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PROJECT OF
INTERNATIONAL BUSINESS


SUBMITTED TO:   SUBMITTED BY:
MRS. SHELLY     TANYA SHARMA
                B.B.A. L.L.B.
                V TRIMESTER.
DECLARATION



I, TANYA SHARMA pursuing BBA LLB (honors) (5th
trimester) at Institute of Technology and Management
i.e. ITM University School of Law hereby declare that I
have completed my project on KENTUCKY FRIED
CHICKHEN (KFC) ‘’ in the academic year of 2011-2012.
The information submitted is true and in the best of
my knowledge.




SUBMITTED TO:                        SUBMITTED BY:
MRS. SHELLY                          TANYA SHARMA
                                     B.B.A. L.L.B.
                                     5TH TRIMESTER.
ACKNOWLEDGMENT

This project report could not have been prepared,
without the help and encouragement from various
people. Hence, for the same reason I would like to thank
my guide, mentor and of course my professor Mrs Shelly .
It was from her support that I got proper guidelines for
preparing this project. There are many other people I
would like to thank on the same line without which this
project would have been nonsense over stilts and the
ones who made my project and the product work for me.
All these information is collected from various sites
including the company’s site. Which is being the most
helpful area from which I have gathered the information
and completed this project. I thank all for making my
project good enough.
INTRODUCTION
KFC India

KFC is the world’s No.1 Chicken QSR and has industry leading
stature across many countries like UK, Australia, South Africa,
China,USA, Malaysia and many more. KFC is the largest brand
of Yum Restaurants, a company that owns other leading brands
like Pizza Hut, Taco Bell, A&W and Long John Silver.
Renowned worldwide for it’s finger licking good food, KFC
offers its signature products in India too! KFC has introduced
many offerings for its growing customer base in India while
staying rooted in the taste legacy of Colonel Harland Sander’s
secret recipe. Its signature dishes include the “crispy outside,
juicy inside” Hot and Crispy Chicken, flavorful and juicy
Original Recipe chicken, the spicy, juicy & crunchy Zinger
Burger, Toasted Twister, Chicken Bucket and a host of
beverages and desserts. For the vegetarians in India, KFC also
has great tasting vegetarian offerings that include the Veg
Zinger and Veggie Snacker . In India, KFC is growing rapidly
and today has presence in 21 cities with close to 107 restaurants.
HISTORY AND BACKGROUND
KFC History

Way back in 1930’s Colonel Harland Sanders got some
distinguished Kentucky folks lickin’ their fingers. It’s
been in fashion since then!
Colonel Harland Sanders, founder of the original
Kentucky Fried Chicken, was born on September 9,
1890.When he was six, his father died and his mother was
forced to go to work while young Sanders took care of his
three year old sibling. This meant he had to do much of
the family cooking. By the time he was seven, Harland
Sanders was a master of a range of regional dishes.
After a series of jobs, in the mid 1930s at the age of forty,
Colonel Sanders bought a service station, motel and cafe
at Corbin, a town in Kentucky about 25 miles from the
Tennessee border. It is here that Sanders began
experimenting with different seasonings to flavor his
chicken which travelers loved and for which he soon
became famous.
During the next nine years he developed his secret recipe
of 11 herbs and spices and the basic cooking technique
which is still used today. Sander's fame grew. He sold his
chicken on the highway! But when the highway was
removed, he sold up and traveled the United States by car,
cooking chicken for restaurant owners and their
employees. If the reaction was favorable Sanders entered
into a handshake agreement on a deal which stipulated a
payment to him of a nickel for each chicken the restaurant
sold.

By 1964, from that humble beginning, Colonel Harland
Sanders had 600 franchise outlets for his chicken across
the United States and Canada. Later that year, Colonel
Sanders sold his interest in the United States operations
for $2 million. The 65-year-old gentleman had started a
worldwide empire using his $105 social security cheque.
Sadly, Colonel Harland Sanders passed away on
December 16th, 1980 aged 90.

His legacy lives on with KFC restaurants all over the
world. KFC now stretches worldwide with more than
13,000 restaurants in more than 80 countries and
territories around the world serving up the Colonel’s
Original Recipe. It is a $13 billion brand based out of
Kentucky and is the leading QSR around the world which
is based in Louisville, Kentucky. Yum! Brands own 5
brands, out of which KFC is the largest brand within the
Yum! Portfolio, founded by Colonel Harland Sanders in
the year 1938.
PROBLEMS FACED IN GLOBAL
WORLD

In the latest salvo against fast-food chains, KFC is being
sued for frying its chicken in cooking oils that contain
trans fats, which can contribute to heart disease and
diabetes. Here's the skinny on the fat fight:

Why doesn't KFC use a healthier oil? Like most fast-food
chains, KFC cooks with partially hydrogenated vegetable
oil, which doesn't turn rancid as quickly as healthier,
nonhydrogenated oils. "Extra crispy" chicken may also
taste better when fried in this oil. "The flavor is crunchier,
and you don't get that feeling of fat coating your mouth,"
says Ted Labuza, a food scientist at the University of
Minnesota. But the oil does have dangerous trans-fatty
acids.

What's so bad about trans fat? It raises one's bad
cholesterol, which boosts the risk of coronary disease. A
federal dietary panel has recommended that people
consume no more than 2 g per day.
Is KFC's food really that unhealthy? The company says its
products "meet or exceed all government regulations."
But as the Center for Science in the Public Interest, the
activist group behind the lawsuit, points out, a three-piece
extra-crispy combo meal contains as much as 15 g of
trans fat--more than a person should ingest in a week.

What are other chains doing? Wendy's plans to eliminate
trans fats from its food; the Cheesecake Factory is doing
so already. McDonald's backpedaled on a promise to cut
trans fats and says it's studying alternative oils, as is
Burger King.
PROBLEMS FACED BY KFC IN
INDIA
The case highlights the ethical issues involved in
Kentucky Fried Chicken's (KFC) business operations in
India. KFC entered India in 1995 and has been in midst
of controversies since then. The regulatory authorities
found that KFC's chickens did not adhere to the
Prevention of Food Adulteration Act, 1954. Chickens
contained nearly three times more monosodium
glutamate (popularly known as MSG, a flavor
enhancing ingredient) as allowed by the Act. Since the
late 1990s, KFC faced severe protests by People for
Ethical Treatment of Animals (PETA), an animal rights
protection organization. PETA accused KFC of cruelty
towards chickens and released a video tape showing the
ill-treatment of birds in KFC's poultry farms. However,
undeterred by the protests by PETA and other animal
rights organizations, KFC planned a
massive expansion program in India
RE-ENTRY OF KFC INTO INDIAN
MARKET
A case in point is KFC. KFC entered India in 1995, but
a controversy surrounding the levels of MSG in its
preparations and subsequent protests from farmers'
groups and animal rights activists spelt trouble for the
company. Ultimately, the company had to shut all but
one outlet in the country. Only recently in 2003 it made
a quiet re-entry into the Indian market. Then came up
with the strategies and menu that is desirable by the
Indian consumers. And since 2003 it is expanding
successfully its business in India.



Mission statement
“To be the leader in western style quick service
restaurants through friendly service, good
qualit food and clean atmosphere ”
Goals of KFC

Build an organization dedicated to excellence.
Consistently deliver superior quality and value in our
products and services. Maintain a commitment to
innovation for continuous improvement and grow,
striving always to be the leader in the market place
changes. Generate consistently superior financial returns
and benefits our owner and employees. To establish in
India our position as leading WQSR (Western Quick
Service Restaurant) chain, serving good value. Innovative
chicken-based products. Consistently, providing a
pleasant dining experience, with fast friendly, in a clean
and convinient locations. All the times we must dedicated
to providing excellent and delighting customers.
OUTCOME OF CASE STUDY OF KFC
IN RESPECT OF SRC
(SELF REFERENCE CRITERION)
KFC has not understood the significance of cultural,
economic, regulatory and ecological issues while
establishing business in a country like india
.
»KFC has not Appreciated the need for protecting
animal rights in developed and developing countries
like India.
» They have not understood the importance of ethics in
doing business.
»They have not examine the reasons for protests of
PETA.

The case highlights the ethical issues involved in
Kentucky Fried Chicken's (KFC) business operations in
India. KFC entered India in 1995 and has been in midst
of controversies since then. The regulatory authorities
found that KFC's chickens did not adhere to the
Prevention of Food Adulteration Act, 1954. Chickens
contained nearly three times more monosodium
glutamate (popularly known as MSG, a flavor
enhancing ingredient) as allowed by the Act. Since the
late 1990s, KFC faced severe protests by People for
Ethical Treatment of Animals (PETA), an animal rights
protection organization. PETA accused KFC of cruelty
towards chickens and released a video tape showing the ill-
treatment of birds in KFC's poultry farms.
STRENGHTS OF KFC

Strengths can be found internally in a company and can
be used to the company’s advantage. The strengths
identified are as follows:

1. KFC's secret recipe.

The secret recipe has long been a source of advertising,
and allowed KFC to set itself apart. Also, KFC was the
first chain to enter the fast-food industry, just before
McDonald's, which opened its first store a year later, and
the "secret recipe" was the initial home replacement
strategy.

2. Name recognition and reputation.

KFC's early entrance into the fast-food industry in 1954
allowed KFC to develop strong brand name recognition
and a strong foothold in the industry. The Colonel is
KFC's original owner and a very recognizable figure, both
in the U.S. and internationally, in their new logo. In fact,
in the fourth annual LogoValue Survey, done by The
Schecter Group, the KFC logo was the only one which
significantly enhance the brand's image (Logos add…1).
3. PepsiCo's success with the management of fast food
chains. PepsiCo acquired Pizza Hut in 1977, and Taco
Bell in 1978. PepsiCo used many of the same promotional
strategies that it has used to market soft drinks and snack
food. By the time PepsiCo bought KFC in 1986, the
company already dominated two of the four largest and
fastest-growing segments of the fast food industry
(Wright, p.424-426).

4. Traditional employee loyalty:
"KFC's culture was built largely on Colonel Sanders' laid
back approach to management" (Wright, p.433). Before
the acquisition of KFC by PepsiCo, employees at KFC
enjoyed good benefits, a pension, and could receive help
with other non-income needs. This kind of "personal"
human resources management makes for a loyal
workforce (Wright, p.434).

5. Improving operating efficiencies by reducing overhead
and other operating costs can directly affect operating
profit.
Due to the strong competition in the US, the fast-food
chains are reluctant to raise prices to increase profit.
Many of the chains are turning to operating efficiencies to
increase profit. For many companies, operating
efficiencies are achieved through improvements in
customer service, cleaner restaurants, faster and friendlier
service, and continued high-quality products.
WEAKNESS

Weaknesses are also found internally like strengths.
Weaknesses, however, can limit a company’s potential.
The weaknesses for KFC are identified as follows:

1. The many sales of KFC lead to a confusing corporate
direction.
Between 1971 and 1986, KFC was sold three times. The
first two sales, to Heublein, Inc and to R.J. Reynolds, left
the company largely autonomous. It wasn't until the sale
to PepsiCo in 1986 that changes in top management
started to take place. These changes happened almost
immediately after the sale.

2. KFC has a long time to market with new products.
Because of the nature of the chicken segment of the fast
food industry, innovation was never a primary strategy for
KFC. However, during the late 1980's, other fast food
chains, such as McDonald's, began to offer chicken as a
menu option. During this time, McDonald's had already
introduced the McChicken while KFC was still testing its
own chicken sandwich. This delay significantly increased
the cost of developing consumer awareness for the KFC
sandwich.

3. Conflicting cultures of KFC and Pepsi Co.
While KFC's culture was largely based on the Colonel's
laid back approach to management, while PepsiCo's
culture is more of a "fast track" attitude. Employees do
not have the same level of job security that they enjoyed
before the PepsiCo acquisition.

4. Turnover in top management.
PepsiCo bought KFC in 1986. By the summer of 1990
PepsiCo's own management had replaced all of the top
KFC managers. However, by 1995 most of this new
PepsiCo management had either left the company or been
moved to a different division. In addition, Kyle Craig,
who was named president of KFC's US operations in
1990, left in 1994 to join Boston Market.

5. Recent contractual disputes with franchisees in the
United States.
This is also an example of the conflicting cultures of KFC
and PepsiCo. KFC's franchisees had been used to little
interference from corporate offices. In 1989, the CEO
announced new contract changes - the first in thirteen
years. "The new contract gave PepsiCo management
greater power to take over weak franchises, to relocate
restaurants, and to make changes in existing restaurants"
(Wright, p.434). The franchisees protested these changes
and the relationship between the corporate KFC and the
franchisees in the United States have been strained ever
since this announcement.
OPPORTUNITIES TO KFC

 New Markets: Globalisation has opened doors for
  new markets for the company. As the developed
  markets are mostly saturated, the developing
  countries like India and China promises a good
  market and generation of demand in the future.
  With more than 70% of the markets in india being
  unexplored and un organised, KFC has a good scope
  of expanding its operations in the country.
 Cross Culture: Generally there is a good acceptance
  of American culture of fast food in India. People are
  opening up to fast foods more regularly in their daily
  lives and not just keeping it a once in a month affair.
  Thus Indian mindset is fast changing.
 Large Youth population: India has a very large share
  of youth population a compared to other countries.
  More than 60% of the population is under the age of
  30yrs. As the young generation are more open to
  fast foods and demand it more, this is a good news
  for the company.
 New variety: Company can also come up with new
  variety in the menu likePizzas, garlic breads to
  attract more customers.
THREATS TO KFC
 Competition: Competitor companies like McDonalds
  are fast catching up with the market. McDonald’s
  with sales of more than 19 billion in 1999, accounted
  for 15 percent of the sales of the nation’s top 100
  restaurant chains.
 Organizations like PETA People for Ethnic
  Treatment for Animals have given a bad name to the
  company which may prove disastrous to the image of
  the firm. Currently, KFC is under massive attacks
  from animal organizations, questioning the way
  KFC’s suppliers are threatening the chicken, before
  they got slaughtered. Anti-KFC campaigns, such as
  the one from PETA are affecting KFC’s brand image
  in a negative way and result in direct dollar losses, as
  less people are consuming KFC chicken.
  Saturated US Market: Now KFC cannot rely on just
  its home market to generate sales. As the US markets
  are already saturated and leave no or little scope for
  growth, company necessarily needs to look at
  offshore foreign markets to generate sales and keep
  up the profits.
PROBLEMS
Through an analysis of the strengths, weaknesses,
opportunities, and threats of KFC, the following potential
problem areas were identified:

1. No defined target market.
The advertising campaign of KFC does not specifically
appeal to any segment. It does not appear to have a
consistent long-term approach. The U.S. has enormous
changes in its demographics. Single-person households
have increased from 12% in 1970 to 25% in 1995. With
this kind of dramatic change, KFC does not have a proper
approach to its target market.

2. Saturation of the U.S. Market.
There has been an increase in the overall number of fast-
food chains. Access to restaurants is now easier due to
non-traditional locations, for example in airports and gas
stations. Also, the age of Americans tends to change the
frequency of eating out.

3. Health Conscious Consumers.
There has been a trend toward an increasingly healthy diet
in America. This put KFC at an extreme disadvantage due
to its fried product offering.

4. Increased Start Up Costs.
Prime locations have increased in cost due to limited
room for expansion. New technology has increased
efficiencies, but resulted in greater increased start up
costs. Restaurant and equipment packages range from
$500,000 to $1,000,000.
ENVIRONMENTAL FACTORS AND
OPPORTUNITIES

Political

The operations of KFC are affected by the government
policies on the regulations of fast food operation.
Currently government are controlling the marketing of
fast food restaurant because of health concern such as
cardiovascular and cholesterol issue and obesity among
the young and children in the country. Governments also
control the license given for open the fast food restaurant
and other business regulation need to follow such as for a
franchise business. Good relationship with government in
giving mutual benefits such as employment and tax is a
must for the company to succeed in any foreign market.

Economic


Though for last 1 year their was economic slowdown all
across the globe but the sales of KFC and other fast food
chains did not slow down to that extent that of other
sectors in. The GDP (Purchasing Power Parity) is
estimated at 2.965 trillion U.S. dollars in the year 2010.
The GDP- per Capita (PPP) was 2700 U.S. dollars as
estimated in 2008. The GDP- real growth rate in 2007
was 8.7%. India has the third highest GDP in terms of
purchasing power parity just ahead Japan and behind U.S.
and China. Foreign direct investment rose in the fiscal
year ended March 31 2007 to about $16 billion from just
$5.5 billion a year earlier. There is a continuous growth in
per capita income; India’s per capita income is expected
to reach 1000 dollars by the end of 2007-08 from 797
dollars in 2006-07. This will lead to higher buying power
in the Hands of the Indian consumers. So taking into
considerations the economic factors of India KFC is safe.
The only danger to it will be if there is a terrorist attack in
India and the victim is KFC


Socio Cultural

India is the second most populous nation in the world
with an approximate population of over 1.1billion people.
This population is divided in the following age structure:
0-14 years – 31.8%, 15-64 years – 63.1% and 65 years
and above – 5.1%. There has also been a continuous
increase in the consumption of fast food in India. The
social trend toward fast good consumption is changing
and India has seen an increase of 90% fast food
consumption from the year 2002- 2007. This increase is
far greater than the increase in the BRIC nations of Brazil
(20 per cent), Russia (50 per cent) and China (almost 60
per cent) Thus this shows a positive trend for fast food
industries in India.


Technological

The Indian fast food Industry is heating up with a lot of
foreign players entering the Indian market. The
technological knowhow and expertise will also enter the
Indian market with an increase in competition. With the
lower rates and increase technology the fast food counters
are attracting youth by giving them attractive deals. For
e.g. KFC and Domino’s pizza. For a fast food restaurant,
technology does not give a very high impact on the
company and it is not a significant macro environment
variables. However KFC should be looking to competitors
innovation and improve itself in term of integrating
technology in managing its operation. For example in
inventory system, supply chain management system to
manage its supply, easy payment and ordering systems for
its customers and wireless internet technology.
Implementation of technology can make the management
more effective and cost saving in the long term. This will
also make customer happy if cost savings results in price
reduction or promotional campaign discount which will
benefits them from time to time.
Environmental

As one of world largest consumer of beef, potatoes and
chicken, KFC always had been critics for world
environmentalist. This is because high consumption of
beef causing the green house effect by methane gasses
coming from the cow’s ranch. Large-scale plantation has
effect the environment and lost of green forest opening
for plantation activities. Vegetarian environmentalist
criticizes the fast-food giant for cruelty to animals and
slaughtering. In America, once KFC want to introduce
whale burger causing uproar because whales are
endangered species. Before using paper packaging, KFC
once had been criticized for being insensitive to pollution
because of using ne based packaging for its food products.
Imagine millions of people purchase from fast food
operator and how is the impact to world environment by
throwing away those hard to recycle packaging.

Our world is getting concern on environment issue and
business operating here should not just care for profit, but
careful usage of world resources for sustainable
development and care for environment safety and health
for our future generation. Critics and concern from all
public or activist should be review and support if
necessary to ensure we play our social responsibility
better.
Legal factors

As a certified fast food operator, there are many
regulations and procedures that KFC should follow. For
example is the Halal certification that becomes a concern
to Muslim consumers. KFC should protect its integrity
and consumer confidence by ensuring all materials and
process are as claimed or must followed. Other legal
requirement that the business owner should follow as
stipulated in laws are such as operating hours, business
registration, tax requirement, labor and employment laws
and quality & environment certification (such as ISO) in
which the outlet has been certified. The legal requirement
is important because the offenders will be fined or have
their business prohibited from operating which can be
disastrous.

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Kfc project of intrntnl business

  • 1. PROJECT OF INTERNATIONAL BUSINESS SUBMITTED TO: SUBMITTED BY: MRS. SHELLY TANYA SHARMA B.B.A. L.L.B. V TRIMESTER.
  • 2. DECLARATION I, TANYA SHARMA pursuing BBA LLB (honors) (5th trimester) at Institute of Technology and Management i.e. ITM University School of Law hereby declare that I have completed my project on KENTUCKY FRIED CHICKHEN (KFC) ‘’ in the academic year of 2011-2012. The information submitted is true and in the best of my knowledge. SUBMITTED TO: SUBMITTED BY: MRS. SHELLY TANYA SHARMA B.B.A. L.L.B. 5TH TRIMESTER.
  • 3. ACKNOWLEDGMENT This project report could not have been prepared, without the help and encouragement from various people. Hence, for the same reason I would like to thank my guide, mentor and of course my professor Mrs Shelly . It was from her support that I got proper guidelines for preparing this project. There are many other people I would like to thank on the same line without which this project would have been nonsense over stilts and the ones who made my project and the product work for me. All these information is collected from various sites including the company’s site. Which is being the most helpful area from which I have gathered the information and completed this project. I thank all for making my project good enough.
  • 4. INTRODUCTION KFC India KFC is the world’s No.1 Chicken QSR and has industry leading stature across many countries like UK, Australia, South Africa, China,USA, Malaysia and many more. KFC is the largest brand of Yum Restaurants, a company that owns other leading brands like Pizza Hut, Taco Bell, A&W and Long John Silver. Renowned worldwide for it’s finger licking good food, KFC offers its signature products in India too! KFC has introduced many offerings for its growing customer base in India while staying rooted in the taste legacy of Colonel Harland Sander’s secret recipe. Its signature dishes include the “crispy outside, juicy inside” Hot and Crispy Chicken, flavorful and juicy Original Recipe chicken, the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket and a host of beverages and desserts. For the vegetarians in India, KFC also has great tasting vegetarian offerings that include the Veg Zinger and Veggie Snacker . In India, KFC is growing rapidly and today has presence in 21 cities with close to 107 restaurants.
  • 5. HISTORY AND BACKGROUND KFC History Way back in 1930’s Colonel Harland Sanders got some distinguished Kentucky folks lickin’ their fingers. It’s been in fashion since then! Colonel Harland Sanders, founder of the original Kentucky Fried Chicken, was born on September 9, 1890.When he was six, his father died and his mother was forced to go to work while young Sanders took care of his three year old sibling. This meant he had to do much of the family cooking. By the time he was seven, Harland Sanders was a master of a range of regional dishes. After a series of jobs, in the mid 1930s at the age of forty, Colonel Sanders bought a service station, motel and cafe at Corbin, a town in Kentucky about 25 miles from the Tennessee border. It is here that Sanders began experimenting with different seasonings to flavor his chicken which travelers loved and for which he soon became famous. During the next nine years he developed his secret recipe of 11 herbs and spices and the basic cooking technique which is still used today. Sander's fame grew. He sold his chicken on the highway! But when the highway was removed, he sold up and traveled the United States by car, cooking chicken for restaurant owners and their employees. If the reaction was favorable Sanders entered
  • 6. into a handshake agreement on a deal which stipulated a payment to him of a nickel for each chicken the restaurant sold. By 1964, from that humble beginning, Colonel Harland Sanders had 600 franchise outlets for his chicken across the United States and Canada. Later that year, Colonel Sanders sold his interest in the United States operations for $2 million. The 65-year-old gentleman had started a worldwide empire using his $105 social security cheque. Sadly, Colonel Harland Sanders passed away on December 16th, 1980 aged 90. His legacy lives on with KFC restaurants all over the world. KFC now stretches worldwide with more than 13,000 restaurants in more than 80 countries and territories around the world serving up the Colonel’s Original Recipe. It is a $13 billion brand based out of Kentucky and is the leading QSR around the world which is based in Louisville, Kentucky. Yum! Brands own 5 brands, out of which KFC is the largest brand within the Yum! Portfolio, founded by Colonel Harland Sanders in the year 1938.
  • 7. PROBLEMS FACED IN GLOBAL WORLD In the latest salvo against fast-food chains, KFC is being sued for frying its chicken in cooking oils that contain trans fats, which can contribute to heart disease and diabetes. Here's the skinny on the fat fight: Why doesn't KFC use a healthier oil? Like most fast-food chains, KFC cooks with partially hydrogenated vegetable oil, which doesn't turn rancid as quickly as healthier, nonhydrogenated oils. "Extra crispy" chicken may also taste better when fried in this oil. "The flavor is crunchier, and you don't get that feeling of fat coating your mouth," says Ted Labuza, a food scientist at the University of Minnesota. But the oil does have dangerous trans-fatty acids. What's so bad about trans fat? It raises one's bad cholesterol, which boosts the risk of coronary disease. A federal dietary panel has recommended that people consume no more than 2 g per day. Is KFC's food really that unhealthy? The company says its products "meet or exceed all government regulations." But as the Center for Science in the Public Interest, the activist group behind the lawsuit, points out, a three-piece
  • 8. extra-crispy combo meal contains as much as 15 g of trans fat--more than a person should ingest in a week. What are other chains doing? Wendy's plans to eliminate trans fats from its food; the Cheesecake Factory is doing so already. McDonald's backpedaled on a promise to cut trans fats and says it's studying alternative oils, as is Burger King.
  • 9. PROBLEMS FACED BY KFC IN INDIA The case highlights the ethical issues involved in Kentucky Fried Chicken's (KFC) business operations in India. KFC entered India in 1995 and has been in midst of controversies since then. The regulatory authorities found that KFC's chickens did not adhere to the Prevention of Food Adulteration Act, 1954. Chickens contained nearly three times more monosodium glutamate (popularly known as MSG, a flavor enhancing ingredient) as allowed by the Act. Since the late 1990s, KFC faced severe protests by People for Ethical Treatment of Animals (PETA), an animal rights protection organization. PETA accused KFC of cruelty towards chickens and released a video tape showing the ill-treatment of birds in KFC's poultry farms. However, undeterred by the protests by PETA and other animal rights organizations, KFC planned a massive expansion program in India
  • 10. RE-ENTRY OF KFC INTO INDIAN MARKET A case in point is KFC. KFC entered India in 1995, but a controversy surrounding the levels of MSG in its preparations and subsequent protests from farmers' groups and animal rights activists spelt trouble for the company. Ultimately, the company had to shut all but one outlet in the country. Only recently in 2003 it made a quiet re-entry into the Indian market. Then came up with the strategies and menu that is desirable by the Indian consumers. And since 2003 it is expanding successfully its business in India. Mission statement “To be the leader in western style quick service restaurants through friendly service, good qualit food and clean atmosphere ”
  • 11. Goals of KFC Build an organization dedicated to excellence. Consistently deliver superior quality and value in our products and services. Maintain a commitment to innovation for continuous improvement and grow, striving always to be the leader in the market place changes. Generate consistently superior financial returns and benefits our owner and employees. To establish in India our position as leading WQSR (Western Quick Service Restaurant) chain, serving good value. Innovative chicken-based products. Consistently, providing a pleasant dining experience, with fast friendly, in a clean and convinient locations. All the times we must dedicated to providing excellent and delighting customers.
  • 12. OUTCOME OF CASE STUDY OF KFC IN RESPECT OF SRC (SELF REFERENCE CRITERION) KFC has not understood the significance of cultural, economic, regulatory and ecological issues while establishing business in a country like india . »KFC has not Appreciated the need for protecting animal rights in developed and developing countries like India. » They have not understood the importance of ethics in doing business. »They have not examine the reasons for protests of PETA. The case highlights the ethical issues involved in Kentucky Fried Chicken's (KFC) business operations in India. KFC entered India in 1995 and has been in midst of controversies since then. The regulatory authorities found that KFC's chickens did not adhere to the Prevention of Food Adulteration Act, 1954. Chickens contained nearly three times more monosodium glutamate (popularly known as MSG, a flavor enhancing ingredient) as allowed by the Act. Since the late 1990s, KFC faced severe protests by People for Ethical Treatment of Animals (PETA), an animal rights
  • 13. protection organization. PETA accused KFC of cruelty towards chickens and released a video tape showing the ill- treatment of birds in KFC's poultry farms.
  • 14. STRENGHTS OF KFC Strengths can be found internally in a company and can be used to the company’s advantage. The strengths identified are as follows: 1. KFC's secret recipe. The secret recipe has long been a source of advertising, and allowed KFC to set itself apart. Also, KFC was the first chain to enter the fast-food industry, just before McDonald's, which opened its first store a year later, and the "secret recipe" was the initial home replacement strategy. 2. Name recognition and reputation. KFC's early entrance into the fast-food industry in 1954 allowed KFC to develop strong brand name recognition and a strong foothold in the industry. The Colonel is KFC's original owner and a very recognizable figure, both in the U.S. and internationally, in their new logo. In fact, in the fourth annual LogoValue Survey, done by The Schecter Group, the KFC logo was the only one which significantly enhance the brand's image (Logos add…1).
  • 15. 3. PepsiCo's success with the management of fast food chains. PepsiCo acquired Pizza Hut in 1977, and Taco Bell in 1978. PepsiCo used many of the same promotional strategies that it has used to market soft drinks and snack food. By the time PepsiCo bought KFC in 1986, the company already dominated two of the four largest and fastest-growing segments of the fast food industry (Wright, p.424-426). 4. Traditional employee loyalty: "KFC's culture was built largely on Colonel Sanders' laid back approach to management" (Wright, p.433). Before the acquisition of KFC by PepsiCo, employees at KFC enjoyed good benefits, a pension, and could receive help with other non-income needs. This kind of "personal" human resources management makes for a loyal workforce (Wright, p.434). 5. Improving operating efficiencies by reducing overhead and other operating costs can directly affect operating profit. Due to the strong competition in the US, the fast-food chains are reluctant to raise prices to increase profit. Many of the chains are turning to operating efficiencies to increase profit. For many companies, operating efficiencies are achieved through improvements in customer service, cleaner restaurants, faster and friendlier service, and continued high-quality products.
  • 16. WEAKNESS Weaknesses are also found internally like strengths. Weaknesses, however, can limit a company’s potential. The weaknesses for KFC are identified as follows: 1. The many sales of KFC lead to a confusing corporate direction. Between 1971 and 1986, KFC was sold three times. The first two sales, to Heublein, Inc and to R.J. Reynolds, left the company largely autonomous. It wasn't until the sale to PepsiCo in 1986 that changes in top management started to take place. These changes happened almost immediately after the sale. 2. KFC has a long time to market with new products. Because of the nature of the chicken segment of the fast food industry, innovation was never a primary strategy for KFC. However, during the late 1980's, other fast food chains, such as McDonald's, began to offer chicken as a menu option. During this time, McDonald's had already introduced the McChicken while KFC was still testing its own chicken sandwich. This delay significantly increased the cost of developing consumer awareness for the KFC sandwich. 3. Conflicting cultures of KFC and Pepsi Co.
  • 17. While KFC's culture was largely based on the Colonel's laid back approach to management, while PepsiCo's culture is more of a "fast track" attitude. Employees do not have the same level of job security that they enjoyed before the PepsiCo acquisition. 4. Turnover in top management. PepsiCo bought KFC in 1986. By the summer of 1990 PepsiCo's own management had replaced all of the top KFC managers. However, by 1995 most of this new PepsiCo management had either left the company or been moved to a different division. In addition, Kyle Craig, who was named president of KFC's US operations in 1990, left in 1994 to join Boston Market. 5. Recent contractual disputes with franchisees in the United States. This is also an example of the conflicting cultures of KFC and PepsiCo. KFC's franchisees had been used to little interference from corporate offices. In 1989, the CEO announced new contract changes - the first in thirteen years. "The new contract gave PepsiCo management greater power to take over weak franchises, to relocate restaurants, and to make changes in existing restaurants" (Wright, p.434). The franchisees protested these changes and the relationship between the corporate KFC and the franchisees in the United States have been strained ever since this announcement.
  • 18. OPPORTUNITIES TO KFC New Markets: Globalisation has opened doors for new markets for the company. As the developed markets are mostly saturated, the developing countries like India and China promises a good market and generation of demand in the future. With more than 70% of the markets in india being unexplored and un organised, KFC has a good scope of expanding its operations in the country. Cross Culture: Generally there is a good acceptance of American culture of fast food in India. People are opening up to fast foods more regularly in their daily lives and not just keeping it a once in a month affair. Thus Indian mindset is fast changing. Large Youth population: India has a very large share of youth population a compared to other countries. More than 60% of the population is under the age of 30yrs. As the young generation are more open to fast foods and demand it more, this is a good news for the company. New variety: Company can also come up with new variety in the menu likePizzas, garlic breads to attract more customers.
  • 19. THREATS TO KFC Competition: Competitor companies like McDonalds are fast catching up with the market. McDonald’s with sales of more than 19 billion in 1999, accounted for 15 percent of the sales of the nation’s top 100 restaurant chains. Organizations like PETA People for Ethnic Treatment for Animals have given a bad name to the company which may prove disastrous to the image of the firm. Currently, KFC is under massive attacks from animal organizations, questioning the way KFC’s suppliers are threatening the chicken, before they got slaughtered. Anti-KFC campaigns, such as the one from PETA are affecting KFC’s brand image in a negative way and result in direct dollar losses, as less people are consuming KFC chicken.  Saturated US Market: Now KFC cannot rely on just its home market to generate sales. As the US markets are already saturated and leave no or little scope for growth, company necessarily needs to look at offshore foreign markets to generate sales and keep up the profits.
  • 20. PROBLEMS Through an analysis of the strengths, weaknesses, opportunities, and threats of KFC, the following potential problem areas were identified: 1. No defined target market. The advertising campaign of KFC does not specifically appeal to any segment. It does not appear to have a consistent long-term approach. The U.S. has enormous changes in its demographics. Single-person households have increased from 12% in 1970 to 25% in 1995. With this kind of dramatic change, KFC does not have a proper approach to its target market. 2. Saturation of the U.S. Market. There has been an increase in the overall number of fast- food chains. Access to restaurants is now easier due to non-traditional locations, for example in airports and gas stations. Also, the age of Americans tends to change the frequency of eating out. 3. Health Conscious Consumers. There has been a trend toward an increasingly healthy diet in America. This put KFC at an extreme disadvantage due to its fried product offering. 4. Increased Start Up Costs.
  • 21. Prime locations have increased in cost due to limited room for expansion. New technology has increased efficiencies, but resulted in greater increased start up costs. Restaurant and equipment packages range from $500,000 to $1,000,000.
  • 22. ENVIRONMENTAL FACTORS AND OPPORTUNITIES Political The operations of KFC are affected by the government policies on the regulations of fast food operation. Currently government are controlling the marketing of fast food restaurant because of health concern such as cardiovascular and cholesterol issue and obesity among the young and children in the country. Governments also control the license given for open the fast food restaurant and other business regulation need to follow such as for a franchise business. Good relationship with government in giving mutual benefits such as employment and tax is a must for the company to succeed in any foreign market. Economic Though for last 1 year their was economic slowdown all across the globe but the sales of KFC and other fast food chains did not slow down to that extent that of other sectors in. The GDP (Purchasing Power Parity) is estimated at 2.965 trillion U.S. dollars in the year 2010. The GDP- per Capita (PPP) was 2700 U.S. dollars as estimated in 2008. The GDP- real growth rate in 2007
  • 23. was 8.7%. India has the third highest GDP in terms of purchasing power parity just ahead Japan and behind U.S. and China. Foreign direct investment rose in the fiscal year ended March 31 2007 to about $16 billion from just $5.5 billion a year earlier. There is a continuous growth in per capita income; India’s per capita income is expected to reach 1000 dollars by the end of 2007-08 from 797 dollars in 2006-07. This will lead to higher buying power in the Hands of the Indian consumers. So taking into considerations the economic factors of India KFC is safe. The only danger to it will be if there is a terrorist attack in India and the victim is KFC Socio Cultural India is the second most populous nation in the world with an approximate population of over 1.1billion people. This population is divided in the following age structure: 0-14 years – 31.8%, 15-64 years – 63.1% and 65 years and above – 5.1%. There has also been a continuous increase in the consumption of fast food in India. The social trend toward fast good consumption is changing and India has seen an increase of 90% fast food consumption from the year 2002- 2007. This increase is far greater than the increase in the BRIC nations of Brazil (20 per cent), Russia (50 per cent) and China (almost 60
  • 24. per cent) Thus this shows a positive trend for fast food industries in India. Technological The Indian fast food Industry is heating up with a lot of foreign players entering the Indian market. The technological knowhow and expertise will also enter the Indian market with an increase in competition. With the lower rates and increase technology the fast food counters are attracting youth by giving them attractive deals. For e.g. KFC and Domino’s pizza. For a fast food restaurant, technology does not give a very high impact on the company and it is not a significant macro environment variables. However KFC should be looking to competitors innovation and improve itself in term of integrating technology in managing its operation. For example in inventory system, supply chain management system to manage its supply, easy payment and ordering systems for its customers and wireless internet technology. Implementation of technology can make the management more effective and cost saving in the long term. This will also make customer happy if cost savings results in price reduction or promotional campaign discount which will benefits them from time to time.
  • 25. Environmental As one of world largest consumer of beef, potatoes and chicken, KFC always had been critics for world environmentalist. This is because high consumption of beef causing the green house effect by methane gasses coming from the cow’s ranch. Large-scale plantation has effect the environment and lost of green forest opening for plantation activities. Vegetarian environmentalist criticizes the fast-food giant for cruelty to animals and slaughtering. In America, once KFC want to introduce whale burger causing uproar because whales are endangered species. Before using paper packaging, KFC once had been criticized for being insensitive to pollution because of using ne based packaging for its food products. Imagine millions of people purchase from fast food operator and how is the impact to world environment by throwing away those hard to recycle packaging. Our world is getting concern on environment issue and business operating here should not just care for profit, but careful usage of world resources for sustainable development and care for environment safety and health for our future generation. Critics and concern from all public or activist should be review and support if necessary to ensure we play our social responsibility better.
  • 26. Legal factors As a certified fast food operator, there are many regulations and procedures that KFC should follow. For example is the Halal certification that becomes a concern to Muslim consumers. KFC should protect its integrity and consumer confidence by ensuring all materials and process are as claimed or must followed. Other legal requirement that the business owner should follow as stipulated in laws are such as operating hours, business registration, tax requirement, labor and employment laws and quality & environment certification (such as ISO) in which the outlet has been certified. The legal requirement is important because the offenders will be fined or have their business prohibited from operating which can be disastrous.