Contents in this Page
Introduction
External Environment Analysis of KFC has been conducted in this report. Model of change management has been applied on KFC. Planned and unplanned change model has been also analysed with the application of KFC’s change activities. In the last part of the report some recommendations has been suggested for KFC that may foster their growth.
External Environment Analysis of KFC
Recent history and Strategic Movement of KFC:
Increased dividend rate: KFC has increased its dividend rate to 14.7% (The Motley Fool, 2019). KFC utilizes investments in potential sector that makes the able to maximize the dividend. Increased dividends increases high satisfaction of investors. It makes sure that investors keep investing in KFC because they know that their investment will bring higher return. The company use the investments to increases their business growth by expanding the business.
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Opened new restaurants: It has opened 372 new restaurants in 46 countries and 9 of the restaurants are opened in US (QSR Magazine, 2019). The company have identified the potential markets in the markets that will make them profitable therefore it has expanded its business to the new countries. Brand value of KFC will bring new customers toward them in the new market and new sales of these markets will bring higher profit for the company. Therefore, KFC have to maintain its quality of food in the new restaurants to enhance its reputation there which will make the brand stronger among local competitors.
Closed restaurants: KFC has closed its 107 locations and 21 restaurants among them is from US (QSR Magazine, 2019). The company was facing loss from the outlets that was reducing the profit level of the company. To stop the loss KFC decided to close all the restaurants and the company will be able to utilize the operating costs in other potential sector that will make the company highly profitable. Even KFC can invest in more new restaurants in potential markets as like as Asian countries with operating costs of these closed restaurants to be beneficial because disposal income of Asian people has increased than past history.
Increased system-wide same-store sales rate: KFC has increased its system-wide same-store sales rate about 2% in 2019 than 2018 (QSR Magazine, 2019). China has become one of the key profitable market for KFC and profit of the country has increased about 11% which is accounted form 27% of the company’s total revenue (QSR Magazine, 2019). In India, sales of the company has increased to 22% (Business Line, 2020). In USA the sales increased to 2% and the sales rate become 17% (Business Line, 2020). KFC has successfully increased its profit in different countries by delivering more customer focused services. As a result, customers’ satisfaction increased and they have maintained sales from KFC that helped the company to generate higher revenue.
Easy accessible restaurants: KFC has its restaurants in 140 countries and all their restaurants are located in the main cities of the countries (Statista: 1, 2020). City people are fond of fast food and the company have identified the scope furthermore established its restaurants in all potential cities. Therefore, customers visit KFC more than the local fast food provider and the company get enough customers of their target. The company should plan easy accessible restaurants for future restaurants as like as present in order to ensure customers’ flow.
Decreased revenue:
The graph presented above shows the revenues of KFC from 2014 to 2019 and indicates the decreased rate of revenue in every new-year. Revenue of KFC in 2019 was 2.49 billion U.S. dollars and 2018 was 2.64 billion US dollars which refers that the revenue of 2019 was lower than 2018. In 2017, amount of the generated revenue was 3.11 billion US dollars which is higher than the revenue of 2018 and 2019. It can be noted that KFC achieved revenue of 3.51 million dollars in 2014 and it was the highest revenue that the company have generated in last 6 years. KFC should find out the limitations for which they are unable to achieve highest revenue as like as 2014. And prevent their limitations to be beneficial like past years.
Increased restaurants number:
From the above graph it is noted that number of KFC restaurants are increasing in every year and it has 24,104 restaurants across the world. It had 22, 621 restaurants in 2018 and opened new 1483 restaurants in 2019. The company is finding out its potential markets and expanding business to be stronger fast food provider across the world.
Higher employee retention: KFC maintains higher retention in their company by providing different type of facilities to their employees. For instance, KFC pays retail vouchers with the value of £200 to every employees in every quarter, increases maternity and paternity pay, provides childcare vouchers. KFC provides eye care voucher for their employees, provides private medical insurance and conducts employee assistances programme. It also provides other facilities such as: free fruit for the employees of head office, free meal on shift, bonus based on performance etcetera. All these facilities increase employees’ loyalty toward KFC and they remain in the company.
Locked all stores in China temporary because of COVID-19: COVID-19 has spread across the world drastically. To stop spreading of the deadly disease that caused by Corona virus, KFC has locked its stores in many country. The disease has started to spread from China and one of KFC employee got infected through the virus. Therefore, the company has locked its stores in China to minimize the transmission of COVID-19 in February.
External Environment Analysis of KFC with PESTLE Analysis:
PESTLE analysis of KFC will show the impact of the external environments on the company. Therefore, the company will be capable of finding effective way of minimizing the impact of the environments. The external environments are political, economic, technological, legal and ecological environment. PESTLE analysis of KFC has been analysed below:
Political Environment: By analysing political environment, an organization can find out the impact of the political factors on them and they can take significant steps to minimize the impact of the environment. Political factors such as: fiscal policies, tax policies, relation of mother country with host country etcetera impacts the operations of KFC. It has to maintain the political factors of the 140 countries while executing their operations in order to avoid complexities that are created by the government of the host countries. For instance, KFC has employed a devoted UK internal tax tam who will handle the UK fiscal obligations and a professional external adviser network has been also involved in order to monitor the risks, governance and status. These teams and advisor will ensure that KFC maintains all the UK taxation rules. It will help the company to operate business in UK by avoiding the complexities related to the tax regulations of the country.
Economic Environment: Analysing economic environment helps companies to know about the in influences of the economic factors that help the company to identify the effective way of handling the influences on them. Economic factors such as: buyer’s income, inflation rate, interest rate and others factors effects the operations of KFC. The company considers the financial capability of their targeted customers and provide budget menu for the customers to deliver high value for customers’ money. For instance, KFC delivers reasonable menu for Indian people that attracts Indian people toward the company enormously. As a result, two-thirds of Indians about 845 million Indian people eat the foods of KFC at least one in a week. It refers that KFC generates higher revenue in India by delivering higher value of money for Indian Customers.
Social Environment: Social environment analysis refers to the impact of the social factors on an organization that assists companies to take necessary steps in order to face the impact and ensure their success. Shared believes of people is one of the key social factors that effects KFC. The fried chicken of KFC contains too much fat and calories that is harmful for health therefore health aware people try to avoid KFC foods. To attract these customers, KFC has started providing the foods which are less harmful. For instance, KFC serves grilled chicken breast clocked that contains calories of 180 which is lower than the past chicken grill that had 390 calories. KFC has introduced sandwich with honey barbecue sauce that contains 370 calories where original sandwich contains 500 calories. They have many more foods with less calorie such as: biscuits, potato wedges, cheese, macaroni and best salad. All of these foods will attract the customers who avoid KFC for higher calories. As a result, revenue of the company will increase.
Technological Environment: Analysis of technological environment refers to the influences of technological factors that helped companies to grow or hinder their growth. Technological improvement has played outstanding role in fostering the business KFC. The company have become partner of UberEATS and people can order the foods of KFC by installing UberEATS app. It ensures fastest delivery of KFC foods that increases the sales of their foods. KFC uses internet based marketing because it is one of the most effective way to engage a huge number of customers together. It also minimizes the marketing cost of KFC that saved costs can be utilized in innovating new foods to increase revenue.
Legal Environment: Legal environment analysis show the effects of legal factors and show the correct way in which company have to operate its business in order to avoid legal difficul. KFC has targeted to make all plastic-based packaging reusable within 2025. By eliminating plastic packaging it will be able to reduce its environmental impact. It will increase its reputation and customers will be loyal to KFC after seeing their environment friendly steps. As a result, KFC will be able to strengthen its competitive advantage.
Development of Change Model, The Changes brought by KFC and Leadership Styles:
Change Management:
Change management indicates the process, tools and methods that assists to manage the change of an organization that is conducted to achieve the targeted business outcome. Companies can implement the plans that makes effective change in organizations, handle the change and assists people to cope up with the change through change management. Different type of changes are implemented within an organization to achieve its business goals such as: change in decoration of the stores, change in the feature of goods and amenities, change in the leading styles of leaders and many more areas. With the help of change management companies can consume their resources in proper way to implement the change. It minimizes the time of implementing change, miscellaneous cost and makes change implementation easier for employees. KFC implemented change in their food items to satisfy the increasing health awareness need of customers. For example, Kentucky Grilled Chicken bears 180 calories and 6 grams fat which bearded 390 calories with 23 grams fat before.
Model of Change Management
Change management models refers to the concepts, theories and methodologies that deliver in-depth tactic to organizational change. The goal of change management model is to deliver guidance to implementing changes, directing the change process and makes sure that the changes and acknowledged furthermore place into practice. Lewin’s change management model is one of the most popular model. It has three steps such as: unfreeze, change and freeze. These steps direct the process of implementing change in a company in order to achieve their business goal. In the first step of the model which is unfreeze refers to planning about the change a company want to implement. In the second step of Change, companies implement the change according to their plan. Refreeze indicates that the change has been accepted by the employees certainly and they have adjusted with the change by putting it in practices. The model has been evaluated below:
Unfreeze: Before implementing a change, it goes through the first step of the change management model which is unfreeze. A company should maintain communication with their employees in this step to inform employees about the change and inform them the significant of the change to their company. Therefore, employees become motivated to accept the change. Companies think about the change needs to be implemented and become optimistic to implement the change in unfreeze step. Being optimistic about implementing the change fosters the change implementation. For example, elaboration of KFC is Kentucky Fried Chicken and this name created bad impression on customers’ mind because of the part ‘fried chicken’. Therefore, the company thought to divert customers’ mind from ‘Fried chicken’.
Change: Change is the step of moving toward the implementation of the change. Companies implement the change and employees face difficulties to adjust with the change. This step should be implemented with proper plan and execution to ensure the effectiveness of the change. Companies keep encouraging their employees to accept the change by make them realizing the importance of the change. For instance, KFC had replaced their name ‘Kentucky Fried Chicken’ to ‘KFC’ which was the abbreviation of the name to divert customers’ from the part fried chicken. Employees has to promote to inform customers about the new name of the company. Even employees has to handle the customers’ carefully with satisfactory answer that why they had changed their name.
Freeze: The last step of the model is freeze where the employees is adjusted with the implemented change and company freeze the change to keep it. Employees become habituated to the change and do not feel difficulties because of the change. For instance, after KFC renamed their brand, the employees became habituated to the new name and the name was promoted greatly. And the customers who were annoyed with the Kentucky Fried Chicken, accepted the name KFC positively. As a result, KFC got back the customers’ attraction and their reputation has increased because of the name.
Planned and Unplanned Change:
Organizations have to implement changes according to the situation to ensure their growth. These changes assists companies to achieve their targets and desired growth. Two types of changes are implemented in companies such as: planned change and unplanned change. These are analysed below:
Planned change: Planned change refers to the way to prepare a company or its specific part to achieve new goals of targets. When companies make cautious decisions the planned changes occurs. Planned change increase the productivity and service ability of a company. Quality of goods and amenities are enhanced through planned change that makes the competitive position of an organization stronger by increasing customers’ satisfaction. Planned change assists companies to implement technological change within a company that helps companies to adopt with the advanced business world. KFC occurs planned change within their company to adopt with the advanced business world. For instance, KFC started to renovate their restaurants with new fancier designs in both outside and inside of the restaurants. This planned change started to attract many more customers for the company than before because people loved the exclusive new designs.
There are many planned changes that an organization occurs to interact with the external factors. Companies planned changes to minimize the influence of the external factor on business. For instance, competition of fast food industry has increased dramatically because of globalization therefore KFC started new promotion $5 “Fill Up”. This promotional package includes an entrée, a drink, several sides and dessert. It attracted many customers toward KFC because the competitors were not providing this type of promotional package with lower costs. As a result, KFC created customers satisfaction highly than their competitors and increased revenue.
Unplanned change: Unplanned changes are occurred because unforeseen happenings. Companies conduct unplanned changes to minimize the impact of the unforeseen happenings which is out of their control. KFC conducts unplanned changes to decrease the effect of the unforeseen events that may harm their business. For instance, global environment has become drastically polluted and KFC has committed to make all plastic-based packaging reusable within 2025. KFC will be capable of contributing in saving world environment that will assists them avoid the penalties or compensation that is set for breaking environment related rules. The change has been conducted due to avoiding legal interference of government in KFC’s operations. From the above analysis it is seen that KFC has implemented the change in plastic consumption because of the unforeseen influences of the external factors that is the unplanned change of KFC.
Leadership and Change Management:
Leadership plays outstanding role in the change management process of an organization by ensuring the successful implementation of the change. Leaders of can organization uses appropriate leadership approach in leading their employees and make employees aware about the effectiveness of the change. Employees get easily influenced by their leaders of the leaders use appropriate leadership style and it makes employees more responsible. Leaders make employees more responsible by making them realize about their contribution toward the organization. After realizing their contribution, employees become proactive and try to give their best to maximize the result of the change. Appropriate leadership approaches helps companies to ensure that all the departments are working cooperatively to implement the change and they can ensure the maximum use of the available resources. As a result, companies can implement the change by controlling the costs of the chance implementation. KFC applies appropriate leadership approach to influence their employees that makes the change implementation easier for the company. Leaders influence the employees of KFC appropriately that makes them capable to giving their best to the organization while implementing the change. Employees become proactive after getting right direction by their leaders and adjust with the changes that KFC conducts. As a result, changes are successfully implemented in KFC with outstanding result.
The Roles of Organizational Culture on Change Management Program in KFC:
Organizational Culture of KFC Fosters Their Change Management:
Organizational culture and values of KFC that fosters change management has been evaluated below:
Focuses on customers’ satisfaction: The companies focus on customers’ satisfaction keep on conducting changes in their products according to customers’ choice. KFC focuses on customers’ satisfaction that encourages the company to invent new products to increase customers’ satisfaction. For instance, KFC has 18 food innovation teams and KFC Chizza is one of the most successful food that invented by the team that creates customers’ satisfaction highly. They innovate foods and makes customers happy that culture drives change management in KFC.
Emphasizes on the development of product quality: To develop the quality of goods, companies need to implement changes in their goods. KFC focuses in developing their foods’ quality in order to maintain their global demand that culture fosters change management program of the company. For instance, KFC foods contains high calories that have bad impact on human health therefore the company reduced calories from their ‘Side’ salad. It has attracted health conscious people toward them greatly.
Focuses on providing quick service: KFC commits to provide quick services to their customers and this culture of the company compel them to implement different type of changes. For example, KFC has become partner with UBerEATS in order to provide fastest home delivery to the customers. To maintain the culture of quick service, KFC conducted this partnership that brought change in delivery system.
Gives emphasis on making the company more profitable: KFC focuses in making its company more profitable than before that inspire the company to implement changes. For instance, the new promotion of KFC $5 “Fill Up” was made to attract more customers toward them and it successfully increased the revenue of the company. It indicates that the culture of being more profitable fosters change management of KFC.
Applies democratic management style: Democratic management styles is the style in which managers involve employees before reaching to a final decision in order to make employees more responsible. KFC applies democratic management style therefore employees get the change to take part in decision making that makes employees more responsible. Employees feel valued after knowing that KFC values their opinions and express their opinion related to the organizational change. The employees work proactively to implement the changes conducted by the company. It seems that democratic management supports the change management of KFC.
Leadership Styles of KFC Supports Change Management:
The way or process through which managers influence the employees to follow their instructions in order to achieve the goal of their organization is called leadership. Appropriate leadership approach ensures’ best performance of employees that helps companies to attain the desired growth by increasing the productivity level. The leadership approach used by the leaders of KFC are analysed below:
Laissez-faire leadership: Laissez-faire leadership is the style in which leaders’ hands are off and team members are allowed to make decisions. Leaders of KFC apply different types of leadership approaches and laissez-faire is one of them. This leadership approaches encourages employees to show their creativity that helps KFC to enhance the quality of their foods. Employees stay highly motivated after seeing their value within KFC and work proactively. Employees works more to implement changes this approach because employees get the chance to prove their capabilities. As a result, KFC gets best outcome from employees’ work and it help the company to maintain their global demand.
Authorization leadership: Authorization refers to the process in which leaders make all the decisions and allow little input from group members. KFC leaders applies authorization leadership to have authoritarian control over the groups. It is applies in order to make the decisions quicker because leaders decide about the change quickly therefore change process becomes easier. KFC leaders use authorization leadership where strong and directive leadership is needed. Employees work by following the command of their leaders that ensures maximization of the result. But KFC may ignore creative solution in this style because employees are not allowed to give opinion.
Democratic leadership: This leadership styles indicates to the process where group members are allowed to take part in decision making. Leaders of KFC applies democratic leadership also in their organization. KFC encourages exchange ideas, discussion with employees and participation of employees within their company. It helps KFC to get creative ideas and solutions form their employees because employees find out the ideas with their experience and brain storming. Group members remain committed to give their best and it ensures higher productivity for KFC. But companies have to ensure effective communication to have the best ideas from their employees.
Vision and Mission of KFC Drives Change Programmes:
Vision of KFC supports change: Vision of KFC is to primary build in food services of ASEAN region by serving quality foods and excellent customer-focused service. ASEAN region is an intergovernmental organization that consists of ten countries in Southeast Asia and KFC has targeted to make their position stronger in the countries. To maintain their dominance, it provides quality foods by innovating foods in through their food innovation team. It seems that the vision drives the changes within KFC because innovation in foods will help the company to provide different kinds of food and it will be the top food services of ASEAN region.
Mission Statement of KFC supports change: Mission of KFC is to deliver finger licking good food for their customers across the world (Comparably, 2020). KFC bring changes on the taste of their foods that makes KFC foods tastier. The steps of making foods tastier requires changes in foods’ that refers that the mission of providing finger licking foods encourages KFC to implement changes. Even the company conducts change in food’s taste according to the demand of the countries. Through enhancing taste of the foods, KFC become capable of increasing its revenue.
Assessment of the Changes Made by KFC:
KFC has conducted many changes in order to ensure the growth of their business. The company conducts these changes to adopt with the competitive business world. Assessment of the implemented changes of the KFC:
Started using the abbreviation of their brand name: Kentucky Fried Chicken changed their name to KFC which is the short form of their name to divert customers’ mind from the part ‘Fired Chicken’ (Trusted Media Brands, 2020). KFC successfully removed bad impression from customers’ mind and it increased the revenue of the company. This change brought effective outcome for KFC.
Reduced calories from Chicken and Sandwiches: KFC reduced calories from Kentucky Grilled Chicken from 390 to 180 calories and reduced calories from Honey BBQ from 500 t0 370 calories (Hearst Digital Media, 2020). This healthy change initiative satisfied the health conscious customers. Therefore, they become more attracted to the company and it increased KFC sales enormously.
Changed the outlook of their restaurants: Renovation of KFC outlets with new fancier design for inside and outside has attracted too many customers for them (Business Insider, 2016). Customers liked the decorations and became interested to spend quality time in KFC that drives KFC revenue. It also refers that the changed decoration of KFC has become beneficial for them because it attracted so many new customers including the existing.
Started providing promotional packages: Promotional package meal of KFC for $5 “Fill Up” increased the sales of the company enormously (Business Insider, 2016). The package contains entrée, several sides, a drink and dessert. Customers’ satisfaction increased greatly after having this budget friendly package. This changed meal package boosted the sales of KFC.
Recommendations for KFC:
KFC should innovate their foods more in order to reduce the calories more from the foods. It will ensure good health of customers’ therefore customers will buy more KFC foods globally. They may sell organic foods to attract more customers who still avoid fast food because of the high calories and it will increase their sales more quickly. KFC Grilled Chicken has great demand and KFC should keep enhancing the quality and taste of the item to gain more market share globally. The company may service more cost effective foods to have customers of lower classes also because there are huge number of lower classes people across the world and KFC can be dramatically profitable. KFC should maintain the quality of their food to maintain their global demand.
Conclusions
KFC is one of the most renowned brand of fast food across the world. It keeps innovating new food and enhance the quality of their foods to make customers more satisfied. It has created outstanding position on customers’ mind with their finger licking foods. KFC should maintain their innovation of making new foods and developing current items to make their position stronger. It should expand its business in the countries where it has not entered yet. By entering in new market, KFC will be capable of increasing profit and making its position stronger in global market.