Kfc – business strategy kfc is one of the leading chicken restaurants selling the best quality products worldwide

KFC – BUSINESS STRATEGY Lecturer: Nguyen Phuong Mai Group 5: Duong Thi Hai Anh – 18071006 Dam Thi Thu Linh – 18071131 Lam Thi Van Anh – 18071010 Nguyen Quoc Bao – 18071048 Vu Thi Ngoc Nhung – 19071464 Hoang Anh – 19071284 TABLE OF CONTENTS Introduction 01 02 03 04 Porter’s Diamond Model Entry mode Corporate-level strategies Hinders or Motivations Conclusion INTRODUCTION q KFC is one of the leading chicken restaurants selling the best quality products worldwide, the most successful brand with the highest revenue in the industry q The business strategy of this fried chicken brand depends largely on the success of KFC PORTER’S DIAMOND MODEL Demand condition q Market prospect: • With a young population structure (50% of the population is under 35 years old) and the strong rise of the middle class, Vietnam is a delicious piece of cake that many businesses race to occupy • Young generation is seen as more receptive to foreign tastes and products • Industrial life, fast food, and fast drink are the factors that help Fast Food develop rapidly q Ability to pay: Vietnam's GDP per capita in 2021 is 3,694.02 USD/person according to the latest data from the World Bank Accordingly, the GDP per capita of Vietnam increased by 167.75 USD/person compared to 3,526.27 USD/person in 2020 This level of income is enough for consumers to be willing to pay from 2-6 USD for a meal at KFC without having to think too much q Sophisticated and demanding domestic customers: • The taste of Vietnamese people is very rich and diverse • Customers nowadays also pay more care about their health and the foods they consume; very difficult obstacle to overcome 2 Factor Condition q Human Resources: • Vietnam is a populous country with a young population structure • KFC has always valued the skill level and performance of its human resources q Raw Materials: Vietnam is an agricultural country, so farming and animal husbandry are the two main industries that are very developed in Vietnam That has created a great advantage for KFC when it can use local ingredients while reducing costs q Technological innovation: Vietnamese government has a policy of investing in science and technology through a variety of priority measures q Support policy: Vietnam has had policies to open up to investors and stimulate consumer demand 3 Related and supporting industries q Presence of related industries: KFC chicken is provided by several big companies such as C.P., Unitek, Long Binh, etc G.A.P Da Lat Store Co., Ltd specializes in providing high-quality vegetables and fruits for KFC q Presence of supporting industries Firm strategy, Structure, Rivalry q Firm strategy KFC’s strategy is to focus on customers to provide them with high-quality products that offer continually consistent quality and taste in the offering q Structure of the organizations q Rivalry In Vietnam, a few competitors with KFC can be named such as Lotteria, Jollibee, McDonald, etc But the "remarkable" competitor to mention is Lotteria ENTRY MODE 2.1 KFC ‘s method to enter into Vietnam q In 1997, the KFC brand was introduced to Vietnam by Tony Chew through the joint venture company KFC This is not a completely favorable time because of the Asian financial crisis The first KFC store was opened at the Saigon Super Bowl building, the first complex, entertainment and shopping complex in Ho Chi Minh City, near Tan Son Nhat Airport q KFC's difficult start-up process: q Fierce competition q Market saturation 2.2 The advantages of KFC’s entry mode to Vietnam q First mover q A well-known brand q The right time q Marketing initiatives 2.3 The disadvantages of KFC’s entry mode to Vietnam q Too many competitors: domestic fast food, street vendor,… q Culture of food q Too much time and money to educate CORPORATE - LEVEL STRATEGIES 2.3 Explore the corporate-level strategies that the company is pursuing in the Vietnamese market 2.3.1 KFC PRODUCT DEVELOPMENT STRATEGY q KFC has directed its product differentiation strategy to differentiate itself from competitors KFC has differentiated its products with flavors from a blend of eleven spices With its strengths of having a strong foothold in the market with completely different products from competitors, KFC is constantly making a difference but also diversifying its products in each market q Not only focusing on developing new product lines, changing products to catch up with consumers' tastes, but KFC also pays special attention to customers' health 2.3.2 FUNCTION LEVEL STRATEGY q Supply Management Objective: To ensure adequate, timely and cost-effective supply of ingredients such as chicken, potatoes, vegetables to make salad q Financial Management Objectives: Allocate resources in a reasonable way, ensure the management and use of capital for the right purposes, economically and effectively in the best possible conditions q R&D Objective: Focus on developing new and diversified products to meet the needs of customers client 2.3.2 FUNCTION LEVEL STRATEGY q Marketing Management Objectives: To best meet the needs of target customers, improve competitiveness, expand market share, create a basis for sustainable development q Quality Management Purpose: Focus on improving product quality as well as service quality q Human Resource Management Objective: To fully meet the organization's human resource needs in terms of quantity and quality 2.3.3 COMPETITIVE STRATEGY HINDERS or MOTIVATIONS Hinders q Buyer's bargaining power • Customers are a significant competitive pressure that can greatly and directly affect the production and business activities • The level of requirements for quality and food hygiene and safety of the people is also increasingly strict • The taste of Vietnamese people does not like the greasy taste Unfortunately, this is the main flavor of fast food brands, including KFC • A matter of form Fast food is considered as one of the causes of this phenomenon, it makes Vietnamese consumers feel more reserved and careful when they want to use this type of food q Substitute products • Fast foods such as fried chicken, hamburgers Grease is easy to cause boredom for many people In addition, nowadays, with many people's health playing an important role, they tend to choose for themselves delicious, nutritious meals including full nutrients • Recently, pure Vietnamese fast food is also growing and is more popular because of its taste, nutritional standards and reasonable prices than many foreign fast foods Strong competitive force Motivations q Boom in demand: in the fast food segment, consumers are increasingly looking to familiar global brands rather than to other conventional eateries q A series of events occurred makes roadside eateries limited in operating areas The added value for the product is to ensure hygiene, clean chicken is the advantage of KFC q According to many KFC experts, Vietnam is the "ripe" time for supermarkets, commercial centers and the fast food market to explode q Stable consumer income: Vietnam is one of the countries that not suffer too much economic fluctuations, so the income of users will be stable and increase over time, so KFC will rely on that as a lever for economic growth with campaigns to attract customers q People are more concerned about food safety, especially after avian flu, and KFC is one of the reliable addresses CONCLUSION q KFC's strategy helps the brand position itself competitively in the market and achieve its business goals q KFC still faces stiff competition from other potential competitors Thank you for listening! 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