A REPORT ON OPERATIONAL STRATEGIES SUBMITTED TO Dr. RANJIT ROY GHATAK http://www.cyberessays.com/Term-Paper-on-Kfc-Operations-Management/16274/ KFC INDEX SL.NO. PARTICULARS 1. INTRODUCTION 2.

MAJOR PROBLEM IDENTIFICATION 3. KEY SUCCESS FACTORS 4. ANALYSIS SWOT ANALYSIS FIVE FORCES MODEL VALUE CHAIN ANALYSIS QUALITY MANAGEMENT OPERATIONAL STRATEGIES 5 RECOMMENDATION AND CONCLUSION 6 REFRENCES Company History: KFC Corporation is the largest fast-food chicken operator, developer, and franchiser in the world. KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of roasted chicken products, side dishes and desserts. Outside North America, KFC offers beef based products such as hamburgers or kebabs, pork based products such as ribs and other regional fare. KFC, a wholly owned subsidiary of PepsiCo, Inc. until late 1997, operates over 5,000 units in the United States, approximately 60 percent of which are franchises. Internationally, KFC has more than 3,700 units, of which two-thirds are also franchised. In addition to direct franchising and wholly owned operations, the company participates in joint ventures, and continues investigating alternative venues to gain market share in the increasingly competitive fast-food market. In late 1997 the company expected to become a wholly owned subsidiary of Tricon Global Restaurants, Inc., to be formed from the spinoff of PepsiCo's restaurant holdings. New Management for Kentucky Fried Chicken In 1964 Sanders sold Kentucky Fried Chicken for $2 million and a per-year salary of $40,000 for public appearances; that salary later rose to $200,000. The offer came from an investor group headed by John Y. Brown, Jr. a 29-year-old graduate of the University of Kentucky law school, and Nashville financier John (Jack) Massey. A notable member of the investor group was Pete Harman, who had 40 12 17 23 29 32 39 PAGE NO 2 7 10

been the first to purchase Sanders's recipe 12 years earlier. Under the agreement, Brown and Massey owned national and international franchise rights, excluding England, Florida, Utah, and Montana, which Sanders had already apportioned. Sanders would also maintain ownership of the Canadian franchises. The company subsequently acquired the rights to operations in England, Canada, and Florida. As chairman and CEO, Massey trained Brown for the job; meanwhile, Harland Sanders enjoyed his less hectic role as roving ambassador. In Business Week, Massey remarked: "He's the greatest PR man I have ever known." Within three years, Brown and Massey had transformed the "loosely knit, one-man show ... into a smoothly run corporation with all the trappings of modern management," according to Business Week. Retail outlets reached all 50 states, plus Puerto Rico, Mexico, Japan, Jamaica, and the Bahamas. With 1,500 take-out stores and restaurants, Kentucky Fried Chicken ranked sixth in volume among food-service companies; it trailed such giants as Howard Johnson, but was ahead of McDonald's Corporation and International Dairy Queen. Stock Plummets in 1970 Several observations about franchise arrangements noted by stock market analysts and accountants in the late 1960s became widespread news by 1970. First, Wall Street noticed that profits for many successful franchisers came from company-owned stores, not from the independent shops--though this was not the case with Kentucky Fried Chicken. This fact tied in with a memorandum circulated at Peat, Marwick, Mitchell & Company, and an article published by Archibald MacKay in the Journal of Accountancy stating that income labelled "initial franchise fees" was added when a franchise agreement was signed, regardless of whether the store ever opened or fees were collected. Such loose accounting practices caused a Wall Street reaction: franchisers, enjoying the reputation as "glamour stocks" through the 1960s, were no longer so highly regarded. Kentucky Fried Chicken stock hit a high of $55.50 in 1969, then fell to as low as $10 per share within a year. In early 1970, following a number of disagreements with Brown, Massey resigned. When several other key leaders departed the company, Brown found the housecleaning he planned already in progress. A number of food and finance specialists joined Kentucky Fried Chicken, including R. C. Beeson as chief operational officer and Joseph Kesselman as chief financial officer. Kesselman brought in new marketing, controlling, and computer experts; he also obtained the company's first large-scale loan package ($30 million plus a $20 million credit line). By August 1970 the shake-up was clear: Colonel Harland Sanders, his grandson Harland Adams, and George Baker, who had run company operations, resigned from the board of directors. Colonel Sanders, at 80, knew his limits. In a 1970 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." Heublein Makes Changes in 1970s 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 fast-food markets. The popularity of barbecued spare ribs, introduced in 1975, kept the numbers for Kentucky Fried Chicken looking better than they really were. 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. For Heublein, acquisitions were doing more harm than good: Kentucky Fried Chicken was stumbling just when the parent company had managed to get United Vintners, bought in 1969, on its feet. In 1977 the company appointed Michael Miles, who was formerly responsible for the Kentucky Fried Chicken ad campaign at Leo Burnett and had joined Heublein's marketing team in 1971, to chair the ailing Kentucky Fried Chicken. Richard Mayer, vice-president of marketing and strategic planning for Heublein's grocery products, took charge of the Kentucky Fried Chicken U.S. division. The 1980s: Profits and Expansion

Miles and Mayer's work culminated with the highly successful 1981 ad campaign, "We Do Chicken Right." A year later, in step with the fast-paced 1980s, R.J. Reynolds Industries Inc. acquired Heublein, giving Kentucky Fried Chicken another lift; the company had expansionary vision, capital, and the international presence to tie it all together. Kentucky Fried Chicken sales that year reached $2.4 billion. By 1983 the company had made impressive progress. With 4,500 stores in the United States and 1,400 units in 54 foreign countries, no other fast-food chain except McDonald's could compete. But while many industry insiders were crediting the team with victory, Mayer wasn't so quick to join in. As he noted in Nation's Restaurant News, "People keep talking about the turn-around at KFC. I'd really rather not talk about it. The turn-around is only halfway over." With the entrance of R. J. Reynolds came in to the exit of Michael Miles, who resigned to become CEO of Kraft Foods; Mayer took over as chairman and CEO. Mayer continued on a cautious line for the next several years, refusing to introduce new products as obsessively as its competitors. "In the past two years," Mayer said in a KFC company profile in Nation's Restaurant News, "people have gone absolutely schizoid A lot of chains have blurred their image by adding so many new menu items." In further commentary, he added, "We don't roll out a flavour-of-the-month." PepsiCo Buys Company in 1986 Mayer's conservatism gained him the respect of Wall Street and his peers in the fast-food industry. In 1986 soft-drink giant PepsiCo, Inc. bought Kentucky Fried Chicken for $840 million. Reasons cited were KFC's superior performance and its 1980--85 increase in worldwide revenue and earnings. The successful operator of the Pizza Hut and Taco Bell chains, PepsiCo did quite well introducing new products through those restaurants. It was just a matter of time before Kentucky Fried Chicken would be expected to create new products. The overall market for fast food seemed glutted by the late 1980s. PepsiCo CEO D. Wayne Calloway saw Kentucky Fried Chicken's national niche as secure for two reasons: first, with competition spurred by the large number of fast-food suppliers, weaker chains would inevitably leave the market; second, Kentucky Fried Chicken still had room to grow in the Northeast and Mid-Atlantic regions. Internationally, the company planned 150 overseas openings in 1987. Japan, a major market, had 520 stores, Great Britain had 300, and South Africa had 160. KFC International, headed by Steven V. Fellingham, planned to concentrate on opening units in a handful of countries where its presence was limited. The People's Republic of China was the most notable new market secured in 1987; KFC was the first American fast-food chain to open there. Franchisee Problems with New Parent Company Imperative to the success of Kentucky Fried Chicken was the establishment of successful relations with the numerous franchisees. Most of them lauded parent PepsiCo's international strength and food-service experience; KFC had its own inherent strength, however, according to franchisees, which the parent company would do well to handle with care. That strength was the sharing of decisionmaking. In 1966, for instance, the Kentucky Fried Chicken Advertising Co-Op was established, giving franchisees ten votes and the company three when determining advertising budgets and campaigns. As a result of an antitrust suit with franchisees, in 1972 the corporation organized a National Franchisee Advisory Council. By 1976, the company worked with franchisees to improve upon contracts made when Brown and Massey took over. Some contracts even dated back to when Colonel Sanders had sealed them with a handshake. The National Purchasing Co-Op, formed in 1979, ensured franchisees a cut of intercompany equipment and supply sales. All of these councils had created a democratic organization that not only served the franchisees well, but helped keep operations running smoothly as Kentucky Fried Chicken was shifted from one corporate parent to another. As time passed, however, PepsiCo's corporate hand seemed to come down too heavily for franchisee comfort. In July 1989, CEO and Chairman Richard Mayer resigned to return as president to General Foods USA. Mayer, who together with Mike Miles was credited for bringing Kentucky Fried Chicken out of the 1970s slump, departed as the company battled over contract rights with franchisees. John M. Cranor, an executive who had joined PepsiCo 12 years earlier, took over as CEO. Kyle Craig, formerly

with Burger King, Steak & Ale, and Bennigan's, began in an advisory role, later stepping up to become president of KFC-USA. To update its down-home image and respond to growing concerns about the health risks associated with fried foods, in February 1991 Kentucky Fried Chicken changed its name to KFC. New packaging still sported the classic red-and-white stripes, but this time wider and on an angle, implying movement and rapid service. While the Colonel's image was retained, packaging was in modern graphics and bolder colors. New menu introductions were postponed, as KFC once again went back to the basics to tighten up store operations and modernize units. A new $20 million computer system not only controlled fryer cooking times, it linked front counters with the kitchen, drive-thru window, manager's office, and company headquarters. International Success in 1990s Though KFC may have had problems competing in the domestic fast-food market, those same problems did not seem to trouble them in their international markets. In 1992 pretax profits were $92 million from international operations, as opposed to $86 million from the U.S. units. Also, in the fiveyear span from 1988 through 1992, sales and profits for the international business nearly doubled. In addition, franchise relations, always troublesome in the domestic business, ran smoothly in KFC's international markets. To continue capitalizing on their success abroad, KFC undertook an aggressive construction plan that called for an average of one non-U.S. unit to be built per day, with the expectation that by 1995 the number of international units would exceed those in the United States. International sales, particularly in Asia, continued to bolster company profits. In 1993, sales and profits of KFC outlets in Asia were growing at 30 percent a year. Average per store sales in Asia were $1.2 million, significantly higher than in the United States, where per store sales stood at $750,000. In addition, profit margins in Asia were double those in the United States. KFC enjoyed many advantages in Asia: fast food's association with the West made it a status symbol; the restaurants were generally more hygienic than vendor stalls; and chicken was a familiar taste to Asian palates. The company saw great potential in the region and stepped up construction of new outlets there. It planned to open 1,000 restaurants between 1993 and 1998. In 1996 the company prepared to rid itself of its restaurant division by drawing together Pizza Hut, Taco Bell, and KFC. All operations were now overseen by a single senior manager, and most back office operations, including payroll, data processing, and accounts payable, were combined. In January 1997 the company announced plans to spin off this restaurant division, creating an independent publicly traded company called Tricon Global Restaurants, Inc. The formal plan, approved by the PepsiCo board of directors in August 1997, stipulated that each PepsiCo shareholder would receive one share of Tricon stock for every ten shares of PepsiCo stock owned. The plan also required Tricon to pay a one-time distribution of $4.5 billion at the time of the spinoff. If approved by the Securities and Exchange Commission, the spinoff would take place on October 6, 1997. PepsiCo CEO Roger Enrico explained the move: "Our goal in taking these steps is to dramatically sharpen PepsiCo's focus. Our restaurant business has tremendous financial strength and a very bright future. However, given the distinctly different dynamics of restaurants and packaged goods, we believe all our businesses can better flourish with two separate and distinct managements and corporate structures." KFC and its franchisees did settle their contract disputes; according to a press release, "the crux of the agreement revolves around KFC franchisees receiving permanent territorial protection. In turn, KFC Corporation will have more direct influence over certain national advertising and public relations activities." Still KFC faced the need to rennovate its restaurant buildings, and also faced stiff competition from Boston Market, Burger King, and McDonald's, so it remained to be seen if the new parent company would refresh KFC's image and profits. MAJOR PROBLEM IDENTIFICATION After PepsiCo acquired KFC RJR Nabisco, KFC faced some difficult parent-subsidiary relationship. They follow different types of organizational culture than KFC. KFCs strategy was longer relationship with employees and behave like a family member but PepsiCo depends more on performance if dont

do well they dont hesitate to sack their employees. Employees were always in a threatening position from where it was tough to provide better service. Another problem was decentralization. PepsiCo decision making process was decentralized so that problem was created from different level and lack of coordination was occurred. KFCs offerings were relatively limited before PepsiCo purchased them, after PepsiCo purchased them, they came up wider variety of food where some were not successful .That means they had a problem with their offerings .They did not differentiated their offerings for different targeted segments .They were not as fast as their competitors to build restaurants, means they had problem in delivery channels. They were only in fried chicken market this is also a problem so their competitor were getting advantage in non fried chicken. Health issue was another problem. Franchising problem was that they were not maintaining distance that they maintained between franchiser and their own outlets .They did not able to deal with franchiser uniformly. Management Shift of Year 1986 when KFC was acquired by PepsiCo from RJR Industries. Sweeping changes into the culture was initiated by the new management- this brings about demoralization to old KFC employees and even franchisees. KFCs leadership in the US market was so extensive that it had fewer opportunities to expand its US restaurant base, which was growing at about 0.8% per year. There was widespread discontent among the franchisees, some of whom felt the new owners did not understand the chicken business and were not providing leadership expected from a franchisor. Saturated fast food industry in U.S. market Consumer health food trend Healthier, swift, sophisticated and cheap alternatives. Prominent examples include McDonalds and the newer entrant to the fast food market, Subway. Home-cooked image of Boston Chicken Because the fast food market in India is highly competitive, KFC faces a wide number of direct and indirect competitors. KFCs main competitors are fast food chains such as McDonalds and Dominos, which are already well established throughout India. McDonaldss in particular is a direct competitor, as they have already successfully introduced their Salads plus line, which directly targets healthy food conscious Indians. But, there are a number of other competitors that is also focusing on chicken types products. All this competition makes it quite difficult for KFC to maintain or even broaden their customer base. However, with the introduction of a new and healthy product range, KFC can differentiate itself from most competitors and will gain a competitive advantage. ANALYSIS KEY SUCCESS FACTORS KFC is a Market leader: Worlds largest chicken restaurant chain and third largest fast-food chain. KFC had refocused international strategies to grow its company and franchise restaurant base all over the world. Find, motivate, and retain hard-working and entrepreneurial managers and franchisees around the globe.

 Inventory system, supply chain management system to manage its supply, easy payment and ordering systems for its customers and wireless internet technology. Implementation of technology can make the management more effective and cost saving in the long term. This will also make customer happy if cost savings results in price reduction or promotional campaign discount which will benefits them from time to time. Goodwill and reputation: The Company certainly has earned a good name and reputation by its previous products and services in the market. It is even more recognised in other markets outside India, where the company is among the leading fast food giants. The brand is recognised and trusted in India for its quality products, price, and customer service. It therefore has a good head start and enjoys a good chance of becoming a leader in Indian 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-fill A, KFC customer base remained loyal to the KFC brand because of its unique taste. KFC has continued to dominate the dinner and take out segment of the Industry. Ranks highest among all chicken restaurant chains for its convenience and menu variety. It generates $1B revenue each year. KFC was losing market share as other Chicken chain increased sales at a faster rate. KFC share of Chicken Segment sales fell from 71 percent 1999, to less than 56 percent in 2009, a 10 -years drop of 15 percent. Huge competition in this segment. India is still mostly a vegetarian dominated cultured society. South India is especially very much so. This may reduce the market share of the company. KFC has not yet invested much on R&D, and innovating new products for Indian Markets. This may lead to failure of their products as they are not in line with the Indian mind set, peoples taste and preferences and their likes and dislikes. This may prove fatal for the company. Competition: Competitor companies like McDonalds are fast catching up with the market. McDonalds with sales of more than 19 billion in 1999, accounted for 15 percent of the sales of the nations top 100 restaurant chains. Organisations 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 organisations, questioning 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 home market to generate sales. As the US markets are already saturated and leave no or little scope for growth, company necessarily needs to look at offshore foreign markets to generate sales and keep up the profits. SWOT ANALYSIS OF KFC: SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieving that objective. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strengths: attributes of the person or company that is helpful to achieving the objective. Weaknesses: attributes of the person or company that is harmful to achieving the objective. Opportunities: external conditions that is helpful to achieving the objective. Threats: external conditions which could do damage to the objective. Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If

the objective is NOT attainable a different objective must be selected and the process repeated. Matching and converting Another way of utilizing SWOT is matching and converting. Matching is used to find competitive advantages by matching the strengths to opportunities. Converting is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. An example of conversion strategy is to find new markets. If the threats or weaknesses cannot be converted a company should try to minimize or avoid them. Internal and external factors The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories: Internal factors The strengths and weaknesses internal to the organization. External factors The opportunities and threats presented by the external environment to the organization. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. [pic] INTERNAL FACTORS- STRENGTHS: STRONG BRAND NAME, GOODWILL AND REPUTATION: KFC the Company certainly has earned a good name and reputation by its previous products and services in the 14 market. It is even more recognized in other markets outside India, where the company is among the leading fast food giants. The brand is recognized and trusted in India for its quality products, price, and customer service. It therefore has a good head start and enjoys a good chance of becoming a leader in Indian 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-fill A, KFC customer base remained loyal to the KFC brand because of take out segment of the Industry Ranks highest among all chicken restaurant chains for its Convenience and menu variety. It generates $1B revenue each year. LOCATED AT STRATEGIC LOCATIONS: Located at the most strategic joints all over the country in major metros with the most posh surroundings and where the footfall is the maximum or are major shopping hubs. EFFECTIVE STORE MANAGEMENT /CLEANLINESS: Key to continued growth was to find, motivate, and retain hard-working and entrepreneurial managers and franchisees around the globe. In addition to short term profits, store managers were also responsible for building local public relations, maintaining employee morale, developing customer good-will, keeping tab on the competing chains and creating a legacy of special chicken cooking recipe. The KFC restaurants are the ideal examples of neat and clean atmosphere with regular and efficient employees taking good care of the store and the customers always with a smile on their face. COMPETITIVE MARKETING STRATEGY: Large scale promotion activities and localizing some of its products and advertising strategies positioned the brand as a premium brand and grabbed a lions share of the value share of the market especially among the chicken loving youth of India. STRONG DISTRIBUTION NETWORK: Focused on building outlets in non traditional places like universities, shopping malls, airports, movie halls. Maintains a database of city streets for their efficient home delivery system

 WEAKNESSES: LACK OF INNOVATION AND LESS INVESTMENT IN RND: KFC has not yet invested much on R&D, and innovating new products for Indian Markets. This may lead to failure of their products as they are not in line with the Indian mind set, peoples Taste and preferences and their likes and dislikes. This may prove fatal for the company. FEWER OPTIONS AVAILABLE FOR VEGETARIANS AND NON CHICKEN LOVERS: The menu is primarily focused on a few types of chicken and thus has fewer choices available for other segments of fast food lovers and thus may fail to attract a wide range of customers. CULTURE INCOMPATIBILITY: KFC still finds it difficult to enter many markets mainly because of the culture incompatibility with the local market. It is still restricted to the urban markets of India. RECENT DROP IN SALES: The brand suffered recent drop in sales in the current year after the recessionary phase and small competitors taking away shares of their market OPPORTUNITIES: NEW MARKETS: Globalization has opened doors for new markets for the company. As the developed markets are mostly saturated, the developing countries like India and China promises a good market and generation of demand in the future. With more than 70% of the markets in India 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 India. 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 Indian mindset is fast changing. LARGE YOUTH POPULATION: India 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 good news for the company BOOM IN ORGANIZED RETAIL AND CONSUMERISM: With malls and shopping hubs growing exponentially all over the nation in metros and Tier 2 cities the demand for people going to the malls and spending money has increased significantly over the years. The demand for food eaten outside has also increased over the years and more and more people prefer to eat at restaurants while out of their home. Aspiration level of the people especially the youth has gone to a level at which American eateries are the in thing and the Fast food chains are cashing on it by attracting more of the market to their joints. 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, Subways, Nirulas and other fast food chains more familiar with the Indian ethos are fast catching up with the market. Apart from that the Indian consumers preference for local spicy Indian preparation chicken and meat is a serious threat to the Company. THREAT FROM NGOS AND POLITICAL ORGANIZATIONS: 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 the way KFCs suppliers are threatening the chicken, before they get slaughtered. AntiKFC 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. Apart from that being an American iconic brand name it is a soft target for many political organizations who will try to attack its reputation to highlight their causes. SATURATED U.S MARKET: Now KFC cannot rely on just its home market to generate sales. As the

US markets are already saturated and leave no or little scope for growth, company necessarily needs to look at offshore foreign markets to generate sales and keep up the profits. BULK OF THE POPULATION IS VEGETARIAN: India is still mostly a vegetarian dominated cultured society. South India is especially very much so. This may reduce the market share of the company. ECONOMIC CRISIS: With the Government facing a high fiscal deficit tax and duty hike will result in less money in the hands of the consumer as a result of which expenditures will be cut on luxury food items. This is a serious threat facing KFC. PORTERS 5 FORCES MODEL ANALYSIS OF KFC: [pic] Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a business unit to reassess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average. Porter's five forces include three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. The threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives: Buyer propensity to substitute Relative price performance of substitute Buyer switching costs Perceived level of product differentiation Number of substitute products available in the market Ease of substitution. Information-based products are more prone to substitution, as online product can easily replace material product. Substandard product Quality depreciation The threat of the entry of new competitors Profitable markets that yield high returns will draw firms. This results in many new entrants, which eventually will decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition). The existence of barriers to entry (patents, rights, etc.)The most attractive segment is one which entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily.

 Economies of product differences Brand equity Switching costs or sunk costs Capital requirements Access to distribution Customer loyalty to established brands Absolute cost advantages Learning curve advantages Expected retaliation by incumbents Government policies Industry profitability; the more profitable the industry the more attractive it will be to new competitors Internet era; today competitors need only a website to enter a market The intensity of competitive rivalry For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Sustainable competitive advantage through innovation. Competition between online and offline companies; click-and-mortar -v- brick-and-mortar Level of advertising expense. Powerful competitive strategy used by a company which can intensify competitive pressures on their rivals. How will competition react to certain behavior by another firm? Competitive rivalry is likely to be based on dimensions such as price, quality, and innovation. Technological advances protect companies from competition. This applies to products and services. Companies that are successful with introducing new technology are able to charge higher prices and achieve higher profits, until competitors imitate them. Examples of recent technology advantage in have been mp3 players and mobile telephones. Vertical integration is a strategy to reduce a business' own cost and thereby intensify pressure on its rival. The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Buyer concentration to firm concentration ratio Degree of dependency upon existing channels of distribution Bargaining leverage, particularly in industries with high fixed costs

 Buyer volume Buyer switching costs relative to firm switching costs Buyer information availability Ability to backward integrate Availability of existing substitute products Buyer price sensitivity Differential advantage (uniqueness) of industry products RFM Analysis The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources. Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Impact of inputs on cost or differentiation Presence of substitute inputs Supplier concentration to firm concentration ratio Employee solidarity (e.g. labour unions) Supplier competition - ability to forward vertically integrate and cut out the buyer 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 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. 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 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. KFC-VALUE CHAIN ANALYSIS All the functions of KFC such as production, marketing, R&D, service, information systems, material management and human resources have a role in lowering the cost structure and increasing the perceived value of the products through differentiation. KFC specialized in chicken and they says, No bodys cooking like KFC today and we are the chicken experts There is no competitor for spicy chicken which is made by KFC PHILOSOPHY OF KFC The CHAMPS Program Champs stands for our belief that the most important thing each of us can do is to focus on the customer. It stands for our commitment to provide the best food and best experience for the best value CHAMPS stand for the six universal areas Of customer expectation common to all cultures and all restaurants concepts.

THE CHAMPS These are: Cleanliness Hospitality Accuracy Maintenance of Facilities Product Quality Speed of Service CHAMPS is the philosophy to ensure that the customer has the consistent quality experience in every restaurant, everyday, on every occasions and you will be playing role in delivering CHAMPS to our 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 all over 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 chicken products Current Products Kentucky fried chicken Zinger burger Krushers GameBox Twister Boxmaster Chicken Bucket Hot wings Fries Corn on the cob Zing Kong Snacker(chicken & veggie) Veggie Feast Soft Drink Coleslaw Chicken Thali Veg Finger Snack Box Sundae Soft Twirl KFC Original Recipe 6 cups Crisco Shortening 1 eggs well beaten 2 cups Milk 2 cups Flour 2 teaspoons ground pepper

3 tablespoons salt 1 teaspoon MSG 1/8 teaspoon Garlic Powder 1 dash paprika 2 Frying Chickens cut into 6 pieces Place shortening into the pressure cooker and heat over medium heat to the shortening reaches 400F. In a small bowl, combine the egg and milk. In a separate bowl, combine the remaining six dry ingredients. Dip each piece of chicken into the milk until fully moistened. Roll the moistened chicken in the flour mixture until well coated. In groups of four or five, drop the covered chicken pieces into the shortening and lock the lid. When pressure builds up cook for 10 minutes. 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 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 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 PRODUCTION CAPACITY AND PRICING: 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 Variable Cost = $675000000 Profit Margin is Or Mark Up = $225000000(25% of Sales) per unit variable cost = $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 KFC beats its competitors through the revising marketing strategy at every movement but the main competitor of KFC is Mc Donald COMPETITIVE ADVANTAGE |KFC |McDonalds | |Spicy Products |Burger and French Fries | |Indian people like spicy products instead of boiled food | | |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 because local staff can better deal|Its Staff consist of simple Graduates and give them training | |with the customers | | |KFC uses Top to Bottom and Bottom to Top Approach in Management. |McDonalds Uses Top To Bottom Approach. | |KFC is Co branding with Walls |No such Case. | QUALITY CONTROL METHODS AND MANAGEMENT Quality management (TQM) is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on

meeting customer needs and other organizational objectives. It empowers an entire organization, from the most junior employee to the CEO, with the responsibility of ensuring quality in their processes. In particular, it provides management with the ability to ensure quality through more streamlined and effective process-improvement channels. Quality Management is no more relevant to any one type of organization than any other; on the contrary, it is a philosophy appropriate to any situation in which quality assurance is important. Quality Description Quality Management aims to go beyond simply meeting customer requirements or responding to the customer feedback on the products and services offered by the organization. If faults were found, the supplies were held back, reworked or rejected, and additional funds were usually required to produce the needed quantity and quality. The aim of Quality Management is to 'get it right the first time every time' while avoiding the cost associated with other quality management techniques such as simple testing. Quality Management seeks to identify the sources of possible defects and to prevent them from affecting the final product. Quality Management achieves this by identifying the root causes of the most prevalent and costly defects and to prevent such defects in the future by removing these root causes. KFC's Quality Management Program Managing quality in a manufacturing company revolves around understanding customer expectations, defining product specifications based on these expectations, and subsequently ensuring that the products being manufactured (that is, the outcome of the manufacturing process) conform to the design specifications. In this context, the detailed specifications of a manufacturing process, although of great relevance to the success of the internal operations of the company, are of no direct interest to the customer. In contrast, managing quality in service businesses, although similar in spirit, is somewhat different and is more challenging because of certain characteristics inherent to service operations. These include the intangibility of service outcome in some cases and the presence and participation of customers in the creation of most services. Service customers generally care about the service outcome and about the way a service process is executed. Consequently, quality management in services revolves around managing both of these factors (Apte, Karmarkar, and Pitbladdo [1994] discuss the measurement and management of service quality in detail). For example, KFC's management needs to control not only the taste, temperature, and appearance of the fried chicken, but also the courtesy and the speed of service it offers to its customers. Quality management at KFC recognizes this fundamental dichotomy by using two complementary programs for measuring quality: (1) The quality, service, and cleanliness (QSC) program for judging the quality of service outcomes from the perspective of a customer, and (2) the operations facility review (OFR) program for measuring a restaurant's process implementation performance against KFC's process specifications. The results of these two quality measurement programs are incorporated into "Today's KFC restaurant quality period report," a quarterly report prepared for senior management at KFC. To understand customer expectations and to measure the company's performance against that of its competitors, KFC regularly uses the following customer- and market-oriented surveys to manage its service quality. KFC hires a professional interviewing service to survey customers on their impressions of product and service quality. It also periodically hires a consulting firm to identify important service attributes and their relative importance to the customers of a quick-service restaurant. It uses the understanding of customer expectations it gains in designing and continually revising its quality measurement schemes. KFC receives customer complaints via complaint cards available at all KFC restaurants and through letters and phone calls from customers. A KFC representative responds to each customer complaint by letter or phone. KFC also monitors and tracks the number and the types of complaints different restaurants receive. KFC regularly uses market tracker surveys to measure its performance on key customer service

attributes compared to that of its competitors (such as McDonald's and Wendy's). The customer service attributes it tracks include speed of service, mispacks, courtesy, product quality, and value for money spent. Quality, Service, Cleanliness (QSC) Program KFC implemented the QSC program in 1977. This program is designed to measure and evaluate quality at each KFC restaurant, company owned or franchised, from the viewpoint of a customer. "Mystery shoppers," independent individuals contracted contracted by KFC, evaluate the quality, service, and cleanliness of each restaurant. Mystery shoppers are well trained to use the standard QSC form so that they perform each evaluation in an objective, accurate, and consistent manner. KFC revises and updates the form frequently to ensure that it reflects the ever-changing customer expectations, as revealed in the surveys. QSC Evaluation Form Service Quality (50 Points) Service time (total and window time) Attentive, energetic, warm, and courteous service Professional appearance, including wearing a uniform Accuracy of order taking and filling (no missing or extra items) Helpful, suggestive selling Product Quality (30 Points) The following criteria are measured for all productschicken products (original recipe, crispy, hot wings, etc.), cold and hot side items (such as cole slaw, potato salad, French fries, biscuits, etc.) and beverages: o Standard temperature Absence of visible shortening and proper breading of chicken o Color, texture, overall appearance O Proper filling and closing of containers Cleanliness (20 Points) Clean entrance doors and windows Clean and well-supplied rest rooms Clean and neat service counter and surrounding area Clean and neat customer seating area Neat exterior, well-maintained landscaping Operations Facility Review Form Product/Process Quality (44 Points) Evaluate each product using the following criteria: Quality standards for ingredients used Storage and handling of ingredients Cooking procedures; time, temperatures, cleanliness, etc. Hold time Facilities (16 Points) Clean, neat, and well-maintained facilities (interior and exterior) and fixtures Customer Viewpoint Service and Product Quality (15 Points) Selected items from QSC form: service time, courtesy, order taking and filling accuracy, product temperature, and appearance Sanitation/Operations (15 Points) Procedures used and frequency of cleaning processes for kitchen, service counters, seating areas, and rest rooms O Equipment clean, well maintained, and in good working order Critical Issues Presence of rodents, cockroaches, other insects Cross contamination potential due to faulty procedures or equipment Spoiled, reprocessed, or unapproved products being sold Employee(s) with communicable disease

Operational strategies Most modern fast food stores have now implemented some form of localization in order to satisfy the markets of foreign counties. The processes and decision making responsibilities are closer to the countries in question and only recently has KFC been able to quietly slip back into the Indian market with out a considerable backlash from the local community. Yum Brands Inc. still use a similar approach to their franchising and still implement control over the stores they set up through advertising, business coaching, training, development and cooperative sourcing(Yum! Brands Inc, 2009), but now use a varied menu in order to capture the market of the foreign areas. Post India, KFC has changed their business strategy somewhat in that they still use a Global Standardization strategy but use a degree of local responsiveness. This is partly because of the results in India and the movements of the competition to make their product similar to that of the host country. For example changes in their menu in China and Indonesia to that in Australia and the US. Inventory Control Is Key to Controlling More than Costs The two most costly expenses of any restaurant operation are food/beverage and labour, yet many restaurateurs choose not to conduct regular food and beverage inventories. Inventory reports not only evaluate both how well your kitchen crew and service staff are controlling portions and what your total food cost is in terms of percentage of your menu price, but should also include a item box for "shelf life", which can be added to inventory report forms. To set up a computerized or manual report, you could configure a format in this fashion using any variety of simple spreadsheet applications on your computer: 1. Items. This column would categorize and sub-identify (i.e. Meat = category, Poultry = identify, Fresh Boneless Chicken Breasts, Prep-Frozen Wings etc. = sub group) all food and beverage items that you would need to purchase to run your operation and is determined by your projected sales. Solicitation of active participation from your Chef, Head Cook, would be ideally included in determining what to purchase. There have been cases where, I meet owners who decide to handle the F&B buying and then complain that either "the Chef has no creativity" or "we aren't selling anything". If we hire these professionals, we must let them do their job. 2. Unit Cost. The second column is the unit column, or how the food is ordered by the pound, case, bottle, can and so on. These are the unit quantities that you will be counting. 3. Starting Inventory. The third column is the inventory that had in stock when conducted last inventory report. 4. Purchases. The fourth column would list any purchases that made since the last inventory report next to the corresponding category. 5. Subtotal. The fifth column would total items (3.) and (4.). 6. Closing Inventory. More efficient with an assistant to call out inventory as they record information on column six of this report form -- ALL food and beverage in the kitchen, cold and dry storage areas. 7. Product Used. Subtract closing inventory (6.) from Subtotal (5.) and record in column seven. 8. Unit Cost. This eighth column identifies the most recent price paid (as costs will fluctuate-sometimes wildly) for each item on the list. Unit costs shall be monitored regularly to receive the best possible price and value for QUALITY product. But keeping in mind the good working relationships with purveyors is essential to remain successful and switching purveyors for price alone is usually not a good idea. 9. Total Cost. Multiply the unit cost (8.) by the product used (7.) which will give the total cost they spent on F&B in column nine for a given period. 10. Items Needed. It will be fairly easy to determine what KFC will need for the next week/s of

business based on the fact that they now know what has been used in the last week/s and have a relatively good idea of what is planned in terms of business for the upcoming week/s. Receiving Procedures at KFC Receiving food and supplies from your vendors requires more than simply taking boxes off a delivery truck. Restaurant owners and managers should have procedures in place for any employee who handles deliveries. Consider these suggestions for ways to manage deliveries and other receiving procedures in your restaurant. Verify Quantity and Quality Whenever KFC receives an order, the manager or responsible employee take "check in the order," or verify that the correct amount of products was received as well as checking the quality of the incoming product. KFC follows these steps: 1. Verify the quantity. Be sure that every product ordered is accounted for in the delivery. An easy way to do this is to compare the order guide to the invoice and manually check off all items as KFC look through the delivery. Also, it makes sure that product weights and counts are correct. 2. Ensure quality. Be sure the items are of good quality. All refrigerated or frozen items should arrive at the proper temperature, and products should show no signs or damage. 3. Check the cost. Make sure the total cost on the invoice is correct. The money spend on food orders and other supplies usually makes up a large part of the restaurant expenses, and recording the appropriate amount in your financial records is very important to the overall profits and losses. Drive-through-Window Test As a part of its major responsibilities, the senior management of KFC's South Central division (roughly the Texas and Oklahoma area) routinely evaluates the division's financial and operating performance compared to that of other divisions and its competitors. In the fourth quarter of 1989, it became apparent that KFC restaurants in the division were experiencing serious problems. The profit margin had eroded from 16 to eight percent. KFC's performance on key customer attributes, as revealed by the QSC, OFR, and market tracker surveys, was also suffering. For example, KFC was being ranked in the bottom half of the quick-service restaurant industry in the categories of (1) speed of service and (2) value for money spent. From historical sales data, KFC knew that roughly 50 percent of its sales volume was contributed by the drive-through-window (DTW) operation. Slow service, as perceived by customers, was a particularly critical problem for DTW, since speed of service is unquestionably the most important dimension of service quality for a quick-service restaurant. The division was also experiencing a high level of competitive pressure from new double drive-through hamburger operators, such as Rally's and Checkers. This competitive pressure combined with the slowness of service spelled trouble. KFC had no marketable competitive advantage over the double drive-through or other major quick service restaurants that used drive-through as a major portion of their business. KFC could lose market share. Slow service could also have a ruinous impact on product innovation activity. KFC might introduce new products, but if customers had to wait too long to get these products, they were not likely to come back to KFC to try these products again. The real dilemma here was that the company might think that customers were turned off by the new products, when in fact it was the slow service that turned them off. KFC, therefore, set a dramatic improvement in DTW speed of service as its primary goal for restaurants in the division. The critical question was, could this really be done? The perceived wisdom in the company was that the DTW operation had been fine-tuned over many years, and hence, cutting down on service time was nearly impossible. However, Chuck Reynolds, then regional manager, sought a way to reduce service time by conducting a test at a few restaurants. Organizing the Test at Oklahoma City

Quality:

Quality in KFC is because of 1) proper procurement of raw materials 2) product packing 3) secret recipe 4) wide variety of items Procurement Issues All the raw materials like chicken are bought from value chicken, vegetables from Monsalwa and they use canned fruit for salads. The machinery is all automated and is in conformance to international standards. KFC officials often visit the outlets without giving prior notice in order to check the conformance to quality standards and procedures Moreover, Food Inspection Teams from Health Ministry visits twice a year to ensure Hygienic Conditions at the Kitchen. KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of roasted chicken products, side dishes and desserts. Outside North America, KFC offers beef based products such as hamburgers or kebabs, pork based products such as ribs and other regional fare. Product packaging KFC makes its own disposable packaging. If they need promotion Pepsi contributes in improving the packaging quality. KFC does family packaging. They use paper material for packaging to avoid health hazards and environmental pollution. KFC does brand labelling. Some of its products also have informational labels such as Halal, Veggi Burgers and Chicky Meals. Quality assurance KFC takes great pride and care to provide the best food and dining experience in the quick service restaurant business. They believe eating sensibly, combined with appropriate exercise, is the best solution for a healthy lifestyle. Chicken & its Products are Locally produced and processed chicken. Supplied in frozen form 100% Halal Quality maintained because of secret recipe The Colonel's secret flavour recipe of 11 herbs and spices that creates the famous "finger lickin' good" chicken remains a trade secret. Portions of the secret spice mix are made at different locations in the United States. On September 9, 2008, the one complete copy was temporarily moved to an undisclosed location under extremely tight security while KFC revamped the security at its headquarters. Before the move, KFC disclosed the following details about the recipe and its security arrangements The recipe, which includes exact amounts of each component, is written in pencil on a single sheet of notebook paper and signed by Sanders. The recipe was locked in a filing cabinet with two separate combination locks. The cabinet also included vials of each of the 11 herbs and spices used. Only two executives had access to the recipe at any one time. KFC refuses to disclose the names and titles of either executive. One of the two executives said that no one had come close to guessing the contents of the secret recipe, and added that the actual recipe would include some surprises.

RECOMMENDATION AND CONCLUSION: It has been illustrated that whilst the benefits of internationalisation can be quite enormous, they can also be riddled with risk and problems that need a lot of work and money to overcome, as shown with the KFC example. "The Indian consumer is probably the most infuriating on the planet," says Mr Seth. "But if you are creative and patient, the rewards can be enormous." With a rapidly growing economy and a developing middle and upper-class population well into the hundreds of millions, international companies such as KFC expanding into India was always inevitable. This paper has broadly identified some of the issues that KFC had in internationalising into India. It was discussed that KFCs choice of entry mode of franchising was favourable against other modes in the Indian market because of the relative costs and rules associated with franchising, and also its ability to sustain a source of competitive advantage for KFC. It was then concluded that KFCs Global Standardised Strategy was perhaps one of its greatest downfalls because of its lack of local responsiveness in regards to food laws and the high vegetarian population. KFC maintain a Global Standardised Strategy however choose to adapt this strategy to suit international markets that require a higher level of local responsiveness and not so much focus on cost reductions. This paper also explored the ethical and cultural implications for KFC as it endured to create a place for itself in the Indian market. KFC was scrutinised by many community and world groups such as PETA for their treatment of the animals used in the products. They were also met by legal barriers such as the Prevention of Food Adulteration Act 1954, in regards to their ingredients and processes in their products. Despite their successes and failures along the way, KFC have managed to cement themselves as one of the largest and most popular fast food chains in India, as well as growing stronger across the globe. KFC now operates numerous stores in all the big Indian cities such as New Delhi and Bangalore and can see opportunity for continuous growth throughout the country as the economy develops. As Gupta describes, the changing lifestyles and aggressive marketing by fast food outlets, such as KFC and McDonalds, these fast food giants are quickly becoming popular in the smaller towns; therefore, success of existing fast food outlets and entry of more is inevitable. Refrences http://www.kfc.co.in/AboutUs.aspx http://en.wikipedia.org/wiki/KFC www.kfc.com www. Mcdonalds-india-supply-chain-729402.html www. mgmnt5313 #_Toc448096358.html http://www.peerpapers.com/essays/Mcdonalds-Project/181384.html?read_essay http://www.scribd.com/doc/2021691/Kfc-Swot-Analysis http://www.csgstrategies.com/search-pest-analysis-of-kfc.asp http://www.freeessays123.com/essay21631/kentuckyfriedchickenkfcinindia.html http://www.managementparadise.com/forums/miscellaneous-projects/37385-kfc.html http://www.managementparadise.com/forums/miscellaneous-projects/37385-kfc.html http://www.universitip.com/term-papers/quality-management-at-kfc-213750386.html http://www.universitip.com/term-papers/quality-management-at-kfc-213750386.html http://www.sba.pdx.edu/faculty/melliep/339/QualityMgmtKFC.pdf http://wps.prenhall.com/chet_ninemeier_restaurantop_1/32/8378/2144851.cw/sitenav/index.html