5 forces - KFC FAST FOOD INDUSTRY Strategic Management...

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KFC & FAST FOOD INDUSTRY Strategic Management PRESENTED BY SHAHRYAR HASSAN 4517 KHALID YOUSUF 3724 SAQIB RAHIM 5286 TOUSEEF ALI 7363 RAFIQUE AHMED 5445
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EXECUTIVE SUMMARY The case is about KFC, which is the third largest fast food chain with over 12,200 outlets in 99 countries. The outlets comprise of franchises, company owned and affiliated. One of the issues faced by KFC was that it offered only chicken related products and they were facing stiff competition globally where they suffer great losses but they continued there business even where they were facing losses to maintain there presence in the region due to which its customers were related to a certain segment. This issue can be resolved by diversifying its menu. Other issues like customer’s taste and preferences changes could be resolved by introducing new menu items that cater to their preference and innovating the product line. Complaints of bad customer service can be reduced by training the employees for proper customer dealing.
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Industry’s Dominant Characteristics Market Size and Projected Growth The total sales for the top US Fast Food industry were $422 billions in the year 2003. The top 7 chicken chains sales were 9861 million. Growth was around 3.3% in 2003. Scope of Competitive Rivalry Companies having presence globally by offering franchises and company owned outlets but now companies prefer to have joint venture with local entrepreneur because they understand the local culture and customs of the domestic market. Number of Rivals Competition is very intense in this industry. There were tens of thousands of fast-food outlets in United States including all of the regional and local outlets, the 10 largest chains in 2003 accounted for about 88.88% of total Sales. Pace of Technological Change Pace of change in the technology was minute as franchises were renovating outlets and also locating outlets on more prominent locations and upgrading the facilities of kitchens
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Structural Analysis of industry (Porter’s five forces model) Threat of New Entrants / Entry Barriers Factor HUF (1) MUF (2) Neutral (3) MFA (4) HFA (5) Comments Economi es of Scale Low 3 HighGiants are able to achieve economies of scale by high volume of production and many outlets but smaller chains are unable to achieve it due to low volume production.
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