1. Introduction –The five forces frame work of analyzing was introduces by Michael E. Porter in his book competitive strategy `Techniques for analyzing industries and competitors`.
Through this tool we can analyze an organization in strategic process. Porter has developed the five forces in such a way that any organization or any market can be benefited or analyzed. Based on the information about the KFC using the five forces analyses management can decide how to influence particular characteristics EntryFor the current United Kingdom 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 United Kingdom or even make a significant amount of profit. While there are enough people in urban United Kingdom 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 they’ve never heard of .
The brand name is already established .Also, there is already a large variety in the numerous western-style dining places in United Kingdom, such as McDonald’s, Pizza Hut, Domino's and Subway, and any new fast-food entrants would just be presenting something very similar to what’s already there. While small neighbourhood 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 PowerThe 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 United Kingdom, urged many of its U.
S. suppliers to also extend branches into United Kingdom.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, labour 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 ComplementsAs mentioned above, there are a few major competitors in the fast-food industry in United Kingdom for KFC, namely McDonald’s, 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 United Kingdom 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, KFC’s 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.RivalryUnlike what one would expect, KFC has little rivalry with similar fast-food chains in United Kingdom. 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, United Kingdom chicken lovers who may not be as accepting to pizzas 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.
2. PESTEL Frame work: In Macro environment there are many factors that will effect the decision making in any organisation. To overcome and analyse these factors organisation can categories it in to PESTLE model which is considered as below. The macro-environmental or external factors of KFC can be identified by using PESTLE analysis which stands for Political, Economic, Social, Technology, Legal and Environmental.Political factors:This factor mainly deals with the government policies and procedures which is worked out through legislation and consists of all legal factors such as How stable is the political environment? Government position on market ethics Government view on culture and religion Government policy on Economy Taxation policy on tax rates and incentives These are some of the political factors that include legal issues, government implementations and define both the formal and informal rules under which the organization must be operated.Economic factor:KFC organization is affected with national and global economic factors such as Cost of labour, Interest and Inflation rates, Economic growth rates, Business cycle stage (e.
g. recession, recovery) and Unemployment rates. Due to recession the income of the KFC has consistently dropped down and most of the employees were jobless and the rest employees were employed for very few hours also the organisation had to cut down their budget.Social factor:It includes the cultural and demographic aspects of the external macro environment. The potential of the employees who come from different back grounds and work together in the KFC and customer trends and aspect which the KFC has to consider as per their needs and wants of the customer such as changes in lifestyles, Level of education, Value in society, Demographics (age, sex, race etc.
,) and Change in consumer needs and wants. The U.K people are mostly dependent of the fast food centres as they find very busy with their schedules.Technological factor:This factor is the major driver of globalization which reduces the minimum efficient of production levels and some of the technological factors are recent technological developments, Rate of technology changes, Alternative way of providing services, New discoveries, Communication technology.
The technology has now become the most important aspect in KFC as when the customers are mostly delighted and satisfied with service including latest technology that is available in the KFC. The latest Technological methods that are used to serve the customer faster are such as digital screens, wireless headphones for the staff, cooking utensils.
