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http://www.scribd.com/doc/31608312/Structural-Analysis-KFC
One of the major models of analyzing a companys competitor position in themarket is given by Porter. Porters five forces comprising of threats of newentrants, bargaining power of buyers and suppliers, threats of substitutesand the rivalry among existing competition determine the degree to whichi n v e s t m e n t i n a p a r t i c u l a r i n d u s t r y w i l l d r i v e r a t e s o f r e t u r n t o the freem a r k e t l e v e l . I n s h o r t , p o r t e r s f i v e f o r c e s d e t e r m i n e a c o m p a n y s profitability and opportunities in the industry.KFC, one of the largest chains of fast food restaurants faces all these forces and tends to eliminate them to strengthen market position. KFC has been inthe fast food industry since the 1930s. It entered Pakistan in 1907 and hascarried out successful business. It is a well established multinational offeringa premium experience of value added chicken meals and ot her fast food toits customers.K F C h a s p u t u p m o d e r a t e b a r r i e r s t o e n t r y f o r p o t e n t i a l e n t r a n t s . H e n c e , although it is not very difficult to enter the fast food industry, it is extremelyd i f f i c u l t t o e n t e r a s K F C s c o m p e t i t o r . W e l l e s t a b l i s h e d b r a n d n a m e , h i g h economies of scale, a moderate level of product differentiation, high capitalr e q u i r e m e n t s a n d a c c e s s t o d i s t r i b u t i o n c h a n n e l s m a k e i t a s u c c e s s f u l business altogether and thus makes it difficult for a new entrant to enter theindustry and compete with it.Rivalry among existing competitors is moderate, since all major players havea prominent position in the market. Price competition exists, but KFC focusesmore on differentiating and marketing efforts to raise sales than bitter pricew a r s a n d a d v e r t i s i n g b a t t l e s . E x i t b a r r i e r s f o r t h e f i r m a r e h i g h d u e t o accountability to not only its loyal customers but its suppliers, employeesand the band name itself. High exit and entry barriers promise high returnsb u t m a k e t h e f i r m r i s k y a t t h e s a m e t i m e . A n e w e n t r a n t p r o m i s i n g K F C s special recipe at a lower price will definitely hurt the company.Substitute products for KFC have gained power due to renewed health ando b e s i t y c o n c e r n s . I n P a k i s t a n , i s s u e s l i k e n o t u s i n g H a l a l c h i c k en haveseriously damaged the brand, but KFC has overcome this b
y e f f e c t i v e marketing and branding efforts. However, during the process it lost some of the trust people placed upon it and has given space to substitutes like madeto order and ready made recipes. KFC loyal customers will however not shiftto substitutes due to high switching costs which can be both monetary and emotional.
ge from them.