ASSIGNMENT

OF
STRATEGIC MANAGEMENT
(STRATEGIC ROADMAP OF
KFC)

Submitted To:

Submitted By:

Mr. Gautam Bansal

Poonam Khurana
Simranpreet Kaur
Jasveen Kaur
MBA 2C

KENTUCKY FRIED CHICKEN (KFC)

Background of the Company
KFC (formerly known as Kentucky Fried Chicken) is a trademark franchise of Yum! Brands,
Inc., headquartered in Louisville, Kentucky, United States .Founded by Col. Harland Sanders,
KFC is known mainly for his fried chicken. Col. Sanders began selling fried chicken at his gas
station in the year 1939 in Corbin, Kentucky which subsequently moved to a motel. He closed
his business in the late 1940s when the Interstate highway through town. In the early 1950s, he
began traveling the United States and met with Pete Harman in Salt Lake City, Utah, and in 1952
co-founded the Kentucky Fried Chicken restaurant is the first in the world (his first restaurant
does not use that name). Sanders sold the entire KFC franchise in 1964 worth 2 million USD,
which has since been resold three times. Ultimate owner is PepsiCo, which incorporate them into
the company Tricon Global Restaurants division, now known as Yum! Brands, Inc.
In Indonesia, sole franchisee of KFC is PT. Fast-food Indonesia, Tbk ( IDX : FAST ), which was
founded by Gelael Business Group in 1978, and registered as a public company since 1994 .
Indonesias first KFC restaurant opened in October 1979 in Jalan Melawai, Jakarta.
1930
Way Back In 1990 Colonel Harland
Sanders Got Some Distinguished
Kentucky Folk Licking Their Fingers.
Its been in Fashion Since.

VISION
Our passion, as a restaurant company, is to put a Yum on people faces around the world,
satisfying customers every time they eat our food and doing it better than any other restaurant
company.
MISSION
To be leader in Western Style restaurants through friendly services, good quality food & clean
atmosphere.

STP
Segment:
People willing to have hygienic & delicious non conventional meal at restaurant.
Target:
Children & Youth.
Positioning:
The best Chicken Burgers.
ENVIRONMENTAL SCANNING OF KFC
External Analysis
PESTLE Analysis
Political
The operations of KFC are affected by the government policies on the regulations of fast food
operation. Currently government are controlling the marketing of fast food restaurant because of
health concern such as cardiovascular and cholesterol issue and obesity among the young and
children in the country. Governments also control the license given for open the fast food
restaurant and other business regulation need 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.
The political instability of Pakistan is affecting the progress of the company such as some of the
KFC outlets have been burned in Karachi at the death of Benzir Bhuto. Instability of the
government in the country is also a big threat to the company because due to change in
government, policies of the country also changes.

Economic:
There has been a rising rate of inflation in India which is affecting the prices of its products. Also
the tax provisions like that of VAT are to be applied according to the guidelines of the
government. Decreasing value of rupee has also affected the revenues of the company.
Socio- Cultural
Culture element includes the attitude, values, beliefs, behavior associated with demographics.
MNCs usually face challenge of understanding the culture of the country in which they are
working. To solve these problems KFC hire all employees of local area so that its easy to
understand the culture of the country. For Example KFC Management knows Pakistan is a
Muslim country, therefore they use 100% Halal (Zibiha) chicken. Indian people do not take beef,
Germans like beers, Finish like fish type food, Asian like rice & American eat big sized menu. So
far KFC showed good efforts in localization of its menu & suit local taste.
Technological
Management information systems have highly emerged as a weapon in gaining advantage for the
food courts as it enables companies to have access to data regarding the potential customers and
provide customized services to its consumers.
Legal
There is an impending legal dispute in the KFC franchise in India where certain infringement of
rights and violation of religious laws pertaining to the contents of the food. The existence of meat
in their menus in India is apparently offensive to the Hindu religion in the said market.
Environmental
Over and above ensuring their packaging is supplied via recycled or renewable resources; KFC
are enthusiastically complying with the new environmental directives on recovery and recycling
of packaging waste. The packaging material and carton design are all adapted to maximize
performance keeping in mind eco friendly. Organizations like PETA KRRs also impact the KFC
product strategy. In Japan once KFC tried to introduce whale burger causing uproar because
whales are endangered species.

PESTLE ANALYSIS OF KFC in INDIA

Political:
India
is
liberally opening doors
for international fast food
joints.

Economic: An ever
growing middle class
with
increasing
purchasing power.

Social: Women are moving out

of kitchen to offices. Thus
KFC offers ready to serve food
to reduce there burden.

Positive

Positive

Positive

Technological: Enough
of
technology
is
available.

Legal:
Franchising
models available and
working successfully in
India.

Positive

Environmental:
Activists
against killing of animals
like PETA can create trouble.
Watch out

Positive

When KFC came to India in 1995, it had to resume their operations because of their
controversy
in handling of poultry.
Internal
Analysis
INDUSTRIAL ANALYSIS
PORTERS FIVE FORCE MODEL
Bargaining Power of Buyers: Bargaining power of buyer is high since switching cost is very
less. Due to close competition from MC D and other street vendors, the availability of substitutes
is more that too at competitive prices
Bargaining Power of Suppliers: Bargaining power of supplier is more since they can switch on
to other food joints if they would not get good margins and acceptance of their conditions.
Threats of New Entrants: Threats of new entrant is low because there are already well
established fast food giants like MC D, Subway, Pizza Hut enjoying high margins, brand value
and highly differentiated products.
Competitive Rivalry: KFC is facing huge competitive rivalry from MC D, Subway, Pizza Hut,
Big Mac, Burger King.
Substitute Products: Availability of ready to eat food like Maggi, McCain, Sunfeast Yippee
Noodles etc.

SWOT Analysis of KFC

Strengths

Brand Equity.
High variety in Chicken Meals.
Hygienic Food & Quick Service.
Recognized all over the world & have strong markets in UK, Thailand, Japan, Korea, China,

Mexico, and Middle East.

Franchisee & Licensing fees earn huge revenue for company.
Secret & Trade Mark of Recipes has maintained its supremacy in the fast food.

Weakness

Least concern about R&D.

Over franchising leads to loss of control & quality.

Opportunities

Increase growth of 15-25 age demographic.

Introduction of more vegetarian products.
Introduction of home delivery.

Threats

Increase amount of ready to eat foods

High prices compared to competitors.
PETA & KRRS like Organizations.
Diseases like Bird Flu etc.
Fluctuation in International Exchange Rates.
Increasing Health Consciousness among people.
Competitors: Mc D, Pizza Hut, Dominoes, Subway, Burger King, Taco Bell.

MICRO ENVIRONMENT

Company major goal of the KFC is to provide high quality, hygienic, tasty products that
provide customer delight.
Suppliers - The KFC needs regular supply of chicken, sauces and vegetables.
Customer - Company survives on the basis of meeting the needs, wants of their customers. They
try to increase the perception of More Value for Money for the customers.
Competition - Closest competitor for KFC is MC D, as it is targeting to the premium, middle
and lower class of the country and providing high quality of services.
BCG MATRIX OF KFC PRODUCTS

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STRATEGIES ADOPTED BY KFC Relative Market Share

PRODUCT STRATEGY
KFCs specialty is fried chicken served in various forms. KFCs primary product is pressurefried pieces of chicken made with the original recipe. The other chicken offering, extra crispy, is
made using a garlic marinade and double dipping the chicken in flour before deep frying in a
standard industrial kitchen type machine.
The main products of KFC still are fried chicken but KFC tried to development new products for
suitability with modern situation; the menu for health. Moreover, new menu of KFC will
emphasize the taste and health.
PRICING STRATEGY
KFC globally enters the market using market skimming. Their products are priced high and
target the middle to upper class people. Gradually they trickle down the prices focusing on the
middle

to

lower

class

people

to

penetrate

both

sides

of

the

market.

It prices its burgers, French fries and soft beverages with relation to its competitors. They
compare the price of their products with McDonald, Dominoes and Pizza Hut. If the competitor
provides the same product at a lower price than the organization usually lowers the price of its
product too. In the case of KFC, Fried Chicken is its main selling point and controls a monopoly
over the fast food market (only with fried chicken). KFC price their product keeping different
points in view. They adopt the cost base price strategy. Pricing of the product includes the govt.
tax and excise duty and then comes the final stage of determine the price of their product. The
products are bit high priced according the market segment and it is also comparable to the
standard of their product.
LOCATION STRATEGY
KFC adopts the franchising system. KFC opens its franchises in most populated and well income
area. Most KFC restaurants are located in the source communities such as shopping malls, the
petrol, and lodging en route. KFC is placing itself close to schools, colleges, cinemas and
markets which are mostly populated by the young and those who are in a hurry or are tired due to
hovering around therefore; KFC enjoys a large number of footfalls every day. In addition, they

also have outlets close to non-vegetarians (mostly Muslim populated areas). The products of the
KFC are cooked on the spot.
PROMOTION STRATEGY
The promotion of KFC includes TV Program, Radio, Internet, Newspapers, Magazines, Public
Relation, Outdoor, Billboards, Events etc. At KFC, Promotion is the main tool to bring all
chicken lovers attention towards its delicious one-of-a-kind product, the Fried Chicken. All KFC
outlets offer its customers with various forms of incentives to buy its Chicken such as Coupons,
Discounts, and Bundled packages. Using coupons that one can acquire after spending a particular
amount over a period of fixed time, customers can enjoy the benefits of free meals or free addons. Additionally they provide meal vouchers and exciting offers in their print ads, which the
customer must cut and bring along.

Environmental concerns: Over and above ensuring their packaging is supplied via recycled or
renewable resources; KFC are enthusiastically complying with the new environmental directives
on recovery and recycling of packaging waste.
Packaging: The packaging for KFC products is chosen according to performance against three
criteria: heat retention, moisture removal, and grease absorption. The packaging material and
carton design are all adapted to maximize performance against these three criteria.
Recycled Paper: All the clamshells and chicken boxes contain as much recycled material as it is
legally allowed. By law they are required to have virgin fiber board in any part of the packaging
that is in contact with food. Any virgin fiber comes from board suppliers who use pulp bought
from managed forest in Scandinavia. This ensures that any wood cut for paper production is
replaced with new plantings. For example: In 2010, KFC introduced fast foods first reusable
food container. They have also replaced the plastic plates with paper serving boxes. It is part of

their plan to reduce their use of non-renewable resources and to reduce the amount of Styrofoam
from our restaurants.
Litter: KFC UKI are aware of our responsibilities to the Management of Litter and all our
packaging carries the Keep your Country Tidy signs.
TARGET STRATEGY
Age: Generally there is no age limit focus by the KFC. The target and focus is on each and every
individual in a society. KFC finds its largest demographic in the young of any society.
Gender: Both male and females are focused by KFC; gender does not play any role here.
Household Size: This plays a vital role in the demographic factor of the KFC. Generally they
target whole families rather than single persons. This being the reason for their Family Meals
which are basically bundled items served at a nominally cheaper rate.
Income: Income is an important key factor for KFC. This factor decides which class is to be
targeted. In the early rise of KFC they focused on the upper class but slowly are introducing
economy meals that attract the lower to middle classes.
Strategy: Given the competitive nature of fast food joints, KFC uses the Push Strategy to help
them create awareness, be different, and sound attractive.
KFC Entry in India
KFC was the first food multinational to enter India after economic liberalization policy of the
government in early 1990s. It got permission to open 30 new outlets across the country. KFC
opened first fast food outlet in Bangalore in June 1995 targeting upper middle class population.
OTHER STRATEGIES ADOPTED BY KFC:
KFC is working in the direction set by it in its vision & mission statements.

QUALITY STRATEGIES

KFC strives to provide customer satisfaction through improved quality and clean atmosphere
as highlighted in its statements. Working towards its quality it has Quality Assurance Lab that

monitor the entire integration process from livestock to feed and on to the preparation of

ready to cook produce.

It cooks under the minimum temperature specified by WHO and also has a standard
procedure that would minimize the risk of cross contamination between raw & ready to eat
products.

LOCALIZATION STRATEGY
In order to provide variety & bring tasty meals customers KFC has developed a team of food
technologist constantly experimenting with new flavors & creative concepts to provide more

value, choices & health options to different customers.

Introduced local flavors to have exciting dining experiences like spicy burgers as Indian
consumers like more of spicy foods.

INSPECTION STRATEGY
To achieve clean atmosphere KFC strives to maintain standards & have engaged reputable
pest control companies to assist. The trained service teams conduct regular inspection which
include right treatment after operations hours and also provide follow up checks during
operation hours whenever needed.

HUMAN RESOURCE STRATEGY

KFC is undertaking a program under Colonels Education Program to train its employees
regarding the methods of effectively dealing with the customers.

GROWTH STRATEGY:
KFC earlier made an alliance with Pepsi and Walls. Through this alliance it was able to
provide one of the favorite beverages of its customers along with the meals and generate
higher revenues. At the same time Pepsi got the advantage of easy distribution to the
customers.

DIFFERENTIATION STRATEGY:

KFC is using differentiated market coverage strategy. It means that different marketing mix
will be used for different age groups. It differentiates itself from others mainly on taste factor.
It uses original recipes developed in the kitchens of KFC which act as its USP.

BRANDING STRATEGY:
KFC uses brand extension strategy where by all the products are advertised as being offered
by KFC under its own name.

ANALYSIS OF THE STRATEGIES ADOPTED BY KFC:

1. By following the strategy of recycling of chicken boxes and containers KFC is able to
reduce its cost of buying them and also enables it to position itself as socially responsible
company.
2. By following the quality strategies through quality assurance labs KFC is able to compete
with local players and street vendors for the discretionary income of consumers because
people prefer to purchase food stuffs from KFC instead of buying unhygienic foods from
local street vendors.
3. As restaurants are into providing services so the most important P in their marketing mix
is people. The quality of the human resource employed by the restaurants is the most
important factor contributing to the performance. So the colonel education program
provided by KFC for training of its employees have a huge impact on the service
betterment provided by it.
4. A major factor contributing to the high sales of KFC has been the packaging quality which
it uses. The packaging used is able to retain heat and prevent moisture which ensures high
quality of foor for longer times. So it provides convenience to the consumers to take meals
to their homes and in turn helps in increasing customer base.

STRATEGIC ROADMAP

EXPANSION: One of the suggested moves for KFC can be increasing the number of outlets

by reducing the franchisee fee and offering attractive offers for opening up the outlets.
Implication: This will increase market reach of KFC
SPECIAL PACAKAGES: KFC should introduce different product ranges for different
occasions such as Ramadan Package, Birthday Package, Midnight Package and Navratre
Special etc.
Implication: By introducing these product ranges the company will be able to differentiate
its services from other quick food restaurants. On these occasions the company will be able

to capitalize the potential customers which will provide it an edge over the other competitors.
KIDS ATTRACTION: In order to attract children to their meals, KFC can introduce happy
meals with toys in them.

Implication: This will enable KFC to have share of those children who prefer MCD because
they are offering toys in happy meals for the kids. This inturn will help beat KFC to beat MCD if
they are able to provide a better range of toys along with the happy meal at competitive prices.

EXCLUSIVE STORES: KFC has most of its stores inside malls and multiplexes but its
exclusive stores have been very less in number if we look at the exclusive stores of its
competitors. When the stores are opened in a mall area other players like MCD, Dominoes
etc also open up their restaurants so the customers get spread in all these restaurants.

Implication: By opening exclusive stores the company will be able to direct customers to its
own store only at places which are easily accessible by its customers. Also by opening up
exclusive restaurants it will be able to remove the space barrier and can provide space for parks
along with the stores which can serve as picnic spots for families.

DIFFERENT COUNTERS: Veg/non Veg: Many of the customers do not prefer KFC
because it is mainly positioned as a non-veg restaurant and Vegetarian people are reluctant to
buy from such restaurants because it becomes their psyche that the vegetarian meal is
prepared and served at same place as non Veg meals.

Implication: By separating the kitchen space and serving counters of veg and non veg items
KFC can have an edge over the other joints and will be able to attract vegetarian segment which
will increase its customer base.

MORE VEG VARITIES: KFC should update its menu by including some more of
Vegetarian meals. At present it does provide some of the veg items like ZINGER,SMACKER
but the range of non veg meals have been comparatively higher which can be balanced out.

Implication: Most of the meals offered by KFC have been non-vegetarian. But if we look at the
competitors, their list contains more of Vegetarian food which is appropriate to the Indian
culture. By introducing more of Veg meals they can not only enjoy the dominance in the non-veg
meals but can also have the share of competitors providing Veg meals.

LOW CALORIE MEAL: Today there has been a growing trend of health consciousness
among the people. But KFC has not been providing low calorie meals who are fitness
oriented.

Implication: If KFC is able to provide these low calorie meals it can acquire a huge untapped
market and also compete with quick food restaurants like SUBWAY which has been the only
dominant player in this niche segment.

POSITIONING STRATEGY: KFC should change its positioning strategy because it is

positioned mainly as a food court offering Non Veg items. It should heavily advertise its Veg
items and should remove the non Veg label.

Implication: This would change the perception of veg consumers and attract those who do not
prefer to visit KFC because of availability of Non veg.

INSPECTION: There have been cases where KFC has been accused of having inferior
quality at times. Findings by the Shanghai Food and Drug Administration found the levels of
antibiotics and steroids in Yums one of the batches of KFC chicken supply were safe, though
the watchdog found a suspicious level of an antiviral drug. Also, one of the issues raised in
China were of SUDAN RED dye used in the products of KFC which was banned from use
in food due to concerns of increased risk of cancer.

Implication: By adopting a strategy whereby regular testing of the meals is done in the R&D
department and also before immediate delivery to the consumer can help KFC assure consumers
regarding high quality of its meals.