Kentucky Fried Chicken and the Global Fast-Food Industry

Essay by bagoUniversity, Bachelor'sA+, May 2006

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Kentucky Fried Chicken (later KFC) in the year 2000 was a company whose primary goal was to increase its expansion in all possible regions of the world as much as possible. This company has obtained such a big position in the fast-food industry that any further step in domestic or foreign market is connected to many different problems that are usually visible by smaller companies (cultural differences, stability of state economy, political situation, etc.)

From the year 1952 when KFC was established to 2000 the company has gone through five owners. These owners gave KFC several attributes and experience. The analysis of owner's positive and negative decisions throughout the history can help to create the future strategy for the next years. Mr. "Colonel" Sanders, the founder of KFC, has used two techniques which had a positive influence on the increase of the profit - franchising and product innovation. Second owners have used franchising as well but also added other features of today's KFC - foreign expansion and the entrance of stock exchange.

With the third owner (Heublein, Inc.) we can see negative effects of what can happen if a particular industry experience is missing. Due to the quality problems the expansion of KFC has decreased but this mistake was very soon recognized and eliminated. The third owner R.J.Reynolds Industries, Inc. have basically no effect on KFC evolution. The black era of KFC started in 1986 when the company was sold to PepsiCo, Inc.. Different corporate strategy and culture, personnel measures and changes caused that KFC's financial performances have decreased and in the beginning and in the middle 90's reached the bottom level (operating profit of 4 % instead of 12 or 17 %, J.Krug, 2001).

By the end of the 90's thanks to management decisions operating profit has again...