According to Michael Porter, in order to survive in a dynamic and competitive world, a firm must be able to gain competitive advantages over its competitors by understanding itself and the environmental changes. A firm with wealthy resources may not be able to sustain the competitive advantages if it does not have a well effective management. An effective management should be able to come out with different strategies to deal with different situation based on the remote and industry environment. This is because it enables a firm to sustain competitive advantages and gain market share even thought the industry is unattractive.
This report is regarding the internal and external analysis of KFC (Malaysia) Holding Bhd which includes their unique resources, core competencies, strategic issues and etc. This report will show us an in-depth view on current situation and issue of the fast food industry.
2.0 REMOTE ENVIRONMENT
The remote environment comprises factors that originate beyond and usually irrespective of, any single firm's operating section: social, political, economic, technological and ecological factors. By using PESTEL framework, we would able to analysis many different factors in the fast food industries.
Political (Threat & Opportunity)
Based on the fast-food industry, some political constraints are placed on firm through fair-trade decision, tax programs, pollution, pricing policies and government policy. In Malaysia Budget 2010, Islamic Development Department of Malaysia (JAKIM) intensifies HALAL certification by collaborating with international institutions to obtain standards certification such as HACCP and GMP. These changes may restrict and affect some of fast food industry getting it licensed.
Furthermore, the service tax may replace to goods and services tax (GST) in Malaysia Budget 2010. The GST rate to be imposed will be lower than current services tax rates. As a result, some of the fast-food industry like KFC, McDonalds able to gain benefit in lower their tax charge to consumers and increase their profits.
Economic factors concern the nature and direction of the economy in which a firm operates. Based on Malaysia Budget 2010, Malaysia economy in 2010 will expected to grow 2 to 3 percent. This show recession in Malaysia is slowly recovered. As a result, it may reduce the price of raw material and purchasing power from fast food industries will increase. Fast food industry may reduce their price and attract more consumers.
As we all know, one of the major issue for fast food industry concern is for individual health. The fast-food industry has been the target of a great deal of public concern over the relationship between obesity and health. As the fast food industry caught in the middle of this new social concern, its menu consisted principally of high-calorie, artery-clogging foods. Besides that, fast-food industry causes rise in obesity claiming that companies like KFC and McDonald’s created an environment that encouraged overeating and discouraged physical activity.
Next, the consumers are very concentrate with the food hygiene, so the environment inside and outside for any food production or marketing establishment shall kept clean and tidy. It is because once food poisoning to the customer, it will lead removed the business license.
Fast food industry having competing technology development like modern cooking machine, packing, credit card payment and so on in order to perform more efficiently in timely manner. In addition, fast food industry having very fast replacement technology due to only replaced or updates the technology able to compete with each others. For example, KFC is the first who introduce the baking system in front of customer to satisfy the customer which means that all the cooking, baking and all other work that is involved in the...
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