The paper "Corporate Strategies of PepsiCo and Functional Strategies of KFC Business Operations" is a wonderful example of a case study on management. Fueled by increased free trade, regional economic integrations, and overall trends of globalization, the business environment is intensely competitive today. Therefore companies need to be tuned to the environmental developments as well as the competitiveness of the industry within which they operate. This paper provides an analysis of the US Fast Food industry and the current corporate, functional, and operational level strategies of KFC. The paper will also provide recommendations aiming to improve the growth and profitability of KFC in the face of dynamic US and international market conditions. 1.1External Analysis - Porter's Five Force Analysis.
For organizations such as KFC, which operates in a global environment, the industry conditions become diverse from market to market. However, the USA provides the largest fast-food restaurant market with Americans spending over 55% of their food dollars in restaurants and being well disposed towards quick service fast food concept. Therefore the analysis focuses on the US fast food industry. In Porter’ s view, the intensity of each force will indicate how restrictive or less attractive the industry is in terms of industry players being able to maintain high prices and thereby earning greater profits. 1.2Threat of New Entrants The entry barriers can be in the form of legislature requiring licensing or in the form of natural monopolies or oligopolies.
Entry to industries can be also in the form of heavy capital intensity naturally restricting new entrants. The existing barriers are more natural ones such as the high capital intensity of setting up a chain of outlets with outlet setting up costs are as high as US$ 1.7 million per unit.
The market is structured similarly to an oligopoly where top-ten restaurant chains now control more than 55 percent of all fast-food sales. Competing against well-established industry giants such as Mc Donald, KFC, Taco Bells, and Pizza Hut. However there is no legislature, which restricts entry into the industry, license requirements are not too restrictive. Thus new entrants, especially from foreign markets that possess fast food service experience and presence outside the USA may enter the market with sufficient financial strength.
Therefore this competitive force is moderate for the industry.
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