Business Environment and KFC Analysis Report: Module ABC

This report offers a comprehensive analysis of KFC's business environment. It begins with an introduction to the business environment and its impact on organizations, using KFC as a case study. The report examines different types of organizations, including public, private, and voluntary sectors, alongside their legal structures. It then delves into the size and scope of these organizations, using Oxfam and KFC as examples, outlining their backgrounds, services, and organizational structures. The report explores the interrelationship between various organizational functions within KFC, such as marketing, production, human resources, finance, and research and development. It further analyzes the positive and negative impacts of the macro environment on KFC's operations, utilizing a PESTEL analysis to assess political, economic, social, technological, environmental, and legal factors. Finally, the report includes an internal and external analysis of KFC, examining the interrelation between strengths and weaknesses and external macro factors, providing a complete overview of KFC's business environment and strategic considerations.

Business and Business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Types of organisation and their purpose...............................................................................1
P2. Size and scope of organisations ...........................................................................................2
TASK 2............................................................................................................................................4
P3. Relationship between different organisational functions and objectives..............................4
TASK 3............................................................................................................................................5
P4. Positive and negative impact of macro environment upon business operation ...................5
TASK 4............................................................................................................................................7
P5. Internal and external analysis of organisation.....................................................................7
P6. Interrelation between strength & weakness with external macro factors.............................8
CONCLUSION...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is the combination of external and internal environment that
impact the business. Enterprises are established to sustain the business for which they require
some resources like finance, raw material, labour etc. These are the dimensions that affect
business (Bah and Fang, 2015). This assignment is related to KFC which is an American fast
food restaurant chain that specializes in fried chicken. This company was founded in 1930 by
Harland Sanders and it is headquartered in Gardiner Lane Louisville, Kentucky, US. This
assignment will discussed about business and business environment. Company's macro
environment analysis will also take place and the interrelationship among different departments
of organisations are discussed.
TASK 1
P1. Types of organisation and their purpose
Public organisation: These are government owned organisations which are established
to serve public. These enterprises work for the welfare of general people and not to maximise
their profits. HM revenue and Custom is the UK's Tax, payments and customs authority and
developed by the UK government in 2005 (Chang, 2016). In return it help in
Types of legal structure: local government- This is a lower level government and they have responsibility to
maintain laws & legislations at city or district level. State government- It is an unit that is specialised to develop laws and polices for a state.
This government have some political autonomy fro directly control the federal
government.
 Central government- In this legal structure, rules and regulations are formulated at nation
level. This kind of authorities are responsible for various policies like national
environment policy which are directed as to make contribution towards sustainable
economic development.
Private organisation: These are the organisations which is run by private individual or
group and they work for earning profits. KFC is taken as an example for understanding the
concept of private companies. It is an US based company which is working as the fast food
restaurant . Enterprise founded in 1930 by Harland Sanders and is dealing in the products like
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fried chicken, hamburgers, beverages etc. Purpose behind the existence of KFC is to capture the
fast food market by maximising the satisfaction level of consumers and providing them quality
product. Company has four objectives to achieve i.e. to bring excellence, superior quality,
consistently delivery and value of their product & services. Legal structure of this sector are-: Partnership: In it, the partners share in the ups and downs of profit and loss pooling their
funds towards a common purpose. .
 Private limited company: It is a type of private enterprise which is owned by
shareholders. Many jurisdictions use this in comparison of public ownership (Fabuš,
2017).
Voluntary sector: These sectors are also known as community sector and it is
undertaken by non profit organisations. Oxfam is taken to understand the concept of this sector.
It is an international non-government organisation which was founded in 1942, it work as a
confederation of 20 independent charitable organisation. Purpose behind the existence Oxfam is
to alleviate the global poverty. These kind of organisations work for providing employment and
social welfare.. Types of legal structure of this sector includes -: Company limited by guarantee: These are the alternative corporations of non-profit
organisations, these are not require to have shareholders or share capital but they have
people as guarantor.
 Cooperative society: These are the voluntarily autonomous organisations which are
establish to meet the common goal of individuals through a jointly owned enterprise.
P2. Size and scope of organisations
The above discussed organisation have some scope and sizes of various kinds are-:
Voluntarily organisation-: (Oxfam)
 Background- It is an independent charitable organisation which is founded in 1942 and
it work as a non-government organisation. It is situated in England but is serving all over
the world (Groşanu and et. al., 2015).
 Services- this organisation is providing relief to disaster affected people and also work
for removing poverty from the country.
 Size & scope- Organisation's size and scope is high because it involved 20 charitable
trusts which is serving all over the world. There are 5300 people and 22,000 volunteers
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who are working under this organisations. There are large scope because this organisation
generate employment and work for social welfare worldwide.
 Shareholders- Volunteers, trustees and donors are counted as the shareholders of Oxfam.
 Mission - Organisation's mission is to create a world without poverty and to fulfil the
needs of citizens who really require it.
 Vision- A world in which everyone is valued and treated equality and the world without
poverty.
 Organisation structure- Oxfam is following a hierarchy structure in which roles and
responsibilities are voluntarily divided among members so that every one can contribute
in it. Legal structure- It is as following:
Trusts- It refer to a firm which is work as an agent and a separate legal entity. These kind
of firms are not flexible in nature so making change is not easy in organisation.
Unincorporated associations- It is group of people who come together for a reason to
make and earn profit and fund for the benefits of the society. Objective- The main objective of the company is to create lasting solutions the injustice
of poverty so that they can empower the individuals by creating solution to provide a
secure and poverty free future.
Private organisation-: (KFC)
 Background- It is an America based fast food company which was founded in 1930 and
its headquarter is in Texas, US. This is a subsidiary of yum brand and specializes in fried
chicken.
 Products & Services- KFC is a fast food provider and products in which it is dealing are
hamburgers, fries and beverages.
 Size & scope- There are 24000 employees who are working under this company. There
are large scope because this company operate its business worldwide more over 124
countries and it has the second ranked among it's 10 competitors.
 Mission & vision- Company's mission is to provide good quality product to their
customers and its vision is to maintain the goodwill of company all over the world.
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 Organisation structure: KFC follows hierarchical organisation structure in which
decisions are taken by head of the departments or division head which others have to
follow (Hamilton and Webster, 2018). Shareholders- Investors, customers and owners are the shareholders of the company. Legal structure- It is as following:
Partnership- It is a formal agreements where to or more then two companies and parties agree to
run the business to advance their mutual understanding and interests.
Sole trader-They are also known as sole proprietors and it is a simple business agreements where
individuals are responsible to run and operate the whole business.
Objective- The objective of the firm is not sell chicken to make money and make profit but also
expand the business and increase and maintain the quality in fast food in world industry.
HM Revenue and Custom
 Background- Her Majesty's Revenue and Custom is a public company which is
developed by UK government and it is a non ministerial department of UK government.
This firm was founded in 2005 and it is responsible for the collection of taxes.
 Services- The services which is provide by this company is capital allowance, child
benefits, investments scheme and other public services.
 Mission & vision- The vision of HMRC is to close or remove the tax gap so that
customer felt that tax system is easy for them.
 Scope & size- There are 56,000 employees who are working under it and there are wide
scope cause of maximise revenue and bear down on avoidance or implement tax and
payments to their customers.
TASK 2
P3. Relationship between different organisational functions and objectives
Organisational structure-It shows that how activities like task allocation and , coordination and
supervision are directed towards the achievement of the organisational gaols. Because the
company require to be efficient, flexible and caring in order to achieve the sustainable
competitive advantages. There are several types of organisational structure like hierarchical,
matrix, horizontal and others. KFC follow hierarchical organisational structure.
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Illustration: Organisational structure
Source: Organisational structure,(2019).
Organisational functions- These are those factors that help the company to operate the business
of the company and management the management and business environment of the firm. These
factors can be HR department, marketing department, front office, production department,
research and development department etc. The interrelation within these departments are as
following:
 Marketing and production- There is an important relationship between marketing and
production of KFC because performance of the two is not possible without the support of
each other. Task of marketing department in organisation is to study their customers and
market to increase its sales (Hillary, 2017). It help in conducting research which is
necessary for identifying target audience . On the other hand, production department
engaged in production process of goods and services, for which they are dependent on
marketing people to get information about market demand & trend so that they can
produce accordingly.
 Production and sales- KFC's sale department and productions department are
interrelated to each other because sales is not possible without production. Sales team has
a responsibility to increase the sales of organisation by attracting the customers. On the
other hand, production team work for converting raw material into output and transfer it
to the sales team for further selling the product. Objective of organisation will be
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achieved when the sales of company increases and in return it enhances the profit of
organisation(Ibrahim and Primiana, 2015).
 Human resource and sale- Again these two departments of KFC have a connection
between them because for conducting the sales activities, sales team must need people
who can sales their products for which they require the help of human resource
department. For example when Kentucky Fried Chicken need delivery boys for home
delivery service, they will ask for the help from HR team, their responsibility will be to
conduct a recruitment & selection process of hiring after understanding the requirements
of sales team. By doing this, objective of organisation get achieved when right candidate
is selected for performing the task and their performance increases the productivity of
company.
 Finance and marketing- These two departments of KFC have a link between them
because finance team make a budget and marketing team perform their activities
according to that. For example: if KFC's marketing department is planning to increase
their advertisement through distribution of pamphlet they need to take help of finance
team. Finance department provides funds to marketing department for carrying out their
marketing activities. It is the responsibility of organisation's marketing department to
manage their activities within that budget (Relationship Between Organizational
Functions & Organizational Structure. 2019.).
 Research & development and production- These two departments of Kentucky Fried
Chicken also have a link between them because for production, the management
department of the company require research. For example, production department
manage the production and manufacture goods and services according to the customer
needs. Whereas R&D help in doing market research to finding out consumers
demands(Ketata, Sofka and Grimpe, 2015).
TASK 3
P4. Positive and negative impact of macro environment upon business operation
PESTEL Analysis:- It is a tool through which an organisation able to identify threats and
opportunities from the environment in which it is operating. This framework used by the
company to monitor external or macro environment that directly impact the activities of an
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organization. KFC is very popular firm and operates its business at worldwide. The PESTLE
analysis of KFC is discussed below:
Political factors: Political factor means how much governmental decisions affect the
working of the company. In context of KFC, it is dealing worldwide so its overall performance
can easily get affected by the political changes in any country. For example there is a law made
for these companies in which their intellectual properties are protected, but in case KFC is
working in a country where this law is not mandatory by the government it will affect the
organisation in negatively as it reduces the investment by the investors in organisation which
directly impact the financial structure of company. But the positive impact of this factor on the
company will be that they do not go through the complete process of this which reduces the time
and expenses of organisation.
 Economic factors: This factor explains how the economic condition of any
country affect the performance of KFC. For example when the UK is facing high
inflation rate, purchasing power of their citizen will get reduced and as a result it
will impact the company negatively by reducing its sales which will affect the
overall performance of the company. On the other hand positive impact of this
economic factor on the organisation is that the price of their products will increase
which may help them to make a balance between inflation and their profits.
 Social factors: This factor explains how much consumer's taste, preferences,
culture and belief affect the performance of the KFC. Like increasing awareness
about the health is making customers careful about what they are eating. It is
shifting their minds from junk food to eat healthy products which is not good for
KFC as it is having a bad impact on it as sales of organisation reducing which is
also affecting its profit. On the other hand if company focuses on meeting the
needs of their customers by adding healthy item in their menu it will give a
positive impact to it, as it will increase their sale and also improve the image of
the company.
 Technological Factors: Better technology brings changes in the organization.
This factor explains how does the technologies are impacting performance of
KFC. Company is using big flat television screens with menu written over it. This
technology is attracting customers to the company because now it is easy for them
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to read it on a big large screen instead of peeping into pamphlets. Positive impact
of this factor is that it has increased their customer base and on the other hand
negative impact of this factor is that it is increasing cost of the company.
 Legal factors:- This factor explains how much government laws and regulation
impacts the performance of the company. For example ,there is a law made by
government after witnessing the exploitation of employees by forcing them to
work extra which has impacted KFC because proper regulation is expensive for
the company so it again have the negative impact on the company because their
expenses are increasing . But on the other hand organisation is engaged in it
because of the ethical and social responsibility which is positively impacting the
company by improving its brand image.
 Environmental Factors:- This factor is about how much weather and climate
affect the performance of any organisation. Like in case of KFC, if it is working
in a country where weather conditions are very much fluctuation it will directly
affect the transportation of company. Its negative impact on organisation will be
delay in supply of resources and finished products but on the other hand, when
company is making their packaging items from the recyclable & renewable
resources it will positively impact the organisation as get get the support from
government.
TASK 4
P5. Internal and external analysis of organisation
SWOT is a tool that organisations apply in their business enterprise to understand their
internal strength & weaknesses and external opportunities and threats.
Strengths of KFC
 Global presence – Because it is spread in numerous countries in the world, KFC is
leading as market leader in Non–vegetarian sector in many countries.
 Strong parent company – Yum!Brands is the parent company of the firm which is one
of the largest restaurant company dealing in fast food and also owns Taco Bell and the
Pizza Hut.
Weaknesses of KFC
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 Unhealthy Food – Individuals are facing various diseases due to the consumption of fast
food. So, Nowadays people focus on healthy food and avoid the intake of food which
includes high calories and fats. This creates issues for the fast food chain like KFC.
 Franchise issues – Managing franchisee is one of the major problem which affects the
success of KFC. Many outlets were shut down because of operating issues between the
company and its franchisees which is the weakness of company.
Opportunities for KFC
 Market expansion – With the modernisation, lifestyle of people have changed and they
used to have outings or make trips and throw parties on any occasion. Thus market
expansion is an opportunity which can result in increase in the firm's growth.
 Specializing into vegetarian menu – Kentucky Fried Chicken can do specialisation in
their veg. Stuffs so that the firm can take competitive advantage and flourish in the global
market.
Threats for KFC
 Competition – As the industry is not on top in the fast food restaurant chain, it need to
beat the other competing fast food companies who are growing globally.
 Raw material prices – Rise in the price of raw materials will influence the company as a
whole.
By using SWOT analysis, KFC can make decisions regarding how the organisation can
take advantage of opportunities, use latest technology and acknowledge the new trends. Thus,
internal analysis will help the firm to sustain in the market for longer run.
P6. Interrelation between strength & weakness with external macro factors
 POLITICAL- There are some political factors that are acting as the weakness of KFC
like franchisee issues that is affecting its success of the company and other than this
company is serving unhealthy food which is not much supported by the government.
Company has a global reach as it is serving the entire world, it is the strength of KFC but
any political changes will influence the overall performance of the organisation. Other
than this, organisation is dealing worldwide and it is the strength for the company
because good political situation of a country allow organisation to increase its
performance (Makarova and Polyanin, 2015).
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 ECONOMICAL- Organisation is facing franchisee issues which is weakness of the
company because of which it is not able to contribute value to the US economyand as a
result it is directly affecting the overall performance of KFC. Strength of a company
about global reach is also affected by economical changes in a country because of
inflation, this reduces the sale of enterprise.
 SOCIAL- Kentucky fried chicken has a strength which is that the organisation o[perate
its business worldwide because people are liking their product and that is why company
is able to expand itself on such a large platform. Organisation has met the needs and taste
of customers. Weakness of company is to produce unhealthy food which is again have a
social impact because people are becoming health conscious day by day and it will
reduce company's sales. They are harming animals for making their non veg products
which is again socially impacting it in negative way.
 TECHNOLOGICAL- Technological advancement has helped Kentucky Fried Chicken
to make their global reach possible, which is one of their strength. Company's
advertisement strategies are also excellent because of the technological factor which is
increasing customer base of the company and in return it is increasing their profits (Lee,
ed., 2017).
CONCLUSION
From the above report it has been concluded that there are different type of organisations
work in the market and each of them have their own mission, goals and objectives. Other than
this it helped in understanding company's legal structure, their scope as well the size of each
sectors.With the help of PEST analysis, organisation is able to understand the impact of macro
factors on business activities and operations. SWOT analysis helps the company to understand
its internal environment which helps in making effective decisions.
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REFERENCES
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Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
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Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
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Kljucnikov and et. al., 2016. The entreprenurial perception of SME business environment quality
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Kozubíková, L., Homolka, L. and Kristalas, D., 2017. The effect of business environment and
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Lee, I. ed., 2017. The Internet of Things in the Modern Business Environment. IGI Global.
Makarova, Y. L. and Polyanin, A. V., 2015. Formation of the business environment in the
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ONLINE
What Is Business Environment? - Definition & Factors. 2018. [ONLINE]. Available Through
<study.com/academy/lesson/what-is-business-environment-definition-factors-
quiz.html>
Relationship Between Organizational Functions & Organizational Structure. 2019. [Online].
Available Through: <https://smallbusiness.chron.com/relationship-between-
organizational-functions-organizational-structure-18571.html>.
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