Saturday, 31 March 2012

Kentucky fried chicken

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. How well did KFC fare under its various owners--Heublein, Reynolds and PepsiCo? What value did they add to the KFC enterprises? Did they have anything to offer KFC that would help KFC improve its financial performance or competitive strength?

Under Heublein quality-control issues and restaurant cleanliness was a problem. Heubein came from a liqueur industry and he did not have experience in the restaurant business. Heublein assigned a new management team to redirect KFC’s strategy. In 177 a “back-to-back” program was established to remodeling existing restaurant putting special emphasis on cleanliness and service. Marginal products were eliminated and product consistency was reestablished. Once the operating problem was under control, then they started building new restaurants.

Heublein was under the impression that his management skills were enough to conduct KFC and that KFC did not required much management intervention. His lack of experience in the restaurant business brought about other operations related problems.

Reynold had little more experience in restaurant than Heublein when it acquired KFC. As opposed to Heublein, RJR differed in management style for KFC, whereby, RJF allowed KFC ‘s managers to operate autonomous with little interference. RJF avoided many operation problems that plagued Heublein during its ownership of KFC. RJR did not enhance the business’ operation of the fast food service, they only damage KFC‘s image, relating it to a tobacco business.

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PepsiCo. predominant in consumer product orientation, provided KFC the experience required to operate the restaurant business. The marketing strategy of fast food followed by many of the PepsiCo’s patterns, as the marketing of soft drink and snack food would be eventually, the perfect combination. Restaurant chains also provided an additional outlet of numerous synergies by operating the three business under the same corporate umbrella. This strategies improved the financial performance and competitive strength of KFC.

What are the chief economy and business characteristics of the global fast-food industry?

The global fast food industry is made up of eight major sectors composed by sandwich chains, pizza chains family restaurant, grill buffet chains, dinner housed, chicken chains. Mc Donald, the sandwich chain and the largest in the industry, accounts for the 5 percent of the sandwich segment. Burger king with 16 percent of the market, runs in the second place of the sandwich fast food industry. Mc Donald generated the greatest per store share. Dinner house such as Applebee’s and Red Lobster made up the second largest and fastest-growing fast food segment. Much of the growth in dinner houses came from new unit construction , a market contrast with other fast-food chains. Its characteristics are well known brand names, franchising, local management of it branch.

What forces are driving change in the industry?

Fast food restaurant have been forced to change due to the growing income of consumers which provide them with better and affordable alternative such as a full services restaurant. Full Service restaurant differ tremendously with the fast food restaurant in atmosphere, ambience and food quality. Demand for more healthier food among consumer is an other driving force that prompt fast food chains to change.

Declining margins in the fast-food chains reflected the increasing maturity in the US fast-food industry. As an alternative to domestic expansion, many restaurant began to expand into international markets to benefits from international market.

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