SWOT Analysis of KFC Company - Case Study Example

Marketing Report Name: Course: Tutor: Institution: Date: Executive Summary The KFC Company is an international fast food company. The organization has over the years increased its international market through franchising. However, the organization faces increased strategic marketing challenges. In order to offer recommendations on how to improve on its marketing approach, the report evaluates the organizational SWOT analysis. In this case, a strength analysis reveals that the organization has a competitive strength in its marketing unique formula and increased global sales. On the other hand, a weakness analysis reveals that the organization faces weaknesses in its adoption of the franchise market expansion approach that is highly expensive. In addition, an organizational opportunities analysis reveals that the organization has increased market opportunities in the market with respect the emergence of a new market segment in the market. Finally, a threats analysis reveals that the organization faces increased market treat form local restaurants. In regard to this analysis, the report recommends organizational marketing strategies with respect to the four marketing mixes namely the price, place, product and people. Table of Contents Executive Summary 2 Table of Contents 3 1.0 Introduction and Background 4 2.0 SWOT Table 5 3.1 Strengths 6 3.2 Weaknesses 6 3.3 Opportunities 7 3.4 Threats 8 4.0 Recommendations 9 4.1 Pricing Strategy 9 4.2 Place 10 4.3 Products and People Management 11 5.0 Conclusion 11 References 13 1.0 Introduction and Background Organizational success is hedged on accurate marketing and the adoption of the appropriate marketing framework. Although marketing is hedged on the basic principles of the marketing mix, which include price, place, promotion and people, it can be drafted to address the unique purposes in the respective organizations. In this case, the marketing plans and approaches are developed and designed to address and fit into the organizational framework and unique selling points (Viardot, 2004, p.3). This is the case at Kentucky Fried Chicken (KFC) a fast food restaurant started in 1940. The restaurant unique selling point was and remains to be its secret recipe that the founder Colonel Saunders had and only sold on Franchise to the respective selected stores. Over the years, the restaurant has developed and emerged as the second largest fast food store in terms of sales, only second to MacDonald’s. The restaurant through its diversified products has exerted influence in India, China, Japan, USA, and UK among other foreign markets. This report is a review of the organizations SWOT analysis. It provides a discussion and subsequent recommendations on the established weaknesses and threats. 2.0 SWOT Table 3.0 Findings and Discussion 3.1 Strengths The organization has an increased strength base in the market. This is majorly evidenced by the presence of its original 11 herbs and spices recipe. This original recipe has remained a comparative advantage over competitors in fried chicken preparation. Consequently, this has enabled the organization retain a market competitive edge that is a unique selling point in the market. Consequently, this has enabled the organization achieve an increased customer satisfaction and loyalty levels. As such, this offers the organization increased market competitiveness both in the present and in the future. In addition, the organization has a key strategic strength in its investment in the emerging Asian markets inclusive of China and India. For instance, in China the organization has over 4000 outlets in operation. The Asian market presents a viable opportunity through which the market can expand and increase its services in the market. Therefore, this gives the organization a market advantage both in the present and in the future. Moreover, the organization has a key strength in its global size in the market. As such, the organization, as the second to MacDonald’s in terms of sales has increased profit margins. This enables the organization acquire increased market success through increased returns on investments (Pahl and Richter, 2007, p.13). 3.2 Weaknesses Despite its increased strengths and market competitiveness, KFC faces a number of internal organizational operation challenges. These range from the organizational structures to its customer base. The organization faces increased challenges in the dieting concerning the product ingredients. The products are rich in fat and calories. In this case, the products cause lifestyle diseases such as obesity and heart attack. Consequently, this has faced increased criticism in the market as majority of the health experts consider the foods unhealthy. This has greatly influenced the organizational performance and success as it faces increased competition from organizations such as MacDonald is, adopting healthy fast food recipes in the Asian market. In addition, the organizational operational success is influenced by the presence of franchise markets. In this case, managing the franchise in the market. Therefore, this negates the organizations ability to expand and compete with others in the market such as Stuburks. A combination of these weaknesses reduces on the organizations market competitiveness. The organization targets and seeks to serve a target population of majorly the youths and career professionals with minimal time for kitchen and cooking chores (Chen, 2010, p.7). However, due to its increasing health related issues sensitivity, its unhealthy diet products reduce the organizational influence on this group. 3.3 Opportunities The global markets increasingly growing with international trade and technology developments. In this case, the market is facing increased opportunities for expansion and development. Traditionally, KFC was known for its chicken products in the market. This has enabled the organization establish a market competitive edge in the industry allowing for increased market influence. However, as already established, the organization has increased its market influence across the globe across Europe, Asia and USA. In this case, the diverse markets call for increased products diversification. The organization has an opportunity to expand its product line from the current chicken focus to other fast food varieties. This is bound to succeed due to the availability of diverse market segments across the regions (Samatha, 2010, p.16). These opportunities present an organizational increased performance and success rate for the organization. 3.4 Threats The organization has over the years faced an increased market challenges and external threats because of the adopted marketing and production structures. For instance, the market faces increased challenges in the market due to the existing healthy dieting culture in the global market. In this case, it risks losing its competition in the market as an increased number of customers shift their loyalty onto other healthy products. Consequently, this has increased an organizational failure risk in the global platform. In addition, the organization faces an increased threat in the operation and execution of the process with respect to increased legal suits against its products under the accusations that it violates the health and safety regulations of ensuring success (Lam, Chan, Xu, D. H., Xu, Parwani and Yu, 2009). Finally, the organization faces increased market competition from the emergence of local fast food restaurants. Such restaurants offer customized recipes that make them increasingly appealing to the local customers, at the expense of the international fast food restaurants such as KFC. 4.0 Recommendations As evidenced in the above analysis, it is apparent that KFC faces increased marketing challenges as demonstrated by its weaknesses and threats analysis. Consequently, in order to enhance an increased organizational performance, this report offers strategic marketing recommendations with regard to the four marketing mix on price, place, and product and people analysis. To this effect, the report offers a review and operationalization framework for the execution of the recommendations under each marketing mix variable. 4.1 Pricing Strategy The pricing strategy is an imperative marketing mix component. In its operation, organizations seek to establish market influence with respect to either high or low pricing strategies. A low cost strategy implies that the organization seeks to approach and target the diverse middle ad low class population. On the other hand, high prices represent increased product quality. This serves as a branding and market positioning strategy. KFC is a renowned global brand with high quality products. However, increased market competition from the local restaurants and other international restaurants, call for the adoption of a low pricing strategy (Yoo, Donthu and Lee, 2000, p.197). The adoption of this strategy will enable the organization compete with its market competitors; the organizations should adopt a low pricing approach. The strategy is an applicable alternative for KFC. This is because the organization with its large-scale production has increased revenues, profit margins and reduced costs. Therefore, its per unit production is considerably reduced as compared to the local restaurants. Therefore, by charging low prices for its products, although educing on its profit margins, would enhance reduced organizational profitability and market competitiveness in the long run. The adoption of this strategy will enable the organization overcome the existing local restaurants competition. 4.2 Place The concept of place in marketing is important as it allows for the delivery of organizational products to the final; consumers. Although organizations might develop superior products, a failure in the place marketing mix results to an ultimate fail in the organizational success process. Currently, the organization uses the franchising marketing approach to enhance and expand its market influence in the global market. In this case, the origination sells its recipe to the franchisee companies. Although the organization has increased market influence through this approach, it has resulted to increased challenges in management. The process of managing the franchises is expensive in the industry. In this case, this report recommends that the organization should adopt the subsidiary expansion and distribution approach. In this case, the distribution approach will increase the organizations influence in the market. The disadvantages of franchising such as losing control. In this case, through the adoption of increased marketing influence and control, the organization will rely on its own business model. As such, this will enhance increased uniformity and commitment in the market through enhanced customer relations. Consequently, this will reduce the legal suits established and filed by civil and customer groups in the market. The legal suits are not only expensive to the organization, but also impact on its market reputation. Therefore, the adoption of the subsidiary market expansion approach will enhance increased market competitiveness in the industry. 4.3 Products and People Management The organizational products presented in the market present a vital strategic competitiveness edge for the respective corporations. In this case, the presentation of unique and competitive organizational products increases an organizational performance and success rates. KFC as an organization has focused on the chicken products variety. In this case, the organization gains increased market focus concentration. However, as established, venturing in the diverse markets calls for product diversification and expansion. Consequently, through this approach, this report recommends the adoption of a product diversification approach in management (Manchanda, Rossi and Chintagunta, 2004, p.468). On its part, the report recommends the adoption of an approach in which the organization can introduce products such as vegetable fast foods to allow for market competitiveness through competing with the market leaders such as McDonalds. With respect to people management, this report establishes that the organization experiences an increased employee turnover. As a result, it recommends the adoption of stringent global human resource management approaches to allow for increased market competitiveness through reduced employee turnover. 5.0 Conclusion In summary, this report offers a review of the organizational SWOT analysis in the market. The analysis reveals that despite the strength and opportunities for the corporation faces increased market threats and weaknesses. On one hand, the analysis establishes the organizational unique selling point in its 11 herbal formulae and the increased market sales quantity. On the other hand, this increases the market opportunities as the organization has an increased capital base. In this regard, their study reveals that the organization has an emerging market opportunity in the healthy dieting population. The report argues that the organization can conveniently invest in this market due to its increased working capital base. In addition, the report establishes that the organization faces increased market expansion weakness due to the high expansion costs in franchise strategy that denies the organization the required market influence and relationships. In order to remedy these challenges, the report recommends the adoption of the low pricing approach, product diversification, subsidiary expansion approach as well as appropriate international human resource management approaches. Consequently, this report concludes that through the adoption of these recommendations, KFC will increase and enhance competitiveness in its strategic marketing approach. References Chen, Y. C. 2010, “Content-based business English course for EFL”. The Internet TESL Journal, 16(1). Lam, E. T., Chan, R. C. F., Xu, D. H., Xu, K. S., Parwani, K. P., & Yu, J. Y. 2009, “Expansion of SUBWAY in China”, Oxford University, London. Manchanda, P., Rossi, P. E., & Chintagunta, P. K. 2004, "Response modeling with nonrandom marketing-mix variables”, Journal of Marketing Research, vol 41, issue 4, 467-478. Pahl, N., Richter, 2007 “SWOT analysis: Idea, methodology and a practical approach”, GRIN Verlag, Munchen. Samatha, N. 2010, Business strategy: Great chance for McDonalds to invest and develop in Vietnam’s fast food market. Publications Oboulo. com. Viardot, E. 2004, Successful marketing strategy for high-tech firms, Mass, Artech House Boston, Yoo, B., Donthu, N., & Lee, S. 2000, “An examination of selected marketing mix elements and brand equity”, Journal of the Academy of Marketing Science, vol 28, issue 2, 195-211. Read More