K.F.C Strategy

The need for strategy, in order to expand its existing product in very promising markets for KFC is very essential. KFC, along with McDonalds, and other major fast food chains have dominated the American continent as well as else where. Since the 1950 's when the founder of KFC had a dream, of building an empire in the fast food market, the company has undergone lots of changes. The company has changed ownership, it has taken over from Pepsi and passed over to Tricon, which owns Pizza hut, Taco bell and others. Nowadays, KFC, still dominates the chicken fast food industry while has stores in more than 100 countries operating vast profits. (De Witt 'et al.2004a) Although, due to increased conditions of life, and differentiation of the life style of the population around the world, there is still a lots of room for expansion, especially in countries with large population, and high development rate. One of the most significant locations for expansion is considered the Latin American countries, which the geographical proximity to U.S.A., along with their development rate, and amount of population seem to be very attractive for many companies. ( Washington Times, The (DC), Aug 09, 2005Item: 4KB20050809110639 a) Countries like Mexico, Brazil, and Argentina have a sum of 3 hundred million population, amount equal to the United States. Such resources, regarding population and natural benefits couldn 't miss the attention of any company, while the demographics shown very suitable conditions for development. ( Chesterton Blumenauer (Binswager)by Steve Bergsman )

Those countries after difficult times, struggling to establish an economic and governmental stability, seem to find their way and create favourable conditions for progress. ( Washington Times, The (DC b), Aug 09, 2005Item: 4KB20050809110639) So far KFC, is well established in Mexico, but doesn 't do so well in the rest of the countries coming third in total restaurants in Latin America. (De Witt 'et al 2004 b) KFC Company has to make the analogous research in the markets of these countries, in order to identify the most suitable ones, to establish its brand among the biggest fast food chains.

Using the B.C.G. matrix and S.W.O.T. analysis we will try to analyse what is the current position of the company and identify the potentials that the company has in the market. B.C.G. is a tool that analyse the position of the business in the market at some moment in time, and reveals the potential market share and market growth that the company hold 's. This doesn 't mean 's that all these figures and allocation of the company between the matrixes is truth. The matrix analysis allocates the company as one unit, and doesn 't reveal the share and growth of all of its products. So using this technique for planning, is essential, but not reaches in great depth of the market and company 's information.(http://www.marketingteacher.com) As has been mentioned and above, SWOT is and internal analysis of strengths and weaknesses, and an external one of opportunities and threats. This should be kept simple, and realistic regarding the businesses conditions. The people conducting the SWOT should be very careful while this can be very subjective, and mislead in wrong conclusions. This matrix can be used for diagnosis of the present condition of the business, and use the information to draw the plans for the future. (http://www.marketingteacher.com)

BCG Matrix

Relative Market Share in the Industry 20 1 0.5 0 KFC

Industry
Sales 0
Growth

-20

KFC Growth rate:4%
KFC R.M.Share :55.2%
(De Witt & et al 2004 c)

Regarding to the BCG Matrix analysis system, the KFC, at the particular moment were the information 's been gathered, considered as star. Which means that the conditions are favourable for market penetration and product development. Analysing that little more thorough, we will see that KFC has the opportunity to penetrate the Latin America market using their existing products along with a range of products suitable for the nutrition habits of these countries. Before doing so tough, the company has to make a very good research regarding the culture of the countries, in order to identify which are the dishes that sell the most in those countries, which is the daily schedule of the potential clients, how much they are willing to spend in food, how much profit they likely to make and so on. A very reliable method of identifying all these information 's is the pest analysis, which can reveal all the political, economic, socio-cultural, and technological factors involved, and affecting the market. In the particular situation though, SWOT analysis should take place first, while pest it requires more thorough examination of details involved, whereas SWOT is more subjective, and broad.

Strengths : A firms strengths are its current resources and capabilities that can be used for a developing a competitive advantage.

· Good reputation among the customers & Strong brand name.
· Competitive advantages such as patents in fried chicken.
· Resources such as assets and people.
· Experience in expansion, and knowledge how to apply data.
· Financial gains, and profits form its current operation.
· Location and geographical suitability - Technology systems, communications within the company.
· Isomorphism of each outlet, which standardize the processes of operation and quality of product, strong culture.

Weaknesses: A firms certain absent strengths.
· The mass market in Latin America is under economic crisis.
· People make a turn in more healthy options.
· The elements of culture: *Language *Religion *Values *Attitudes *Manners and Customs *Material culture *Aesthetics *Education *Social Institutions Language can be categorized into verbal and non-verbal one.
· The particular market is dominated with competitors in fast food industry, such as McDonalds, Burger Kings, and local ones, which already start to expand in the area.
· The "isolate" of the rest market, by selling mainly chicken.
· Political stability, and inflation.

Opportunities: The external environmental analysis, which may reveal opportunities for growth and profit making.

· Good access to natural resources through the trades agreement and access to distribution resources

· Cheap resources such as building rates and large scale of population at least in the three major countries. ü Argentina : Population: 34 million, Strengths: Economic stability and a stable currency; low inflation; high literacy rate; long a favourite of international investors Prices (Buenos Aires): New CDB rents $34 to 50 p.s.f./yr.; purchase $280 to $380 p.s.f.(Source: Chesterton Blumenauer (Binswager c)

ü Brazil Population: 157.8 million Strengths: New "open door" policy for business; tremendous natural resources; huge labour and consumer market; stable economy. Prices (Sao Paulo): New CBD rents $40 to 45 p.s.f./yr.; purchase $300 to 330 p.s.f. (Source: Chesterton Blumenauer (Binswager d) ü Mexico Population: 95 million Strengths: Proximity the U.S.; good national land transportation; laws expanding ownership rights of foreign companies; current presence of many foreign investors. Prices (Mexico City): New CBD rents $25 to 30 p.s.f./yr.; purchase $1,345 to 1,793 p.s.f. (Source: Chesterton Blumenauer (Binswager e)
· Market rate of development
· Possible competitors weaknesses.
· Change of life style
· Product innovation, development.
· Opportunity to arrange partnerships, and business deals.

Threats: Are the changes of the environment that may cause threads in to the company.
· Environmental influences( bird flue).
· Competitors are all ready there.
· Market demand?
· New innovations, technology changes.
· Stabilize the current capabilities.
· Economic situation in U.S
· Seasonality, weather effects.
· Political changes & legislation changes.

ü Argentina: Rising costs; union strength; location in extreme south of continent; predicted surplus of older CBD space in Buenos Aires( Chesterton Blumenauer (Binswager e)

ü Brazil: Language sets it apart; new laws restrict local pension fund investment in real estate. ( Chesterton Blumenauer (Binswager f)

ü Mexico: High inflation (although greatly improved in last two years) (Chesterton Blumenauer (Binswager g)

Coming to a conclusion, KFC, as we can realize, KFC has a tremendous opportunity of expansion in the area. Despite natural changes, and dangers, which may make the business loose its only product, like bird flu, the area shows a continuous economic and political progress, and further development will not late to come. Using tools such as standardization of processes and products, available resources, and adoption of a menu according with the nutrition habits of each country, success is not far. KFC should start its market penetration from the biggest economies such as Brazil and Argentina, as well as in lower level in the rest of the countries of the area. While they are already established in Mexico, they will be able to surround the rest of the countries, and control the company 's performance. Their target should be to penetrate the markets of large cities of Brazil and Argentina, as well as tourist resort areas. In these areas the life style has changed due to development, and people are too busy to cook food at home. This enforces them to eat out quick and cheap. It is vital that KFC need 's to launch new products in the menus according with the local cuisine, so the outlets will not be isolated in just one market segment (chicken). Further more, the company has to follow the leaders in the area (McDonalds) and offer the clients services that are in demand, like Internet, or organize local football championships with minor prizes. Participating in the day to day life of the locals with some way, the company 's profile will get adopted faster from the population, and product awareness will became the easy part. Yet, the advertising campaign has to reflect in the majority of the people 's taste, which can be anything to do with football. This has to be selected carefully and not support either some club, because this will create "enemies" from the opposite club 's, but to be neutral as sponsor of some competition and not individual teams.
The majority of the outlets should be given in local 's who know the market, law, culture, and customs better. An adequate level of them should be company owned, to operate as training centre 's and give the guide lines in the franchise one 's. Moreover, running company owned restaurants, KFC would be able to gain profits from assets in the near future, while now the buildings are cheap but by the time they will gain value.
The company should give the required training to the staff either by general training courses of the company or individually. The staff of the outlets will need to adopt the company 's corporate culture, and advertise it with any possible way. The company should make sure that these people are happy at work, because they can be very important for establishing the first outlets, and further expansion in Latin America.

Referencess
· Bergsman, Steve: Sep/Oct98, Management with a Latin accent, Journal of Property Management, Vol. 63 Issue 5, p70, 5p, 3c
· Kearney, Harvard Business Review, Jun2005, Risk and reward in world markets, Vol. 83 Issue 6, p48-48, 1p, 1c;
· Macarthur, Kate, 7/25/2005, McDonald 's secret marketing sauce, 00018899, Vol. 76, Issue 30
· Miller (1998) Strategic management, 3rd edition, Mc Graw- Hill international edition
· Norton, Irving, Browell, Naughton, McDonald, Howell, Chapman (2003), Six weeks to strategic excellence, Cox &Wyman ltd, Great Britan.
· Nwogugu, (2004), Corporate governance, strategy and corporation law. Fast –food chains face new challenges, Managerial auditing journal, Vol 19, No 1, pp2967, ISSN 0268-6902
· Pearce/Robinson (2000) Strategic management, formulation/implementation, control, 7th edition. Mc Graw-Hill international edition
· Rubin stein, Ed, Mcd to double units in Latin America, with an accent on brazil, Nation 's Restaurant News, 00280518, Vol. 31, Issue 45
· Thompson/Strickland (2003) Strategic Management, concepts and cases, 13th edition, Mc Graw- Hill/Irwin, New York.
· Washington Times, The (DC), Aug 09, 2005 Latin America sees progress,
Item: 4KB20050809110639
· Wentz, Laurel, Macarthur, Kate: 5/5/2003, Mc Internet test expanded in Brazil , 00018899, Vol. 74, Issue 18
· Wit & Meyer (2004) Strategy Process Content Context, 3rd edition, Thompson Learning
· Zuckerman, Amy. Jun2000, Quality on the rise in Latin America, World Trade, Vol. 13 Issue 6, p82, 2p, 1c;

References: · Macarthur, Kate, 7/25/2005, McDonald 's secret marketing sauce, 00018899, Vol. 76, Issue 30 · Miller (1998) Strategic management, 3rd edition, Mc Graw- Hill international edition · Norton, Irving, Browell, Naughton, McDonald, Howell, Chapman (2003), Six weeks to strategic excellence, Cox &Wyman ltd, Great Britan. · Rubin stein, Ed, Mcd to double units in Latin America, with an accent on brazil, Nation 's Restaurant News, 00280518, Vol. 31, Issue 45 · Thompson/Strickland (2003) Strategic Management, concepts and cases, 13th edition, Mc Graw- Hill/Irwin, New York. · Washington Times, The (DC), Aug 09, 2005 Latin America sees progress, Item: 4KB20050809110639 · Wentz, Laurel, Macarthur, Kate: 5/5/2003, Mc Internet test expanded in Brazil , 00018899, Vol. 74, Issue 18 · Wit & Meyer (2004) Strategy Process Content Context, 3rd edition, Thompson Learning