INDIA STRATEGY TERM PAPER PRESENTATION

Presented By: Aparna Priyadarshini MBA 2010,Date: 12th April 2010 Asian Institute of Management,Manila

Company Background
KFC Corp, owned by YUM brands is one of the oldest(1952) and most popular chicken and food restaurant in the world. Other restaurants under YUM brands are Taco Bell, Pizza hut, Long John Silvers and A&W KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of other meat products suiting to local palate. In India they opened in 1995 and are lagging behind in terms of sales and reach vis--vis chains like McDonalds and Dominos

Target Market
Geography: India Metros and Tier II Cities Demography: Urban people of both genders aged between 15 to 45 years of age. Income Group: A, B and C segment of people. Psychographic: People who have a busy lifestyle and are influenced by western culture
An important thing to note is that Indian Fast food market is fundamentally different-Eating at home remains very much ingrained in Indian culture. Fast food joints or QSRs are one of the cheap sources of taking a break from home cooked food and eating out. The growth in nuclear families, particularly in urban India, exposure to global media and Western cuisine and an increasing number of women joining the workforce are responsible for changing this trend.
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Strategic Group DataData-Competitors

Others 33%

Mc Donalds 35% Mc Donalds KFC Dominos Pizza KFC Dominos Pizza 15% 10% Caf Coffee Day Others

Caf Coffee Day 7%

In India the fast food joints also compete against the other Quick Service Restaurants like Pizza Hut(same company as KFC) and dominos.
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PESTLE ANALYSIS
Political: India is liberally opening doors for international fast food joints Positive Economic: An ever growing middle class with increasing purchasing power Positive

Social: Women are moving out of kitchen to offices. A lot of Indians are veggies, so the menu has to changed Positive

Technological: Enough enabling technologies available Positive

Legal: Franchising models available and working successfully in India Positive

Environmental: Activists against killing of animals like PETA can create trouble Watch Out

When KFC came to India in 1995, it had to shut down because of the controversy about their handling of poultry.
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PORTERS FIVE FORCES

Threat of new Entrants
India is has opened doors for foreign fast food players recently

Verdict: The industry is moderately attractive

MEDIUM Bargaining power of Suppliers

There are a lot of suppliers available in the market

Competitive Rivalry HIGH

Bargaining power of Buyers:

There are only few western fast food joints in India

LOW

MEDIUM

Threat of Substitutes
Not a lot of options available

MEDIUM
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STRATEGIC MAP 1
GAP
Domin os Pizza

McDonalds

Service KFC
CCD

Number of Outlets

Number of outlets and good customer service is a KSF in this industry KFC has to increase its reach and try to move rightwards

STRATEGIC MAP 2

CCD

Domino s Pizza

GAP

Price

KFC
McDonalds

Extensive Menu

Both Price and Extensive menu are KSFs in this industry and KFC is weak in both. It should try to move into the GAP zone

STRATEGIC MAP 3

KFC

Domino s Pizza

McDonalds

Operations

CCD

Extensive Menu

As evident from the clutter, operations are thresholds to succeed in this industry whereas Extensive menu i

STRATEGIC MAP 4
McDonalds

Number of Outlets

Domino s Pizza

KFC
CCD

Quality Standards

As evident from the clutter, quality standard is threshold and number of outlets is a KSF
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Key Success Factors

KSFs: Location/Number of Outlets Extensive Menu Price Service/Ambience Taste Threshold Factors: Operations Quality Standards

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Competitive Matrix
Factors Weights McDonalds KFC Domino's Coffee Day Location/No of outlets 35% 9 4 7 4 Extensive Menu 25% 8 5 7 5 Price 15% 8 5 4 4 Service/Ambience 10% 7 7 9 6 Taste 10% 7 8 9 5 Weighted Score 100% 7.75 4.9 6.6 4.35 Market Share 35% 10% 15% 7%
KFC is losing out because of fewer number of outlets. Given that the market has lot of veggies, extensive menu is very important KFCs strength is Taste and it should try to differentiate on this basis.

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Future Competitive Matrix

Factors Weights McDonalds KFC Domino's Coffee Day Location/No of outlets 35% 9 7 7 4 Extensive Menu 30% 8 7 7 5 Price 10% 8 6 4 4 Taste 10% 7 8 9 5 Service/Ambience 15% 7 7 9 6 Weighted Score 100% 8.1 7 7.2 4.7 Market Share 35% 10% 15% 7%
To grow, KFC has to improve its acceptability by customizing its menu to suit local taste Price will become less important as almost all players in the industry will be similarly priced
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Vision/Mission Statement
Mission:
TO SELL FOOD IN A FAST, FRIENDLY ENVIRONMENT THAT APPEALS TO PRIDE CONSCIOUS, HEALTH MINDED CONSUMERS

Vision:

OUR PASSION, AS A RESTAURANT COMPANY, IS TO PUT A YUM ON PEOPLE'S FACES AROUND THE WORLD, SATISFYING CUSTOMERS EVERY TIME THEY EAT OUR FOOD AND DOING IT BETTER THAN ANY OTHER RESTAURANT COMPANY. THE UNIQUE EATING EXPERIENCE AT EACH OF OUR RESTAURANTS MAKE OUR CUSTOMERS SMILE AND INSPIRE THEIR LOYALTY FOR LIFE. TOWARD THAT END, OUR ASSOCIATES AROUND THE WORLD ARE TRAINED TO BE CUSTOMER MANIACS MANIACS.'
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Competencies The Ladder Model

Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Threshold Competencies Competitive Advantage

Competencies

Resources

Peripheral Competencies

Incompetencies

Resources: Resources: Good tasting recipe Fried chicken specialist People Global Experience Brand Recognition

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Competencies The Ladder Model

Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Threshold Competencies Competitive Advantage

Competencies

Resources

Peripheral Competencies

Incompetencies

Competencies Patented recipes Good customer service International footprint Brand Equity

InIn-competencies Fried chicken specialist

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Competencies The Ladder Model

Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Threshold Competencies Competitive Advantage

Competencies

Resources

Peripheral Competencies

Strategic Competencies Patented recipes Brand equity Good Custom Service

Incompetencies

Peripheral Competencies International Footprint

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Competencies The Ladder Model

Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Threshold Competencies Competitive Advantage

Competencies

Resources

Peripheral Competencies

Distinctive Competencies Patented recipes Brand equity

Incompetencies

Threshold Competencies Good customer service

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Competencies The Ladder Model

Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Threshold Competencies Competitive Advantage

Competencies

Sustainable Competitive Advantage

Peripheral Competencies

Patented recipe of chicken

Resources

Competitive Advantage
Incompetencies

Brand Equity

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Long Term Objectives

Strategic Objectives:
Expansion into all major urban cities resulting in market leadership Multi-brand Innovation and becoming a top of the mind brand in fast food industry Market leader in terms of employee welfare and customer satisfaction Financial Objectives: Strong Cash Generation and Returns Increasing the profit margin from 11% to 17% through improved operations and reduced overhead costs

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Value PropositionProposition-Triangle
KSFs
Extensive Menu/Taste
No of Outlets

Competencies
Patented recipes
Brand Equity

Customer Service

Customer centric culture

Ensuring superior dining experience by offering a wide range of specialized recipes , wherever you go!

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Strengths

Weakness
W1. High Price W2. Image of Fried W3. Poor Reach W4. Fewer Items Menu W5. Conflict in mgmt style of PepsiCo and Yum Brands Introduce cheaper items in the menu (W1,W4,O3) Change the image of KFC from fried to healthy(W2,O3) Open up new outlets in Urban locations (W3,O1,O2,O3)

SWOT
Opportunities
O1. Increase outlets O2. Increase in income of urban Indian O3. Shift in food habits e.g.-Vegetarian

S1. Good Taste S2. Brand Equity S3. Global Experience S4. Operations S5.Trademark Recipes S5. Strong Customer Focus Introduce new recipes suited to local taste(S1,S2) Target the brand conscious urban population(S2, S3,O2)

Threats
T1. Health conscious eating habits T2. Animal Care Activists T3.Intense Competition

Introduce healthier recipes(T1,S5) Differentiate as one proving fastest service(T3,S2,S4) Engage is CSR activities(T2,S3,S2) Differentiate through good service(S5,T3)

Work on the image of a healthy fast food chain through advertising( T1, W2) Develop a strong culture of good service (T3,W5)

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Options Filter
Options Competencies KSF's Weight 0.3 Introduce new recipes suited to local taste(S1,S2) 7 Target the brand conscious urban population(S2, S3,O2) 7 Introduce cheaper items in the menu (W1,W4,O3) 6 Change the image of KFC from fried to healthy(W2,O3) Open up new outlets in Urban locations (W3,O1,O2,O3) Introduce healthier recipes(T1,S5) Differentiate as one proving fastest service(T3,S2,S4) Engage is CSR activities(T2,S3,S2) Differentiate through good service(S5,T3) Work on the image of a healthy fast food chain through advertising( T1, W2) Develop a strong culture of service and differentiate from competition(T3,W5) Stategic Intent 0.3 8 4 7 0.2 8 3 6 Vision/ Mission 0.2 6 4 7 Score 1 7.3 Yes 4.7 No 6.5 Yes Select (Yes/No)

6.5 Yes

7 5 4 6 7

7 8 5 7 8

6 7 5 7 7

6 7 5 8 7

6.6 Yes 6.7 Yes 4.7 No 6.9 Yes 7.3 Yes

6.6 Yes

7.7 Yes
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Recommendations
Short Term
Introduce new recipes suited to local taste(S1,S2) Introduce cheaper items in the menu (W1,W4,O3) Introduce healthier recipes(T1,S5) Differentiate through good service(S5,T3) Work on the image of a healthy fast food chain through advertising( T1, W2)

Long Term
Change the image of KFC from fried to healthy(W2,O3) Open up new outlets in Urban locations (W3,O1,O2,O3) Engage is CSR activities related to animals & environment(T2,S3,S2) Develop a strong culture of good service (T3,W5)

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The Fast Food Framework

Create Enabling frameworks

Identify Competitive Advantage Develop robust supply chain

Improve reach by opening up outlets. Make judicious sourcing decisions

Research on food habits, taste and preferences

Understand Drivers
Identify internal competencies and KSFs Understand Target Market

Support Initiatives
Develop good relationship with customers and suppliers

Start Here

Iterate and Refine

Customize menu. Add to customer delight through quick and great service

Develop a culture of adding value to the customer through high quality great and quick service

Indulge in brand building exercise. Create trust for product quality & taste

Deliver Value
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Sources/References:
www.wikipedia.org www.kfc.com www.yum.com www.datamonitor.com www.ebscohost.com

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