STRATEGIC MANAGEMENT

Topic: PESTLE ANALYSIS & SWOT ANAYLSIS.

Understanding the environment your business operates in is a key part of planning,

and will allow you to discern the threats and opportunities associated with your area
of business.

An external analysis looks at the wider business environment that affects your

business.

An internal analysis looks at factors within your business such as your strengths and
weaknesses.

Examining your internal and external analyses together gives you a complete picture
of your current situation and the steps you can take to plan your marketing.

PESTLE external analysis : PESTLE analysis helps you to identify the main external
opportunities and threats in your market:

 Political changes such as trade agreements between countries 

 Economic factors such as interest rates, exchange rates and consumer
confidence
 Social factors such as changing attitudes and lifestyles, and the ageing
population
 Technological factors such as new materials and growing use of the internet
 Environmental factors such as environmental law and impact on the
environment
 Legal factors such as new and existing legislation 

SWOT internal analysis : You also need to understand your own

internal strengths and weaknesses.
 
A SWOT analysis combines external and internal analysis to summarise your
Strengths, Weaknesses, Opportunities and Threats. For example, a new business may
note the following:

 Strength: enthusiastic employees or a unique product

 Weakness: no existing customer base and limited finances
 Opportunity: potential customers with problem the product solves, interested
investors
  Threat: competition from established businesses with a bigger budget. You
need to look for opportunities that play to your strengths. You also need to
decide what to do about threats to your business and how you can overcome
important weaknesses.
 For example, your SWOT analysis might help you identify the most promising
customers to target. You might decide to look at ways of using the internet to
reach customers. And you might start to investigate ways of raising additional
investment to overcome your financial weakness.

COMPANY
Kentucky Fried Chicken (KFC)
SWOT internal analysis 
Strengths of KFC

Such a largely known and beloved company like KFC boasts many strengths,
including a global presence, unique menu options, and a secret even the internet hasn’t
exposed.

With over 15,000 establishments in 120 countries, KFC is an internationally

recognized venue. Surprisingly, in many of these countries, KFC holds more clout for
their non-meat menu options.

The powerful corporation behind the KFC brand.

Alongside KFC, Taco Bell and Pizza Hut also share the same corporate owner, Yum!
Brands. Since they own so many other fast-food restaurants, it’s clear Yum! Brands
have the influence, power, and resources to improve KFC as a restaurant. 

New non-meat options for a growing market.

KFC stands out amongst the other restaurants Yum! Brands own. Despite the appeal
of the finger-licking chicken KFC offers, many people are enjoying KFC’s vegetarian
options too, particularly vegetarians and vegans. Many other corporations are failing
to acknowledge this health-conscious market base, giving KFC an attractive lead in
this sector.

A trade secret only a select few know.

To this day, the trade secret behind KFC’s delicious chicken — the “11 herbs and
spices original recipe” — remains a mystery to the public. Maintaining private
information like today’s world is quite the feat, but it’s not too surprising considering
Colonel Sanders wrote the recipe down and locked it away in a vault.

Weaknesses of KFC

Despite its vast reputation, KFC suffers from similar faults of other fast-food
restaurants, including having primarily serving high-fat foods and following a
questionable franchise management system.

A flawed menu.

KFC succumbs to many common issues shared by other fast-food joints. The menu is
high in fats and calories— if you want to go over your daily allotted calories for the
day, eat a few pieces of chicken, KFC fries, and boom! Considering how health-
conscious the public is these days, greasy chicken isn’t going to cut it anymore.

Questionable franchise system.

KFC follows a franchise management system, meaning each one is individually

managed. It’s not uncommon for one KFC to have high reviews while another, just
down the street, is collecting bad press. Such a volatile system is prone to operation,
production, and poor management qualities, affecting how the public feels about the
joint in question, and the overall brand.

Opportunities of KFC

By maintaining the same price point with new menu options, KFC is positioned
to enter a new market without sacrificing the beloved chicken-focused meals the
company is praised for.

Cheap menu people love.

KFC offers hefty portions for a cheap price. People will always find themselves drawn
to unique flavors when it’s time to grab something cheap and easy for dinner.

Primetime for vegetarian meals.

KFC is in the prime spot to dive into the vegetarian market. Although other fast food
joints have ventured in, none are as committed as KFC. Still, with other healthier
options like Subway, this firm will find itself fighting a tough battle. Subway isn’t
even the biggest competitor; McDonald’s also offers healthy, non-meat options. The
only difference is, KFC is ready to specialize while other fast-food restaurants are only
dipping their toes into this market.

Adding new vegetarian options will improve the relationship between KFC and
health-conscious and vegetarian consumers. By creating a new section of the menu for
these consumers, KFC will likely see an increase in reputation.

Now, KFC has the perfect opportunity to strengthen its brand worldwide. It’ll still be
recognized for its delectable chicken, but also become a pioneer within the non-meat
industry.

Threats for KFC

Threats bombard KFC every turn— luckily, this is the case for most fast-food joints. If
KFC is proactive now, it can eliminate many of these threats before they transform
into a commandeering issue.

The #1 issue: competition.

All fast food chains share a common threat: competition. Despite its popularity, KFC
isn’t the leader of fast food. In many ways, it’s not even close. And so it must compete
with the bigger and medium-level guys in a crowded industry.

More health-conscious than ever.

The public is taking health into their own hands by understanding how fast food items
are made, the number of calories in each option, and seeing through elusive
advertisement language. It’s a great stride for consumers but makes companies like
KFC nervous.

High raw material costs.

Raw material prices are rising; if KFC wants to remain competitive, it will need to
maintain the quality consumers expect without hiking up the prices of its menu.

The franchising mistake.

As discussed in the weaknesses category, the franchise management system is harmful

to KFC’s reputation. It only takes one bad location to tarnish KFC’s entire brand.
Word of mouth spreads fast, thanks to social media, and it won’t take long for bad
reviews and negative feedback to crop up.

SWOT Analysis of KFC: Conclusion

You’ve likely consumed Kentucky Fried Chicken (KFC) at least once in your lifetime.

It’s survived several recessions, yet remains an underdog in the fast-food industry. It
isn’t struggling, but in some places, it’s nearly non-existent, replaced with a similar
brand called Mary Brown’s. Perhaps this is because of the faulty franchise system,
which makes it difficult to judge the quality of the brand based on how differently
each restaurant is managed. Or the health-conscious crowd, who want less greasy
chicken and healthier options, is dragging down the business.

Still, KFC isn’t down for the count. It’s made strides in creating non-meat and
vegetarian options for consumers. Thousands of locations exist all over the world to
this day. And with its herbs and spices recipe still a mystery, the firm feels confident
in its tasty chicken. It may not be the best, but it’s still a fan-favourite for many.

PESTLE external analysis

POLITICAL FACTORS IMPACTING KFC

HEALTH REGULATIONS
KFC is a multinational fast-food brand it’s operating in different countries. The
government regulations of different countries are different and they could impact the
company. Especially the government officials give preferences to the health
regulations.

The brand has maintained very good relations with the political systems and
government officials over the years. But it could change with the new vegan and diet
control trend.

MOCKING DONALD TRUMP

Donald Trump, former president of the USA, once said in his tweet that the US
nuclear button was “bigger and more powerful” than the nuclear program of North
Korea. KFC jumped into the discussion and mocked the comment of Donald Trump.
Although it was a harmless humorous comment, it caught the attention of Donald
Trump’s fans and they didn’t like the company’s involvement in the political tension.

POLITICAL DISPUTE
KFC became the main accomplice in the famous political dispute between Steve
Cohen (Representative of Tennessee Democrat) and William Barr (Attorney General).
Rep. Cohen made fun of Barr by calling him chicken referring to the KFC’s chicken.
The brand name and logo were visible. It was a sudden incident and done without the
permission of KFC.

ECONOMICAL FACTORS AFFECTING KFC

ECONOMIC RECESSION & PANDEMIC

The pandemic of covid-19 has dropped the annual revenue of KFC to a great extent. It
was because of the months of lockdown and shutdown of hotels and restaurants
worldwide. The media and the government were promoting social distancing
awareness. The economy would continue to decline until we have the proper
vaccination of the virus.

STRUGGLING IN CHINA
KFC is operating chains of hotels and restaurants worldwide. But the brand isn’t
growing in the Chinese market. It’s because of many factors like government
regulations, less market response, and many others.

IMPACT OF “FRIED CHICKEN”

Before the brand name “KFC,” the company used the brand name “fried chicken”
when the customer market wasn’t sensitive. The brand is selling the same product, but
the fried chicken brand isn’t acceptable by the health-conscious market.

The company has successfully changed the brand name without losing its market. It’s
because KFC’s brand name sends the signal that the company offers more products
than just fried chickens.

VEGAN FOOD
KFC has recently started offering vegan food items to the vegetarian market. It’s a
great shift in the brand. The company should add more vegan food items to the menu.
It would help the company to increase its market share, sale, and revenue.

SOCIAL FACTORS IMPACTING KFC

CULTURAL TRENDS
A majority of the Indian market is vegan and the cow meat is sacred to them. It’s a
great step for the company to add vegan food to its menu. Just like Muslim countries
want Halal meat. They won’t accept your product if you offer them chicken without
slaughtering the bird according to their belief.
NEGATIVE ASSOCIATION
Issues like low wages, poor treatment of employees, and animal abuse are some of the
negative associations that KFC. The poultry farms feed steroids food to the chicken to
increase their growth and they stuff the birds in small cages. Many animal welfare
organizations and customers have boycotted the hotels and restaurants that follow such
practices.

HEALTHY DIET TREND

KFC’s menu comprises of salty, oily, and high calories food items. The customers
market doesn’t want such food that causes health issues like obesity, blood pressure,
and heart attacks. Many people blame fast-food hotels and brands for their obesity and
declining health. That’s why they call the fast-food junk food.

TECHNOLOGICAL FACTORS AFFECTING KFC

TECH SAVVY
KFC is quick to accept and adapt to the latest technological trends. The company
believes in improving the working environment through technology. For instance,
KFC uses voice-activated tests during the training of its employees. It’s because the
younger employees are tech-savvy and they’re quick to learn and adapt to the tech
changes in the workplace.

SOCIAL MEDIA
Some of the KFC franchises in Australia have allowed employees to use social media
platforms. The company has also given them permission to share ideas, thoughts, and
ask questions on social media platforms.

ADVANCED TECH
KFC also uses some of the advanced tech tools like Kiosks for quick ordering, food
delivery, payment clearance, and collecting your food. All of these tools save a lot of
time for hungry customers. The company serves them food on time.

According to an estimate, 98% of the hotels and restaurants of KFC use the click-and-
collect tool, and it increased more than 20% of the company’s profitability.

LEGAL FACTORS IMPACTING KFC

RULES & REGULATIONS
As we know that KFC is operating its fast-food chain hotel and restaurant business in
more than 150 countries across the world. Therefore, the company should follow the
labour and wage laws, health and safety standards, and regulations of different
countries. Failure to comply with those laws would put the brand in a lot of trouble.

PENALTY
KFC had to pay 19000 pounds of the penalty when the food inspector found a
cockroach eating the food near takeaway boxes in Britain. Many customers have
complained that the company offers poor quality food. Such news and incident aren’t
good for the reputation of the company.

ENVIRONMENTAL FACTORS AFFECTING KFC

ECO-FRIENDLY TREND
The customer market has become very cautious about the environment and sustainable
operations of businesses. KFC is aware of these customers’ trends and the company
has taken many steps over the years to make the organization sustainable and reduce
carbon waste.

BIODEGRADABLE PAPER
Usage of biodegradable paper and recyclable material is one of the sustainable steps of
KFC. It has helped the fast-food chain brand to decrease more than 14000 tons of
plastic packaging.
COGENERATION SYSTEM
KFC made a partnership with Tidy Planets. It has created a product by the name of
Chip. It’s a small-scale cogeneration system project that converts used/scrapped
cooking oil into hot water and electricity on the product site. It has helped the
company to decrease the carbon emission rate of 4000 tons annually.

CONCLUSION 
After a careful study of the pestle analysis of KFC, we have realized that the KFC has
to worry about health regulation due to the growing diet trend. The company should
utilize the technological and vegan menu advantage to overcome legal issues.

Name: Sharon. Saldanha

Roll.no BMS 2093

Batch V Sem