstedes cultural model would reveal the following facts- Figure 1: Hofstedes Cultural Insights for India Source: ("Country Comparison - Hofstede Insights", 2018) The above figure clearly indicates that the Indian people score low on the individualism quotient, which means the people like to work in groups and group culture is prevalent there ("Country Comparison - Hofstede Insights", 2018). The people of India score very high on the power distance score which means that the people appreciate the hierarchy system prevalent at their work place and they are very dependent on their bosses or the higher authorities for the performance of their job roles ("Country Comparison - Hofstede Insights", 2018). The score of India on the Hofstedes culture for the aspect of masculinity indicates that the Indian society is driven by competition, success and achievement ("Country Comparison - Hofstede Insights", 2018). The low score of the nation for the aspect of uncertainty avoidance indicates that the people have low preference for avoiding uncertainty ("Country Comparison - Hofstede Insights", 2018). The cultural characteristics of the country United States of America on the basis of Hofstedes cultural model would reveal the following facts- Figure 2: Hofstedes cultural insights for United States of America Source: ("Country Comparison - Hofstede Insights", 2018) The above figure clearly indicates that the people of the United States of America are very individualistic and like to work in an individualistic manner (Taras, Steel, Kirkman, 2012). The low score on the power distance aspect indicates that the people of the United States of America do not endorse the inequality of the division of power in the society ("Country Comparison - Hofstede Insights", 2018). The high score on the aspect of masculinity indicates that the people of the United States of America are driven by factors like success, competition and achievement ("Country Comparison - Hofstede Insights", 2018). The low score on the uncertainty avoidance indicates that the people of America are fairly tolerant towards the changes in technology, innovations and the desire to try out new things ("Country Comparison - Hofstede Insights", 2018). Therefore, from the above discussion it becomes clear that if the American company, Kentucky Fried Chicken (KFC) is to expand its business in India then it will have to take into consideration the various aspects of the culture of the Indian nation. The company will especially have to make adjustments in the aspects of power distance, individualism, uncertainty avoidance as well as masculinity. Management of the business in India KFC opened its first outlet in India at Bangalore in the year 1995 ("Home | KFC", 2018). The company currently owns more than 350 outlets in the nation ("Home | KFC", 2018). This is a reflection of the successful collaboration of the company KFC with the franchise Yum ("Yum! Brands A World with More Yum!", 2018). It is to be noted that the company has transformed some of the traditional products offered by it in order to suit the taste as well as the needs of the Indian customers (Sania, Kalpina, Javed, 2015). It is to be noted that in the initial phase the company had to face some protest as the regards the type of raw materials used by it for the preparation of its products. Then there were others who protested to the non-vegetarian products sold by the outlets ("Home | KFC", 2018). The company KFC, therefore in order to capture the needs as well as the requirements of the customers started its new brand of products and food items with the slogan So Veg, So Good ("Home | KFC", 20 18). This plan was introduced as part of its Indian-specific promotional strategy, which was much appreciated by the Indian customers. The second important strategy adopted by the company in a bid to capture the Indian market was the introduction of the 5-in-1 meal boxes and the use of the local dabbawalas for the purposes of the delivery of the products to the office goers (Shoyemi, 2014). It is to be noted that the Indian dabbawalas are known for their efficiency as well as timely delivery services (Shoyemi, 2014). Therefore, this strategy proved to a vital one for the company as it not only enabled them to procure a reliable delivery system but also enabled them to capture the office goers customers of the nation. Another, important strategy utilized by the company is the introduction of the new system of Watt a Box, which is similar in many respects to the traditional 5-in-1 meal boxes of the company with the only difference being that in this particular respect the customers ca n order their meals over the phone (Hussain, 2014). The company even follows effective pricing policy as well as provides discount services in a bid to attract more customers to its outlets. These in short are some of the strategies, which the company has utilized over the years to capture the market of the Indian nation. The company offers a wide range of products to its Indian customers like Hot Crispy Chicken, Chicken Zinger Burger, Fiery Grilled bucket chickens, Rice Bowlz and various others ("Home | KFC", 2018). The company also provides a wide range of vegetarian products to the Indian customers. This is something which is not seen among the range of products offered by the company in its American outlets. The pricing strategy followed by the company in its Indian outlets is different from the ones which it follows in its American market. The company follows a pricing strategy in its Indian market as per the needs and the requirements of the customers and the market conditions. The company uses the social media and newspapers for the purposes of promotion of its products. The company in order to attract more customers had tie up with various other companies like Yum brands and Pepsi Co ("Home | KFC", 2018). They even offer attractive offers like combo meals and others to attract the customers. The primary supplier of raw materials for the company is Venkys, which is the largest supplier of raw chickens in India ("Home | KFC", 2018). The operational strategy followed by the company in India are listed below- The use of vegetarian menu as well as the localization of the products. Effective Supplier system Effective price strategy Focusing on the younger customers It is to be noted that the business of the company grew by 8% in the country of India in the year 2017 ("Home | KFC", 2018). The company owns more than 350 outlets in the country ("Home | KFC", 2018). The supplier system of the company in the country India is shown by the following figure- Figure 3: Supplier system Source: (Created by the Author) Targeted customer base and competitors The primary competitors of the company KFC in India are McDonalds, Subway, Dominos and various others ("Home | KFC", 2018). Initially, the target customer base of the company was just the office going population and to capture that customer the company effectively utilized the services of the dabbawalas. However, over the years, the focus of the company has changed significantly and to grab the attention of the other part of the population of the nation, the company started to focus on its vegetarian menu. The company, presently, is trying to grab the attention of the younger generation of the Indian population in the age range of 18-40 ("Home | KFC", 2018). It is commonly seen that the people in this particular age range are the ones who live a fast life and are more open to the kind of products offered by the company KFC. Risk Management Risk can be defined as the potential situation in which a person or an organization stands to lose or gain something of considerable value (McNeil, Frey, Embrechts, 2015). It is to be noted that risk forms an important aspect in the process of business management (Schermerhorn et al., 2014). It is often that the companies which are willing to come out of their comfort zone and take considerable amount of risks are the ones which succeed in the longer run (McNeil, Frey, Embrechts, 2015). The company, KFC is an example of this particular doctrine. The company KFC is one of the largest and most loved brands of the United States of America. The company could have stayed content with its monopoly of the business world. However, the company undertook a considerable amount of risk when it decided to venture into the market of India. It is to be noted that the culture as well as the eating habits of India is completely different from the country of the United Nations of America. There was a considerable element of risk involved in the process. However, the company decided to take the risk and judging by the performance of the company in the recent few years in the Indian nation it would be fair to say that the risk taken by the company KFC paid off. Risks faced by KFC in India The company in the recent times has enjoyed considerable success in the Indian nation. However, there are some risks as well which the company faces in the country of India- The first risk faced by the company is the threat from the various competitors like McDonalds, Subway, Dominos and various others. It is seen that the consumption of the food items sold by the various outlets of the KFC increases the chances of obesity among the consumers. The vegetarian food preferred by the people of India not only limits the number of products offered by the company but also narrows down their targeted customer base. Kitchen hygiene is another common issue, which the company has been facing for a long time. Commodity price fluctuation is another factor which the company needs to deal with. It is commonly seen that in countries like India, the prices of the various commodities keeps on changing and this often becomes a cause of concern for the company as the prices of the products sold by the company are fixed and the company needs to adjust the changes in the prices from its profit margin. The inconsistency of the supplier chain system is another factor which the company needs to take into consideration. It is often seen that in countries like India, due to various factors the supply chain often gets disrupted and therefore in those situations the company have to deal with the scarcity of the resources. Price pressure is another factor which the company needs to take into consideration. Often it is seen that there pressure on the company for the kind of pricing strategy which they adopt and in those situations they are unable to put the prices of the products as per the requirements and the needs of the company. The company KFC can manage the above listed risks by various effective strategies like the ones mentioned bellow- The company can counter the health risk which its products cause by the use of healthy ingredients for the manufacture of its food items. The company can follow the strategies used by the company Subway (Schermerhorn et al., 2014). Implementation of the proper hygienic guidelines can improve the hygiene issues which the company faces in its kitchen. The threat from the competitors can be neutralize by effective management strategies. The collaboration with the brand Yum is such an instance (Klijn et al., 2015). The pricing pressure can be neutralized by following effective pricing strategies taking into consideration the needs as well as the requirements of the customers (Wang, Yiu, Mak, 2013). The problem of supply chain system can be resolved by developing effective supplier system. The company even make use of multiple supplier systems in bid to ensure that even if one system is unable to deliver the desired results the others will (Wang, Yiu, Mak, 2013). The company can overcome the price fluctuation problem by devising effective supplier systems which will ensure that the company gets timely delivery of raw materials and that too at affordable prices (Schermerhorn et al., 2014). Conclusion Therefore, from the above discussion it becomes clear that the companies need to take various factors into consideration for the purpose of doing business in other countries of the world. It is normally seen that various companies embark on the path of globalization without taking into consideration the cultural, political, environmental, legislative and other aspects of the countries in which they are about to open their business centers. This often instead of expanding the business of the company causes several problems for the parent companies. Therefore, it is advisable for the companies to take into consideration the internal as well as the external environments of the countries into consideration before opening their business centers into those countries. The companies also need to take into consideration the various risks faced by them and develop effective risk management strategies which would mitigate the risks faced by them. 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