Hospitality Business Plan for KFC in the Vietnamese Market

This report provides a comprehensive analysis of Kentucky Fried Chicken's (KFC) business plan, focusing on its operations in the Vietnamese market. It begins with an introduction to KFC, its mission, vision, objectives, and strategic statements. The report then delves into a macro-environmental analysis using the PESTEL framework, examining political, economic, social, technological, ecological, and legal factors impacting KFC's performance. It further analyzes the hospitality macro environment to inform strategic management decisions, exploring competitive advantages, product strategies, and marketing approaches. The report also applies Porter's Five Forces model to assess the competitive landscape, including rivalry among existing competitors and the threat of new entrants, providing insights into KFC's market position and potential challenges. This report aims to offer a holistic view of KFC's business strategies and its adaptation to the Vietnamese market.

The Hospitality Business Plan
1. Introduction of the chosen organization
Kentucky Fried Chicken (KFC), a brand pioneered by Mr. Harland Sanders was
originally created for his own livelihood after development and has become one of the fastest
food service systems in the world. Currently, it belonging to one of the brands of Yum Brands
Inc (USA) and has more than 20,000 restaurants in 109 countries and territories worldwide.
KFC is famous for its unique flavorful fried chicken that is created by 11 different spices with
traditional recipes. Besides traditional dishes such as Fried Chicken or Hamburger, coming to
Vietnam market, KFC has prepared many dishes suitable for Vietnamese taste such as mixed
cabbage (Coleslaw), chicken rice, shrimp hamburger, etc.
In addition, despite being a fast food model, they provided friendly service style, a cozy
and comfortable restaurant atmosphere are the keys to success not only in Vietnam but also in
many countries. The first store opened in Ho Chi Minh City in December 1997, June 2006 at
the Hanoi capital and in the following years expanded to other provinces across Vietnam. So
far, KFC has more than 140 large and small stores, with more than 3,000 employees, at the
same time creating career opportunities for citizens. Vietnam is a developing country with the
need of modernisation, KFC is one of the international companies that have spent 10 years

suffering losses with a sustainable journey to become a familiar brand of the Vietnamese
people.
2. Mission, vision, objectives and strategy statement
Strategy defines and represents an organisation's purpose through the company's
mission, vision, goals or values.
Mission : To maximise profitability, improve shareholder value and deliver sustainable
growth year after year.
Vision : To be the leading integrated food services group in the ASEAN region delivering
consistent quality products and excellent customer-focused service.
Values of KFC are potential, the Colonel’s values are not a marketing gimmick. They are
alive and well inside our walls – in our food, our people, our services and our restaurants. At
KFC, we have a passion for food, and serve it with pride. We belive to ensure that every
guest leaves happy.
Objectives : Bringing to consumers a leading brand of food, creating bright and fun for
people of all ages. "Young in mind, active in life" is the criterion and strategic brand of KFC
Vietnam
Strategy statement : KFC uses demographic segmentation to serve the market according
to the needs and desires of customers, mainly young people. KFC used to serve a sample
menu worldwide with indiscriminate targeting. But recently they've started localising their
menus, transforming their value-based product positioning strategy. In the consumer's mind
when thinking of fried chicken comes KFC. To have a strong foothold like today, KFC has a
very unique product strategy. They constantly diversify their products, but also develop
chicken rice, mixed cabbage, and soft bread for many markets. Vietnam's eating culture is
very familiar and they have responded quickly to a nutritious meal. In addition they also offer
different prices for consumers to have more choices. KFC's strategy is to localise wherever
they go, they use communication very effectively and a huge amount of interaction.
3. Macro-environmental analysis
PESTEL analysis highlights six environmental factors in particular: political,
economic, social, technological, ecological and legal.
- Political factors
The Vietnamese federal government has implemented monetary tightening measures in
Vietnam Dong to cope with high inflation prices by cutting government spending to slow
inflation. The fast food industry in Vietnam has grown in the past ten years up to 40%
(according to research by Nielsen Company). Therefore, this is also an opportunity for KFC
to expand further for the benefits of the economic environment in Vietnam. Vietnam's new
franchise law was legalised after Vietnam joined the WTO in 2006. The Government of
Vietnam has used trade rules to promote foreign franchising with the expectation that it will
develop in the future. The 30% growth over many years shows great potential as a form of
business in Vietnam.

- Economic factors
According to VnExpress, KFC and Lotteria in Vietnam are the fastest-growing fast food
companies with trillions of revenue, but the revenue growth rate started to decline partly due
to the expansion of the market. For instance, convenience stores, customers change their
preferences from saving time and more convenience because it appears nearly everywhere on
the street. Vietnam's GDP growth in recent years has left foreign countries as an emerging
market, at 7.1% (2018). Compared to a few years ago, the fast food industry in Vietnam is
estimated. It has grown and generated high revenue according to Nielsen Market research,
but recently the trend of healthy eating has started to gain consumer attention. Moreover,
market research company Euromonitor said international companies dominate the restaurant
market in Vietnam was set up by small families but did not have the potential to deal with big
competitors. In May 2018, according to the European Commission's report the Food and
beverage market entry handbook, Vietnamese people spend 78% of their time eating out at
local vendors restaurants and only 1% of the choice to go for fast food.
- Social factors
KFC often pays attention to the ethnic, social and honest values of the locality.
Restaurants have adjusted dishes and drinks to suit the taste and civilisation of the local
Vietnam, but in general, the fast food chain is growing more slowly. One of the factors
affecting the slow growth is due to the changing eating habits of Vietnamese people and a
higher priority for health. A large portion of Vietnamese consumers identify good health as a
sign of success compared to wealth. In addition, KFC has been criticised for using enticing
advertisements to attract children and people to the restaurant while they are hiding risks and
health-related problems when consuming fast food.
- Technological factors
This is a very important factor to become more competitive and keep up with the ever-
changing trends. Without state-of-the-art technology a company will go a lot slower in the
market. Most of these daily stores have a click-and-take option so you can order food before
you arrive at the store, help you save time in queue. KFC has adopted many new technologies
whenever they think it is time to introduce new technology. They use the latest technology in
machines, stoves, and ovens to organize the cooking order and reduce the time it takes to
prepare food. They have applied a HACCP product quality management system (a quality
management system based on hazard analysis and critical control points) into all of their
production processes. To increase profit and sales, self-order and online ordering kiosks are
applied and with good results. Better social media advertising also helps KFC increase its
digital presence.
- Environmental factors
Being a big fast food chain, it is not surprise that KFC makes a big contribution to the
environment. They have switched from cardboard to paper to be recyclable and
biodegradable in order to reduce the amount of tons of packaging. In addition, KFC has
adopted a number of measures to reduce carbon emissions and make its supply chain more
environmentally friendly.

- Legal factors
The KFC company operates in many countries around the world, it must comply with all
laws relevant to the country in which it operates. Specifically, they need to disclose all
relevant information in the financial statements, and pay the appropriate amount of tax so that
stakeholders know their real position. Therefore, any non-compliance can put the company in
danger. KFC operates in the food business so food hygiene and safety standards as well as
quality need to be met depending on each country.
M1 Critically analyse the hospitality macro environment to determine
and inform strategic management decisions
Mainly, political, economic, environmental and social factors have a great influence on
KFC. As seen, KFC products are highly appreciated by consumers for their quality.
Therefore, KFC should continue to promote this strength to improve quality further to
enhance its reputation and increase its competitive position in the market. KFC should create
new and more novel products, design more heart-shaped hamburger for lovers. This will
cause excitement and curiosity for everyone. Another solution is to expand the menus that
blend Vietnamese and Western styles. For example, adding ingredients such as vermicelli,
pho, noodles, but can be processed in Western style. Currently, the KFC distribution system
is being strongly competed with other fast food brands and also with the tendency to open up
when Vietnam joins the WTO, KFC needs to take more active measures to continue
attracting. retain customers. Strict management of its distribution system from employee
selection, facilities, location, storage, and preservation needs to be consistent in quality at
stores across the country. In addition, developing a door-to-door delivery system, improving
the quality of the team as well as the delivery process to ensure on-time delivery.
Currently, the three words "KFC" have become quite familiar to consumers. According to
the research data, it can be seen that advertising and promotion factors significantly affect the
youth's decision to choose KFC, so KFC should continue to maintain advertising and
promotion as outlined above. Regarding competitors, continue to promote 4Ps to maintain
their current positions and strategies to position more firmly in the minds of customers to
create a deep KFC image in the mind, whenever it comes to chickens, fried refers to KFC.
Regarding public relations, KFC should make public about the origin of raw materials and
nutritional content in each meal with the press and consumers in order to create confidence in
quality and actively do charity activities.
Marketing budget allocation based on the market objectives and the market cycle of the
product. While the revenue growth of KFC and Lotteria in recent years decreased to less than
5%, the sign of gradually going sideways, the fried chicken chain from the Philippines
(Jollibee) maintained the double-digit growth. This result makes the race of two-way codes in
the fast-food market gradually becoming a trio. In 2019, the revenue is nearly 1498 billion
VND (65646 USD), so how much revenue is expected in 2020 to allocate to the cost of
advertising, direct marketing, sales promotion and PR.
4. Industry analysis :
a. Porter’s 5 force model
Porter's Five Forces Model is a model that identifies and analyses five competitive
forces in all industries and helps identify the industry's weaknesses and strengths. It often be

used to specify the structure of an industry to define a company's strategy, Porter's model can
be applied to any segment of the economy in search of profitability and attractiveness.
To be able to see how KFC has adapted and how successful we are together analysis of
5 pressure blocks as defined by Michael Porter that KFC is facing in Vietnam.
- Rivalry between existing competitors
1 2 3 4 5
Competitor
Concentration
Industry
growth
rate
High
exxit
barriers
Competitor
Differentiation
High
fixed
costs
Currently, foreign fast food companies are operating in Vietnam more and more and are
continuing to penetrate this potential market with the opening of more stores in almost all
provinces and cities across the country. Can say about :
* Lotteria of Korea appeared in 1972 in Japan and 01/2004 officially entered Vietnam.
Currently present in 30 cities with 210 stores nationwide.
* Jollibee of Philippines (JFC) is the first and biggest fast food group in Asia established in
1978. Entering Vietnam market in 1997 with 1 store operating under the franchise form, there
were about 70 years old. The store is mainly located in the South and will continue to expand
in the future when they have purchased the chain of Pho 24 and Highlands Coffee.
* The Pizza Company of Thailand. In April 2013, TPC - a fast food brand belonging to
Minor Food Group (Thailand), was officially present in Ho Chi Minh City. The brand
currently has more than 60 stores in Vietnam.
- The threat of entry

According to M-porter, potential competitors are those that are not in the industry on the
market but may affect the industry in the future. That depend on two very important factors in
.Firstly, the Industry attractiveness, it shown through many factors but in short will be overall
through 3 expenditures: rate of return, number of guests row, number of businesses in the
industry, number of businesses industry. We can see Vietnam with a population of over 80
million inhabitants is enormous environment with the food industry. Besides trying to create
KFC from more than half a century ago, he was successful with the public secret blend of 11
aromatherapy and herbs along with the century. That made it expensive to enter the industry.
KFC is also encountering many barriers when entering the Vietnamese market, such as:
capital,
engineering, commercial factors, distribution systems, customers, brands, the specific
resources, input materials (patented, source controlled force of government protection, etc.
Compared with other industries, the real industry ,the product does not require high capital.
Technology and specific resources are key sost important. From there, we see that the barriers
to entry into the industry are also quite high.
- The threat of substitues

The fast food market has only been active in recent years because the taste of the market
has been awakened by firms. However, Vietnam is an agricultural country with a rich and
diverse culinary culture, so the pressure from alternative products is not small for fast food
restaurants. In the same fast food industry, Popeye's is known as Louisiana's cuisine. Their
menu and tastes are similar to KFC's, offering customers a choice of fried seafood, biscuits
and mashed potatoes. To alleviate this pressure group of food companies quickly, so we can
promote our strengths and connect with each other if needed to build firm foothold in the
Vietnamese market.
- The bargaining power of buyers
Bringing quality products and services to customers is the most important thing, KFC is
responsible for making a decision where to import from. The amount of poultry they get is
huge, which means that suppliers have to ensure a standard and clean source of raw
ingredients, like not injected poultry. There are a couple of reasons for this see why customer
pressure is not small in Vietnam for the fast food industry.With a large population and rapidly

growing urban population growth rate has created a part of the young has a rather high
income and is accompanied by their willingness to spend pay. It is a fact that every
Vietnamese family is willing to pay more for it. Health is also a concern, currently the
number of fat people obesity, cardiac spike and KFC was listed as a risk on. This is the
challenge that KFC needs to overcome, creating confidence for customers and branding.
- The bargaining power of suppliers
Suppliers control the quantity of goods provided to KFC, having the right to decide
whether or not they wish to continue with the buyer contract. If anyone wants to copy the
KFC menu they can pay the supplier many times the amount. If that happens, KFC will lose
its suppliers and not reach the market. In addition, the price issue of agricultural products that
suppliers to the company is also a pressure, due to fluctuating prices in Vietnam, long-term or
short-term contracts also need to be company noted. Vietnam is an agricultural country so
cultivated. Cultivation and breeds are two main professions that are very prosperous.That has
created an advantage in KFC Vietnam.They farer risk to reduce damage, actively build close
relationships with reputable suppliers. Top product quality to ensure quality in the market
(CP Vietnam.) All documents are subject to inspection by the authorities and with the
implementation of these strategies, KFC has implemented two goals at the same time:
Ensuring to supply quality products to the market and reduce the risk from your suppliers.
As a result, that strategy worked when avian flu was discovered in Vietnam. While processed
products from poultry scurry, KFC is straight ahead important breakthrough. That
achievement is due mainly to efforts and vision strategy of KFC.

b. Stakeholder analysis
Stakeholder, which can be an individual, a group of people, or an organisation with an
interest in the performance and success of a project. Stakeholder can include the following
groups of people: suppliers, members, internal employees, customers, outside investors or
regulators. Determining the right stakeholder is one of the factors determining the success of
a project. If the stakeholder is not secure, your project will be unlikely to succeed.
When there are too many people who can influence an issue, conflict is inevitable. One of
the problems that often occurs is a conflict of interest or a connection between those
stakeholders. However, in reality these conflicts are sometimes not easily discernible, but
sometimes they confront each other directly. This seriously affects the development of the
business. Stakeholders are tied to a company with some type of assigned benefits, often in the
long run and because of greater demand. Not only that, but also conflicts between internal
and external stakeholders. For example, when a factory operates profitable for the business,
the employees' jobs cause noise and air pollution to the surrounding environment. From there,
leading to residents around complaints, if the factory cannot find a solution, they will be
forced to close and that will affect the interests of shareholders and employees. Even the
employee might be also live in the surrounding place.
Specifically, on KFC's related parties including shareholders, the managers and the
employees. In addition, they also include franchisees, which are independent companies or
individuals that operate many KFC restaurants around the world under the parent company's
brand. The franchisee must provide the strategic aspect so it has a significant impact.
Conduct a stakeholder analysis / mapping is not only a way of identifying and
understanding the different sometimes contradictory expectations of the stakeholders that the
organization must interact, but also a part of the stakeholder approach. general. The matrix
consists of two axes: one of the potential for cooperation and one of the potential to hinder

the business, the fact that stakeholders can move away from their boxes as their interests have
changed.
Employees ( Parttime ) Employees ( Fulltime )
Media
Goverment
Customers
Shareholders
Lenders
Chairman / Directors
c. SWOT analysis (or Situational Factors Analysis Summary (SFAS))
INTERNAL ENVIROMENT ANALYSIS SUMMARY (EFAS)
Internal
factors
Weight Rating Weighted
Score
Comments
Strengths
Reputable and
quality products
0.3 4 1.2 Secret homemade 11
herbs recipes
Wide distribution
system
0.2 3 0.6 Had expanded their
network, mostly
targeted to big cities
Weaknesse
s
High employee
turnover rates
0.3 2 0.6 Shortage of long
term staff
Unhealthy menu 0.2 4 0.8 Mostly deep fried
food
Total
Scores
1 13 3.2
+ Power -
-Level of Attention / Interest +

INTERAL ENVIROMENT ANALYSIS SUMMARY (IFAS)
External
factors
Weight Ratin
g
Weighted
Score
Comments
Opportunities
Young population 0.2 3 0.6 Hitting psychology
of young people,
the number of the
youth are
increasing
Vietnamese’s people
income increased
0.1 2 0.2 Salary growth in
every industry
from low to higher
Innovation on healthy
menu
0.3 4 1.2 To target different
types of customers
Threats
Not stable currency
rates
0.2 3 0.6 They still put a
great deal on the
VNmese market,
despite constant
losses
Consumer are more
concerned about their
health
0.2 4 0.8 Consumers tend to
reduce on oily food
Total Scores 1 16 3.4
SITUATIONAL FACTORS ANALYSIS SUMMARY (SFAS)
Strategic factors Weight Rating Weighted
score
Duration Comments
Short Intermediate Long
ST1 – Reputable and
quality products
0.3 2 0.6 X KFC has a wide
range of stores in

all provinces and
a strong service
staff
WE1 – High employee
turnover rate
0.4 3 1.2
X
Unstable changes
often make much
employees do not
have a lot of
experience, also
spend lots of
recruitment costs
and training but
not long using
staff.
OP3 – Innovation on
healthy menu
0.1 2 0.2
X
Creative more
vegetable side
dishes to attract
more kinds of
consumers.
TH2 – Consumer are
more concerned about
their health
0.2 2 0.4
X
Currently the
number of fat
people obesity,
cardiac spikes
and KFC was
listed as a risk on.
Total Scores 1 9 2.4
5. Capability analysis:
a. McKinsey 7s Model
The McKinsey 7S Model is a benchmark for organisational performance, assuming that
an organisation has 7 internal elements that need to be linked and strengthened to create the
success of the organisation.
The McKinsey 7S model specifies 7 factors classified as "hard" and "soft" factors. Hard
factors are easy to identify and are influenced by governance, while soft ones are harder to
grasp, are more ambiguous and are influenced by corporate culture. Staff and skills
KFC's unique culture always recognises the merit and passion of the profession per
worker in KFC. Considering staff as a key element in its sustainable development strategy,
KFC Vietnam always promotes restaurant management training programs. No asset of a
business is more important and valuable than the people who make the organization
successful. Moreover, there is nothing more precious than the word "wisdom" and "virtue" of
the people who accompany each other on the company's development. To do this, in 2016,
KFC Vietnam cooperated with Hoa Sen University to organise the training program
"Effective restaurant management” for restaurant managers for 6 months.