Global Fast Food Industry Analysis: KFC and McDonald's

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Global Industry Report
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Table of Contents
Introduction......................................................................................................................................3
Globalization....................................................................................................................................4
Contemporary issues of globalized business...................................................................................5
Leadership and management skills for present business environment..........................................10
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................12
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Introduction
The specific report will be constructed in order to make a recent and feasible report in the
context of global industry. Here, global fast food industry will be taken into consideration while
making the report. In addition to that, two different multinational companies that operate their
business in global fast food industry will be considered while making the report. KFC and
MacDonald’s will be considered for analysing the report. KFC is the American based fast food
restaurant chain and they are very sucessful at conducting their busienss in global context It was
initially founded back at 1952. On the other hand, McDonald’s is another American fast food
company and it was initially found back in 1940. In this report, analysis of some contemporary
issues and its impact upon the business operation and objectives of the chosen fast food
organizations will be evaluated. Additionally, different skills and traits of leadership and
management that are needed for conducting business in recent context will be discussed in the
report.
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Globalization
Globalization can be described as the worldwide movement regarding the financial, trade,
economical and communicational integration between different nations (Steger, 2017).
Globalization can make impact in different local and national perspectives and it can help into
constrcutuing an interdependent and interconnected world that allows free transfer of goods,
capitals and services while neglecting national barriers (Baylis et al., 2017). However,
globalization is not associated with some unhindered movements like movement of labour as it
might hurt any fragile or small economy largely.
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Contemporary issues of globalized business
In order to identify and critically analyse different contemporary issues that might affect the
globalized business of fast food industry, PESTEL analysis can be taken into consideration.
Here, different components of PESTEL framework and the effect of these componenst form the
business perspectives of both KFC and McDonald’s has been analysed:
Political Factors
This particular aspect generally refers towards the effects of diverse governmental policies and
actions that might affect the business perspectives of two famous fast food organizations KFC
and McDonald’s. Interventions of governments can help in determining the path and rate of
further business development in context to both KFC and McDonald’s. From the perspective of
McDonald’s, through the help of their governmental policies they can increase their agreements
regarding international trading. On the other hand, they need to maintain the guidelines of
government regarding health and diet while making different types of food. Additionally,
McDonald’s need to evolve their organizational policies and strategies while considering the
health of their entire consumer base at certain extension (Rijal, 2015). It is possible for
McDonald’s Corporation to expand their business internationally and they can improve their
overall business perspectives based into different international trade. Since both McDonald’s and
KFC belong from fast food industry, KFC can also enhance their global supply chain business
from the improved and enhanced international trade.
However, in context of both KFC and McDonald’s, the external political factor can represent
some threat towards their business operations at certain extension. The political policies in recent
context criticize the products of both KFC and McDonald’s since those products might
negatively affect the health of their entire consumer base. It has been observed in recent context
that more people are dying from different heart diseases and most of those heart diseases can
come from unhealthy eating habits (Song et al., 2017). Nonetheless, this political external factor
might also provide some opportunities in respect to both KFC and McDonald’s since they need
to improve and change their entire product line. The diverse political factors of recent fast food
industry also drive these two fast food organizations to change their rigorous growth strategies
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and competitive strategies so that these companies can cope up with the changing political
aspects.
The recent political aspects of different nations are providing more interest into making healthy
foods for their citizens rather than unhealthy fast foods. Thus, for successfully conducting
business into different nations, it is essential for both KFC and McDonald’s to consider making
healthy foods and beverages while minimizing the production of unhealthy foods at certain
extension. Both the fast food organizations are required to add some healthy items like salads in
their food items in order to represent their food menu in more attractive manner towards the
health conscious community (Aithal, 2017). Thus, analysis of political external factor represents
both opportunities and threats the perspective KFC and McDonald’s at certain contexts.
Economical Factors
Both KFC and McDonalds belong to the American market and both of these organizations have
a strong international presence. Therefore, both the organizations have to deal with different
economic conditions and trends. Changes in economical aspects can directly and indirectly
influences the business perspectives and business performance of any fast food organization.
Regional economies, national economies in addition with global economy can directly inflect the
operating processes of KFC and McDonalds. From several instances, it has been observed that
the developed countries like United Kingdom, France, Spain, China and many others has a slow
but stable growth in their economical condition (Pan et al., 2018). It is a brief opportunity in
context to KFC and McDonalds since their entire business can grow from conducting business in
those developed countries.
China has been one of the biggest markets of fast foods since most of their population are
obsessed with consuming fried chickens and burgers. However, in recent time, China has
restricted different multinational fast food organizations from doing business in the country in
order to restrict their people from consuming fast foods. Thus, it shuts down the opportunity for
KFC and McDonald’s to expand their economical market into the Chinese economy (Sharma,
2018). Not able to sell their products in China results in developing an economical threat towards
KFC and McDonald’s to certain extent.
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Nonetheless, both of these fast food organizations have significant presence in many developing
countries like India, Ghana, Bangladesh, Hong Kong and many others. Both McDonald’s and
KFC have numerous amounts of restaurants in those developing countries. In recent context, it
has been observed that developing countries are rapidly enhancing their economical situations,
which brings many opportunities to the economical perspectives of both of these fast food
organizations.
Social Factors
Social factors and social trends of global or national population can positively or negatively
influences the consumer behaviour to certain extent. Different trends of social aspects can make
direct impact upon the revenue generation of both McDonald’s and KFC. In recent time, the
tendency of people belonging from different nations are changing at a fast pace. People are
getting dependent into buying fast foods instead of cooking since they have a busy and hectic
schedule (Anton, 2015). This tendency is rapidly growing in the urban regions where people
need to put more time into their job rather than any other thing. Since both KFC and McDonald’s
have several existences in different urban areas, it is an opportunity for them to increase their
revenue generation by substantial amount.
On the other hand, since both the companies operate their business from different market places,
they experience some diversity in different cultural aspects. Diversity in culture can represent
both threat and opportunity in the business operations of McDonald’s and KFC. Both of these
organizations have to develop their product while considering the preferences of local consumers
(Derbyshire, 2018). It is the main reason that the food items of both the companies differ from
one country to another depending upon the taste and preference of the people residing there.
However, if they are not able to make food from the perspectives of their local consumer base,
they will surely lose profit. They need to be flexible in terms of food items in order to match with
consumer preference.
Nevertheless, an increment into the number of health conscious people has been experienced in
last few years. Health conscious people generally avoid consuming fast foods, which a threat
towards the business standpoint of both KFC and McDonald’s.
Technological Factors
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In recent context, the success rate of both KFC and McDonald’s depends upon the maximum
usage of recent technologies and trends. Both of these fast food organizations can get several
benefits from adopting recent technologies since it can help them to increase their production
rate and it will help them to take on attracting promotional strategies. Both of these organizations
has the perfect opportunity for increasing their investment into research and development so that
they can increase the efficiency and effectiveness of their entire organization at certain extension.
Increasing the effectiveness and efficiency can help those organizations to move up their
profitability ratio by several levels (Ghasemi et al., 2016). Applying more automation into their
system can genuinely increase their productivity. However, both the organizations need to
change several aspects of their operation management so that they can modify their approaches
regarding productivity. It will help them to get success in this current era of advanced
technology.
In today’s society, the number of internet and Smartphone users are increasing at an exponential
rate. Consumers in recent context order food from online instead of going to a restaurant. This
technological aspect is an opportunity from the perspective of both KFC and McDonald’s since
they can reach towards a larger consumer base by making an online version of their local
restaurant. It will be easier for the Smartphone users to order the food items of KFC and
McDonald’s online insted of going to their offline store.
Environmental Factors
This detailed factor of external environment refers towards the recent trends of . Recent trends in
ecological sectors have tremendous effect into the operating process of different fast food
organizations like KFC and McDonald’s at certain extension. Both of these fast food
organizations can make several improvements into their sustainability and environmental
programs in order to strengthen their respective business performances and brand equity
(Gandrita and Rosado, 2019). By conducting different programs related with environmental
sustainability, it is possible for these two fast food organizations to increase their emphasis into
diverse sustainable business practice. These kinds of environmental sustainability programs can
create several opportunities in respect with McDonald’s and KFC since by conducting these
types of programs; it is possible for both of these organizations to maintain stability in their
business while maintaining a stable growth.
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However, the climate conditions of different regions can represent several threats towards the
business operation of both KFC and McDonald’s at certain extension. Climate condition can
directly affect the supply of raw materials and it can influence the supply chain system of both
KFC and McDonald’s. Both of these organizations are required to maintain their CSR (Corporate
Social Responsibility) activities in order to maintain their responsibilities towards a wider
environment. McDonald’s has a good and diversified supply chain system, which helps them to
address different aspects of climate change. However, KFC does not have a stable supply chain
system, which limits their opportunity of addressing climate change.
Legal Factors
Any change into law or legislation can make direct impact into the business perspectives and
business policies of organizations like Mc Donald’s and KFC.
In recent context, it has been observed that some countries make health regulations for posing
limit into the availability and accessibility of fast foods into work places and schools. This law is
an enormous threat from the perspective of fast food organizations like McDonald’s and KFC
since it limits these organizations from serving their biggest consumer base (Kałkowska and
Kozlov, 2016). In addition to that, in some countries there are some regulations regarding animal
welfare, which limits the business opportunities of both of these organizations to a far greater
extension. Any kind of regulation regarding animal welfare can certainly increase the cost of
supply chain, which is a threat from the perspective of both McDonald’s and KFC. Additionally,
most of developing and developed countries has their own rules regarding minimum wages and
the amounts of minimum wages are increasing continuously. It is a threat from the perspective of
KFC and McDonald’s since their operation cost can get higher due to the increment of minimum
wage.
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Leadership and management skills for present business environment
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Conclusion
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Reference List
Aithal, P.S., 2017. A critical study on Various Frameworks used to analyse International
Business and its Environment. International Journal of Applied Engineering and Management
Letters (IJAEML), 1(2), pp.78-97.
Anton, R., 2015. An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces,
Diamond, PESTEL, and SWOT Analysis.
Baylis, J., Smith, S. and Owens, P. eds., 2017. The globalization of world politics: An
introduction to international relations. Oxford University Press.
Derbyshire, J., 2018. Use of scenario planning as a theory‐driven evaluation tool. Futures &
Foresight Science, p.e1.
Gandrita, A. and Rosado, D.P., 2019. The Effect of Incorporating a Human Capital’s Analysis
into Strategic Planning. Journal of Reviews on Global Economics, 8, pp.206-225.
Ghasemi, A., Beigilanlouei, S. and Pourmahdian, H., 2016. Human resource development
formulation and evaluation in an Iranian Petrochemical Company using ANP and grey relational
analysis. Management Science Letters, 6(7), pp.461-474.
Kałkowska, J. and Kozlov, A.V., 2016. Decision Making Process for the Knowledge-Based
Enterprise: Fuzzy Sets Theory Application to Strategic Management. In Information Systems
Architecture and Technology: Proceedings of 36th International Conference on Information
Systems Architecture and Technology–ISAT 2015–Part III (pp. 163-174). Springer, Cham.
Pan, W., Chen, L. and Zhan, W., 2018. PESTEL Analysis of Construction Productivity
Enhancement Strategies: A Case Study of Three Economies. Journal of Management in
Engineering, 35(1), p.05018013.
Rijal, R., 2015. Environmental determinants of multinational companies in Nepal: A case of
KFC and pizza hut (Master's thesis, Universitetet i Nordland).
Sharma, S., 2018. New Ideas in Strategic Thinking: Multi-variables Dialectical Analysis in
Strategic Management.
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