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PROJECT OF PRINCIPLES OF MANAGEMENT

2010

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KFC

ACKNOWLEDEMENT

We would like to thank our course instructor Mr. ASIM GILL for guiding and

encouraging us in every step of making of this project. Has his

encouragement been not there we would never have been able to complete

this project? We would also like to thank the management of KFC

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KFC

DEDICATION

Dedication is a devotion to whom we love, who

Are our benefactors, who pray for us and who made

Us capable of doing all these under this head, there

Are two personalities, which are our PARENTS, our

TEACHERS. So we have devoted our report to our

beloved parents and beloved teachers.

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KFC

KFC PAKISTAN:

Presently KFC is branched out in nine major cities of Pakistan (Karachi, Lahore, Rawalpindi,

Faisalabad, Multan, Peshawar, Sialkot, Hyderabad, and Islamabad) with 45 outlets nation-

wide. Opening the first KFC outlet in Gulshan-e-Iqbal, Karachi in 1997, and KFC wore the title

of being the market leader in its industry. Serving delicious and hygienic food in a relaxing

environment made KFC everyone’s favorite. Since then, KFC has been constantly introducing

new products and opening new restaurants for its customers.

In Pakistan totally Chicken buy from Pakistani Poultry Forms, and also this Chicken is 100% Halal

CUPOLA:

Cupola is a Dubai based multinational company involved in several business

including, oil gas exploration, plastic cards, retail markets and food franchising.

CUPOLA PAKISTAN:

Cupola holds the master franchise rights to operate KFC in Pakistan since 1999.

That was a major difference that when Cupola takes complete Operate in Pakistan

that was only 05 Outlets in allover Pakistan, and then now the major difference that

Cupola takes 60 Outlets in Pakistan.

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KFC

KFC WELFARE:

Apart from fulfilling the commitment of serving delicious, fresh and hygienic food and at the

same time providing the customers with the ultimate entertainment; KFC also plays part in

the economic development of our country.

Presently KFC has provided employment to over 1200 Pakistanis, which adds up to

6000 individuals directly dependent on KFC Pakistan.

The Government of Pakistan receives over Rs.10 to 11 million per month from KFC

Pakistan as direct taxes.

95% of all food and packaging material used in KFC Pakistan is procured locally,

which sums up to a purchase of over Rs.35 million per month.

Each new outlet developed by KFC Pakistan costs approximately Rs.40 million, which

is a huge amount for our construction industry.

Introduction the new product:

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KFC

EXTRA CRISPY: DETAIL this is for anyone who believes that the crunchier and crispier their chicken is, the better. KFC's Extra Crispy chicken is freshly prepared with a flaky breading and then fried to a crispy golden brown. You'll even hear the crunch as you bite through the crusty coating and get to the mouthwatering, tender

EXTERNAL ENVIRONMENT ANALYSIS:

PEST ANALYSIS:

Political Factors:

Following are the factor involve in the political factors of the KFC:-

1. Government Policies:

Although KFC is a foreign company, but they have to obey the policies of the

Government where he run its business activities. KFC has handled this situation very

tactfully and obey the policies of the Government as prescribe by the government in

order to run this kind of business.

2. Price Policies:

Price policies are also an important factor. KFC maintain & design its price policies

keeping in view the income & income distribution of the people living in the country.

That’s why all the classes are the target market of KFC.

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KFC

3. Political Stability:

Political stability is very important if KFC want to become the leader in fast food business

in Pakistan. So this is also an important political factor.

Economical Factors:

Following factors are included in the economical factors of the KFC:-

1. Income:

Income is an important economical factor of the KFC. This factor decides which class KFC

is going to target. In the early time of KFC they focus on the upper class but they

introduce some meal through which we can say that they target the middle & the upper

level as well.

2. Consumption Behavior:

KFC also estimated the consumption behavior of the people, their liking and disliking and

make decision accordingly.

3. Payment Methods:

Payment method is an important factor in the economical factor of the KFC. They check

the behavior of the regarding the payment methods of the people. They check whether

the gives money in the form of cash or plastic money.

Social/Cultural Factors:

Social/Cultural Factors includes the following things:-

1. Social Class:

As we discuss earlier that KFC target all the class including the upper class, upper middle

and lower middle class etc.

2. Culture:

Though the culture of KFC from where they come is different but they adopt the Pakistani

culture also.

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KFC

3. Religion:

KFC not only adopt the Pakistani culture but also the Religion as well. They offer Halal

foods to the customers, which is the symbol that they adopted the Muslim religion.

4. Age:

Generally there is no age limit which is focus by the KFC. They target & focus on each

and every age of the society. But for somehow in our opinion they target heavily on the

youngsters as compared to the middle & old age.

5. Gender:

In this case they generally focus on the both Males & Females of the society & similarly

target them.

6. Household Size:

Household size plays a vital role in the demographical factor of KFC. Generally they

target the whole family not a single family member. That’s why KFC introduced many

family packages meals.

7. Population:

Population also plays a vital role in the demographical factor of KFC. In the light of this

population they can make their strategy.

Technological Factors:

Following are the factors included in the technological factor of the KFC:-

Pace of Change:

Pace of change means rate of change. KFC has strategy to introduce new technology whenever they think that it is a time to introduce new technology.

INDUSTRY ANALYSIS:

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KFC

Five Forces Portal Model:

The above figure gives brief knowledge about the five forces portal model effecting the

organization or how the KFC is tackling these factors.

1. Threats of New Entrants:

KFC is overconfident for its own products as being specialized for chicken products as

far as our information is KFC is not doing much to apply some sort of barriers to entry

but its current good will and chicken products are really hard to imitate and compete

with it. So Currently KFC has no new threats of new entrant.

2. Bargain Power of Supplier:

KFC has agreement with supplier in Pakistan that is with KNN’s. As Being the only

supplier for KFC KNN’s does bargain much with the KFC neither they have any issue

related with bargaining if little bargaining is done KFC’s profit margin allows them the

stable price even if bargaining is done.

3. Bargain Power of Customer:

Bargain power of customer is maximum discount of 20% that is only on the references

by managers or grants by managers for their customers still we would say this 20% even

doesn’t bother KFC much because of its profit margins.

4. Threats of Substitute Products:

These threats are really there in the fast food market and few little restaurant chains

have already tried to imitate their products and tried to create substitute till now such

like AFC but now yet successful in doing that. Threats for KFC is Substitute by big chains

of world as Hardees has recently launched in Pakistan and this can create substitute

products of KFC and KFC is not prepared for that.

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KFC

5. Rivalry among competitors:

KFC has some sort of rivalry with Mc Donald’s as where eve KFC has and outlet at any

hot spot McDonald’s starts its operations there KFC has no direct Share

loss or Customer loss with that as both the companies earning on their own unique

product range taste and their customers may vary according to the taste preferences.

But they do try to attain by giving different deals at different occasions times.

This Analysis has made us conclude that KFC is not well prepared for a strong competitor

though currently bargain power of customers, suppliers doesn’t bother KFC much. Rivalry

among competitor of KFC is not affecting it any way this we can say is the Opportunity for

KFC as before its rivals or new entrants comes and threatens, it’s the time KFC may apply

strategic Leadership for this purpose and to fully understand and work in accordance with

the opportunity.

SWOT ANALYSIS:

STRENGTHS:

Oldest and finest in Business

Loyal customers

Faces numerous advantages of being a Multinational Organization e.g. economies of

scale, government incentives etc and its good will in entire world.

KFC holds strong CSR and provide customers with Quality Products.

KFC holds total quality management assuring complete product safety and great

response to customers.

KFC has Competitive advantage in fast food industry because of its quality and

variety of products of chicken.

Employees are its strength who stands strong with its organization.

Product is their strength customers come here for our product ignoring the

environment.

Hospitality standards are our strength, standards are very high they don’t bear

ignorance regarding product.

They don’t do much advertisement as awareness is there & they don’t find a need for

advertisement.

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KFC

WEAKNESS:

Presence of Multinational competitors in the market e.g. McDonalds (specialized not

in chicken serving but in burgers).

It has compressed hierarchy causing employees to stress and restlessness caused by

no proper work division and less people working more.

It takes more work from same people if worker is not trained for that job.

Over confidence on own product (not prepared for competition).

OPPORTUNITIES:

Cheap and easy availability of labor.

Increase consumption of fast food has increased the market size.

Consumer prefers “All under one roof” in order to increase their sales turnover they

can increase or add the served items.

People can easily lend KFC land to operate franchises because of their goodwill and

good market value.

Loyal customers are its opportunity because of them no virus marketing affected KFC

yet.

THREATS:

Entrance of New competitors into the market.

High political instability/uncertainty.

Animal diseases like bird flu are a major threat.

Compressed hierarchy can collapse the whole system of the management efficiency.

PLANNING PROCESS:

STRATEGIC PLAN & OPERATIONAL PLAN:

KFC has strategic planning to increase its market worth value of the market and its market

share. They work on a well defined strategic planning for this. They are working efficiently

on operational plans for example they only open up the branch were they can easily earn up

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KFC

to more than desired or planned revenue even like KFC has open up its wheels for less cost

and market penetrating in areas like Thokar Niaz Baig and Bahria Town this is part of their

operational plans once they will think they have made the spot then they would open up its

new branch. Operational plans also include launching of a new product to change or

innovate its product line for the customers.

POLICIES:

KFC policies are excellence for their standards which are shortly termed as CHAMPS i.e.

C: Cleanliness

H: Hospitality

A: Accuracy

M: Maintenance

P: Product

S: Speed of Serve

KFC policies regulates around these standards, hospitality is also with the employees

regarding their issues and privacy.

PROCEDURES/RULES:

Procedures are well described in CHAMPS standard library whose access is only given to the

employees.

There procedures/ rules include safety for its products as well as their employees by

providing with sanitizers keeping kitchen environment clean and hygienic.

PLANNING TOOLS& TECHNIQUES:

KFC managers are mostly indulged in planning technique of forecasting on quantitative

grounds that’s the responsibility of Regional managers to plan with contingency thinking and

most of times regional managers do nothing except firing employees of their jobs to retain

profits and revenue which was generated or to deal with economic issues.

CONTROLLING:

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KFC

TYPES OF CONTROLLING:

All types of controlling we have studied are done by the KFC and all these types of

controlling are as follows:

Feed Forward Control:

Feed forward controlling is done by the territory managers along with UBM’s (Branch

Manager).

They do store monitoring or visits to KNN’s factory to check its supplies and controlling is

done far before the product is to be made. With these visits they assure the quality and

health of chickens for the hygienic products.

Feed Back Control:

Feedback controlling is done by the supervisor of the branch or the assistant manager

through comment cards and also done through call centers and survey that what we were

told but we didn’t experience while visiting KFC and no calls were made according to our

Concurrent Control:

Concurrent controlling is done by the Unit Business Manager and this controlling is done for

the assurance of food quality by being in Kitchen monitoring workers with number of visits

during a day also for reducing variances and wastages.

External Control:

Yum brand representatives visit restaurants and its franchise owner Cupola offices for

standards and quality check up. And once they find any flaw in the standards or quality they

don’t simply bear or give a chance to the manager or person responsible for that flaw. Visits

are sometimes informed and some of the times they visit without informing.

MANAGEMENT BY OBJECTIVES:

In KFC there is no management by objective is done as no opinions are taken from their

teams working under supervisors UBM’s And AUBM’s.

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EMPLOYEE DISCIPLINE SYSTEM:

Disciplines are maintained in KFC as this is their core strategy to have disciplined employees

as these disciplines employees are key to their standards. All this employment discipline is

maintained by managers and are followed CHAMPS.

FINANCIAL CONTROL:

KFC has one financial department that sees all the financial activities in the organization.

Branch Finances are looked after by the UBM. UBM has to report all the financial activities

required to be done or done to the finance department directly.

PURCHASING CONTROLS:

Purchasing depends on the restaurant branches. Four types of Purchasing is done

In house

Ware house

Direct

Indirect

Requests are send to the respective persons for the purchases that is it is send to

procurement department. In house purchasing is for the use of in-house keeping it includes

purchasing of furniture goods and storage goods. Warehouse purchasing is requested by the

store supervisor for purchasing goods needs for the warehouse. Direct purchasing is done by

Managers again for the Branch use things are bought from the certain amount that is given

to the manager by the finance department. Indirect purchasing is done by requesting the

department for goods needed.

INVENTORY CONTROL:

Inventory is done several times a week one final time a month and at the end of the year.

Inventory controls are looked after by UBM and AUBM and they check inventory for three

times a day to be accurate regarding their costs and what can be saved.

STATISTICAL CONTROL:

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All the stats of the branch is taken care by the UBM and all these stats are given to the

financial department

ORGANIZING:

ORGANIZATIONAL CHART:

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SPAN OF CONTROL:

Span of control (Number of workers working under single person) of Employees are as

follows

CEO:

Span of control of CEO is Head of food department and all the employees under HOFD in

organizational chart.

Head of Food Department:

Span of control of Head of food department is of 3 Regional managers and all the employees

under regional manager as described in the organizational chart.

Regional Manager:

Span of Control of all Regional Manager is of Area Coaches i.e. some cities have a single

area coach and regional manager works for Regions.

Area Coach:

Span of control of all area coaches is territory manager (which hold certain territories of

Cities under area coaches) and all the employees under territory manager as described in

the organizational chart.

Territory Manager:

Span of Control of territory manager is the entire unit business managers (managers of each

branch it the city) and the all workers under the Unit business manager.

Unit Business Manager:

Unit business manager also known as branch manager, Span of control of Unit Business

manager is assistant unit business manager and all the employees working under assistant

business manager.