limited products, though unique, KFC has been impacted by fierce competition from competitors like McDonald’s, Wendy’s and Burger King among others. A close analysis of the case study draws to the conclusion that there is need for KFC to diversify its products while attempting to retain its uniqueness in order to remain viable in the long run.
In the early 1950s, Harland Sanders embarked on a franchising strategy which saw KFC rapidly growing in America to become one of the most recognizable brands. Having been taken public and listed on the New York Stock Exchange, KFC grew a strong foothold in the United States which prompted it to venture into international markets. Thus, the major motive behind PepsiCo’s acquisition followed a strong belief that the restaurant industry complemented their business of soft drinks and snacks. It was believed that restaurants increased the number of outlets to sell soft drinks and this would also increase the organisation’s popularity. Given that KFC was an already established business entity in the market, PepsiCo sought to capitalise on this through an acquisition which would sort of transfer all the loyal customers from KFC to them.
PepsiCo believed that it could take advantage of the numerous synergies available for operating different businesses under one umbrella name. Management skills could be transferred among three businesses. The company had earlier own acquired Pizza Hut and Taco Bell which were leaders in pizza and Mexican categories which could create a synergy with the chicken brand. These synergies were hoped to create competitive advantage for PepsiCo since it would be operating different lucrative businesses which will help it gain more market shares.
It can be seen from the case study that the fast food industry is characterised by stiff competition from other rival competitors. Reynolds and Lancaster (1999) suggest that Porter’s Five Forces Model is an ideal business strategy that is used to analyse