Risk Management in KFC

This report analyzes the internal and external risk factors faced by KFC, including stakeholders, SWOT analysis, and suggestions for risk control methods. It also discusses the impact of human, technological, and physical factors, as well as economic, natural, and political factors. The report provides insights into the risk management strategies that KFC can adopt to ensure growth and profitability.

Risk Management

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Executive Summary
The main aim of this report is to understand the concept of risk management. In this report,
KFC has been taken into consideration to analyse the internal and external risk. It has been
seen that the company has high risk due to arising conflicts between stakeholders. Human,
physical and technological factor also raise the risk of losing customer and shareholders.
External risk is also analysed by including the economic, natural and political factors of the
organisation. It is observed that the company has to adopt the controlling methods and
techniques such as safety hazards, incentive scheme and many others.

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Contents
Introduction................................................................................................................................3
Overview of organisation...........................................................................................................3
Discussion..................................................................................................................................4
Key Stakeholders risk.............................................................................................................4
SWOT Analysis......................................................................................................................5
Internal Risk...........................................................................................................................8
External Risk..........................................................................................................................9
Suggestion Table......................................................................................................................10
Conclusion................................................................................................................................13
References................................................................................................................................15

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Introduction
Risk Management is the identification, evaluation, and prioritization of risk which is
followed by coordinated of resources to minimize, monitor, and control the probability or
impact of unfortunate events. An organisation can achieve the considerable gains but the
chance of risk is increases with the gains in the future. It is necessary for the organisation to
analyse the risk in order to balance the potential gains against the potential losses by avoiding
the expensive mistakes. An organisation achieves the success in the market when it performs
well and facing less risk. It is essential for the organisation to analyse the risk in order to
reduce the future risk to sustain the growth and profitability (Aven, 2016). The main aim of
this report is to analyse the risk of hospitality industry. KFC has been taken into
consideration to analyse the risk of the organisation.
At the beginning of the report, the discussion is made on the internal and external risk
factors which affect the growth of organisation. The SWOT Analysis will used to analyse the
internal and external risk. After that, the table will be formed as per the analysis of factors.
Overview of organisation
KFC is an American fast food restaurant chain that specialise in fried chicken. It is the
world largest restaurant chain with 26,621 locations globally in 136 countries. It also has the
subsidiaries company of Yum! Brands, and a restaurant company that also owns the Pizza
Hut, Taco Bell and Wing Street chains. It is the first fast food company of America who
expand the business at the international level. It is continuously increasing with the rapid rate
and earned revenue with amount of US $23 billion. KFC expand its menu to offer other
chicken products such as chicken fillet sandwiches and wraps as well as salads (KFC, 2019).

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Discussion
The resort also faces the internal and external risk that affects the growth of the
organisation. In this report, the analysis has been done in the different segments such as
stakeholders, SWOT analysis, internal and external risk.
Key Stakeholders risk
Customers, Individuals, End Users, sponsor, employees, suppliers and partners are the
stakeholders of the company. Pizza Hut is the partner and Yum! Brands are the subsidiary
company of the organisation. Pizza Hut and Yum Brands are the main key stakeholders of the
organisation who helps the company to grow in the market. It has been seen that the company
have the risk related to its stakeholders (Yum! Brands, 2019).
As per the analysis, it is observed that the organisation have the risk of its new supply
chain partners. Chicken suppliers are the new suppliers of the organisation that affects the
demand of the food. The transition between the two models always raises the risk due to high
level of disruption and another. It is difficult to maintain the relationship between the two
suppliers in the organisation. As the company develop their relationship with the Chicken
suppliers, it has a risk of disruption in the organisation that affects its brand image in the
market. It is also important to maintain the relationship with the exiting or former partners
because it directly affects the future partners. The risk of affecting the new relations is
increases that directly affect the supply chain network of organisation. The company have a
risk of decreasing the quality due to unhealthy relations with the organisations (Giannakis, &
Papadopoulos, 2016).
KFC changes its supply chain network from its shipping companies. The organisation
closes their restaurants in UK and Ireland for several days after changing the shipping
companies. The new companies fail to fulfil their expected deliveries on time, due to which

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the reputation of the company is decreases. The risk of financial damage, unsatisfied
stakeholder expectation and actual performance is arises due to changing the channel of
distribution. Retailers are the stakeholder of the company that is why; they expect from the
companies to deliver the products on time. The company also has the risk of decreasing the
demand of the services due to unsatisfied retailers (Yum! Brands, 2018).
SWOT Analysis
Strength
 Global presence is strength for the
company because it is located at the
many places. It is the second largest
supply chain network who has 18000
KFC outlets around the world. It is
also a market leader in Non-veg food
joints in majority of countries.
 The company uses the secret recipe in
their product. It uses 11 herbs and
spices as the most famous trade
secrets in the catering industry
(Takata, 2016).
 It is a strong parent company because
it has the subsidiaries of Yum! Brands
Weakness
 As discussed above, the organisation
has many franchises in the different
location. It is observed that the
company fails to maintain its
franchises. It is difficult for the
organisation to manage the large
number of franchises (Mind Tools,
2019).
 Use of fatty ingredients is considered
as the harmful for human. It is an
issue of all fast food chain which is
not an exception for KFC.

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and a restaurant company. The
subsidiaries of the company are
famous for their services in the world.
That is why; it can be said that the
company is strong parent company
(Bull, et. al, 2016).
Opportunity
 The company can expand its business
in online market as the company has
high brand image in the market.
 As per the changing lifestyle, the
demand of consumers is changing
Threat
 The company has the high risk of
competitors. The competitors copied
the services of the organisation in
order to give competition. As the
company have high brand image in
the market that is why; the

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towards the fast food. It is observed
that the company also offers the
vegetarian and non-vegetarian fast
food to consumers. It offers the
non-vegetarian fast food which is
different from its competitors. The
company has to take the advantage
of its services in order to beat the
competitor and helps to expand to
business at the international level
(Kossovsky, 2018).
 It has been seen that the company has
the opportunity to become the no. 1
fast food network as it have the high
brand image in the market. The
company provides the both services
such as vegetarian and non-vegetarian
due to which it can attain the high
market share (Phadermrod, Crowder,
& Wills, 2019).
 It has been seen that the demand of
health conscious consumer is
increases that is why; it has the
competitors copied the services of the
company and give it close
competition in the terms of revenue
and services.
 It is observed that the company
provides the services of fast food that
are considered as the unhealthy
product for human. The company has
high risk of losing the customer as the
demand of consumer is changing
towards the healthy products.
 Due to channel conflict, the company
has to close the franchises that affect
the brand image due to which the risk
of losing the customer is high with
the falling demand (Future Insights
Network, 2019).
 Price rising by the suppliers affects
the industry of fast food and the risk
of losing the middle class customer is
also high.
 Rise in the raw material prices may

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opportunity to attract the health
conscious customer by providing the
healthy products.
affect the industry, of which KFC
business is not an exception.
Internal Risk
Human factors
It has been seen that the employees face the issue of health and safety. The employees
work in risky environment that is not safe for their health. As per the employee case of KFC,
a 16 year casual worker falls down into a container of hot oil which is placed on the floor
behind him without any information. As per the investigation, the company is failed to
maintain the safe work environment. It is observed that the employees have the risk of their
health (HRD, 2017).
According to the case, it has been seen that the company have the high risk of losing
the employees. The accident indicates the sign of death for the employees that is why; they
left the jobs. KFC also fined for the amount of $105,000 after the accident of employee fall
into oil. The company has the risk of increasing the employee turnover rate. The employees
are the main asset of the organisation that’s why increasing turnover rate affects the
profitability and growth (Saltan, 2017).
Technological factors
The company are very backward in the case of introducing new technologies. It has
been seen that the US companies invest the major amount in order to deliver the services

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through mobile ordering and employee replacing roots. It is observed that the company does
not have a mobile application with the new payment system so that the customer can easily
pay the amount. The other fast food chains have their own mobile application with the new
payment system. In this case, it has been seen that KFC have risk of losing the customer as
well as competition in the market. The competitors of the company grab the whole market
share by adopting the new technology.
Social media is another factor of technology due to which the brand image is affected.
The negative point capture by the media develops the negative image in the mind of
consumers as well as in the market. One negative review of consumer affects the brand image
in the market (Taylor, 2016).
Physical factors
The workplace of KFC is dirty because it is observed that the ice cubes used by the
company is dirtier more than the toilet water. Incorrect use of replacement fuses, faulty
wiring, and poorly installed equipment harms the health of employees. The quality of product
is also getting poor due to poor condition of workplace. The company has the risk of getting
poor quality of product which is the main strength (Guilford, 2013).
External Risk
Economic Factors
It has been seen that the economic factors affects the growth of the organisation. The
subsidiaries companies of KFC such as Yum, Pizza hut are struggling with the economy of
China. The competitor companies change their menu card as per the changing demand of
consumer towards the healthy product but KFC stick on the chicken services due to strength.
The company has high risk in the financial terms during the period of inflation as it

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continuously invest in its chicken services. Investors and shareholders of the company have
the high risk of facing lose during the organisation face the losses.
Natural Factors
The company serves the chicken service that is why; natural factors affect the quality
of services. The decreasing quantity of chicken affects the prices of raw material of KFC
products. The increasing price of raw material affects the productivity of the organisation
because it increases the risk losing the customers due to unsatisfied demand.
Political Factors
It has been evaluated that the organisation is criticized by nutritionist all over the
world as it provide the unhealthy products. It is playing with the health as well as mind of
consumer by using the influencing words. The company has the risk of banned the
advertisement on television as well as the franchises. As per the nutrition report, people are
dying for the heart diseases due to fast food. The sponsors also have the risk as per the rules
and regulation of government. Export and import services are also banned by the government
due to which the suppliers also face the risk of losing their business (Glendon, & Clarke,
2015).
Suggestion Table
Risk
Category
Risk Type Stakeholders
Affected
Likelihood
Rating
Consequence
Rating
Risk
Control
Method
Internal
Factor
Human Employees A 1 It has to use
the safety

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factors hazards
Technologica
l factors
Customer
Sponsor
B 2 Adopt
advance
technology
by investing
the high
amount on it.
Physical
factors
Employees D 4 It has to
offers the
multiple
number of
facilities to
its
employees
such as
medical
insurance,
incentives,
safe and
secure
environment
External
Factor
Economic
Factors
Investors
Shareholders
Sponsor
F 6 It has to
adopt the
cost

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Owners leadership
strategy in
order to
manage the
production
cost
Natural
Factors
Customers
Franchise
holders
C 3 It has to
adopt the
new
techniques
and strategy
in which it
has to
provide the
less quantity
with same
price rate in
order to
maintain the
prices.
Political
Factors
Sponsors
Customers
Suppliers
E 5 It has to
provide the
healthy
product to
consumers in

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order to
retain in the
market for
long time
(Burton,
2015).
It has to
advertise the
legal product
so that the
investors,
sponsors can
easily invest
without any
risk of
wasting
money.
Conclusion
From the limelight discussion, it has been concluded that the company has high level
of risk. As per the analysis, it has been seen that the company fails to build the strong
relationship with the stakeholders. The brand image of the company is affected due to
increasing conflict between the stakeholders. As per above discussion, it is observed that the
company has the high risk of increasing employee turnover due to lack of safety hazards. It is

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observed that the organisation have the high level of internal and external risk due to many
reasons such as financial risk, losing consumers, shareholders and sponsor. It is
recommended that the company has to adopt the technology and safety hazards as per the
requirement to overcome the issues.

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References
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their foundation. European Journal of Operational Research, 253(1), 1-13.
Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb,
C., ... & Carter-Silk, E. (2016). Strengths, Weaknesses, Opportunities and Threats: A
SWOT analysis of the ecosystem services framework. Ecosystem services, 17, 99-
111.
Burton, L. (2015). How to Avoid Electrical Hazards at Work. Retrieved from:
https://www.highspeedtraining.co.uk/hub/electrical-hazards-workplace/
Future Insights Network. (2019). The KFC crisis – a lesson in relational risk
management?. Retrieved from: https://www.futureinsights.org/insights/the-kfc-crisis-
a-lesson-in-relational-risk-management
Giannakis, M., & Papadopoulos, T. (2016). Supply chain sustainability: A risk
management approach. International Journal of Production Economics, 171, 455-
470.
Glendon, A. I., & Clarke, S. (2015). Human safety and risk management: A psychological
perspective. Crc Press.
Guilford, G. (2013). KFC’s ice cubes are 12 times dirtier than toilet water, says China’s
official media. Retrieved from: https://qz.com/106688/kfcs-ice-cubes-are-12-times-
dirtier-than-toilet-water-says-chinas-official-media/
HRD. (2017). KFC fined $105,000 after employee fell into boiling oil. Retrieved from:
https://www.hcamag.com/au/news/general/kfc-fined-105000-after-employee-fell-into-
boiling-oil/149460

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KFC. (2019). About KFC. Retrieved from: https://online.kfc.co.in/about-kfc/about
Kossovsky, N (2018). Why Reputation is a Vital Enterprise Risk, Not a Marketing Issue.
Retrieved from: https://www.qsrmagazine.com/outside-insights/why-reputation-vital-
enterprise-risk-not-marketing-issue
Mind Tools. (2019). SWOT Analysis. Retrieved from:
https://www.mindtools.com/pages/article/newTMC_05.htm
Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-performance
analysis based SWOT analysis. International Journal of Information Management,
44, 194-203.
Sadgrove, K. (2016). The complete guide to business risk management. Routledge.
Saltan, J. (2017). KFC worker trips and falls into hot oil. Retrieved from:
https://www.healthandsafetyhandbook.com.au/kfc-worker-trips-and-falls-into-hot-oil/
Takata, H. (2016). Effects of industry forces, market orientation, and marketing
capabilities on business performance: An empirical analysis of Japanese
manufacturers from 2009 to 2011. Journal of Business Research, 69(12), 5611-5619.
Taylor, K. (2016). KFC is making massive changes to speed up service. Retrieved from:
https://www.businessinsider.in/KFC-is-making-massive-changes-to-speed-up-
service/articleshow/52540707.cms
Yum! Brands. (2018). About Us. Retrieved from: http://www.yumcsr.com/about/
Yum! Brands. (2019). Stakeholders. Retrieved from:
http://www.yumcsr.com/food/stakeholders.asp

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