Kentucky Fried Chicken and the Global Fast-Food Industry...

Kentucky Fried Chicken and the Global Fast-Food Industry Case Analysis 1.0 Source Problem The change in demographic trends in the past two decades has seen an overall increase in costs for KFC and other fast food chains. Due to immense price competition and saturation of the US market, KFC is unable to raise its prices to cover the increased costs. The slower US population growth rate, oversupply of fast food chains and the minuscule 1% growth in the US restaurant industry per year has resulted in KFC ¡Ã‚ ¦s focus on expansion of their international markets. 2.0 Secondary Problems 2.1 Short Term ÂÆ'ÃÅ" New product introductions are slow. ÂÆ'ÃÅ" Market research inefficiency. Eg. Germans were not accustomed to buying takeout or ordering†¦show more content†¦A supplier group is powerful when: ÂÆ'à ¥ It is dominated by a few large companies and is more concentrated than the industry to which it sells. Tyson Foods in Mexico. ÂÆ'à ¥ Satisfactory substitute products are not available to industry firms; ÂÆ'à ¥ Industry firms are not a significant customer for the supplier group; ÂÆ'à ¥ Suppliers ¡Ã‚ ¦ goods are critical to buyers ¡Ã‚ ¦ marketplace success; ÂÆ'à ¥ The effectiveness of suppliers ¡Ã‚ ¦ products has created high switching costs for industry firms ÂÆ'ÃÅ" KFC being a major player in the industry, it has some bargaining power. Increase bargaining power enables KFC to negotiate lower prices from suppliers. ÂÆ'ÃÅ" Tyson Foods is the primary chicken supplier in Mexico, however, it also supplies KFC ¡Ã‚ ¦s competitors including McDonalds and Burger King in Mexico. Bargaining power of buyers  ¡V Medium ÂÆ'ÃÅ" Firms seek to maximize the return on their invested capital. Buyers (KFC customers of an industry or firm) want to buy products at the lowest possible price, at which the industry earns the lowest acceptable rate of return on its invested capital. To reduce their costs, buyers/customer bargain for higher quality, greater levels of service and lower prices. These outcomes are achieved by encouraging competitive battles among the industry firms. Customers (buyer groups) are powerful when: ÂÆ'à ¥ They purchase a large portion of anShow MoreRelatedKentucky Fried Chicken and Global Fast Food Industry2025 Words   |  9 PagesKENTUCKY FRIED CHICKEN AND THE GLOBAL FAST-FOOD INDUSTRY UNIVERSITY OF DHAKA A report submitted to the Faculty of Business Studies in partial fulfillment of the requirements of the final term examination in Principle of Management, Summer-2013. 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