KFC

Pakistan

Strategic

Management

Report

Class: BBA-8 C

Submitt To: Sir Mansoor

Junejo

Submitted By:

Muhammad Saddam Shah

Najeebullah Mangi

Namarta Kumari(B)

Pooja Kumari(B)

Ruqia Kalhoro

Sajjad Ali Dayo

Salma Kanwal

Shabnam Laghari

Uroosa Qureshi

Date: June 02, 2015

Executive Summary

Purpose of report: We team members wanted to analyze the strategic management and practices of the KFC Pakistan, what strategies it currently follows, what impacts or improvements those strategies cause, what are the reaction or counter strategies of competitors and what impact they have on KFC and last but not the least do these strategies work or any other strategies could be followed.

Analysis: As we all know that a company comprises of internal and external environment, its internal environment comprises of its culture, management practices, technologies etc. which could be simply categorized as strengths or weaknesses of company. Then the competitors their actions & strategies, possible threats and opportunities from the environment are all the part of external environment. First of all we started our analysis with EFE (external environment evaluation) and identified possible opportunities and threats existing for KFC in Pakistan. In external evaluation matrix weight is assigned to each factor according to its importance and subsequently rate is assigned to the factors which show the companys responsiveness toward the factor. On the basis of this we made following EFE matrix. After that we knew the possible opportunities and threats for KFC , their importance and KFC s responsiveness towards them, the next step was to know the competitors positions in market so we went for CPM

(Competitors profile matrix). Porters five forces model: We also analyzed the external environment factors through Porters five forces model as per the bargaining power of suppliers, consumers, threat of substitute products, potential entrants and current competitor. rafter knowing this, we went for internal evaluation of KFC through IFE (Internal factor Evaluation Matrix), resource based view, VRIO frame work, value chain analysis and IFE (Internal factor evaluation matrix).Resource based view: It is a strategic tool or approach that is used to achieve firm's sustainable competitive advantage, all the way through which firms can imagine its own unique resources to formulate strategies to avail opportunities from the environment. After analyzing each and every thing related to problem identification, we were able to develop few strategies which could be implemented in the KFC in order to increase its market share and effectiveness and efficiency of the operations. Those strategies are market development and product development. Control and Evaluation: We all know that every strategy is only up to the mark and successful, when we implement it flawlessly and whole heartily and to ensure this level of implementation we must formulate the control and evaluation plan on the basis of few parameters, by which we can compare actual and expected results if they match then its great achievement and if there is any discrepancy between them, we must be able to take corrective actions and achieve our goals in the most efficient way so that we can enjoy a good competitive place in market.

KFC Pakistan

Page 2

About KFC:

Kentucky Fried Chicken commonly known as KFC stand as the second large fast food chain in the world. It has been pioneered almost fifty years ago at Corbin, Louisville USA. KFC has 18875 outlets in 15 countries across the globe. It is annual earning is almost US$ 23 billion. The main products offered by KFC are Fried chicken, chicken burgers, wraps, French fries, soft drinks, salads, and desserts, breakfast the pioneer of KFC is of the Colonel Harland Sanders who has started the business in his kitchen and created the famous recipe of 11 secret herbs .it is the subsidiary of Yum Brands.

Mission Statement:

To sell food in a fast, friendly environment that appeals to satisfaction, health conscious consumers

Vision:

KFC Vision is "To be the leading integrated food services group in the ASEAN region delivering consistent quality products and excellent customer-focused service.

About Colonel Harland Sanders:

KFC was established in 1930s by Harland Sander. He was born in 1890 and raised on a farm outside Henryville, Indiana. His father had died when he was only five. The responsibility of 2 more siblings was on his shoulders along with his mothers. In order to survive his mother taught

KFC Pakistan

Page 3

him to cook. And he started to sell fried chicken on the roadsides, in 1930 by using his own dining table. Americans loved whatever he cooked. By 1937, Sanders prolonged his restaurant to 140 seats, and by 1940 he purchased a motel across the street, the Sanders Court & Caf. Sander never publicly revealed his secret recipe of 11 herbs although he claimed that all the ingredients are available to every cook shelf. Soon he became the world famous American-cook.

KFC Pakistan

KFC has started its operations in Pakistan in the year of 1997.it is first branch was the Gulshan-E-Iqbal Karachi branch. Now it is operating almost in the major 18 cities of the Pakistan including Karachi, Lahore, Rawalpindi, Faisalabad, Multan, Peshawar, Sialkot, Hyderabad, Islamabad and Sukkur.in Pakistan KFC offers the HALAL products and it is fulfilling the needs of customer by offering variety of fast food products.KFC is contributing in the economy of Pakistan by providing employment to almost 1200 Pakistanis and it is paying taxes to government of 10 to 11 million annually not only this but it purchasing the raw material for packaging from local customers and it also developing infrastructure in Pakistan by opening new outlets .

Products of KFC

KFC offer lots of product and meals in reasonable price, but few of products are below.

Burgers

chicken

Combos

Snacks & Side

Hot Menu

Zinger Burger

1 piece

Chicken Meals

Orders:

Chicken Mania

Colonels Chicken

2 pieces

Sandwich

& 20 Pieces

wow meal

Nuggets

chicken burger

Meals

Burger

pieces

Arabian Rice

Zinger

Colonels Fillet

Family Meals

& 10 Pieces Hot

Mighty zinger

10 pieces

wings

toasted twister

Burger

Dinner Roll

box master

SUB60

Regular &

zinger stripes

Large Fries

bucket of fries

Hot Shots

family feasts

Zinger Jr.

Corn on the

value burger

Cob

hot wings

Hot & Crispy

Rice n Spice

Soup

hot shots

Cole Slaw

corn on cob

Chicky meal

KFC Pakistan

Page 4

KFC Pakistan

Page 5

Product life cycle:

KFC have short product life cycle, there are few products that are in introduction phase, few are in maturity phase and few are in decline phase. In introduction phase are hot wings and corn on cob. Hot shots are in growth phase, zinger, chicken mania, chicken burger, rice and spice are in maturity phase, toasted twister are in decline phase.

Unique features of KFC :

Kentucky fried chicken have very strong brand images, it have secret recipes which contain eleven herbs. KFC have patent of Kentucky grilled chicken which no one copied and cannot easily imitated.KFC have unique infrastructure and have attractive outlet which attract the customers. KFC have strong training and development program for each and every employees.KFC also hire deaf and dumb peoples for providing equal opportunities.KFC have strong CSR activities.

Internal Assessment of KFC Pakistan

Resource based view of KFC Pakistan

Resource based view is an strategic tool or approach that is used to achieve firm competitive advantage, through which firms can visualize its own unique resources to formulate strategies to avail opportunities from the environment, each firm have unique resources for giving competitive advantage. Firms have two types of resources tangible and intangible resources. There are two critical assumption of resource based view resources must be heterogeneous and immobile.

KFC gain competitive advantage and it formulate strategies on the basis of valuable resources that it owned, some of resources are tangible and some are intangible. Tangible resources include various patents like original recipe and Kentucky grilled chicken and it has sixty outlets with innovative decoration which gives physical uniqueness to the KFC. Patent is not easy imitated while physical outlet is protected and it is not copied by other player. KFC have secret recipe of 11 herbs and spices which is legally protected and it is not copies or imitate, based own unique

KFC Pakistan

Page 6

resources KFC compete in the food industry and gain competitive edge over its competitors. Based on its secret recipe KFC differentiate its products over its competitors. KFC have greater distribution outlet which give unique services to its customers like dine in, take away and KFC van facilitate to its customers. KFC involve in local activities to build good public relation and goodwill. Giving equal opportunities to deaf and dumb people in their firm and provide education to the underprivileged children. Intangible resources include their brand name and their goodwill that provide hygiene and quality food to their customers. Its secret recipe and physical outlet provides heterogeneity that are immoveable due to legal right it reserves based on its unique resources it formulate best strategies that leads to wards its gaining competitive advantages.

Value chain analysis

Primary activities through which raw materials are transferred into benefits to customers and support activities are those which provide inputs that ensure the primary activities to act which ultimately achieve efficiency in the company through coordination of these activities.KFC has got competency in its C.H.A.M.P.S operating system. Which stands for cleanliness, hospitality, accuracy, maintenance, product quality & taste and speed in service. C.H.A.M.P.S operating system is designed at KFC to ensure the quality, service and all other facilities that it provides to its customers.

Primary activities

1. Inbound logistics

in order to ensure quality and standards KFC import most of the ingredients including chicken from united states and these ingredients are shipped periodically. Carry logistics which is Logistics Company relocate the chicken to KFCs centralized freezer and kitchen which is located in shatin, in seasons chicken have been transported on daily basis. The secret of KFCs quality of food is that it uses fresh ingredients. On the other hand cost of transportation increases because of outsourcing of logistics service on frequent basis. Hence it increases cost of food.

2. Outbound logistics

In order to deliver quality food, KFCs products are kept in freezer. And staff cooks and serves to customer immediately. When food is offered to customers it must be inspected to ensure the quality. No doubt there is high quality control which strengthen brand image. And it delivers food on time.

3. Operations

KFCs product excellence system consistently ensures the quality to raw material, packaging, tools that it uses and new product deals that joy the customers. It also carries out ingredient and

KFC Pakistan

Page 7

equipment specification to meet its standards of quality food. it provides fresh food to customers and food is not sold more than 45 minutes, and if this happen so it is withdrawn from sale of that food it highlights that KFC cant compromise with quality of food. The different packaging for different food items shows its brand standard. The system is clearly instructed to the staff for operational work in order to maintain the consistency in quality.

4. Marketing and Sales

KFC has also established the brand excellence system that promotes the value of brand and clearly communicate personality of KFC. KFCs slogan is "we do chicken right" that appears on mass transit bus stop, railway stations, newspapers and magazines as well. KFC now uses internet also to advertise its brand, Designer City HK provided the website platform with additional marketing path to market its new deals and extensive service offers. The site strengthens the spirit and heritage of KFC. KFC has positioned in market as fashionable, eat-in and fast service outlet and it targets the customers from 16 to 40 years old and with more emphasis on youngsters, office workers and executives. in order to increase sales KFC usually advertise its specific products by running consistently campaigns along with several combinations that stimulate different product items at same time. KFC is offering twin deals as on 6pc order 6pc hot crispy free and it offers prepaid coupons on 350 shop free tickets.

5. Service

KFC provide very efficient service to customers that definitely add value to the company. for this reason it gives training to the staff and provide right equipment to all of its branches. Hence it increases cost but instead it provides high flexibility in price which is based on brand loyalty. KFC is very committed to provide the best services to its customers on every visit and in every outlet. KFC is passionate to go extra miles to make customers happy and satisfy. as KFC is operating in different countries and it has to follow global standards to operate successfully. KFC now offers free Wi-Fi service to its customers inside outlet and also free home delivery to maintain its customer satisfaction.

Supporting Activities

Human Resource Management:

KFCs vision to operate worldwide with their best quality to insure their quality they need talented employee. Here the role of HR is to recruit and hire the operational staff mostly they hire local people (HCNs) where they operates like in Pakistan so hire Pakistani people. They also provide training for management and operational team by head office. KFC recruiting procedure is simple and they have online systems, where they have all available vacancies by position, location or area. For performance appraisal of employees they use 360 degree evaluation system. They also hire hearing impaired people and trained them and make them able

KFC Pakistan

Page 8

to operate KFC outlets smoothly, and this is the great opportunity to survive in the Pakistan also because they work for social welfare by giving chance to hearing impaired people to work. KFC has flexible work environment also, so we can say KFC has good HR department and it works efficiently.

Technological Development:

KFC is international fast food restaurant famous for their special fried chicken and having advanced technology and run operations smoothly like, electronic cash register system used for sales operation, recording daily sales and maintaining them. The other is inventory control system this is directly integrated with headquarters and system is called ARMS system through this system KFC work efficiently and manages their inventories and help to follow just in time inventory. Website of KFC gives detailed information regarding products and their nutrition value to provide awareness to health conscious society.

Infrastructure:

No doubt infrastructure of KFC is most attracting and they follow same infrastructure worldwide and represent their specialty as building of KFC is easily identifiable. They have unique representation worldwide; they make their own disposable products with the logo of KFC used for serving like soft drink cups, tissue papers, plates. KFC always open its franchise on the basis of convenience.

Procurement:

For purchasing raw material and other cooking ingredients and equipments using at KFC from their approved suppliers as they follow the uniform policy given by headquarters for its all franchises. KFC buy bulk of products to control purchasing cost and suppliers having low bargaining power. KFC regularly maintaining and reviewing delivery, quality and cost of products purchased by different approved suppliers to increase efficiency and simplify the process of procurement.

VRIO Framework of KFC :VRIO framework is used to find out the core competencies or sustainable competitive advantages which are helping firms to operate profitably in long term. For KFC , we tried to find out its competitive advantage where we used four key components which helped to identify in what KFC has competitive advantage as compared to its competitors.

Resources

Valuable

Rare

Imitable

Exploited by

the

Organization

Brand

yes

yes

yes

Yes

Recipe

yes

yes

yes

Yes

Experience

Yes

No

No

Yes

Location

Yes

No

No

Yes

Price

Yes

No

no

Yes

KFC Pakistan

Page 9

Internal Factor evaluation Matrix

This contains the internal strengths and weaknesses of the KFC Pakistan. The weight assigned to the factors is based on their importance for the company. Rate is given on the factor according to the company response toward the factor that how effectively company is responding to these factors Brief description of factors identified under the heads of strengths and weakness are described below:

Strengths

High Brand equity: KFC is the well known international brand due to its international familiarity KFC has leverage of its brand name. it is the strength of KFC in Pakistan because it has its well known brand name which represents its strong brand equity.

Clean environment: The greater strength of KFC is that it has clean and calm environment at its outlets. KFC provide hygienic food to its customers and it keeps it environment clean at the outlets which makes it attractive place to visit.

Qualitative products: KFC products are well known for their quality. It provides product quality in terms of test and hygienist. Also it provides qualitative services to its customer. Employees at KFC serve customer with high respect and courtesy.

Standard trade mark recopies: KFC has its own well known food recopies which are legally protected and no one can copy it. These are unique formulas which make KFC products better than other competitors products.

Largest market share in major cities: KFC has captured largest market share in the major cities of the Pakistan especially in Faisalabad because of its brand name and quality of product which is also a greater strength of the company.

Global exposure: KFC is operating across the globe it has global business exposure. It is easy for KFC to share the knowledge and skills of the employees across the countries in which it is operating not only this but it can easily transfer the resources as well. Its global exposure has made KFC effective in the global market.

Weaknesses

High price: Pakistan is a developing country. Purchasing power of the country is very low majority of people belong to low income families. For which they cant afford the high price products of KFC which is out of there range to purchase. So due to high prices KFC products are

KFC Pakistan

Page 10

only in access of elite and upper middle class of the individuals which is only the small chunk of population

Fried image: due to the growing health issues especially obesity people are avoiding to purchase KFC food because they consider it as a fried food which is cooked in oil and lead to high cholesterol and other health problems

Small parking space: one of the issues that people in big cities avoid to go KFC outlets is that they dont have enough space for vehicle parking.

Less customer insights: in Pakistan KFC dont have much customer insight. It offers its global products here as well which are not suitable according to the test of the customers. It should spend time and resources on the customer intelligence through which it can be able to know the needs of customers in the local markets.

Inconsistent services: in Pakistan KFC dont have the consistent services at its outlets at different locations. At the same outlet but in different place the quality of food and services changes which creates negative image of the company in the customer minds.

Small number of outlets: KFC has very small number of outlets which are located only in major cities while the greater portion of the market is not captured where customer demand exists for the products.

IFE matrix of the KFC is shown below. Score of KFC is 3.03 which show that KFC is operating at above average than the industry.

Factors

Weight

Rate

Score

Strengths

High Brand equity

.10

4

.40

Clean environment

.09

3

.27

Qualitative products

.18

4

.72

Standard trade mark recipes

.15

4

.60

Largest market share

.12

4

.48

Global exposure

.04

3

.12

Weaknesses

High price

.08

1

.08

Fried image

.05

1

.05

Small parking space

.07

2

.14

Less customer insights

.01

2

.02

Inconsistent services

.06

2

.12

Small number of outlets

.05

1

.05

1.00

3.03

KFC Pakistan

Page 11

External Assessment Of KFC Pakistan.

PESTLE Analysis

Political Factors

Political strikes and Sit Downs in major cities of Pakistan are hitting the sales of the company. Current Government emphasis on economic growth policies so this can be an opportunity for KFC to invest in new projects at low capital cost. Pakistan continues to face extraordinary challenges on the security and law enforcement front A number of extremist groups within Pakistan continue to target US citizens and other Western interests and Pakistani officials Terrorism is also threatening to the businesses in the country

Economical Factors

Currently State bank of Pakistan has reduced the interest rate and it is now 7.5% at the lowest level it can be helpful for KFC to finance its new projects from banks at low financial cost. Low economic growth (2.2%) is in the Pakistan and GDP per capita 806USD which can be a threat because it will impact on the purchasing power of the people so it may lower the demand of KFC products. Average inflation 3.24% and Food inflation 1.19% in Pakistan which indicates prices of the raw material are low so it can be beneficial for KFC to lower its production cost and ultimately product price so demand will increase for the KFC products.34% current tax rate which can be threaten because tax increase the financial burden for the company.

Social Factors

Trend to eat outside increased due to change in the preferences of the people to eat outside in Pakistan. Increased in fast food consumption it is estimated that about 7% fast food consumption has increased. People prefer convenient and good taste. Dual career couples are mostly demanding fast food because both wife and husband are working so who cook the meal at home. Nuclear family systems, Urbanization and Cultural transformation.(westernization) has also influenced the people to eat fast food and there lies an opportunity for KFC to capture the market.

Technological Factors

Technology has transformed the ways of doing businesses. Now KFC can do Advertisement through internet receive online order placement. Modern food processing technologies has reduced the operation cost for the companies and there lies opportunity for KFC to adopt those technologies. KFC can use Cooling systems for food preservation which helps to make raw material fresh. KFC can also provide online product information.

KFC Pakistan

Page 12

Legal factors

There is not as such law enforcement in Pakistan that can be threaten because its patent can be copied and also many counterfeit can be promoted as KFC products which decrease the company sales and ruin its image.As per transparency international Pakistan is ranked 127 out of 177 in Transparency Internationals corruption perception index (CPI). New businesses may be invited to contribute a facilitation fee to avoid an uncomfortably long wait for telephone lines and similar facilities here is also corruption in the public sector, including procurement, tax and public finance so this may be threat for KFC to run its operations smoothly in Pakistan.

Environmental Factors

Due to increased global warming companies are facing issues for environment preservation.ISO standards are emphasizing on environment safety. And KFC is always had been critics by world environmentalist, because high usage of beef causing the bad effect to the green house by methane gasses coming from the cows farm KFC introduced the paper packaging for its food products to sustain its brand image.

Porters Five Forces Model:

Rivalry among the competitors:

There are national as well As international companies entering in the fast food industry. Due to this competition is increasing among the companies. The companies are providing same kind of products with minor variation. There is intense competition among the customers because companies charging same prices with little variation and little variety in food items.

Threat of new Entrants:

According some research finding there is increasing population in Pakistan, and there is increasing middle income group. There is large untapped market in fast food industry, Due to these factors, so many national as well as international entering in to the market with large investment in food sectors. Another factor is that most of the population shifting from rural areas to urban areas. Companies bring little variation in fast food sectors.

Customer bargaining power:

Due to intense competition, most of the companies variety of products with reasonable price, due to this customer loyalty is decreasing and customer are easily shifting from one company to another companies. Due to these factors customer bargaining power is high. Thats why companies maintain quality in food items and providing food menu with reasonable price.

KFC Pakistan

Page 13

Supplier bargaining power:

Supplier bargaining power is very high, because there are few suppliers in the markets and there is strong completion among the companies and thats why supplier power is high .supplier power is also depends upon the quality of raw material and the time delivery on which they shipped their raw material to their customers.

Availability of substitute:

There are so many companies are operated in the markets and they are offering different products with different varieties and so many other restaurants are operating which also providing fast food as well due to this customer loyalty is low and customer switching behavior is high because of lots of substitutes are available.

External Factor Evaluation Matrix

EFE matrix is used for assessing the company current position in the market. It shows the possible opportunities and threats which are present in the external markets. In EFE matrix weight is assigned to each factor according to its importance and subsequently rate is assigned to the factors which show the companys responsiveness toward the factor. In end by multiplying rate with the weight final score is computed which shows the current position of the company in the market. For KFC Pakistan the factor which we have considered as opportunities and treats are described in the following paragraphs.

Opportunities

Expand outlets: in Pakistan the major area of country is not captured by the KFC. It is greater opportunity for KFC that it should open its outlets in those areas where it is not serving but the demand for product exists in this way it can capture the big market share and increased sales.

Parking areas: As most of customer avoid to visits KFC because of less convenience for vehicle parking by establishing the appropriate parking areas for the customer vehicles it can attract them so this is also greater opportunity for the KFC in Pakistan.

Drive through facility: due to social transformation from single career couples to the dual career couples the trend of fast food is increased. Women who work prefer ready to eat foods so for that individuals KFC should provide drive though facility.

Modern infrastructure: at its outlets KFC should establish modern infrastructure of its outlet building and use modern technology for facilitating the customers in better way this will help it to increase its customer base.

KFC Pakistan

Page 14

Balanced menu: KFC has image for only fried chicken. But there is great opportunity for it that it provides variety of other foods in its menu and different food items in its menu.

Threats

Price conscious customers: in Pakistan people are very price sensitive they prefer low price more than quality so for KFC it is potential threat that its customer may switch to the other brands which offer them low price products.

Energy shortage: energy shortage is the big issue which Pakistan is facing today. As KFC use gas and electricity as inputs so this shortage of energy causes obstacles in terms of high product cost and delays in products.

Health consciousness: people are becoming more health conscious so they avoid too fast food. For KFC it can be threat to its product demand if it continues the same trend of fast food in the market.

Increased competition: competition in the fast food industry has been increased in the Pakistan many local as well as international firms have been entered in the market which is the potential threat for the KFC in Pakistan.

Economic down turn: Pakistan economy is facing several problems. Increased inflation has perished the purchasing power of the individuals so they are not preferring the fast food items because their prices are too high, not only this but employees are demanding high wages due to inflation which put pressure on the product cost. The EFE Matrix of KFC Pakistan is shown below. The score of KFC Pakistan is 3.32 which indicate that company is performing above average in the industry.

Factors

Weight

Rate

Score

Opportunities

Expansion of outlets

.10

4

.40

Parking area

.11

4

.44

Drive through facility

.11

4

.44

Modern infrastructure

.09

3

.27

Balanced menu

.15

4

.60

Threats

Price conscious customers

.10

3

.30

Energy shortage

.05

3

.15

Health consciousness

.07

2

.14

Increased competition

.12

4

.48

Economic down turn

.10

1

.10

1.00

3.32

KFC Pakistan

Page 15

Competitors Profile Matrix

Problems of KFC:

Our team have analyzes few problems KFC have facing. These problems are temporary KFC can overcome these problems by formulating good strategies. Some of few problems are below

Slow innovation in product line:

KFC Pakistan only focusing on the chicken related food items. Mc Donalds is offering variety of food items in meats. They keep on introducing burgers, like Zinger extreme or the new Jalapeno one. According to one research it is said that most of local franchise copied the chicken related.

Health issues:

Due to greater intake of fast food health problems are increasing day by day, fast food causes several health issues like obesity, hypertension, and heart disease. According to global burden study publishes in lucent medical journals Pakistan is the 9th most obese country in the world. According to one study KFC Pakistan only uses 10% natural ingredients and remaining 90% ingredients are artificial or chemical enhanced.

Rice Starch and Sodium Phosphates, Leavening (Sodium Acid Pyrophosphate,

Sodium Bicarbonate, Mono calcium Phosphate), Salt, Dextrose, Monosodium Glutamate, Spice, (Sodium Acid Pyrophosphate, Sodium Bicarbonate),

KFC Pakistan

Page 16

Monosodium Glutamate, Spice, Nonfat Dry Milk, Dextrose, Extractives of

Turmeric and Extractives of Annatto. Breading Set in Vegetable oil.

Chicken it contains so many growth hormones like steroids antibiotics and growth hormones.

Customer switching behaviors:

Customers go for other companies when they find that other companies offer different products with high quality and in reasonable prices. Now there are so many local players are operating and there are so many substitute are present due to this customer switching behavior is high and customer loyalty is decreasing. Now the customers require variety of products with reasonable price. Besides that, income of consumers greatly influences their decision makings in purchases good. For instance, if a person has average or higher income, they are willing to purchase normal goods at the given price; whilst the lower income worker prefers to purchase inferior goods as that they have lower purchasing power.

Intense competition:

According to brand scenario.com and whitengreen.com international as well as local companies entering into food market and this has increase competition within the food industry. Due to intense competition customers switching behavior is high. More than 100 fast food chain is present in Pakistan.

Conflicts of management practices:

In 2014 Dubai based cupola group held master franchise of Kentucky fried chicken (KFC) Pakistan. Kentucky fried chicken culture largely based on colonial laid based approach. According to some approach, KFC suffer some financial and managerial crises and the quality of service was decreased.

Proposed strategies:

According to internal and external matrix (IE), according to internal factor analysis of Kentucky fried chicken is 3.03, KFC have 3.32 score in external factor analysis. The score lies in grow and build score. Keeping mind of score of internal external analysis we proposed growth strategies for growth strategies. High growth in Fast food industry, Customer preferences for fast food, Pakistan is a developing market and the food business is an attractive segment, Cozette Phifer-Koerber, a spokeswoman for Johnny Rockets, said in an e-mailed response to question Currently KFC only chicken related products so it needs product development.

KFC Pakistan

Page 17

SWOT MATRIX:

Opportunities O

Increased Fast food consumption Change in life style Un tapped Market Population growth

Availability to increase outlets in Different location

Strengths S

Brand Equity Global experience Efficient operations Trade mark recipes

good test in chicken products

Threats T

Weaknesses W

High prices

Health issues

Fried image

Poor law enforcement

Close substitutes

Economical down turn

Inconsistent Quality

Intense competition New Entrants

KFC Pakistan

Page 18

SWOT based strategies:

Strategy Implementation

In order to sustain competitive advantage we have suggested two strategies that KFC should implement one is product development and other is market development.

Product Development

KFC should launch some new products like; Onion nuggets, Spaghettis, Omelet sandwich and Milk shake. New product development requires some changes throughout the organization and without changes successful implementation is not possible. Following are some suggested changes in all the areas of organization:

Company structure

KFCs current structure is divisional structure and these divisions are based on geographical location having division in every franchise. But for product development no change in organizational structure is needed, current hierarchy supports the proposed strategy.

KFC Pakistan

Page 19

Company culture

KFCs current culture is based on C.H.A.M.P.S which means; Cleanliness, Hospitality, Accuracy, Maintenance, Product quality, Speed in services, Team work and employee empowerment. But here also the company culture will be remained same existing culture supports new strategy.

Financial resources

KFC is generating current profit of approximately PKR 230 million per year which is enough to support this strategy but if it needs more financial resources then it should go for debt or equity financing.

Operations/production

KFCs current operations are no doubt are efficient; having very attractive in infrastructure, high quality raw material for current products, electronic cash register system, inventory control system is called ARMS, chicken meat processing machine and Jinan Hiwell Machinery based on high Capacity Automatic forming fast Food Processing machine but it requires new type of inventory for new products and new machinery specific to the nature of products.

Human resources

Currently KFC is having highly trained and developed managerial staff in addition to qualified lower staff waiters, service providers, and qualified cooks for existing products. As new products are launched to recipe and ingredient's usage vary from product to product for this reason KFC has to train the existing cooks and also hire some new cooks only if need is not fulfilled by trainings.

Market Development

Another Strategy which we had proposed is market development. KFC should operate in other locations where it can increase the sales and get high market share. Some proposed market locations are; Rahim yar khan, Mirpur khas, Shaheed benazirabad( nawab shah), Murree , Sadqabad , D.G khan, Dadu and Dehrki. Like product development market development also requires changes to have a successful implementation. Following are some suggested changes:

Company structure

KFC 's current structure is divisional structure and these divisions are based on geographical location having division in every franchise. But for market development no change in

KFC Pakistan

Page 20

organizational structure is needed, current hierarchy supports the proposed strategy and structure can be applied at different locations.

Company culture

KFCs current culture is based on C.H.A.M.P.S which means; Cleanliness, Hospitality, Accuracy, Maintenance, Product quality, Speed in services, Team work and employee empowerment. But here also the company culture will be remained same existing culture supports new strategy. the same culture will be applied at each new franchise.

Financial resources

KFC is generating current profit of approximately PKR 230 million per year, for new market development it needs additional funding. According to our analysis one franchise need approximate 87 million rupees and for purchase/Construction of building for the new restaurant and it requires huge investment to finance equipments, furniture, and other appliances . In addition to it, cost vary from city to city according to real estate prices so KFC should consider these factors.

Operations/production

KFCs current operational resources are not sufficient for new franchises. It Requires new infrastructure, machinery, raw material in order to operate new franchise, for each new franchise new resources are required.

Human resources

Existing human resources are working over existing franchises. No doubt, Required new human resources, managers as well as lower staff hire for each new franchise.

Control and evaluation

Again strategy implementation is not enough. In order to know the benefits of the strategies to the company that either objectives or met or not, Without control and evaluation no cost and benefit of strategies can be recognized. It helps us to take corrective action in any un wanted situations.

For better and relevant evaluation of strategies there is strategy evaluation matrix composed of certain steps that we have to take like:

Identify and Evaluate major changes in internal strategic position

Identify and Evaluate major changes in the external strategic position

KFC Pakistan

Page 21

Evaluate that firm has achieved the objectives

Take correctives actions if objectives are not met.

Along with above steps here is another question that what should be evaluate? and how we evaluate the strategies? Definitely we analyze current performance as measure for evaluation & control and performance will be of following areas:

Profit margin Sales growth

Market share Assets growth Balanced score card

If performance results in not consistent to desired output so here are also some suggestion regarding corrective actions:

Restructure Change the one or more key individuals Re set objectives Formulate new policies

Change the strategies Outsources business function Hire more employees

Conclusion

Strategic analysis need a through environmental analysis without it, it is not possible for any company to make strategic decisions. As a student of Strategic Management we have worked in team and tried our level best to perform the thorough analysis of the company KFC Pakistan and proposed some valid recommendation under the light of the concepts learned in the strategic management. In this regard we have performed thorough external and internal evaluation of the KFC Pakistan and applied all the learned concepts off strategic management. in our report we have performed the internal external audit of the KFC Pakistan following this we have identified the strengths weaknesses, opportunities and threats for the company. On the basis of that date we have formulated the IFE and EFE matrix and CPM. Apart from that we have performed thorough PESTLE analysis , Porter Five Forces Model analysis, VRIO frame work Value chain analysis etc. after knowing that all we have proposed some strategies for KFC on the basis tools which we have learned in the subject i.e. SWOT matrix, IE matrix etc. and finally we have suggested the implementation plan and evaluation plan in order to reap the benefits from proposed strategies. To best of our knowledge we have done this all.

KFC Pakistan

Page 22

Appendix

Kentucky Fried Chicken. (2011, October 14). Retrieved June 1, 2015, from

http://www.newspakistan.pk/2011/10/14/kentucky-fried-chicken/

Fast Food consumption in Pakistan. (n.d.). Retrieved February 1, 2015, from

http://www.brandsynario.com/fast-food-consumption-in-pakistan

Fast food industry: Competition helps middle-class contribute to growth - The Express Tribune. (2013, July 13). Retrieved March 1, 2015, from http://tribune.com.pk/story/576600/fast-food-industry- competition-helps-middle-class-contribute-to-growth/

Management change: Cupola sells KFC Pakistan to Delicious Holdings - The Express Tribune. (2014, January 29). Retrieved May 3, 2015, from http://tribune.com.pk/story/665104/management-change- cupola-sells-kfc-pakistan-to-delicious-holdings/

Military. (n.d.). Retrieved April 13, 2015, from

http://www.globalsecurity.org/military/world/pakistan/politics.htm

Overseas Business Risk Report - Pakistan. (n.d.). Retrieved April 11, 2015, from https://www.gov.uk/government/publications/overseas-business-risk-report-pakistan/overseas- business-risk-report-pakistan

Fast food industry Pakistan. (n.d.). Retrieved February 18, 2015, from http://ilm.com.pk/pakistan/pakistan-information/fast-food-industry-of-pakistan-growth-and-history/

Fast food industry: Competition- The Express Tribune. (2013, July 13). Retrieved February 18, 2015, from http://tribune.com.pk/story/576600/fast-food-industry-competition-helps-middle-class-contribute-to- growth/

Analysing the Impact of Information Management in KFC. (n.d.). Retrieved April 12, 2015, from http://www.ukessays.com/essays/business/analysing-the-impact-of-information-management-in-kfc- business-essay.php

KFC. (n.d.). Retrieved May 10, 2015, from

http://wenku.baidu.com/view/cd639038376baf1ffc4fadaa.html

196 Discounts Just for Seniors. (n.d.). Retrieved May 1, 2015, from http://www.giftcardgranny.com/blog/senior-discounts/

KFC competitors. (n.d.). Retrieved from

http://www.pafkiet.edu.pk/Portals/0/Market_Forces_2014_Part-5.pdf

KFC: Finger Lickin' Good. (n.d.). Retrieved April 26, 2015, from

http://www.kfc.com/about/news/2013/040513.asp

KFC Pakistan

Page 23

Kentucky Fried Chicken. (2011, October 14). Retrieved April 27, 2015, from

http://www.newspakistan.pk/2011/10/14/kentucky-fried-chicken/

Human resources to meet emerging business needs. (n.d.). Retrieved May 1, 2015, from http://www.afrbiz.com.au/case-studies/kfc-human-resources-to-meet-emerging-business-needs/Page- 1.html?showall=1

KFC 's recipe for success. (2009, March 19). Retrieved March 12, 2015, from http://knowledge.insead.edu/leadership-management/strategy/kfc-chinas-recipe-for-success-1706

Analysis of Total Quality Management and Quality Assurance in Kentucky Fried Chicken (May,2013). (n.d.). Retrieved April 1, 2015, from http://www.academia.edu/3632007/Analysis_of_Total_Quality_Management_and_Quality_Assurance_ in_Kentucky_Fried_Chicken_May_2013_

Los Angeles Conservancy. (n.d.). Retrieved April 1, 2015, from https://www.laconservancy.org/locations/kentucky-fried-chicken

KFC Pakistan

Page 24