Business and the Business Environment (Unit 1): KFC Analysis

This report provides a comprehensive analysis of KFC's business environment, focusing on the impact of the macro environment on its operations. It utilizes the PESTEL framework to examine political, economic, social, technological, environmental, and legal factors affecting KFC. The report also conducts an internal and external analysis of KFC, identifying its strengths and weaknesses using a SWOT analysis. Furthermore, it explores the interrelation between these strengths and weaknesses with the external macro factors, providing a holistic view of KFC's position in the market. The analysis covers various aspects, including KFC's historical background, product offerings, and market strategies, emphasizing the importance of adapting to changing consumer preferences and external pressures. The report concludes by highlighting the critical role of strategic management in navigating the complexities of the business environment and ensuring KFC's sustainable growth.

Unit Title and Number: Business and the Business Environment (Unit 1) L/508/0485
Table of Contents
Q 1) Identify the positive and negative impacts the macro environment has
upon business operations, supported by specific examples.
Q2) Conduct internal and external analysis of specific organizations in
order to identify strengths and weaknesses.
Q3) Explain how strengths and weaknesses interrelate with external macro
factors
Reference
Q1
PESTEL
PESTEL is simple method to analyse the macro environment.
Political -Marketing decisions are highly dependent on changes in the political
environment.
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The political environment includes: legal regulation by laws; regulation and control of
business activities by government and other bodies; political changes in the country
and the world.
Current laws affect all marketing decisions and actions in companies: on product,
prices, distribution and communications.
The political environment and political changes generally have a bearing on the
conditions for normal business operations.
Political stability and predictability are prerequisites for a more successful business.
Example: KFC is affect by the government police on regulation of fast food
operation
The government control the marketing of fast food ,because of the health.
Economic-The economic environment includes the general economic conditions in
the country over a period of time that affect the company's ability to serve its
customers
Current economic conditions and changes in the economy are crucial for the
success of each organization's marketing strategy. The economic factors cover an
analysis of the general state of the country's economy (inflation, gross domestic
product, interest rates, exchange rate, unemployment, etc.) and the ratio between
small, medium and large business, between private and state property, and the type
of competition, etc.
Example; Fast food is with high demand ,because of the busy way of life. KFC and
other fast foods restaurants sell more of their products ,paid more tax and support
the economic of the country
Social-Culture is too broad a concept. People live in a specific environment that
shapes their views, values and norms of behaviour.
The cultural environment in which the business operates affects the structure of
demand, the needs and preferences of different user groups.
This factors includes age, gender, numeracy, natural growth, birth rate, mortality,
population migration, educational and social group and etc (Marshall, n.a).
Example –KFC should offer Halal (food allowed for Muslims)meat in the region
with the Islamic population
Technologic-The most dramatic factor determining the lives of people is technology
and therefore one of the determining conditions for the effective development of
marketing and its successful adaptation to the needs and preferences of the client is
the use of the
Latest achievements of the scientific and technological progress.
The development of modern technologies in the fields of production,
communications, transport, etc. radically changes the standard of living of society,
and hence the way people meet their needs.
The requirements of the consumers for the quality of the goods and services offered,
the ways of acquiring them, the conditions and the convenience of their purchase are
changing.
Example :Now You can order Your food directly to Your home or office.KFC and a
lot of fast food restaurants has their mobile app .With one klick your food arriving
within one hour fresh and warm.

Unit 1:Business and the Business Environment NSAB505B1
Environment
The environment is a factor of global importance for the economy of each country
and affects equally all enterprises in its territory.
The threats and opportunities depends of four main trends in the environment;
1)Restriction of raw materials, 2)Increased energy costs 3) pollution 4)State
intervention in the process of rational use and reproduction of natural resources and
in the protection of the environment.
EXAMPLE: Raw material is very important for every company, as it is the base
material for producing final products. Production of the company can be highly
influenced by raw material restrictions and increase in . With this, profitability of the
company automatically reduces.
Legal/Law
In this factor includes health and safety, consumer rights, prohibitions, tax, customs,
and any other government policy (Marshall, n.a).
EXAMPLE: All these legal policies should be followed by management team of KFC
in order to provide safety and security to their employees.
As per the above mentioned analysis it has been concluded that, all the above
explained external factors highly affect the working of an organisation. Along with
this, it has also determined that if managers of chosen company consider these
elements effectively, it will be beneficial for the growth and image of whole
enterprise. For example, if company implement effective legislations within their
company, it will aid the company in enhancing their brand name as well as motivates
the employees working within the company. Like health and safety measures, pay
taxes on time and many more can help the company in maintaining their
sustainability for a longer period of time. Along with this, managers should use latest
and upgraded technologies so that they can provide high quality products and
services to their customers.
Q2
Introduction
KFC founder Colonel Sanders is a typical example of the American Dream. Born in
1890 in Kentucky, USA. Harland's father died quite early and only six years old
began cooking for his younger brother and sister. He worked as a fire brigade,
conductor, insurance agent and others until 1930 when he arrived in Corbin where
he bought a small gas station. When Sanders been 40 years old he involve in
culinary business .Sanders dedicates much of his time to creating, developing and
refining a recipe that later became known worldwide as the Original Recipe of KFC.
It consists of 11 herbs and spices and adds unique flavor to the chicken through the
special way of preparation - a pressure that preserves its thick aroma and juiciness.
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The face of Colonel Sanders is today a synonym of the largest and most sought-after
chicken products chain in the world - KFC with over 15,000 restaurants in over 79
countries (Biography.com Editors, 2014).
KFC is introduced in Great Britain in 1965 in Preston. Now in United Kingdom has
around 890 restaurants and over 24 000 employees. It is the first fast food chain
which was enter into the marketplace of China and now it is the biggest company
with largest market share. KFC provides wide range of fast food products which
includes fries, soft drinks, fried chicken, breakfast, desserts and many more.
Strengths
1) The main advantage of sandwiches offered by KFC is that they are made from
chicken meat rather than minced meat that is highly appreciated by consumers.
2 ) KFC offers not only different types of hamburgers, but only menus with chicken
3 ) They offer home or office supplies, this expanding their potential customers
4) Their product range offers more fresh products than their main competitors - Mc
Donald’s.
5) Try to accentuate not only the freshness of their sandwiches, but to present them
as a kind of healthy food - promotional "sandwich crunch - sesame bread, juicy
chicken meat, fresh salad, light mayonnaise sauce"
6) Good positioning of the labour market among young people - offering flexible
employment and part-time work, making them one of the preferred employers among
young peoples and learners.
7) They don’t offers only sandwiches ,they offer also baked beans ,mash potatoes ,
coleslaw and etc
8) Offer discounts specifically for students who hold internationally valid
International students identity cards for discounts .
9) Brand awareness is the main strength of the company
10) KFC has a franchise and licensing system
11) KFC takes care of product quality and high level of service.
12)They start to offer vegetarians meal as well (Bhasin, 2017).
Weaknesses
1)In most of the countries where they operate they are hiring employees with a
minimum wage, which creates a bad image for a certain group of people, who do not

Unit 1:Business and the Business Environment NSAB505B1
perceive them as a potential employer in which they can quickly rise to a higher
position.
2)Rarely have promotional products
3)Most of the assortment offered by them is high-calorie, high-cholesterol foods,
mostly fried foods
4)Very little advertisements - rarely use outdoor billboards, almost no TV ads
5)There are no specially targeted products for children, lovers of healthy eating,
lovers of many sauces and spices.
6) There have been cases of non-compliance with quality rules by companies that
have purchased a franchise, which violated the reputation of the brand as a whole
7) KFC has fixed fixed prices that take away some potential customers (Davis,
2018).
Opportunities
1) Entering more quantity promotions at a lower price or a bonus garnish to a menu
as some of the competitors offer, the UK market has proved in practice as a
successful strategy to increase sales. Taking advantage of this KFC can make
bigger profits. Should also be placed on advertising for them - on television, radio,
the Internet, etc.
2) As KFC restaurants are often visited by families, it is good to develop products
child-friendly or lure for children, which can be a reason for the whole family to
choose exactly this restaurant for lunch during your Sunday walk, for example.
3)Includes salads in the menu that will significantly expand the range of customers
who prefer balanced food
(Davis, 2018)
Threats
1)Consumers prefer fresh and fresh sandwiches, freshly squeezed juices instead of
carbonated beverages a trend towards healthy eating, which is likely to reduce the
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number of people on a national scale who would eat in restaurants such as KFC and
their competitors McDonalds.
2) New research in health food which will negatively affect the consumption of some
of the company's products
3) High competition with local manufacturers
KFC need to form a healthier image, introduce new balanced meals in the menu
and continue to improve product quality especially in restaurants operating under a
franchise contract (swot-analysis-of-kfc, 2018).
For every organization, who is working with the motive to earn money and
satisfy the requirements of customers, it is required to examine both internal strength
and weaknesses as well as external opportunities and threats. It can be done with
the help of SWOT analysis. With this, management team of the company will be able
to identify all their weakness and threats and then adopt some measures with the
help of which they can covert them into their strengths and opportunities. Also, it is
necessary to examine the current market trends, so that they can produce services
which satisfy the requirements of customers.
Q3
Political and legal factors The stability of the political situation in the country, allows
the company to anticipate changes, reducing the risk of losing. The market economy in the
country provides new opportunities for investment and business activities.
The company owns licenses for its business and the products fully meet the requirements of
state standards, which increases the level of consumer confidence and hence the demand
From the point of view of safety and environmental and consumer safety, products do not
contradict of
Legislation UK
Economic Factors 1)The company provides full-time and part-time jobs suitable for
students, people without higher education, mothers with children. 2)KFC provide the
lowest price so many people from different social class can afford to eat in KFC. 3)
KFC provide employment opportunities with the help of which living standard of
people will be increased.
Social and cultural factors 1)The last few years has been growing in the interest
of this type of food in the UK market. This is mainly due to the fact that servicing and
consumption in restaurants is not time consuming and is preferred in the short lunch
breaks of the working people.

Unit 1:Business and the Business Environment NSAB505B1
2) The chicken meat , which is mainly in the menu of KFC restaurants, is present in
90% of the menu for the average people. It is preferred because of their low
nutritional composition, low fat, high content of fat-soluble vitamins. Chicken meat is
also suitable for children.
3)The web site that the restaurant offers its customers provides them with various
services such as company history information
products and promotions, online KFC club registration, calorie calculator and more.
The number of people actively using the Internet in the Europe has increased twice
in the past 3 years (Kasi, pestelpest-analysis-of-kfc, 2015).
Technology Factors
1)Since 2007 KFC presents its new "old" and unique secret recipe, which contains
the same secret 11 herbs and spices, and rejoices its fans with the same good taste,
but there is no trans fats in it, because they start to use the new soybean fat in their
products.
2) KFC has their mobile app which make it easy to order food and pay online.
Environmental Factors It is currently believed that fast food products are harmful to
health.
To solve this problem, new cooking technologies are being developed, the number of
salads and natural low-calorie foods increased
So the company is trying to reduce the damage in the health . Use by the company
processes and raw materials do not pose a threat to the environment (Kasi,
pestelpest-analysis-of-kfc, 2015).
Porter’s 5 forces analysis is a easy way for assessing and evaluating the
competitive strength and position of a business.
Competition
McDonald's-
the main and biggest competitor on the fast food market in front of KFC.
The McDonald's restaurant chain is quite expanded 1,249 restaurant in the UK
It is this prevalence in the country that makes them extremely popular among
consumers and easily accessible, McDonald's is a company that deliberately targets
children as consumers Special children's menus are available that include a unique
toy from a specially developed series that can not be found elsewhere.
McDonald's overtakes KFC with a wider range of desserts
The McDonald's chain has intensive advertising - we can often see them on city or
highway billboards, in TV clips or hear about their new promotion on the radio -
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something that is a weak KFC side that does not advertise their products so actively
(Kasi, porters-five-forces-analysis-porter-model-of-kfc, 2017).
Suppliers power-In order to offer high-quality products, a company must rely on
high-quality production factors - technological, information, as well as quality raw
materials and good suppliers. There is a large number of supplies who are ready to
support KFC with the raw products like chicken ,potatoes and soft drinks. Due to
regular and bulk orders, large number of suppliers are ready to accept all the terms
and conditions of KFC. Suppliers available at the marketplace have low bargaining
power against KFC as it is one of the biggest brand and have ample number of
suppliers who provide raw materials to them.
Buyer power-People who buy KFC products usually enjoy fast food and like to eat
in the restaurants often. Fast food is a favorite food: tasty, cheap, convenient,
practical, and so on. are a priority that make this group unforgettable for KFC Their
consumers are usual
young people, students, families with kids (Kasi, porters-five-forces-analysis-porter-
model-of-kfc, 2017). There are large number of options available for customers,
therefore it is very easy for them to switch easily to another rival company. Therefore
bargaining power of customers in case of KFC is very high.
Threat of substitution-Many restaurants now especially in London has local small
chicken shop which one offer the similar products like KFC ,but with the lower price.
It is one of the biggest threat for the company as people start considering street food
more than restaurant food. Therefore, it is necessary for KFC to provide attractive
infrastructure with high quality food products, in order to attract large number of
customers.
Threats of new entry-There a lot of substitutes products offered to the consumers
Dixy Fried Chicken. Specialist in Halal chicken and established in 1986 (Kasi,
porters-five-forces-analysis-porter-model-of-kfc, 2017). It is the food industry where
ample number of companies attracted to enter, therefore it is very essential for the
existing company to satisfy their current customers as well as attract new customers.
With the help of market analysis, company can provide best and effective food
products to their customers, according to their demand.
Intensity of competitive rivalry- In today's world, fast food industry is highly
competitive in nature. There is intense competition for KFC as large number of fast
food chain available at the marketplace such as McDonald's, Burger King and many
more. In order to reduce the competition level and for retaining their customers for
long period of time, KFC introduced smart card technology for kids. With the help of
this card, company offer discounts to their customers in KFC.
The micro-environment analysis completes the search for threats, limitations and
opportunities for the enterprise. The analysis of factors makes it possible to define

Unit 1:Business and the Business Environment NSAB505B1
several key features of the external environment dynamics, complexity and
uncertainty.
As per the above mentioned, company use Porter's five force model in order
to identify the competition and position of business at the marketplace. There are
various rival companies available at the marketplace which highly influence the
profitability of company. It is also very important for KFC to examine its current
market position as well as it rival company position. KFC introduce various options to
their customers in order to retain them for a long period of time. For this they adopt
latest and upgraded technologies with the help of which they produce high quality
products and services. Along with this, they offer various discounts to their
customers, with the help of which they gain competitive advantages at the
marketplace.
In order to resolve the problem relating to high competition, company adopt
attractive pricing strategy with the help of which KFC provide good quality food
products to their customers in low or affordable price. Along with this, it will provide
various offers to retain their best customers.
Bibliography
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The Biography.com website: https://www.biography.com/people/colonel-harland-sanders-
12353545
Davis, J. (2018, 04 20). swot-analysis-kfc-kfc-swot-analysis. Retrieved 03 21, 2019, from
howandwhat.ne: https://www.howandwhat.net/swot-analysis-kfc-kfc-swot-analysis/
Kasi, A. (2015, 12 19). pestelpest-analysis-of-kfc. Retrieved 03 21, 2019, from
freepestelanalysis.com: https://freepestelanalysis.com/pestelpest-analysis-of-kfc/
Kasi, A. (2017, 07 11). porters-five-forces-analysis-porter-model-of-kfc. Retrieved 03 21,
2019, from www.porteranalysis.com: https://www.porteranalysis.com/porters-five-forces-
analysis-porter-model-of-kfc/
Marshall, T. (n.a). marketing-theories---pestel-analysis. Retrieved 03 10, 2019, from
www.professionalacademy.com:
https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-analysis
swot-analysis-of-kfc. (2018, 11 09). Retrieved 03 02, 2019, from heartofcodes.com:
http://heartofcodes.com/swot-analysis-of-kfc/
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porter's five force analysis. (20017,11 07) https://www.porteranalysis.com/porters-five-
forces-analysis-porter-model-of-kfc/

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