1.1: Introduction
of Company
KFC is the world largest
and most well-known chicken restaurant, with chains in more than 10 thousand
locations and worldwide in 80countries. KFC and its franchised employees are
more than 200thousand in all over the world. John Y Brown and Jerry Messy
purchased KFC for USA for $2 million in1964 that time KFC become a corporation.
After five years, Colonel buys first 100 shares of KFC. In 1986, Pepsi Company
purchased KFC. Pepsi company changed the logo from Kentucky fried chicken to
KFC in1991 and then in 1992 KFC 100th restaurant opened in Japan and in1994 90th
restaurant in china. KFC is the part of Tricon global restaurant. Tricon global
restaurant is the world largest restaurant group, with in nearly 100 countries
around the world, which in turn was spun off in 1997, and has now been renamed
to Yum! Brands. In 1997, KFC franchised with Gray Mecanza International and
started work in Pakistan. Rawalpindi branch started work in 1999 and in
Islamabad in August 2002 and now in Pakistan; there are 45 outlets nation-wide.
1.2: History
One man operation
Starts in 1930 by Harland Sanders
the founder of KFC
Named as the dining area
"Sanders Court & Cafe."
In 1939 "Sanders Court &
Café” was rebuilt named as KFC.
In 1960, 190 KFC franchisees and
400 franchise units in the U.S. and Canada
Cupola holds the master franchise
rights to operate KFC in Pakistan since1999.
1.3: Mission Statement:
“To be the leader in western style quick
service restaurants through friendly service, good quality food and
clean atmosphere”
1.4: Restaurant
Structure
1.4.1: Area
Mangers:
Area Managers are
accountable for providing coaching, leadership and operational support to 8-10
KFC Restaurants within a defined Area.
1.4.2:
Restaurant General Manager
The
Restaurant General Manager is accountable for creating and running an energetic
and valuable
work environment, which is committed to serving the best chicken at the fastest
speed
and
with a smile. The Restaurant General Manager reports directly to an Area
Manager and is
accountable
for successfully implementing and maintaining all Company policies and procedures in relation to operations, customer
service, cash handling, marketing, purchasing, human resources, health &
safety, administration, training and development
1.4.3:
Assistant Manager
The
Assistant Manager is responsible for assisting the Restaurant General Manager
(RGM) in creating an energetic and valuable work environment, which is
committed to serving the best chicken at the fastest speed and with a
smile. Assistant Managers are also
responsible for ensuring all Company policies and procedures are followed in
relation to operations, customer service, cash handling, marketing, purchasing,
human resources, health & safety, administration, training and development.
Responsible
for assisting the Restaurant General Manager and Assistant Managers in creating
an energetic and valuable work environment, which is committed to serving the
best chicken at the fastest speed and with a smile. Trainee Managers help with
day-to-day running of the restaurant, and need to ensure that all operations,
customer service, cash handling, marketing, purchasing, human resources,
administration and training & development policies are followed.
1.4.5: Customer
Service Team Members
Responsible for working
the service areas and ensuring quality product, service and cleanliness is
delivered to all customers at top speed and with a smile!
1.4.6: Food
Service Team Members
Responsible for putting
the crunch in the coating and the zing in the Zinger the cook’s main task is to
prepare and cook the irresistible KFC products! The cook must also maintain the
cleanliness of the cooking area as well as the quality of product and speed of
preparation.
1.5: The KFC MANAGEMENT Hierarchy Chart
1.6: KFC: Activity, Input Process and Output
The activities involved
within this organization:
KFC products are the main raw materials
(Chicken, mashed potatoes, seasoning) determined by the head office supplier,
usually raw materials (bread, beverage puree, vegetables, packaging, etc.)
1.6.1: Input
o The menus are shown above the counter, instead
there are also usual plastic panels menu’s in front of the counter.
o The customers can makes an order after choosing the
menus they interested in.
1.6.2: Process
o Customers queuing while waiting for their turns.
o The counters worker will take the order based on
customers has chosen.
o The workers will ring up the order and assemble
partially-prepared ingredients to complete the order.
o The customer has to wait a few minutes while the
worker was preparing the order.
o The menus / meals were prepared after a few minutes
waiting and ask for the payment form the counter.
1.6.3: Output
o The customers pick up the meals after making a
payment. The customers will receive a receipt from the workers.
o Take a seat as the place was a free sitting area.
o Enjoy the meals / dishes.
1.7: KFC SWOT Analysis
1.7.1: Strengths
o
Brand
Equity
o
KFC
secret recipe of 11 herbs and species
o
Very
strong internationally
o
Strong
Franchises all over the world
o
Interactive
relationship marketing
o
Strong
trademarks recipes
o
Ranks
highest among all chicken restaurants
o
Chains
for its convenience and menu variety
o
Largest
multi-branded restaurant in the world
1.7.2: Weaknesses
o
Lack
of knowledge about their customers
o
Lack
of relationship building with employees, customers and suppliers
o
Lack
of focus on Research &Development
o
KFC
desserts portion is not as better as should be
o
They
only focus higher income level people
o
Presence
of Multinational competitors in the market e.g. McDonalds.
1.7.3: Opportunities
o
They
have the opportunity to expand their sweet products
o
They
can open more outlets to get maximum market share
o
They
can open temporary outlets in peak season in the hill stations like naran,
kaghan, swat etc.
o
They
can capture more customers by decreasing the price of their products
o
Updating
their restaurants, Balanced menu, customer focus and Increase delivery service.
1.7.4: Threats
Rated
83 out of 100 in terms of competitiveness
Increasing
inflation rates directly affect menu prices
Supermarkets
and new competitors
Health
Trend away from fried foods
Changing
customer demands
Some
international events badly affected the market of KFC in Pakistan like IRAQ and
AFGHAN war and we know KFC is American based. Therefore, it creates a great
impact on the performance of KFC. During the war the sale of sale KFC decrease
more then 25%.
Current
political situation is a big threat for KFC
Diseases
like bird flu is the big threat for KFC
1.8: TECHNOLOGY FEATURES of KFC
It is a touch screen
machine to facilitate the computation the amount of food.
1.8.2: Credit
Card Swipe Machine
Credit card payment service
with flexible and customizable solution.
Time attendance system –
1.8.4: Websites
-To get information about
the product, promotion, history of KFC and etc. http://www.kfcpakistan.com
Certain KFC is offering the
free WiFi as an incentive to attract customers to surf the net at KFC premise
and at the same time customer will buy some food or drinks.
1.8.6: Telecommunication
The Recipe Scaling and
Food cost is features with vendor purchasing management that was installed in all
KFC branch locations. These locations were connected via VPN using ADSL
technology.
1.9: TECHNOLOGICAL
ELEMENTS
New techniques affect the
quality of products and services in better way. Technology is very important in
order to compete with the competitors. Organizations have an eye on their
competitors and also new techniques which their competitors used.
KFC master franchisee,
Cupola Pakistan (Pvt) Ltd. has been one of the early users of Sidat Hyder –
Supply Chain Management solutions which is the basis to manage all the Supply
Chain activities countrywide.
Complementing its SCM
product line, Sidat Hyder Morshed Associates has developed a Quick-Service
Restaurant solution (QSR) to replace the existing RSS systems in use with KFC
here in Pakistan. The solution has been recently deployed at the first site now
going LIVE in Karachi.
The front-end application
runs on a touch-screen display and is fully integrated with the SCM, there by
offering an end-to-end functionality by catering to restaurant needs and the
complete cycle of over-the-counter sales, purchase & inventory management
Although KFC and
McDonald’s has same cooking machinery but KFC has efficient delivery system;
they provide home delivery so quickly. KFC purchase machinery from Haney Penny
company, they are main suppliers of machinery throughout the world.
1.10: Internal
Communication
Internally all the KFC
Pakistan stores communicate regularly for the betterment of organization. KFC
Pakistan has a Paper Less environment in the organization. They use Telephone
and E-mail facilities to remain in contact with their Head Office Karachi to
plan strategies, share ideas and get instruction to maintain and improve the
business because these two ways of communication are very fast an very cheap as
for as e-mail as concerned, they have no traditional way to communicate like
time consuming traditional mail system.
1.11: PoS system
POS (point of sale) is
the physical location at which goods are sold to customers. A point-of-sale
(POS) software terminal is a computer replacement for a cash register. More
sophisticated than traditional cash registers, a POS (point of sale) software
system includes the ability to track customer orders, process credit cards, and
manage inventory.
At all KFC stores in
Pakistan PAR Technology Corporation’s Point of Sale system is used including
both software and hardware.
PAR provide the tools
that KFC Pakistan need to increase order accuracy, improve speed-of-service and
raise customer satisfaction levels with software solutions that can span the
entire enterprise - from the front counter to the back office and beyond to
integrate the total organization.
PAR uses reliable Dell®
hardware to run its Back Office Computer to unleash the power of business.
1.12: Transaction Record
KFC Pakistan uses a
complete package of Point of Sale system to keep record of every transaction
occur. All KFC Pakistan stores nationwide use PoS and at the closing time of
the store they send a complete transactional record of that day by using PoS
through internet. Because of this head office maintain their accounts very well
and take quick decision on the behalf of these records.
1.13: MARKETING
STRATEGIES OF KFC
1.13.1: Segmentation
KFC has divided the market of Pakistan into distinct groups of customers
with different demands, tastes and behavior who require separate products or
marketing mix.In Pakistan the niche marketing is being used for particular
classes of people. They have made segments of the market on the
following bases.
o
Demographical
o
Behavior
o
Behavior
o
Geographical
1.13.1.1: Demographical
In demographics their
first segment is consisted of the income factorize. High income, average income
and low income.
1.13.1.2: Behavior
In behavioral aspect they segmented the market on the basis of quality,
taste and price. Following are the different possible segments in this regard.
o Taste conscious
o Quality conscious
o Class conscious
o Combination of price and quality
1.13.1.3: Geographical
In the basis of the
geographical factor we have divided our market inthree main segments.
o Urban areas
o Sub urban areas
1.14: Management
Information System Used by KFC:
Management Information
Systems (MIS) is the term given to the discipline focused on the integration of
computer systems with the aims and objectives on an organization.
Each KFC outlet use MIS in accounting, knowing production, and very useful in formulating HR policies which helps them to rate their employees.MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product which is very useful for KFC future development. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems.
Each KFC outlet use MIS in accounting, knowing production, and very useful in formulating HR policies which helps them to rate their employees.MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product which is very useful for KFC future development. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems.
o MIS systems let the KFC management:
To capture information and store it, whenever they are making bills it helps them to count sales per day, per week and per month because a copy of the bill is stored in the computer.
To capture information and store it, whenever they are making bills it helps them to count sales per day, per week and per month because a copy of the bill is stored in the computer.
o Access stored information easily and
manipulate it for the needs of their clients’ while billing or taking order
they just enter the code of the product requested at that time and the quantity
demanded.
o Control flow of information into, around
and out of the systems.
o Work within legislation such as the Data
protection Act.
o Manage resources this is a very important
function as every day inventory is recorded and therefore resources could be
managed.
o Produce reports for themselves so that
they can compare their own performances with their own and other.
o Maintain records needed for quality
control so that the success story of all the employees can be appraised.
o Respond confidently to the demands of the
Common Inspection Framework MIS help them because they now easily check when
the last stocking was done.
Manage and track employee records of work, achievement and progression for promotions.
Manage and track employee records of work, achievement and progression for promotions.
o Record and track outcomes.
o Manage marketing information to further
improve sales.
o And a host of other information related functions.
If Management Information
Systems are flexible, and relate to the needs of the organization, the clients
and the curriculum that they are delivering, then they work well and
effectively. One has to be sure that, whatever systems you use, they suit your
purposes and can be customized to do so, are easy to use and allow rapid data
entry with rapid and flexible access for reporting purposes.
1.15.1:
Product
Their all products are
different from every product and the packaging and other products feature are
different from other they change their products by introducing new products but
their main product the Kentucky fried chicken is the same
1.15.2:
Price
The price is not affordable by all persons in Pakistan. Due to its
large setup the price selecting are very challenging for the new product
of KFC .
1.15.3: Place
They provide free home
deliveries for some specific cities. They open their outlets in those places in
the cities where people can buy products easily and without difficulties. They
also introduce mobile units for delivery of their products
1.15.4:
Promotions
In Pakistan KFC not advertise their products too much because
people KFC due to its reputation in other countries. They promote their products
through special packages like Ramadan packages, mid night package. They promote
their products through billboard, pamphlets and through other promotion
strategies.
1.16: The important of the system
The emergence of a global economy,
transformation of industrial economies, transformation of the business
enterprise, and the emergence of digital firm make information systems
essential in business today. Information system is a foundation for conducting
business today. In many businesses, survival and the ability to achieve
strategic business goals is difficult without extensive use of information
technology. Including KFC. There are six
reasons or objectives why businesses use information system:
o
Operational
excellence
o
New
products, services, and business models
o
Customer
and supplier intimacy
o
Improved
decision making
o
Competitive
advantage
o
Survival
1.16.1: Operational excellence.
Business
improves the efficiency of their operations in order to achieve higher
profitability. Information systems are important tools available to KFC
managers for achieving higher levels of efficiency and productivity in business
operations.
1.16.2: New products, services, and business models.
Information
system is a major tool for KFC to create new products and services, and also an
entirely new business models. A business model describes how a company
produces, delivers, and sells a product or service to create wealth.
1.16.3: Customer/supplier intimacy.
When
a business serves its customers well, the customers generally respond by
returning and purchasing more. This raises revenue and profits. The more a
business engages its suppliers, the better the suppliers can provide vital
inputs.
1.16.4: Improved decision making.
Managers
of KFC having the right information at the right time to make an informed
decision. These raise outcomes less costs and raise customers. Information
system made it possible for the managers to use real time data from the
marketplace when making decision. Example: KFC provided the list of menu
together with price, on the advertisement in the website so that the customer
can find the details about the menu.
1.16.5: Competitive
advantage
When
firms achieve one or more of these business objectives chances are they have
already achieved a competitive advantage. Doing things better than your
competitors, charging less for superior products, and responding to customers
and suppliers in real time all add up to higher sales, and higher profits.
Example: Toyota Production System focuses on organizing work to eliminate
waste, making continues improvements, and TPS is based on what customers have
actually ordered.
KFC's competitive
advantage is its supply chain and distribution system. This allows the fast
food giant to cultivate relationships with business partners and establish a
footing in regions where the competition is still struggling.
Because KFC's supply
chain and distribution system is so well set up around the world, it has less
difficulty than other fast food giants in establishing a presence, especially
in less saturated areas where there is still much opportunity for growth. KFC
is also able to compete effectively because of its famous trade secret: the 11
herbs and spices that it uses in the products sold all over the world.
1.16.6: Day to day Survival.
Business
firms invest in information system and technology because they are necessities
of doing business. These necessities are driven by industry level changes.
Example: KFC introduced the web site for order the items from the company.
Information technology has become more of a commodity, when coupled with
complementary changes in organization and management, it can provide the
foundation for new products, services, and ways of conducting business that provide
firms with a strategic advantage.
1.17: Porter’s five forces
Porter’s
five forces help to identify the key structural factors determining an
industry’s
competitive
position in the market and its profitability. They highlight the strengths,
weaknesses
opportunities
and threats along with their significance of the industry. Analysis helps to
understand
the current competitive position the industry occupies, animates positioning
and
clarifies
areas of improvement. It will also help determine intensity of industry
competition and
the
forces impacting strategy formulation.
1.17.1: Rivalry
Numerous
competitors operating as fast food franchises exist in the market. Some of them
are
NaNdos,
McDonalds, Pizza Hut, HFC, AFC, Go Chicks, Dixy Chicks, Cock n Bull, Hardees,
Salt
and Pepper and Subway. These continuously fight against each other for a better
position in
the
market. Rivalry among competitors takes place in the form of price
competitions, advertising battles, product differentiation and increased
customer services. Rivalry in fast food industry can be measured by analyzing
the following:
1.17.1.1: Number of competitors and size
Fast
food franchise industry in Pakistan consists of large number of firms having
large
variance
in size and scale. KFC’s competition is restricted to the size of the
competitor. KFC will usually not consider what Cock n Bull or AFC is doing as
important as to what McDonalds or Pizza Hut is doing. Fierce competition might
result in the form of various
deals
and price cuts offered specially in burgers between McDonalds and KFC, but on
the
whole rivalry in the industry remains moderate due to the existence of numerous
players
operating in various sizes.
1.17.1.2: Industry growth
Pakistan’s
fast food franchise industry is still unsaturated and is in its growth phase.
There
is a lot of room for firms to enter and be profitable. For past few years the
industry is growing at the rate of 10% annually. Hence, because the overall
profitability from the industry is high, the rivalry is not very bitter and
everyone gets its share of profits without diverging into severe price-wars and
advertising battles. However, major players in the market, mostly equal in
size, do get influenced by each other’s strategies and imitate quickly but that
usually does not result in price wars. The rivalry thus remains moderate.
1.17.2: Threat of Entry
New
entrants will impose a threat to the existing players in the industry. These
entrants may be
potential
entrants of acquisitions and will bring new capacity and resources and will lay
foundations
for enhanced competition for market share. These threats to entry are
determined by barriers to entry along with expected reaction of the existing
competitors. As the barriers set by the existing players increase, the threat
of new comers to enter the market will decrease.
1.17.2.1: Barriers to entry
If
the barriers to entry are high the threat of entry is low. Here, we will be
focusing on the
barriers
to entry in fast food industry to which KFC belongs
1.17.2.2: Product Differentiation
Product
differentiation means that established firms have brand identification and
customer
loyalty. KFC has differentiated its products on the basis of “Food, fun &Festivity”,
providing numerous variants of its special recipe in the form of chicken meals.
Hence the emphasis on ‘we do chicken right’. Therefore, there is not a high
threat to entry into the industry. Firms come in, differentiate slightly and
run businesses
without
competing on product differentiation.
1.17.2.3: Brand Loyalty
Brand
loyalty is high.
1.17.2.4: Capital Required
Capital requirements are the
financial resources needed for investment to set-up the
business
and to compete. Thus, the capital requirements are huge: setup, plant and
equipment,
management and employees, suppliers, production, marketing and promotion
etc.
Therefore, the capital for entering the industry is a barrier to entry and
poses a threat
to
new comers.
1.17.3:
Bargaining Power of Buyers
KFC
as a buyer or the customers of KFC can compete in the industry by forcing down
prices or
demanding
higher quality and more incentives. The following factors determine the
bargaining
power
housed by the buyers:
1.17.3.1: Concentration of buyers
KFC
has a large customer base. Its revenues are not dependent upon the buying power
of
a
single customer. Buyers always hold sufficient power to bargain with
the
firm. However, if the customer base in large, the sales and profitability is
not affected
by
retaliation by a small group. If the group is large however, the bargaining
power
increases.
1.17.3.2: Price sensitivity
The
population in Pakistan is price sensitive; people would rather go for similar
product
selling
for fewer prices than buying an expensive one. Also, there are lots of
alternatives
to
within and outside the fast food industry as a whole. While a brand loyal
customer
may
pay whatever price KFC asks for a customer looking for just good fast food
would
go
to a place where his need is satisfied with the least amount of cost incurred.
Hence0,
price
sensitivity gives a lot of power in the hands of the buyers.
Therefore,
the bargaining power of a single buyer is not much, but on the whole they have
got
bargaining
power based on their buying behavior, price sensitivity and low switching cost
1.17.4: Pressure from
Substitutes
Substitutes
are the products that can perform the same function as the industry product.
For fast
food
the substitutes are home-made-meals, ready- to -cook meals offered by Knorr,
Mon Salwa,
K
& N’s Chicken and local vendors, other restaurants as they could choose
anyone of these
foods
over fast-food. Moreover, increased health consciousness has lead people to
switch from
fast
food to health oriented food as offered by Subway or made at home.
1.17.4.1: Switching costs
When
a customer switches from a product to its substitute, then he has to bear a
switching
cost. If the cost is high then the probability of customer to switch will be
low. Therefore, there is increased pressure of substitutes because customers
can easily switch from products on the basis of low prices. On the whole, the
switching cost remains low
and
pressure from substitutes high.
1.17.5: Bargaining Power of Suppliers
Suppliers
of KFC include K & Ns, Pepsi Co, Hilal, Nescafe and bread and buns are
produced
internally.
Marination is imported from California, India and Dubai. The suppliers within
Pakistan
can compete in the industry by raising prices or reducing quality of produced
goods or
