Analysis of KFC's Strengths, Weaknesses, and External Factors

This assignment provides an in-depth analysis of KFC's strengths and weaknesses, highlighting its ability to adapt to changing environmental factors such as technological advancements, economic fluctuations, and legal considerations. The analysis also explores how these external factors impact the company's sales, competitors, millennial preferences, supply chain issues, and franchise management, ultimately affecting the overall performance of the organization.

Business and the business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Explain various type and purposes of organisations.........................................................1
P2 Scope and size of range of different types of organisation.............................................3
LO 2.................................................................................................................................................5
P3 The relationship between different organisational functions and link to organisational
objectives and structure..........................................................................................................5
LO 3.................................................................................................................................................7
P4 PESTLE analysis of KFC .................................................................................................7
LO 4.................................................................................................................................................9
P5 SWOT analysis of KFC ....................................................................................................9
P6 The strength and weaknesses interrelate with external macro factors............................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment includes internal and external factors that affects business
activities. Some factors are uncontrollable like, political, economic, technological, social and
legal. Some elements are partly controllable such as supplier, employees and customers etc. but
they both affects all-over performance of the organisation.
Present study is based on Kentucky fried chicken (KFC). It is American fast food
restaurant chain. It deals in list of products but its main product is fried chicken. It is located in
more than 22,621 locations globally.
Report will include different type and purpose of organisation. It will describe the scope
and size of different types of company. It also emphasizes on the SWOT analysis of the KFC.
Furthermore, it will include the interrelation between strength and weakness with the external
factors of the organisation.
LO 1
P1 Explain various type and purposes of organisations
Public company: -
It is a governed by government and provides services to general public. The company
sells their securities to general public by initial public offer. The share of public company is
traded in stock exchange. The subsidiary of public company is also called as public company.
The public company are governed by some rules, laws and regulations and are bounded to follow
them.
The purpose of the public company is to offer high quality product and services to
general public at affordable price and enhance their shareholder value by maximize profit. The
objectives of public company are integrated with social and environment goals.
TESCO is a public company. Its intent is to provide product and services in the
international market. TESCO is expanded their market at global level by providing product at
low pricing to the people in the global market that support in progress of the company in global
market (Kolk, 2016).
Private company: -
Private company is governed by the individual or group of people. There is no
interference of the government in this organisation. There article of association is restricted to
the transfer of share in any other individual and general public. Its main objective is to earn
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profit. It is directly registered in companies act. It has separate legal entity. They also trade in
stock exchange but not by initial public offering.
The purpose of private firm is to increase profit for owners and shareholder and expand
their business operations at global level (Laudon and Traver 2016).
The purpose of KFC is made the company the largest fast food operation in the world
wide and increased the quality of fast food and capture the whole fast food market (Bohari, Hin,
and Fuad, 2017).
Voluntary company: -
It is an association where members are come together in an agreement voluntarily for
reach a common goal. It does not have separate legal entity and cannot own property by their
own name. It includes trade unions, trade associations and professional associations etc.
The purpose of voluntary organisation is to focus social impact not on profit. It also
improves well-being of people and offer them satisfactory health services.
OXFAM is the charitable organisation that aim to reduce poverty from the country. It
focuses on four main resources: economic justice, essential services, right in crisis and gender
justice (Hamilton and Webster, 2018).
Legal structure of the organisations
legal structure of public company: -
The activities of public company are run by its board of director on the behalf of its
shareholder. It sells its share to general public by stock exchange. The board of director and
management can leave and transfer their ownership and powers. It publishes its annual report so
banker and investor can identify the organisations positions.
Legal structure of private company: -
Private organisation has separate legal entity. All shareholders has limited liability for the
debts and profit of the company. It is run by its board of directors, shareholders and chairman
etc. the company must be formed the article of association and memorandum of association.
Legal structure of voluntary company: -
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In voluntary company, the decision is taken by the volunteers of the company. It is an
unincorporated association. It has limited liability membership. The guarantee of the
organisation is limited (Becker, Kunze and Vancea, 2017).
P2 Scope and size of range of different types of organisation
Bases Public organisation
(TESCO)
Private organisation
(KFC)
Voluntary organisation
(OXFAM)
Background TESCO is a British
multinational retailer industry,
founded in 1919. it is the third
largest industry in the world by
gross revenue. TESCO is
expanded globally with enter in
11countries in the world.
KFC is an American fast
food chain. It is also
known as Kentucky
fried chicken. It is
second largest restaurant
chain in world
(Whincop, 2017).
OXFAM is a charitable
organisation that focusing on
reducing poverty. It was
founded in England in 1942. It
is a non-profit organisation.
Objectives There are two main objectives
of TESCO: reducing their
products prices and doing
better their customers
experience in each visit.
It has two main
objectives: first is
development of their
products and second is
increased varieties in
their menu.
The objective of OXFAM is to
expand the business operations
so that more people are
engaged with organisation that
will help in fulfilled the needs
and wants of the people.
Vision &
Mission
Vision of TESCO is created
need and wants around the
world.
Mission is growing their
business operations with full of
innovation, modern and
opportunities.
KFC's vision is to sell
fast food in friendly and
fast environment with
affordable price.
Mission of KFC is
delivering constant
quality fast food to the
customers.
The vision is made world
without poverty. The mission
of OXFAM is people are
valued and treat equally to each
person.
Products It includes supermarket,
hypermarket, superstore and
convenience shop etc
The products are KFC
beverages, chicken,
chicken wings, desserts
OXFAM company helps in
bringing out the online
technology to improve the
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(Geissdoerfer Vladimirova and
Evans, 2018).
and grilled chicken and
many more.
condition of poverty.
Market size
and scope
It generates £57,491 million
revenue in 2018. it scopes to
expand more on globally.
KFC generates on an
average $942000 sales
annually and $436
million net income. its
scope is to increase the
market share worldwide
and to improve in the
quality of the products.
OXFAM have 19 organisation
and local communities in more
than 90 countries. Its scope is
expanding their organisation
globally.
Stakeholder The stakeholders of TESCO
are any person, institute and
company who own at-least one
share of the company.
The stakeholder are
employees, contracted
vending companies and
delivery services,
suppliers etc.
OXFAM have volunteers,
funders, donors and
communities as a stakeholder.
Number of
employees
Number of employees are
460000 in 2017
KFC have 24000
employees and ranked
second among the
competitors.
OXFAM have 5300 employees
in world wide and 22000
volunteers.
Legal
structure
Legal structure of TESCO
includes 11members in chief
executive committee and
various level of hierarchy
(Geissdoerfer, Vladimirova
and Evans, 2018).
KFC is listed on the
New York stock
exchange. The company
decision is taken by the
owner of the company.
They have to maintain
the memorandum of
association and article of
association.
They are formed the council of
trustee which is governed by
the association of OXFAM.
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Organisation
structure
TESCO follows hierarchical
organisation structure.
KFC follows Managerial
organisation structure.
It follows tall organisation
cognition.
LO 2
P3 The relationship between different organisational functions and link to organisational
objectives and structure
Organisation structure
KFC follow the hierarchy organisational structure to perform their operations smoothly.
In this structure all level of authorities is linked vertically in the company and also linked the
chain of commands between the supervisor and employees in all level of the organisation. In this
structure of the KFC higher level control the lower level. There are board of directors, president,
department head, then super visor and then come employees. In the KFC Higher level concern
with the organisation structure they make plan or the KFC like in what area have to serve their
food what will be the target market and customers and the quality of the food. This plan is
executing by the supervisors they set the target for the employees and employees perform and
prepare the food as the direction of the supervisor. This continuous and smooth process of
operations that help the KFC in flexible supply chain and making strategies (The 5 Types of
Organizational Structures: Part 1, The Hierarchy,2019).
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Relationship between different department
KFC is the fast food chain and counted as one of the largest restaurant chain. To maintain
its chain and image in the world or to provide the perfect taste to the customers they want
because of this unique taste and recipe and method KFC has different department which follow
different operations and functions in the organisation and they all are interlinked with each other
to provide the best services to the customers (Aithal,2016).
Purchase and Production department
Production department of KFC is depended on the purchase department for producing
quality product food. If the purchasing department has good relation with the suppliers like
farmers then the raw material like vegetables and chickens, pork is easily available and the
production can be continued without any breakdown. In case if the demand of the food is more
than supply then it will affect the production department when raw material is not available on
time and KFC company will not satisfy their customers (Marketing and its relationship with
other business activities,2019). So, there is strong relation between production department and
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Illustration 1: hierarchy organisational structure
(source: The 5 Types of Organizational Structures: Part 1, The
Hierarchy)

the purchasing department for producing quality product and fulfil the demands and needs of the
customer. As if purchasing department is supplying raw material within the time then production
department prepare the food on time. The KFC's objective is attained as it follows Hierarchy
structure and company can earn the profit (Widya Yudha, Tjahjono and Kolios, 2018).
Relationship between Marketing and Finance department
KFC marketing department is linked with the finance department as without planning
Flow of the capital will be disturbed for the whole year. As marketing department of KFC
needs money for the advertisement, sells and promotion of the product so it will depend on
finance department. If in the company there is improper flow of fund then the marketing
department will be able to buying, buying the materials and promotional material of the products
and cannot invest in the promotion techniques for the product that will loss to the company
revenue and brand value. The company is followed hierarchy structure which has various levels,
it will be simple to communicate systematically because of chain through that KFC can achieve
its objectives (Marketing and its relationship with other business activities,2019).
Benefits of relationship between different departments
 It helps in improving the communication between different departments.
 It helps in easy and flexible supply chain management in the company.
 It helps in easy cash flow in the company.
 It helps in improving different business activities carried out by the different department.
 It helps in building good relation with customers.
Cons of relationship between different departments
 Time is time consuming because of interdependency on one another department.
 Departments are not working accordant to their method they have work according to
other department needs and wants as they cannot take their own decision.
 There may be struggle between different departments of the company.
LO 3
P4 PESTLE analysis of KFC
PESTLE analysis refers to the external factor of the organisation that analyse the problem and
affect business activities. It stands Political, Economic, Social, Technological, Environmental
and legal factors. KFC is an American fast food chain company and has its brand image in the
worldwide. The functioning of the KFC is taken by the external factors of the company.
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Governmental factor:
it influences business operations by many ways. Political factor can create opportunities as well
as threat to the business.
Positive impact: Political factor can open up many options for the organisation. If there is
political stability in the country that is a good time to establish a franchisee of KFC and the free
trade agreement also reduced KFC's cost of sourcing the product.
Negative impact: some time political factor is affected the performance of the organisation. KFC
have to followed all the policies of the government where KFC runs their business if they break
any policy, they are liable to pay to government as well as they have to close their store on this
location (Widya Yudha, Tjahjono and Kolios,2018). KFC is doing various customers centric
activities but due to some countries' government laws it cannot starts which impacts negatively to
KFC.
Economical factor:
It is also an important factor that affect organisation. The product price and the income of the
employees are decided by economic of the countries where they run their business.
Positive impact: the economic environment helps to identify the resources for the business that
they are needed to run their operations. With the help of economic environment, KFC identifies
the availability of financial resources than set up their business on those countries where good
financial resources are available.
Negative impact: - some time economic environment creates competitions that affects sales of
the organisation as well as profit and sometimes it reduces market share of the organisation. Due
to financial crises there will be price sensitivity that is affected the flow of cash in the market.
Social factor:
Positive impact: it introduces many opportunities for the organisation because it helps to identify
the trends, thinking and perception of the people that help to KFC in decision making. KFC have
strong customer loyalty, so customers with promoting KFC through word of mouth that is
enhanced the sale of the products in the countries.
Negative impact: sometimes it creates threat for the organisation because in present there are
vastly change in demographic. People attitudes, belief and interest are changes that fails the
existing decisions of the organisation. Different cultures of the countries are also affected the
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sale of KFC. Different country has different beliefs and perceptions so it affects the purchasing
power of the consumer (Widya Yudha, Tjahjono and Kolios,2018).
Technological factor:
Positive factor: the new approaches and technology is introduced in the marketing. With the use
of this technology, KFC can make its process effective and achieve their goals. KFC is instantly
starting its marketing with the help of digital platform that can gain the merchandising of their
product.
Negative impact: when any technical problem arises in the machinery that can stop the hole
process and waste lot of time. When the research and development activities are not conducted in
the company then it lacks in the technology and decreases the sales of KFC.
Legal factor:
Positive impact: For selling product in the other country there must be laws followed by the
company to sustain in the country. To expand the business by the KFC in new countries have to
follow their rules and laws. If their laws and policies are in favour of the new business and
welcomes the international business in the countries will provide the best policies to them. Their
interest rates, taxation policies will help the KFC to import and export of the production and the
demand of the new products will high and company will also able to fulfil the high demand of
the customers that generate the great revenue of the company (Pestle analysis,2016).
Negative impact: Legal factors affects the procedure cost and the request of its product in the
country. Legal factors like laws and policies of that country for the international business, its
taxation policy will influence the import and export of the products, because of this value of the
product also get high that affect the demand of the products.
Environmental factor:
Positive impact: As the KFC is food chain company, that require huge amount of vegetables,
pork’s and other materials to produce their foods. If the environmental conditions of the country
are good and seasonal vegetables will grow more that will help the production of the food. That
will also help the company to fulfil the demand of the customers as they want fresh and quality
foods and helps in makes profit (Pestle analysis,2016).
Negative impact: If the environmental condition is not favourable in the production of the
vegetables and other products like pork, chicken as KFC is mainly produced the non-vegetarian
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foods, this will influence the company in their production. Because of the environment pork’s
and chicken get effected then quality of the food will get low that affect the organisation.
KFC image.
LO 4
P5 SWOT analysis of KFC
SWOT analysis is stands for Strength, Weaknesses, Opportunities and Threat which is
used to determine the external and internal factors of the company. KFC is an American fast
food chain company and had a restaurant chain in world.
Strength: -
KFC has many strengths that are as follows-
 Strong global presence: its presences more than 130 countries with over 21000 stores. It
has very vast global presence and hold 2nd position in world's largest restaurant chain.
One more strength is majority of countries are non-vegetarian food segment.
 Variety in menu: KFC is offered variety of veg and non-veg food to their customers. Its
foods are based on the region in which they operate.
 KFC's secret recipe: one of the biggest strengths is its secret recipe “11 herbs and spices”.
Its recipe is remained same for all its franchisee (Phadermrod, Crowder and Wills, 2019).
Weakness: -
there are some weaknesses where KFC needs to improve: -
 Supply chain and distribution issues: KFC has many distribution issues related to delivery
of the fast food. This issue is so big and they created situations of closing stores in UK.
 Managing franchisees: it is also a critical issue of KCF in their success. It arises due to
conflict between KFC and its franchisees.
 Food quality related issues: food quality is always a biggest issue for food industry. In
past year, KFC is also faced cooking related issues for non-veg food. The issue is that
non-veg increases fat of the people where KFC said low calories food.
Opportunities: -
 Innovative menu for health-conscious generation: in present millions of people are
conscious about the health. Kfc's menu are added low calories items that enhance
profitability.
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 Focus on low cost: the preferences of customer are changed. They want health as well as
best price. Kfc is focused on increasing low cost products to enhance their sales.
Threat: -
 Competitors: from the last two-three years, the competitors of KFC are increased. Its
measure competitors are McDonald and other fast food brands because they also
introduce innovative products with low calories.
 Millennial preferences: the preferences are vastly varying from generations. The
demographic changes are also created pressures on KFC. The customers want great
services with best quality of food. The preferences are increased day by day.
P6 The strength and weaknesses interrelate with external macro factors
As KFC is American fast food chain company, run its business activities globally. It is
related to the political factors of the environment as if there is political instability in the country
the company will not able to establish their franchisees and that will affect the global grow of the
company as well as the sales (Bohari, Hin and Fuad,2017).
The Company is doing manual working to make foods as it shows the lack in the
technological changes in the company as it takes more time to complete the work manually
without use of technology that is related to the technological factors of the environment.
KFC is offered variety of products in the market that creates brand value in the market
but it may affect through the economic factors of the environment. If the prices of the product are
rise then the customer will not able to purchase their product and it will affect the sale of the
variety of products and also decrease the profitability.
The company has large number of product range but it will affect by the legal factors
because each country has different laws and as a global company KFC have to followed global
laws such as in Indian laws, they are not allowed to sell beef in their stores (Laudon and Traver,
2016).
One of the weaknesses of the KFC is that they are facing Supply chain and distribution
issues. Thus, this is related with the political factor due to government of some countries are not
supporting the delivery of chicken.
Another weak point of the KFC is that they are unable to manage their franchises at
global level. This is related with economical factor. Due to price fluctuation, the company is
unable to expand its business in various countries.
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CONCLUSION
From the above study it can be concluded that environmental factors play an important
role in the organization. It helps in identifying the strength and weaknesses of the company so
that the company can overcome these weaknesses and take advantages of opportunities and grow
more. Many factors affect the functioning of the company such as political, social, economic,
environmental factors etc. There are different organisations such as public, private and voluntary
organisation. All this organisation has played their different roles in their sector. From the above
study it can be observed that external and internal factors both play an important role in the
organisation and affect the organisation to its decision-making process. It also concluded that all
the departments n organisation is interlinked and helps each other to achieve the o0verall
organisational target in the market.
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REFERENCES
Books and Journals
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