CHAPTER -I INTRODUCTION

Kentucky Fried Chicken (KFC) - one of the most known fast food chains in the world started in the early 1930's by Kernel Sanders in the Southern USA as a small franchise operation. Colonel Sanders has become a well-known personality throughout thousands of KFC restaurants Worldwide. Quality, service and cleanliness (QSC) represents the most critical success factors to KFC's global success.KFC (Kentucky Fried Chicken) is a fast food restaurant chain headquartered in Louisville, Kentucky, United States, which specializes in fried chicken. An "American icon", it is the world's largest fried chicken chain and the second largest restaurant chain overall after McDonald's, with over 17,000 outlets in 105 countries and territories as of December 2011. KFC was founded by Harland Sanders, who began selling fried chicken from his roadside restaurant in Corbin, Kentucky during the Great Depression. Sanders was an early pioneer of the restaurant franchising concept, with the first "Kentucky Fried Chicken" franchise opening in Utah in the early 1950s. Its rapid expansion saw it grow too large for Sanders to manage, and he eventually sold the company to a group of investors. Despite this, his image was still used as branding (as "Colonel Sanders"; Sanders had been made a Kentucky colonel after the success of his initial restaurant), and he worked as a goodwill ambassador for the company until shortly before his death. Throughout the 1970s and 1980s, KFC had mixed success at home as it went through a series of corporate owners who had little or no experience in the restaurant business, although it continued to expand in overseas markets. In the early 1970s, KFC was sold to the spirits firm Heublein, who were taken over by the R.J. Reynolds conglomerate, who sold the chain to PepsiCo. PepsiCo spun off its restaurants division (also including Pizza

Hut and Taco Bell), as Tricon Global Restaurants, which later changed its name to Yum! Brands. The chain primarily sells fried chicken pieces and variations such as chicken burgers (chicken sandwiches [US]) and wraps, as well as side dishes such as French fries and coleslaw, desserts and soft drinks, often supplied by PepsiCo. Its most famous product is pressure fried chicken pieces, seasoned with Sanders' "Original Recipe" of 11 herbs and spices. The exact nature of these ingredients is unknown, and represents a notable trade secret. KFC is famous for the slogan "finger licking' good", which has since been replaced by "So good", and "Nobody does chicken like KFC". KFC's two major single markets are in its home country and China, which together contain around half of its outlets. KFC has been the target of an ongoing campaign by the animal rights organization PETA, although KFC executives have protested that the chain is unfairly singled out for criticism. The chain has also been accused by Greenpeace with contributing to the destruction of the world's rainforests with unsustainably sourced cardboard and paper packaging.Food, Fun & Festivity, this is what KFC is all about. Leading the market since its inception, KFC provides the ultimate chicken meals for the Chicken Loving Nation. Be it Colonel Sanders secret Original Recipe Chicken or the Hot & Spicy version, every bite brings a YUM on the face. At KFC we proudly say: KFC has more than 11,000 restaurants in more than 80 countries and territories around the World. In 1971, Heinlein, Inc. acquired KFC, soon after; conflicts erupted between the Colonel (which was working as a public relations and goodwill ambassador) and Heinlein management over quality control issues and restaurantKFC is part of Yum! Brands, Inc., however in the case of Pakistan KFC builds the relation of Quality Service and cleanliness for Customer.

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) 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.KFC (Kentucky Fried Chicken) is a fast food restaurant chain headquartered in Louisville, Kentucky, United States, which specializes in fried chicken. An "American icon", it is the world's largest fried chicken chain and the second largest restaurant chain overall after McDonald's, with over 17,000 outlets in 105 countries and territories as of December 2011. KFC has been the target of an ongoing campaign by the animal rights organization PETA, although KFC executives have protested that the chain is unfairly singled out for criticism. The chain has also been accused by Greenpeace with contributing to the destruction of the world's rainforests with unsustainably sourced cardboard and paper packaging.

HISTORY
Born and raised in Henryville, Indiana, Harlan Sanders passed through several professions in his lifetime, with mixed success. Sanders first served his fried chicken in 1930 in the midst of the Great Depression at a gas station he owned in North Corbin, a small city on the edge of the Appalachian Mountains in south eastern Kentucky. The dining area was named Sanders Court & Caf and was successful enough for Sanders to be given the honorary title of Kentucky Colonel in 1936 by the Kentucky Governor Ruby Laffoon. The following year Sanders expanded his restaurant to 142 seats, and added a motel he purchased across the street. When Sanders prepared his chicken in his original restaurant in North

Corbin, he prepared the chicken in an iron frying pan, which took about 30 minutes to do, too long for a restaurant operation. KFC was founded by Harland Sanders (Sanders) in the early 1930s, when he started cooking and serving food for hungry travellers who stopped by his service station in Corbin, Kentucky, US. He did not own a restaurant then, but served people on his own dining table in the living quarters of his service station. His chicken delicacies became popular and people started coming just for food. Kentucky Fried Chicken was born. Soon, Sanders moved across the street to a motel-cu restaurant, later named 'Sanders Court & Cafe, that seated around 142 people. Over the next nine years, he perfected his secret blend of 11 herbs and spices and the basic cooking technique of chicken. Sanders' fame grew and he was given the title Kentucky Colonel by the state Governor in 1935 for his contribution to the state's cuisine. Sanders' restaurant business witnessed an unexpected halt in the early 1950s, when a new interstate highway was planned bypassing the town of Corbin. His restaurant flourished mainly due to the patronage of highway travelers. KFC received permission to open 30 new outlets across the country. It chose Bangalore as its launch pad because the city had a substantial upper middle class population, with a trend of families eating out. Also, it was considered Indias fast growing metropolis in the 1990. The Bangalore outlet was opened in June 1995. Apart from Bangalore, PepsiCo planned to open 60 KFC and Pizza Hut outlets in the country over the next seven years. However, KFC became embroiled in various controversies even before it started full-fledged business in India. In 1964, KFC was sold to a small group of investors that eventually took it public. Heublein, Inc, purchased KFC in 1971 and was highly involved in the day

to day operations. R.J. Reynolds then acquired Heublein in 1982. R.J. took a more laid back approach and allowed business as usual at KFC. Finally, in 1986, KFC was acquired by PepsiCo, which was trying to grow its quick serve restaurant segment. PepsiCo presently runs Taco Bell, Pizza Hut, and KFC. The PepsiCo management style and corporate culture was significantly different from that of KFC. PepsiCo has a consumer product orientation. PepsiCo found that the marketing of fast food was very similar to the marketing of its soft drinks and snack foods. PepsiCo reorganized itself in 1985. It divested non-compatible units and organized along three lines: soft drinks, snack foods and restaurants. PepsiCo Worldwide Restaurants was created to create synergism between its restaurant companies.By the end of 1994, KFC was operating 4,258 restaurants in 68 foreign countries. KFC is the largest chicken restaurant and the third largest quick service chain in the world. Due to market saturation in the United States, international expansion will be critical to increased profitability and growth.

COMPANY PROFILE MARKET SHARE

In 1986, after the KFC acquisition, PepsiCo now had three of the four largest and fastest growing segments within the U.S. quick service industry. In 1994, PepsiCo had some of their largest market shares in the U.S. Market.KFC has also met the changing demands of society. As the world has gone to a more healthy living, KFC has come out with many changes on its menu, including Honey BBQ Chicken, Popcorn Chicken, Rotisserie Chicken and has begun to promote its lunch and dinner buffets. Dinner is also very important to KFC.

The buffets now offered at KFC during lunch and dinner is also very important. KFC is typically a fast-food service however with these buffets, this may persuade customers to dine-in instead of take out.KFC has also tried to meet the demands of consumers wanting fast-food in other "non-traditional" locations. They are currently testing airports, shopping malls, universities, and other hightraffic areas.

KFC as a Market Leader:

It has covered 80% of the market share in fast food industry KFC has recognition around the world and has been globally positioned for many years in Pakistan and to cap ture the market share in Pakistan adopts champs philosophy.Strategic Planning is the process of developing and maintaining a strategic fit between the organizational goals, capabilities and its changing marketing opportunities and is done by KFC in a well-defined manner. Strategic planning sets the stage for the rest of the planning in the firm. KFC is looking that how much its current strategies are beneficial for them. Although these are good and profitable but dynamic changes in environment are requiring identifying the attractive opportunities. That is the reason that they are expanding their market size by focusing on sub urban areas and targeting middle class people by providing them differentiated products at a fair price. They are opening their new mobile outlets in there potent tonal markets. KFC is also going to increase its sweet dishes to avail the opportunity available for tm.

KFC in a Growing Market:

The market of KFC is increasing day by day. Being a food market it is always considered in a growing market because it increases continually with the population. Their growth is continuously increasing and if they want to be a

leader, they has to develop a strategy which is predominantly a market expansion strategy and in this way they will not lose their leadership. It has greatly increased their market share in Pakistan by following different strategies that may be regarding their products, prices, placement or promotions. They have been following the strategies for market expansion by targeting the new users of the product, describing the new uses of the product and by showing them more usage of the product.

Describing the New Users:

In this method, the new uses of the product are being described. As the motto of KFC says we do chicken right, here they claims that they are the best in using the chicken correctly. In the early days the chicken was simply used in a simple way for cooking, but KFC has introduced it in a number of ways and described it to the people by launching it as a meal as well as in the snacks form. They prove them with the best cooked chicken with a great taste. Instead of the chicken pieces, they also serve chicken nuggets, burgers, hot shots, twisters etc. many new innovative products are being introduced by KFC that is greatly helpful in attracting the customers and increasing its market share.

More Usage:
In the advertisement of KFC mostly seen on the bill boards, they have shown in the new scheme of zinger deal of Rs.290 + 10 and u get zinger + another chicken burger. And in Ramadan, they launches the deal of Rs. 500 and it says that all you can eat, it gives the unlimited zinger burgers and chicken pieces. In this way they have greatly increased their usage of their products.

 New Users:
The people who do not eat KFC should be attracted, that may be by attracting the non-users of the product, non-users of the brand or the non-believers. They are done in the following ways.

Non Users:
The people who do not eat the fast food, they should be attracted like KFC has been attracting their customers by providing deals with IPhone. If the person is an IPhone user and he is not a KFC customer, they simply receive a message on their hand set and they just have to show it on the KFC and counter and get a free meal. Its a strategy to attract the non-users. In a similar way, distributing deal coupon on specific purchases, in shopping malls may also be very effective.

Non Users of the Brand:

The non-users of KFC can be attracted by describing them the quality features of the product that they think of trying the product once. In this case promotional activities play an important role. If the promotions are done in an effective manner, people would definitely try the product and also lowering the prices may be very effective that people may switch from other brands to KFC.

Non-Believers:
KFC is quite successful in attracting the non-users of the product and the brand as well, so it is not really necessary to hit the non-believers. This is because they are the most difficult people as it is very hard to break their social, religious and cultural believes

 FINANCIAL RATIO ANALYSIS AND CAPITAL OUTLOOK

Financial ratio analysis is the calculation and comparison of ratios, which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing.

PRESENT SITUATION
The organization is currently structured with two divisions under PepsiCo. David Novak is president of KFC. John Hill is Chief Financial Officer and Colin Moore is the head of Marketing. Peter Waller is head of franchising while Olden Lee is head of Human Resources. KFC is part of the two PepsiCo divisions, which are PepsiCo Worldwide Restaurants and PepsiCo Restaurants International. Both of these divisions of PepsiCo are based in Dallas.

STRUCTURING
Another strategy of KFC is currently working with is to improve operating efficiencies. This in turn can directly impact the operating profit of the firm. In 1989, KFC centered on elimination of overhead costs and increased efficiency. This reorganization was in the U.S. operations and included a revision of KFCs crew training programs and operating standards. They emphasized customer

service, cleaner restaurants, faster and friendlier service, and continued highquality products. In 1992, KFC continued with another reorganization in its middle management ranks. They eliminated 250 of the 1500 management positions at corporate and gave the responsibilities to restaurant franchises and marketing managers.

OBJECTIVES
1. Product development 2. Increase variety on menu 3. Introduce desert menu 4. Introduce buffet to restaurants

A .Introduction on the Neighborhood Program with following:

Menu items target African Americans in major cities with the following items: Greens ,Macaroni and cheese ,Peach cobbler ,Red beans & rice.

B .Menu items targeting Hispanics in major cities with the following items:
Fried plantains, Flan, TresLeches.

C. Implementation on non-traditional units including the following:

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Shopping mall food courts, Universities, Hospitals , Airports ,Stadiums, Amusement Parks, Office Buildings , Mobile Units.

D. Increase profitability of KFC through the following:

1. Reduced overhead costs 2. Increased efficiencies 3. Improved customer service 4. Cleaner restaurants 5. Faster and friendlier service 6. Continued high quality products 7. Resolve franchise problems in the United States. 8. Implied Objectives

E. Expansion of international operations to provide the following:

1. Increased percentage of overall sales growth 2. Increased percentage of profit growth 3. Increased expansion of franchises into Mexico 4. Expansion of franchise operation beyond Central America 5. Continued promotion of healthier image through removal of the word "fried" from the name 6. Improve menu selection of rotisserie

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7. Organizational Structure.

SALE AND RE-BRANDING Kentucky Fried Chicken logo used between 19521978
By 1964, Kentucky Fried Chicken was sold in over 600 franchised outlets in both the United States and Canada. Sanders sold the entire KFC franchising operation in 1964 for $2 million ($14,987,124 in 2012 dollars), payable over time at a three per cent interest rate, to a group of investors headed by John Y. Brown, Jr and Jack C. Massey. The sale included a lifetime salary and the agreement that he would be the company's quality controller and trademark. According to Massey, when the offer was first touted to Sanders it was difficult to know how he felt about the deal: he would dismiss it one day and talk about it as if it were inevitable the next. Massey knew that Sanders believed in astrology and waited until Sanders had a particularly positive and dramatic horoscope before making a definitive offer. Massey went into Sanders' office and made him a written offer. Sanders looked at the figure, opened up his drawer, read his horoscope, and agreed to sell it. Sanders apparently became disenchanted with the deal, telling the Washington Post, "I don't like some of the things John Y. done to me. Let the record speak for itself. He over-persuaded me to get out". Massey and Brown changed the restaurant's format from the diner-style restaurant envisioned by Sanders to a standalone fast-food take-out model. Giving all their restaurants a distinct red-and-white striped color pattern, the group opened over 1,500 restaurants, including locations in all 50 U.S. states and several international locations. The concept caught on because it was the best chicken most people had ever tasted and took a dish that had been a Sunday dinner treat and made it an

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everyday staple. Massey and Sanders did not like each other, and the Colonel grew incensed when Massey decreed that company headquarters would be in Nashville, Tennessee, and not in Kentucky. He bellowed, "This arentno goddam Tennessee Fried Chicken, no matter what some slick, silk-suited sonofabitch says". Brown did not like the idea either, but Massey owned 60 per cent of the company, and Brown 40 per cent, and Massey wanted company headquarters to be near his home. Brown claims that he brought order and efficiency to a chaotic management structure, and treated the increasingly disgruntled Sanders with tact and patience. Sanders' nephew Lee Cummings left the company after the sale to found the Lee's Famous Recipe Chicken chain. In 1966, at Massey's insistence, the company went public. By this time Sanders regretted selling his company, and exchanged his $1.5 million worth of stock for the exclusive rights to the company's Canadian activities. Later that year Massey resigned from the company and Brown announced that headquarters would be moved to Louisville, Kentucky. According to Sally Denton, Massey left the venture with a "sour taste in his mouth", and refused to discuss the former partnership publicly. By 1967, KFC had become the U.S'.s sixth largest restaurant chain by volume. By 1968, Kentucky Fried Chicken was the largest fast-food business in America and in 1969 it was listed on the New York Stock Exchange. Massey resigned as chairman of the company in March 1970, and Brown took over his role. In August 1970 Colonel Sanders and his grandson Harland Adams resigned from the board of directors. In a New York Times article, Sanders stated, I realized that I was someplace I had no place being. ... Everything that a board of a big corporation does is over my head and I'm confused by the talk and high finance discussed at these meetings". The company, once too large for Sanders to handle, grew too much for John Y. Brown as well. In July 1971 Kentucky Fried Chicken was taken over by

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Connecticut-based Heublein, a specialty food and alcoholic beverage corporation, for $285 million ($1,635,529,992 in 2012 dollars).Heublein planned to increase Kentucky Fried Chicken's volume with its marketing know-how. Through the 1970s the company introduced some new products to compete with other fastfood markets. As management concentrated on overall store sales, they failed to notice that the basic chicken business was slacking off. Competitors' sales increased as Kentucky Fried Chicken's dropped. At this time a Texas firm, Church's Chicken, began making inroads into KFC's market share with "Crispy Chicken. In 1972 KFC introduced "Extra Crispy Chicken".In 1974 Sanders complained of the declining food quality: My God, that gravy is horrible. They get tap water, mix it with flour and starch and end up with pure wallpaper paste. Another thing. That new crispy recipe is nothing in the world but a damn fried dough ball stuck on some chicken" The outburst prompted a KFC franchisee in Bowling Green, Kentucky to unsuccessfully attempt to sue Sanders for libel.[31] In 1973 Heublein attempted to sue Sanders after he opened a restaurant in Shelbyville, Kentucky under the name of "Claudia Sanders, the Colonel's Lady Dinner House".In 1974 Sanders countersued HeubleinInc for $122 million ($574,931,174 in 2012 dollars) over the alleged misuse of his image in promoting products he had not helped develop, and for hindering his ability to franchise restaurants. A Heublein spokesman described it as a "nuisance suit. In 1975 Heublein settled out of court with Sanders for $1 million ($4,319,109 in 2012 dollars), continued his salary as goodwill ambassador and allowed his restaurant venture to go forward as "Claudia Sanders Dinner House". In 1976, Sanders complained that the company "doesn't know what it's doing" and that is was "downright embarrassing" to have his image affiliated with such an

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inferior product. Michael Miles was promoted by Heublein to run the chain in 1977 and is credited with turning around the ailing company by instituting a backto-basics formula. One of Miles' most notable strategies was to lure Sanders back onside, and to listen to his recommendations for the business. Miles also embarked on an extensive store refurbishment program, as outlets had become dated and run-down. Sanders passed away in 1980, having continued to travel 200,000-250,000 miles a year, largely by car, promoting his product until shortly before his death. In 1982, Heublein was purchased by R.J. Reynolds, who had to contend with the introduction of Chicken Nuggets across the McDonald's chain in 1983. Reynolds sold their restaurant division in 1986 to PepsiCo for a book value of $850 million ($1,802,185,792 in 2012 dollars). Reynolds sold the chain to pay off debt related to its recent purchase of Nabisco and in order to concentrate on its tobacco and packaged food business. PepsiCo made the chain a part of its PepsiCo Worldwide Restaurants division alongside Pizza Hut and Taco Bell, and it was anticipated that they would bring their merchandising expertise to the firm. In 1991 the KFC name was officially adopted, although it was already widely known by that initials. The early 1990s saw a wave of new product launched throughout the chain, such as spicy "Hot Wings", skinless chicken and popcorn chicken, as well as the "Zinger", a spicy chicken fillet burger, for international markets. In 1993, rotisserie style chicken was introduced at certain US outlets. In 1994 Roger Enrico was appointed as the CEO of the ailing PepsiCo Worldwide Restaurants, and David C. Novak was appointed President of KFC and charged with turning around the company, which was struggling after competitors such as McDonald's had introduced value menu offerings. Novak oversaw 10 quarters of consecutive growth at the restaurants after introducing new products such as the chicken pot pie and marinated chicken.

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In 1997, PepsiCo spun off its restaurants division as a public company valued at $4.5 billion ($6,514,925,373 in 2012 dollars) in order to pay off short-term debt and because, as one PepsiCo executive admitted, "restaurants weren't our shtick". According to one analyst it was not clear whether the $4.5 billion was a fair return on PepsiCo's investment, given that much of PepsiCos debt had arisen from investment in its capital-intensive restaurants. The company was named Tricon Global Restaurants, and at the time had 30,000 outlets and $10 billion in sales ($14,477,611,940 in 2012 dollars), making it second in the world to only McDonald's. It was renamed Yum! Brands in 2002. The original KFC franchise restaurant in Salt Lake City was rebuilt in 2004 to incorporate a small museum. From 2002 to 2005 KFC experienced three years of weak sales, when underinvestment in product development left the brand looking "tired and poorly positioned", according to Restaurant Research, an independent consultancy. KFC responded by adding a cheap hot chicken burger to the menu, called a "Snacker", which is easier to eat than chicken on the bone. It also began a makeover of the brand image, bringing back the full "Kentucky Fried Chicken" name at some outlets, giving new prominence to touched-up portraits of Colonel Sanders, and promoting once more the cardboard buckets of chicken it had abandoned briefly in the 1990s.

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Chapter II : Analysis I
Porters Five Forces Analysis Entry
For the current Indian 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 India or even make a significant amount of profit. While there are enough people in urban India 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 theyve never heard of. The brand name is already established. Also, there is already a large variety in the numerous western-style dining places in India, such as McDonalds, Pizza Hut, Domino's and Subway, and any new fast-food entrants would just be presenting something very similar to whats 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.

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In terms of food, KFC, upon its move into India, urged many of its U.S. suppliers to also extend branches into India. 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. This gives us a brilliant strategy. With this strategy, KFC created competition among its suppliers, lowering the supplier bargaining power. In terms of human resources, labor cost is extremely low because the supply of non-skilled workers great exceeds the demand for them. With so little buyer and supplier bargaining powers, KFC is able to have a very tight control over its prices and expenditures.

Substitutes and Complements

As mentioned above, there are a few major competitors in the fast-food industry in India for KFC, namely McDonalds, Pizza Hut, Domino's and Subway. The substitute products, in this case, would be burgers, pizza, and sandwiches. Though they are competitors, their primary products differ greatly from each other, in that they sell, chicken, burgers and fries, pizzas, and sandwiches,

respectively. Traditional Indian dining, home-cooked meals, and grocery stores with ready-to-eat foods are also substitutes, as families could choose any one of these over fast food for a meal. These substitutes are definitely considered healthy as compared to the fast food chains. Even foods from street vendors count as substitute goods. While other fast foods serve as substitute to KFC, they can also serve as complements for fast foods as a whole. If the general price of fast foods goes up, KFCs price rises as well, and the same can be said of the quantity sold of these products, which make them complements to each other. KFC also sets up stores located near popular tourist attractions, so tickets to these tourist

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spots are also complementary goods because the more people tour these attractions, the more customers KFC will get.

Rivalry
Unlike what one would expect, KFC has little rivalry with similar fast-food chains in India. 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. For example, if KFC raised its price for chicken by a small amount, Indian chicken lovers who may not be as accepting to pizzas (many Indian people strongly dislike the taste of cheese) are not going to switch to Pizza Hut just because

the price for KFC increased. In addition to that, these restaurants have such different target customers that the fluctuation of price for one restaurant is not going to affect the others. For example, a full meal at KFC ranges about Rs.100, whereas a full meal at Pizza Hut can cost over Rs.300. The drastic difference in price assures no price competition between these restaurants.

SWOT ANALYSIS:
SWOT analysis mean strength, weakness, opportunities and threats and the SWOT analysis of KFC is:

Strengths
Goodwill and reputation :The company certainly has earned agood name and reputation by its previous products and servicesin the market. It is even more recognized in other markets outsidePakistan, where the company is among the leading fast foodgiants. The

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brand is recognized and trusted in Pakistan for itsquality products, price, and customer service. It therefore has agood head start and enjoys a good chance of becoming a leaderin Pakistan fast food industry. Employee Loyalty: Employee Loyalty is one of the major strengths of KFC. The turnover rate in the company is amongst the lowest in the industry. Customer Loyalty :Despite gain by Boston Market and Chick-fillA, KFC customer base remained loyal to the KFC brand because of its unique taste. KFC has continued to dominate the dinner andtake out segment of the Industry. Ranks highest among all chicken restaurant chains for its convenience and menu variety. It generates $1B revenue each year.

Weaknesses
KFC was losing market share as other Chicken chain increased sales at a faster rate. KFC share of Chicken Segment sales fell from71 percent 1999 , toless than 56 percent in 2009 , a 10 -years drop of 15 percent. Huge competition in this segment. KFC has not yet invested much on R&D, and innovating new products for Pakistan Markets. This may lead to failure of their products as they are not in line with the Pakistan mind set, peoples taste and preferences and their likes and dislikes. This may prove fatal for the company.

Opportunities

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New Markets: Globalization has opened doors for new markets for the company. As the developed markets are mostly saturated, the developing countries like Pakistan and China promises a good market and generation of demand in the future. With more than70% of the markets in Pakistan being unexplored and unorganized, KFC has a good scope of expanding its operations in the country. Cross Culture: Generally there is a good acceptance of American culture of fast food in Pakistan. People are opening up to fast foods more regularly in their daily lives and not just keeping it a once in a month affair. Thus Pakistan mindset is fast changing. Large Youth population: Pakistan has a very large share of youth population a compared to other countries. More than 60%of the population is under the age of 30yrs. As the young generation are more open to fast foods and demand it more, this is a good news for the company. New variety: Company can also come up with new variety in the menu like Pizzas, garlic breads to attract more customers.

Threats
Competition: Competitor companies like McDonalds are fast catching up with the market. McDonalds with sales of more than19 billion in 1999, accounted for 15 percent of the sales of the nations top 100 restaurant chains. Organizations like PETA People for Ethnic Treatment for Animals have given a bad name to the company which may prove disastrous to the image of the firm. Currently, KFC is under massive attacks from animal organizations, questioning

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the way KFCs suppliers are threatening the chicken, before they got slaughtered. Anti-KFC campaigns, such as the one from PETA are affecting KFCs brand image in a negative way and result in direct dollar losses, as less people are consuming KFC chicken Saturated US Market: Now KFC cannot rely on just its homemarket to generate sales. As the US markets are already saturated andleave no or little scope for growth, company necessarily needs to lookat offshore foreign markets to generate sales and keep up the profits.

Competitive analysis
Competitors You cannot enjoy the business without competitors. No organization can afford to ignore their competitors. It is very important for marketing managers to monitor the activities of their competitors, what they are doing? KFC adopted such sort of strategy that there is no competitor for spicy chicken, which is made by KFC.KFC beats its competitors through the revising marketing strategy at every movement but the main competitor of KFC are Mc Donald COMPETITIVE ADVANTAGE KFC Spicy Products McDonald Burger and French Fries

Indian people like spicy products instead of boiled food

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Arabian Rice and Zinger Burger

Big Mac

Free Delivery

Charges for home delivery

Chicken is eaten by every community Beef is banned in some community

Local Staff and Highly Qualified Its Staff consist of simple Graduates because local staff can better deal and give them training with the customers

KFC uses

McDonalds Uses Top To Bottom

Top to Bottom and Bottom to Top Approach. Approach In Management.

PEST ANALYSIS:

The Pest Analysis includes the political, economical, socio-culture and technological factors. These are described in detail as under:

Political Factors:
The political factors includes the government policies as KFC being a foreign company, but they have to obey the policies of the Government laid by the government of Pakistan,

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the country where the business activities are being carried out. KFC has handled this situation very tactfully and has obeyed the policies of the Government as prescribe by the government in order to run this kind of business. The other major factor is the pricing policies. KFC maintain & design its price policies keeping in view the income & income distribution of the people living in the country. Thats why all the classes are the target market of KFC. And the most important factor is the political instability. As in Pakistan, there are political crises faced by the government, these greatly affect the business of KFC.

Economical Factors:
The economic factors includes the income of the people, KFC is going to target. Income is an important economical factor of the KFC. This factor decides which class KFC is going to target. In the early time of KFC, they were focusing on the upper class but they after some time changed their strategies and started to target the mass market by introducing some different kinds of meals and offers through which we can say that they target the middle & the upper level as well. The consumption behavior of the people plays an important role. KFC also estimated the consumption behavior of the people, their liking and disliking and make decision accordingly. Payment method is an important factor in the economical factor of the KFC. They check the behavior of the regarding the payment methods of the people. They check whether the gives money in

the form of cash or plastic money.

Socio-culture Factors:
The Social/Cultural Factors includes the Social Class, as it is discussed earlier that KFC target all the class including the upper class, upper middle and lower middle class etc. Although the culture of KFC from where they come is entirely different but they have adopted the Pakistani culture as they had to serve the people living

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in Pakistan having entirely different culture from other areas. And it has not only adopted the Pakistani culture but also the Religion as well. They offer Halal foods to the customers, which is the symbol that they adopted the Muslim religion strategies as they had to serve in the Muslim country, to the Muslim customers.

Technological Factors:
The technological factors include the Pace of change at a fast level. Pace of change mean rate of change. KFC has strategy to introduce new technology whenever they think that it is a time to introduce new technology. Research & Development is also an important factor in the Technological factor. KFC always support the work of research & development in order to introduce the new technology. Capital formation means stock of machinery. KFC has a stock of machinery in order to run its business activities. In other words KFC has a good amount of Capital Formation

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Marketing mix of KFC

Since 1982, KFCs All-American salute to Mothers national card contest has been KFCs way of honoring moms and their families for making mothers Day KFCs biggest sales day of the year. The contest encourages children to creatively express their feelings for their moms by making a homemade card and give them chance to compete for more than $10,000 in cash and prizes. Educational packets, including language, history and art exercises highlighting Mothers Day, were sent to thousands of schools nationwide.

There are 4 Ps of Marketing: 1. PRODUCTION 2. PRICING 3. PROMOTION 4. PLACEMENT

Production:
Basically the product is anything that be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. KFC is specially dealing in the chicken products; Basically, KFC has the special raspy for chicken products that is why, KFC known as a chicken specialist allover the glob. KFC target the Asia and east side because they observe that they people are like the chicken products, so they enter in the market due to the demand of their

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chicken products. KFC product variety of product in the chicken, those products are: PRODUCTS:

Original recipe chicken Extra Tasty CrispyTM chicken Hot WingsTM pieces Tender Roast chicken Chunky Chicken pot pie Kentucky Nuggest Colonels Crispy Strips Honey BBQ sandwich Original Recipe Sandwich Tender Roast Sandwich Triple Crunch Sandwich Triple Crunch Zinger Sandwich

BRAND: There are three brands of the KFC:

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1) 2) 3)

Taco bell Pizza Hut Long john silvers

Pricing:
KFC during pricing their products keep the different points in the mind like they adopt the cost base price strategy. Pricing of the product includes the Government taxes and excise duties and then they come at final stage of determine the price of their products. KFC prices of products are a bit high according to the market segment and it is also compatible to the stander of their products. Calculation of the price under Cost Based Pricing Strategy: Total Pounds of Chicken Served in KFC Restaurant Annually = 1.914 Billion

Total KFC Chicken Pieces Sold Annually = 5.89 Billion Total Retail Sales = $8.9 Billion Sales Price of per Chicken Piece = Total Retail Sales / Chicken Pieces sold = $8.9 Billion / $5.89 Billion =$1.51

We assume that Fixed Cost is = $6000000000

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Variable Cost Profit Margin is Or Mark Up Per Unit Variable Cost

= $675000000 = $225000000(25% of Sales)

= $675000000 / 5890000000 = $ 0.115

Unit Cost = Variable Cost + Fixed Cost / Chicken pieces Sold = 0.115 + 6000000000 / 5890000000 = 0.115 + 1.02 = $1.135 Now suppose manufacturer wants to earn 25% mark up on sale. The manufacturer mark up price is calculated:

Mark Up Price = Unit Cost / (1 Desired Return on Sales)

=1.135 / (1-.25) = 1.135 / 0.75 = $1.51

Promotion:

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Promotion is one of the necessary plates in any form of business or in other words you can say that promotion is the key of success. If you promote your product at the right time. KFC also known the importance and significance of promotion so they uses the bill boards the major source of advertisement and one of the most important thing that they uses media especially the newspapers to promote their products. They are also creating awareness among the masses about their existing product range as well they tell us about the future product.

Marketing efforts to be taken by the restaurant: Paste delivery posters at petrol pumps, flats, colleges, plazas, and departmental stores. Distribution of delivery flyers in residential areas, markets, plazas and institutions (as per the plan) Visit offices and business places.

Placement:
In the case of the KFC the placement of the product is not important but the placement of the restaurant is important. The products of the KFC is cooked at the sport and then served after that. KFC Cavalry branch opened in June 1998, in the main commercial zone of Cavalry Grounds near the Jinnah Flyover. The restaurant is a three-story building including the basement (where the chicky play area is located). It is ideally located in the center of a main commercial and residential area of Lahore. The area that KFC Cavalry caters for is the residential and office area of Cavalry Grounds and Cantt, as the main target market. Another

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branch the KFC opened in the Lahore is in Garden Town (opposite to Barkat Market). KFC also target the Faisalabad and open its branch in D ground. Now we can easily judge that the KFC target the place for their restaurant, which is well known and is in the Porsche area where the income level of the people is high then the middle class level. Because the prices of the KFC products is high with comparison to the local products manufacturer who are dealing in the same kind of product in which KFC is dealing but the prices of the KFC is high due to special taste, high quality, and due to international brand, it is the world recognized fast food restaurant all around the world. So, for the placing strategy, KFC chose the well income class area for their restaurants.

Product Issues General description: Features: Quality Control Over Ingredients Every Chicken Tested K & Ns state-of-the-art Quality Assurance Lab monitors the entire integration process from livestock to feed and on to preparation of ready-to-cook and cooked products. Every Chicken Certified HACCP K & Ns ensures food safety by implementing the international HACP (Food Safety System) and enjoy the unique privilege of being the first and only

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HACCP certified company is India producing chicken and chicken products. Free from diseases and bacteria, drug residues and other contaminants. Quality Assurance Certificate Director General ( Research ) has issued quality assurance certificate for the chicken used by KFC. Packaging We are asked as many questions on our packaging as our products by our customers. The packaging for KFC products is chosen according to performance against three key criteria: Heat Retention Moisture removal Grease absorption The packaging material and carton design are all adapted to maximise performance against these three criteria. Recycled Paper All our clamshells and chicken boxes contain as much recycled material as it is legally allowed. By law we are required to have virgin fibre board in any part of the packaging that is in contact with food. Any virgin fibre comes from board suppliers who use pulp bought from managed forest in Scandinavia. This ensures that any wood cut for paper production is replaced with new plantings. Environmental concerns

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Over and above ensuring our packaging is supplied via recycled or renewable resources; KFC are enthusiastically complying with the new environmental directives on recovery and recycling of packaging waste. Litter We at KFC UKI are aware of our responsibilities to the Management of Litter and all our packaging carries the Keep your Country Tidy signs Branding This research measured and compared the brand identity of Kentucky Fried Chicken (KFC) in India. Brand identity was defined as the customer impressions of four different KFC identity elements - properties, products, presentations, and publications. A survey of young consumers in the countries (n = 795), showed that the respondents were more apt to eat within KFC restaurants, and spend more time doing so, than the Americans. The Chinese also had much more positive impressions of KFC. Brand identity impressions were correlated with overall customer satisfaction and with future patronage intentions for both groups. These findings support a model where differences in cultural frames of reference lead consumers to actively localize the brand identity of this nominally globalized product.

Promotion Issues
Sales promotion

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For the sales pormotion KFC introduced their goods like watches , keychain, e.t.c to the customers. Advertisement The advert titled Pool was done by OGILVY & MATHER, New Delhi advertising agency for KFC ZINGER BURGER (KFC company) in INDIA

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Chapter III - Analysis II

Data Analysis:
The data we received is as follows: We did a survey on KFC on people with age group of mostly 20-25yrs. Mostly all were open to non-veg food, and following were the results. As seen below KFC has shown a good report on all the micro factors that we considered.

5 4 3 2 1 0

5 Perfect , 1 Poor

We also asked questions on whether they would like KFC to start homedelivery services.

NO not required Makes No difference YES Definitely

Percentage

20

40

60

80

100

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We also inquired How close is the nearest KFC outlet from your house? Above 5Km 5%

3-5Km 15%

1-3Km 20%

Within 1Km 60%

Would you like to order at home or Dine in?

40% 30% 20%

I like to mostly order Sometimes order,sometime Dine in No fun without Dine in

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CHAPTER-IV SUMMARY, RECOMMENDATIONS & CONCLUSION

CONCLUSION AND RECOMMENDATION

Based on our analysis of the salient problem and the strategic alternatives, we recommend that KFC re-franchise all of the 129 company units in Mexico. This most effectively mitigates the risk of doing business in Mexico by making a franchisee responsible for the profit and loss of each unit. KFC will still receive royalties based on the sales of each unit. However, franchises will protect the company from currency devaluation. KFC is able to reduce this risk while still maintaining a presence in one of the largest growing markets. Expansion is not recommended at this time due to the volatility of the economic and political situation in Mexico. KFC is a market leader in providing Fried chicken. As KFC, so it is competing with the prominent market signs like pizza hut, McDonalds. N its product category, it is doing really well but they need improvements in their hot menu. They should also make their menu dynamic, by introducing new meals after certain period of time. New items should be introduced by varying the taste. They should also try the local desi taste addressing the desi food lovers, thus it will help to increase their market share. The prices of KFC are reasonable as compared with other fast food restaurants. But as price is always a primary concern for the customer, therefore, they should adopt certain strategy to attract the customers. And it can only be done by

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lowering the prices. It could be by introducing some discount packages for families, employees, students or regular customers. The membership card can be used to provide certain extra value to the customer. AS far as placement of the products is concerned, it is an important factor, for a company to increase its market share, by targeting the right customer. KFC needs to have more outlets, at commercial areas. It will help to target the actual as well as the potential customers. Mobile outlets may be an effective addition as well. KFC has large customer equity, but being a market symbol, a company should strive for having more actual customers. KFC should work for having more solid marketing departments. They should organize and run the proper advertisement campaign. It would definitely be an incremental factor for their sales. They can also use the brand promotions. They can set up the promotional campaigns. All they need is an effective marketing department to facilitate the promotional activities THE "SECRET RECIPE" of KFC SUCCESS IS ACTUALLY THE WHOLE FRANCHISE SYSTEM!!

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BIBLIOGRAPHY

WEBSITES: http://books.google.co.in http://en.wikipedia.org http://www.kfcs.ca http://ezinearticles.com

BOOKS:

Kotler, Phillip and Keller, lane Kevin (2008) Marketing Management, 12th Edition. Prentice hall.

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