RCM301: Risk and Crisis Management: KFC Business Risk Report

This report provides a comprehensive analysis of risk and crisis management within Kentucky Fried Chicken (KFC). It begins with an introduction to KFC's operations and identifies key internal and external stakeholders. A SWOT analysis highlights the company's strengths, weaknesses, opportunities, and threats. The report categorizes risks into internal (human, technological, physical) and external (economic, natural, political) factors, offering a detailed examination of each. The report concludes with a risk summary table, encapsulating the various challenges faced by KFC in its business environment. Desklib provides students access to similar solved assignments and reports.

Running head: CRISIS AND RISK MANAGEMENT
Crisis and Risk Management
Name of the Student:
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Author’s Note:

1CRISIS AND RISK MANAGEMENT
Executive Summary
The report discusses the concept of risk management in the particular context of the business
risks faced by the company Kentucky Fried Chicken (KFC). The report begins by introducing
the company KFC and its business operations. The report next discusses about the
stakeholders, namely, the internal and the external stakeholders, who are associated with the
business activities of the company under discussion here. An environmental analysis of the
company which highlights the strengths, weaknesses, opportunities and also the threats faced
by the company currently has also been undertaken. The report then categories the various
risks faced by the company into two sections, namely, internal risks and the external risk. The
internal risks had been discussed in the context of the human, technological and the physical
risks faced by the company. The external risks, on the other hand, had been discussed in the
context of the economic, natural and political factors. Finally the report concludes with a
summary table of the different kinds of risks faced by the company.

2CRISIS AND RISK MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
Kentucky Fried Chicken (KFC).................................................................................................3
Stakeholders of KFC..................................................................................................................4
SWOT Analysis.........................................................................................................................6
Risks faced by KFC...................................................................................................................7
Internal Risks.........................................................................................................................7
External Risks........................................................................................................................8
Risk Summary Table..............................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

3CRISIS AND RISK MANAGEMENT
Introduction
Risk is defined as the situation or the scenario in which an individual or an
organization stands to gain or lose something substantial or of value (Franks et al., 2014). In
the particular context of the business world this loss or gain is generally in terms of
profitability, market share, revenue, projects, image or brand name and others (Grace et al.,
2015). The business enterprises during the course of their business operations often find
themselves in these situations of risks and the prospects of a business enterprise depends to a
great extent on the effectiveness as well as efficiency with which it being able to mitigate the
risk (Farrell & Gallagher, 2015). In this regard, the process of identification of risk or
business environment scanning becomes very important since they provide an overview to
the organization regarding the kinds of risks that it is facing currently (Bromiley et al., 2015).
An effective knowledge regarding the risks and the stakeholders who are affected by
these risks is important since it helps the organizations to formulation the strategies or the
measures that can help it to mitigate the adverse effects of these risks. Wu, Chen and Olson
(2014) have opined that the various risks are actually future opportunities which if utilized in
an effective manner can contribute in a substantial manner towards the growth of the
concerned organization. This report will discuss about the concept of risk management and its
affect on the stakeholders (internal and the external) in the particular context of the
organization Kentucky Fried Chicken (KFC).
Kentucky Fried Chicken (KFC)
Kentucky Fried Chicken (KFC), founded by Harland Sanders in 1952, is an
“American fast food restaurant chain” and has its headquarters at Kentucky (KFC.com,
2018). The food chain specializes in the genre of fried chickens and as a matter of fact the

4CRISIS AND RISK MANAGEMENT
entire brand or the market image of the company has been established on the basis of the
these fried chickens that the company offers to the customers (Owens, 2018). The company
initially began its business operations in Kentucky however after gaining success in this city
the food chain expanded into the other cities of the nation (Davis et al., 2018). Furthermore,
the food chain is currently operational in more than 100 different nations of the world and in
addition to the standard fried chickens which had made the company it offers other kinds of
food items to the customers as well depending on the kind of city or nation it is operational in
(Talwar, 2018). For example, some of the most popular food items offered by the company to
its customers are “chicken fillet sandwiches and wraps, as well as salads and side dishes, such
as French fries and coleslaw, desserts, and soft drinks” (KFC.com, 2018).
The company in order to expand the prospects of its business in the recent times has
undertaken collaborations with companies like PepsiCo, Pizza Hut, Taco Bell and others
(KFC.com, 2018). In addition to these, the company under discussion here also takes the help
of effective promotional as well as marketing strategies for the promotion of the food items
offered by them to the customers (Chan, 2015). The various promotional slogans used by the
company over the years like “’It's Finger Lickin' Good!”, “Nobody does chicken like KFC”,
“So good” and others have contributed in a significant manner towards the success gained by
the company (Zabeen, Wei & Lu, 2016). For example, the company is the 2nd largest private
food chain of the world just behind McDonald’s with annual revenue of US$26 billion
(KFC.com, 2018). Furthermore, the food chain has more than 20,000 outlets in different
nations of the world (KFC.com, 2018).
Stakeholders of KFC
Jones, Wicks and Freeman (2017) have stated that the stakeholders are the entities
who not only take an active interest in the business activities of a particular organization but

5CRISIS AND RISK MANAGEMENT
at the same time are affected by the strategies or the business decisions of the concerned
organization as well. In the majority of the cases, it is seen that there are two kinds of
stakeholders who are associated with a particular organization, namely, the internal
stakeholders and the external stakeholders. As per Tantalo and Priem (2016), the internal
stakeholders refer to the individuals who are already associated with the business enterprise
in the capacity of board members, staff, donors, volunteers and others. The decisions or the
strategies that an organization decides to pursue had a direct impact on the internal
stakeholders of the company and thus it is important for an organization to formulate the
different strategies that they are going to use in discussion with the internal stakeholders of
their business. The external stakeholders, on the other hand, are individuals, communities,
constituents and others which are impacted by the business activities of an organization
(Tantalo & Priem, 2016). Jones, Wicks and Freeman (2017) are of the viewpoint that both of
these stakeholders are important for a particular business enterprise and thus they need to take
into effective consideration the perspective and also the needs of both of them for making
decisions.
An analysis of the internal and the external stakeholders of the company KFC is likely
to reveal important information regarding the business operations of the organization. The
internal stakeholders of the KFC are the various members of board of the organization, the
regional managers, the waiters, cooks, ground staff, cleaning staffs and the other individuals
who are associated with the business of the concerned organization (Talwar, 2018). On the
other hand, the external stakeholders of the concerned organization are the customers who opt
for the food items offered by the company, the constituents in which they are operational and
others (Owens, 2018). These in short are the main internal and the external stakeholders of
the company KFC.

6CRISIS AND RISK MANAGEMENT
SWOT Analysis
A SWOT analysis of the company would reveal the following details-
Strength  The company has been operational in the food industry for more than
six decades and enjoys a positive brand or market image (KFC.com,
2018).
 The fried chickens offered by the company had become a brand in
itself and has been much appreciated by the customers over the years
(Owens, 2018).
 The company offers a wide range of food items to the customers
including sandwiches, salads, soft drinks and others (KFC.com, 2018).
 The recent collaborations that the company has undertaken with Pizza
Hut, Taco Bell, PepsiCo and others have enhanced the prospects of
the company’s business (Owens, 2018).
Weakness  The overdependence of the company on its fried chickens for the
process of their business in all the nations has not hampered the
prospects of the company in some nations (Davis et al., 2018).
 The high employee turnover which the company has been facing for
quiet sometime now is adversely affecting the prospects of the
company (Talwar, 2018).
 Some of the suppliers used by the company had not only delivered as
per the requirements of the company and this had affected the
business of the company in an adverse manner (Davis et al., 2018).
Opportunity  Effective focus on the age bracket of 18-24 is likely to increase the
sale of the food items offered by the company in a significant manner.
 Use of e-commerce and other kinds of mobile apps within the

7CRISIS AND RISK MANAGEMENT
framework of their business would help the company in a substantial
manner (Talwar, 2018).
 Focus on corporate social responsibilities events and policies would
enhance the brand image of the company and thereby the sale of the
food items offered by them (Chan, 2015).
Threat  High level of competition from competitors like McDonald’s, Subway
and others (Davis et al., 2018).
 The growing consciousness of the people regarding their health and
also the kind of foods that they consume is adversely affecting the sale
of the food items offered by KFC since the majority of the items
offered by the company belong to the category of junk food (Owens,
2018).
Risks faced by KFC
The different kinds of risks that the company KFC faces currently on the score of its
business operations can be broadly categorized into two categories, namely, the internal risks
and the external risks.
Internal Risks
Grace et al. (2015) are of the viewpoint that the internal risks are the ones which an
organization faces on the basis of its internal affairs like the management of the business,
internal stakeholders and others. However, at the same time, it needs to be said that these
internal risks are as catastrophic as the external ones and thus the organizations need to adopt
adequate mitigation measures or strategies for the resolution of the same (Franks et al., 2014).
The internal risk that the company KFC is facing currently because of the human factor is the
high employee turnover rate (Chan, 2015). This has been one of the major issues of worry for

8CRISIS AND RISK MANAGEMENT
the company and it is seen that every year thousands of employees switch over the other
companies complaining about the uncongenial working environment of the company. The
internal risk that the company KFC is facing currently because of the technological factor is
the inability of the company to take the help of the emerging technologies within the fold of
their business operations (Zabeen, Wei & Lu, 2016). The competitors of the company by
virtue of taking the help of these emerging technologies pose a substantial amount of threat to
the company. Another physical factor because of which the company faces a substantial
amount of risk is the fact that the physical locations of most of the outlets of the company are
a bit far away from the heart of the city and this adversely affects the business of the
company (Zabeen, Wei & Lu, 2016). A look at the competitor of the company McDonald’s
reveals that most of their outlets are located in the heart of the cities and this as a matter of
fact has contributed towards the success gained by them (Zabeen, Wei & Lu, 2016).
External Risks
As per the opinion of Soltanizadeh et al. (2016) the external risks are the kind of risks
that an organization faces on the basis of the external business environment in which it is
operational. The majority of the nations of the world are still reeling from the adverse effects
of the economic recession that it faced a while and this had affected the buying behavior of
the customers in a substantial manner (Cole, Giné & Vickery, 2017). The company KFC
faces a significant amount of economic risk on the basis of this particular fact. The people of
the contemporary times have become much conscious regarding their health and also the kind
of food products that they offer to the customers (Cole, Giné & Vickery, 2017). In this
regard, it needs to be said that the majority of the food items offered by the company belongs
to the category of junk foods (Owens, 2018). Thus, the company faces a substantial amount
of natural risk on the basis of this factor. KFC is currently operational in more than 100
different nations and it is seen that the company does not gets the same kind of congenial

9CRISIS AND RISK MANAGEMENT
political conditions in all these nations. A stable congenial political environment is one of the
most basic requirements of the business enterprises and thus the organization faces a
significant amount of risk because of the uncongenial political condition of some of the
nations in which it is operational (Davis et al., 2018).
Risk Summary Table
Risk
Categor
y
Risk Type Stakeholders
Affected
Likeliho
od
Rating
Consequ
ence
Rating
Risk Control Method
Internal Human
Factors
Internal
stakeholders
D D Improvement of the
human capital
management strategies
followed by the
organization.
Internal Technologi
cal Factors
Internal and
External
stakeholders
B B Integration of recent
technologies within the
framework of organization
so as to improve the
business processes and
also the quality of services
offered to the customers.
Internal Physical
Factors
Internal and
External
stakeholders
C C Establishment of outlets
which are at suitable
business locations.
External Economic
Factors
External
stakeholders
D D Provided discounted offers
to the customers to attract

10CRISIS AND RISK MANAGEMENT
them towards the food
items sold by the
company.
External Natural
Factors
External
stakeholders
E E Changing the menu
offered by the company
and making it healthy.
External Political
Factors
Internal and
External
stakeholders
E E Forming effective business
relationships with the
national governments
Conclusion
To conclude, the business enterprises on the score of their business operations face
various kinds of risks which can affect the prospects of their business in an adverse manner.
These risks can be categorized as internal and external risks and have the potential to hamper
the long-term as well as the short-term goals of an organization in an adverse manner. Thus,
it becomes important for the organizations to take the help of diverse kinds of mitigation
strategies so as to mitigate the effects of these risks. The mitigation of these risks is not only
important from the perspective of the business prospects of an organization but also from the
perspective of the stakeholders as well. Thus, it can be said that the success or the failure of
an organization depends to a large extent on the ability of the organization to mitigate the
different risks that it faces.

11CRISIS AND RISK MANAGEMENT
References
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management: Review, critique, and research directions. Long range planning, 48(4),
265-276. Retrieved from
https://www.sciencedirect.com/science/article/abs/pii/S0024630114000582
Chan, T. S. (2015). Franchising of Us Fast Food Chains in Hong Kong: Entry and Expansion
Strategies. In Proceedings of the 1989 Academy of Marketing Science (AMS) Annual
Conference (pp. 163-167). Springer, Cham. Retrieved from
https://link.springer.com/chapter/10.1007/978-3-319-17055-8_33
Cole, S., Giné, X., & Vickery, J. (2017). How does risk management influence production
decisions? Evidence from a field experiment. The Review of Financial Studies, 30(6),
1935-1970. Retrieved from https://doi.org/10.1093/rfs/hhw080
Davis, B., Lockwood, A., Alcott, P., & Pantelidis, I. S. (2018). Food and beverage
management. Routledge. Retrieved from
https://www.taylorfrancis.com/books/9781317193876
Farrell, M., & Gallagher, R. (2015). The valuation implications of enterprise risk
management maturity. Journal of Risk and Insurance, 82(3), 625-657. Retrieved from
https://onlinelibrary.wiley.com/doi/abs/10.1111/jori.12035
Franks, D. M., Davis, R., Bebbington, A. J., Ali, S. H., Kemp, D., & Scurrah, M. (2014).
Conflict translates environmental and social risk into business costs. Proceedings of
the National Academy of Sciences, 201405135. Retrieved from
https://doi.org/10.1073/pnas.1405135111