Kentucky Fried Chicken, India- Strategy

STRATEGY TERM PAPER PRESENTATION

INDIA

Presented By:Aparna Priyadarshini

MBA 2010,Date: 12th April 2010 Asian Institute of Management,Manila

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� KFC Corp, owned by YUM brands is one of the oldest(1952) and

most popular chicken and food restaurant in the world.

� Other restaurants under YUM brands are Taco Bell, Pizza hut, Long

John Silver’s and A&W

� KFC primarily sells chicken pieces, wraps, salads and sandwiches.

Company BackgroundCompany BackgroundCompany BackgroundCompany Background

� KFC primarily sells chicken pieces, wraps, salads and sandwiches.

While its primary focus is fried chicken, KFC also offers a line of

other meat products suiting to local palate.

� In India they opened in 1995 and are lagging behind in terms of

sales and reach vis-à-vis chains like McDonalds and Dominos

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� Geography: India� Metros and Tier II Cities

� Demography: Urban people of both genders aged between

15 to 45 years of age.

� Income Group: A, B and C segment of people.

Target MarketTarget MarketTarget MarketTarget Market

� Income Group: A, B and C segment of people.

� Psychographic: People who have a busy lifestyle and are

influenced by western culture

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An important thing to note is that Indian Fast food market is fundamentally different-Eating at home remains very much ingrained in Indian culture. Fast food joints or QSRs are one of the cheap sources of taking a break from home cooked food and eating out.

The growth in nuclear families, particularly in urban India, exposure to global media and Western cuisine and an increasing number of women joining the workforce are responsible for changing this trend.

Strategic Group DataStrategic Group DataStrategic Group DataStrategic Group Data----CompetitorsCompetitorsCompetitorsCompetitors

Mc Donalds

35%

Others

33%

Mc Donalds

KFC

KFC

10%Dominos Pizza

15%

Café Coffee Day

7%

KFC

Dominos Pizza

Café Coffee Day

Others

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In India the fast food joints also compete against the other Quick Service Restaurants like Pizza Hut(same company as KFC) and dominos.

PESTLE ANALYSISPESTLE ANALYSISPESTLE ANALYSISPESTLE ANALYSIS

Political: India is

liberally opening

doors for

international fast

food joints

Positive

Economic: An ever

growing middle

class with

increasing

purchasing power

Positive

Social:Women are

moving out of

kitchen to offices.

A lot of Indians

are veggies, so

the menu has to

changed Positive

Technological:

Enough enabling

technologies

available

Positive

Environmental:

Activists against

killing of animals

like PETA can

create trouble

Watch Out

Legal: Franchising

models available

and working

successfully in India

Positive

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When KFC came to India in 1995, it had to shut down because of the controversy about their handling of poultry.

PORTER’S FIVE FORCESPORTER’S FIVE FORCESPORTER’S FIVE FORCESPORTER’S FIVE FORCES

Bargaining power Bargaining power

Threat of new

EntrantsIndia is has opened

doors for foreign fast

food players recently

MEDIUM

Verdict:

The

industry is

moderately

attractive

of Buyers:There are only few

western fast food joints

in India

MEDIUM

of SuppliersThere are a lot of

suppliers available in

the market

LOW

Threat of

SubstitutesNot a lot of options

available

MEDIUM

Competitive

Rivalry

HIGH

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KFC

STRATEGICSTRATEGICSTRATEGICSTRATEGIC MAP 1MAP 1MAP 1MAP 1

Service

McDonalds

Dominos

Pizza

GAP

KFC

Number of Outlets

CCD

Number of outlets and good customer service is a KSF in this industry KFC has to increase its

reach and try to move rightwards 7

KFC


Price

Dominos Pizza

CCD

GAP

Extensive Menu

McDonalds

Both Price and Extensive menu are KSFs in this

industry and KFC is weak in both. It should try to move into the GAP zone 8

KFC

McDonalds


Operations

Dominos Pizza

CCD

As evident from the clutter, operations are thresholds to

succeed in this industry whereas Extensive menu i

Extensive Menu

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McDonalds


Dominos Pizza

Number of Outlets

Quality Standards

Outlets

As evident from the clutter, quality standard is threshold

and number of outlets is a KSF

KFCCCD

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KSF’s:

� Location/Number of Outlets

� Extensive Menu

� Price

Service/Ambience

Key Success FactorsKey Success FactorsKey Success FactorsKey Success Factors

� Service/Ambience

� Taste

Threshold Factors:

� Operations

� Quality Standards

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Competitive MatrixCompetitive MatrixCompetitive MatrixCompetitive Matrix

Factors Weights McDonalds KFC Domino's Coffee Day

Location/No of outlets 35% 9 4 7 4

Extensive Menu 25% 8 5 7 5

Price 15% 8 5 4 4

Service/Ambience 10% 7 7 9 6

Taste 10% 7 8 9 5

•KFC is losing out because of fewer number of outlets.

•Given that the market has lot of veggies, extensive menu is very important•KFC’s strength is Taste and it should try to differentiate on this basis.

Taste 10% 7 8 9 5

Weighted Score 100% 7.75 4.9 6.6 4.35

Market Share 35% 10% 15% 7%

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Future Competitive MatrixFuture Competitive MatrixFuture Competitive MatrixFuture Competitive Matrix

Factors Weights McDonalds KFC Domino's Coffee Day

Location/No of outlets 35% 9 7 7 4

Extensive Menu 30% 8 7 7 5

Price 10% 8 6 4 4

Taste 10% 7 8 9 5

Service/Ambience 15% 7 7 9 6Service/Ambience 15% 7 7 9 6

Weighted Score 100% 8.1 7 7.2 4.7

Market Share 35% 10% 15% 7%

•To grow, KFC has to improve its acceptability by customizing its menu to suit local taste•Price will become less important as almost all players in the industry will be similarly priced

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Mission:Mission:Mission:Mission:

TO SELL FOOD IN A FAST, FRIENDLY ENVIRONMENT THAT APPEALS TO PRIDE CONSCIOUS, HEALTH MINDED CONSUMERS

Vision:Vision:Vision:Vision:

OUR PASSION, AS A RESTAURANT COMPANY, IS TO PUT A

Vision/Mission StatementVision/Mission StatementVision/Mission StatementVision/Mission Statement

YUM ON PEOPLE'S FACES AROUND THE WORLD, SATISFYING CUSTOMERS SATISFYING CUSTOMERS SATISFYING CUSTOMERS SATISFYING CUSTOMERS EVERY TIME THEY EAT OUR FOOD AND DOING IT BETTER DOING IT BETTER DOING IT BETTER DOING IT BETTER THAN ANY OTHER RESTAURANT COMPANY. THE UNIQUE EATING UNIQUE EATING UNIQUE EATING UNIQUE EATING EXPERIENCE EXPERIENCE EXPERIENCE EXPERIENCE AT EACH OF OUR RESTAURANTS MAKE OUR MAKE OUR MAKE OUR MAKE OUR CUSTOMERS SMILE CUSTOMERS SMILE CUSTOMERS SMILE CUSTOMERS SMILE AND INSPIRE THEIR LOYALTY FOR LIFE. TOWARD THAT END, OUR ASSOCIATES AROUND THE WORLD ARE TRAINED TO BE CUSTOMER MANIACSCUSTOMER MANIACSCUSTOMER MANIACSCUSTOMER MANIACS.'

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Competencies Competencies Competencies Competencies –––– The Ladder ModelThe Ladder ModelThe Ladder ModelThe Ladder Model

Competencies

Strategic Competencies

Distinctive Competencies

Threshold Competencies

Sustainable Competitive

Advantage

Competitive Advantage

ResourcesResourcesResourcesResources::::•Good tasting recipe•Friedchicken specialist•People•Global Experience•Brand Recognition

Resources

Competencies

Incompetencies

Peripheral Competencies

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Competencies





Advantage


Resources

Competencies

Incompetencies


CompetenciesCompetenciesCompetenciesCompetencies•Patented recipes•Good customer service•International footprint•Brand Equity

InInInIn----competenciescompetenciescompetenciescompetencies

Fried chicken specialist

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Competencies





Advantage


Strategic CompetenciesStrategic CompetenciesStrategic CompetenciesStrategic Competencies•Patented recipes•Brand equity•Good Custom Service

Resources

Competencies

Incompetencies


Peripheral CompetenciesPeripheral CompetenciesPeripheral CompetenciesPeripheral Competencies

International Footprint

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Competencies





Advantage


Resources

Competencies

Incompetencies


Distinctive CompetenciesDistinctive CompetenciesDistinctive CompetenciesDistinctive Competencies•Patented recipes•Brand equity

Threshold CompetenciesThreshold CompetenciesThreshold CompetenciesThreshold Competencies•Good customer service

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Competencies





Advantage


Resources

Competencies

Incompetencies


Sustainable Competitive AdvantageSustainable Competitive AdvantageSustainable Competitive AdvantageSustainable Competitive Advantage

•Patented recipe of chicken

Competitive AdvantageCompetitive AdvantageCompetitive AdvantageCompetitive Advantage

•Brand Equity

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Strategic Objectives:� Expansion into all major urban cities resulting in

market leadership

� Multi-brand Innovation and becoming a top of the mind

brand in fast food industry

� Market leader in terms of employee welfare and

Long Term ObjectivesLong Term ObjectivesLong Term ObjectivesLong Term Objectives

� Market leader in terms of employee welfare and

customer satisfaction

Financial Objectives:

� Strong Cash Generation and Returns

� Increasing the profit margin from 11% to 17%

through improved operations and reduced overhead costs

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KSF’s CompetenciesExtensive Menu/Taste Patented recipes

No of Outlets Brand Equity

Customer Service Customer centric culture

Value PropositionValue PropositionValue PropositionValue Proposition----TriangleTriangleTriangleTriangle

Ensuring superior dining experience by offering a wide range of specialized

recipes , wherever you go!

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WeaknessWeaknessWeaknessWeaknessW1. High PriceW2. Image of ‘Fried’W3. Poor ReachW4. Fewer Items MenuW5. Conflict in mgmt style

of PepsiCo and Yum Brands

SWOTSWOTSWOTSWOT

StrengthsStrengthsStrengthsStrengthsS1. Good TasteS2. Brand EquityS3. Global ExperienceS4. OperationsS5.Trademark RecipesS5. Strong Customer Focus

• Introduce cheaper items in the menu (W1,W4,O3)

• Change the image of KFC from fried to ‘healthy’(W2,O3)

• Open up new outlets in

OpportunitiesOpportunitiesOpportunitiesOpportunitiesO1. Increase outletsO2. Increase in income

of urban IndianO3. Shift in food

• Introduce new recipes suited to local taste(S1,S2)

• Target the brand conscious urban population(S2, S3,O2)

ThreatsThreatsThreatsThreatsT1. Health conscious

eating habitsT2. Animal Care

ActivistsT3.Intense

Competition

• Open up new outlets in Urban locations (W3,O1,O2,O3)

O3. Shift in food habits e.g.-Vegetarian

population(S2, S3,O2)

•Work on the image of a healthy fast food chain through advertising( T1, W2)•Develop a strong culture of good service (T3,W5)

• Introduce healthier recipes(T1,S5)

• Differentiate as one proving fastest service(T3,S2,S4)

• Engage is CSR activities(T2,S3,S2)

• Differentiate through good service(S5,T3)

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Options FilterOptions FilterOptions FilterOptions FilterOptions FilterOptions FilterOptions FilterOptions FilterOptions Competencies KSF's

Stategic

Intent

Vision/

Mission Score

Select

(Yes/No)

Weight 0.3 0.3 0.2 0.2 1

Introduce new recipes suited to

local taste(S1,S2) 7 8 8 6 7.3 Yes

Target the brand conscious

urban population(S2, S3,O2) 7 4 3 4 4.7 No

Introduce cheaper items in the

menu (W1,W4,O3) 6 7 6 7 6.5 Yes

Change the image of KFC from

fried to ‘healthy’(W2,O3) 5 6 8 8 6.5 Yes

Open up new outlets in Urban Open up new outlets in Urban

locations (W3,O1,O2,O3) 7 7 6 6 6.6 Yes

Introduce healthier

recipes(T1,S5) 5 8 7 7 6.7 Yes

Differentiate as one proving

fastest service(T3,S2,S4) 4 5 5 5 4.7 No

Engage is CSR

activities(T2,S3,S2) 6 7 7 8 6.9 Yes

Differentiate through good

service(S5,T3) 7 8 7 7 7.3 Yes

Work on the image of a healthy

fast food chain through

advertising( T1, W2) 6 6 7 8 6.6 Yes

Develop a strong culture of

service and differentiate from

competition(T3,W5) 7 8 8 8 7.7 Yes

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Short Term� Introduce new recipes suited to local taste(S1,S2)

� Introduce cheaper items in the menu (W1,W4,O3)

� Introduce healthier recipes(T1,S5)

� Differentiate through good service(S5,T3)

� Work on the image of a healthy fast food chain through advertising( T1, W2)

Long Term

RecommendationsRecommendationsRecommendationsRecommendationsRecommendationsRecommendationsRecommendationsRecommendations

Long Term� Change the image of KFC from fried to ‘healthy’(W2,O3)

� Open up new outlets in Urban locations (W3,O1,O2,O3)

� Engage is CSR activities related to animals & environment(T2,S3,S2)

� Develop a strong culture of good service (T3,W5)

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Identify

Competitive

Advantage

Develop robust

supply chain

Develop good

relationship with

Identify internal

competencies

and KSFs Iterate and Start Here

Understand Drivers

Create Enabling

frameworks

Support Initiatives

Research on food habits, taste and preferences

Improve reach by opening up outlets.Make judicious sourcing decisions

The Fast Food Framework

relationship with

customers and

suppliers

Develop a culture

of adding value

to the customer

through high

quality great and

quick service

and KSFs

Understand

Target Market

Iterate and Refine

Start Here

Deliver Value

Indulge in brand building exercise.Create trust for product quality & taste

Customize menu. Add to customer delight through quick and great service

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Sources/References:Sources/References:Sources/References:Sources/References:Sources/References:Sources/References:Sources/References:Sources/References:

� www.wikipedia.org

� www.kfc.com

� www.yum.com

� www.datamonitor.com

www.ebscohost.com� www.ebscohost.com

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Kentucky Fried Chicken, India- Strategy

Business

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