KFC Case study part A PDF

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KFC CASE STUDY PART A

VATSAL SHAH (0906281) TIRTHAL PATEL () PINKAL PATEL (0924318) NOOPUR DESAI (0923732)

Contents Executive Summary.............................................................................................................................2 Risk Identification...............................................................................................................................4 References............................................................................................................................................ 7

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Executive Summary The goal of risk assessment is to guarantee that risk and vulnerability levels are set up and afterward appropriately oversaw in an organized way so any potential risk to execution conveyance (level of asset, time, cost and quality) and result/advantage acknowledgment by the business owner(s) is satisfactorily figured out how to guarantee that the task is effectively finished. The intention behind this risk assessment document is to give a structure to ensure that degrees of risk and vulnerability are appropriately overseen for the rest of the Case Study. This case study will accomplish this by characterizing the accompanying:

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Procedure that will/was received by the management to recognize, examine and survey risks for the rest of the case study; How risk mitigation strategies will be created and sent to lessen the probability and additionally effect of risks; How frequently the risks will be audited, the survey procedure and who will be included; How risk status revealing and changes in the status of the risk will be attempted as per the risk assessment policies. A complete risk register containing all the risks recognized for the Project, its present evaluating, and the risk relief techniques distinguished to decrease the probability and reality of each risk.

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Company Background Kentucky Fried Chicken changed its name to KFC in 1991. Which was grown in a small backroom in a fuel station has grown to chicken fast food chain in the world. Initially incorporated by Col. Harland Sanders in Corbin, Kentucky in 1952. The main secret behind the success for this chain of restaurant was the speed cooking of the chicken i.e., pressure cooking. This gives time to work on the quality of the food. The very first franchise was opened in Utah in 1952. KFC was the first fast food chain to expand globally, opening new franchise in Canada, Mexico, UK, and Jamaica by 1960s. In early 1970s, the whole chain of KFC was sold to PepsiCo. In 1987, China also accepted the KFC franchise. Now a days, KFC is a subsidiary of Yum! Brands worldwide other than China but in China it is called Yum! China. In 2019, With a value of 5.5 billion US Dollars, KFC beats its previous year sales. Currently the brand value for KFC over 12.6 billion UD Dollars. It is the second largest restaurant chain in the world with 22,621 locations in 136 countries as of December 2018. However, the employee KFC holds is also way more as their sales, 4,55,000 employees.

Development of universal tasks to accompany:     

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Expanded level of general development of deals Expanded level of development of benefits Expanded development of establishments in Mexico Development of establishment activities in the past of Central America Advancement of a more beneficial picture by expelling the "singed" from the name Improve menu identification of the rotisserie.

Risk Identification 3

Operational Risk: “In February 2018, logistics mismanagement by DHL, which had been selected by KFC UK as their new delivery partner, caused a chicken shortage in the United Kingdom – KFC's largest market in Europe – forcing the company to temporarily close hundreds of restaurants around the country”[ CITATION Ala18 \l 16393 ] KFC is successful today due to its secreted recipe here is a great risk of their business getting damaged if their recipe is leaked and other brands start using that recipe. Every brand has its own recipe which is precious to them and try to keep it a secret. So, if a recipe is leaked it can damage the business. UK is the major seller for KFC globally. The operation risk seen and faced by KFC as 800 out 900 KFC outlets were closed due to this event in the UK. There was an outburst of people on roads for the demands of KFC specials or used social media to express their upset expression. People risk Less effective coordination and communication among KFC employees and the unexpected departure of employees create a worse impact on the company’s operations. “KFC fined £46,000 after worker falls in deep fryer.”[ CITATION Chi19 \l 16393 ] While following the cleaning procedures on a regular day, a 23-year-old suffers burn of three degree. Just a slip from the ladder while cleaning cookers from above, disaster occurred. This can make a financial as well as people risk as it is affecting both the things. This is not a single incident happened, it happens everyday at a new branch of KFC which may affect the finance as well. The employees working at KFC may think that there are no safety procedures followed for the employees working with the organization. This in return let them face the People risk as well. External events: Uncertain events such as natural disasters, global trade, developments and so on can impact on KFC’s operation. To illustrate this, I would like to give an example of coronavirus. Recently, food companies including KFC, McDonalds and Starbucks are temporarily closing their stores to minimize the risk of spreading the virus. Hygiene plays a very important role in maintaining health. Though KFC is very hygienic, still it can cause disease. Chicken is most important ingredient for KFC and it is known for non veg food. Chicken related diseases like bird flu are happening often and it can damage the reputation of KFC. So, they need to take great care in this matter as chicken is their most important ingredient. 4

“As Wuhan Coronavirus Drags on Chinese Markets, the World Economy Braces for a Slowdown. IKEA has shuttered all of its mainland China stores and KFC and Pizza Hut have closed thousands of branches.” [ CITATION Amy20 \l 16393 ]

Financial Risk: Market Risk: Some of the competitors of KFC makes an adverse effect on the company’s finances. For instance, Mc Donald’s and Popeyes are stiff competitors of KFC which can result in narrow profit margins and increase advertising and marketing expenses. KFC is under constant fire as the company uses lucrative advertisements to lure children and hiding health issues that occur from fast food consumption. “Nine pieces of chicken were sold altogether for £1. In comparison, a bucket of six pieces is priced at £9.99 on the KFC menu.” [ CITATION Sab18 \l 16393 ] Due to “teething problems” with the new delivery partner, KFC faced the delivery problems in UK. Sometimes, switching the procedure for raw materials orders adversely affect the market of the well stable business. KFC being the most popular fast food chain restaurant faced the biggest loss due this change. Price Risk: KFC needs to lower the prices to handle the market competitions so, again it is a loss in profit for the company. KFC has faced many cases where customers have complained for low quality or rotting foods. This negative publicity causes the company to reduce price to earn reputation and fame again. “A number of vegans have been left “sick” and “heartbroken” after being mistakenly served chicken burgers at KFC despite having ordered one of the chain's new vegan offering.”[ CITATION Kat20 \l 16393 ] One 25 years woman was served chicken instead of vegan Quron chicken burger. She realised that it is a chicken burger after a bite. This can be considered as a price risk as there is a loss of price when the wrong order is placed and replaced with the correct one. It has not happened with one person there are many experienced the same thing. Also, this can hurt the reputation of the KFC globally as nowadays VEGAN is trend.

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Strategic risk: Economic Risk: Economic upheaval such as fluctuated GDP rates and foreign currency exchange rates and inflation also affects the operation of KFC. “In December 2012, the chain was criticized in China when it was discovered that a number of KFC suppliers had been using growth hormones and an excessive amount of antibiotics on its poultry in ways that violated Chinese law.”[ CITATION Tif13 \l 16393 ] Demographic Risk: Lack of population in the area can have a negative impact on how profitable a business is. As chain exploded in internationally, sales stagnated and location rapidly shuttered in USA. “Now that the KFC on Wilfrid-Hamel is closed, those hankering for a bucket of Kentucky Fried Chicken can still satisfy their craving, but they'll have to venture to the outskirts of the greater Quebec City region to do so.”[ CITATION Bri19 \l 16393 ] Suddenly on one Sunday the KFC branch at Wildfrid-Hamel, Quebec was closed and 20 employees were out of their jobs. Worker Union stated that the main reason behind the closing of this branch was demographics of the region and as well many of the people in that area switched to follow Vegan. Political Risk: Governments are giving favours to domestic companies that pose a threat to foreign organizations. KFC is giving its franchise in multiple countries but, the governments promote domestic companies so, KFC outlets may be restricted by several companies.

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References Arlt, W. G. (n.d.). Top 10 Global Fast-Food. Retrieved from https://www.forbes.com/pictures/flik45lgd/kentucky-fried-chicken/#29b579f05a25 Barr, S. (2018, February 26). Independent UK's Largest Quality Digital News Brand. Retrieved from https://www.independent.co.uk/life-style/food-and-drink/kfc-chickenshortage-latest-factory-1-pound-sale-excess-produce-lincolnshire-a8228636.html Brian Lupaz, H. H. (2019, December 30). CBC News. Retrieved from https://www.cbc.ca/news/canada/montreal/kfc-closure-quebec-city-1.5410806 Giordano, C. (2019, April 2). Independent UK's Largest Quality Digital News Brand. Retrieved from https://www.independent.co.uk/news/world/australasia/kfc-fine-deepfryer-burns-new-south-wales-australia-a8850801.html Gunia, A. (2020, January 31). TIME. Retrieved from https://time.com/5775027/wuhancoronavirus-global-economy/ Hsu, T. (2013, February 5). Los Angeles Times. Retrieved from https://www.latimes.com/business/la-fi-mo-kfc-chicken-china-yum-20130205story.html KFC SAYS “CHICKEN, CHICKEN, CHICKEN.” THE REAL HISTORY OF THE KFC NAME CHANGE. (2016, May 04). Retrieved from KFC: https://chickenchattin.kfc.com/kfc-name-change-history/ Ng, K. (2020, January 7). Independent UK's Largest Quality Digital News Brands. Retrieved from https://www.independent.co.uk/news/uk/home-news/vegan-kfc-burger-chickennottinghamshire-veganuary-a9273636.html Petroff, A. (2018, February 20). CNN Money. Retrieved from https://money.cnn.com/2018/02/20/news/kfc-chicken-shortage-uk-stores/index.html Sanders, C. H. (2016, May 4). Chicken Chattin. Retrieved from KFC: https://chickenchattin.kfc.com/kfc-name-change-history/

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