CASE ANALYSIS:

Kentucky Fried Chicken and the Global Fast-Food
BUS 478 D1.03 Professor Wosk By: Frank CHU 20005-6416 March 3, 2003

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Individual Case – Kentucky Fried Chicken
History and Introduction Kentucky Fried Chicken Corporation (KFC) is the world’s largest chicken restaurant chain. It operates more than 10,200 restaurants worldwide in more than 79 countries. After PepsiCo brought up KFC in 1986, KFC carried out significant changes in different areas including the new focus on product quality, the new product offerings and differentiation, and the control system. Recently, KFC is inevitably facing a lot of business problems such as losing market shares and dealing uncertainties with the international markets. This report will focus on the recent matters that KFC have and will organize into four sections. First it will analyze KFC’s external environments, then the internal. Later, it will discuss the company’s global environments and strategies. At the end, it will provide recommendations for the identified problems. External Analysis The external analysis will focus on Porter’s five forces. Risk of entry by potential competitors The threat of entry barrier of the chicken fast-food chain industry is moderate. On one side, the entry barrier is low because the entry capital investment is low. For example, Chick-fil-A enters the industry by opening many small units in the food courts of shopping malls. Instead of investing millions in building restaurant houses, those units cost only US$2000-US$4000 per month, which is a less costly strategy to enter the industry. On the other side, the barrier is high because the industry is already filled with few big players such as KFC and Boston Market, which account 56% and 12.8% of the total number of restaurants in the chicken fast-food market. Their large sizes enable them to achieve the absolute cost advantages