BCG Matrix of KFC The need for strategy, in order to expand its existing product in very promising markets for KFC is very essential. KFC, along with McDonalds, and other major fast food chains have dominated the American continent as well as else where. Since the1950’s when the founder of KFC had a dream, of building an empire in the fast foodmarket, the company has undergone lots of changes. The company has changedownership; it has taken over from Pepsi and passed over to Tricon, which owns Pizza hut,Taco bell and others. Nowadays, KFC, still dominates the chicken fast food industry while has stores inmore than 100 countries operating vast profits. (De Witt 'et al.2004a) Although, due toincreased …show more content…
The business strength measure is the business;sRelative Market share. The environmental measure is the Market Growth Rate.BCG Matrix: The market growth rate measures industry attractiveness. Becausefor the case of YUM Brand, all SBUs ( KFC, Taco Bell, Pizza Hut, Long John Silver’s, A&W) are located in the same fast- food industry, the referent standard is the industrygrowth rate measured against the SBUs’ growth rate. The underlying theory for examining market growth rate is the industry life cycle. The BCG assumes that growthrates ( life cycle stages) affect a firm’s finances. results in 4 categories in a portfolio of a company:1.Stars (=high growth, high market share) • Use large amounts of cash and are leaders in the business so they shouldalso generate large amounts of cash. • Frequently roughly in balance on net cash flow. However if needed anyattempt should be made to hold share, because the rewards will be a cashcow if market share is kept. So, KFC Malaysia is under Star position.2.Cash Cows (=low growth, high market share) • Profits and cash generation should be high, and because of the low growth,investments needed should be low. Keep profits high.3.Dogs (=low growth, low market share) • Avoid and minimize the number of dogs in a company. • Beware of expensive ‘turn around plans’.4.Question Marks (= high growth, low market share • Have the worst cash characteristics of all, because high demands and lowreturns due to
(iii) Decreasing financial rate. The financial rate is less and less year after year. It is a problem for the company. (iv)Too many fields Dobbies refers to. There are many fields Dobbies has its business on. Dobbies' main activity is horticulture, but it also stretch to foods, restaurant, ect. It will bring the company more risks.
It is used to measure the position of a firm in relation to its relative market share as well as its market growth. Based on this the situation where in all of the given four divisions of the firm are at different levels of performance can be evaluated in order to formulate a 5 year strategy plan. This can help in the creation of a portfolio
2. What do the results say about how firms in this industry can deliver strong financial returns in different ways?
Constantly growing firm with increasing revenue (15.5% in 2005), net profit, total assets and high returns on equity (5.1% in 2005)
REFERENCES•www.mcdonalds.com, accessed on 18 July, 2008•www.mcdonldsindia.net, accessed on 18 July, 2008•en.wikipedia.org/wiki/McDonald's, accessed on 19 July, 2008•http://www.associatedcontent.com/article/263943/mcdonalds_strategic_marketing_mix.html?cat=4, accessed on 19 July, 2008•www.kfc.com, accessed on 25 August, 2008
The BCG matrix portrays the perspective of the product portfolio, which is the growth-share matrix. This framework of tool categorizes products within a company's portfolio or within the business units as stars, cash cows, dogs, or question marks according to growth rate, market share, and positively or negative cash flow. By using positive cash flows a company can capitalize on growth opportunities. From this analysis, it can be seen that the products that is growing
The Nine –Cell industry attractiveness/business strength matrix graph will have the industry attractiveness on the vertical axis while the competitive strength is depicted on the horizontal axis; to the far left corner will be a large bubble representing U.S. grocery and the U.S. snacks, indicating that the U.S. Grocery and the U.S. snacks have both favorable industry attractiveness and competitive strength and thus warrants priority attention. In addition, the U.S. beverage, U.S. cheese and the U.S. convenient meals seem to huddle in the 3 diagonal cells stretching from the lower left to upper, indicating they merit intermediate attention by the Kraft incorporated. However, these segments of the company can be profitable if the company
One tool that can help an organization to understand its competitive positioning is the BCG Matrix. This matrix is based on the product life cycle theory and is typically used to help organizations make decisions about what products or services should be given priority over scarce resources (VBM, 2012). In analyzing Jackson's portfolio it is important to bear in mind that not all services are going to be in any one category. With a hospital this large and diversified, there will be things in which it is especially strong and things in which it is especially
In introduction stage KFC-J entered the market using market-skimming strategy as indicated in the U.S standard manual. Their products were high price and targeted only upper class. Gradually in 1972 after heavy losses in Osaka and start-up challenges, as a market strategy, Weston and his team adjusted prices to compete with typical Japanese take-out products. They also adjusted their prices to suit the middle class in order to penetrate the market.
KFC Does two types of planning, Strategic Planning and Operational Planning. Strategic Planning is done to increase its market worth value of the market share and Operational Planning includes launching of new product to change or innovate its product line for the customers. Planning objectives of KFC are to expand the organization on all over the UAE, to create and build superior quality for the customers, to follow marketing mix strategies and to generate superior financial return for KFC and KFC’s employees. Menu planning is done by researching. Supply chain management planning includes the full process related to the supply of raw materials which include chicken, spices and packing material and to increase operation, the objectives of supply chain management planning is to increase the level of outsourcing, increase globalization, increase the supply, increase the competitive pressure and increase the customers.The KFC mission statement is to “sell food in a fast, friendly environment that appeals to pride conscious, health minded consumers”.
Kentucky Fried Chicken (KFC) is a popular fast food chicken restaurant chain around the world. (Bell, Shelman, 2011) It is one of the subsidiary of Yum Brand. This company also operates the Pizza Hut and Taco Bell. (Yum! Brands, Inc, 2016) KFC was founded by Harland Sanders in 1952. (Bell, Shelman, 2011) Sanders was successful in creating the brand, even the logo of KFC brand is the portrait of him. He became a notable figure in American history thanks to his great contribution on creating KFC brand. Nowadays, KFC becomes more and more popular, the sales ranking of KFC was the 11th among the worldwide restaurant brands. (The QSR 50, 2015) The sales of KFC in 2014 was 4200 million dollars. (Details in Appendix 1) It means KFC has a large quantities of consumption needs. Actually, KFC has 14,577 restaurants around the world and 70% of them are located outside America (Yum Brand Annual Report, 2015). The restaurant profit was increased year by year from 2013 to 2015. (Details in Appendix 2) Therefore, it is potential to enlarge the customer base by analyzing consumer behaviors.
Providing customers with the best of both worlds: west meets east. In addition to its radical strategic approach of localization with regard to its food, they extended that viewpoint when selecting their management team. By hiring Chinese executives, Yum! Brands is able to build relationships with the local suppliers more easily and quickly. It definitely helps with their competitive advantage that chicken is a staple meat in China. Given these factors, it is clear that KFC has a competitive advantage in this market. However, taking a closer look at the industry and thinking longer-term, the competitiveness is undesirable but there is still potential to improve profitability. See the analysis
The overall goal of this ranking was to help corporate analysts decide which of their business units to fund, and how much; and which units to sell. Managers were supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated by the cash cows to fund the stars and, possibly, the question marks. As the
Key External Factors Opportunities Overall Market Size Increasing Annual Market Growth Rate Low Technological Requirement Threats High Competitive Intensity High Inflationary Vulnerability High Customer Demand Environment Impact Social impact TOTAL 0.30 0.15 0.20 0.05 0.05 1.00 3 2 3 3 2 0.9 0.3 0.6 0.15 0.10 2.80 0.05 0.10 0.10 3 3 3 0.15 0.30 0.30 Weight Rating Weighted Score