BCG Matrix of KFC free essay sample

KFCs parent company is Yum! Brands, Inc., the worlds largest restaurant company in terms of system restaurants, with more than 37,000 locations in more than 120 countries and territories and employing more than one million associates. Yum! is ranked number 239 on the Fortune 500 List, with revenues exceeding $11 billion in 2008. Therefore, KFC is well-known in the world; the market growth of KFC is low which mean the market would hard to grow anymore. KFC is in the ‘Cash Cows’ area. Cash Cows is where company has high market share. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a â€Å"mature† market, and every corporation would be thrilled to own as many as possible. They are to be â€Å"milked† continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. We will write a custom essay sample on BCG Matrix of KFC or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Nowadays, KFC still dominates the chicken fast food industry while has stores in more than 100 countries operating vast profits. Although, due to increased conditions of life, and differentiation of the life style of the population around the world, there is still a lots of room for expansion, especially in countries with large population, and high development rate. KFC using the BCG matrix and SWOT analysis to analyze what is the current position of the company and identify that the company has the potentials to growth in fast food market. The BCG Matrix made a significant contribution to strategic management and continues to be an important strategic tool used by companies today. The matrix provides a composite picture of the strategic position of each separate business within a company so that the management can determine the strengths and the needs of all sectors of the firm. The development of the matrix requires the assessment of a business portfolio, which include an organization’s autonomous divisions (activities, or profit centers). (See appendix 4) Porter’s five forces model 1.Rivalry among existing competitors There are some competitors of KFC such as McDonalds, Subway and burger king. As we know, every fast-food restaurant’s menu is quite similar. So, the intensity of rivalry is relatively high. There is a strong competition, companies would compete over price. KFC can take some controls over the  sales through their strength and opportunities like producing more menus like healthy fast food before the competitors do. 2.Threat of entry from new competitors The opportunity of new entrants in this fast-food industry is low, because the start up cost may be high and also it’s hard to compete over the largest giant fast-food restaurant. Another reason, why is it so hard for new entrants to start up in fast-food industry may be the brand loyalty. Fast-food restaurant like KFC, McDonalds, Burger King and other giant fast food restaurant already has their strong customer base. 3.Bargaining power of suppliers The bargaining power of suppliers of KFC is low. As we can see, KFC carbonated drinks is under Pepsi.co, and they seems to have kind of contract to prevent KFC to have any business with another carbonated drinks company such as Coca cola. While KFC can’t get any supplier for the carbonated drinks, Pepsi.co do supplies their product to KFC’s main competitors. 4.Bargaining power of Buyers / Customers As KFC is not the only fast food restaurant, the bargaining power of buyers is high. Customers have lots of choices for fast food, either the customers are looking for the affordable prices or the tastes of the food. It all depends on the customers. Overall, the competition between these industries can be categorized as a healthy competition. 5.The Threat of Substitute products and services The existence of substitute products can be a strong competitive threat for companies as it doesn’t allow the company to raise the prices of the product and increase the profitability. All of the fast food companies can considered as substitute to each other as they serve the customers the same way. There are large number substitute product that can replace the KFC, such as pizza, burger and others.