Essay, Pages 7 (1658 words)
Burger King is the second largest chain of hamburger fast food restaurants in the world. Burger King have strong company’s history background, the first interior concept was the 1960s with featured artists such as Marilyn Monroe, Elvis Presley, James Dean and vintage cars photos. Burger King is selling burgers, several variations of chicken, fish, salads, breakfast, fries, and sodas. Since Burger King also offering various type of chicken, this might be a threat to KFC’s signature product, chicken.
Burger King also promotes their meals in discounted price (RM29.95) that suitable for family and also a group of friends having meal there.
They offering reasonably priced quality food, served quickly, in attractive, clean surroundings. These have built up their brand image to the customers. Besides that, Burger King also have weakness in Malaysia, because the fewer outlets compare with other fast food industry especially KFC. 5.0 Market Analysis In this section, we are going to examine the ultimate customers of KFC and distinguish between different customer segments.
We have concluded that all of the fast foods’ customers are ultimate customers. Unlike other food businesses, for example snack food manufacturer that usually sell their product to distributor / retailer before they reach the hand of consumers (end user), there is no strategic customer due to the businesses’ nature as they sell fast food to the public directly, regardless of a customer’s identity as an individual or a business entity.
The target market of fast food businesses
The target market of fast food businesses is broad, from young age kid to senior citizens.
Fast food in Malaysia is accepted by all race and religion because all are in Halal. Increasing woman involve in labor force, they have lesser time for at-home food preparation. Fast food is often an alternative way for them to settle the meal of their children. Due to two-income family, increasing standard of living of Malaysians make fast food affordable and convenient for most of the families.
As for younger generations like college students, they tend to take fast food as supper as this is the trend of their ‘night life’. Fast food restaurants are often the place of chatting and group studying. Lunch promotion in fast food restaurants is targeted on working people who have the limited break time. While senior citizens enjoy fast foods like others, they may seek healthy offering in the food menus (salad), or choose the one that offer low fat and low calories. However, this customer segment has the lowest consumption on fast foods due to health concern.
The findings of the market analysis are that the consumption of different customers segments differs in terms of demographic, psychographic, geographic, and behavioral variables, though it is not much different between various customer segments except senior citizen. It’s due to the growing trend of fast food consumption that suit the fast-paced lifestyle of students, working people, and two-income families in the modern society.
The threshold resources
First of all, we identified the threshold resources that required by KFC in order to survive within the industry. A huge capital is necessary for KFC to run the business smoothly and compete with the other big players within the industry. The secret recipe of KFC is their trade secret that may help them survive in the industry. So, it is essential to protect their intellectual property to avoid be imitated by the new entrants and the competitors. Well-trained employees are initial assets for successful firm. They may satisfy the customers’ need and demand and also can translate the company objective to action. Sufficient of raw material and production capacity are supporting the firm activities and sales.
Own Poultry farm KFC holdings has its own integrated poultry farm and processing plants, which bred and supply whole and cut chicken parts and also further processed chicken products to both domestic and export market. This enables them to achieve economies of scale and standardize the quality. Financial Resources Increased profits According to KFC Holdings’ 2008 financial highlights, it achieves consistent and significant growth throughout the recent years except in year 2005 (loss attributable to equity holders). Its operating profit increased nearly 3 times in year 2007 compare to year 2003, and doubled for the profit before tax and profit attributable to equity holders. This high profitability allow for future expansion in business operations and product development.
KFC is doing quite well in managing their human resources. There are more than 7,500 staffs serving customers daily from all the outlets in Malaysia. Fair wages, open communication, working conditions and schedules are the important contributors to create real employee loyalty in KFC which will directly stimulate the staffs’ motivation and passion towards their job. Intellectual capital Secret recipe KFC own secret recipe that hard to imitate by others firms. The Colonel’s secret flavor recipe of 11 herbs and spices that creates the famous “finger lickin’ good” chicken remains unrevealed as a trade secret. Portions of the secret spice mix are made at different locations in the nations, and the only complete, handwritten copy of the recipe is kept in the headquarters.
Another critical unique resource of KFC Holdings’ is its broad customer database. The advantage is that the customer database is shared by its other brands like Ayamas and Rasamas which are the brands under KFC Holding as well. Brand Name The other unique resources that help KFC successful are their strong company’s history and their good reputation. KFC now still dominate the chicken fast food industry. Since KFC has the strongest brand in the fast food industry so it is pertinent to consumer loyalty and attracting the right sort of franchisee. This is pivotal to the success of the franchise.
Key Success Factor
Key Success Factor (KSF) is the factor and activities that required for the success of a firm in the industry. It is necessary for KFC to sustain their business. Convenience location KFC located in convenience location bring products closer to their customers. It is because the main reason of taking fast food is seek for convenient and can get to it easily. KFC is multi-brand, in Malaysia, Pizza Hut and KFC operate in same location.
Technology is required to lower the cost and improve the efficiencies of KFC. Computer information system improve KFC efficiencies in term of employees schedule, compensation, sales analysis, inventory control, front counter service and so on. With modern machinery and technology, food can be prepared and serve in quick and standard quality, result in high profit due to high quantity customers served. Skills and capabilities KFC involve in product innovation strategy which keep come out the new products to retain and satisfy their customers. For example is KFC HotRods in Malaysia. KFC is doing successfully in advertising and promotion to attract their target market. KFC also practice Just-In-Time delivery to all the branches in Malaysia which will enable to reduce the handling cost.
Effective store management / cleanliness
The excellent service style and restaurant environment will create repeat business. Transparent food handling process, modern seating, shop decoration and cleanliness will comfort the customers and achieve high satisfaction. Core Competencies A core competence refers to skills and activities that a firm emphasizes and excels in doing while in pursuit of its overall mission. To identify the core competencies, our group decided to select Value Chain Analysis as the only framework to better understand the ways that a business creates value to customers through the examination on the contribution of different business activities. We figure out that KFC is adopting low cost leadership and differentiation strategy to create value.
The Value Chain
The Value Chain Analysis is a perspective in which business is seen as a chain of activities that transforms inputs into outputs that customer’s value. In order to identify the core competencies of KFC, we wish to use Value Chain Analysis which consists of support activities and primary activities. Primary Activities Inbound Logistic Group Logistic Division (GLD) was established to provide the Group with the best and most effective logistic service. This involves consolidating and centralizing the logistics. The GLD is divided into two units which are Logistics Operations (stored and distribute chilled, frozen and dry stocks) and Logistics Support (planning, order taking, Enterprise Resource Planning, human resources, accounts etc).
In order to combat with the rising costs of labors, fuel, maintenance etc, GLD is implementing some initiatives to be more cost effectively and efficiencies such as enhance stock accuracy and integrity; optimize resources and reduce transport costs. Operation KFC’s products in Malaysia are HALAL and to ensure the HALAL compliance through their operations, QSR has control over its raw materials, purchases, manufacturing processes and as well as packaging. KFC are diligent in preventing cross-contamination during the storage, preparation, handling, packaging and transportation of the products. Moreover, they are adhering to best practices to maintain the highest standards of quality and hygiene. The careful inspection of products at each step might improve the product performance and lower defect rate.
The delivery of chicken supplies is done by a large fleet of trucks equipped with refrigeration & freezer that owned by in-house distribution system. This direct delivery between plants and KFC protects the freshness of chicken (minimal lead time) and maintain consistent supply. Internal distribution channel also means that KFC can keep the transportation cost down since it eliminates the need of outsourcing to external distributors, as well as easier for KFC to keep an eye on tracking the delivery process in terms of coordination between poultry plants and refrigerated trucks and on-time delivery to KFC branches.
Marketing and Sales
In order to better compete within the industry, KFC has now come out with their new breakfast meal. KFC’s breakfast menu is not just Western oriented with sausage and chicken muffin, but also with porridge and even Nasi Lemak (a local popular breakfast). They are also offering others alternatives chicken-centric meals like Cheezy Chickaroni, Hot Rods, and Zinger Tower. At the same time, they have continued to expand traditional chicken range by introducing variants like the Colonel Burger and X-meal for teens and young adults.