The Global Fast Food Industry External Remote Environment Analysis

Stakeholders

A stake holder of a company is any group or an individual who can have an effect or is affected by the success of the company’s goals. For the company to easily achieve its corporate business objectives (goals) , it must have a good connection with its external parties. This means that if the company’s relationship with its stakeholders is not strong, the company is bound to fail in achieving it’s corporate business objectives. This is because their interest to the corporation influences the corporation’s achievements.

The company’s strong relationship with stakeholders is measured based on confidence, trust and cooperation. This means that the stakeholders’ interest to the company will be high if there is high trust, respect and good team work. This is majorly primary strategic management. For a company to maintain its competitive advantage and remain relevant, it should clearly identify its stakeholders and other external parties and strengthen its association with them. Stakeholders will include shareholders, employees, customers and suppliers.

 It’s difficult to clearly identify the other external parties because there is no clear formula to define it. But because of advertisements, different people are becoming stakeholders depending on different factors. This involves global impacts of an industry such as climate change or cultural due to marketing and advertising.

CUSTOMER

This is an individual or group which receives or consumes the final product or services of the company. For the company to increase and maintain its level of clients, it must produce high and good quality products or services. This will ensure that customers demand will be loyal and high. Also because of competition in the market, the corporation should be dynamic in its activities and the price for the product should be fair as different people have different perceptions to price hence should set fair prices to accommodate all customers. The company communicates through advertisements, trade exhibitions & promotions, giving free samples, cash discounts, offering credit facilities among others. This increases customer awareness of the product or service.

Suppliers

These are short term financiers of the company. Their confidence in the company depends on how prompt the corporation honors their credit facilities and how regular they carry on their businesses. The company communicates to this group through cheques, when they make payments, purchase orders.

SHAREHOLDERS

They are the owners of the company. Their shares form the equity capital of the company. For them to retain their interest they must receive good dividends from the profits of the company and their investments must keep on appreciating in that company. This will increase the value of the shares and the company’s’ reputation. The company communicates to is shareholders through the Annual General Meeting, AGM which is convened yearly. These people are important to the company because if they have no confidence in the company, the value of shares will reduce in stock market, investors will withdraw their investments from the company and no new investors will invest, creditors will stop offering their services, employees will not receive their salaries, sales will go down and the hence the corporation will collapse.

Employees

These are the managers of the company. The receive salary from the company and they are motivated if their working conditions in the company is good. the company communicates to the employees through holding meetings, letters of appointments, letters of dismissal and journals.

The importance of the employees in the company is to ensure that the resources of the company are taken care of to achieve high results. This will increase sales and improve the reputation of the company. Also investors will be high and hence the value of the shares will increase.

ENVIRONMENTAL ANALYSIS

Economic environmental

World financial market is being affect by Middle East crisis the and US sub prime crisis and there is a global impact on consumer spending worldwide. At first sight this would seem a disproportionate reaction but banks all over the world are exposed to US debt. Sub-prime lending was lending at higher interest rates as a means of helping American consumers of lower incomes and poorer credit records obtain mortgages. These loans were then sold on, in complex ways, to other institutions including hedge (higher risk higher return) funds. The treatment of sub prime loans by the banks is likely to have far reaching effects including, possibly, a slowdown in the US economy and a confidence linked decline in US consumer spending. The Middle East crisis has affected the world economy because Middle East is the source of oil. Although there are alternative sources of energy still oil remains the most important source of energy. Crisis in the energy sector the world is affected.

Fact is that US retail sales rose only 0.3% in August 2007 suggesting increasing caution of the crisis ahead. US retail sales are a major driver of economic growth and may be viewed as an early response to a housing slump and financial market turmoil. Over the past 12 months, retail sales rose by 3.9% excluding autos. However, the level of spending did not indicate recession tendencies though analysts expect growth to decline in the near future. There were modest increases in sales for furniture (0.5%), electronics (0.4%), sporting goods (0.3%), and health care (0.3%) compared with the same month a year ago. Thus, this national economic problem might have a small effect on the food sector because some foods are usually priced higher than regular food (Xinhua News Agency, 14 September 2007).

Technological Trends

Nearly half of all Americans have broadband Internet connections in their homes, according to the annual survey by the Pew Internet & American Life Project in July 2007. The number of home broadband users nationwide now equals the total number of Americans with any type of Internet connection in 2000, the first year the survey was conducted. Four out of 10 African-American adults have broadband access at home, compared to 15% two years ago. Nearly one-third of rural Americans have home broadband connections, compared to about half of Americans living in urban areas and the suburbs. According to Pew, income and race are becoming less important differentiators in US broadband adoption.

Also, according to a May 2007, 67% of US consumers favor making purchases at a traditional store. Some 69% said they used the Internet to comparison shop, and 58% said they go online to locate items before going to the store to make a purchase. Only 13% said the Internet had not improved their patronizing experience. The conclusion is that, instead of replacing brick and mortar stores, the Internet is an extension of consumers' patronize experience, providing a resource to research product and price. When asked what the most powerful influencer was concerning purchasing decisions, 60% said word of mouth, followed by advertising (47%) and online information (43%). In view of the technological trend of consumers being reliant on the Internet for information, KFC should consider setting up a website to have an edge against their competitors.

This will assist in the increasing of profitability of fast food industry through advertising in the internet, website development which will list the products of the firm. The future of the firm is predicted with little degree of certainty.

Socio-Political Trends

According to a survey by Light speeds Research, 70% of US adults support government actions like restricting TV ads for food. Women are more supportive than men of such measures, with 73% reporting support of government actions versus 63% of men.

According to a nationwide telephone survey conducted by Research! America and The Endocrine Society in December 2006, some 27% of respondents prioritized obesity as the top health issue for children, followed by lack of health care/insurance (16%) and nutrition/unhealthy diet (9%). According to Health Day News, the research, which was released on Dec. 13, also found that 52% of respondents regard obesity as a public health issue that society should help solve with 46% regarding it as a private issue. According to the National Center for Health Statistics at the U.S. Centers for Disease Control and Prevention, about 66% of American adults aged 20-74 and 17% of children aged 2-19 are overweight or obese.

In some countries, health regulation requires nearly  restaurants to post calorie information on their menus. This means all these developments in the national and local level are beneficial for food vendors because the growing concern about healthy eating would surely boost their sales. In some countries and religions beliefs and values determines the type of food being sold in the market. Take for example in the Muslim world some meaty foods will not be sold because of the beliefs. This applies to the east and the west. Foods taken in Japan can strange in Africa Europe and other places and the converse is true.

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