1 - Strategic Change

1.1 The Strategic Planning Process

Today in such business environment which is highly competitive, forecast-based or budget-oriented

planning methods are not enough for large organization to survivor. These organizations must engage
themselves in ‘Strategic Planning’ which clearly describes the objectives and assessment of both the internal
and external situation to make strategy, implement it, evaluate its progress and finally make adjustments to
stay on track.

Here is a simplified view of strategic planning process:

Mission and objectives:

First of all set mission and create objectives. Mission statement defines the company’s vision for business,
which include the unchanging values and purpose of the organization’s future opportunities.
As guided by the vision from business point of view, the organization’s leader can describe objectives for
strategy and finance. The financial objective measures earnings growth and sales targets. Whereas the

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strategic objectives are related to business position of the firm and may include various measures such as
reputation and market share.

Environmental Scan:
Environmental scan may include components which are as follows:
• Analysis of the organization internally
• Organization industry analysis (task environment)
• Analysis of the organization externally (microenvironment)

The internal analysis of the organization identifies its strength and weakness, whereas the external
environment defines threats and opportunities. An organization profile of the weaknesses, strengths, threats
and opportunities is acquired by the means of SWOT analysis.

The analysis of an industry can be performed using a framework which is developed by Michael Porter
know as Porter’s five forces. This framework describes entry barriers, suppliers, customers, substitute
industry rivalry and substitute products.

Strategy Formulation:
The information given from the environmental scan, the firm should identify its weakness and external by
matching its strength to the opportunities.

And to attain such superior profitability, a firm should develop a competitive advantage over its rivals. An
advantage can be competitive based on differentiation or cost. Michael Porter analyzes three industry-
independent generic strategies from which firms can chose.

Strategy Implementation:
The strategy which is selected is implemented by mean of budgets, programes and procedures. Over here the
Implementation involves organization of the organization’s resources and motivation for the staff to achieve
objectives.
And the way through which the strategy is implemented can have a huge impact on whether it will be
successful. In large company who implement such strategy likely will be different people from those who
create and formulate it. To such reason, care must be taken the reasoning and to communicate behind it.
Otherwise such implementation might not successful if the strategy is not understood or misunderstood or if
managers from lower level resist its implementation because they do not understand why this strategy was
selected.

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Evaluation and Control:
The strategy implementation must be monitored and adjustments made as needed.
Evaluation and control consist of the following steps:
1. Measure the defined parameters
2. Target values should be defined for these parameters
3. Measurements performance
4. Compare measured results to pre-defined stranderds
5. Make required changes

2 - Generic Strategies - Michael Porter (1980):

Generic strategies were first used in the early 1980s, and quite popular today. The three main strategic
options open to organization that able to achieve a sustainable competitive advantage. Each of thses options
are considered within the context of two aspects of the environment which is competative:

a. Cost Leadership.
The leader in any low cost market gains competitive advantage from being able to many to produce at the
lowest cost. Factories built and then maintained and then labor is hired and trained to provide the lowest
possible costs of production. And the 'cost advantage' is the focus of the organization. Costs cut in every
element of the value chain. And the products tend to be the 'no frills.' However, this low cost cost doesnot

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lead to low price. As Toyota company not only producing high quality products with low price but also
using marketing skills too too boost its progress.

b. Differentiation
this is another important strategy to use as not only producing products with good low prices but also make
them different from others in every possible ways. Differentiation always plays a vital role in company to
progress and to gain higher response. The benefits here for differentiation require producers to aline the
markets in order to get the targeted goods and services on specific segments, generating a price higher then
average. For example, British Airways service is different from other.

3. Focus or Niche strategy

Another strategy called focus strategy is also known as a 'niche' strategy. Where an organization not able to
afford a wide scope cost leadership but not also a wide scope differentiation strategy, a niche strategy could
be more suitable. In niche strategy an organization focuses resources and efforts on a narrow, defined
segment of a market. Competitive advantage is generated significantly for niche.

When a firm focusing on cost it aims is to being the lowest cost producer in that niche or segment. The
differentiation focus a firm creates competitive advantage through differentiation within the niche or
segment.

4 - The danger of being 'stuck in the middle

First of all focus on one generic strategy. It is always argued that if you select more than one approach, and
then fails to achieve them, your organization gets stuck in the middle without any competitive advantage.

5 -Case Study

According to the strategic planning process model and Porter’s generic strategies I have chosen three
organizations which are of the same league are as follows:

1. McDonalds
2. KFC
3. Pizza Hut

5.1 - History
Let’s discuss one by one the history of each organization.

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5.1.1- McDonalds McDonalds is the leading global foodservice retailer with more than 31,000 local
restaurants serving more than 58 million people in 118 countries each day. More than 75% of McDonald's
restaurants worldwide are owned and operated by independent local men and women.
Mcdonalds serve the world some of its favorite foods - World Famous Fries, Big Mac, Quarter Pounder,
Chicken McNuggets and Egg McMuffin.
Mcdonalds history began with its founder, Ray Kroc. The strong foundation that he built continues today
with McDonald's vision and the commitment of its talented executives to keep the shine on McDonald's
Arches for years to come.

5.1.2- KFC (The Kentucky Fried Chicken)

KFC was founded by Colonel Harland Sanders (born on September 9, 1890) at the age of sixty-five. KFC is
currently one of the largest businesses of the global food service industry and is widely known around the
world as the face of Colonel Sanders.

Every year, over a billion KFC chicken dinners are served featuring the Colonel’s “finger lickin’ good”
special recipe. The Colonel has spread his industry currently to more than eighty countries and territories
globally.

After his amazing start-up in 1952, the Colonel devoted himself for the rest of his life to his chicken
franchising business. To spread his famous recipe, he spanned the country in his car from his small business
in Kentucky to cook his chicken for restaurant owners and their employees. If his subjects loved it like his
other customers had, the Colonel made a deal with the establishment, saying that they would pay him a
nickel for each chicken they sold in their restaurant. So many restaurants agreed that by 1964, the Colonel
had over six hundred franchised outlets in the United States and Canada for his chicken. Also in 1964,
Colonel Sanders decided to sell his interest in the United States company for small change (only $2 million)
to a small faction of investors, such as John Y. Brown Jr., the governor of Kentucky from 1980 to 1984.
However, Colonel Sanders continued to be the public spokesman for KFC and in 1976, he was named the
world’s second-most identifiable celebrity by an independent survey.

5.1.3- Pizza hut

The history of Pizza hut began in 1958, when what is now the world's largest pizza franchise was born.
Today the Pizza hut company is part of the Pepsi Empire, but back then two brothers's borrowed $600 from
their mother and started to forge the history of Pizza hut.

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Pizza Hut has subsequently branched out and developed franchises all over the world. In fact it is diversity
that has made the history of pizza hut so successful. Their menus and recipes are not the same, different
locations use different suppliers and different toppings, according to the demand of their clients. The
building block of the history of pizza hut has been this diversity, not often present in such a large concern.

The whole history of pizza hut has been achieved through innovation, but the history of pizza hut really took
off with amalgamation into the Pepsi Company and more aggressive marketing techniques especially in the
take out market.

Not surprisingly over the years Pizza hut had to reinvent the pizza again and introduce a healthier style of
pizza. Pizza in itself is not the unhealthiest meal, but it is laden with unnecessary calories and fats when
cheese is added. Pizza hut was forced to add new taste combinations to their menus that offered a lower fat
alternative. It is now possible to select between three to eight toppings depending on the prices you have
paid. This lower fat alternative offers a leaner option of chicken or ham and between two and six fresh
vegetables toppings.

As I have given you the brief history of these organization lets now have a look of these organization
corporate, business and operational strategies through SWOT analysis.

5.2 - SWOT analysis of McDonald's

Mission Statement

"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means
providing outstanding quality, service, cleanliness, and value, so that we make every customer in
every restaurant smile."

Strengths
1. Strong Brand, strong recognition
2. Growth afforded by franchise model-allows McDonald's to retain control of brand while building a
corporation with significant capital infusion from franchisees.
3. Fast food model---standardized food prep methods ensuring standardized quality, centralized
procurrement leading to higher profits,

Weaknesses

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 1. Perceived lower food standards due to fast food model.
2. Profit margins can become slim due to the customer's expectation of "inexpensive menu" and
higher food costs.

Opportunities
1. New global markets continually opening.
2. Economic downturn may force people to opt for less expensive "fast food", rather then restaurant
quality.

Threats
1. Nutritional issues. People are becoming more aware of the quality of the food they eat, and more
people are looking for "organic", natural and vegetarian alternatives.
2. Obesity Fast food is continually blamed for obesity in children and adults.
3. A lengthy recession could hurt fast food chains when pricier chains begin to offer competitvely
priced menus with the perception of better quality.

5.3 - SWOT analysis of KFC

Mission Statement

" To sell food in a fast, friendly environment that appeals to pride conscious, health minded
consumers."

Strengths
1. Brand equity
2. 2nd only to McDonalds in foreign sales
3. Strong cashflow
4. Generate around 1 billion Pounds each year
5. String franchise and licence free revenues for cash flows
6. Very strong internationally like UK, Middle East, China, Japan, USA etc
7. Largest multibranded restaurant in the world 100 KFC and Pizza hut combos 600 KFC and taco bell
combos.

Weakness
1. Recent drops for sales in KFC

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 2. Failed to rank in top 20 in growth since 2000
3. Same store sales decline
4. Lack of point of scale scanning system
5. Admitted inability to provide quality service
6. Lack of knowledge about their customer
7. Lack of relationship building with employees, customers and suppliers
8. Question of over franchising leads to loss of control and quality

Opportunities
1. Growth of 18-24 age demographic
2. Increase in UK median income
3. International beef scare from mad-cow and hoof and mouth disease
4. New leadership
5. Domestic market
6. Updating restaurant
7. Balanced menu
8. Customer focus

Threats
1. Rated 83 out of 100 in term of competitiveness
2. Increasing wages rates directly affect menu prices
3. Supermarket and new competitors threaten HRM market
4. International exchange rates
5. Health trend away from fried food
6. Changing customer demands
7. Quality of service focus

5.4 - SWOT analysis of Pizza Hut

Mission Statement

" We take pride in making a perfect pizza and providing courteous and helpful service on time all the
time. Every customer says, "I'll be back!"

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We are the employer of choice offering team members opportunities for growth, advancement, and
rewarding careers in a fun, safe working environment.

We are accountable for profitability in everything we do, providing our shareholders with value
growth."

Strength
1. Part of the largest restaurant chain in the world
2. Over 20,000 franchises around the world
3. Brand leader in the UK
4. Innovative range of pizzas under one roof
5. Famous television advertising
6. Food attracts people of various ranges from young to old.
7. Sound financial situation and international turnover.
8. 100% owned by yum!
9. Pizza Hut sits on top of global full-service restaurant tree

Weakness
1. Loyal customers are feeling that the satisfaction of the pizzas is declining.
2. While Novak said Pizza Hut’s expansion into China is going exceedingly well, there is battling
problems in New Zealand and Australia.
3. There are complex computer systems and internal conflicts from franchisees.
4. There is a lack of an organic pizzas, which will limit the target market

Opportunities
1. New Pizzas with different crust sizes and flavours.
2. Pizza Hut expands Indian market menu and looks to old favourite to bolster sales in the US
3. Pizza Hut targets upscale products and a downscale consumer base

Threats
1. Rising competition undermines Pizza Hut as consumers go for greater convenience
2. Rising cheese costs threaten margins
3. Threat from Dominos pizza, also from Mc Donald’s who have tried to introduce a new meal that is a
Pizza called: McPizza.

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After SWOT analysis of these organizations we can now easily judge through their corporate, business and
operational strategies that how they travel from domestic to global with the passage of time.

6 - Strategic Change
Now coming to other topic of the assignment which is in which sectors these organization should bring
‘strategic change’ in the next five years.

What I have studied so far about these organization, their history, way of going global, strategies, changing
with the passage of time. All these organizations are food change and almost following the same strategies
except their products and I could conclude and suggest following key elements and should bring change on
these elements which are as follows:

6.1 - Adding restaurant:

According to study that I did all these restaurant adding franchises and opening new stores with a growth
rate of almost 700-900 which seems good from business point of view but strategically giving a bad impact
in their customer satisfaction. Without proper approval these organizations giving franchises to new owner
who hardly maintain the standards of organization and quality of the food. Strategic change should be
needed here to shorten adding stores and give franchises to proper and responsible people who meet the
standards and quality.

6.2 - Menu Items and prices:

Now a days with fast growing world these organizations somewhat maintain their standards and quality but
with limited amount of products with them which is also one of the draw back. People in today’s world need
change in every possible ways and need to get change on daily basis so strategic change should be required
here too to introduce new meals to customer so that customer stay with them and within an affordable
prices.

6.3 - Geographical Location:

This element plays a very important role in a food change industry to be successful and to do business, what
I studied and learned and experienced these food chains open their stores into such places too where there is
no need. Strategic change is required here for choosing proper location for the store to be opened like in
shopping mall, near cinemas, in supermarkets instead of every road corner and in middle of highways.
Those sites should be chosen which is convenient to customers.

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6.4 - Attention to Store Efficiency:
Strategic change is required for attention towards store. Currently all these companies focusing on customers
satisfaction and not even one of them putting attention towards store efficiency and outlook. This is a big
drawback of these companies not getting proper business. If the store is efficient and not looking attractive
and welcomed for customer then how come these companies will attract customers. Customer once place the
order has to wait for like ages to get served this is totally lack of efficiency of the management because the
managers have not been given proper training about how to make store efficient to run. All these companies
have to trained their manager properly so that they can manage stores properly and get the best out from
them. And need to keep their store neat and clean too.

6.5 - Extensive Advertisement:

These food chain now a day’s not advertising themselves properly which is also a back draw. They should
have to advertise themselves properly so that if there is any promotion going on in the store so customer
should come to know while sitting at home about new products and promotion and new packages instead of
going to store to get aware of. Strategic change is required at this part as well.

6.6 - Hiring Trained Staff and Communicative staff:

According to my observation and personal experiences in all these food chain proper staff is required with
communication and welcoming skill, staff with smiling face is required. Staff should be paid handsome
wages so that while staff comes to work they should do work properly. Change is required here too.

6.7 - Religion Respect:

All these companies should respect all kind of religions so that every one get served and be happy. For
example a part from Islamic countries huge amount of muslim communities living in Europe, USA, Canada,
Australia, China too but the stores here are not Halal and just out of 200 products 3 or 4 are halal for muslim
communities. Which is again adraw back. Strategic change is required here too. All these companies should
open halal stores too so that this huge amount of community also get served and might increase around 30-
40 percent annual income of all these stores.

These are so far according to my knowledge strategic changes required in all these food chains to get upto
proper rhythm once again. I believe the information that I provided is best to my knowledge and
observations.

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7 – Conclusion

Now a day’s with fast growing and changing environment of the world everyone needs change, everyone
need to experience new things, everyone wants to get change and runs with the same pace of changing
world. If fast food chains need to do business properly they have to listen their customer and continuously
should bring change in their services and should bring some new products too to keep attracting the
customer and every one want to taste something new.

Fast food chain like Pizza Hut, McDonalds and KFC should change their key element to progress and to
make good business internationally. Key elements plays a vital role in any Company’s progress from
domestic to global as these fast food chain needs to keep changing themselves with the passage of time to
compete in such cruel world with lots of competitors.

And as the strategic changes discussed in my assignment will play a vital role to the best of my knowledge if
these companies change their strategies as its is compulsory now to change their key elements. They as in
non-muslim country should increase such chains which should be totally halal and this will be a huge
strategic change for all these companies to capture huge community which annually may increase upto 40%
of income.

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Bibliography

Garcia, Augie. Discussions, March 12, 1999

Gibson, Charles H. Financial Statement Analysis, 7th edition. 1998.

Tricon 1997 Annual Report. Tricon Global Restaurants, Inc.

Dun and Brandstreets Industry Averages. 1993,1994,1995 editions

References

Englehardt, C. S. & (2002) Organizational flexibility for a changing world. Leadership & Organization
Development Journal. pp. 113-121.

Harris, L. & McGrady, A. (1999) Local government reorganization –rules, responsibilities and renegotiating
relationships. Strategic Change. Vol. 8, pp. 287-297.

Jacobs, C. D. & Heracleous, L. Th. (2005) Answers for questions to come: reflective dialogue as an enabler
of strategic innovation. Journal of Organizational Change Management. Vol. 18, No 4, pp. 338-352.

Klein, Stuart M. (1996) A management communication strategy for change. Journal of Organizational
Change Management. Vol. 9, No 2, pp. 32-46.
www.mcdonalds.co.uk
www.kfc.com, www.kfc.co.uk
www.pizzahut.com, www.pizzahut.co.uk

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