Kfc Report

TABLE OF CONTENTS

LETTER OF AUTHORIZATION…………………………………………………………………………………. 3
ACKNOWLEDEMENT…………………………………………………………………….………………………. 4
EXECUTIVE SUMMARY……………………………………………………………………...…………………… 5
INTRODUCTION………………………………………………………….……………………………………….. 6
HISTORY……………………………………...……………………………………………………………………... 6
KFC IN PAKISTAN……………………………………..………………………………………………………….. 7
MISSION STATEMENT KFC……………………………………….……………………...……………………… 8
KFC’s VISION ………………………..……………………………………………………………………………. 8
CUPOLA……………………………………………………………………………………………………………... 9
PROFILE…………………………………..……………………………………………………………………......... 9
MISSION STATEMENT—CUPOLA……...……………………………………………………………………... 10
VISION STATEMENT…………………………………...………………………………………………………... 10
MARKET SEGMENTATION KFC………………………..……………………………………………………... 11 • Business Strategy………………………………………………………………………………… 11 • Target Market…………………………………………………………………………………….. 11 • Market Segmentation……………………………………………………………………………. 11 • Benefits……………………………………………………………………………………………. 11 • Competitors…………………………………………………………………………………….… 11 • Push/Pull Process…………………..……………………………………………………………. 12
CORE COMPETENCY…………………………………..………………………………………………………... 12
SLOGANS…………………………………………………...……………………………………………………... 12
KEY SUCCESS FACTORS (KFC)……………………………..………………………………………………….. 13 KFC FACTS ………………………………………………………...……………………………………………… 13
SUPPLY CHAIN ……………………………………………………..……………………………………………. 13

KFC PAKISTAN SUPPLY CHAIN…………………………………...………………………………………….. 15
SUPPLIERS………………………………………………………………………………………………………… 15
GIVING PAKISTANIS ALTERNATIVE DISHES……………………………...………………………………. 16
HALAL CHICKEN OUR PROMISE AND PRIDE……………………………...……………………………… 16
CHICKEN & BAKERY PRODUCTS OF HIGHEST QUALITY…..…………………………………………… 17
PROCUREMENT ISSUES………………………………………………………………………………………… 17
WAREHOUSING AND TRANSPORTATION…………………….…………………………………………… 17
PERFORMANCE OVERVIEW………………………………………...…………………………………………. 17
INVENTORY MANAGEMENT …………………………………………….…………………………………… 18
QUALITY ASSURANCE………………………………………………….………………………………………. 19
QUALITY ASSURANCE CERTIFICATE……………………………………………………………………….. 20
JIT & KFC…………………………………………………………………….…………………………………….. 20
CHANNEL OF DISTRIBUTION ………………………………………………………………………………… 21
PRODUCT LIFECYCLE & VALUE CHAIN OF KFC..………………………………………………………… 21
KFC AND PAKISTAN GROWING TOGETHER…………………………………………………………….… 22 • Customers………………………………………………..……………………………………… 22 • Company …………………………………………………………...………………………....... 22
PORTER’S FIVE FORCE ANALYSIS …………………………….……………………………………………... 22
(BCG) MATRIX………………………………………………………………..…………………………………….23
COMPLEMENTARY BRANDS………………………………………………………………………………….. 24
PACKAGING …………………………………………………………………………………………………........ 25
SURVEY……………………………………………………………………………………………………….......... 25
RECENT ACHIEVEMENT OF KFC ……………………………….…………………………………………... 25
CONCLUSION AND RECOMMENDATIONS………………………………………………………………... 25
REFERENCE…………………………………………………………….…………………………………………. 26

LETTER OF AUTHORIZATION

July 7, 2010

Iqra University,
Main Campus,
Defence View,
Shaheed-e-Millat Road Karachi.

Dear Sir,

The purpose of this assignment is to expose students to emerging technologies and to create an opportunity for students to utilize their professional business communication skills. This formal report will be coordinated with a questionnaire and an interactive face to face discussion to provide a bundled resource on this semester’s project.

At a minimum, our report includes information related to the following:
An introduction to Kentucky Fried Chicken-Current Issues, Threats. Supply Chain Management in Kentucky Fried Chicken.
Systems available for order inventory – What are they? What are they supposed to do? This is a basic information section and provides information related to the journalistic questions.

A conclusion summarizing the main points of the report. A recommendation section outlining the actions required and suggestions for future research and investigation

Sincerely,

Group Members

ACKNOWLEDEMENT

Any accomplishment requires the efforts of many people and this is no exemption so I would like to thank to those people who were the part of this project in numerous ways.

I express my sincere thanks to Dr. Masood, teacher of Supply Chain Management for allowing us to do the report on Kentucky Fried Chicken.

I would like to thank him for initially exposing me to study and making available material and motivational help that was needed time to time.

I also express my deep sense of gratitude and thanks to Mr. Rashid Ahmed Sidiqui who work for Afeef Group for being my project guide and thank him for valuable time he gave me and the immense patience he had in answering even the seeming trivial queries & continuance support in better understanding the study with his excellent ideas throughout the project.

EXECUTIVE SUMMARY

On June 8, 2010 Dr. Masood assigned us a project. We are asked to explain how KFC’ supply chain work within & outside the organization and how it deals with their franchises in all over Pakistan specially in Karachi and how supply chain management work for transport, warehouses, quality, demand forecast, customer satisfaction and future improvement . Even though where are KFC’s warehouses in Karachi and how their franchises order the inventory?

The Services sector is one of the fastest growing industries in Pakistan and we had the opportunity to study the supply chain management practiced at KFC, which was previously named as Kentucky Fried Chicken.

The project reveals KFC’s background, their vision, mission, and their coverage area. This project also focuses on company’s business overview, the kinship partners and their business centers. The main focus of the project is to demonstrate how KFC plans for future production, use of source, makes its product, and delivers it to the customer and the criteria to return the delivered products.

INTRODUCTION

Kentucky Fried Chicken:

KFC Corporation, based in Louisville, Kentucky, is the world's most popular chicken restaurant chain, specializing in Original Recipe, Extra Crispy, Twister and Colonel's Crispy Strips chicken with home-style sides.
Every day, nearly eight million customers are served around the world. KFC's menu includes Original Recipe chicken -- made with the same great taste Colonel Harland Sanders created more than a half-century ago. Customers around the globe also enjoy more than 300 other products -- from a Chunky Chicken Pot Pie in the United States to a salmon sandwich in Japan.
KFC has more than 11,000 restaurants in more than 80 countries and territories around the world. And in quite a few U.S. cities, KFC is teaming up with sister restaurants, A&W, All-American Food, Long John Silver's, Taco Bell and Pizza Hut, selling products from the popular chains in one convenient location.

[pic]

HISTORY

Harland Sanders (1952) formed “Colonel Sanders Recipe Kentucky Fried Chicken” by 1960 more than 200 take-home retail outlets and restaurants (franchises) across the U.S. He sold his business to Jack Massey and John Young Brown these 2 businessmen concentrated on budding KFC’s franchise system across the U.S. By the late 60’s strong grip in the U.S., attention for international markets. In 1969 joint venture with company in Japan, and rights to operate franchises in England were acquired. By 1971, KFC had established 2450 franchises and 600 company-owned restaurants in 48 countries. In 1971 KFC was acquired Heublein, Inc. (business for producing alcoholic beverages) little know-how in restaurant business. Conflicts were started between Colonel Sanders and Heublein management. Sanders upset over poor quality control and restaurant cleanliness. Heublein sent in a new management team to redirect KFC’s strategy “back-to-the-basics”-strategy. New restaurant construction stopped until existing restaurants could be upgraded and operating problems removed. This strategy enabled KFC to gain better control of its operations (soon it was again aggressively building new restaurants) R.J. Reynolds Industries, Inc.

KFC IN PAKISTAN

KFC formerly known as Kentucky Fried Chicken is the venture of Gray Mackenzie Restaurant International Ltd. Founded first by Colonel Harland Sanders; KFC is branded for its fried chicken. More than 10,000 outlets in the World. In 1996 KFC started its first restaurant in Pakistan at Karachi. Mr. Rafiq Rangoonwala CEO of KFC Pakistan. Presently KFC has providing employment to over 1200 Pakistanis. And around 6000 individuals directly dependant on KFC Pakistan. The Government of Pakistan receives over 10 million per month from KFC Pakistan as direct taxes.

Eating out is a part of our culture. Capitalizing on this habit various outlets have been established offering toothsome delicacies with comfortable lounging arrangements. However, one has to go to a specific outlet to get preferred food. Going to distant locations for gastronomic adventures is inconvenient, time-consuming and at times uncomfortable. Cupola has come up with outlets located at easy-to-reach locations in different areas. It promises consistency of recipe, quality, cozy environment and above all superior quality at affordable price.

MISSION STATEMENT KFC
KFC Management feels so strongly about recognition that it's near the top of their corporate mission statement. "Recognition: we find reasons to celebrate the achievements of others and have fun doing it," is right up there with "Customer Focus" and "Belief in People." [pic] [pic]
KFC’s vision is :

“ To bring people of all ages, races and backgrounds together to enjoy’ Soul Food’ – ‘proper food at reasonable prices’ – within bright and fun interiors.”

KFC is designed to be perceived as a fun and inclusive brand.

[pic]

Presently KFC is branched out in nine major cities of Pakistan (Karachi, Lahore,
Rawalpindi, Faisalabad, Multan, Peshawar, Sialkot, Hyderabad, and Islamabad) with 45 outlets nation-wide. Opening the first KFC outlet in Gulshan-e-Iqbal,
Karachi in 1997, and KFC wore the title of being the market leader in its industry.
Serving delicious and hygienic food in a relaxing environment made KFC everyone’s favorite. Since then, KFC has been constantly introducing new products and opening new restaurants for its customers. In Pakistan totally Chicken buy from Pakistani Poultry Forms, and also this Chicken is 100% Halal.

CUPOLA

Cupola is a Dubai based multinational company involved in several business including, oil gas exploration, plastic cards, retail markets and food franchising. Cupola holds the master franchise rights to operate KFC in Pakistan.

PROFILE

Rafiq Rangoonwala, Chief Executive Officer, Cupola Pakistan is a dynamic personality with a business degree from the US. He has been associated with companies like Pepsi Co and KFC during his 15-year stay in US. Under his leadership Cupola Pakistan has taken lead in many areas of community services which were untapped. He strongly believes in moving forward and allowing local communities to benefit from the business accomplishments. Social welfare, environment protection and education are the areas where the company contributes. He has won several awards for his extraordinary work in the field of marketing, sales and corporate social responsibility.

MISSION STATEMENT-- CUPOLA

Our mission is to harness and reap the potential of the rapidly developing markets of the Arabian Peninsula and South Asia. We apply a regional focus to allow us to reap the potential of rapidly expanding markets in the Arabian Peninsula and South Asia. In the mature capital markets of Europe and the United States, we are well regarded as innovative and creative niche investors. We believe in the minimization of risk: through the depth of our senior management and the quality of our professional staff; through exhaustive and through an emphasis on pre-feasibility.

What everyone in Cupola shares is an almost obsessive drive for quality, an active consciousness of the team approach and a commitment to our collective success. We strive continually to improve the tangible and intangible returns for all our stakeholders.

VISION STATEMENT

The vision statement of Cupola is:

“Cupola creates value through change, challenging existing paradigms and by applying vision, innovation and skilled execution. We seek opportunities for investment where others do not look and we examine these opportunities with open-mindedness, thoroughness and hard-headed practicality.”

Market Segmentation KFC:

Business Strategy :
KFC fast-food chains are currently under the restaurant division of PepsiCo Incorporated. Some major threats include the changing attitudes of society toward healthier eating habits, KFC has more than 9,800 outlets located in 77 countries. In marketing, KFC restaurants are not restricted from locating within close proximity of other KFC restaurants. There are two alternative strategies for KFC. The first strategy involves keeping PepsiCo beverage division and snack foods division together, and a divestiture of PepsiCo restaurant division; selling Taco Bell, Pizza Hut, and KFC.

Target Market:

KFC targets the young generation, as wel as kids as here in this country the youth and children are more towards eating out and are more energetic. It targets the early single segment that is the upper class.

Market Segmentation:

Previously they were focusing on single segment that was through Niche Marketing by offering “Combo Deals”. Now they are focusing more on other classes as well. They are dealing in masses by introducing value deals; most recently introduced “Zinger Junior”.

Benefits:

Colonel’s value combo meals introduced previously were expensive and so there were less sales but through their recent offers, they have increased the sales by offering low prices.

Competitors:

• Direct competitors: The firm claims Pizza Hut, Burger King and McDonald’s as their direct competitors because of their existence in the fast food supply chain and because of their delivery speed.

• Indirect competitors: KFC indirect competitors include Subway and Dunkin Donuts because of their price and their existence as international brands in the fast food market. They also consider the local outlets selling burgers as their indirect competitors that are not a source of real threat like Mr. Burger. Unlike what one would expect, KFC has little rivalry with similar fast-food chains in Pakistan. The primary reason is that their core products are different, as in they sell different kinds of fast foods with very different tastes and styles.

Push/Pull Process:

Pull processes are commence by a customer order while the push processes are initiated by the expectancy of customer order. KFC use both pull as well as push process, to a certain extent push is created and after that level the pull created by the firm did its task. One important question can be asked to what level that push can be applied. The products will be pushed to the restaurants where the customers automatically demand that product and hence a pull is created.

CORE COMPETENCY

Perfecting its secret recipe of 11 herbs and spices in 1939, KFC has come a long way, with over 10,000 outlets in the world; KFC has maintained its title, for the last 60 years, of being “The Chicken Experts”. Kentucky Fried Chicken has become KFC. Does anybody know why? We thought the real reason was because of the "FRIED" food issue. It's not. The reason why they call it KFC is because they can not use the word chicken anymore. Why? KFC does not use real chickens. They actually use genetically manipulated organisms. These so called "chickens" are kept alive by tubes inserted into their bodies to pump blood and nutrients throughout their structure. They have no beaks, no feathers, and no feet. Their bone structure is dramatically shrunk to get more meat out of them. This is great for KFC because they do not have to pay so much for their production costs. There is no more plucking of the feathers or the removal of the beaks and feet.

SLOGANS
KFC in its advertisements says;

“Nobody does chicken like KFC”

“We do chicken right”

KEY SUCCESS FACTORS (KFC): KFC is the Market Leader and Worlds largest chicken resturant chain and third largest fast food chain in 2009.

• location • effective store management / cleanliness • key to continued growth was to find, motivate and retain hardworking andenterpreniual managers and franchises around the globe.

In addition to short term profits, store manager were also responsible for building local public relations, maintaining employee morale, developing customer goodwill, keeping tab on the competing chains and creating a legacy of special chicken cooking receipe. overall marketing image also becoming increasingly clear...

KFC FACTS

• Presently KFC has provided employment to over 1200 Pakistanis, which adds up to 6000 individuals directly dependent on KFC Pakistan. • The Government of Pakistan receives over Rs.10 to 11 million per month from KFC Pakistan as direct taxes. • 95% of all food and packaging material used in KFC Pakistan is procured locally, which sums up to a purchase of over Rs.35 million per month. • Each new outlet developed by KFC Pakistan costs approximately Rs.40 million, which is a huge amount for our construction industry. • Annual turn over in Pakistan 2.5 billion. • KFC doesn’t buy its supplies from Pakistan

SUPPLY CHAIN
We are unswerving to providing our customers with safe, delicious meals and operating restaurants that meet the highest food safety standards. This obligation is at the heart of our operations and our supply chain management, and is evident in every aspect of our business - from raw material procurement, including livestock and produce, to our restaurant food preparation and delivery.
While Supply Chain Network Manager Keeps three point in his mind during the whole process for finished goods are as follows: 1. Animal Welfare 2. Supplier Code of Conduct 3. Avian Influences

Animal Welfare:

We have a track record of leadership in animal welfare. Our animal welfare leadership program began with the formation of KFC's Animal Welfare Advisory Council. The Council, which also provides advice to our KFC outlets, helps us to continuously research new methods for both welfare advancement and viability that will ultimately determine the adoption of improved practices. For example, through The Council, stun methodology and technique are constantly being reevaluated. Our suppliers are also an integral part of this collaborative study and evaluation.

Supplier Code of Conduct:

Our suppliers are selected, assessed and rewarded through the Supplier Tracking and Recognition (STAR) system. It is a meticulous, industry-recognized audit system that sets and monitors standards for all of our brands' key suppliers. All of our restaurants, regardless of their ownership structure or location, must adhere to our strict food quality and safety standards. The guidelines are translated to local market requirements and regulations where appropriate and without compromising the standards.

Avian Influenza Response:

According to the World Health Organization and CDC properly cooked chicken is safe to eat. Nevertheless, we have taken added precautions with a rapid and active response plan in the event that an external disease threatens to enter our food supply. In 2005, we developed an aggressive global plan after several outbreaks of Avian Influenza impacted our supply chain.

KFC PAKISTAN SUPPLY CHAIN

Supply Chain is one of the significant factors for the smooth functioning of any business. And when we are talking about fast food business with KFC’s as the subject of the study it can expected a Supply Chain model of one of the highest precisions. It is this unmatched Supply Chain Structure, which not just ensures on time delivery of raw materials and supplies to KFC but also enables it to cut down on its cost and maximize profitability along with maintaining highest quality standards of its products. The level of commitment of KFC can be gauged from the fact that even before it set up its first restaurant in the country it infused Rs 400 Crore to set up its delivery mechanism. KFC’s initiative to set up an efficient supply chain and deploy state-of-art technology changed the entire Pakistani fast food industry and raised the standards of performance to international levels.

As already mentioned, KFC had been working on its supply chain even before it opened its first joint in the country. KFC, an international brand which was trying to make inroads into the country, developed its Pakistani partners in such a manner that they stayed with the company from the beginning. The success of KFC Pakistan was achieved by sourcing all its required products from within the country. To ensure this, KFC developed local businesses, which can supply it highest quality products. Today, KFC Pakistan works with different suppliers on a long term basis and several other stand alone restaurants for its various other requirements.

SUPPLIERS

As KFC cannot compromise on the quality of food they provided, so that’s why reliable suppliers are very much important to them. There are two categories of supplies: The Dry Food supply and the Frozen Food supply. For the Dry food like “burger buns” KFC have established their own warehouses and dry- stores for South Region. Whereas for North Region, they get dry food from the vendor “Dawn Bread”. For the Frozen food “Chicken “they have agreement with K&N Chicken for supplying Chicken and fish is supplied by Thailand and spices are supplied by Dubai to all over restaurants in Pakistan.

Supply chain of food from field to plate

A simplified supply chain from the farmer to the plate would be as follows:

[pic]

GIVING PAKISTANIS ALTERNATIVE DISHES

My experience in the food business shows that Pakistanis love to eat out with families is part of their evening entertainment. Though, the older generation still loves to eat traditional spicy foods the younger generation wants a change. Fortunately chicken is preferred over red meat by many and we have capitalised on this preference. Chicken variants attract young and old equally. On top of this they get same taste quality at all the outlets. Across Pakistan we have 62 outlets with the largest number of outlets located in Karachi. The success in the northern part of the country has encouraged us to open more outlets.

HALAL CHICKEN OUR PROMISE AND PRIDE

Initially people were a little concerned whether the chicken served at KFC outlets is Halal (slaughtered according to Shariah) as some quarters were spreading disinformation. We just cannot think of serving any item which is not Halal or prepared in oil which is also not Halal. K&N, the largest vendor of prepared chicken in Pakistan supplies us chicken. They are not only very particular about slaughtering but also follow stringent quality standards be it selection of chicken or its processing. The birds are slaughtered manually but all other steps are performed on an automated system, with the least human contact. Workers also wear appropriate dresses, masks and gloves to avoid contamination.

CHICKEN & BAKERY PRODUCTS OF HIGHEST QUALITY

K&N has an elaborate infrastructure for raising chickens. The chicken feed is of international standard and superior quality. Birds are kept in hygienic environment and are vaccinated regularly. This allows us as well as K&N to maintain consistent quality and weight. A quarter of fried chicken served at any outlet is of the same weight, size and quality. The spices used have the same taste and quality. That is the reason you go to any of the outlet you will find the same crispy and tasty items. We use superior quality vegetable oil produced in Pakistan. Therefore, it is not fair to classify our products under 'junk food'. In fact our carefully prepared products are nutritious.
While we buy chicken from Pakistan's leading chicken supplier, we make all bakery products in house. At each outlet machines have been installed to prepare the best bakery products. We take special care and are proud to tell customers that our bakery products are oven-fresh and that is the reason one can clearly tell the taste of our bakery products from those sold elsewhere. We also sell our bakery products under the brand name of CASA.

PROCUREMENT ISSUES

All the raw materials like chicken are bought from value chicken, vegetables from Monsalwa and they use canned fruit for salads. The machinery is all automated and is in conformance to international standards. KFC officials often visit the outlets without giving prior notice in order to check the conformance to quality standards and procedures. Moreover, Food Inspection Teams from Health Ministry visits twice a year to ensure Hygienic Conditions at the Kitchen.

WAREHOUSING AND TRANSPORTATION

KFC products transportation is handled by Afeef Groups. Their warehouse in Karachi is situated in KORANGI industrial area and insurance facility is also provided for the KFC products. Mobiles vans are used for transportation.

PERFORMANCE OVERVIEW

KFC has taken advantage of all these excellent investment opportunities that Pakistan offers for franchising and has expanded and penetrated the market a lot. KFC has adapted to the legal and political environment and conditions of Pakistan. The Pakistani culture has also molded the operations of KFC in Pakistan. All the outlets of KFC in Pakistan present Pakistani food culture. KFC has displayed banners that it servers Halal food all over its outlets which represents Pakistani culture. They also offer families’ deals as the people are very close to their families and like to have food with them. KFC has also brought some changes in the culture of Pakistan. The most significant is the way it has changed the eating habits of the local population. People now are aware of unhygienic conditions that prevail in some of local restaurants. And KFC has also brought the idea of self-service in Pakistan.

INVENTORY MANAGEMENT
Inventory control system allows management to match the raw material usage in each location with materials in inventory. KFC runs a lean stock control to save money. Ongoing communication between the central Restaurant Supply Planning team and individual restaurants helps to manage the stock more effectively. A mixture of employees who previously worked in the restaurants, together with specialist stock controllers, makes Supply Planners work with the new stock control system, to ensure enough raw materials, e.g. chicken, potatoes, fish, etc, leave the KFC distribution centers. This ensures that restaurants can produce the meals required for the level of demand forecasted. A forecast is an estimate of future sales of finished products.

|[pic] |
| |
|Technology used: |
|[pic] |

The system installed in all KFC locations gave an urgently needed inventory control solution to the enterprise. The Recipe Scaling and Food Cost features with vendor purchasing management was installed in all KFC branch locations. These locations were connected via VPN using ADSL technology. The head office is able to control and oversee all operations on the ground.
Furthermore the solution includes workforce management and a payroll feature.
KFC operations manager states that the inventory control system allows management to match the raw material usage in each location with materials in inventory, preventing foul play from employees which was a problem before the integration of the new system

• PoS system: POS (point of sale) is the physical location at which goods are sold to customers. A point-of-sale (POS) software terminal is a computer replacement for a cash register. More sophisticated than traditional cash registers, a POS software system includes the ability to track customer orders, process credit cards, and manage inventory. At all KFC stores in Pakistan PAR Technology Corporation’s Point of Sale system is used including both software and hardware. PAR provide the tools that KFC Pakistan need to increase order accuracy, improve speed-of-service and raise customer satisfaction levels with software solutions that can span the entire enterprise from the front counter to the back office and beyond to integrate the total organization. PAR uses reliable Dell hardware to run its back office computers to unleash the power of business. KFC Pakistan uses a complete package of Point of Sale system to keep record of every transaction occur. All KFC Pakistan stores nationwide use PoS and at the closing time of the store they send a complete transactional record of that day by using PoS through internet. Because of this head office maintain their accounts very well and take quick decision on the behalf of these records.

QUALITY ASSURANCE

Quality control means monitoring the quality weight, strength, consistency, color, taste, reliability, finish, or any one of myriad of characteristics to ensure that the products meet the international standard. For this purpose there is separate department in KFC which is responsible for the quality control. This department satisfying the customers needs for the quality, and differentiate the organization from the competitors and attract the large number of customers. KFC assure that the Pakistani outlets operating under the KFC franchise offer products of international quality standard. The outlet decor and signage are identical. We have made the highest investment in developing our human resource. We often tell the outlet workers that the customers pay our salaries. Therefore, we take extra care of each customer whether buying only a drink or every item that we have to offer, a solitary customer or a group of dozen.
The duty of this department is check the raw material that whether it is according to the standard or not. Department check the quality each and every step till the final product. Because according to the Manager of KFC the early detection of defective part of process can save the cost of further work on the product.

QUALITY ASSURANCE CERTIFICATE:

Director General (Research) has issued quality assurance certificate for the chicken used by KFC.

[pic]

JIT & kfc

JIT is a form of providing supplies for customers, as the name suggests, just in time. It involves not even being in possession of the raw materials needed to fulfill an order until that order is placed and yet they are still capable of filling orders in a short period of time. KFC is another example of a JIT system wherein KFC doesn't begin to cook its orders until a customer has placed a specific order.
CHANNEL OF DISTRIBUTION

KFC has only one channel of distribution i.e. direct where the goods are transferred to the consumer directly. KFC has no middlemen. KFC does distribution of consumer goods directly to the consumer. KFC also does distribution of services to the consumer like parking, sitting, home delivery, etc. KFC gets Wheels! KFC launched its first mobile unit, which took the streets of Karachi by storm. The mobile unit has been designed to cater to the needs of those who are on the go, and have little time to stop by at restaurant. It also provides a unique convenience of enjoying the delicious KFC offering anytime, anywhere, thus making fast food truly fast and convenient. KFC intends to further develop its mobile network nationwide through more such units. KFC does intensive distribution on its outlets.

PRODUCT LIFECYCLE & VALUE CHAIN OF KFC

KFC is a very strong chain of fast food restaurants with more than 10,000 restaurants all over the world. Being in “Maturity Stage” it has high opportunities of introducing its new products and deals. In Future it will be expanding its chain by introducing more outlets in Pakistan as well as in other countries.

• Believe in value creation. • Provide ultimate choice of quick service restaurants for consumers • Won the hearts of millions of Pakistanis

Future outlook:

It is not a cliche but a fact that Pakistan enjoys enormous economic potential. A population of over 165 million people offers an enormous market. People are loving and hardworking and ready to work for the collective welfare. We have been encouraged by our customers to go to smaller towns. We are not only doing business but also investing in community welfare because we want to create a better Pakistan.

KFC AND PAKISTAN GROWING TOGETHER

Customers :
KFC’s customer market consists solely of the consumer market.
KFC’s products are bought by individuals (males, females, singles, kids and families).
Therefore, the product range KFC offer should appeal to as many people within this consumer market as possible, to ensure that the maximum amount of products can be sold.

Company :
KFC is a multinational fast food chain company that has successfully established itself in the Pakistan market. It has a long history, going back to where Colonel
Harland Sanders created its distinct recipes. The KFC brand is well known in
Pakistan, which makes it a powerful marketing tool to use against competitors.
Currently, KFC is under massive attacks from animal organizations, questioning the way KFC’s suppliers are threatening the chicken, before they got slaughtered.
Anti-KFC campaigns are affecting KFC’s brand image in a negative way and result in direct dollar losses, as less people are consuming KFC chicken.

PORTER’S FIVE FORCE ANALYSIS

Entry:

For the current Pakistan market for fast food, it is not difficult for a fast food restaurant to enter the market. However, it would be extremely difficult to take over already running major fast food chains' dominancy in Pakistan or even make a significant amount of profit. While there are enough people in urban Pakistan for any restaurant to survive, KFC holds the first-mover advantage into the 'non-veg food specialty food segment' that gives them free reputation. Customers, especially children who are used to going to KFC as a treat or reward from their parents or grandparents, are not going to want to go to other restaurants they’ve never heard of. The brand name is already established. Also, there is already a large variety in the numerous western-style dining places in Pakistan, such as McDonald’s, Pizza Hut, Domino's and Subway, and any new fast-food entrants would just be presenting something very similar to what’s already there. While small Neighborhood restaurants generally have low barriers to entry, these are the barriers to entry for similar restaurant businesses to enter the fast-food chain market.

Buyer/Supplier Bargaining Power :

The customers of KFC, especially as individual buyers, have almost no bargaining power because if only one customer threatens to no longer eat at KFC, the store is not going to lower its price because the cost of losing one customer is not very great. The suppliers, like the buyers, have very little bargaining power. In terms of food, KFC, upon its move into Pakistan, urged many of its U.S. suppliers to also extend branches into Pakistan. KFC also began helping local suppliers by giving them technological support to improve their products. This is a brilliant strategy because the supplies that KFC would otherwise need to import from the U.S. can now be obtained domestically, and if the U.S. suppliers decide to raise their prices, KFC can easily switch to the local suppliers..

(BCG) MATRIX

Question Mark:

Currently KFC have launched a new product in the market. They have also tried to come into the beverages market by launching its new brand of shakes called KRUSHERS. As it is a fairly new product it comes in the category of the Question Mark in the BCG Matrix. It has a low market share thus brings low revenue. KFC is advertising a lot to popularize this product so there is a lot of expenditure on it. This product is individually not bringing any profits and is a cash drain for the company. Company may decide to completely remove this product from the market if it does not do well soon and start bringing in revenue.

Dog:

KFC’s Veg Thali comes under this category. Although company had launched this product much earlier, it has still failed to become a success. As KFC is known more for its non-veg food, this also results in low demand for this item. It has a low market share and although low on expenditure (as company does not spend on its promotion), it does not bring in much revenue as demand is low. The product is mostly CASH NEUTRAL.

Cash cow:

KFC’s Chicken Bucket is the most successful product of the company. It has the highest market share amongst all the other products. It has good demand in the market and brings in huge sales revenue. The development and other expenses are also low and thus this product is a CASH SIRPLUS for the company.

Star:

The star product of the company is its crispy Boneless Chicken. It has a high market share and brings in high revenue. But it also has high developmental expenditure involved. The profit therefore is generally not very high brought in by this product. This product is CASH NEUTRAL for the firm. The company is trying to make this product a cow as well, by reducing the expenditure.

COMPLEMENTARY BRANDS

Pepsi & Nescafe.

PACKAGING

KFC makes its own disposable packaging. If they need promotion Pepsi contributes in improving the packaging quality. KFC does family packaging. They use paper material for packaging to avoid health hazards and environmental pollution.

SURVEY

Survey Research : KFC conducted survey through questionnaires and informal interviews.
Questionnaires were distributed in the KFC restaurant, different offices, open market and Bazars. They went out in the market to know people’s likings and disliking. RECENT ACHIEVEMENT OF KFC

The Stevie International Business Awards New York, U.S.A. – September 14, 2009 – Cupola Pakistan has won its second consecutive International Stevie Award for Pakistan in the Sixth Annual International Business Awards ceremony held in New York. The International
Business Awards is regarded as “The Business Oscars” And is the only global, business awards program honoring extra ordinary performances of corporations in the various business initiatives. KFC Pakistan has won this prestigious award for the second year running and has done so promoting a message that is very near and dear to our hearts.

Conclusion and recommendations:

Based on our research of KFC supply chain, we can safely suggest that KFC should revise its product prices. This can be done by re evaluating their supply chain and revising some process and making them more cost efficient. There is still a lot of opportunity for KFC to increase their number of outlets. KFC should introduce more variety of products. We can also conclude that they need to make sure that their restaurants offer a diversified menu, provide their customers with quality food, excellent service and restaurant cleanliness. KFC should always listen to their customers and try to follow the new trends on the market in order to fully satisfy their customers.
Concerning the pakistani market, they should always keep an eye at competitors and see if possible mergers or acquisitions could be made. PizzaHut and Mcdonalds has been faster than KFC when they acquired Pakistan, which could have really helped KFC regainits loss market share and reduce competition.

Reference

• Mr. WASIF GHAZI, Head Supply Chain KFC

• Mr. RASHID AHMAD SIDDIQUI , warehouse manager, KFC

• www.kfc.com

• www.kfcpakistan.com

• www.wikipedia.com
-----------------------

Customer

Foodservice operator

Bargaining Power of Customers

Bargaining Power of Suppliers

Competitive Rival within an Industry

Foodservice supplier

Farmer/ manufacturer

KFC

Threat of New Entrant

Threat of Substitute Product