Chapter 2 INTRODUCTION OF KFC Background: Kentucky Fried Chicken was founded by Harland Sanders in Corbin, Kentucky.

Harland Sanders was born on a small farm in Henryville, Indiana, America, in 1890. Sanders loved to cook and to invent a new recipe. One day he tested to mix eleven herbs and spices with wheat flour until he got success and he had a secret recipe for cooking chicken. Sanders opened the first facility with a 142-seat restaurant, a motel, a gas station. During the 1930s an image that would became known throughout the world began to develop. First Sanders was named an honorary Kentucky Colonel by the states governor; second, he developed a unique, quick method of spicing and pressure frying chicken. In 1950s a new road was built, most of people used another new road, so; Sanders cust omers decreased. Eventually, Sanders decided to close his restaurant then he invested the first franchise in 1952 also 105 USD with the secret recipe and the method throughout America. Colonel Sanders sold 5 cent per piece chicken for copyright. Through the promise between Sanders and partner was signed by handshake. In 1963 Sanderss recipe was franchised to more than 600 outlets in the United States and Canada. In 1964 Sanders sold Kentucky Fried Chicken to an investor group headed by John Y. Brown, Jr. and Nashville financier John (Jack) Massey that Colonel Sanders still was Kentucky Fried Chicken Goodwill Ambassador for helping and giving suggestion. After on 16 January, 1969 Kentucky Fried Chicken Corporation was renowned in the New York Stock Exchange that there were 3,000 chains worldwide. In 1971 Kentucky Fried Chicken merged with Connecticut-based Heublein Inc., a specialty food and alcoholic beverage Corporation. In 1982 R.J Reynolds Industries, Inc. (or RJR Nabisco, Inc. in the present) merged with Heublein Inc. So, Kentucky Fried Chicken was shared of R.J Reynolds Industries, Inc. In 1986 Kentucky Fried Chicken was a big change that Soft-Drink giant PepsiCo, Inc., bought Kentucky Fried Chicken for $840 million from RJR Nabisco, Inc. Reasons cited were KFCs superior performance and its 1980-85 increase in worldwide revenue and earnings. In 1997 PepsiCo prepared to separate KFC, Pizza Hut, and Taco Bell to be a new Corporation under name Tricon Global Restaurants, Inc that was 30,000 chains in 100 countries worldwide. On May in 2002 Tricon Global Restaurants, Inc. was changed Yum! Brands, Inc. till the present after the acquisition of a restaurant tries John Silver and A & W. The company is making up a food brand with 5 brands include KFC, pizza Hut, Taco elegant bell , try John Silver and A & W. is why the company changed its name to match the number of network operations at the

restaurant also named Yum! This name is also called a company's stock in the New York Stock Exchange. KFC Australia Originally founded in Kentucky, USA, KFC started its first Australian restaurant in the Sydney suburb of Guildford in 1968. As one of the key operating divisions of Yum Restaurants International, the KFC restaurants are either operated by the company or under the terms of franchise or license agreements. The Colonels secret recipe of 11 herbs and spices is still the key to the KFC heritage. The company now has over 505 restaurants nationally, employing over 12,000 people on a permanent, casual and part time basis. Since opening its first restaurant, KFC has steadily grown, opening new stores and increasing sales. Over recent years KFC has maintained a high standard of performance in a competitive market. Profit is consistently good and is generally better than the companys competitors. The KFC Australian operation is the most profitable in the worldwide network and is often at the forefront of new developments in KFC strategies for global success.

Products of KFC AUSTRALIA CHIKEN BURGERS SIDE DISHES OTHERS Popcorn chicken Fillet burgers potato Kentucky nuggets Roasted chicken Zinger burger Coleslaw Wicked wings Bacon and cheese burgers Seasoned chips Crisp strips Source: (www.kfc.com.au)

Chapter 3: CONTEXT OF THE BUSINESS 3.1 PEST Analysis Pest Analysis for Australia Political Trading: Australia has good trading policies with its neighbor counties, and their trades are in favorable conditions.

Pressure Groups: Pressure groups will make the organization to think about the Corporate Social Responsibility and Ethics that it need to consider and practice in Australia. Wars and Conflict: Australia isnt involved in any form of war within and outside the country. So the political environment seems to be sound. Government Policies: The government of Australia has open door policy which always motivates various international businesses to invest their resource for the benefits of Australian customer. Election: Australia holds voting election for House of Representative every 3 years using Australian election System. Therefore, though political environment is relatively stable, business regulations might be revised when new government comes in power. Economic Home Economy Situation: Australia is facing recession, along with the inflation rate of 2-3% and unemployment rate around 6%. Taxation Issues: There are various tax implied on Australia, including sales tax, corporate tax rate, progressive income tax, pay as you earn tax. The corporate tax rate is very competitive in Australia compare to major economies. Season and weather: The climate is pleasant and favorable for BAB. International Trade: Australia trade is more focused towards Asia and other pacific countries. Monetary Issues: Australia interest rate is around 3%, which is favorable for investors because they can get finance in a lower cost. Social Media Views: Media has great impact on peoples life. Religion: Religious are pretty diversified in Australia, but it seems only a small portion among those religions does not eat beef. Education: 99% of the population is literate. Since the customer is highly educated. BAB should provide qualified goods. Living Standards: Australia has high purchasing power party, which is good for business. Power Distance: Australia only scoring 36 for Power Distance compared to world average of 55. Managers in BAB should work with its employee in parallel terms and focused more on team work. Technological

Intellectual Property Issues: The current value of intellectual property in Australia is over $30 billion. Transportation: Transportation infrastructure of Australia is well established which make it more possible for BAB to better serve its customer in maximum way. Environmental While operating in Australia, you have to consider not having negative impact on environmental issues and support Australias campaign regarding environmental issue.

3.2 SWOT Analysis

3.3 External & Internal Stakeholders

3.4 Success Factors, Goals & Objective of the Company Key Factors for Success in the Industry -Quality -Service -Cleanliness -Satisfying the customers needs -choose new location that will adopt the product of KFC

KFC Australian operations have reached this milestone via a commitment to its company mission, which is: To be the leading fast food operator by exceeding customers expectation for quality, service, cleanliness and value with a chicken dominant menu. The company goals are: Make KFC a world class organization of people dedicated to excellence. Provide customers with unmatched quality, service, cleanliness and value.

 Generate consistently superior financial returns through leadership in market share of sales and profit to benefit KFC shareholders, franchises and employees. Act as a responsible member of communities in which employees live and work. In support of these goals, KFC provides a structured management training program for team members who want to develop their career path within KFC. The organization prides itself on the number of loyal long term staff that form part of management. Many restaurant managers started their KFC employment as team members on the restaurant floor and have worked their way up through the KFC training system. KFC has clear action plans to support its corporate goals and in doing so is a great example of an effective corporate partnership with the community. The KFC operations in Victoria have been one of Whitelions most important corporate supporters to date. As an organization that employs a large number of youth aged between 15 and 19, KFC has certainly demonstrated a connection with the community in which the employees live and work and the issues they confront.

Chapter 4: RISKS IN THE BUSINESS 4.1 Identification & List Of The Risks The concept of risk is at the foundation of every firm as it seeks to compete in its business environment. According to financial theory, (total) risk is composed of two components, systematic and unsystematic risk. The examples of systematic risk could be changes in monetary and fiscal policies, the cost of energy, tax laws, and the demographics of the marketplace. Finance scholars refer to the variability of a firms stock returns that moves in unison with these macroeconomic influences as systematic, or stockholder, risk (Lubatkin & Chatterjee, 1994). On the other hand, a loss of a major customer as a result of its bankruptcy represents one source of unsystematic, or firm-specific risk (idiosyncratic or stakeholder risk). Other sources include the death of a highranking executive, a fire at a production facility, and the sudden obsolescence of a critical product technology (Lubatkin & Chatterjee, 1994). As a result, in this study we view macroeconomic risk as systematic risk and industry risk as unsystematic risk. Macroeconomic Risk Macroeconomic risk is the variation of cash flows or stock returns caused by market wide factors such as inflation, industrial production etc. Industry Risk

Industry risk is defined as change in stock returns and firm profits due to industry effects (Rumelt, 1991). Unlike macroeconomic risk factors the industry-specific risk factors influence a certain group of securities that belong to the same industry group (e.g. beef price affects retail and restaurant industries). In an effort to achieve content validity, the authors conducted a thorough analysis of the published industry and academic literature that implicitly or explicitly mentions the industry factors or forces that affect the overall risk of the restaurant industry. Relevant restaurant industry value drivers were drawn from studies of Choi (1999), Chathoth and Olsen (2007) and Chung (2005) which touched upon business cycles, co-alignment principle, and value drivers in the restaurant industry. A preliminary list of value drivers reported by government agencies (such as Bureau of Labor Statistics), industry equity analyst reports, and industry trade magazines was compiled. The selection of the variables was based on the following three criteria: 1) The variables should be related to the restaurant industry and must either be used by the NRA or covered in the trade magazines and annual company reports. 2) The variables should have at least 10 years of history 3) The variable should be reported on a monthly basis. Based on the above criteria, a total of 30 relevant variables were identified and were placed in five broad categories: inflation, labor, industrial production, producer prices, and construction. Risk in Hospitality Management Research The concept of risk did not seem to be on hospitality researchers agenda until De Noble and Olsen (1986) observed market volatility in the foodservice industry. Their findings revealed that almost half of the foodservice executives (N=231) who participated in that study did not make any attempt to evaluate the environmental conditions, demographics trends, technological changes, social/cultural trends, and political/legal factors. Huo and Kwansa (1994) compared the betas of hotel, restaurant and utility firms for the recessionary period of 1990-1991 as determined by the degree of financial leverage (DOL) and degree of operating leverage (DOL). The researchers reported that DFL and DOL accounted for 5% and 16% of the variation in beta for restaurants. Gu (1993) used Sharpe Ratio to evaluate risk-adjusted performance of hospitality firms. His study was followed by Kim, Mattila, & Gu (2002) who examined hotel real estate investment trusts (REITs) risk-adjusted performance by utilizing Jensen Index. In 2003, Kim and Gu conducted a sector analysis of restaurant firms in terms of their risk-adjusted performance. The semi-variance measure (e.g. downside risk-upside volatility) was recently introduced to hospitality management literature by Madanoglu, Lee and Kwansa (2008) who investigated risk-return features of fast-food and casual-dining restaurants. List of the Risk - Risk related to Commercial kitchen for fire safety 1. Cooking hood filters are cleaned at least every two weeks 2. Cooking hood ducts are professionally cleaned at least every six months

3. Oil in deep fryers is replaced at least weekly and filtered every second day 4. Air conditioning, refrigeration, cooking and dishwasher equipment is serviced annually 5. Good housekeeping and adequate ventilation provided for motors and equipment 6. Gas supplies are isolated from the main supply after hours 7. A fire blanket is correctly installed 8. A wet chemical fire extinguisher is correctly installed 9. An additional fire extinguisher, for electrically based fires is also installed 10. All fire equipment is regularly serviced as per Australian Standards requirements - Risk related to Public and customer safety 1. Entrances, stairs, ramps and exits are in a safe condition 2. Internal floors and amenities are in a safe condition 3. Customers are not permitted access to kitchen or food preparation areas 4. Access to amenities is kept free of storage 5. Spills are cleaned up immediately and floors are left dry 6. Wet floor signs are available if required 7. Regular inspection of all tables and chairs, damaged items are removed 8. Tables and chairs are not located too close to high traffic areas 9. External seating complies with local council restrictions 10. Compliance and understanding of RSA obligations, including those for BYO 11. Compliance and understanding of all food safety requirements - Risk related to Cash handling procedures 1. Do you have documented cash handling procedures? 2. Are these procedures available to relevant staff? 3. Do you set maximum limits for cash held at the point of sale? 4. Are takings counted in a secure, back of house location? 5. Do you have a safe installed? 6. Are takings and float secured in a safe after hours? 7. Is banking conducted at least every two days? 8. Do you conduct minimal cash business? - Risk related to Physical and electronic security 1. Do you have bars or security grills fitted to all concealed doors and windows? 2. Is an electronic security alarm installed? 3. Is this alarm monitored by a licensed security company? 4. Does the alarm have a dual path of connection back to base? 5. Are perimeter detection devices installed as well as internal detectors? 6. Are internal audible alarms and external strobe lights installed?