KFC in Vietnam: Business Environment, Stakeholders, and SWOT Analysis

This report provides a comprehensive analysis of KFC's business operations within the Vietnamese market. It begins with an executive summary highlighting the growth of the fast-food industry in Vietnam, KFC's strong presence, and the need for innovation to maintain competitiveness. The report then explores different types of organizations, focusing on private sector entities like KFC, and identifies internal and external stakeholders. It details the interrelationships of various functions within KFC, such as marketing, finance, and human resources, and their linkage to the divisional organizational structure. The study also examines the impact of macro-environmental factors on KFC through a PESTLE analysis, covering political stability, economic growth, socio-cultural influences, technological advancements, environmental considerations, and legal regulations. Furthermore, the report conducts a SWOT analysis, outlining KFC's strengths, weaknesses, opportunities, and threats in the Vietnamese market. The conclusion summarizes the key findings and emphasizes the importance of strategic adaptation for KFC's continued success in Vietnam.

Running head: KFC
Business and Business Environment
[KFC in Vietnam]
Name of the student:
Name of the university:
Author note:

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Executive summary
The fast-food industry in Vietnam is growing even though a significant number of people love
cooking foods and like the family atmosphere. However, the growing interest in fast foods in the
young population is a big boost to the industry. KFC, as found in this study, has gained a strong
foothold in Vietnam. However, the study also reports the slow progress of their growth.
Therefore, KFC needs to give its utmost attention to innovative ideas and technologies to
increase the efficiency of their operations.

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Table of Contents
Introduction......................................................................................................................................3
Different types of organisations.......................................................................................................3
Stakeholders.................................................................................................................................4
The interrelationships of the various functions within KFC and their linkage to organisational
structure...........................................................................................................................................4
The impact of macro-environment factors on KFC.........................................................................5
SWOT analysis of KFC...................................................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
This project is aimed at discussing various points related to business. All these points are
going to be helpful for business students in effectively completing their academic studies as well
as getting a good job. Besides, this study holds a discussion on the various organisational
functions of KFC and how these are related to its organisational structure. The study also
examines the influence of the external business environment of Vietnam on KFC. Moreover, the
study tries to identify the strengths and weaknesses of KFC concerning the external business
environment in Vietnam.
Different types of organisations
Research suggests that different forms of organisations exist categorised as both for-
profit and not-for-profit organisations. The various types of organisations are as mentioned
below (Žižka et al. 2018):
 Private Sector
Private companies are mainly profit-oriented. However, there is increasing adoption of
environment-friendly strategies as part of their environmental performance.
 Sole Trade
Partnership, private limited or public limited companies fall under this category. An individual
can also run such a business without being a part of any organisation. Firms because of
partnerships can either have limited or unlimited liability. A private limited company has limited
liability including private shares. The shares of a public limited company are open to the public.
A public limited company can be specifically categorised as a Franchise and Workers
cooperative (Okech and Njururi 2016). In Franchise, the business owner pays a corporation (Lee
et al. 2015). In Workers cooperative, all the workers are eligible for equal pay. They make joint
business decisions. Private companies may go for issuing stock and having shareholders as well.
However, they do not trade on public shares. Their shares are less liquid. Hence, it is difficult to
determine the values of the shares (Pérotin 2016).
 Public Limited Company
A public limited company has few advantages and disadvantages as well. Such companies
possess the stronger financial capability as they are open also to public shares. In this way, they
have more opportunities and higher funds pouring from wider resources. Moreover, such firms
can probably grow and expand to a new marketplace. However, they need to abide by to more
regulation as compared to private companies. Issues and ownership are hard to be controlled in a
PLC firm.
 Voluntary Organisation
Such organisations are not-for-profit organisations. The formation of such organisations happens
when a group of people comes together voluntarily to serve a shared purpose.
 Charitable Organisation

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Charitable organisations are more or less similar to voluntary organisations; however, differ in
some respect. Charitable organisations serve social, religious, philanthropic, etc. purposes. A
portion of the total profit is utilised in serving the organisations’ purpose.
While talking about Vietnam and the kind of industries that exist there, it appears as if
many Cooperative enterprises are growing successfully in the country. Such organisations do not
have shareholders. Profit is shared between the members or is reinvested in enterprises. This
means they give more importance to value rather than just profit.
Stakeholders
All public listed companies and private firms excluding the voluntary organisations have
an interest in their organisations. However, they differ concerning the profit shares and the power
to vote. Stakeholders can be internal as well as external. Each one of the stakeholders has its
objectives. The stakeholders who are generally a part of an organisation are as mentioned below
(Bui and Ennis 2017):
 Internal Stakeholders
The list of internal stakeholders generally comprises of employees, owners and manager.
 External Stakeholders
The list of external stakeholders generally includes society, suppliers, shareholders, government,
creditors and customers.
The interrelationships of the various functions within KFC and their linkage to
organisational structure
To understand the various business functions in KFC and their linkage to its
organisational structure, KFC in Vietnam will be considered as an example. KFC proved as
being strategically correct for its decision to enter Vietnam. KFC chain of restaurants opened
their first-ever outlet in Ho Chi Minh City in the year 1997 (Kfcvietnam.com.vn 2019). The
concept went on to become a success than in a few years. KFC could expand the number of its
franchise stores to 75 in Vietnam including 47 itself in the Ho Chi Minh City
(Kfcvietnam.com.vn 2019). According to a spokesperson from KFC, Vietnam is a potential
destination for their business. This is perhaps the reason KFC had wanted from their very first
day in Vietnam a strong foothold in the market (Kfcvietnam.com.vn 2019). Initial few years
were not as good as it is now for KFC.
 The mission and vision
KFC’s mission is to maximise profitability, deliver sustainable growth year after year and
improve shareholder value. The vision is to be the leading integrated food services group in the
Asian region, and delivering consistent quality products and excellent customer-focused service
(Kfcvietnam.com.vn 2019).
 Objectives

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The company is not just intended at good foods offered to customers but also at establishing a
long-term relationship with them by being responsible for its social and environmental
performance (Kfcvietnam.com.vn 2019).
There are other important business areas as well such as those mentioned below
(Kfcvietnam.com.vn 2019):
 Marketing
KFC does make good utilisation of appropriate marketing tools such as social media channels to
promote the brand image and advertise the exciting food offers. Due to the effective marketing of
products, KFC has been able to promote its uniqueness on a larger platform. The uniqueness lies
in a fact that the brand is specialised in selling grilled chicken with side dishes made with fresh
chicken. KFC claims that its recipes are their own and have not been copied from anywhere else.
The three key success factors for KFC in Vietnam are selling foods in unique flavours, practicing
a friendly service style and maintaining heartiest devotion to its customers.
 Finance
The list of financial activities includes but not limited to like preparing financial statements such
as balance sheets, income and cash flow statements for publishing into the company’s annual
report.
 Human Resources
They have various main duties like recruitment and selection, training and development
programs, and maintaining employee relations.
 Organisational Structure
Organisational structure particularly followed in KFC is “divisional organisational structure”
(Kfcvietnam.com.vn 2019). With this structure, KFC can segment its employees based on
product, service or markets. This means KFC works extensively to identify the correct match for
their products, services and markets. KFC with its corporate culture effectively tackles the
various business issues. The structure has so far proved helpful in rolling out new products to
meet the diverse and growing demand of Vietnamese. The structure has proved helpful in
attaining fiscal stability and operational effectiveness (Burrell and Morgan 2017). Due to
effective bonding between the corporate structure and the distribution channel KFC was able to
control the operational cost. Similarly, with a good bonding between the marketing team and the
organisational structure, KFC was able to deploy skilled staff to take care of various marketing
and advertisement activity. KFC has been the most loved food brand for years among the young
Vietnamese (Kfcvietnam.com.vn 2019).
The impact of macro-environment factors on KFC
This section covers a macro-environmental analysis of KFC with the help of PESTLE
analysis of KFC in Vietnam.
 Political

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The political stability of Vietnam was one of the key reasons for KFC’s success in the country.
The political circumstances proved helpful for KFC to become the leading fast-food brand in
Vietnam. The Vietnamese government is different from other Asian countries concerning
building a robust and very friendly legal framework that suits the local business as well as
foreign investors. The Vietnamese government is very strict with the environmental impact of
businesses and does ensure that safe food is only delivered to its people (Nguyen et al. 2017).
Hence, this is one of the areas of concerns for KFC in the long-term (Nguyen et al. 2017). By
performing significantly good on this growing aspect of the business, KFC will be able to sustain
its competitive advantage.
 Economic
The growth rate of the economy for Vietnam has been one of the best in the world. The economy
has increased annually at 7 to 8.5% (Anh, Minh and Tran-Nam 2016). The country is considered
a true emerging market and potential place to invest for U.S. investors. Vietnamese government
ensured cutting the government expenditures to control the increasing inflation rate in the
country. Recent research suggests that the fast-food industry will continue to grow (Anh, Minh
and Tran-Nam 2016). This means KFC still has significant rooms to accommodate. It is doable
by adopting innovative ideas and utilising up-to-date technologies. Vietnamese will expectedly
see few more stores of KFC in popular places.
 Social
Socio-cultural factors in Vietnam have also contributed to the success of KFC. Vietnam is one of
the most populous countries in the world (Wertheim-Heck and Spaargaren 2016). Due to the
busy life in Vietnam such as in Offices, there is no better option than to depend on fast foods. It
is not just quicker but also effective in terms of pricing. Rather, fast foods fit effectively into the
pocket (Wertheim-Heck and Spaargaren 2016). This trend proved helpful for KFC in acquiring a
leadership position in Vietnam. However, a considerable population in Vietnam prefers cooking
food at home and give respect to the family atmosphere (Wertheim-Heck and Spaargaren 2016).
KFC should be aware of this and keep attracting people with a sustainable business strategy like
offering organic foods. The multi-domestic strategy proved helpful for KFC to offer relevant
food to Vietnamese. Young population in Vietnam prefers foreign products (Wertheim-Heck and
Spaargaren 2016). This has worked as well in favour of KFC.
 Technological
The increasing usage of the internet helped KFC to utilise the internet as a channel to promote
new products and advertise for similar purposes. KFC has been good at experimenting with
ideas. Evidently, they used technologies to increase their efficiency in utilising the latest
machines and boilers (Kfcvietnam.com.vn 2019). By utilising advanced equipment, KFC has
been able to deliver foods on a quick note.
 Environmental
The leftover food contributes to greenhouse gas emission. This can be threatening for KFC
considering the worldwide growing awareness on environment pollution. Bird flu and other
harmful diseases do affect the quality of chicken (Hoang, Chu and Van Tran 2015). Since KFC
has a very good market image in Vietnam it cannot go with affected chickens. Cases like Bird flu
will lead to increased operational cost.

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 Legal
Few existing laws in Vietnam can affect KFC’s business strategy. Few of these laws include but
not limited to increasing ordinance on food hygiene and safety, Commercial law on franchising,
and Law on food safety (Ha, Shakur and Do 2019).
SWOT analysis of KFC
This section covers the strengths and weaknesses of KFC. This analysis will help to identify
opportunities and threats for KFC in Vietnam (Mai and Phuong 2016):
 Strengths
The worldwide brand image that KFC enjoys is second only to McDonald’s. KFC's
environmental performance has been better than most of the fast-food brands. KFC has a secret
recipe that they only know. Profits are constantly growing for KFC. They are making more than
one billion profits every single year.
 Weaknesses
One of the major weaknesses is not trying for new foods rather continuing with the same. Prices
should be made more extravagant to make foods more affordable to some people. Growth is not
happening at a faster rate.
 Opportunities
Their concerns for environment-friendly approach should be benefitting in the long term. The
secret recipe should be helpful for KFC in regards to sustaining a strong market foothold.
Increasing profits with passing years could be utilised for new and emerging technologies.
 Threats
The brand image of KFC has been helpful to gain a foothold in Vietnam; however, a sustained
performance will a lot depend on their capability to be flexible with changing consumer demand.
KFC needs to experiment with new kind of foods to be flexible with the changing market
demand. High prices can affect its competitive advantage. There is a need to show more
innovation to identifying the kind of foods to be flexible with the demand and be ahead of its
competitors.
Conclusion
To conclude, it can be said that KFC should create new product lines to remain
competitive. Discount rates should be considered to give enough reason to purchase. The quality
of the products should be improved.

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