Kfc Stategic Analysis free essay sample

Analysis is a part of the external analysis when and it gives an overview of the different macro-environmental factors that the company has to take into consideration. Political: The government policies on the regulations of fast food operation affect the operations of KFC. Currently because of health concern such as cardiovascular and cholesterol issue and obesity among the young and children in the country, Government are controlling the marketing of fast food restaurants. They also  control the license given to open the fast food restaurant and other business regulation needs to follow such as for a franchise business. Good relationship with government in giving mutual benefits such as employment and tax is a  must for the company to succeed in any  foreign market. Economic: The organizations in the fast food industry are not exempted from any disputes and problems in the economic situations. The brand in affected by the economy of the corresponding states like the changes in the exchange rates or the inflation changes. We will write a custom essay sample on Kfc Stategic Analysis or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The brand should also be well informed of the existing tax requirements by the corresponding economies in which they are operating. Exchange rate fluctuations will also play an essential role in company’s operations. Socio cultural: India is the second most populous nation in the world with an  estimated  population of over 1. 1billion people. There has also been a nonstop increase in  the use of fast food in India. The social trend toward fast good consumption is changing and there has been an increase of 90%  fast food consumption in India. This increase is larger than the increase in  the BRIC nations of  Brazil (20%), Russia (50 %) and China (60 %). Thus this shows a positive trend for fast  food industries in India. Technological: The Indian fast food Industry is heating up with a lot of  foreign players inflowing the Indian market. The technological knowledge and  proficiency will also enter the Indian market with an increase in competition. With the lower  rates and increase technology the fast food counters are attracting youth by giving them attractive deals, for example KFC. Though  KFC should be looking to  competitors innovation and improve itself in term of integrating technology in managing its operation. For  example in inventory system, supply chain management system to  manage its supply, and wireless internet technology. Implementation of technology makes the management more successful and cost saving in the long term. Environmental: As one of world largest consumer of beef, potatoes and chicken, KFC always had been critics for world environmentalist because high consumption of beef causes the green house effect by methane gasses coming from the cow’s ranch. Vegetarian environmentalist criticizes the fast-food giant for unkindness to animals and slaughtering. Before using  paper packaging, KFC had also been criticized for being insensible to  pollution because of not using paper based packaging for its food  products. Our world is getting  concern on environment issue and business  operating here should not just care for profit, but careful usage of world resources for  sustainable development and care for environment safety and  health for our  future generation. Legal factors As a  certified fast food operator, KFC should follow many regulations and procedures. KFC should protect its integrity and consumer confidence by ensuring all materials and process are as claimed or  must followed. Other legal constraints that the business  owner must follow as fixed in laws are such as  operating hours, business registration, tax requirement, labor and employment laws and  quality amp; environment certification (such as ISO) in which the outlet has been certified. * Internal Factor Analysis (Michael Porter’s 5 Force Model) Porters five forces analysis is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon industrial organization economics to erive five forces that determine the competitive intensity and therefore attractiveness of a market. The Five Forces directly are interconnected with the effect on the company’s ability to serve its customers and to make a profit. A change in any of these forces generally requires a company to re-assess its competitive strategies. Entry For the current Indian market for fast food, it is not difficult for a fast food restaurant to enter the market. Though, it would  be very difficult to take  over already running major fast food chains dominancy in  India or even  make a  significant  amount of profit. KFC holds the first-mover advantage into the non-veg food specialty food segment that gives them free reputation. The brand name  is already  established. Moreover, there  are already   numerous western-style dining places in India,  such as McDonald’s, Pizza Hut, Dominos and Subway, and any new fast-food entrants would  just be presenting something very similar to what’s already there. Buyer Bargaining Power Buyers (in the fast food industry) are those who order’s fast food at the local restaurant, over the telephone, or internet or just paying or consuming the products. The customers of KFC, especially as individual buyers, have almost no bargaining power  because if only one customer threatens to no longer eat at KFC, the store is not going to lower its price  because the cost of losing one customer is  not very great. Supplier Bargaining Power The suppliers like the buyers, have very little bargaining  power. In terms of food, KFC, upon its move into India, urged many of its U. S. suppliers to also extend branches into India. KFC also began helping  local suppliers  by giving  them technological support to improve their products. This is a  brilliant strategy  because the supplies that KFC would otherwise need  to import from the U. S. can now be obtained domestically, and if the U. S. suppliers decide to raise their  prices, KFC can easily switch to the local suppliers. With this strategy, KFC created competition among its suppliers, lowering the supplier  bargaining power. Substitutes and Complements There are  a few major competitors in the fast-food industry in India for KFC, specifically  McDonald’s, Pizza Hut, Dominos and  Subway. The substitute  products, in  this  case, would be  burgers, pizza,  and sandwiches. Although they are competitors, their primary products differ greatly from each other, in that they sell, chicken, burgers and fries, pizzas, and sandwiches, respectively. Traditional Indian dining, foods from street vendors and grocery stores with ready-to-eat foods are also substitutes, as  families could choose any one of  these over fast food for a  meal. While other fast foods serve as substitute to KFC, they can also serve as complements for  fast foods as a whole. KFC’s price rises as well if the general price of fast food goes up, and the same can be said of the quantity sold of these products, which make them complements to  each  other. Rivalry KFC has little rivalry with similar fast-food chains in India because their core products are different, as they offer different kinds of fast foods with dissimilar tastes and styles. If KFC raised its  price for chicken by a little amount, Indian chicken lovers would not switch to  Pizza  Hut just  because the  price  for  KFC  increased. Moreover fluctuation of price for one restaurant is not going to affect the others because these restaurants have different target customers. * Competitor Analysis As the fast food market in India is highly competitive, KFC faces a wide number of  direct and indirect competitors. KFC’s main competitors are fast food chains such as McDonald’s, subway, pizza hut and Domino’s, which are already well established throughout India. McDonalds’s is a direct competitor, as they have already successfully introduce their salads plus line, which directly targets healthy food conscious Indians. McDonalds mainly sells hamburgers, cheeseburgers, French fries, breakfast items, soft drinks, milkshakes and desserts. In reaction to changing consumer tastes, the company has expanded its menu to include wraps and smoothies. All this competition makes it quite difficult for  KFC to maintain or even broaden their customer base.