Key Strategic and Operational Issues of KFC - Assignment Example

Operations Management Executive Summary KFC is one of leading fast food chain of the world and has a record of very efficient and superior service and delivery of quality products. This report is an attempt to analyse the different aspects of the operations management of Kentucky fried chicken in the different. A research has been conducted on the company to understand the facets of operations management of the business. The methodology of research that has been conducted here is primary as well as secondary research. A proper questionnaire has been put to the people so that internal issues of the company can be analysed. Finally an analysis of the responses and the recommendation is given for the KFC. Contents Executive Summary 2 Contents 3 Introduction 4 Operational Issues 5 Research Methodology 7 Analysis 9 Findings and Conclusions 13 Recommendations 13 References 15 Appendix 16 Introduction KFC is a fast food restaurant chain which specializes in fried chicken. The company is headquartered in Kentucky, United States. This is the second largest chain in the world after McDonald’s in term of number of outlets. It operates in 74 countries in the world. It has more than 5,200 restaurants in US and over 15,000 in the world. It is a part of Yan Brands! It reached Britain in 1965 even before Mc Donald’s or Burger King. It has many competitors in U.S. fast food chains like McDonald’s Burger King, Taco Bell, Wendy’s, Subway, Hardee’s etc. The companies are classified as market order winners and market qualifiers based on their strategic perspectives. Market Order winner is a criterion which consumers use to differentiate its products or services from another firm. It is way through which a firm’s ability to be successful in the market is analysed. It represents those competitive characteristics which makes the customers of the firm choose its products and services over its competitors. The order winners are the competitive advantage which the firm has. They basically focus on one strategic initiative like quality, price/cost, speed, delivery, flexibility, product design, and image and after-market service. Market qualifiers are companies which have minimum criteria to be considered as a source of buying by consumers. It is indicates those competitive characteristics which companies must exhibit so that it can become a viable competitors in the market. It can be seen that KFC is a market order winner. It has high quality products, operational processes, service which is used in the business. KFC faced many troubles by 2005 because of its lacklustre reputation on high streets and that resulted in slumping sales. KFC started to do in depth research to find out a way to rebuild the brand’s fortune. They adopted a new strategy and made it based entirely on taste. This set them apart from the competitors. It bought back both the young people and families into their stores. They also went ahead with new product development which increased the frequency of visits by the customers and resulted in her profits. The brand started to grow steadily from 2006 with a growth of 30% annually. KFC has adapted them according to the market in which they operate. They have changed their menu to keep in line with the domestic market. KFC strive sot develop new menus which would be loved by the customers. For example in India, they came out with vegetarian product to fit it with the local demands. They also strive to maintain high quality in their foods which they serve. They continuously monitor and improve their operational system so that they don’t have to lose out on possible market opportunities. KFC focuses on its operational strategy which is crucial to their success (Chary, 2009, p. 121). Their report will discuss about the different strategic issues and operational issues faced by the operational manager of KFC. Operational Issues The main operational process of the companies like KFC is the delivery system, service it delivers to the customers. Another important operation issue of KFC is the quality control process which it undergoes. Quality control requires that the business must create environment for the employees and management to achieve perfection. This can be done through training personnel, creating new benchmarks for the product quality and testing the products according for standard variations in the product. The quality control at KFC begins from the supply chain like supply of raw materials. They needs to check whether the supply of raw material is than from imported manufactured resources or from local manufactured resources. KFC has many essential and prominent programs of quality assurance and quality control which are conducted by them so that they remain at top in terms of fast-food chain across the world (Gillespie, Jeannet and Hennessey, 2009, p. 321). They analyse product through nutritional quality, supplier quality, and food safety control. They have to ensure Nutritional Quality, Cleanliness Quality, Raw materials Quality etc. They also have to comply with many laws like ISO 9001 Certification. KFC have developed standards which procedures which would minimize the risk of contamination of the products. KFC provides information on the nutritional values to help the consumers to plan on the wholesome balance meal. KFC has a team of food technologist which keeps on experimenting with creative new flavours, with improved healthy options. KFC constantly monitors the performance of the suppliers through the submission of quality reports. KFC food technologies conduct quarterly questions to their in house suppliers and then evaluate the answers (Anand and Joshi, 2001, p. 11). They are closely monitored by Department of Veterinary Service. It is an ISO 9001 certified company. All the Ayamans chickens are killed according to Halal procedures which are certified by Jabantan Agama Islam Selangor. The main attributes of the KFC restaurants excellence are CHAMPS. C is signifies cleanliness, H signifies hospitality, A for accuracy, P for product quality, M for maintenance while S stands for speed of service. This CHAMPS concept encompasses all aspects of quality of service offered by KFC like friendliness of service, good maintenance, accuracy in service order etc. Most of the KFC outlets have always have had issues with the cleanliness of the outlets. The KFC outlets have a distinct distasteful smell at their outlets instead of aroma of freshly friend chicken. This is because the garbage of the restaurants is near the outside or near the entrance which causes the place to emit foul smell. This is an important issue because KFC sees high rate of customers entering per hour. Hence they have to keep up with equal rate of cleanliness across their restaurants. Hence they need to keep the tables unkempt and greasy so that it does not stink. They need to use appropriate mechanism to ensure that it does not violate the established (Hu and Xie, 2013, p. 15). Statistics have shown that the order of KFC takes around 5 minutes to register and another 15 minutes before the order reaches the customers. While their customers take 4.5 minutes to take order from the customers. The Staff at the KFC restaurants face the problem of understand the taking orders. They have often been complained of inhospitable and impolite manner of their staff. In some states the management lack the passion of serving the customers. The manager does not take steps to win over the consumers in case of any issue with them. KFC has been ethically aware of the Quality assurance guide it delivers to the customers via its web page. In its web page it has a list of nutritional values for each of its food items. The clients have become ethically aware of the health conscious of the clients. Hence they have arranged for a balanced diet regime like offering salads with their item. They have also offered national drinks like diet coke. KFC has also changed its food according to the culture of the country (Christian and Gereffi, 2001, p. 443). Like in India, KFC has used many vegetable items on its menu. KFC has started to use purified oil and other organics oil to cook its menus. Sometimes the Delivery system of the company is not up to the mark, and it needs to be taken care of. Because of high traffic jams and peak hours, they struggle to keep up pace and deliver their product on time. This issues are slowly been taken care of. One of the main operational issues faced by KFC is with the issue of Pets control. They use extreme care at terminating the pests which helps to keep their kitchen and god downs clean. Research Methodology In order to carry out a successful research it is imperative to have a thorough study of the various issues that are faced by KFC. This would be possible if a primary research is conducted for analysing the real time data from the authoritative sources of the company. The most popular way for conducting a primary research is through the implementation of the interview questionnaire to a group of employees. The responses of the employees and the other related people are generally recorded and analysed using the appropriate techniques after elimination of the outliers. The use of the well structured questionnaire is essential for the collection of the necessary information through the face to face interview of the individuals. The type of questionnaire that has been selected for the research is an open ended one. This questionnaire is now introduced to the sample of people who have been selected for the survey. The size of the sample in this case is 8. Out of these 8 interviewees, 2 are the customer contact employees who have to deal with the customers, 1 employee is the floor manager of a KFC outlet and 2 employees are the operations managers. On the other hand 3 customers from different age groups like one university student, one middle aged business executive and a retired person has been consulted considered in the sample. On the other hand the support of the secondary data has been taken to set up the background of the entire research process and to find out the different aspects of the business of KFC. In most research processes either a qualitative or quantitative method is taken for the analysis. The questions that are set in the questionnaire are open ended type and hence there is a lot of flexibility on part of the researcher to gather facts which might otherwise have been neglected in the study. In this particular case the qualitative research is being conducted because the different behavioural aspects of the people who are being considered in the research sample are being considered. However, the research has been backed up with necessary information regarding the operations and the businesses under the name of the brand KFC. The research is one is an exploratory manner which means that at each step the study tries to provide a solution to the operational problems of KFC that has not been defined. For this thorough secondary research is essential in the research process. On the other hand the initial parts of the essay where the various issues have been analysed descriptive form of research have been carried out. In the first part of the essay the different operational issues faced by the managers of the KFC business has been analysed to provide the framework for the essay. In the next part the interview responses of the managers, employees and the customers have been analysed to provide an insight into the issue from the 360 point of view. To conduct the secondary research scholarly resources like books, journals and scholarly articles have been extensively used. Analysis The responses of the people included in the sample of study have been recorded and analysed to find out the real scenario of the issues that the operations manager of KFC face. The responses that have been analysed below provide the various aspects of the behaviour of these people and their attitudes towards the organisation and its culture. The responses have been analysed one by one. As far as meeting the expectations of the customers, three of the customers feel that the brand has been able to meet the expectations of an average customer. KFC has also been able to meet the demand of the market and the position of the company in comparison with the competitors is quite decent. There are a number of players in this market but the brand has been able to retain its own set of brand loyal customers. The interview has brought out the fact that there is a set of customers who would prefer to stick to the brand when it comes to the fast food restaurant. According to the customer contact staffs the brand has been able to match the needs because of the unique taste and the recipe with the secret ingredients which have been able to make the customers return back to this restaurant. The floor manager is of the opinion that the food that is served to the customers is always hot and the servicescape including the physical appearance, the music played in the stores as well as the friendly behaviour of the customer contact staff are the reasons why the customers feel at home in this restaurant. The operations managers feel that the freshness of the chicken and the quality of the products that are being served including the potatoes of the French fries and the fresh burger bread are the main reasons why the company prefers to come to the KFC. The children can also be given the chicken as it is not unhealthy and do not contain elements that might be detrimental to the health of the children. In the context of the response to the second question, it has come up that the packaging of the products is an important aspect of the KFC products. The style of presenting the products in buckets provides an opportunity for the customers to carry it away easily and it keeps the products hot. On the other hand the drive-through KFC outlets help the passing away customers to buy the KFC products without dropping in the stores. This has enabled the company to get access to the customers who are running short of time and would prefer to pick up food on their way to a place. The operations managers feel that the company is able to maintain efficiency in the preparation of the fried products. The three customers were of the same opinion. Since the chicken that is served is fresh it is preferred by the young people because it has less fattening ingredients. The method of preparation that the company uses at a fixed time for frying and at a designated temperature and pressure would result in the perfect Kentucky Fried Chicken which cannot be replicated by any other brand. An average outlet of KFC generally has about 50 items in the entire menu which would include the burgers, wraps, French fries as well as the different varieties of chicken like the hot and crispy wings as well as the chicken strips added to the menu along with the other original KFC. The company has opened its operations in various other countries like India, China, New Zealand and Australia. This has helped the country to have access to the variety of markets and customer base. According to the customer contact employees the company has modified their original menu in these countries according to the local palette. Accordingly in India vegetarian recipes have been introduced and in China rice bowl have been incorporated in the menu list along with the chicken. In this manner the company has ensured that KFC in the local markets have something to offer to anyone who is entering into the restaurant. The customers are of the opinion that KFC has a lot of flexibility and they are constantly on the phase of developing and inventing the menu that they serve. The customers have a variety of things to choose from the menu list. This menu list also varies from country to country. According to the operation manager, KFC tries to provide the freshest chicken to the customers. This is done by maintaining a very good inventory system for each of the outlets whereby the stock of fresh chicken is delivered from the storehouse to the outlets at regular intervals of time. The company has also been able to maintain the secrecy in the ingredients that is being used in the cooking of the chicken. Special apparatus is also used for the cooking which makes it easier for the back end staff to deliver the right chicken to the customers. Floor managers feel that the designs of the shops and the area of the service is that the people can feel free to work in the environment and can help out the customers. On the other hand the customers can feel free to move around the stores. The place for disposal of the wastes is also cleaned from time to time to keep the place hygienic (David, 2009, pp. 12-37). The customers are of the opinion that there is very little risk in food offered by the KFC restaurants. The managers on the other hand have faced various kinds of risks over the years. The major risks are regarding the quality of food. In any particular case of the chicken not being of good quality or the recipe has not met the expectation of the customer it might have an effect on the entire brand name and the brand may lose the market share. Again the operations manager has to ensure that the raw materials are supplied to the kitchens at the right time. In this process the freshest chicken have to be sent to the outlets. Since KFC uses a secret recipe, the ingredients containing the 11 secret spices and herbs that make up the special ingredients for the chicken, is to be brought to the KFC restaurants. The managers may also face problems related to the breakdown of the machines and the various kinds of equipments that contribute to the great taste of Kentucky Fried Chicken. The operational risks may also include the issues relating to the availability of the chicken or any activist protest against the inhumane killings of the chicken. According to the customer contact staffs there are several incidents in which an angry customer may spread a negative word of mouth in case that person is not satisfied. In such cases the other customers may have a negative impression about the food that is served by the customers. Again there might be problems due to shortage of staff if there are excess people in the queue. Thus there is the risk of losing customers in case they find that there is a long queue for they might decide on moving on to a different restaurant (Berger and Huntington, 2002, p. 321). The customers are of the opinion that KFC manages the operational issues well because they get more or less the best services. However there are various reasons which might cause discontent in the minds of the people. This may be due to a very long waiting time and food served which is not hot. The operation managers face issues with the quality control where they have to answer to the senior management in case the food that is being served is not meeting the quality standards. The operations managers also have to make sure that the food that is being served is safe. This is because children are also included also come to the restaurant to have the chicken. The customers are of the opinion that the customer contact staffs are quite friendly. But there are several situations in which they try to avoid the matter relating to the restaurant management and blame it on the senior management of KFC. For example, in case of the fast track delivery of the products often it happens that the employees try to maintain the standard queue. If any customer asks for a speedy delivery, then the staffs generally say that it is the rule of KFC to maintain the FIFO method while serving the clients. The customer contact staffs feel that there is a necessity for more and more staffs in the stores especially in the prime locations. The operations managers’ response reflect the fact that company continuously engages the employees in the training and development programmes which are related to the shortening of the delivery time and to make the entire process of preparation of the chicken. Findings and Conclusions From the analysis of the responses provided by the different set of people who are considered in the sample, it is clear that from the point of view of the customers, the company is able to cater to the various markets and the customers are to a large extent satisfied with the products and the services in the KFC restaurants. There are seldom occurrences of issues that may affect the customers and hence in an average KFC restaurant the complaints from the customers are comparatively less. The company maintains a proper team of nutritionist and a good quality control team so that the perfect Kentucky fried chicken reaches the customer. The operations managers have a significant role to play in this context. They are properly trained to tackle the various issues and are trained with the necessary skills and expertise. The company introduced the street snack section in the menu to cater to the greater number of price sensitive customers. The processes in which the company manages the supply chain from the chicken to the final product of KFC, is done in an efficient manner and ensure that high level of accuracy is maintained so that the customers satisfaction is ensured and a uniform quality of KFC product is served in all the stores in all the countries of the world. Recommendations Several innovative strategies have already been taken up by the company. Therefore the company has to ensure that these strategies are implemented in a proper manner and the employees who come in contact with the customers present themselves in the right manner and present a friendly behaviour towards the customers. The operations of the company have to be formulated in such a way that the delivery of the services is done taking the least time and the inventory management has to be appropriate. This means that old stocks of chicken and other materials should not stock up in the storehouses of the company and there should be any stale chicken that should be served in the stores. The company has a very good track record of maintaining the quality and safety of the food served. KFC has to strive for maintenance of this standard through regular testing process and quality checks at regular intervals in the supply chain of the organisation. References Anand, A. and Joshi, V. 2001. Marketing Design: Marketing of Products. [Pdf]. Available at: http://www.idc.iitb.ac.in/~chakku/dm/02_marketting%20design.pdf. [Accessed on: 4 January 2014]. Berger, P. L. and Huntington, S.H., 2002. Many Globalizations: Cultural Diversity in the Contemporary World. London: Oxford University Press. Chary, S. N. 2009. Production and operations management. New Delhi: Tata McGraw-Hill Education. Christian, M and Gereffi, G. 2001. The Marketing and Distribution of Fast Food. [Pdf]. Available at: http://www.cggc.duke.edu/pdfs/GlobalHealth/2010-09-03_Christian_Gereffi_The_marketing_distribution_of_fast_food_Ch30.pdf [Accessed on: 4 January 2014]. David, F. R., 2009. Strategic Management: Concepts and Cases. Upper Saddle River, NJ: Prentice Hall. Gillespie, K., Jeannet, J. P. and Hennessey, H. D. 2009. Global Marketing, 2009 Ed. New Delhi: Dreamtech Press. Hu, W. and Xie, Y. 2013. Comparative Study of McDonalds and Kentucky Fried Chicken (KFC) Development in China. [Online]. Available at: http://www.theseus.fi/bitstream/handle/10024/60257/Xie_Yuanyuan%20and%20Hu%20_Wei.pdf?sequence=1 [Accessed on: 4 January 2014]. Appendix Questionnaire 1. How does KFC try to match up to the expectations of the customers? 2. How far do you think the company designs and serves the products and the shop outlets in order to capture a larger share of the target market? 3. How much are the operations of the business of KFC flexible and agile as per the variety of needs of the customers? 4. How do you feel the company manages the various kinds of operational risks that may crop up in the day to day activities of the business? 5. How does the company take care of the various issues of operations management? 6. How does the company train the employees so that they can deal with the problems arsing out of operational inefficiency? Read More