KFC

KFC

KFC

Introduction

KFC operates in 74 countries and territories throughout the world. It was founded in Corbin, Kentucky by Colonel Harland D. Sanders. In 1964, the Colonel decided to sell the business to two Louisville businessmen. In 1966 they took KFC public and the company was listed on the New York Stock Exchange. In 1971, Heublein, Inc. acquired KFC, soon after; conflicts erupted between the Colonel (which was working as a public relations and goodwill ambassador) and Heublein management over quality control issues and restaurant cleanliness. In 1977 a "back-to-the-basics" strategy was successfully implemented. By the time KFC was acquired by PepsiCo in 1986, it had grown to approximately 6,600 units in 55 countries and territories. Due to strategic reasons, in 1997 PepsiCo spun off its restaurant businesses (Pizza Hut, Taco Bell and KFC) into a new company called Tricon Global Restaurants, Inc.

KFC, being one of the world's most recognizable brands, has its own internal strengths and weaknesses and external opportunities and threats, which are identified and analyzed below.

'Kentucky Fried Chicken Corporation (KFC) was the world's largest chicken restaurant chain and the third largest fast-food chain in 2000' (Krug 2001, cited in Thompson and Strickland 2003, p. C-203). The statement suggests that the brand-name image or the company reputation of KFC is very strong. Such buyer goodwill can be classified into valuable intangible assets, which an internal strength itself is giving KFC enhanced competitiveness. Also, KFC was one of the first fast-food chains to go international in the late 1950's and was one of the world's most recognizable brands. This means that KFC had a high degree of organizational agility in gaining wide geographic coverage and had a strong global distribution capability. Such competitive capability can be identified as KFC's internal strength. KFC's international strategy was to grow its company and franchise restaurant base through several high-growth markets. This suggests that the company was able to evaluate the right market opportunities available of serving additional customer groups or expanding into new geographic markets and market openings to extend the company's brand name or reputation to new geographic areas.

The fast-food market in the United States was highly competitive and the declining margins in the fast-food chains reflected the increasing maturity in the US fast-food industry. As an alternative to domestic expansion, many restaurants began to expand into international markets. The early entry into international markets placed KFC in a strong position to benefit from international expansion. Latin America was one of the international markets KFC focused on. After 1990 it took a very aggressive strategy by opening company-owned restaurants and by expanding its franchise operations. Mexico is the strongest presence of KFC in Latin America, where most of them are company-owned, mainly because of the lack of a law protecting patents, information, and technology before 1990. Another market of great importance is Brazil - Latin America's largest economy and mainly unexplored by KFC.

Key Industry Success Factors

Key industry success factors (KISFs) by their very nature are so important that all firms in the industry must ...