2010

PROJECT OF PRINCIPLES OF MANAGEMENT

[KFC]
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May. 27

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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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 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 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.

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Introduction the new product:

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:
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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
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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.

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:
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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.
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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.

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
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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:
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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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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:

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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.
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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.

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:
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STRENGTHS:

• Oldest and finest in Business

May. 27 • 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.

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).

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OPPORTUNITIES:

• Cheap and easy availability of labor.

May. 27 • 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 to more than desired or planned revenue even like KFC
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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
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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.

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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

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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:

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:
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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.
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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.

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

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• In house

• Ware house

• Direct
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• 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:

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

the financial department

ORGANIZING:
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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:

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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.