Kentucky Fried Chicken in China (C) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Kentucky Fried Chicken in China (C)
This case presents the start-up of operations in Beijing and discusses the difficulties Kentucky Fried Chicken (KFC) is having with its local partners. By March 1988, KFC has established its largest restaurant in the world in Beijing with sales that are booming and showing no sign of slowing down. Nevertheless, the extent of operational problems and the shortage of hard currency profits is raising concerns over whether further expansion is warranted.
Swot Analysis of "Kentucky Fried Chicken in China (C)" written by Paul W. Beamish, Allen Morrison includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kfc Fried facing as an external strategic factors. Some of the topics covered in Kentucky Fried Chicken in China (C) case study are - Strategic Management Strategies, International business, Joint ventures and Global Business.
Some of the macro environment factors that can be used to understand the Kentucky Fried Chicken in China (C) casestudy better are - – increasing commodity prices, talent flight as more people leaving formal jobs, there is backlash against globalization, technology disruption, there is increasing trade war between United States & China, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion,
supply chains are disrupted by pandemic , wage bills are increasing, etc
Introduction to SWOT Analysis of Kentucky Fried Chicken in China (C)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kentucky Fried Chicken in China (C) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kfc Fried, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kfc Fried operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Kentucky Fried Chicken in China (C) can be done for the following purposes –
1. Strategic planning using facts provided in Kentucky Fried Chicken in China (C) case study
2. Improving business portfolio management of Kfc Fried
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kfc Fried
Strengths Kentucky Fried Chicken in China (C) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kfc Fried in Kentucky Fried Chicken in China (C) Harvard Business Review case study are -
Ability to recruit top talent
– Kfc Fried is one of the leading recruiters in the industry. Managers in the Kentucky Fried Chicken in China (C) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Kfc Fried is one of the most innovative firm in sector. Manager in Kentucky Fried Chicken in China (C) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Kentucky Fried Chicken in China (C) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Successful track record of launching new products
– Kfc Fried has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kfc Fried has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Kfc Fried is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Global Business industry
– Kentucky Fried Chicken in China (C) firm has clearly differentiated products in the market place. This has enabled Kfc Fried to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Kfc Fried to invest into research and development (R&D) and innovation.
Training and development
– Kfc Fried has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Kentucky Fried Chicken in China (C) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Kfc Fried has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kfc Fried to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Kfc Fried
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kfc Fried does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Kfc Fried has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Kfc Fried has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Kentucky Fried Chicken in China (C) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Kfc Fried are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Kentucky Fried Chicken in China (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kentucky Fried Chicken in China (C) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Kentucky Fried Chicken in China (C), is just above the industry average. Kfc Fried needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Kfc Fried has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Kfc Fried even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Kfc Fried, firm in the HBR case study Kentucky Fried Chicken in China (C) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Kfc Fried has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kfc Fried is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kentucky Fried Chicken in China (C) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Kfc Fried has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Kentucky Fried Chicken in China (C) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Kfc Fried has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Kfc Fried has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Kentucky Fried Chicken in China (C), in the dynamic environment Kfc Fried has struggled to respond to the nimble upstart competition. Kfc Fried has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Kentucky Fried Chicken in China (C) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Kentucky Fried Chicken in China (C) can leverage the sales team experience to cultivate customer relationships as Kfc Fried is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul W. Beamish, Allen Morrison suggests that, Kfc Fried is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Kentucky Fried Chicken in China (C) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Kentucky Fried Chicken in China (C) are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kfc Fried in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kfc Fried can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Kfc Fried can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Kfc Fried can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Kentucky Fried Chicken in China (C) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Kfc Fried can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kfc Fried to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Kfc Fried to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kfc Fried in the consumer business. Now Kfc Fried can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Kfc Fried can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kfc Fried can use these opportunities to build new business models that can help the communities that Kfc Fried operates in. Secondly it can use opportunities from government spending in Global Business sector.
Building a culture of innovation
– managers at Kfc Fried can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Creating value in data economy
– The success of analytics program of Kfc Fried has opened avenues for new revenue streams for the organization in the industry. This can help Kfc Fried to build a more holistic ecosystem as suggested in the Kentucky Fried Chicken in China (C) case study. Kfc Fried can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Kfc Fried can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– Kfc Fried can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Kentucky Fried Chicken in China (C) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kentucky Fried Chicken in China (C) are -
Increasing wage structure of Kfc Fried
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Kfc Fried.
Environmental challenges
– Kfc Fried needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Kfc Fried can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Stagnating economy with rate increase
– Kfc Fried can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kfc Fried can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Kfc Fried in the Global Business sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kfc Fried in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High dependence on third party suppliers
– Kfc Fried high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Kfc Fried is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Kfc Fried needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kfc Fried with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kfc Fried can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Kentucky Fried Chicken in China (C) .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Kfc Fried business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Kfc Fried has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Kfc Fried needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of Kentucky Fried Chicken in China (C) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Kentucky Fried Chicken in China (C) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Kentucky Fried Chicken in China (C) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Kentucky Fried Chicken in China (C) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Kentucky Fried Chicken in China (C) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Kfc Fried needs to make to build a sustainable competitive advantage.