TASK 5:PORTERS FIVE FORCES MODEL : KENTUCKY FRIED CHICKEN
DESCRIBE PORTERS FIVE FORCES MODELUSING REAL ORGANISATION EXAMPLE(S) : BUYER POWER SUPPLIER POWER THE THREAT OF NEW ENTRANTS THE THREAT OF SUBSTITUTES PRODUCT THE RIVALRY AMONG THE EXISTANCE FIRM IN THE INDUSTRY
BUYER POWER The factor of a lot of competitors such as McDonald, KFC, Pizza Hut and Burger King. The loyal and potential customer of customer starting to declined and this caused a big loss to the KFC. Customer can go to any fast food restaurants that offered more affordable price especially to students which requiring a lot of money to survived. To attract their consumers back, KFC start to decrease their prices and give a discount of their products to the consumers. KFC reward ‘My KFC Card Programed’ to their loyal customer. By this card, the customers are able to get a discount as much as 5% and also exclusive VIP offers. So, the buyer power of KFC is high when this is proved that the consumers able to influence the priced when they has many choices.
SUPPLIER POWER There are a lot of suppliers available for KFC’s raw materials. KFC can easily switch their supplier to another supplier since the materials need in the process of producing KFC is easily to get such as chicken. In 2004, KFC has some internal problems and issue regarding of their raw chicken supplier. KFC’s supplier was found doing something horrible when slaughtering the chicken. KFC decide to terminated the contract between them and thus find the new supplier to replace them. So, chicken supplier can’t easily increase the price for chicken since their supplier power is low.
SUPPLIER POWER (CON’T) Other than that, KFC also binding a contract with Pepsi.co for supplying carbonate water to KFC’s customer. In the contract, KFC has promised to Pepsi.co that they won’t have any business related with carbonate drinks such as Coca Cola or A&W. In the same time, Pepsi do supplies their drinks to the competitors of KFC. This is lowering down the supplier power of KFC.
THE THREAT OF NEW ENTRANT There a lot of substitute’s product offered to the consumers. Radix Fried Chicken which is almost similar to KFC has grabbed the customers’ attention to switching their taste to something that are more fresh than KFC and to find something difference. Radix Fried Chicken’s main product is chicken. So, the existence of Radix Fried Chicken has become a new rival to KFC. The Radix Chicken was founded in 2008 while KFC was found in 1930.
THE THREAT OF SUBSTITUTE PRODUCT Popeyes Louisiana Kitchen also sell the product/service almost same as KFC. Popeyes serves chicken dishes in mild and spicy flavors and offers sides such as Cajun fries, mashed potatoes with Cajun-style gravy and Cajun rice. As well as fried chicken, other entree items include a chicken-and- sausage jambalaya and po boy sandwiches. Most combo meals come with a side order, drink, and a biscuit The price for both fast food is almost same.
THE THREAT OF SUBSTITUTE PRODUCT KFC has find another alternatives to reduce the threat of substitutes products by providing KFC a.m where they are operating in the morning to provide breakfast for customer. Other than that, they also providing free wifi for their consumer who eat in their franchise. This will attract and also make the customer comfortable since they can easily surfing the internet. KFC also open for 24 hours. The will easier the customer who starving at the late of night to find some food. In certain place, KFC also provide drive thru service to those who are rushing.
THE RIVALRY AMONG THE EXISTANCE FIRM IN THE INDUSTRY In Malaysia fast food industry, McDonald ranked as the most favorite fast food in Malaysia and follow by KFC and Pizza Hut. McDonald that has been developed since 1980 has become a closest rival of KFC. KFC has implement loyalty program to attract their consumer’s attention to their brand. They have providing their customers a card to kids. The card is useful to obtain a discount in KFC, Sunway Lagoon, MPH bookstore, Petrosains and also Zoo Melaka.