HI6008 Business Research: Risk Management Strategies in KFC

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HI6008 BUSINESS RESEARCH
ASSESSMENT 1-“Risk Management strategies in KFC”
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Table of Contents
1. Introduction..............................................................................................................................3
2. Project Objective......................................................................................................................4
3. Project Scope............................................................................................................................5
4. Literature Review.....................................................................................................................6
Impact of Fast Food on Human’s Health....................................................................................6
Risks associated with the Fast food outlets..................................................................................6
KFC Australia Makes its Chicken................................................................................................7
Risk Management Education at KFC...........................................................................................8
Corporate Social Responsibility at KFC.....................................................................................9
5. Conclusion..............................................................................................................................12
6. Reference List.........................................................................................................................13
7. Appendix................................................................................................................................15
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1. Introduction
The main purpose of this assessment is to analyse the risk management strategies in the KFC
Company. Kentucky fried chicken (also known as KFC) is the world’s second largest fast food
outlet after McDonald. It was founded in September 1952 in Louisville, Kentucky, United states
by Colonel Sanders. As per their official website KFC, have more than 17,000 restaurants spread
across more than 115 countries, serves more than 12 million customers every day. The first ever
Australian KFC was opened in 1968 in Guildford, Sydney. Every enterprise, along with its
strengths, has their own set of weaknesses, commonly termed as Risks. However, with good risk
management strategies, the enterprise can completely overcome or at the very least minimize the
impact of such risks. A good risk management strategy gives an organised and reasonable
approach to determining, evaluating and controlling risk. It works in a procedure for consistently
refreshing and reviewing into the appraisal dependent on new improvements or moves made by
the company. The comprehensive understanding of risk management strategies have been made
in this assignment so as to identify the role of such strategies in mitigating the risk factor.
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2. Project Objective
The project objectives provide a direction for the overall report study and a detailed description
of information which is needed to be focused. Fast food is convenient and good on taste (May
and Plummer, 2011). Some people have those convenient foods because they like the taste while
others have those because they do not have much time to cook food at home. Similarly, some
people have it because they are lazy. The craze of eating fast food is increasing significantly.
With the huge customer base to serve, there arise different questions that KFC management need
to address, some of which can be termed as the project objective:-
 To identify that are people getting sufficient nutrition they required daily by eating
fast food.
 To analyse that eating of junk food is good for health.
 To measure various people health risks of eating a lot of fast foods.
 To understand these risks related to KFC and also to figure out what strategies and
activities are being carried out to overcome those risks.
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3. Project Scope
Fast foods are the type of food served quickly by the restaurant or street vendors. In Australia,
there are many franchises of fast food restaurants. KFC is one of the largest franchises out there.
Each fast food restaurant is famous for its own dish. KFC is typically known for its special fried
chicken. On the other hand fast food is a bulk production of food, what happens if there is
shortage of raw material or lack of suppliers for proper supply of goods and material. Similarly
lack of the storage for the preservation of cooked food and proper means of waste management
control are some other risks related to KFC and can be another scope of this project study (Koks,
et. al., 2015). For gaining better insight and facts about the research topic, the visit and study of
official site for KFC is made that leads to a greater scope of this project study. Similarly, for the
purpose of literature review, the reference of some related articles, news and reports from other
authors and sites has been gathered.
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4. Literature Review
Impact of Fast Food on Human’s Health
According to the mind-set and thoughts of Zhu, et. al. (2017), it is evident that the first thing that
occurs in our mind when we hear about KFC, besides their delicious chicken, is our health. Some
people, without adequate knowledge about the practices and procedures followed in the fast food
outlets, start saying negative things about them and many start blindly believing such things
without themselves researching about the facts and figures behind it. It is absolutely true that
consumption of excess amount of Fast Food instead of balanced diet does deteriorate the health
of the consumer. Similarly, there have been instances in the past where KFC employees have had
accidents due to lack of proper control environment in the kitchen. But this does not in any way
imply that the food from KFC is uneatable. Rather, enjoying delicious taste of food offered by
such outlets time and again and not on regular basis is not so bad at all. Offering delicious fried
chicken is not the only good aspect of KFC. In addition to this, it is also observed during the
research study that there are different control activities taken up by KFC to maintain the welfare
of their employees, customers and the community as a whole (Zhu, et. al., 2017). Moreover,
franchises like KFC have been a boon to the economy of the locality where it is situated.
Similarly, as a part of their Corporate Social Responsibility (CSR), KFC has been involved in
numerous social welfare activities and programs. KFC is like a necessary evil to the society.
Risks associated with the Fast food outlets
From the insights published in the article of KFC Australia (2018), it is examined that the main
risks related to fast food outlets like KFC involve risks related to consumers, employees and their
operation in their locality or the society where they operate. KFC has from the beginning of its
operation acknowledged such risks and formulated and implemented strategies and activities to
mitigate such risks. Providing consumers with good and nutritious food has always been their
first and foremost priority. Similarly, taking good care of their employees and helping them excel
both personally and professionally has also been the priority of KFC outlets. In addition to this,
with help of different corporate social responsibility (CSR) related activities, KFC have been
helping improve the status of the locality that they have been operating in. The first priority of
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KFC since its beginning has always been their consumers. KFC has been serving millions of
customers all around the world each day. KFC Australia alone has been serving 2 million
consumers weekly through their 640+ restaurants across the country (KFC Australia, 2018).
On the contrary, as per the thoughts of Singh (2018), KFC have, time and again, been accused of
deteriorating the health of their consumers. It is not the completely true scenario. Though the
food served by KFC is not completely healthy to replace a balanced diet, KFC has been taking
all the steps necessary to maintain the nutrition level and freshness of the food that they serve.
KFC provides good quality of food in cheap price within short period of time. The food provided
is tasty food with enjoyable eating experience. It provides both dine in and take away facilities.
It’s good to go there to spend time with your families and have gathering with friends, with
staffs, colleagues, students and so on. And as for the negative side of KFC people claiming KFC
buy chicken from those factories which abuse the chickens people also say more than 850million
of chickens killed for KFC only. Similarly some other negative part of KFC could be tobacco
spit in the chicken eyes, chicken faces are spray painted, having chickens heads ripped off
(Singh, 2018).
KFC Australia Makes its Chicken
As quoted by the author Chris Jager (2018) in his article “How KFC Australia Makes its
Chicken” posted in Life hacker Australia official Website, every store of KFC has equal space
maintained at same temperature to store the raw material. KFC chickens are delivered fresh
everyday which are kept in cool temperature but not frozen. Every crate of chicken is labelled
clearly with a use of date, batch code and the exact time when chickens were killed. When the
chickens are fried and ready to serve each batch of chicken has a set time that it needs to be sold
by if there is anything left over after the time limits they are binned and replaced with new lot.
Similarly, the consumers can now get the knowledge about the updated data regarding the
specific amount of nutrition that they are consuming with each meal from KFC. This can be
accessed through the nutrition factsheets provided in the official website of KFC itself. This way,
the consumers are now able to access and determine the perfect diet for them, thus benefitting
both the consumers as well as the franchise (Jager C, 2018).
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Figure: About Us
Source: (KFC Australia, 2018)
KFC Australia (2018), in order to manage risk and formulate strategies after their consumers,
KFC has also adopted different strategies for the well-being and safety of the employees. As per
the official site of KFC Australia, more than 34000 Australians have been currently employed by
KFCs within Australia only. Also, as per their CSR report published in 2014, KFC Australia
describes how the wellness initiative launched in August 2012 helped employees learn more
about healthy living. Similarly, the initiative has helped the employees improve their work life
balance through series of online training models. The report also states that employees were
offered free access to healthcare as a part of the initiative. Moreover, the report also emphasizes
on the aspect of flexible working environment in KFCs and how that have helped increase
efficiency and effectiveness of employees in the franchise (KFC Australia, 2018).
Risk Management Education at KFC
On the basis of the views and study of Schroder and McEachern (2005), Education assistance is
also available as social benefits in KFC Australia’s flexible work environment to all staffs at
their company owned stores. Their programme presents as far as $1000 to their employees for
pursuance of tertiary education for accepted courses. Such assistance also helps to waive study
expenses of the employees; for instance Higher Education Contribution Scheme (HECS) fess or
non-HECS courses, study or examination leave and textbooks expenses is also covered under the
assistance. They also cover the costs for those employees to complete a certificate IV in retail
service. Additionally, as a training and development program, KFC Australia has rewards and
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recognitions awarded to their employees in order to empower their employees. With respect to
other risks too, KFC has been time and again adopting different strategies to smoothen their
operation all over the world. Along with focusing on proper supply of nutritious chicken to the
consumers and providing different welfares to their employees, KFC has also been adopting
many effective ways to reduce their wastages. Proper management of the wastage is a must for
every business and more so to the huge franchises like KFC. It has always been challenges to
these businesses to cope up with the problem of waste management due to the huge volume of
wastage collected. However, over time, along with proper disposal of daily wastage and proper
dumping and restocking of unutilized raw materials, KFC has also been collaborating with their
other stakeholders for strategic recycling of recyclable wastage (Schroder and McEachern,
2005).
Corporate Social Responsibility at KFC
In the views of Khan (2018), for an instance, in the year 2014 KFC brought new uniforms for
their employees which caused the problem of disposing 60,000 staffs’ old uniform. Instead of
dumping the same, KFC collaborated with its produce suppliers; Cut Fresh Salads and Unifresh
to commence the sustainable transfer of uniforms to Pacific Nonwovens, a fibre technology
company that will convert them to 25,000 sq. meters of Super felt carpet underlay, to be sold
commercially. This strategic action from KFC was beneficial to both franchise as well as the
environment. Similarly, as an aid to the conservation of energy for betterment of the society,
since 2011, KFC have been saving their electricity consumption and they have reduced it by 15%
on a restaurant basis. This was possible by energy efficiency management at restaurants along
with innovation in fixtures and fittings. This can also be regarded as one of the many strategic
actions of KFC against the risk of excessive energy usage for energy efficient operation. In
addition to that, KFC Australia has participated to the Carbon Disclosure Project (CDP) since
2011. Moreover it is in its 7th year national greenhouse and energy reporting, and has been
providing information to the Australian Department of Environment Clean Energy Regulator on
its carbon emissions across more than 640 restaurants. This shows the strategic approach of
KFCs towards the transparency of their operations which is an attribute of good faith of a well-
established franchise towards the society (KFC Australia, 2018).
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Similarly, with an objective of reducing water consumption, KFC Australia has implemented a
range of water-saving measures which reduced the water consumption by over 35% from the
baseline set by LEED (Leadership in Energy and Environmental Design). Similarly, KFC
Australia is also the first among the Quick Service Restaurants (QSRs) to implement bottle and
can recycling in store. Moreover, in order to achieve the objective of sustainable buildings, East
Maitland store of KFC was certified the first Australian LEED QSR while the second one was
officially opened in February 2015 in Lidcombe, NSW. KFC Australia intends to certify each
and every store operated under the franchise in near future. Not only limiting their research and
other activities to themselves, KFC Australia is co-operating with its supply network in an
industry driving farm to fork study to determine and survey the ecological and social hotspots
over their production network. KFC Australia gathers an Industry Sustainability Working Group,
comprising of industry specialists to comprehend hybrids, openings and best practice activities
over our supply network (Khan, 2018).
According to the mind-sets of Weaver (2018), KFC require large production for food every day
in Australia they are serving approximately 2 million of customer in a week. Therefore, it can be
analysed that sometimes there would be high turnover than expected while sometimes very low.
When the food are in display to serve it will have its time limit to sold out if it cross that then
should be binned or replaced with new one. The record shows in UK almost 160 stores were
closed for almost 1 week and at that time KFC struggled to find the charities to donate their
thousands of tonnes of chicken surplus. KFC was trying to reduce the volume of chicken they
have to destroy and offer for free meal vouchers for people in need to access the meal via those
ways instead. In terms of social aspect, the first and foremost benefit towards the society from
KFC is that it provides fair employment opportunity to everyone and especially young
Australians. The intention is to provide the opportunity to such young Australians to develop
their career in the same field. Despite that, in reality most of the young students who enter in this
industry don’t feel it as a place to develop their career. However, KFC Australia’s day to day
activities provide such youngsters with real life practice such as high standards, time
management skills, face to face customer service and dealing. In addition to these, KFC is also
providing the employment opportunities to skilled personnel and managerial positions (Weaver,
2018).
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Anon (2018), similarly, as an act of giving back to the locality that they operate on, KFC try to
use local produce as far as possible. Roughly 85% of all their materials are sourced from inside
Australia. They are honoured to work with Australian farmers and suppliers over the spectrum of
their menu. This can also be regarded as the strategy of KFC in order to provide their consumers
with better, fresh and quality products (Aaker and McLoughlin, 2010).
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5. Conclusion
On the basis of the above report study, it is observed that Kentucky fried chicken (KFC) is one of
the largest fast food outlets of the world serving millions of consumers every day. With its reach
over hundreds of countries and serving through thousands of restaurants, KFC is a global
franchise that deals with fried chicken. Being a huge corporation in its own, KFC has many
aspects that affect the everyday operation of their business. With consumers, the food that they
provide and employees being the major concern of KFC, they are always focused on providing
the best services all over the world. Like all other businesses, KFC franchise also has some of
their own risks that might affect their business operation. Depending upon the nature and extent
of such risks, KFC has formulated and implemented their own sets of strategies in order to
overcome such risks. Similarly, with changing time and evolving needs, KFC has always been
willing to modify their strategies in order to fulfil their objective of consumer satisfaction and
employees welfare.
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