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Leadership Strategy Of KFC

Paper Type: Free Essay Subject: Marketing
Wordcount: 1560 words Published: 11th May 2017

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KFC was first introduced by Colonel Sanders. His first franchise was in year 1952. Under new management, the first sale was for $2 Million. In 1980, there were more profit and expansion of KFC was carried out. Within 50 years, the profit went up to $ 7 Billion. In 1952, Col. Sanders started franchising his recipe door to door financed by his $105.00. Col Sanders had more than 600 franchised outlets in the US and Canada by year 1964. He sold his interest in his company for $2 million to a group of investors. In 1966, KFC went public. KFC was listed on the NYSE in 1969. Current Market Cap value on the NYSE is 7.2 Billion. A competitive marketing strategy in the international market focused on the Latin American countries is the reason why KFC can maintain a market leadership in the global fast-food industry.

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Key to continued growth was to find, motivate, and retain hard-working and entrepreneurial managers and franchisees around the globe .In addition to short term profits, store managers were also responsible for building local public relations, maintaining employee morale, developing customer good-will, keeping tab on the competing chains and creating a legacy of special chicken cooking recipe. KFC had a refocused international strategy to grow its company and franchise restaurant base all over the world.

Their Competitive marketing strategy: was to developed three types of chicken, original recipe (pressure cooked) ,extra crispy (fried)and also tender roast (roasted) .Sweeping changes into the culture was initiated by the new management- this brings about demoralization to old KFC employees and even franchisees. Several restructurings led to layoffs throughout KFC, replacement of KFC managers with PepsiCo managers .Conflicts between KFC and PepsiCo cultures- this is manifested with PepsiCo’s stronger emphasis on performance rather than loyalty expressed by Col. Sanders to KFC employees over the years.

According to SWOT ANALYSIS, the weaknesses of KFC are as follows.KFC finds difficulty in entering the German market (culture incompatibility) .KFC sales stagnated. There was widespread discontent among the franchisees, some of whom felt the new owners did not understand the chicken business and were not providing leadership expected from a franchisor. Company stores floundered and become underperforming the franchised operations, further convincing franchisees that the company did not know its own business. (KFC HQ acquired them to company-owned) .Overseas expansion with the rapid economic growth and trend toward two-income families that had fuelled the growth of fast-food industry in the 1950s and 1960s were appearing in the late 1960s in the other country. [1] 

Primary objective is to take advantage of the potential growth in other countries, to establish a strong position and to develop their image. Key Success Factors are ever continuing cost savings through R&D, innovations and use of new technology to work efficiently. These success techniques will lower costs and increase profits in the industry. KFC uses an integrated low cost/differentiation leadership, since it can count on its brand name and original taste and recipes to be unique while at the same time compete on price using the benefits of cost savings from economies of scale.

Based on the analysis, we can conclude that they should start by solving their internal issues such as management and restaurant menu before thinking about expanding. They should work on the management issues to create a good atmosphere where employees are happy to work in. I certainly do not believe that by treating employees poorly, a company can be successful. They also need to make sure that their restaurants offer a diversified menu, provide their customers with quality food, excellent service and restaurant cleanliness. KFC should always listen to their customers and try to follow the new trends on the market in order to fully satisfy their customers. Otherwise, competitors will satisfy them and will eventually outperform you as Boston did with its grilled chicken.

Even though, KFC seems to have an emotional attachment to their original recipe that made their success, they definitely need to move on and develop new products that customers want in order to increase their financial performance and value. We have seen that Boston and Popeye’s are stealing customers away from KFC because they understood what customers wanted and started offering healthier items. KFC should certainly do the same and enhance their menu. [2] 

On the other hand, it is time to talk about another local business success story and how can we talk about successful organizations without talking about Al-Baik.

It is next to impossible that you are living in Jeddah or ever visited it without being to Al-Baik. The local fast food chain has been around since 1974. After 35 years by now, the restaurant is mainly operating in Jeddah with minimum number of branches in Makkah, Madinah, Yanbu and Taif. Arguably, Al-Baik possesses the highest market share and customer loyalty amongst its competitors especially in Jeddah; noting that when I say competitors, I mean international multibillion brands like McDonald’s, KFC, Pizza Hut etc.

For those of you familiar with the debate surrounding Porter’s Generic strategies, Al-Baik is a living proof that you could follow a strategy that combines both differentiation and cost leadership. Although there are a lot of restaurants serving fried chicken, the quality and taste of Al-Baik are certainly unique and its prices are way below the average.

Al-Baik has very strong brand equity whether we are measuring it by evaluating the restaurants’ products or by studying its brand impact on customers. Al-Baik brand communicates strong messages of quality, fast service, trust, affordability, convenience, and social responsibility. Its management has been very smart emphasizing these values into the brand using different methods of advertisements, public relations, or even by spreading stories about the brand. The entrepreneurial story of its founder and how he struggled to raise his community awareness about eating outside the home which was strange back then and how he has been working alone in the restaurant preparing the food, serving it, and then cleaning the small shop are all meant to build some kind of connection with its customers. Also, some suspense and mystery would not hurt either; the secret chicken formula that is only known by few individuals is one of the most preferred stories amongst such food and beverages organizations.

Whether we are talking about fast service, servicescape design, or cleanness of the restaurants environment; Al-Baik is providing exemplary services in all of that. Even more, Al-Baik is one of the few restaurants that introduced items to the menu based solely on customers’ suggestions.

Al-Baik marketers are masters in choosing locations for their restaurants. One has never seen a branch of Al-Baik without it being packed with customers. The huge expansions they carried out in Jeddah have been built on population distribution analysis. That is why wherever you live in Jeddah now; there must be Al-Baik branch within your easy reach.

Al-Baik has always been known for its socially related campaigns. They have a regular presence in Hajj seasons providing free meals to pilgrims and they are periodically campaigning for environmentally related causes like banning smoking in their restaurants or preserving the city clean image. Furthermore, their active participation in the aftermath of Jeddah floods by providing free meals to those devastated by the catastrophe is one shiny example of how organizations could be interacting with its society.

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Nevertheless, staying on the top is not an easy job. Al-Baik management has to deal with many issues to facilitate its growth. One of these important issues is on the mind of every fan who happen to live outside Jeddah; how much should they expand? Should they consider opening new branches in other cities at the Kingdom? What about being multinational or even global?

Moreover, how Al-Baik should respond to the growing concerns raised by healthy and organic foods advocates. And most importantly, how its managers are going to maintain its competitive advantages and how are they going to nurture its sustainability strategy. [3] 

As conclusion, the best selling food in my view is KFC. People nowadays has less time to eat since they are busy working. Therefore, they would choose fast food restaurants as their choice. Thus, the managers of these restaurants need o ensure on cost leadership and make sure they can get the best way to keep the price reduced. This is a marketing strategy in a way to attract customers. More customers make the business more powerful and expand fast.

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