Leading and Managing Change and Crisis

This report analyzes the case of KFC restaurant crisis in the UK in 2018 and explores the concepts of leading and managing change and crisis in organizations. It discusses the crisis life cycle and management strategies used by KFC to handle the crisis.

Leading and Managing Change and Crisis

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Contents
Introduction.................................................................................................................................................2
Overview of the case: KFC restaurant in the UK.....................................................................................2
Crisis life cycle and management................................................................................................................3
Preconditions...............................................................................................................................................5
Trigger event...............................................................................................................................................8
Crisis...........................................................................................................................................................9
Post-crisis..................................................................................................................................................11
A summary case study analysis.................................................................................................................12
References.................................................................................................................................................15
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Introduction
The crisis is the most serious event or situation that threatens the viability of an organization.
The crisis is a very challenging situation for the modern leaders and it is very important to
manage the crisis to save the company from permanent losses. In the dictionary, the word Crisis
is defined as the turning point when an important change needs to take place indicating wither
recovery or permanent loss. This report is written with the intent to analyze the case by
considering the theoretical model of the crisis life cycle. The case that has been chosen for
analysis is “KFC restaurant crisis case for 2018 in the UK”. The report outlines some of the
theoretical concepts such as the general crisis life cycle stages and crisis management models.
All these stages are applied with the purpose to clearly define and understand the concept of
crisis management(Green, 2018). Change is also the most important part of the crisis so the theory
related to change management also applied to understand the organizational changes and cause
of the crisis in a more effective way.
Overview of the case: KFC restaurant in the UK
KFC Corporation is the most famous and second largest restaurant chain after McDonald’s as per
the sales. KFC is also known as Kentucky Fried Chicken and World’s number one brand of
chicken. KFC was established in the year 1952 in the United States. The organization has more
than 19,500 outlets in more than 115 countries. Chicken is the greatest USP of the company.
KFC has faced a situation of crisis in February 2018 because of the shortage of chicken.
According to the research and case analysis, it was found that there were approximately 650
stores that shut down in the UK last year because of the poor supply chain management
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activities. Out of 870 restaurants in the UK and Ireland, only 266 restaurants were open (Fink,
2018).
Crisis life cycle and management
Crisis is an activity or situation which has the adverse effects on the performance and brand
image of the company. Crisis is the situation which cannot be controlled by the organization in
many cases. There are many reasons which lead to crisis for the organizations such as the fraud
or theft, misconduct at the organization, wrong decision making, financial losses and
environment issues. These type of crisis have the potential to destroy the company’s reputation
and sometimes forced the organization to shut down its business. Because of these crisis
situations, company designed and implemented the crisis communication strategies for the
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purpose of minimizing the risks in the organizations. The conceptual framework of the
organizational crisis has evolved with the three main stages which include the:
i. pre-impact or preconditions that explains the situation of the organization before the
crisis,
ii. the trigger is the climax stage induced by one or more events,
iii. Crisis happens and
iv. Lastly the impact of the crisis on the organizations and what they have learnt from the
last stage (Howlett, 2018).
The below image shows the generic crisis sequence model:
According to the theoretical framework, there are three main stages of managing the crisis at the
organization. Crisis management is an effective and significant part of managing organizations.
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Pre-crisis is the first stage which involves the reduction of the risks that may cause the crisis. The
second stage is the crisis response when the organization actually paid attention to the crisis
situation and build strategies to handle these risks (Weaver, 2018).
The third stage in this management cycle involves the post-crisis phase when the organization
looks for more ways to improve the situation of the company. However, these situations are
followed to manage the crisis at the organizations. Below are the important elements of the crisis
life cycle which are going to be explained in the context of the case study of KFC Restaurant.
Preconditions
Preconditions are the warning signs that are recognized by the organization before the crisis.
Similarly, the KFC chicken also recognized some of the financial numbers and come up with the
revenue loss of £920,000 per day. Looking at the comprehensive income statement of KFC
Limited for the year 2016, it was observed that KFC UK pulled the turnover of £479 in the year
2016.
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(Nairn, 2018)
From the reports of KFC Company for the year 2016 and 2017, there were no warning signs
recognized by the KFC. Also according to the previous data for the year 2016-17, a relevant
growth in the consumer price index restaurants has been observed which is shown as below:
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On the other side, according to the reports of Metro UK, it is claimed that the delivery cost of the
chicken has been increased £1 million pounds per day and also the company is suffering from
losses after entering into the contract with DHL for Logistics. Before this crisis situation, KFC
was dealing with the Bidvest logistics for the supply of chicken. While working with the Bidvest
Logistics Company, the KFC has achieved a great number of profits and was able to provide
quality services and products with customers. The organizational change in the logistics services
is found to be the main reason for having this critical situation of KFC (Priday, 2018).
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Trigger event
A trigger event, in this case, is when the company has to close down its outlets in UK because of
the chicken shortage due to the poor performance of DHL. The KFC organization itself also put
a Blame On the DHL for this crisis. On February 16, the outlets in the UK has faced a problem
of no chicken in their restaurants because of the Seasons they are not able to perform the services
and products with customers. It is observed that many other locations in Northern Ireland and
the Republic of Ireland have not been affected because of the different logistical arrangements.
This was a much-unexpected situation for KFC as it has a negative impact on the overall
performance of the company. In one of the statements of KFC, it is said that they are closing
their stores temporarily because of the lack of deliveries by DHL. Supply chain chaos came just
a week after the KFC signed a contract with DHL and operating with food service logistics
provider QSL to manage the supply and distribution of food products in the United
Kingdom. KFC said that the motive of the organization was to bring new supply chain strategy
by making some changes in the distribution and Logistics department improving the service
quality introducing the impact of the supply chain to a level that has not been done before. At
that time the KFC was not aware that the company may have to face these kinds of issues in
future (Linsolia, 2018).
Some of the team members of KFC also viewed that logistics is not only a single reason for this
great chicken crisis. There are many other elements also which have come together to this crisis
such as demand, automation in the facility, new IT software. They also blamed the poor
preparation of the company in case of network planning. The researchers also found that the
company also failed in the implementation of the IT systems as well.
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Crisis
This crisis has been faced by the United Kingdom only in the year 2018 because the restaurant
was literally run out of chicken because of the delivery problems of logistics Company DHL.
Due to this reason the company had to close it's almost 900 outlets temporarily in the United
Kingdom. There were many outlets in the UK locations have been serving the customers Limited
menu. During the crisis situation, the KFC was left with no option as they were forced to offer
limited menus and shorten store hours, but ultimately KFC decided to close the stores on a
temporary basis and notify their customers by explaining that they do not want to lower down its
quality of products. KFC said that they would rather prefer to close a store instead of opening
the stores with a limited menu.
Because of the problems, the company has to face which led to create many negative issues such
as it affects the overall productivity of the organization and also has a great impact on the
customer base. It was very difficult for the KFC to re-establish the customers' trust. BBC news
also said that KFC workers are suffering to a great extent because of this crisis at KFC. The
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workers have not received their shifts and payment after the closure of the stores (Tomlinson,
2018).
Therefore, disruption in the supply chains is very common so it is very important to deal state
with proper planning and deep market research. In terms of returning to a normal situation,
KFC used many ways to manage this crisis. KFC solved this situation by renewing its contract
with its previous distribution partner Bidvest Logistics. Furthermore, the company shared a
series of apology advertisements with its customers to re-establish their trust. It is analyzed that
the company published a newspaper advertisement of one page in ‘The Sun and Metro’ and
humorous approach has been adopted and rearrange the alphabets of KFC to FCK on the chicken
bucket of KFC. KFC restaurants restored a fresh chicken, and then they released an
advertisement with a title of KFC comeback in Britain. KFC also utilized the various public
relations strategies with the use of social media platforms such as engaging with customers on
Facebook, Twitter and Instagram. The social media Strategies and ad campaigns were useful for
the company to manage its situation.
Therefore, during crisis situations, KFC company had built effective communications strategies
and able to manage the reputation of the company. There are many factors that considered by
KFC such as the product life cycles, development of the messages, milestones for financial
resources and human resources and product positioning. Customers, employees and suppliers are
highly affected by the crisis of the KFC. However, effective communication strategies have been
adopted by KFC which helps in managing the crisis of the organization (Green, 2018).
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Post-crisis
There are many lessons that have been learnt through the crisis situation of KFC. The DHL was
failed to deliver the quality services to KFC because of the general shortage of the warehouse
staff members and the software problems which directly lead to the problem of KFC’s chicken
shortage. It is learnt that effective crisis communication strategies can help the organization to
come back to its normal position. It is observed from the above situation that KFC adopted an
effective communication strategy that includes the information with regard to the marketing
initiatives, crisis impact, reasons of closing down its outlets and financial impact of the crisis.
Therefore, there are some of the lessons that have been learnt by the company regarding the
choosing of new logistics provider:
i. Due diligence: There are basically three main areas which needs to be identified while the
selection of the new logistic providers and those areas are financial, operational and
commercial. It is must that the supplier should be financially strong enough to bear the
risks in future. In the area of commercial, it is important that organizations like KFC
should understand how the logistics company worked with other companies and how it
delivers its services. However, the reputation of the company is very essential.
Operational area means that to understand the nature of infrastructure. It is necessary to
analyze how the company operates or outsourced including the analysis of the cold
storage, trucks and facilities.
ii. Trial period: The organizations must go on a trial period before signing any large
contract.
iii. Understanding the risks: The risk assessment is essential before signing any logistics
contract. It is learned that organizations should conduct a cost-benefit analysis. The
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logistics operations cost the companies between 4 to 10% of their sales value and it is
observed that the cost-benefit needs to perform before changing the contractor.
iv. Contingency planning: Contingency planning is also very significant before taking any
risks or bringing any change in the organization. The contracts should always ensure the
detailed schedules covering the transfer of activities. The contracts should also contain
the termination terms and conditions in case of the failure of delivering services by any
party into a contract (Media, 2019).
Therefore, it is clear from the steps that taken by KFC that the crisis communication strategy is
most effective way to manage the company reputation. It is essential to deliver the right message
to the target audience with the objective of retaining its customer base. An effective contingency
planning is also essential before making any changes in the organizational operations. The
change that company wanted to bring resulted in the creation of several problems. Therefore, any
change in the organizational structure, operations will also have the negative impact on the
business. From the case study analysis, it is clear that the wrong decisions and poor planning of
the leaders was also responsible for the KFC Crisis situation. The leaders need to improve their
skills and knowledge for the betterment of the organizations (Wood, 2018).
A summary case study analysis
The case that has been chosen for analysis is “KFC restaurant crisis case for 2018 in the UK”.
The report outlines some of the theoretical concepts such as the general crisis life cycle stages
and crisis management models. All these stages are applied with the purpose to clearly define
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and understand the concept of crisis management. The company has to close down its outlets in
the UK because of the chicken shortage due to the poor performance of DHL. The KFC
organization itself also put a Blame On the DHL for this crisis. On February 16, the outlets in the
UK has faced a problem of no chicken in their restaurants because of the Seasons they are not
able to perform the services and products with customers. According to the research and case
analysis, it was found that there were approximately 650 stores that shut down in the UK last
year because of the poor supply chain management activities. Out of 870 restaurants in the UK
and Ireland, only 266 restaurants were open. In terms of returning to a normal situation,
KFC used many ways to manage this crisis. KFC solved this situation by renewing its contract
with its previous distribution partner Bidvest Logistics. Furthermore, the company shared a
series of apology advertisements with its customers to re-establish their trust. It is learnt that
effective crisis communication strategies can help the organization to come back to its normal
position (O'Malley, 2019).
The most common elements that have learnt from this case study analysis are that the
organizations need to identify three things the selection of the new logistic providers and those
areas are
 Financial: It is must that the supplier should be financially strong enough to bear the risks
in future.
 Operational: Operational area means that to understand the nature of infrastructure. It is
necessary to analyze how the company operates or outsourced including the analysis of
the cold storage, trucks and facilities (Richard, 2018).
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 Commercial: It is important that organizations like KFC should understand how the
logistics company worked with other companies and how it delivers its services.
However, the reputation of the company is very essential.
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References
Fink, R. (2018) Supply Chain Failure: KFC’s Chicken Shortage.
Green, W. (2018) Five lessons from the KFC chicken crisis.
Howlett, D. (2018) KFC losing minimum of £4.2 million a week in supply chain debacle.
Linsolia, I. (2018) The KFC Chicken Shortage.
Media, H. (2019) KFC: A very fcking clever campaign.
Nairn, A. (2018) KFC's response to chicken crisis shows confidence in its brand.
O'Malley, J. (2019) What the KFC chicken crisis tells us about Brexit food shortages.
Priday, R. (2018) The inside story of the great KFC chicken shortage of 2018.
Richard, P. (2018) The KFC chicken crisis is finally over: it's (sort of) ditched DHL.
Tomlinson, C. (2018) The KFC chicken crisis: what we learnt.
Weaver, M. (2018) Most KFCs in UK remain closed because of chicken shortage.
Wood, Z. (2018) KFC returns to original supplier after chicken shortage fiasco.
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