AACSB Case Report
Kentucky Fried Chicken Corporation is player in a leveled-off fast-food industry. With the maturation of this industry in the United States, the restaurants involved face increased intense competition for customers. I find interesting how difficult it is for KFC and other restaurants in other segments of the industry to maintain market share control price because of the amount of competition and rivalry. The restaurants face competition within their segment and with the other segments in the industry. This, along with the NAFTA agreement, has given opportunity for industry leaders, including KFC, to expand more aggressively in Latin America. Threat of New Entrants
This force is weak. KFC has economies of scale holding the largest percentage of market share in the chicken segment of the fast food industry (50.7% in 2002). This allows KFC to spread their costs over the thousands of company-owned and franchised restaurants. Additionally, KFC was bought by PepsiCo, one of the largest consumer products companies in the United States, in which further supports its cost advantage of large production volume and input discounts not accessible to new entrants. It is likely that new entrants would not have the capabilities to withstand the fixed costs or be able to receive funds because of a higher risk of new entrants. KFC’s existence since the 1960s has developed brand loyalty among customers. Even when challenged by rival chicken restaurants, KFC still maintained market share because of consumers’ loyalty to their “unique taste.” Bargaining Power of Suppliers
This force is neutral. This is because KFC is managed by Yum! Brands, Inc who also manages franchises Taco Bell, Pizza Hut, A&W Restaurants, and Long John Silver’s. KFC doesn’t rely on external suppliers for operation, instead it benefits from its management. Market research found that consumers increasingly prefer restaurants that offer a varied menu. KFC had a setback because...
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