KFC's Strategies

2 Pages 563 Words

1- What did each of KFC’s three different corporate parents – Heublein, R.J. Reynolds and Pepsi Co – do to contribute to or hinder KFC’s growth and success?

Conflicts appeared as a result of Hublein’s little experience in the fast restaurant market. As a result, there was low quality control, poor service and shortage on new restaurant openings.

R.J Reynolds was also new to the business, so it decided to take a hands-off approach in management.

Pepsi on the other hand had some experience in the industry. It interfered with KFC’s management and replaced it with its own.

2- What are the chief economic and business characteristics of the global fast food industry?

The fast food industry is extremely large and it reported $320 billion in sales in 1997 for approximately 500,000 restaurants in the US. The market growth rate is 5.2% annually. It is considered as mature. The industry consists of numerous organizations and companies, ranging from McDonald’s to Checkers, and it is not limited to the United States.

We can divide the industry into 6 groups of restaurants and chains:

Ø Sandwich chains
Ø Dinner houses
Ø Griller Buffet
Ø Family restaurants
Ø Pizza
Ø Chicken


3- What does a five-forces analysis of fast-food competition tell us about the overall strength/intensity of competitive pressures in this business?

The rivalry among competing sellers: figuring the following:

Ø Product line and services: efforts are made to extend the product offerings, sometimes beyond the traditional, for example when McDonald’s offered chicken burgers. Services are also considered as a competitive edge.
Ø Pricing and promotions: pricing is critical for buyers and many chains use promotions especially when the offerings exceed demands.
Ø Location and store format: is important likewise any business and has a direct effect on clients.

The potential entry of new competitors: which is difficult s...