PESTEL Analysis is a strategic tool which has been utilized by the strategists and marketers to determine and analyze the external or Macro-environmental factors that could have positive and negative impact on Organization. This article will discuss the PESTEL or PEST analysis of KFC to perform analysis of external factors ( Political, Economic, Social, Technological, Environmental and Legal ) that have impact on the Organization.
Introduction
This fast food chain started from Kentucky by a man called Colonel Sanders, whose picture we see in logo. KFC is known to have been safeguarding its recipe for all these years and have not patented it because patents expire. The man who started it faced many hardships in the beginning of his life and had to start earning his living at a very early age. The first time he sold his famous chicken was on a road side and gained popularity from there. After his death the recipe for gravy was changed because it was too complicated for the standardization processes adopted for franchising.
Political
It was initially named “Kentucky Fried Chicken” after the location from where it first started but later on it was changed to KFC, in order to eliminate the association of the restaurant with fried stuff. They are selling essentially the same but in order to make people psychologically guilt-free they played with words. Now people are consuming the same thing but their mind doesn’t go to the fact how unhealthy it is. KFC is criticized by nutritionists all over the world for this act as they believe that selling unhealthy food is one thing but playing with people’s psychology is wrong on so many grounds. (Abraham, 2004). Nutritionists have claimed that advertising of fast food should be banned as of cigarettes as more people die of heart diseases every year than of lung cancer.
Economic
Yum’s who owns Taco Bells, Pizza Hut and KFC is struggling in the Chinese economy where some of it ventures are growing at a very slow pace and some are even declining. People relate it strongly with the chicken which is strength as well as a weakness for the company because when other fast food can diversify their menu to include items that are healthy, unique and add variety, KFC had to stick to its chicken as people mainly go there for it. As people are becoming more health conscious sales of this venture have been taking constant blows. Each KFC new outlet gives employment to about 20-25 jobless people so they are contributing towards ending unemployment. Also as this is an FDI in all countries except for U.S. it contributes to the GNP growth of that foreign country.
Social
If we try to search about the social issues that concern these fast food chains the most then three top most would be paying workers on the minimum wages, unethical treatment of animals and luring children to their food. First things first, if you are that big of an organization, operating in more than 100 countries in the world and having revenue of the size of a small country’s GDP then why don’t you treat your employees well by paying them their due share. After all they are the ones who interact with customers, keep them happy. The chicken used are genetically modified to store as much fat as possible that’s why they become so heavy that they cannot walk on their legs. This is cruelty to chickens and many animal welfare organizations including PETA protests against this issue. Children are the most innocent of all mankind and advertising to them, luring them through play areas and toys and showing tempting pictures of food, without mentioning the side effects is as much a crime as killing innocent people.
Technological
KFC has started using location targeting techniques to lure competitor’s customers to their outlets and they have been successful in this tactic as store visits per day have increased. They identified their target audience profile as busy parents who are looking for ready to eat food on their way home and since this happens often they want something affordable they started putting their ads whenever these customers would search for nearest food options, also the app would show the distance measured to the nearest outlet. This is the era of technology and more and more people are becoming reliant on their mobile phones completely. KFC has launched ordering and payment app which makes it easy for customers to place their orders through cell phones and pay online. If it is for dine in or take out then the customer has to just check in to let the staff know that they are present at the outlet physically and they do not have to wait in lines.
Environmental
KFC buys its packaging material from a company who contributes in deforestation in order to make paper. Now with the passage of time our future generation will find no trees in the world because of this criminal act also there will be less rainfall, more pollution and more diseases. This paper company also employs underage children to a part of their workforce in order to pay fewer wages to them. Moreover this deforestation has endangered wild life and those rare species which are on the edge of becoming extinct. Only one country has taken initiative and has stopped buying from this Paper Company but KFC as a whole needs to realize the gravity of the situation and respond immediately to it. (Becoming A Global Citizen: Investigating KFC, 2014)
Legal/Law
In order to maintain the law and order situation they have to be in accordance with the local laws of the country in which they are operating, their financial statements need to be truthful so that they can pay the rightful amount in taxes. Since they are in the food business it is their utmost responsibility to follow all the standards of health and food safety, to make sure that raw material procured is free of all diseases and processing is done in a clean environment. There are many law suits on them by their customers who have proof that they have been served faulty food, which is either raw or rotten. It is a publically listed company therefore it has some obligations to its investors as well. It has to disclose its financial position to them and include them in all the major investment decisions. (Corporate Social Responsibility Of Kfc Management Essay)
Bibliography
Abraham, M. ( 2004). KFC®, BP®, and Political correctness. Retrieved December 17, 2015, from Abrahan solar: http://www.abrahamsolar.com/pdf/KFC%20BP%20and%20Political%20Correctness.pdf
Becoming A Global Citizen: Investigating KFC. (2014, June). Retrieved December 18, 2015, from Weebly: http://ifakfcbucketcouldtalk.weebly.com/if-a-bucket-of-kfc-could-talk-blog/kfc-social-environmental-and-economic-impacts-on-global-citizenship
Corporate Social Responsibility Of Kfc Management Essay. (n.d.). Retrieved December 18, 2015, from UK Essays: http://www.ukessays.com/essays/management/corporate-social-responsibility-of-kfc-management-essay.php