BUS7110 The Business Environment For the KFC

Answer:

Introduction and History

Kentucky Fried chicken which is abbreviated as KFC is one of the biggest and successful franchises in the world. KFC is described as one of the most successful franchise because of its fats growth and fast penetration into the competitive market or business environment. The restaurant is commonly known for its special recipe fried chicken and other chicken related products. The original owner and the beginner of the KFC was Harland Sanders who started the business by selling fried chicken on the street (Zhu et al., 2017). With the big competition and very many market forces, KFC was able to grow and even penetrate international market. Sanders is believed to have started the restaurant in Corbin Kentucky where he had the first restaurant. Sanders therefore started looking for ways to make the brand famous and to expand his business (Hill et al., 2014). He started franchising which made him successful in such that by 1964 had around 600 franchises.

The company’s growth was becoming uncontrollable which led to Sanders selling it to his investors. The agreement stated that they should pay him $2 million with annual salary of $40000. Later the annual salary was raised to $200000. By the time Sanders sold the whole restaurant he was earning a profit of about $300000.

KFC today in ranking is the second biggest fast moving food restaurant which comes after McDonald's. The company is under another company branded as Yum! Brand which also owns Pizza Hut and Taco Bell. Approximately, the restaurant has around 19000 employees in all the 16000 worldwide branches. (Thompson et al., 2016). This is in 120 countries which include Asia, Africa, Australia, South, and North America, Jamaica, Mexico, and many others all totaling to 120. 

Ethic System

The purpose of this report was to analyze the business environment and the business ethics of the Kentucky Fried Chicken company. The first part of the report was the introduction and a brief history of the company. This was followed by a description and analysis of the ethical system of KFC which looked at the various things which include the animal abuse, poor condition for the workers in KFC and product quality analysis. The information was provided by the stakeholders and stated examples extracted from the history of the company. Included is a number of verified theories which are related to business ethics.

KFC Ethical System

The todays environment, especially with the restaurants offering fast foods, has become competitive and a company like KFC has to stand strong with strong strategies in order to succeed in the market (Wolf et al., 2017). KFC has to come up with new methods and new ideas on how to maximize their profits, reduce overall costs and most important maximize their sales.  This has to go hand in hand with reducing the existing dilemma about ethics concerning their consumers and their products (Hoy et al., 2017). The dilemmas consist of abuse of the animals, poor conditions of workplace and unstandardized quality of their products.

Poor Products Quality

Fast moving foods have been associated with many health problems. These include addition of calories in the body, increasing the risk of having diabetes and body weight addition. Fast food is believed to be always unhealthy. It can, therefore, cause some body problems to the consumers of such food. These problems can be an increase in body weight which in turn can lead to other problems (EXPERIENCE, 2015). This was evident in 2006 after the company was sued for using cooking oils which had Trans-fats, which have high chances of causing diabetes or even heart diseases (Yan et al., 2014). Trans-fats are said to be the most dangerous type of fats since they are believed to be raising the body’s bad cholesterol and on the other hand lower the good cholesterol. People are advised not to be consuming more than 2g of Trans-fats per day because the fats are dangerous. To defend itself, the company said that their products met the standards of the government (Kerzner & Kerzner, 2017). To make more proves to the public, the group which was behind the lawsuit went ahead and came up with more evidence. They came up with a claim that a three piece extra-cripsy combo food called the dinner-plate and served in Malaysia was found with 15g of the dangerous Trans-fats. This is very many compared to what a normal person should consume.

In other cases, a customer was cut in the tongue by a plastic which was in the food, some worms were discovered in the KFC’s sandwich, in Colorado, children ate at KFC and they became sick which proves that offering of poor quality foods is dangerous in KFC.

Abusing of the Animals

The poor working conditions of KFC, having a poor breed of birds and inefficiency in the operations and the processes of the company contributed to poor practices of the KFC suppliers (Mylonakis & Evripiotis, 2016). There have been several reported incidents where videotapes have shown one of the workers in KFC slaughterhouse jumping up on the chicken and some of them kicking the chicken just for what they described as having fun. There were more reported cases which includes making the chicken suffocate by tying latex gloves over the chicken’s head, making the bird snow by plucking out its feathers and giving the birds tobacco (Mak et al., 2012). Other incidents reported that the birds are even drug in order to become big, they become very fat to the point that they cannot walk. Their wings and their legs are then broken down. The bird’s throats were cut and while they were still conscious, they were thrown in boiling water.

Poor Conditions of the Working Environment

Poor conditions of the working environment are said to be very common especially in China, India and the USA. Due to frustuations, wokers have been reported to abuse the animals in several KFC branches. In other places like in China, there have reports that the workers are underpaid (Pradhan, 2018). This is defined as violating the rights of the workers. KFC is also said to make the part-time employees work for extra hours and fail to pay them the extra amount.

KFC Leadership

Leaders play very important roles in any organization. Leadership includes giving guidance, controlling, staffing and many other important functions. The leaders are responsible for the failure or for the success of an organization. A good leader offers services to the organization, to the customers and to the employees of the organization. In KFC it is the same case. A leader is like the main servant to the employees, customers and the entire organization (Cornwell et al., 2018). It is the responsibility of a leader to make sure that the employees understand both individual goals, team goals and the goals of the organization. In KFC the leaders remind the employees their goals frequently. The culture employed in the leadership of KFC is a high power distance culture. Unless a leader approves an aspired change, the change will not be approved. The communication between the leaders and the employees is the smooth type of communication in KFC (Mak et al., 2005). This type of leadership is where the head manager becomes the boss. Unless they approve a change the change will stay pending. The vision of KFC states that as a restaurant their biggest desire is to make the world smile by satisfying their customers and doing it in a special way not just like any other restaurant. It is therefore clear that in KFC all employees have no choice but to follow the orders and the rules given by the leaders. The employees' power is very limited in such that they can only be allowed to change a drink or change an order.

Organization Culture

The culture of an organization is how the people within the organization such as employees conduct themselves. This includes the believes and the behavior of the employees and the entire organization. Different organizations have different cultures depending on the environment they are working in. Culture in organizational view can be viewed to have different aspects. One of the major aspects is the distance of power between the employees and the leaders (Cornwell et al., 2018). KFC power is the hierarchical power distance which places its main focus on the position and title.

The other aspect is that KFC believes in becoming the best restaurant in satisfying the customers.  From their slogan that they produce the best-fried chicken which can make the customers lick their fingers, KFC’s main focus is to become the best by giving all their best in the services and products their customers receives. KFC employs the culture of team work. They have team leaders and they have set achievable team goals. In this teams, they talk about the health of their products and build strong relationships for working together (Mak et al., 2012). KFC has a strong tendency to believe in people. They believe that having positive intentions and believing in people can make them achieve great success. KFC also believes in the power of recognition. They recognize the most reliable employees and retain them at work. Loving and even celebrating the success of others is what they believe as having fun.

Human Resource Management

Human Resource Management is commonly associated with the HR department of an organization. HR helps in the management of the organization and the resources of any organization. This includes the employee recruitment, employee orientation, and training and other many other functions pertaining to employees. KFC has an HR department just like other organizations. It does the recruitment of new employees, training, and orientation of the employees.

Orientation and Training of the Organization

The company’s focus is on the training and giving quality education to the employees in order to make them enhance their outcomes. Training employees are one of the function of the HR department (Ashforth et al., 2018). When employees are trained there is the likelihood of them increasing their productivity. Training employees makes them better than they were (Tredinnick, 2018). KFC offers to their employees different training programs. KFC offer training to their employees about sexual harassment issues, firing and hiring of the employees, resolution of the conflicts and relationships.

Planning

The other function of the department is to planning. The HR of KFC does planning, they make the plans of the goals to achieve. They are responsible for the allocation of the resources such as the recipe needed (Council, 2015). It is also the responsibility of the HR department to make sure they have precise and achievable set goals defined in the strategic management.

Recruitment and Selection

KFC HR department does the selection and recruitment of new employees. In this process, screening of the potential employees is done before they are selected (Chi, 1994). Recruitment and selection help to reduce the cost of making mistakes such as having under qualified employees or unmotivated employees.

Managing the Relations of the Employees

This is another function of the HR department. Employees in any organization are the main resource an organization has. Therefore, the employee relations can affect their performance and outputs (Chi, 1994). Having activities that help in making the employees lively and also making their relations health will improve their morale and they will feel motivated.

Marketing Strategy

One of the common marketing strategy used by KFC is showcasing. KFC usually gives more attention to families and especially kids (Darnell et al., 2008). They claim that the reason they showcase to children is that if children become adults they are assured that they will be permanent customers. KFC has the following marketing strategies;

1. It practices the societal and the niche marketing system.
2. They offer home online free delivery
3. They are opening many branches and this is moving them from division regions to district region.
4. They offer more than 30 products.
5. Their outlets are opened on reachable places.
6. Their much priority is given to families.

Marketing

In 1982, KFC launched a challenge which used the national card to make mothers happy through their families. The challenge was called All-Americans salute to mothers. The challenge is for the young people which encourages them to show their love to mothers by making a card and then get an opportunity to win more than $10, 000 in prizes or in real money (Dirgiatmo, 2015).

There are four P’s of marketing which includes production, price, promotion, and place.

Production

KFC deals with the production of fried chicken and other chicken-related meals. KFC has the best chicken and has their chicken prepared using herbs and other secret recipes. Their main focus is in Asia because they have discovered that in Asia many people have the love for chicken items.

Price

KFC sells their items at a higher price. The cost of one item incorporates the tax obligations and other government charges. The unit cost of the KFC item is about $1.135.

Promotion

Every business desires to grow and no business wishes to fail at the end of the day. Advertisements are one of the ways in which a business can grow. KFC uses different forms of advertisements to promote their items.  They have adopted the following methods to make their items known to the public use of posters, use of the website, use of the fliers and even visiting the businesses personally to display and explain their brand.

Place 

One of the strategies which KFC has applied well is placement. KFC has spread by targeting the international markets. This has been done by opening various branches n many countries. KFC has approximately 16000 outlets.

Operations Strategy

Each organization has an operations strategy. There are two commonly used strategies. These are the order qualifiers and the order winners (Zindiye & Donga, 2017). These are the two main things that customers consider before making any purchase of any product regardless of the organization. KFC is not left behind but has effectively applied the operations strategies.

KFC’s oder qualifiers and order winners

The other operations strategy used by KFC is the use of delights.  They are used to add value to the customers in any business and therefore end up improving the level of satisfaction of the customers.

Globalization Strategy

One of the biggest strategies KFC uses is called CHAMPS. This is the acronym for cleanliness, hospitality, accuracy, maintenance, product quality and the speed of the service (Hill, 2017). This strategy is applied strictly and followed to the later. This is one of the rules which help KFC maintain and survive in the global market.

The other globalization strategy KFC has adopted is the local cultural strategy. This is where KFC go to the local area and examine the eating habits of a certain area. By doing this, customers will be attracted and they will like the menu of their area since it will fit what they like (Iyer et al., 2015). Previous research shows that in China, KFC has overdone McDonald in terms of market share, this, therefore, shows how this strategy has helped KFC.

Strategic Planning Theory

There are many theories which can be used for strategic planning. KFC has applied some of these theories in its strategic plan. The theory which is best used is;

Environmental Dependency Theory

The developers of this theory were Pfeffer and Aldrich in 1976. Each organization or company has set some achievable goals and objectives. These goals whether individual or group are set in order to grow and benefit the entire organization. In business set organization, there are three goals which help to achieving of the set strategies and it does not matter even if the objectives are not stated in the mission statement of the organization. These goals include growth, profitability and survival (Bryson, 2018). Regardless of these objectives, the environments in which many organizations operate in are very dynamic environments which means that the organizations should to adapt and have positive responses. This calls for the need to have a strategic plan. For a company to emerge to be successful, it must identify itself with the environment in which it operates in. The company will be faced by the environmental forces which may be external or the internal forces all which make the environment complicated (Holloway, 2017). Therefore, these factors can be mostly assessed and monitored by the top management of the organization. Whether an organization is going to succeed or to fail depends fully on the stands it takes about the environmental forces. A change in the organizational environment should mean that the organization should find a way of adapting to the current changes (Bianchi et al., 2006).  Each organization is composed of parts and departments where each work closely to the other in order to ensure the achievement of the organizational goals. Each organization should be aware of the current changes and should be ready to adapt to the changes no matter the environment.

Many businesses exist in an open form system. This means that they do not have direct control of the external or the internal factors which are affecting them. It is therefore important for all the organizations to come up with the strong competitive strategies which will help them to deal with the external forces (Hitt & Duane, 2017). In the case of competition, the organization will then withstand it. It is important to learn the current environment and to know the forces which might come and be prepared as an organization.

This theory is the most appropriate theory to apply in strategic planning of KFC. This theory will allow KFC to know how to deal with the external forces by first learning what the forces are. This will help KFC stand tall even if there is competition. KFC uses the globalization strategy of first studying the surrounding customer needs. This also helps them to satisfy the customer needs. The reason for choosing this theory is because it appropriately deals with the Michael Porters Competitive strategies and also has the environment strategy consideration. A company which knows the environmental factors surrounding them and the competitive environment will deal with the two effectively and will attain a competitive advantage. 

Incorporation of Strategic Planning

SWOT Analysis

Strengths

1. Global Presence KFC stands to be the second largest restaurant which deals with fast moving food. It has approximately 16000 outlets worldwide and it has emerged to reach about 120 countries. It is therefore in most countries worldwide.
2. The KFC secret recipe. The original recipe of the company is the secrete trademark of the company. The original recipe which was first used by Sanders is hidden in a safe at the KFC’s headquarters. The recipe consists of 11 herbs and spices.
3. A big parent company. KFC operates under the branded company Yum! Brand. The company also owns Taco Bell and Pizza Hut. Yum! Brand is one of the largest restaurants in the world with over 41, 0000 restaurants in more than 125 countries.
4. Loyal customers. KFC customers have remained to be loyal despite the many allegations towards the brand. This has helped the company to continue being among the most leading restaurants in the world.
5. Nice reputation and goodwill. The company’s reputation is a good reputation. It has been considered the best and its brand is loved by its customers. The company is known for producing the best tasting fried chicken. 

Weaknesses

1. Use of unhealthy fats. KFC has been mentioned severally that it uses unhealthy fats to prepare the chicken and other products. They claim that the fats they use make the food sweet.
2. Management of the franchisees. To manage the franchisees is a major issue affecting KFC. It has led to the closing of many of the franchises.

Opportunities

1. High chances of penetration. KFC can become bigger by expanding its operations further. They can increase their outlets and emerge as the biggest fast moving food restaurant. By doing this, they will be owning the biggest market share.
2. The era of the generation which is very cautious with health. This is a good opportunity for KFC. It can work by KFC changing its menu to fit the health requirements of the customers.
3. Having special attention on the vegetarians' menu. The current KFC menu for vegetarians is limited. If they major on the menu they can end up being great like the other companies such as McDonald’s.
4. The increased population of the youths. The young generation has the need for quick foods. This is a standing opportunity for the company to put more focus on the youths.

Threats

1. Stiff competition. Competition has been one of the greatest threat each of the fast moving food restaurants faces. There is high competition and unless the company has very good laid strategies it can easily collapse.
2. Consumers are changing their normal eating habits. With the high improved technology where people are able to learn what's best and fits their bodies, it is a big threat that the company might lose some of the customers who are keen. They are likely to change the way they live and probably the way they eat.
3. Price of the raw materials. The world's economy is changing daily. This means that the raw materials are not costing the same price they used to before. This is a big threat to the company.

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