KFC in multinational company

Group 8
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Question:
Present and overview of the establishment and development of the multinational company.
What are worldwide economic factors influencing the development of the multinational
company?
What are worldwide political factors influencing the development of the multinational company?
What are worldwide legal factors influencing the development of the multinational company?
What are worldwide historical factors influencing the development of the multinational
company?
What are worldwide cultural factors influencing the development of the multinational company?
What are your conclusions in terms of the future of the multinational company?

1. Overview about KFC
KFC is the abbreviation of Kentucky Fried Chicken, a brand and operating segment of Yum!
International Restaurant Group (United States). KFC sells fried chicken, a kind of fast-food
which has become more and more popular in populated countries worldwide. Today, the KFC
chain is present in 109 nations and territories all over the world, with more than 20,000
restaurants serving 12 millions guests everyday.
At age 6, Harland was responsible for looking after his smaller siblings and helping out in the
kitchen a lot. The following 30 years saw Sanders work in a variety of positions, from traffic
controller to insurance agent, but his aptitude in the kitchen did not alter. In Corbin, Kentucky, he
began his profession by preparing fried chicken for customers who stopped by the gas station he
worked at. He was successful during the ensuing ten years using a top-secret blend of eleven

flavors and herbs as well as traditional cooking methods.In 1964, Sanders sold his $2 million
investment in the American business to a group of investors, including John Y. Brown JR, who
would later become the governor of Kentucky. About ten years later, Sanders had more than 600
franchisees in the United States and Canada.
In 1969, the business joined the New York Stock Exchange and in 1966 it went public. In 1986,
PepsiCo purchased the firm. By 1997, PepsiCo had switched to an independent restaurant firm
called Tricon Global Restaurant for their fast food restaurant chain, which included the KFC
brand. The Restaurant Company now has almost 35,000 locations spread across 110 countries,
making it the largest shop group in the world by number of locations.
In 1997, KFC opened its first restaurant in Ho Chi Minh City in Vietnam. To this day, this
fast-food restaurants chain has extended its presence to over 153 restaurants in 36 cities and
provinces of Vietnam, providing work for more than 3,000 people and making considerable
contributions to Vietnam’s fast-food industry as well as to the formation of a new consumption
habit and culinary culture in the areas where KFC is present.
2. Economic factors
Below are the economic factors that affected KFC:
● Economic recession & pandemic


The pandemic of covid-19 has dropped the annual revenue of KFC to a great extent. It was
because of the months of lockdown and shutdown of hotels and restaurants worldwide. The
media and the government were promoting social distancing awareness. The economy would
continue to decline until we have the proper vaccination of the virus.
● Struggling in China
KFC operates chains of hotels and restaurants worldwide. But the brand isn’t growing in the
Chinese market. It’s because of many factors like government regulations, less market response,
and many others.
● Impact of “Fried chicken”
Before the brand name “KFC,” the company used the brand name “fried chicken” when the
customer market wasn’t sensitive. The brand is selling the same product, but the fried chicken

brand isn’t acceptable by the health-conscious market.
The company has successfully changed the brand name without losing its market. It’s because
KFC’s brand name sends the signal that the company offers more products than just fried
chicken.
● Struggle in expand due to healthy food trend
KFC is struggling to expand its business in emerging markets as the global slowdown decreases
the fast food consumption of the people.
Moreover, it is strongly related to the chicken only. Now the problem with this is that many
vegetarian people didn’t go to KFC even though it has limited vegetarian options and another
problem is that since many people go to KFC because of its chicken it cannot diversify its menu
to accommodate healthier and variety foods. But now the company is taking a bold move and
started experimenting with Vegan items to accommodate more people to its chain.
● Vegan food
KFC was creating vegan items to compensate for vegan and dieting consumers. They have
started experimenting with fried chicken sandwiches; instead of buns, doughnuts will house the
fried chicken. Hordes of people came running to the nearest KFC location just to try these new
creations. Clearly, these experiments were successful for the company, both economically and
socially. Therefore, KFC has recently started offering vegan food items to the vegetarian market.
It’s a great shift in the brand. The company should add more vegan food items to the menu. It
would help the company to increase its market share, sales, and revenue.
3. Political factors
● Relationship with government
Each country has its own politics and decision-making style. The political atmosphere varies
from one country to the next. Europe and western countries, for example, have severe tax rules.
The monitoring system is extremely advanced. On the other hand, the monitoring policies of
Asian nations fall short of expectations. To prevent complications, KFC must keep excellent
connections with the government. This has an impact on a company's service delivery style. It
leads to lower product quality, which is becoming a serious issue for KFC and other food
companies throughout the world.
However, it sparked controversy when it imitated a tweet by US President Donald Trump that

boasted of having a bigger and more potent nuclear button than North Korea. Even if it was just
a harmless joke, Donald Trump supporters objected to the company's involvement in the political
unrest since it attracted their attention.


● US - China trade war
Trade wars between the United States and China have also had a significant impact on
businesses operating in both countries. Many Chinese businesses operating in the United States,
for example, encountered difficulties in continuing operations, and vice versa. Tariff increases
and other types of restrictions imposed by the governments of the two countries also posed
significant challenges for US-based companies. KFC's journey in China, on the other hand, has
been relatively smooth. The company is not only the first Western brand in the Chinese market,
but also the largest. According to Statista, the company operates over 7000 stores in China, with
5,872 of them being company-owned as of 2020. There were issues prior to KFC when
government laws for foreign brands were stronger. Local partners were crucial in assisting
foreign enterprises in establishing a foothold in the country. By adapting to the local political and
socio-cultural climate, the company has been able to establish itself.
● Health regulation
Government officials place a high priority on public health, and any problem affecting it could
be very problematic for the business. The fast-food franchise's link with unhealthy cuisine filled
with high-calorie diets is one of the key political elements that molded and shaped it. KFC
operates a variety of enterprises all around the world. Different countries' governments have
various restrictions, and they could have an effect on the business. especially those government
representatives that favor health laws. In addition, campaigns against numerous fast-food
restaurants and corporations for encouraging obesity and a bad lifestyle have gradually increased
in number.
Many NGOs play an important role in business in Europe and America. People are becoming
more health concerned, and their eating habits are changing. These non-governmental
organizations campaign and persuade people to watch what they eat and to avoid high-calorie
meals. To avoid the word "fried chicken," KFC was renamed Kentucky Fried Chicken. The

brand has maintained very good relations with the political systems and government officials
over the years. But it could change with the new vegan and diet control trend.
4. Legal factors
Legal factors and compliance are now at the top of the list for most large businesses worldwide.
Noncompliance, in most cases, hurts business image and profitability. Businesses need to
remain compliant to avoid legal tussles, hefty fines and maintain a strong brand image in the
markets they operate. There is a complex web of laws that large and international businesses
need to comply with. From labor to food safety, supply chain, business operations, franchising,
and marketing, there are various laws KFC must comply with. The legal framework also varies
from market to market.
In the age of social media, any type of news, good or bad, travels faster than ever. Businesses
need to maintain an ethical image and adopt ethical practices. Several scandals in the past have
rocked the fast-food industry.
Back in 2015, CNN reported that a customer at a Los Angeles KFC received a serious shock
when he opened up his box of food and dug into the order. What he saw inside was horrifying: a
piece of chicken that appeared to have a small rodent-like body and long, thin tail. On closer
inspection, the diner made a stunning allegation: he had been served a Kentucky Fried Rat.


Fast-food fan Devorise Dixon posted the photo to Facebook on June 11, saying he had ordered a
three-piece chicken tender meal from a KFC in Compton, California, but quickly realised
something was amiss.
“I bit into it I noticed that it was very hard and rubbery which made me look at it. As I looked
down at it I noticed that it was in a shape of a rat with a tail,” he claimed.
Mr Dixon said he returned to the store and claims he was told by an employee that it was in fact
a rat.
The fast-food company says there is no evidence to suggest the suspiciously shaped tender is a
rodent, saying KFC had tried to contact Mr Dixon, but he was refusing to speak with
representatives on the matter.
KFC has made various attempts to contact this customer, but he is refusing to talk to us directly

or through a lawyer. The company’s chicken tenders often vary in size and shape, and we
currently have no evidence to support this allegation. They have extended the opportunity to
have an independent lab evaluate the product at our own expense. That was what the company
trying to prove regards the scandal
KFC also has not remained immune to it. However, the company is now focusing on higher
compliance and ethics in its own business operations and its suppliers. Remaining compliant and
maintaining an ethical image helps businesses avoid losing their image before the customers. It
also helps grow their popularity and sales.

5. Historical effect to industry
The way of formation and growth of KFC has events that record the change of KFC, which can
be mentioned as:
+ In the early 70s, the brand name was sold to Heublein, then transferred to Pepsico
+ In 1987, KFC became the pioneer Western restaurant chain opened in China and quickly
spread to the market here.
+ Pepsico continuously transferred KFC and its network of fast food restaurants to an
independent restaurant with the name at that time Yum! Brands .
Starting from working at its small restaurant in Corbin with its main product being fried chicken,
KFC has emerged from the local Great Depression internationally. After being franchised and
opened in Utah, KFC quickly became a chicken-based fast food industry, with courageous and
strong rivalry. Harland has painstakingly designed and built his own KFC brand name with the
name Colonel Sanders and he has become an extremely typical brand name image that stands out
not only from the glorious history of traditional culture in America, but also very popular in the
advertisements of the KFC chain store.


Since the mid-60s of the last century, KFC has been a pioneering fast food chain that has the
ability to spread to the international market, has a chain of Open shops in many countries and
pioneered in the United Kingdom and Canada. , Jamaica, Mexico. In the 70s and 80s, the KFC
brand name had to go through a lot of changes in ownership as well as difficulties compared to

the entertainment and commercial business of the restaurant.
Experiencing many ups and downs in its development history, in the 90s, KFC expanded the
menu instead of serving customers only fried chicken. Customers coming to the KFC restaurant
chain can freely choose other dishes that are also extremely attractive such as french fries,
chicken filet sandwiches, chicken rolls, coleslaw, side dishes, dishes. Desserts and beverages are
provided from Pepsico.
6. Cultural factors
KFC's menu when operating in Vietnam has been significantly impacted by Vietnamese cuisine.


Due to the long history of wet rice cultivation in Vietnam, rice is frequently the major component
of daily meals for Vietnamese people. KFC has offered chicken, rice, and soup combinations for
the Vietnamese market in an effort to reflect Vietnamese culture. In addition, Vietnamese
consumers frequently utilize items that are heavily spiced, thus KFC adjusted its approach to
offer free ketchup and chili sauce in the Vietnamese market instead of selling sauces in Brazil.


Vietnamese people have a wide selection of affordable street food, including banh mi,
pho, spring rolls, etc. In addition, Vietnamese people frequently have lunch in restaurants.
KFC wants to provide Vietnamese customers with a tempting bargain at lunchtime by
lowering the cost of rice sets (During the time frame 10:00-14:00). This combination
brings KFC's meals closer to Vietnamese consumers' budgets. Customers receive an
entirely different lunch environment than they would at sidewalk restaurants, despite the
fact that the dish's pricing might still be considered greater than that of sidewalk eateries.
7.
As one of the global restaurant chains, kfc has made great efforts to be able to harmonize
with the cultural, historical, economic and legal factors of each country while still
maintaining the core values of the company:
- KFC has a loyal customer base from the company's customer policies for each
country in which they operate.

- With its adaptability to each historical evolution of society, KFC has a firm grip in
the fast food market.
- KFC has adequate duties under each country's laws to acquire the support of the
people in each country where they conduct business.
- KFC can react to economic factors so that it can continue to grow.
all of the above makes us believe that KFC can continue to grow in global business
Reference


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