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Cristal Ann G. Laquindanum   ASMPH Class of 2012
•   Pioneered by Colonel Harland Sanders; Kentucky Fried Chicken (KFC)    has grown to become one of the largest quick foo...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Or...
Lunch/dinner    Lunch/dinner     Side      Breakfast   Snack      Coffee       All               main dishes       sides  ...
Lunch/dinner    Lunch/dinner     Side      Breakfast   Snack      Coffee       All               main dishes       sides  ...
Threat of new entrants                                          LOW                                 Franchising, small-sca...
Critical Success Factors                     Wt         Score       Ave       Score         Ave        Score   Ave1 Produc...
Critical Success Factors                     Wt         Score       Ave       Score         Ave        Score   Ave1 Produc...
Critical Success Factors                     Wt         Score       Ave       Score         Ave        Score   Ave1 Produc...
Critical Success Factors                      Wt         Score       Ave       Score         Ave        Score   Ave1 Produ...
Critical Success Factors                      Wt         Score       Ave       Score         Ave        Score   Ave1 Produ...
Critical Success Factors                      Wt         Score       Ave        Score        Ave        Score     Ave1 Pro...
Critical Success Factors                      Wt         Score       Ave       Score         Ave        Score   Ave1 Produ...
Critical Success Factors                      Wt         Score       Ave       Score         Ave        Score   Ave1 Produ...
Weighted                                Key External Factors                           Weight   Rating                    ...
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Rank              Brand            Outlets                        Key External Factors                         Weight Rati...
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Weighted                              Key Internal Factors                                               Weight   Rating  ...
Weighted                              Key Internal Factors                                               Weight   Rating  ...
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Weighted                              Key Internal Factors                                               Weight   Rating  ...
Weighted                            Key Internal Factors                                        Weight     Rating         ...
Key Internal Factors      Restaurant Lunch/dinner Lunch/dinner           Side                     Coffee Weighted         ...
Weighted                              Key Internal Factors                                               Weight    Rating ...
Strategy Option              TOWS SPACE IEM GSM Total       Integration Strategy       1      Forward Integration         ...
•   Carries more risk•   Develop a new product    targeted to its existing    customers                               •   ...
Why Product Development?• KFC needs to increase sales by improving or modifying  its menu items (tried and tested)• It wil...
• Long term Company Objective:   - Increase net profit margin by 5% annually from 2012 to 2016                            ...
Completion                             Team                  Activities                  Date       Expected Output       ...
Goals               Measures               Current             TargetsCustomer ServiceMarket Share                  Global...
Cristal Ann G. Laquindanum   ASMPH Class of 2012
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KFC STRAMA (defense ppt)

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  • Strama defense May 7, 2012
  • Market share
  • Segmented by the meal of the day
  • Buyer power refers to the ability of customers of the industry to influence the price and terms of purchase. Supplier power refers to the ability of providers of inputs to determine the price and terms of supply. Suppliers can exert power over firms an industry by raising prices or reducing the quality of purchased goods and services, so reducing profitability.
  • The United States has the largest economy in the world with a Gross Domestic Product worth 14,256 billion dollars (2008 estimate) or 22.99% of the world economy
  • The U.S. retail food and beverage industry, including restaurants, is about a $1.5 trillion industry (Plunkett Research Ltd 2012). Restaurant-industry sales are projected to total $632 billion in 2012 and equal 4 percent of the U.S. gross domestic product. Fast food chains dominate the American fast food market in terms of sales, transactions and number of outlets. sales at limited-service establishments in the United States rose 1.5% in 2009 to $160.0 billion
  • National Restaurant Association estimated that, for 2012, its industry would employ 12.9 million people or nearly 10 percent of the U.S. workforce at 970,000 locations. One-half of all adults have worked in the restaurant industry at some point in their lives, and one-third got their first job experience in a restaurant.
  • Food expenditures in the United States have increased steadily since 1990 along with growth in the country’s population; Over the same period, consumers have shown a growing preference for eating out, effectively closing the gap between spending on food consumed in the home versus food consumed away from home. Americans now spend nearly half of their food dollars on meals and snacks at foodservice facilities, such as restaurants, hotels, and schools. Total away-from-home expenditures, defined to include all food dispensed for immediate consumption outside of the consumer's home, amounted to $594 billion in 2010. A considerable amount of which is being spent on eating and drinking places, this includes full-service and fast-service (otherwise called, fast food chains or quick service) restaurants.
  • The improvement in sales among dinner houses and family restaurant chains during the last decade may be attributed to demographic trends in the country. Given the latest available statistics from the US Census Bureau (2009), the United States is at 307,007 million residents and is even projected to increase to 392 million by 2050. It is the third most populous country, with 79% of its population living in urban areas. the rate of population growth is projected to decrease during the next six decades by about 50 percent. The decrease in the rate of growth is predominantly due to the aging of the population. (born during the Baby Boom after World War II). this trend will also affect foodservice industry, particularly the limited service market segment. Those over the age of 65, tend to eat out less often, which poses a challenge for the restaurant industry to entice this generation of retirees to eat out more often. Older individuals tend to spend more time eating their meal, prefer full service restaurants, and are more likely to choose high end, upscale restaurants compared to limited service restaurants or fast food chains.
  • The NPD Group has determined that breakfast accounted for 60% of traffic growth over the 2005 to 2009 period while lunch was flat and dinner traffic declined about 2% per year
  • The structure of the American household is changing. The average age is higher, people are better educated, and there are fewer members per households. A household's structure can have significant implications for how it buys and prepares food. Demographic changes are behind the increasing frequency of nontraditional households. There are more "empty nest" adults living together after their children have grown up, as well as more unmarried people who are perhaps waiting longer to get married or who have been widowed. These people are more likely to further boost the dining-out trend because of the decline in free time. In many families, both parents hold full-time jobs, which leaves less time to prepare meals at home. With the rise of dual-income and single-parent families, and with numerous moderately priced restaurants to choose from, dining out is often the most convenient choice
  • The aging of the Baby Boom generation is having an impact; as older people are more likely to watch their diet, choose healthier foods and compromise on convenience and taste in favor of better nutrition. Growing health concerns are significantly impacting all sectors of the food industry, as obesity levels continue to rise to alarming proportions in the U.S. In response to this, the fast-food industry has been hit with lawsuits over the past several years, alleging that specific corporations are responsible for obesity-related health problems faced by consumers In December 2006, the New York City Board of Health passed a regulation requiring restaurants in the city to remove most trans fats by July 2008. A massive health care act passed in 2010 demanded that all restaurant chains with 20 or more restaurants post calorie counts for menu and buffet items.
  • The race and Hispanic-origin distribution of the U.S. population is projected to become more diverse. The fastest growing race groups will continue to be the Asian and Pacific Islander population. By the turn of the century, the Asian and Pacific Islander population would expand to over 12 million, double its current size by 2010, triple by 2020, and increase to more than 5 times its current size, to 41 million by 2050. On the other hand, the Hispanic-origin population is also considered to be the largest growing group. By 2000, the Hispanic-origin population may increase to 31 million, double its 1990 size by 2015, and quadruple its 1990 size by the middle of the next century. With the growing rate of the Asian and Pacific Islander population in the US, there is also a growing demand for ethnic cuisine, with Asian (particularly Chinese and Japanese) fast food and full-service restaurants seeing strong growth.
  • Hamburgers continue to be extremely popular in the U.S. and they account for 14% of all restaurant orders or 8.7 billion servings from fast food to fine dining restaurants in 2007. Trends within the quick/fast-casual sector include custom-made sandwiches are increasingly popular and made with fresh and specialty ingredients, which meet demand for convenient and fresh food, hence the increased popularity of Subway outlets
  • Food prices and labor costs, in addition to rent and utility costs, have been rising throughout 2007, which has put pressure on the industry’s operating margins. Commodity prices affect the supply costs. When commodity prices increase, cost for the restaurant increases as well. The popularity of chicken items for both casual dining and quick-service firms, and the inability of many firms to increase prices significantly, mean that many restaurant chains are likely to absorb much of the increase in chicken prices. Labor costs are climbing for the restaurant industry, following the passage of new legislation raising the federal minimum wage. These higher commodity and labor costs can eat up the company’s profitability. To counteract this, some firms have overcome these challenges with higher pricing.
  • KFC’s early entry into the fast-food industry in 1954 allowed KFC to develop strong brand name recognition and a strong foothold in the industry. KFC also prides itself for its secret recipe for Original Fried Chicken with its blend of 11 herbs and spices. The recipe is locked away in a safe in Louisville, Kentucky. Today, the recipe uses modern technology security precautions to protect the recipe. Of course, the effect of the enigmatic Colonel Sanders as the face of KFC up to today also influences the company’s strong trademark. Through the years, his face has been part of the company’s logo and even without the name “KFC” people already associate the taste of KFC’s chicken to Colonel Sanders.
  • In 1986, there was a management shift when PepsiCo acquired KFC from RJR Industries. Sweeping changes into the culture was initiated by the new management, which brought demoralization to old KFC employees and even franchisees. Several restructurings led to layoffs throughout KFC, replacement of KFC managers with PepsiCo managers . PepsiCo ’ s stronger emphasis on performance rather than loyalty was opposite to what was expressed by Col. Sanders to KFC employees over the years and this brought about conflict in the company. When David Novak, current CEO for YUM! Brands, came in, he moved quickly to create a new culture within the company. One of his primary objectives was to reverse the long-standing friction between management and franchisees
  • KFC continues to be the market leader in the chicken category (Table 13), with US system wide sales totaling an estimated $4.90 billion then $4.70 billion in 2009 and 2010 respectively. It also leads this category with the highest number of units with 5,200 units and its competitors are far behind with less than 2,000 units each. This brings us to distribution capacity…
  • As of 2012, KFC had 5,200 units in the U.S. and approximately 17 percent of the U.S. units are operated by the YUM Brands, its mother company. It ranked ninth in the list of 10 largest fast food chains in the United States based on US locations.
  • In the past, KFC has been all about their fried chicken roots with campaign slogans like finger-lickin’ good and always having Colonel Sanders as their trademark. Lately the company has tried to create a new culture by pushing their new “Kentucky Grilled Chicken” products and the fact that their chicken now has 0 grams of trans fat. In addition, they have tried to revamp their brand image to target younger consumers by replacing the traditional Colonel Sanders with an animated character and the chain’s locations now have bolder colors and updated graphics. They also have an “in your face” approach in TV ads with a market leading 52 week a year TV advertising schedule.
  • YUM Brand’s philosophy is to reduce company ownership in highly penetrated or under-performing markets, and increase exposure in emerging and under-penetrated markets. For KFC, YUM Brands retain only about 5% ownership of KFC, which lets franchise operators run their branches almost independently. This shows great trust of the mother company to their franchise operators and less friction in terms of management. In return, they collect royalties and still make consistent profit return. . Franchises would have greater independence, resources, and technical support. The firm ’ s new emphasis on franchise support had an immediate effect on morale. Seven years after the divestiture, the company recorded a net income of $617 million on sales of $7.4 billion from a loss of $111 million in net income in 1997 (year of the divestiture)
  • KFC workforce in the US is composed of more than 140,000 people, working at over 5,000 KFC restaurants across the country
  • KFC’s growth, when it started to expand internally, was driven by international operations. About 95% of all new KFCs restaurants in 1994 were from international franchise mainly in China. Yum opened a record-breaking 656 new restaurants in China in 2011, helping usher in 19 percent same-store sales growth. However, inasmuch as this growth is a good development for KFC as a whole, its domestic growth has been troublesome for a few years now. In 2004, parent Yum! told KFC that it could not open any more multibrand restaurants (of which there were almost 1,000) until its domestic same-store sales figures improved. KFC’s leadership in the US market was so extensive that it had fewer opportunities to expand its US restaurant base, which was growing at about 1% per year. However, since the United States still represents over 59% of Yum's revenues, improvement on US market segment still has to be a priority.
  • According to American Customer Satisfaction Index in 2011, KFC scored 75 out of 100. Another survey from Customer Reports, which ranked Chick-fil-A as the nation’s top chicken chain for both food and service, put KFC near the bottom of the rankings revealing dissatisfaction from consumers. This is certainly one success factor that KFC should give priority for improvement.
  • The bottom line for any organization is its ability to generate profits. The net profit margin, indicates how much net income a company makes with total sales achieved. The lower the ratio, the less effective a company is at cost control. For KFC, its net profit margin has been stagnant at 10% for the past 3 years which is the same as that of the restaurant industry 10%
  • In a menu analysis of twelve restaurants out of top 50 restaurants, it shows that KFC belongs to one of the four restaurants that had ten or fewer items on their healthy menus (Table 16). It is also significant to mention that the three out of the four restaurants with fewer healthy menu options are from the YUM Brands (Pizza Hut, Taco Bell, KFC, and Domino’s). Fast food restaurants are generally seen as “unhealthy”, which forced some fast food chains to add healthy options on their menu. KFC only had 8 lunch/dinner main dishes, which is a disadvantage to the restaurant especially with the current trend of consumers having healthier lifestyle.
  • Market Penetration strategy is less risky since it leverages on the company’s existing resources and capabilities. In a growing industry, simply maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. However, market penetration has limits, and once the market approaches saturation, another strategy must be pursued if the firm is to continue to grow A product development strategy may be appropriate if the company’s strengths are related to its specific customers rather that to the specific product itself. In this situation, it can leverage its strengths by developing a new product targeted to its existing customers. New product development carries more risk than simply attempting to increase market share.
  • Market Penetration strategy is less risky since it leverages on the company’s existing resources and capabilities. In a growing industry, simply maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. However, market penetration has limits, and once the market approaches saturation, another strategy must be pursued if the firm is to continue to grow A product development strategy may be appropriate if the company’s strengths are related to its specific customers rather that to the specific product itself. In this situation, it can leverage its strengths by developing a new product targeted to its existing customers. New product development carries more risk than simply attempting to increase market share.
  • Transcript of "KFC STRAMA (defense ppt)"

    1. 1. Cristal Ann G. Laquindanum ASMPH Class of 2012
    2. 2. • Pioneered by Colonel Harland Sanders; Kentucky Fried Chicken (KFC) has grown to become one of the largest quick food service systems in the world; touted as the “world’s most popular chicken franchise”• Well known for their Original Recipe Fried Chicken from a recipe of 11 herbs and spices• Company went through many acquisitions (Heublin Inc  RJ Reynolds  PepsiCo Inc  Tricon Global Restaurants, Inc  YUM! Brands, Inc)• Currently, KFC is under the restaurant company YUM! Brands, Inc (along with Taco Bell and Pizza Hut) with nearly 5,200 restaurants in the United States
    3. 3. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Customers“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    4. 4. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Products & Services“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    5. 5. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Markets“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    6. 6. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Concern for Survival; Growth and Profitability“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    7. 7. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Technology“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    8. 8. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Philosophy“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    9. 9. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Self-concept“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    10. 10. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Concern for Public Image“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    11. 11. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Concern for Employees“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    12. 12. Kentucky Fried Chicken is one of the world’s largest fast food systems serving theworld’s most popular chicken with its Original Recipe® fried chicken - made withthe same secret blend of 11 herbs and spices Colonel Harland Sanders perfectedmore than a half-century ago. The world’s best-fried chicken that tastes so goodstill continuously searches for better ways to improve. Fast food doesn’t have tomean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-food menu choices. Nation-Building“Our passion, as a restaurant company, is to put a KFC on peoples faces aroundthe world, satisfying customers every time they eat our food and doing it betterthan any other restaurant company. KFC offer customers the food they crave,comeback value, and customer-focused teams. The unique eating experience ateach of our restaurants make our customers smile and inspire their loyalty forlife. Toward that end, our 140,000 employees in the US are trained to becustomer maniacs. It is with passion that we strive to be known by our “Southern”way of cooking chicken and share KFC’s unique flavor all around the nation.”
    13. 13. Lunch/dinner Lunch/dinner Side Breakfast Snack Coffee All main dishes sides beverages items items beverages itemsKFC 48 28 102 0 20 0 198Chick-Fil-A 21 13 19 18 16 2 89Popeyes 31 23 12 10 6 0 82
    14. 14. Lunch/dinner Lunch/dinner Side Breakfast Snack Coffee All main dishes sides beverages items items beverages itemsKFC 48 28 102 0 20 0 198Chick-Fil-A 21 13 19 18 16 2 89Popeyes 31 23 12 10 6 0 82
    15. 15. Threat of new entrants LOW Franchising, small-scale entrepreneurs; high fixed cost; intense competitionBargaining Power of Buyers Rivalry Among Existing Bargaining Power of Suppliers LOW Competitors LOW HIGHLow volume purchases, not Low switching costs price sensitive Highly competitive industry with many players; trend of quality meals Threat of Substitute Products HIGH Frozen food section, home cooked meals, healthier alternatives
    16. 16. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 3 0.60 2 0.40 2 0.403 Distribution capability 0.20 4 0.80 2 0.40 2 0.404 Brand Image 0.10 4 0.40 RECIPE FOR SUCCESS: 0.30 3 0.30 3 good product, competitive5 Menu variability 0.05 2 0.10 2 price, 0.10 2 0.106 Advertising 0.10 3 0.30 widely distributed 3 3 0.30 0.30Total 1.00 3.25 2.90 2.55Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    17. 17. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 3 Chick-fil-A: High satisfaction rating 0.40 0.60 2 0.40 23 Distribution capability 0.20 4 0.80 gaining multiple awards 0.40 and 2 0.40 24 Brand Image 0.10 4 0.40 3 0.30 3 0.305 Menu variability 0.05 2 0.10 2 0.10 2 0.106 Advertising 0.10 3 0.30 3 0.30 3 0.30Total 1.00 3.25 2.90 2.55Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    18. 18. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 3 0.60 2 0.40 2 0.403 Distribution capability 0.20 4 0.80 2 0.40 2 0.40 KFC value meals4 Brand Image 0.10 4 0.40 from 99c to $1.99 3 3 0.30 0.30 draws consumers in5 Menu variability 0.05 2 0.10 2 0.10 2 0.106 Advertising 0.10 3 0.30 3 0.30 3 0.30Total 1.00 3.25 2.90 2.55Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    19. 19. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 3 0.60 2 0.40 2 0.403 Distribution capability 0.20 4 0.80 2 0.40 2 0.404 Brand Image 0.10 4 0.40 ranked 9th in 10 largest KFC 3 0.30 3 0.30 fast food chains in the US5 Menu variability 0.05 2 0.10 (5,200 units) 2 0.10 2 0.106 Advertising 0.10 3 0.30 3 0.30 3 0.30Total 1.00 3.25 2.90 2.55 Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    20. 20. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 KFC is joining the healthy bandwagon 0.40 3 0.60 2 0.40 23 Distribution capability 0.20 4 with its KFC 2 0.80 Grilled0.40 Chicken 2 0.404 Brand Image 0.10 4 0.40 3 0.30 3 0.305 Menu variability 0.05 2 0.10 2 0.10 2 0.106 Advertising 0.10 3 0.30 3 0.30 3 0.30Total 1.00 3.25 2.90 2.55 Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    21. 21. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 3 0.60 2 0.40 2 0.403 Distribution capability food choices than 2 0.80 KFC has more 0.20 4 2 0.40 2 0.404 Brand Image competitors combined! 4 0.10 0.40 3 0.30 3 0.305 Menu variability 0.05 2 0.10 2 0.10 2 0.106 AdvertisingLunch/dinner 0.10 Side Lunch/dinner 3 0.30 Breakfast 3 Snack0.30 Coffee 3 0.30 All main dishes sides beverages items items beverages itemsTotal KFC 48 1.00 28 102 3.25 0 202.90 0 2.55 198 Chick-Fil-A 21 13 19 18 16 2 89 Popeyes 31 23 12 10 6 0 82 Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    22. 22. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 3 0.60 2 0.40 2 0.403 Distribution capability 0.20 4 0.80 2 0.40 2 0.404 Brand Image 0.10 4 All three chicken fast food chains made 0.40 3 0.30 3 0.30 effective advertising efforts5 Menu variability 0.05 2 0.10 2 0.10 2 0.106 Advertising 0.10 3 0.30 3 0.30 3 0.30Total 1.00 3.25 2.90 2.55 Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    23. 23. Critical Success Factors Wt Score Ave Score Ave Score Ave1 Product Quality 0.35 3 1.05 4 1.40 3 1.052 Competitive Pricing 0.20 3 0.60 2 0.40 2 0.403 Distribution capability 0.20 4 0.80 2 0.40 2 0.404 Brand Image 0.10 4 0.40 3 0.30 3 0.305 Menu variability 0.05 2 0.10 2 0.10 2 0.106 Advertising 0.10 3 0.30 3 0.30 3 0.30Total 1.00 3.25 2.90 2.55 Note: rating values are as follows: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength.
    24. 24. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E US food industry provides employment to the country 0.05 3 0.154-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    25. 25. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E US food industry provides employment to the country 0.05 3 0.154-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    26. 26. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E 0.05 3 US food industry provides employment to the country retail food and beverage industry, including The U.S. 0.15 restaurants, is about a $1.5 trillion industry4-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 Restaurant industry sales = $632 B or 4% of GDP 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    27. 27. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E US food industry provides employment to the country 0.05 3 0.154-C US consumers prefer to eat out Restaurant industry is projected to employ 12.9 million 0.30 4 1.205-SC Increasing and aging US population workforce (NRA, 2012) people or 10% of the US 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    28. 28. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product Food expenditures have increased steadily; 0.05 3 0.152-E 0.05 Total away-from-home expenditures amount to $594 billion in 2010 Continued growth of US food service industry 3 0.15 (considerable amt in eating and drinking places)3-E US food industry provides employment to the country 0.05 3 0.154-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    29. 29. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.15 US residents = 307,007 million and is projected to increase to 392 million by 2050 but projected to decrease in the next 63-E US food industry provides employment to the country 0.05 3 decades by 50% (due to aging population) 0.15 Older individuals tend to eat out leas often4-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    30. 30. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E US food industry provides employment to the country 0.05 3 0.15 60% of traffic growth was accounted for breakfast4-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    31. 31. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.15 • A household’s structure can have2-E Continued growth of US food service industry implications on how it buys and 0.05 3 0.153-E US food industry provides employment to the country prepares food 0.05 3 0.15 • Dining out = most convenient4-C US consumersthose witheat out choice for prefer to dual-income 0.30 4 1.205-SC and single-parent families Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    32. 32. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E US food industry provides employment to the country 0.05 3 0.15 Older people more likely to:4-C US consumers prefer to eat out •watch their diet 0.30 4 1.205-SC Increasing and aging US population •choose healthier foods 0.05 3 0.15 •compromise out for breakfast Popularity of eatingcompromise on6-SC convenience and taste 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 Fast food industry blamed for obesity-related heath problems 0.053-C • non-fried chicken chains 0.10 Increased competition fromNYC regulation requirin restaurants to remove most trans fats 2 0.20 •Health care act in 2010, restaurants post calorie counts for menu and4-C Operating costs on the rise buffet items 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    33. 33. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.15 • Growing rate of service industry Continued growth of US foodAsian and Pacific Islander2-E population to expand over 12 million 0.05 3 0.153-E • Hispanic-origin population, largest growing US food industry provides employment to the country 0.05 3 0.15 group, may increase to 31 million by 20154-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.05 • With the growing rate of these population, there is also a growing2 0.10 demand 0.203-C Increased competition from non-fried chicken chains4-C Operating costs on for ethnic cuisine the rise 0.05 1 0.05 • Asian fast food and full-service restaurants seeing strong growth E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    34. 34. Rank Brand Outlets Key External Factors Weight Rating Weighted Score 1 SUBWAY 21,635EXTERNAL OPPORTUNITIES 13,867 2 McDonald’s1- E 3 Starbucks 10,987 Increasing US gross domestic product 0.05 3 0.152-E Continued growth ofHut food service7,564 4 Pizza US industry 0.05 3 0.15 5 Burger King 7,2133-E US food industry provides employment to the country 6 Dunkin’ Donuts 5,863 0.05 3 0.154-C 7 Wendy’s US consumers prefer to eat out 5,742 0.30 4 1.205-SC Increasing and aging US population 5,622 8 7-Eleven 0.05 3 0.156-SC Popularity of Taco Bell breakfast 5,588 9 eating out for 0.10 3 0.30 10 KFC 5,253 • Hamburgers continue to be very7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 popular (14% of all restaurant to eat out orders or 8.7 B servings)EXTERNAL THREATS • Increased popularity of Subway outlets (made with fresh and specialty0.10 ingredients2 0.201-C Growing health concerns on fast food service restaurants2-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    35. 35. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E US food industry provides employment to the country 0.05 3 0.154-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC• Popularity of and labor costs have been rising  pressure Food prices eating out for breakfast 0.10 3 0.307-SC Demographicmargins in the American household causes a tendency on operating changes 0.10 4 0.40 • to eat out price increase  cost for restaurant Commodity increasesEXTERNAL THREATS to absorb the increase in • Restaurants most likely commodity prices1-C Growing health concerns on fast food service restaurants • Some counteracted these with higher pricing 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    36. 36. Weighted Key External Factors Weight Rating ScoreEXTERNAL OPPORTUNITIES1- E Increasing US gross domestic product 0.05 3 0.152-E Continued growth of US food service industry 0.05 3 0.153-E US food industry provides employment to the country 0.05 3 0.154-C US consumers prefer to eat out 0.30 4 1.205-SC Increasing and aging US population 0.05 3 0.156-SC Popularity of eating out for breakfast 0.10 3 0.307-SC Demographic changes in the American household causes a tendency 0.10 4 0.40 to eat outEXTERNAL THREATS1-C Growing health concerns on fast food service restaurants 0.10 2 0.202-SC Growing demand for ethnic cuisine 0.05 1 0.053-C Increased competition from non-fried chicken chains 0.10 2 0.204-C Operating costs on the rise 0.05 1 0.05 E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
    37. 37. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    38. 38. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees • KFC’s early entry in 1954 allowed it to develop strong brand name recognition and strong foothold in the3-M KFC is the market leader in the fast food chicken category industry 0.25 4 1.004-M Wide distribution capability • Pride of having KFC’s Original Recipe Fried 4 0.10 0.40 Chicken with5-M Advertising 11 herbs and spices 0.05 3 0.15 • Colonel Sanders influence since the beginning6-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    39. 39. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00 • 1986: management shift when PepsiCo acquired KFC from RJR4-M Wide distribution capability Industries 0.10 4 0.405-M Advertising • Several restructurings led to layoffs throughout KFC  0.05 3 demoralization to old KFC employees and franchisees 0.156-MT Value given to franchise operators 0.05 3 0.15 • Spin off of PepsiCo to Tricon Global Restaurants (currently named7-HR High employment rate YUM! Brands) was lead by David Novak 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R Limited menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    40. 40. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.40 • KFC systemwide sales of $4.70 billion in 20105-M Advertising • 0.05 3 Chick-fil-A and Popeyes as close competitors 0.156-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R Limited menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    41. 41. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.15 As of0.05 KFC3 0.157-HR High employment rate • 2012, had 5,200INTERNAL WEAKNESSES units in the US (17% of the units are operated by YUM!1-O Slow US growth 0.05 2 0.10 Brands)2-M Customer satisfaction rating is low • Ranked 9 out of 2 largest0.20 0.10 10 fast food chains in the US3-F Stagnant net profit margin 0.05 1 0.054-R Limited menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    42. 42. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.15 • Before: “finger-lickin’ good” and Colonel Sanders7-HR High employment rate as its trademark. 0.05 3 0.15 • Now: “healthier” “Kentucky Grilled Chicken”INTERNAL WEAKNESSESfat chickens products, 0 grams trans1-O • Brandgrowth revamp: younger consumers Slow US image 0.05 2 0.10 (animated character, bolder colors, updated2-M Customer satisfaction rating is low graphics) 0.10 2 0.203-F • 52 week/ profit margin Stagnant net year TV ad schedule 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    43. 43. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL •WEAKNESSES only about 5% ownership of KFC YUM! Brands retain1-O • Franchise operators can run their branches almost independently Slow US growth • Less friction between mother company and franchise operators. 0.05 2 0.102-M Customer satisfaction rating is low on sals of $7.4 billion from a loss of 0.10 million in • Net income of $617 miion $111 2 0.203-F net income in 1997 Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    44. 44. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 140,000 people working at over 5,000 KFC 0.10 2 0.20 restaurants across the country with an average of3-F Stagnant net profit margin 28 employees per 0.05 restaurant 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    45. 45. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees • KFC’s growth was driven by international operations3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00 • 95% of new restauratns were from international franchise4-M Wide distribution capability (China) 0.10 4 0.40 • 2004, KFC could not open any more restaurants until its5-M Advertising domestic same-store sales figures improved 3 0.05 0.156-MT Value given to franchise operators • KFC US growth is just 1% per year 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    46. 46. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.40 • American Customer Satisfaction Index in5-M Advertising KFC scored 75 out of 100 2011, 0.05 3 0.15 • given to franchise operators6-MT Value Another survey from Customer Reports puts KFC near the bottom of the rankings 0.05 3 0.157-HR High employment rate • Dissatisfaction from consumers 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    47. 47. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M 10% NET PROFIT MARGIN0.10 Wide distribution capability 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 KFC net profit margin has been stagnant at 0.10 10% for the past 3 years2-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    48. 48. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.20 No menu items in US branches of KFC3-F Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    49. 49. Key Internal Factors Restaurant Lunch/dinner Lunch/dinner Side Coffee Weighted Breakfast Weight Rating Snack All Score main dishes sides beverages items items beverages itemsINTERNAL STRENGTHS 16 Subway 3 10 0 0 0 291-C Starbucks Strong trademark brand 0 0 6 7 0.05 13 4 10 0.20 362-MT Change in management improved relationship between management0 0.10 Taco Bell 7 0 0 0 0 3 0 0.30 7 Pizza Hut and franchisees 6 0 0 0 0 63-M KFC is the market leader in 0 fast food chicken category Dunkin’ the 0 12 13 0.251 4 20 1.00 46 Donuts4-M Wide distribution capability 0.10 4 0.405-M KFC Advertising 8 0 0 0 0 0 8 Sonic 4 2 40 0 0.056 3 0 0.15 526-MT Value given to franchise operators 0.05 3 0.15 Domino’s 10 0 0 0 0 0 107-HR High employment rate Twelve 51 5 68 20 0.05 20 3 30 0.15 194 restaurantsINTERNAL WEAKNESSES1-O Slow US growth • 0.05 2 0.10 Only 8 lunch/dinner main dishes that are2-M Customer satisfaction rating is low considered healthy • 0.10 2 0.20 Three out of the four restaurants with fewer3-F Stagnant net profit margin 0.05 1 0.05 healty items are all YUM! Brands companies4-R No menu items for breakfast • Introduction of KFC Grilled Chicken 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    50. 50. Weighted Key Internal Factors Weight Rating ScoreINTERNAL STRENGTHS1-C Strong trademark brand 0.05 4 0.202-MT Change in management improved relationship between management 0.10 3 0.30 and franchisees3-M KFC is the market leader in the fast food chicken category 0.25 4 1.004-M Wide distribution capability 0.10 4 0.405-M Advertising 0.05 3 0.156-MT Value given to franchise operators 0.05 3 0.157-HR High employment rate 0.05 3 0.15INTERNAL WEAKNESSES1-O Slow US growth 0.05 2 0.102-M Customer satisfaction rating is low 0.10 2 0.203-F Stagnant net profit margin 0.05 1 0.054-R No menu items for breakfast 0.05 2 0.105-R Limited healthy menu options 0.10 2 0.20 C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
    51. 51. Strategy Option TOWS SPACE IEM GSM Total Integration Strategy 1 Forward Integration 1 1 1 3 2 Backward Integration 1 1 1 3 3 Horizontal Integration 1 1 1 3 Intensive Strategy 4 Market Penetration 1 1 1 1 4 5 Market Development 1 1 1 3 6 Product Development 1 1 1 1 4 Diversification Strategies 7 Related Diversification 1 1 8 Unrelated Diversification 0 Defensive Strategies 9 Retrenchment 0 10 Divestiture 0 11 Liquidation 0 Wt Market Penetration Product DevelopmentKey Factors Total Attractiveness Score Total Attractiveness ScoreTotal AttractivenessScore 1 4.40 4.55(Attractiveness Score: 1 = not acceptable; 2 = possibly acceptable; 3 = probably acceptable; 4 = most acceptable; 0 = not relevant)
    52. 52. • Carries more risk• Develop a new product targeted to its existing customers • Less risky; leverages on existing resources and capabilities • Increase market share • Volume discounts, bonus cards, customer relationship management
    53. 53. Why Product Development?• KFC needs to increase sales by improving or modifying its menu items (tried and tested)• It will entail large research and development expenditures• KFC had successful products in the past and consumer may be attracted to try new products based on their past positive experience.• KFC holds the leading market share and is in a very competitive fast food industry
    54. 54. • Long term Company Objective: - Increase net profit margin by 5% annually from 2012 to 2016 << R&D annual objective << Production annual objective << Marketing annual objective << Financial annual objective << Personnel annual objective
    55. 55. Completion Team Activities Date Expected Output Responsible New range of menu Develop five new breakfast items that Market Q1 that includes1 are low in salt, low in fat, and low in Research and 2014 healthy breakfast calories Development items Finance and Reposition franchise outlets with low Q2 Lower operating2 Accounting profit and nonperforming 2013 expense Team Interviews, surveys, Organize market research on consumers’ Q1 Market3 small group current needs and wants 2013 Research Team discussions A statewide marketing effort of Marketing and Increase promos and advertisements to Q24 promotions and Advertising states with lowest market share 2014 advertisements on Team the new menu items Develop training programs to support Team building Human teamwork and work efficiency of the Q15 activities and HR Resource employees in all divisions of the 2013 training programs Management company
    56. 56. Goals Measures Current TargetsCustomer ServiceMarket Share Global Market 50% market 35.2% market share Research shareBrand Image Customer surveys 75 out of 100 90 out of 100Financial Performance Grow by 10%Net Sales 2014 Net Sales $1,768,000,000 year-on-year from 2013-2015 Grow by 10% byNet Income Income Statement $ 185,000,000 2014 % of sales from Grow sales from launched products/Profitable new products 10% 10% to 15% per gross profit from new year productsInnovation and Learning Awareness levelsNew menu breakfast items Consumer surveys None available of 80%
    57. 57. Cristal Ann G. Laquindanum ASMPH Class of 2012

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