KFC's Market Entry into India: Opportunities and Challenges

KFC’s expansion into India represents a significant venture given the country’s burgeoning fast-food industry. The strategic analysis focuses on understanding the multifaceted landscape of India's consumer base, regulatory framework, and competitive environment. Opportunities in KFC’s entry include tapping into a large youth demographic with growing disposable incomes and capitalizing on evolving culinary preferences that blend local tastes with global flavors. However, challenges such as navigating stringent food regulations, intense competition from both international and established local brands, and cultural sensitivities regarding dietary practices pose significant hurdles. Additionally, supply chain complexities and maintaining consistent quality across diverse geographic regions are crucial considerations. This analysis will scrutinize how KFC has tailored its marketing strategies to resonate with Indian consumers while adhering to local business norms and consumer expectations.

Running head: MANAGING GLOBAL BUSINESS
Managing Global Business
Name of the Student:
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Executive Summary
This report intends to shed light on the process of managing global business. The company
selected for the analysis is Kentucky Fried Chicken (KFC). The report will first provide an
analysis of the external environment of the company selected. The external environment
analysis will take into consideration the political, legal, economic, social, environmental and
various other factors into consideration in a bid to understand the industrial condition of the
company. The report will then focus on the process of global diversity and give an account of
the business of the concerned company in the country of India. The report will also take into
consideration the cultural condition of the two countries of India and America in a bid to
understand the cultural conditions of the two countries and the required changes that the
company needs to make in order to make its business profitable in the country of India. The
report will also focus on the risk and risk management. Lastly, the report will provide an
overview of the risks faced by the company in India and also provide some measures by
means of which the company can mitigate the amount of risks faced by it for the overall
growth as well as the development of its business operations in that particular country.
Table of Contents

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Introduction................................................................................................................................3
Political factors.......................................................................................................................4
Economical factors.................................................................................................................4
Social factors..........................................................................................................................5
Technological factors.............................................................................................................5
Environmental factors............................................................................................................6
Legal factors...........................................................................................................................6
Global Diversity.........................................................................................................................7
Management of the business in India.........................................................................................9
Targeted customer base and competitors.................................................................................10
Risk Management.....................................................................................................................11
Risks faced by KFC in India....................................................................................................11
Conclusion................................................................................................................................13
References................................................................................................................................15
Introduction
KFC founded by Colonel Harland Sanders, also known as Kentucky Fried Chicken, is
an American fast food chain popular for their fried chicken items. They have their

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headquarters in Louisville, Kentucky. It is the world’s second largest chain of restaurant after
McDonalds with its presence in almost 20,000 locations globally in 123 countries (Alviola IV
et al.,2014). KFC was one of the foremost American restaurants to expand internationally in
Canada, Mexico and United Kingdom in the mid 1960s. The KFC chain is a subsidiary of the
Yum brands, a brand that also owns pizza hut and taco bell chains (Kelly & Swinburn, 2015).
KFC’s original product was the fried chicken piece that was seasoned by Sander’s secret
recipe of 11 herbs and spices. However, since the 1990s they expanded their menu to include
chicken fillet burgers, wraps, salads, side dishes like French fries and soft drinks.
A PESTEL analysis is a method used to analyze and monitor the external marketing
environment that has its impact on an organization, which is used to identify threats and
weaknesses of the firm. PESTEL stands for political, economic, social, technological,
environmental and legal.
Political factors
Political factors study how and to what extent the government intervenes into the
functioning of the economy. This includes the policies of the government, the political
stability or instability in the market, tax policy, foreign trade policy, environmental law, legal
law and trade restrictions. India has a steady government. The labor force is expensive and
the companies have to pay high taxes, which reduces the profit rate in the country. The
government has given freedom to the companies to do their business there way (Samnani,
2014). KFC designs the pricing structure keeping in mind the income of the people that way
KFC can cater to all the classes. The political climate of India is friendly towards
international businesses, which is an advantage for KFC. The operation of KFC is affected by
the government rules and policies regarding the fast food industry. Currently government is
controlling the fast food restaurants because of the various health issues and obesity related
problems attached to it. KFC maintains a good relation with the government by paying taxes

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properly and increasing employment opportunities for the masses and follows the legal rules
and restriction.
Economical factors
Economic factors have important impact on how an organization work and how
profitable they are. Economic factors include the rate of economic growth, interest rates,
inflation, income of the consumers, exchange rates and so on. KFC is struggling in many
economies like china where their sales are declining due to its health factors (Schröder &
McEachern, 2005). With the growing health consciousness among the people, the sale of
KFC is declining in many economies. Every outlet of KFC gives employment to around 10-
15 people in a way it curbs unemployment ("Home | KFC", 2018). India’s economic
condition is extremely good and per capita is high. Population being low resources is
abundant. Though earlier the target of KFC was the upper classes, later on they changed their
target market to include the middle-income group. The economic condition of India is an
advantage for the company as this increases its sales.
Social factors
This area involves the social and cultural beliefs of the consumers. This includes
population growth, age distribution, career attitudes and so on. These factors are extremely
important because this directly affects how marketers understand their consumers. In the
social issues KFC luring of children to their unhealthy food, unethical treatment of animals
and low wages to employees are widely criticized (Shoyemi, 2014). It is rumored that the
chicken used by KFC are genetically modified to store more fat, which makes the chicken
incapable to carry its own body weight. Many animal welfare organizations like PETA
condemn KFC for such heinous issues. The social system in India is beneficial for the further
growth of the company. The banking system is also strong and literacy rates are high. India
being a capitalistic economy the income of the people are high, and the busy schedule of the

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people makes them resort to these fast food restaurants. KFC very tactfully adapts to the
culture of the country they operate in. the busy lifestyle of the masses makes them resort to
these unhealthy fast foods. The growing awareness about the harmful effects of fast food is
proving to be a threat for KFC.
Technological factors
The technological progression of the country affects the organization’s marketing and
daily operations India has a very high per capita income and literacy rate. There technological
development is also very advanced (Kelsey, 2015). Thus internet usages and exposure to
advanced technology is high. KFC uses strategy to introduce new technology when they feel
it is needed. In the technological era KFC has started mobile apps with the help of which
ordering and payment online is made possible. In a developing country like India this acts as
an opportunity because this increases its sales and growth.
Environmental factors
With the growing concern on environment, this factor has come to the forefront in the
recent years. It has become extremely important due to the scarcity of raw materials. KFC
buys their packaging materials from companies that contribute to deforestation (Tiwari, 2017)
This particular company also uses underage children to work for them in order to pay fewer
wages to them. KFC’s treatment of the chickens used for the meal is said to be injected to
make them obese. This harms the chicken and makes them extremely toxic for human
consumption. This also poses several difficulties for the chickens that sometimes die because
of the injections. The educated people condemn these various factors since they pose as a
threat for the KFC chain.

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Legal factors
This includes the health and safety factors, advertising standards, equal opportunities,
consumer laws and rights, product safety and product labeling. Every company need to know
what is legal and what is not in the economy they are operating. For organizations that are
global this is a difficult area to act because every country has different rules and laws (Smith
et al.,2014). The government in India changes after every five years, corruption level is low.
International companies are invited to start their business but their profit is low because of the
high taxes. The government gives enough freedom to the firms to conduct their business and
does not intervene unnecessary in the daily workings. KFC has to abide by the legal rules and
regulations laid down by the government of India for the smooth operations.
The above analysis clearly provides an overview of the external environmental
conditions faced by the company KFC. The external environmental conditions form an
important part of the company and often it is seen that they are beyond the control of the
company. The company however, can utilize the external environmental conditions by
turning the risks or threats faced by it into future opportunities.
Global Diversity
Global diversity can be defined as the process by means of which one company can
distinguish itself from another not only on the basis of the services provided by them but also
on the basis of the strategies as well as the global plan followed by them. This is an important
process by means of which the various companies can adapt themselves to the global market
and it also allows them to work as per the needs and the requirements of the customers. The
company Kentucky Fried Chicken uses the various aspects of global diversity to market its
products in more than 198 different countries of the world ("Home | KFC", 2018). The
company KFC, in India itself has more than 350 outlets, thereby making India as one the

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largest center of its business ("Home | KFC", 2018). America is another country where the
products of the company KFC are in much demand ("Home | KFC", 2018). The company
KFC, as a matter of fact has its headquarters in Kentucky, United States of America ("Home |
KFC", 2018).
The cultural characteristics of the country India on the basis of the Hofstede’s cultural
model would reveal the following facts-
Figure 1: Hofstede’s Cultural Insights for India
Source: ("Country Comparison - Hofstede Insights", 2018)
The above figure clearly indicates that the Indian people score low on the
individualism quotient, which means the people like to work in groups and group culture is
prevalent there ("Country Comparison - Hofstede Insights", 2018). The people of India score
very high on the power distance score which means that the people appreciate the hierarchy
system prevalent at their work place and they are very dependent on their bosses or the higher
authorities for the performance of their job roles ("Country Comparison - Hofstede Insights",
2018). The score of India on the Hofstede’s culture for the aspect of masculinity indicates
that the Indian society is driven by competition, success and achievement ("Country
Comparison - Hofstede Insights", 2018). The low score of the nation for the aspect of
uncertainty avoidance indicates that the people have low preference for avoiding uncertainty
("Country Comparison - Hofstede Insights", 2018).

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The cultural characteristics of the country United States of America on the basis of
Hofstede’s cultural model would reveal the following facts-
Figure 2: Hofstede’s cultural insights for United States of America
Source: ("Country Comparison - Hofstede Insights", 2018)
The above figure clearly indicates that the people of the United States of America are
very individualistic and like to work in an individualistic manner (Taras, Steel, & Kirkman,
2012). The low score on the power distance aspect indicates that the people of the United
States of America do not endorse the inequality of the division of power in the society
("Country Comparison - Hofstede Insights", 2018). The high score on the aspect of
masculinity indicates that the people of the United States of America are driven by factors
like success, competition and achievement ("Country Comparison - Hofstede Insights",
2018). The low score on the uncertainty avoidance indicates that the people of America are
fairly tolerant towards the changes in technology, innovations and the desire to try out new
things ("Country Comparison - Hofstede Insights", 2018).
Therefore, from the above discussion it becomes clear that if the American company,
Kentucky Fried Chicken (KFC) is to expand its business in India then it will have to take into
consideration the various aspects of the culture of the Indian nation. The company will

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especially have to make adjustments in the aspects of power distance, individualism,
uncertainty avoidance as well as masculinity.
Management of the business in India
KFC opened its first outlet in India at Bangalore in the year 1995 ("Home | KFC",
2018). The company currently owns more than 350 outlets in the nation ("Home | KFC",
2018). This is a reflection of the successful collaboration of the company KFC with the
franchise Yum ("Yum! Brands – A World with More Yum!", 2018). It is to be noted that the
company has transformed some of the traditional products offered by it in order to suit the
taste as well as the needs of the Indian customers (Sania, Kalpina, & Javed, 2015). It is to be
noted that in the initial phase the company had to face some protest as the regards the type of
raw materials used by it for the preparation of its products. Then there were others who
protested to the non-vegetarian products sold by the outlets ("Home | KFC", 2018). The
company KFC, therefore in order to capture the needs as well as the requirements of the
customers started its new brand of products and food items with the slogan “So Veg, So
Good” ("Home | KFC", 2018). This plan was introduced as part of its Indian-specific
promotional strategy, which was much appreciated by the Indian customers. The second
important strategy adopted by the company in a bid to capture the Indian market was the
introduction of the 5-in-1 meal boxes and the use of the local dabbawalas for the purposes of
the delivery of the products to the office goers (Shoyemi, 2014). It is to be noted that the
Indian dabbawalas are known for their efficiency as well as timely delivery services
(Shoyemi, 2014). Therefore, this strategy proved to a vital one for the company as it not only
enabled them to procure a reliable delivery system but also enabled them to capture the office
goers customers of the nation. Another, important strategy utilized by the company is the
introduction of the new system of Watt a Box, which is similar in many respects to the

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traditional 5-in-1 meal boxes of the company with the only difference being that in this
particular respect the customers can order their meals over the phone (Hussain, 2014). The
company even follows effective pricing policy as well as provides discount services in a bid
to attract more customers to its outlets. These in short are some of the strategies, which the
company has utilized over the years to capture the market of the Indian nation.
The company offers a wide range of products to its Indian customers like Hot &
Crispy Chicken, Chicken Zinger Burger, Fiery Grilled bucket chickens, Rice Bowlz and
various others ("Home | KFC", 2018). The company also provides a wide range of vegetarian
products to the Indian customers. This is something which is not seen among the range of
products offered by the company in its American outlets. The pricing strategy followed by
the company in its Indian outlets is different from the ones which it follows in its American
market. The company follows a pricing strategy in its Indian market as per the needs and the
requirements of the customers and the market conditions. The company uses the social media
and newspapers for the purposes of promotion of its products. The company in order to
attract more customers had tie up with various other companies like Yum brands and Pepsi
Co ("Home | KFC", 2018). They even offer attractive offers like combo meals and others to
attract the customers. The primary supplier of raw materials for the company is Venky’s,
which is the largest supplier of raw chickens in India ("Home | KFC", 2018). The operational
strategy followed by the company in India are listed below-
 The use of vegetarian menu as well as the localization of the products.
 Effective Supplier system
 Effective price strategy
 Focusing on the younger customers

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It is to be noted that the business of the company grew by 8% in the country of India
in the year 2017 ("Home | KFC", 2018). The company owns more than 350 outlets in the
country ("Home | KFC", 2018). The supplier system of the company in the country India is
shown by the following figure-
Figure 3: Supplier system
Source: (Created by the Author)
Targeted customer base and competitors
The primary competitors of the company KFC in India are McDonalds, Subway,
Domino’s and various others ("Home | KFC", 2018). Initially, the target customer base of the
company was just the office going population and to capture that customer the company
effectively utilized the services of the dabbawalas. However, over the years, the focus of the
company has changed significantly and to grab the attention of the other part of the
population of the nation, the company started to focus on its vegetarian menu. The company,
presently, is trying to grab the attention of the younger generation of the Indian population in
the age range of 18-40 ("Home | KFC", 2018). It is commonly seen that the people in this
particular age range are the ones who live a fast life and are more open to the kind of
products offered by the company KFC.
Risk Management
Risk can be defined as the potential situation in which a person or an organization
stands to lose or gain something of considerable value (McNeil, Frey, & Embrechts, 2015). It
is to be noted that risk forms an important aspect in the process of business management