Case Study Description of KFC China: Still "Finger Lickin' Good?"
At the end of 2012, an "instant chicken" scandal was revealed in China after a leading national broadcaster reported that chickens reared for KFC in the country were illegally fattened with excessive antibiotics. The local food safety authorities investigated the situation and found that KFC China had been aware of the situation since 2010 but had chosen to remain silent. Local consumers and netizens were in an uproar over the scandal, which eventually in 2013 broke the group's 11-year streak of double-digit growth. A series of marketing campaigns were conducted to rescue the reputation of the fast food giant. The incident reflects the challenges faced by KFC China's supply chain management in ensuring the safety and quality of products from its first-tier suppliers and their suppliers in a subsequent tier. Would the "Finger Lickin' Good" chain be able to rebound fast from the scandal? What could KFC China do about its supply chain and consumers' trust?
Swot Analysis of "KFC China: Still "Finger Lickin' Good?"" written by Zhigang Tao, Claudia H. L. Woo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kfc Lickin facing as an external strategic factors. Some of the topics covered in KFC China: Still "Finger Lickin' Good?" case study are - Strategic Management Strategies, Manufacturing, Marketing, Strategy, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the KFC China: Still "Finger Lickin' Good?" casestudy better are - – geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing commodity prices, central banks are concerned over increasing inflation, increasing energy prices, there is backlash against globalization, talent flight as more people leaving formal jobs,
increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of KFC China: Still "Finger Lickin' Good?"
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in KFC China: Still "Finger Lickin' Good?" case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kfc Lickin, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kfc Lickin 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 KFC China: Still "Finger Lickin' Good?" can be done for the following purposes –
1. Strategic planning using facts provided in KFC China: Still "Finger Lickin' Good?" case study
2. Improving business portfolio management of Kfc Lickin
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kfc Lickin
Strengths KFC China: Still "Finger Lickin' Good?" | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kfc Lickin in KFC China: Still "Finger Lickin' Good?" Harvard Business Review case study are -
Successful track record of launching new products
– Kfc Lickin has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kfc Lickin 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.
Analytics focus
– Kfc Lickin is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Zhigang Tao, Claudia H. L. Woo can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Operational resilience
– The operational resilience strategy in the KFC China: Still "Finger Lickin' Good?" 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.
Ability to lead change in Leadership & Managing People field
– Kfc Lickin is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Kfc Lickin in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Kfc Lickin is one of the leading recruiters in the industry. Managers in the KFC China: Still "Finger Lickin' Good?" are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Kfc Lickin 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 KFC China: Still "Finger Lickin' Good?" - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Kfc Lickin
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kfc Lickin does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Leadership & Managing People industry
– KFC China: Still "Finger Lickin' Good?" firm has clearly differentiated products in the market place. This has enabled Kfc Lickin to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Kfc Lickin to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Kfc Lickin has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in KFC China: Still "Finger Lickin' Good?" HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Kfc Lickin is present in almost all the verticals within the industry. This has provided firm in KFC China: Still "Finger Lickin' Good?" case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– Kfc Lickin is one of the most innovative firm in sector. Manager in KFC China: Still "Finger Lickin' Good?" Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Kfc Lickin in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses KFC China: Still "Finger Lickin' Good?" | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of KFC China: Still "Finger Lickin' Good?" are -
Capital Spending Reduction
– Even during the low interest decade, Kfc Lickin 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.
Interest costs
– Compare to the competition, Kfc Lickin has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study KFC China: Still "Finger Lickin' Good?" 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 KFC China: Still "Finger Lickin' Good?" can leverage the sales team experience to cultivate customer relationships as Kfc Lickin is planning to shift buying processes online.
High cash cycle compare to competitors
Kfc Lickin 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.
Need for greater diversity
– Kfc Lickin 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study KFC China: Still "Finger Lickin' Good?", it seems that the employees of Kfc Lickin don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Kfc Lickin has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study KFC China: Still "Finger Lickin' Good?", in the dynamic environment Kfc Lickin has struggled to respond to the nimble upstart competition. Kfc Lickin has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Kfc Lickin has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - KFC China: Still "Finger Lickin' Good?" should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Kfc Lickin needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kfc Lickin is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study KFC China: Still "Finger Lickin' Good?" can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities KFC China: Still "Finger Lickin' Good?" | 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 KFC China: Still "Finger Lickin' Good?" are -
Learning at scale
– Online learning technologies has now opened space for Kfc Lickin to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Kfc Lickin to increase its market reach. Kfc Lickin will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kfc Lickin is facing challenges because of the dominance of functional experts in the organization. KFC China: Still "Finger Lickin' Good?" case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kfc Lickin in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kfc Lickin to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kfc Lickin 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 Lickin to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kfc Lickin can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, KFC China: Still "Finger Lickin' Good?", to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Kfc Lickin can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Creating value in data economy
– The success of analytics program of Kfc Lickin has opened avenues for new revenue streams for the organization in the industry. This can help Kfc Lickin to build a more holistic ecosystem as suggested in the KFC China: Still "Finger Lickin' Good?" case study. Kfc Lickin can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Kfc Lickin has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study KFC China: Still "Finger Lickin' Good?" - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kfc Lickin to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Lickin in the consumer business. Now Kfc Lickin can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Kfc Lickin can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. KFC China: Still "Finger Lickin' Good?" 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.
Loyalty marketing
– Kfc Lickin has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats KFC China: Still "Finger Lickin' Good?" External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study KFC China: Still "Finger Lickin' Good?" are -
Technology acceleration in Forth Industrial Revolution
– Kfc Lickin has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Kfc Lickin needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kfc Lickin in the Leadership & Managing People industry. The Leadership & Managing People 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.
Increasing wage structure of Kfc Lickin
– 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 Lickin.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Kfc Lickin.
Stagnating economy with rate increase
– Kfc Lickin 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.
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 Lickin needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 Lickin business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Kfc Lickin 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study KFC China: Still "Finger Lickin' Good?", Kfc Lickin may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kfc Lickin with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Kfc Lickin demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of KFC China: Still "Finger Lickin' Good?" 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 KFC China: Still "Finger Lickin' Good?" 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 KFC China: Still "Finger Lickin' Good?" 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 KFC China: Still "Finger Lickin' Good?" 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 KFC China: Still "Finger Lickin' Good?" 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 Lickin needs to make to build a sustainable competitive advantage.