STRATEGIC PLANNING

KFC

TABLE OF CONTENTS
Task Task 1 1.1 , 1.3 1.2 Task 2 2.1, 2.3 2.2 Task 3 3.1 3.2 3.3 Task 4 4.1 4.2 4.3, 5.3, 5.4, 6.3 Task 5 5.1 5.2 Task 6 6.1 6.2 References Plan for the implementation of a strategy plan Examine factors effecting organizational strategy plan Construct a strategy plan for organisation Develop options for strategic planning Existing Business plans and strategies Particulars External environment effecting organisation Page #

Task 1
1.1, 1.3: Importance of external factors and their effects on KFC Strategy. To analyze the external factors and their impact on the strategy of KFC PEST (Political, Economical, Social and technological) analysis is one of the best tool.

PEST analysis of KFC: Political environment: Following are the factor involve in the political factors of the KFC: a) Government Policies: KFC being a foreign organization have to follow all the rules and regulations of the Government of the country in which it is operating. KFC understand the importance of rule of law and follow the rules of the land as these are prescribed by Government, as it does not need to have any interruptions in its work. b) Price Policies: Another key factor is the policies about pricing, in this regarding while designing its price policies KFC consider all the income groups of the country in which it is doing business so to have a big share in market and to expand its target market. It is for that reason all the income groups whether upper or lower are customers of the KFC. c) Political Stability: Stable political environment is an essential for the smooth flow of business activities; same is the case with KFC which in order to be market leader needs the same political stability. Economical environment: Economical factors are also considerable for the growth of KFC and are as under: a) Income: Income of the customers is major economical factor that should be considered by KFC as it should it policies regarding its customers and their income groups. In the beginning the food provided by KFC was only in the range of purchasing power of high income groups customers but now it introduced some new products of meal that are in the range of middle and lower class of the customers. (Henriques, I. and Sadorsky, P., 1999). b) Consumption Behavior: The decision making in KFC is dependent on the behavior of customer towards its different products, so analysis of their likes and dislikes is very important for KFC to develop its business. c) Payment Methods: Another significant economic factor for KFC is the trend of their customer in regard of payment methods. They should evaluate the behavior of customer in this regard and should observe that which method the like the 3

most. Whether they like paying cash or they want to use their plastic money. (www.scribd.com).

Sociological environment Following are the main points that are considered as Social/Cultural Factors: a) Social Class: Customers belonging to all upper, upper middle and lower middle class are targeted by KFC. b) Culture: As KFC is a foreign organization so it has diversity in its culture but it accept the culture of the country in which it is doing its business activities as well. (Ellson, T., 2004). c) Religion: KFC not only accept the culture of country in which it is operating but its religion also. For example, while working in Muslim countries they consider the importance of Halal foods to their customers as it is the only food that is acceptable over there. (www.scribd.com). Technological environment a) Pace of Change: Working globally is a tough task as the organizations need to be in accordance with the changes so KFC also continue to redesign its policies, procedures and technologies whenever these are found outdated. b) Research & Development: Another considerable technological factor is research and development. The policies of KFC are very supportive in this regard so to introduce creative and innovative products in the market. c) Capital Formation: For the smooth operations of KFC it needs capital items like machinery. So order to meet the needs of customers KFC has enough capital formation.

1.2

Needs and expectations of the Stakeholders

All the individuals or groups which have interests in the organization and its business and can influence or can be influenced by business are known as stakeholders of that organization (Ferrell, O. C., 2004). Customers: Customers are regarded as bosses of business organizations by many of the marketers as they the ones which organizations have to satisfy. Customer evaluate an organization on different grounds like in case of KFC they may evaluation the quality and quantity of the food provided to them, environment in which they are served, staff and their level of services etc. So, while making decisions KFC like other organization should focus the

needs and interests of their customers so that they can add value to their products in order to have more and more revenues. Employees: Workers or employees are regarded as backbone of an organization. So, KFC should have a clear and employee friendly HR policy in order to have satisfied customers which can satisfy their customer at their best. Suppliers: Another major stakeholder is suppliers of KFC. In restaurant businesses like KFC, the food that is fresh and acceptable by customers is significant; like in Muslim countries only Halal food is acceptable. Suppliers like to have strong trust based relationship with the organizations they are working (Carroll, A. B., 2004). Creditors: Before starting a franchise business, they must first organize KFC plans and answer any questions that may be asked in order to outline the efficiency of KFC franchise's internal operations (McFarland, Allison, 2001). If there are any creditors or investors from which they are seeking financial assistance, a business plan can provide them with the specific information they need to see how effectively KFC franchise will be operated (http://EzineArticles.com). Government: Domestic companies are usually charged with the lower rates of taxes. Moreover, foreign organizations should follow the rules and regulations of government in regarding of food and price and decision like this are correlated to government polices. Environment agencies: The company sends its staff to analyze the environmental forces of market and also worked according to Environmental Protection Agency.

Local Community: To build and maintain national community relations, KFC has very actively participated in past and has made plans to sponsor societal and community causes not in terms of money only but also in kind.

Franchisee: * * Increased expansion of franchises Expansion of franchise operation beyond North East Asian countries 5

Task 2
2.1, 2.3: Strengths and Weaknesses of Current Business Strategies of KFC

Strength * Image KFC is among some organizations like McDonald is an organization that is renowned in the food industry at international level. This is because that their food meets all the requirements of international standard and they are providing guaranteed quality. The main strategy of KFC to capture market share in a new geographical area is its wide range promotion of products so to create an image of that products in the mind of customers (Madura, Jeff. 1998). * Specialization The main specialty of KFC is its friend chicken products that are so tasty because of a different taste; it is for that reason that KFC is able to maintain its unique image in the fast food industry particularly in London. They can claim to be specialist of chicken products as all the KFC Menu's is comprised of chicken items. But even in burgers KFC does not used meet but rather used fried chicken pieces with their unique style. Their style gives an extra ordinary edge over other fast food restaurants. Weaknesses * Lack of good services in such hours KFC lacks a true fast food spirit during such hours means that lot of people come in KFC that have to wait to their orders because in KFC those are only three counters to handle the customers and quite often customers have to wait for more then 20 to 25 minutes. * Less Variety KFC offers les variety of food as compare to other restaurants and lack of variety create disturbance or their regular customers more over some dishes the specialty of KFC restaurant are not available in Asian countries for example chicken bucket. Opportunities * Increase in dishes variety

KFC has the opportunity to increase the variety the dishes available and because of this they are able to capture the market share to though people that would come to try the new dishes. * Capture more market If the KFC lower the profitability ratio then it can out competes other restaurants by offering lower prices for better quality. The objective has to shift from a selected target market to a mass market which would in turn increase revenues to increase sale. Threats * McDonalds The major threat of KFC is McDonalds. The crowed that visited KFC suddenly shifted towards McDonald to try the new place. McDonald offered more variety at a lower cost so KFC considered it a serious threat to its business. * Local and International Competitors The other threat the KFC faces are the restaurants operating in Asia like Pizza Hut, Salt N Pepper, and different Chinese restaurants which are also called substitutes of KFC fried chicken. Pizza Hut and Caffa Zoke have captured a significance percentage of market shares to develop a loyalty among their customers. Therefore the people who regularly visit these restaurants are not participating in these restaurants (Hamel, G. and Prahalad, C., 1994).

2.2:

KFC position in current market with the assessment of its shares and Competitors.

Market shares: Now Kentucky Fried Chicken (KFC) captures a maximum market share. This is only due to excellent marketing strategies adopted by the organization (Kotler, P. and Keller, K. L., 2006).

Competitors activities: The main competitor of KFC Pakistan currently is McDonald. There are many other competitors in the market which includes Sugar Bun, Marie Brown, and other fast food chain restaurants. On the other hand, there is an inter-competition among the SBUs of same corporate for examples Pizza Hut.

Competitive advantages:

The one of the most important advantage of KFC i.e., its name belongs to chicken. Our traditional food is based on chicken & people like the chicken by heart especially in Asia e.g., India, Pakistan etc. So people prefer KFC and that one is of the most important campaign advantage about its customer. The taste & place i.e., in Asian market because it covers larger area than other competitors. It covers India, Pakistan etc. It has also a good attraction for a consumer that is they provide the facility of attractive arrangement on special association. Such like Birthday and Eid occasions and parties etc. This facility has not given by other competitors (Brown, T. J. and Dacin, P. A. 1997).

Task 3
3.1: i. Modeling tools to develop strategic options for KFC Ansoff Matrix

The decisions of businesses regarding their products and market growth are very important and Growth matrix presented by Ansoff is a best technique in this regard. Product and market matrix of Ansoff propose that growth of KFC is correlated with introduction of new or exiting products to present customers or prospects.

Business strategy of KFC can have directions from Ansoff product and market matrix as a number of growth strategies are provided through it. These strategies include the following: Market penetration Growth strategies include a strategy of Market penetration where goods presently produced by KFC are presented to current customers only. Market development Market of a product can be increased by a number of ways some which are as under: 8

Development of market by introducing existing products to new geographical areas e.g. exporting in new international markets Introducing products with new packing or dimensions Including new channels of distribution Using price discrimination strategies suitable to different income groups

Product development Fresh products of business are presented to its present market according to this strategy of market growth. Latest techniques and methods may be used by KFC to produce products that are comparatively better than the previous ones and can attract existing customers of the organization (www.scribd.com). Diversification Diversification includes concentric diversification, horizontal diversification and conglomerate diversification by adopting these strategies KFC can have growth in its current market (www.scribd.com). ii: The TWOS Matrix: Consumer health food trend Saturated fast food industry Conflicting Corporate Cultures Corporate Cultures No defined target market Time it takes to market new products (Carlson, L. et al., 1993) International Appeal to American products Economies of Scale and Scope The downturn of the Pakistan economy Multi branding Strategy Name recognition and Reputation Employee Loyalty (French, Wendell L. 1998) Global Expansion Targeting Non-Traditional Outlets

* Threats

* Weaknesses

* Opportunities

* Strengths

3.2

Competitor analysis

There were quite a number of successes that McDonald had achieved, for example Super brands Certificate was given to McDonald in the year 2003, and its creativity in the recent year is crucial for its success. As for the KFC Pakistan, it is always one step backward of McDonald in term of menu, for example its Fish burger comes after McDonald offered their Fish Burger, and the 24 hours operation which is practicing in KFC now was actually initiated by McDonald. The other advantage of KFC Pakistan would be its supplier teams, which are Region Food Industries, Commissary, and Bakers Street are also the SBU of QSR Brand. It is advantage that it will manage to get its materials at a cheaper price, because of the same corporate it is in, as compared to dealing with other external supplier. As for the McDonald, the advantage would be its worldwide reputation is better than KFC, because of the popularity and the wider acceptance. For example everyone would think of McD Burger once they heard about the McDonald. One more advantage, would be that it is not public listed, the reason being it is an advantage is because it can prevent its competitors to get its information like sales revenue conveniently. 3.3: Creating Options to form the basis of KFC future Strategy

In order to survive organization need to cope up with the changes to be competitive in the world. The achievement of future objectives is the third main function of marketing department of KFC.

Task 4
4.1: Structure for a strategy plan ensuring participation of all stakeholders

Vision and Mission: To become the leading fast food chain in Pakistan

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The Values: Their current value added of their product is collaboration with hotlink, that when customer receives a SMS from hotlink, they can go redeem the product of discounted food from KFC Pakistan outlet. Another value added of their products is free gifts, drinks upgrade to bigger portion.

Objectives: KFC vision in Europe, America, Asia and all over the world is to dominate the fast food service industry. Dominance means setting the performance standards for customer satisfaction in European Market through providing convenience and value. KFC also have to develop the taste of the people according to KFC world wide taste. They have to set quality standards for the industry (Wiersema, F. D. 1983).

Goals Capture the market of health conscious and vegetarian customer by 10 percent in year 2012. Reduce cost of production of 20% by the year 2012. Improve customer satisfaction by 50% through various methods, for example opinion box provide training, stringent standardization procedure before year 2012. To increase growth rate from 4% currently to 8% by the year 2012. To increase market share in rural area by 10% in year 2012.

Strategies: Currently, the management of KFC is using multi-market strategy for their products. It covers segments including children, family, teen & young adults and budget customer. Every segment has its own marketing mix. Their purpose is to try to target every possible customer segment to increase and maintain revenue for the firm.

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4.2:

Criteria to review potential options for a strategy plan

These are different tools which help to review the suitability of option for strategy plan. Decision making Matrix: Imperative to the success of Kentucky Fried Chicken was the establishment of successful relations with the numerous franchisees. KFC had its own inherent strength, however, according to franchisees, which the parent company would do well to handle with care. That strength was the sharing of decision making.

Cost Benefit analysis: As todays economic environment, where everything from personal usage to corporate usage has increased their prices, it is necessary for KFC Pakistan to consider in cost reduction, in order to have competitive edge as compared to their competitors. This cost reduction is important as its advantages will outweigh the disadvantages.

Scenario analysis: Halal issue is very important in Pakistan as the Muslim population in Pakistan is huge. Government always concern of Halal issue of the food in the country. The word Halal came from an Arabic word which means lawful. Actions, food & drinks and things that allow by Shariah law is called Halal and can be safely use or consume by Muslims. So, in terms of the procedure to execute chicken and the process to handle it until the customers hand has to pay attention to as Halal issue is big in Pakistan.

Task:

4.3, 5.3, 5.4, 6.3:

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Produce a Strategic plan including future objectives and identify resources and develop criteria to evaluate and monitor the plan.

Strategic plan: In KFC all the Marketing efforts are designed and combined in a coherent and consistent way. They have the updated knowledge of market situation. They keep eye on actions of the competitors. They consider that all employees are potentially good, responsible, helpful and trustworthy and they have given them opportunity for growth, self-control and personal responsibility. They know that teamwork and collaboration generate a greater volume of production than does destructive interpersonal competition. Now Kentucky Fried Chicken captures a maximum market share (Kerin, R. A. et al., 1990). This is only due to excellent marketing strategies adopted by the organization.

Future objectives: Improve the quality of food Provide excellent customer service through hygienic foods. Be socially and environmentally responsible company Healthier and balance menu Innovation in food Customer focus strategies Provide stakeholders a good dividend Increase revenue Increase profit

Resources implication: "KFC's culture will be built largely on Colonel Sanders' laid back approach to management". Before the acquisition of KFC, employees at KFC enjoyed good benefits, a pension, and could receive help with other non-income needs. This kind of "personal" human resources management makes for a loyal workforce.

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Evaluation and Monitoring: The finance department will provide close support the business manager on the financial implication of business strategies that will be formulate. Regular feedback will be also given to Departmental Heads to facilitate monitoring of cost at the department level. To achieve the targeted result it is important to evaluate the strategy at every step of the process of planning and implementation of the strategy.

Task 5:
5.1: Core Values of KFC

KFC objectives are closely linked with its values. Core values are considered while setting objectives of the company. Customers Values: KFC place its customer first. QSC&V is the main principle of KFC to provide quality food and service to its customer in hygienic and friendly environment everywhere, every time. Employees expectations: KFC make its employees feel themselves a part of worldwide family of KFC. Social and support events are organized for employees. KFC cares its employees Lives at work and outside work. Business ethics: KFC believe in honesty and fairness in business. Values regarding profit: To get sustainable profit KFC main focus is on the good and quality customer services and strong organizational system. Social/Cultural Values: KFC is not just a quality food restaurant, but also a socially conscious corporate citizen. The Citizen Foundation (TCF) is a professionally managed, non-profit organization with the aim to provide underprivileged children with basic and formal education in Pakistan.

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Environmental Values: KFC is putting more efforts to save the environment. Energy efficiency, animal welfare, forest resources, greening supply chain has improved its environmental performance (Hartmann, P. et al., 2005).

5.2:

Vision and Mission Statement of KFC

KFC Vision: The Association of Kentucky Fried Chicken Franchisees, Inc. is united to protect, promote and advance the mutual interests of all member franchisees and the Kentucky Fried Chicken system (wiki.answers.com)."

KFC Mission statement: To sell food in a fast, friendly environment that appeals to pride conscious, health minded consumers (www.kfc.com).

Brand Mission "Dual branding" helps to appeal to the wider customer base and also provide higher profit: This strategy helps to "improve economies of scale within its restaurant operations."

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Task 6
6.1: Schedule for implementing the strategy plan

Steps of plan

Importance

Time/period

Market analysis

To know needs.

the

customers 2 weeks

Survey from customers

To take customers views 2 weeks about adding local flavour in food and more vegetarian products in menu. To analyze the competitors 2 weeks position in the market.

Competitors analysis

Allocate Resources for the Allocation of required 2 week project resources is important to reduce the chances of failure. Taking Stakeholders To reduce the chances of 2 weeks agreement about project resistance from stakeholders. Research and Development To see the impact of adding 4 weeks local flavour in existing or new products. Marketing To introduce the new product 4 weeks in the market.

Reviewing Customers views To analyze the success of the 2 weeks about new product project. Total Time period 20 weeks

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6.2:

Dissemination process to gain commitment from stakeholders

The main concern of the shareholders of company is the profit that the company can generate, and the amount of money that can be allocated for them. Besides profit, there are other concerns which are theft, loss, damage, misuse, or waste related to the assets, example would be physical assets, financial assets, and intellectual property from theft. Not only this, shareholders need to be informed on how the company is going frequently. Annual report should also be prepared through hardcopy or softcopy to shareholder timely, neatly, accurate, complete and understandable to shareholders.

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REFERENCES
Carlson, L. et al. (1993). A content analysis of environmental advertising claims: A matrix method. Journal of Advertising 22(3), pp. 27-39. Hartmann, P. et al. (2005). Green branding effects on attitude: Functional versus emotional. Marketing Intelligence & Planning 23(1), pp. 9-29. Carroll, A. B. (2004). Managing ethically with global stakeholders: A present and future. The Academy of Management Executive 18(2), pp. 114-120. Ellson, T. (2004). Culture and Positioning as a Determinant Strategy: Personality and the Business Organization. Basingstoke: Palgrave Macmillan. Ferrell, O. C. (2004). Business ethics and customer stakeholders. Academy of Management Executive 18(2), pp. 126-129. Hamel, G. and Prahalad, C. (1994). Competing for the Future. Boston: Harvard Business School Press. Henriques, I. and Sadorsky, P. (1999). The relationship between environmental commitment and managerial. Academy of Management Journal 42(1), pp. 87-99. Karna, J. et al. (2003). Social responsibility in environmental marketing planning. European Journal of Marketing 37(5/6), pp. 848-871. Kerin, R. A. et al. (1990). Contemporary Perspectives on Strategic Market Planning. Boston: Allyn and Bacon. Kotler, P. and Keller, K. L. (2006). Marketing Management. 12 ed. ed. Upper Saddle River: Prentice Hall. http://www.scribd.com/doc/15657169/KFC-Marketing-Plan-for-Pakistan http://EzineArticles.com/4652225 http://wiki.answers.com/Q/Mission_and_vision_of_the_company_in_KFC Madura, Jeff. (1998). Introduction to Business. Cincinnati, OH: South-Western College Publishing. http://www.scribd.com/doc/16240301/Set-1-Marketing-Management-New-File Brown, T. J. and Dacin, P. A. (1997). The company and the product: Corporate associations and consumer product responses. Journal of Marketing 61(1), pp. 68-85. French, Wendell L. (1998). Human Resources Management. New York: Houghton Mifflin. Wiersema, F. D. (1983). Strategic marketing: Linking marketing and corporate planning. European Journal of Marketing 17(6), pp. 46-53. www.kfc.com McFarland, Allison (2001). Developing a Strategic Marketing Plan for Physical Education. Physical Educator. Early Winter 2001, Vol. 58 Issue 4, p191-198

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