1705052014 - KFC Business Strategy PDF

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KFC Business Strategy...

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FOREIGN TRADE UNIVERSITY FALCULTY OF INTERNATIONAL EDUCATION

STRATEGIC THINKING

“ANALYSIS OF A COMPANY: KFC”

Submitted to

: Prof. Hoang Anh Duy

Student

: Nguyen Ngoc Thuy Linh

ID

: 1705052014

Class

: FB9A

Due Date

: 20/4/2019

Hanoi-2019

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TABLE OF CONTENTS 1. KFC CORPORATION…………………………………………………………………………… …………………………….3 2. ENVIRONMENTAL ANALYSIS.................................................4 2.1. Environmental analysis usage........................................4 2.2 External Environment Analysis with PEST…………………………………….………………………….. 4 2.3 Internal Environment Analysis with Porter’s 5 Forces of Competition……………………….. 8 3. SWOT ANALYSIS…………………………………………………………………………………… ………..…………….12 4. KFC DOING BUSINESS IN VIETNAM MARKET........................14 5. CONCLUSION....................................................................15 6.REFERENCES……………………………………………………………………………… ………….…………………………....16

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1. KFC CORPORATION KFC is an acronym for Kentucky Fried Chicken - Chicken Fried Kentucky, one of the brands of Yum Brands Inc (USA). KFC specializes in fried and grilled chicken products, with accompanying dishes and sandwiches made with fresh chicken. Currently there are more than 20,000 KFC restaurants in 109 countries and territories worldwide. KFC is world famous for its traditional fried chicken recipe Original Recipe, created by the same secret blending formula of 11 different herbs and spices completed by Colonel Harland Sanders over half a century ago. In addition to fried chicken menu, KFC also diversifies products to create extremely rich menu for consumers all over the world can enjoy more than 300 different dishes from grilled chicken in Vietnam market for to salmon sandwich in Japan. In 1997, KFC opened its first restaurant in Ho Chi Minh City. Up to now, KFC's restaurant system has grown to more than 140 restaurants, present in more than 21 major provinces / cities across the country, employing more than 3,000 employees and also creating more jobs in the industry. supporting industries in Vietnam. Development Milestones of KFC in provinces:  December 1997 - Ho Chi Minh City  June 2006 - Hanoi  August 2006 - Hai Phong & Can Tho  July 2007 - Dong Nai - Bien Hoa  January 2008 - Vung Tau  May 2008 - Hue  December 2008 - Buon Ma Thuot  November 2009 - Da Nang  April 2010 - Binh Duong  November 2010 - City Vinh, Nghe An  May 2011 - City Nha Trang - Khanh Hoa  June 2011 - Long Xuyen - An Giang  August 2011 - Quy Nhon & Rach Gia  September 2011 - Phan Thiet  December 2011 - Hai Duong  February 2013 - Ha Long

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    

November 2016 - Thanh Hoa September 2017 - Ben Tre November 2017 - Nam Dinh December 2018 - Gia Lai, Phu Tho January 2019 - Da Lat - Lam Dong

2. ENVIRONMENTAL ANALYSIS 2.1. Environmental analysis usage The analysis of the environmental factors of the direct impact, or the microenvironment of the organization, is necessary in order for the enterprise to successfully operate and take up a strong position in the market and, which is important for a lot, periodically assess its activities. In the course of such an analysis, both the strengths and weaknesses of the enterprise are manifested. The following factors belong to the environmental factors of direct exposure: consumers of the company's products, competitors and suppliers.

2.2.1. External Environment Analysis with PEST Analysis of the internal environment is a management survey of functional areas of the enterprise in order to determine its strengths and weaknesses. PEST is a model to analyze external factors, in which "P" represents the political situation (Politics), "E" is the economy (Economic), "S" for society (Social) and "T” is technology (Technology). PEST analysis describes a framework of macro-environment elements that greatly affects the strategic management of the business. a. Politics By the harmonious coordination between the Party and the State, the Vietnam

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Fatherland Front and the mass organizations of Viet Nam's large social organizations have brought together the stable political situation in Vietnam. . Vietnam is a country highly appreciated by international investors in this respect compared to other countries in the region. Our laws and constitution allow, respect and encourage all business activities according to the law. • Ordinance on food hygiene and safety. The ordinance published on August 19, 2003 unifies the issue of food hygiene and safety, overcomes the situation of unsanitary food affecting people's health and life. • Food Safety Regulation The Law on Food Safety 2010 amended and supplemented the issues: Food safety is an issue related to many international treaties and international agreements that Vietnam has signed and acceded to. For many years, our Party and State have paid special attention to food safety and considered this a significant issue in terms of socioeconomy, community health, environmental protection and also a problem. The topic has a great influence on Vietnam's integration process. Law on food safety regulates conditions to ensure safety for food products, food production and trading activities; food advertising and labeling; imported and exported food; control the risk of food contamination, respond to, prevent and overcome food safety incidents; competence, records and procedures for granting certificates of establishments eligible for food production; food testing; information, education, communication about food safety; State management of food safety and specialized food safety inspection. The issuance of the Law on Food Safety Law is appropriate in the context of Vietnam increasingly integrating into the world economy and aiming to create a legal mechanism for our country and countries around the world to recognize the system. standards of each other, including standards for food hygiene and safety. • Commercial Law on franchise activities Decree of the Government No. 35/2006 / ND-CP dated March 31, 2006, detailing the Commercial Law on franchising activities in the territory of the Socialist Republic of Vietnam. This Decree applies to Vietnamese traders and foreign traders engaged in franchising activities; Foreign-invested enterprises specialized in goods trading and activities directly related to the purchase and sale of goods to carry out franchising activities for goods that such enterprises are allowed to trade in services. distribution according to Vietnam's international commitments. Vietnam has been and will try to build a complete legal system to create favorable conditions for investors while promoting economic development. b. Economics In general, the economy in recent years in our country has a very fast economic development. The state gradually tries to reduce inflation and promote the integration process with the region and the world, attracting foreign investment, creating momentum for economic development. Population life is generally stable and improved. The average income per capita in the years increased significantly, the following year was higher than the previous year. Currently, the per capita income of Vietnam is estimated at 2200 USD / year. As income is increasing, people's living expenses increase and consumer demand for fast food spending

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increases, they pay more attention to nutritious foods, High quality and fast production does not take much time so fast food stores like KFC are more sought by customers. c. Social Since 1998 when KFC started appearing in Vietnam market, KFC suffered losses for 7 years to create a habit of a new consumer culture for Vietnamese people, especially young people. Their success today also comes from understanding cultural factors. KFC understands that, while fast food in foreign countries is considered a product of industry, many companies do not need too big premises for business and customers mainly buy take-away. But in Vietnam, people are not familiar with this way of doing business, so fast food Vietnam is still a restaurant but is served quickly. The construction of a store system with different positioning with traditional stores taking red as the main color, serving professionally, KFC has created a new trend in the consumption of Vietnamese. At the same time, KFC products themselves also have differences to suit Vietnamese culture. In addition to traditional dishes such as fried chicken and hambuger, when entering Vietnam, KFC has processed some dishes to serve the Vietnamese tastes such as boneless chicken, soft bread , gravy chicken rice, Jumbo mixed cabbage ... The size of the Hambeger also changes, becoming smaller and suitable for the small physique of Vietnamese people. The product portfolio is arranged in a variety of categories, making it easy for consumers to choose their favorite foods. This category includes: traditional fried chicken, convenient every day, children's meals, soft drinks, snacks, snacks, economy every day, salad, dessert, ... Besides, new dishes have been launched into Vietnam market, contributing to increase the diversity of menu items, such as: fillet butter, shrimp salad, lipton ice tea, Evian water ... With the expansion into seafood ingredients, some soft drinks substituting Pepsi, KFC create interest and curiosity for young people, thereby reducing the boredom in customers when only exclusively serving chicken dishes . Especially for today's young people who always like to find new and strange things. d. Technology KFC is also one of the enterprises that apply modern technology to their business operations. Typically e-commerce applications in communications and advertising. KFC's method of communication  Method of communication via website Introduce businesses: KFC has used the website to introduce its history of formation and development in a short, complete and impressive way through the introduction of safety certificates as well as characteristics of businesses in the food business.

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Product introduction: the homepage is designed according to the layout of e-science websites presenting information of products in a clear and concise manner, but still highly aesthetic and impressive to users, color beauty, attract customers.  Method of communication via facebook social network Currently, facebook is the most popular social information network in Vietnam, especially for young people so Lotteria cannot ignore this online marketing opportunity. Up to now, Lotteria fanpage has nearly 54 million likes. Targeting social networks is mainly due to the following reasons: + Advantage of large traffic, wide popularity. + Social networks have a wide spread so with marketing via social networks, information is constantly updated with unlimited number and time of sending. + Due to the unlimited nature of space and time and multi-dimensional interaction, customer feedback and concerns will be sent to the company at any time to be answered. Other potential customers through direct feedback will see objectively the enthusiasm of the staff.  Online sales form With KFC’s growing trend, online sales are growing strongly. KFC sells on the main website of https://kfcvietnam.com.vn/vn. When customers log in to the company's website, they will see the list of dishes, hamburgers, desserts that are clearly itemized with prices attached. In each product, there will be a "select" item when customers find their favorite food, then they will be transferred to the order. In addition, KFC also has a hotline to order customers simply by calling 1900 6886.

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2.2.2. Internal Environment Analysis with Porter’s 5 Forces of Competition One of the major models of analyzing a company’s competitor position in themarket is given by Porter. Porter’s five forces comprising of threats of newentrants, bargaining power of buyers and suppliers, threats of substitutesand the rivalry among existing competition determine the degree to which investment in a particular industry will drive rates of return to the freemarket level. In short, Porter’s five forces determine a company’sprofitability and opportunities in the industry. a. Supplier: Factors on supplier pressure is also quite important. When the pressure is too great, KFC Vietnam will not be able to actively implement its price strategy but it will depend heavily on suppliers. In contrast, when reducing the pressure, KFC will proactive in implementing its strategy. Vietnam is an agricultural country so cultivation and animal husbandry are the two main industries that have developed in Vietnam, which has created an advantage for KFC. However, the question is: “How will KFC choose ingredients? Purchasing free ingredients with cheap prices or choosing good quality ingredients at higher prices? And this is how KFC managed:  Professional working style, enthusiastic staff.  Product quality is the best.  Prior to risk to reduce damage.  Actively build close relationships with suppliers  Prestige, good product quality ensure quality in the market (CP Vietnam.)  All materials are inspected by the authorities With the implementation of these strategies, KFC has at the same time, two objectives achieved:  Ensuring the supply of quality products to the market.

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Reducing the risk from suppliers. And that strategy has been effective when the bird flu was discovered. While in Vietnam, products processed from poultry are strenuous, KFC was straight forward with an important breakthrough. That achievement is due to KFC's efforts and strategic vision. 

b. Customers: have enough power Customers are a competitive pressure that can directly affect the entire business operation of the industry. We can see how important customers are to any industry, fast food industry is no exception. Main customers of KFC: retail customers and this is also the main cause of fast-food industry pressure. There are several reasons to see why customer pressure is a big problem in Vietnam for fast food industries:  With a large population and an increasing rate of population growth in urban areas, a community of young people who are getting higher income and have the willingness to pay. There is a fact that every Vietnamese family is willing to pay higher for delicious and quality dishes.  Due to the presence of a sufficient number of competitors in the market and a high degree of consumer awareness, when changing the menu, price or other quality characteristics, the consumer often responds immediately, switching his attention to another company.  Moreover, the demand for food is always an urgent need every day, with a large population like our country, the demand for commodities is huge, especially the food industry.  Health problems. Currently, the number of people with obesity and cardiovascular disease increases suddenly ... and KFC is listed as one of the causes. This is the challenge that KFC needs to overcome by building trust for customers and brand image. c. Substitute Products: Present As a substitute, one can mention full-fledged food cooked at home, as well as dishes offered in restaurants and cafes. Vietnam is an agricultural country and has a very rich and diverse culinary culture with a variety of potential substitutes that are not small for fast food firms that can count as much as rice. pho, porridge… Vietnamese cuisine is developed with many delicious, attractive and eye-catching food ... Pressure on substitute products for Fast food products are really clear and not small. In order to alleviate this pressure group, fast food firms should promote their strengths while linking together if they need to establish a firm foothold in the Vietnamese market. d. Potential Competitors: According to M-porter, potential competitors are businesses that are not yet in the market but may affect the industry in the future. That depends very much on two very important factors:  The Appeal of Industry: It is expressed through many factors but in short it will be generalized through 3 expenses: profit rate, number of customers, number of

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businesses in the industry, number of businesses in the industry. We can see that Vietnam with a population of more than 80 million is a huge environment for the food industry. In addition, efforts to create KFC from more than a century ago. KFC succeeded with the secret recipe of 11 aromas and herbs along with basic cooking techniques still applied today. However, KFC Vietnam is also developing dishes from chicken such as crispy fried boneless chicken, chicken noodle, soup, .... Barriers to Enter Industry: Factors that make entry into the industry difficult. FKC is also encountering many barriers when penetrating the Vietnamese market, such as: capital, technology, trade elements, distribution system, customers, brands, specific resources, raw input materials (patent-controlled, government-protected resources, etc. for other industries the food industry does not require high capital. Techniques and specific resources are the most important factors. From that we could see a high barrier to entry into the industry.

e. Competitors: high threat The intensity of competition in the market is high due to the presence of various fast food product segments, a large territorial coverage of networks, high barriers to exit from the market and established contacts with suppliers. At the moment, competitors in the market of fast food chains are becoming more and more. New cafes are opening, which are trying in every way to attract visitors. Therefore, the level of competition for the network is very high. The main competitor of the fast food restaurant chain KFC are the fast food cafe chains McDonalds, Burger King, and Lotteria. For further study of competitive advantages, it is necessary to give a brief description of the main competitors in the industry. Currently, fast food firms are also penetrating into Vietnam market with larger scale. And are continuing to penetrate deeply into this potential market with opening many stores not only in Ho Chi Minh City. Minh but also distributes most of the big provinces and cities. This means that KFC has more and more opponents. The following can be mentioned: 

JOLLIBEE of Philippines. This year, this fast food company will open 4 more stores, bringing the total number of goods in Vietnam to almost 100. Mr. Subido also said that Jollibee is looking for the company to do. franchise partner. Since 1996, the company has only franchised on less than 5 companies in Vietnam.

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LOTTERIA of Lotte Corp. in Korea: Mr. Truong Ham Liem, Sales Manager of Lotteria Vietnam said: “Vietnam is an important and potential market for Lotte. The economic crisis still exists, but Loteria is still invested to the Vietnamese market. He also added that the development plan in the coming years of market expansion plans for lotter is still on top. Specifically, this year lotter will expand 80 stores in Ho Chi Minh City, Hue, Quang Nam, Ha Dong, ....

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3. SWOT ANALYSIS SWOT analysis is one of 5 steps to create a business production strategy of an enterprise, including: establishing the enterprise's principles, SWOT analysis, identifying strategic objectives, forming goals and successors and strategic planning, defining strategic control mechanisms. SWOT is an initial set of initials of English words: Strengths (Strengths), Weaknesses (Weaknesses), Opportunities (Threats) and Threats (Challenges) - is a wellknown model in analysis business. Based on the above analysis of the external and internal environment, a list of opportunities and threats, as well as strengths and weaknesses, was obtained.

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Strengths / Weaknesses and Opportunities / Threats Strengths Weaknesses - Strong financial potential, expanding distribution - High price when compared to VN cuisine price. nationwide - Having outstanding technology, famous brand, high - Understandi...