PROJECT REPORT ON SWOT ANALYSIS -AN EXPLORATORY PROJECT

A PROJECT SUBMITTED TO THE UNIVERSITY OF MUMBAI FOR THE AWARD OF THE DEGREE OF BACHELOR OF MANAGEMENT STUDIES (SEMESTER V)

BY PILLAI SHARANYA SHASHI MODEL COLLEGE DOMBIVLI (EAST)

UNIVERSITY OF MUMBAI OCTOBER 2011

DECLARATION

I, PILLAI SHARANYA SHASHI STUDENT OF BACHELOR OF MANAGEMENT STUDIES FIFTH SEMESTER OF MODEL COLLEGE, HEREBY DECLARE THAT I HAVE COMPLETED THIS PROJECT ON SWOT ANALYSIS OF KFC AND MC.DONALDS FOR THE ACADEMIC YEAR 2011 2012.

THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.

PILLAI SHARANYA SHASHI BACHELOR OF MANAGEMENT STUDIES, SEMESTER V

ACKNOWLEDGEMENT

There are many people who have knowingly and unknowingly helped me with my project for which I want to express my gratitude to them.

I am short of words to express my deep sense of gratitude to my guide GEETA MADAM for her help and her untiring efforts, constant inspiration and stimulating guidance to me in my academic endeavor and in my project.

I also thank my teachers for holding discussions and for the information given to me that formed the basis of the study.

I would also like to thank the college for giving me this opportunity for doing this project. I would also like to thank my family for giving me the support to do the same.

PILLAI SHARANYA SHASHI

LIST OF TABLES

TABLE NO 3.1

DESCRIPTION SWOT ANALYSIS

PAGE NO

4.1

SWOT OF MCDONALDS SWOT OF KFC

4.2

TABLE OF CONTENT SR NO. DESCRIPTION CERTIFICATE DECLARATION ACKNOWLEDGEMENT LIST OF TABLES 1 2 CHAPTER-1 INTRODUCTION CHAPTER-2 PROFILE OF COMPANY-KFC AND MC.DONALDS 3 CHAPTER-3 THEORETICAL VIEW 4 CHAPTER-4 SWOT ANALYSIS OF KFC AND MC.DONALDS 5 CHAPTER 5 CONCLUSION 6 BIBLOGRAPHY PAGE NO I II III IV

CHAPTER: 1

Chapter 1 Introduction

SWOT

analysis is

a strategic

planning method

used

to

evaluate in

the Strengths, Weaknesses, Opportunities,

and Threats

involved

a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares. More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market.

Strengths:

What advantages does an organization have? What does an organization do better than anyone else? What unique or lowest-cost resources can an organization draw upon that others can't?

What do people in market see as organization strengths? What factors mean that "get the sale"? What is an organization's Unique Selling Proposition (USP)?

Consider the strengths from both an internal perspective, and from the point of view of the customers and people in the market. It should also be realistic - it's far too easy to fall prey to "not invented here syndrome." Also, an organization is having any difficulty with this, try writing down a list of organization's characteristics. Some of these will hopefully be strengths. When looking at strengths, think about them in relation to competitors.

Weaknesses:

What could an organization improve? What should an organization avoid? What are people in market likely to see as weaknesses? What factors lose an organizations sales?

Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that an organization doesnt see. Are competitors doing any better than? It's best to be realistic now, and face any unpleasant truths as soon as possible.

Opportunities:

What good opportunities can an organization spot? What interesting trends are you aware of?

Useful opportunities can come from such things as:

Changes in technology and markets on both a broad and narrow scale.

Changes in government policy related to the field. Changes in social patterns, population profiles, lifestyle changes, and so on.

Local

events.

A useful approach when looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.

Threats

What obstacles does an organization face? What are competitors doing? Are quality standards or specifications for job, products or services changing?

Is changing technology threatening organization position? Does the organization have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business? When looking at opportunities and threats, PEST Analysis can help to ensure that an organization doesnt overlook external factors, such as new government regulations, or technological changes in your industry.

About the report Title of study: Present study is titled as SWOT ANALYSIS. The study is made with special reference to MC.DONALDS and KFC.

Objective of the study: To understand how SWOT is applied to companies. To understand the strengths, weakness, opportunities and threats of companies.

Data and methodology: Here for this comparative study secondary data were collected from various magazines, journals, reference books and websites

Chapter layout: Chapter 1: Introduction to title and report Chapter 2: Profile of KFC and MC.D Chapter 3: Theoretical view of SWOT analysis. Chapter 4: Comparative study of Kentucky Fried Chicken and McDonald Chapter 5: Conclusion

CHAPTER: 2

Chapter 2 Profile of McDonald's McDonald's is the leading global foodservice retailer with more than 32,000 local restaurants serving more than 64 million people in 117 countries each day. More than 80% of McDonald's restaurants worldwide are owned and operated by independent local men and women.

They serve the world some of its favorite foods - World Famous Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin.

Their rich history began with our founder, Ray Kroc. The strong foundation that he built continues today with McDonald's vision and the commitment of their talented executives to keep the shine on McDonald's Arches for years to come.

McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily. Headquartered in the United States, the corporation was founded by businessman Ray Kroc in 1955 after he purchased the rights to a small hamburger chain operated by the eponymous Maurice and Richard McDonald.

A McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties

and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.

McDonald's

primarily

sells hamburgers, cheeseburgers, chicken, french

fries, breakfast items, soft drinks, shakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, wraps and fruit.

The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs.

McDonald's first filed for a U.S. trademark on the name McDonald's on May 4, 1961, with the description "Drive-In Restaurant Services," which continues to be renewed through the end of December 2009. In the same year, on September 13, 1961, the company filed a logo trademark on an overlapping, double arched "M" symbol. The overlapping double arched "M" symbol logo was temporarily disfavored by September 6, 1962, when a

trademark was filed for a single arch, shaped over many of the early McDonald's restaurants in the early years. The famous double arched "M" symbol in use today did not appear until November 18, 1968, when the company filed a U.S. trademark.

The first McDonald's restaurants opened in the United States, Canada, Costa Rica, Panama, Japan, the Netherlands, Germany, Australia, France, El Salvador and Sweden, in order of openings.

The

present

corporation

dates

its

founding

to

the

opening

of

a franchised restaurant by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion, and the company became listed on the public stock markets in 1965. Kroc was also noted for aggressive business practices, compelling the McDonald brothers to leave the fast food industry. The McDonald brothers and Kroc feuded over control of the business, as documented in both Kroc's autobiography and in the McDonald brothers' autobiography. The site of the McDonald brothers' original restaurant is now a monument.

With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public about obesity, corporate ethics and consumer responsibility.

Corporate overview Focusing on its core brand, McDonald's began divesting itself of other chains it had acquired during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until October 2006, when McDonald's fully divested from Chipotle through a stock exchange. Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.

Types of restaurants Most standalone McDonald's restaurants offer both counter

service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or "McDrive" as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined; it was first introduced in Arizona in 1975, following the lead of other fast-food chains. The first such restaurant in Britain opened

at Fallowfield, Manchester in 1986.

In some countries, "McDrive" locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts, which offer Walk-Thru service in place of Drive-Thru.

Specially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-and-rollthemed restaurant. In Victoria, British Columbia, there is also a McDonald's with a 24-carat (100%)

gold chandelier and similar light fixtures.

To accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald's introduced McCaf, a caf-style accompaniment to McDonald's restaurants in the style of Starbucks. McCaf is a concept created by McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's in Australia have McCafs located within the existing McDonald's restaurant. In Tasmania, there are McCafs in every store, with the rest of the states quickly following suit. After upgrading to the new McCaf look and feel, some Australian stores have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 McCafs worldwide.

Some locations are connected to gas stations/convenience stores, while others called McExpress have limited seating and/or menu or may be located in a shopping mall. Other McDonald's are located in WalMart stores. McStop is a location targeted at truckers and travelers which may have services found at truck stops.

Since 1997, the only Kosher McDonald's in the world that is not in Israel, is located in the "Abasto de Buenos Aires", Argentina.

Global operation McDonald's has become emblematic of globalization, sometimes referred to as the "McDonaldization" of society. The Economist newspaper uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these

currencies' purchasing power parity. Scandinavian countries lead the Big Mac Index with four of the five most expensive Big Mac's. Norway has the most expensive Big Mac in the world as of July 2008, while the country with the least expensive Big Mac is Malaysia.

Thomas Friedman once said that no country with a McDonald's had gone to war with another. However, the "Golden Arches Theory of Conflict Prevention" is not strictly true. Exceptions are the 1989 United States invasion of Panama, NATO's bombing of Serbia in 1999, the 2006 Lebanon War, and the 2008 South Ossetia war.

Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East looked at the impact

McDonald's had on East Asia, and Hong Kong in particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of other restaurants and institutions. McDonald's have recently taken to partnering up with Sinopec, the second largest oil company in the People's Republic of China, as it begins to take advantage of the country's growing use of personal vehicles by opening numerous drive-thru

restaurants. McDonald's has opened a McDonald's restaurant and McCaf on the underground premises of the French fine arts museum, the Louvre.

Profile of Kentucky Fried Chicken

KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and operating segment, termed a concept of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon Global Restaurants Inc.

KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of grilled and roasted chicken products, side dishes and desserts. Outside the USA, KFC offers beef based products such as hamburgers or kebabs, poutine, pork based products such as ribs and other regional fare.

The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952, though the idea of KFC's fried chicken actually goes back to 1930. Although Sanders died in 1980, he remains an important part of the company's branding and advertisements, and "Colonel Sanders" or "The Colonel" is a metonym for the company itself. The company adopted KFC, an abbreviated form of its name, in 1991. Newer and remodeled restaurants will adopt the new logo and name, while older stores will continue to use the 1980s signage. Additionally, Yum! continues to use the abbreviated name freely in its advertisement.

History Born and raised in Henryville, Indiana, Sanders passed through several professions in his lifetime. Sanders first served his fried chicken in 1930 in the midst of the Great Depression at a gas station he owned in North Corbin, Kentucky. The dining area was named Sanders Court & Caf and was so successful that in 1935 Kentucky Governor Ruby Laffoon granted Sanders the title of honorary Kentucky Colonel in recognition of his contribution to the state's cuisine. The following year Sanders expanded his restaurant to 142 seats, and added a motel he bought across the street. When Sanders prepared his chicken in his original restaurant in North Corbin, he prepared the chicken in an iron skillet, which took about 30 minutes to do, too long for a restaurant operation. In 1939, Sanders altered the cooking process for his fried chicken to use a pressure fryer, resulting in a greatly reduced cooking time comparable to that of deep frying. In 1940 Sanders devised what came to be known as his Original Recipe.

The secret recipe The Colonel's secret flavor recipe of 11 herbs and spices that creates the famous "finger lickin' good" chicken remains a trade secret. Portions of the secret spice mix are made at different locations in the United States, and the only complete, handwritten copy of the recipe is kept in a vault in corporate headquarters.

On September 9, 2008, the one complete copy was temporarily moved to an undisclosed location under extremely tight security while KFC revamped the security at its headquarters. Before the move, KFC disclosed that the recipe, which includes exact amounts of each component, is written in pencil on a single sheet of notebook paper and signed by Sanders. It was locked in a filing cabinet with two separate combination locks. The cabinet also included vials of each of the 11 herbs and spices used. Only two unnamed executives had access to the recipe at any one time. One of the two executives said that no one had come close to guessing the contents of the secret recipe, and added that the actual recipe would include some surprises. On February 9, 2009, the secret recipe returned to KFC's Louisville headquarters in a more secure, computerized vault guarded by motion detectors and security cameras. Reportedly, the paper

has yellowed and the handwriting is now faint.

In 1983, writer William Poundstone examined the recipe in his book Big Secrets. He reviewed Sanders' patent application, and advertised in college newspapers for present or former employees willing to share their knowledge. From the former he deduced that Sanders had diverged from other common fried-chicken recipes by varying the amount of oil used with the amount of chicken being cooked, and starting the cooking at a higher temperature (about 400 F (200 C)) for the first minute or so and then lowering it to 250 F (120 C) for the remainder of the cooking time. Several of Poundstone's contacts also provided samples of the seasoning mix, and a food lab found that it consisted solely of sugar, flour, salt, black pepper and monosodium glutamate (MSG). He concluded that it was

entirely possible that, in the years since Sanders sold the chain, later owners had begun skimping on the recipe to save costs.

Packaging The famous paper bucket that KFC uses for its larger sized orders of chicken and has come to signify the company was originally created by Wendy's restaurants founder Dave Thomas. Thomas was originally a franchisee of the original Kentucky Fried Chicken and operated several outlets in the Columbus, Ohio area. His reasoning behind using the paper packaging was that it helped keep the chicken crisp by wicking away excess moisture. Thomas was also responsible for the creation of the famous rotating bucket sign that came to be used at most KFC locations in the US.

Menu items Chicken KFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried pieces of chicken made with the original recipe. The other chicken offering, extra crispy, is made using a garlic marinade and double dipping the chicken in flour before deep frying in a standard industrial kitchen type machine.

Kentucky Grilled Chicken This marinated grilled chicken is targeted towards health-conscious customers. It features marinated breasts, thighs,

drumsticks, and wings that are coated with seasonings before being grilled. It has less fat, calories, and sodium than the Original Recipe fried chicken. Introduced in April 2009.

KFC has two lines of sandwiches: its "regular" chicken sandwiches and its Snackers line. The regular sandwiches are served on either a sesame seed or corn dusted roll and are made from either whole breast fillets (fried or roasted), chopped chicken in a sauce or fried chicken strips. The Snackers line are value priced items that consist of chicken strips and various toppings. In the UK, Australia and New Zealand, sandwiches are referred to as "burgers"; there is the chicken fillet burger (a chicken breast fillet coated in an original-recipe coating with salad garnish and mayonnaise) and a Zinger Burger (as with the former but with a spicier coating and salsa). Both of these are available as "tower" variants, which include a slice of cheese and a hash brown.KFC considers its Double Down product a sandwich in spite of containing no bread. A variety of finger foods, including chicken strips, wings, nuggets, and popcorn chicken, and potato wedges, are served with various sauces.

Several pies have been made available from KFC. The Pot Pie is a savory pie made with chicken, gravy and vegetables. In the second quarter of 2006, KFC introduced its variation on Shepherd's pie called the Famous Bowl. Served in a plastic bowl, it is layered with mashed potatoes or rice, gravy, corn, popcorn chicken, and cheese, and is served with a biscuit. The bowl had been available at KFC's special test

market store in Louisville since the third quarter of 2005.The KFC Twister is a wrap that consists of either chicken strips or roasted chicken, tomato, lettuce and (pepper) mayonnaise wrapped in a tortilla. In Europe, the Twister is sold in two varieties: 1) the Grilled Twister (chicken strips), and 2) the Grilled Mexican twister/Spicy Toasted Twister (UK) (chicken breast supplemented by tortilla chips and salsa, UK: adds only salsa to pepper mayonnaise), KFC Fillers are a 9 in (23 cm) sub, available in four varieties over the summer period in Australia. Shish kebab in several markets KFC sells kebabs. Kentucky Barbecued Chicken barbecued chicken dipped in the original recipe Wrapstar is a variant of the KFC Twister, consisting of chicken strips with salsa, cheese, salad, pepper mayonnaise and other ingredients, contained in a compressed tortilla.

Advertising Despite his death in 1980, Sanders remains a key symbol of the company in its advertising and branding. Early television advertisements for KFC regularly featured Sanders licking his fingers and talking to the viewer about his secret recipe, and by the 1960s both the Colonel and the chain's striped bucket had become well-known. The bucket as product

placement can be seen in the hands of both Annette Funicello and Dwayne Hickman in 1965's and was also featured prominently in the 1968 Peter

Sellers vehicle, The Party. KFC itself was featured in 1980's Superman II. The Colonel made appearances as himself in Jerry Lewis's The Big Mouth (1967), Herschell Gordon Lewis' Blast-Off Girls (1967) and Al

Adamson's Hell's Bloody Devils (1970), as well as an appearance in 1968 on Rowan & Martin's Laugh-In. Before he became a platinum-selling pop star in the 1970s, Barry Manilow sang the commercial jingle "Get a Bucket of Chicken", which was later included on Barry Manilow Live as part of "A Very Strange Medley." Throughout the mid 1980s, KFC called on Will Vinton Studios to produce a series of humorous, claymation ads. These most often featured a cartoonlike chicken illustrating the poor food quality of competing food chains, mentioning prolonged freezing and other negative aspects.

Chapter: 3

Chapter: 3 SWOT analysis is a strategic planning method used to evaluate in

the Strengths, Weaknesses, Opportunities,

and Threats

involved

a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning has been the subject of much research.

Strengths: characteristics of the business or team that give it an advantage over others in the industry.

Weaknesses: are characteristics that place the firm at a disadvantage relative to others.

Opportunities: external chances to make greater sales or profits in the environment.

Threats: external elements in the environment that could cause trouble for the business.

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated. The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development.

History SWOT analysis came from the research conducted at Stanford Research Institute from 1960-1970. The background to SWOT stemmed from the need to find out why corporate planning failed. The research was funded by the fortune 500 companies to find out what could be done about this failure. The Research Team were Marion Dosher, Dr Otis Benepe, Albert Humphrey, Robert Stewart, Birger Lie.

It all began with the corporate planning trend, which seemed to appear first at Du Pont in 1949. By 1960 every Fortune 500 company had a 'corporate planning manager' (or equivalent) and 'associations of long range corporate planners' had sprung up in both the USA and the UK.

However a unanimous opinion developed in all of these companies that corporate planning in the shape of long range planning was not working, did not pay off, and was an expensive investment in futility.

It was widely held that managing change and setting realistic objectives which carry the conviction of those responsible was difficult and often resulted in questionable compromises.

The fact remained, despite the corporate and long range planners, that the one and only missing link was how to get the management team agreed and committed to a comprehensive set of action programmes.

To create this link, starting in 1960, Robert F Stewart at SRI in Menlo Park California lead a research team to discover what was going wrong with corporate planning, and then to find some sort of solution, or to create a system for enabling management teams agreed and committed to development work, which today we call 'managing change'.

The research carried on from 1960 through 1969. 1100 companies and organizations were interviewed and a 250-item questionnaire was designed and completed by over 5,000 executives. Seven key findings lead to the conclusion that in corporations chief executive should be the chief planner and that his immediate functional directors should be the planning team. Dr Otis Benepe defined the 'Chain of Logic' which became the core of system designed to fix the link for obtaining agreement and commitment. 1. Values 2. Appraise 3. Motivation

4. Search 5. Select 6. Program 7. Act 8. Monitor and repeat steps 1 2 and 3 They discovered that they could not change the values of the team nor set the objectives for the team so they started as the first step by asking the appraisal question, for example, what's good and bad about the operation. They began the system by asking what is good and bad about the present and the future. What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat. This was called the SOFT analysis. When this was presented to Urick and Orr in 1964 at the Seminar in Long Range Planning at the Dolder Grand in Zurich Switzerland they changed the F to a W and called it SWOT Analysis. SWOT was then promoted in Britain by Urick and Orr as an exercise in and of itself. As such it has no benefit. What was necessary was the sorting of the issues into the programme planning categories of: 1. Product (what are we selling?) 2. Process (how are we selling it?) 3. Customer (to whom are we selling it?) 4. Distribution (how does it reach them?) 5. Finance (what are the prices, costs and investments?) 6. Administration (and how do we manage all this?)

The second step then becomes 'what shall the team do' about the issues in each of these categories. The planning process was then designed through trial and error and resulted finally in a 17 step process beginning with SOFT/SWOT with each issue recorded separately on a single page called a planning issue. The first prototype was tested and published in 1966 based on the work done at 'Erie Technological Corp' in Erie Pa. In 1970 the prototype was brought to the UK, under the sponsorship of W H Smith & Sons plc, and completed by 1973. The operational programme was used to merge the CWS milling and baking operations with those of J W French Ltd. The process has been used successfully ever since. By 2004, now, this system has been fully developed, and proven to cope with today's problems of setting and agreeing realistic annual objectives without depending on outside consultants or expensive staff resources.

Internal and external factors The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories:

Internal factors The strengths and weaknesses internal to the organization. External factors The opportunities and threats presented by the external environment to the organization.

The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.

Use of SWOT analysis The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, and

individuals. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. SWOT analysis may also be used in creating a recommendation during a viability study/survey.

Corporate planning As part of the development of strategies and plans to enable the organization to achieve its objectives, then that organization will use a systematic/rigorous process known as corporate planning. SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business and environmental factors.

Set objectives defining what the organization is going to do Environmental scanning

Internal appraisals of the organization's SWOT, this needs to include an assessment of the present situation as well as a portfolio of products/services and an analysis of the

product/service life cycle

Analysis of existing strategies, this should determine relevance from the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors Strategic Issues defined key factors in the development of a corporate plan which needs to be addressed by the organization Develop new/revised strategies revised analysis of strategic issues may mean the objectives need to change Establish critical success factors the achievement of objectives and strategy implementation

Preparation of operational, resource, projects plans for strategy implementation Monitoring results mapping against plans, taking corrective action which may mean amending objectives/strategies.

Marketing In many competitor analyses, marketers build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and other factors. Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. Accordingly, management often conducts market research

(alternately marketing research) to obtain this information. Marketers employ a variety of techniques to conduct market research, but some of the more common include:

Qualitative marketing research, such as focus groups Quantitative marketing research, such as statistical surveys Experimental techniques such as test markets Observational observation techniques such as ethnographic (on-site)

Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis. Using SWOT to analyse the market position of a small management consultancy with specialism in HRM. Strengths Weaknesses Opportunities Threats

Reputation marketplace

in Shortage consultants

of Well at established

Large consultancies

operating level position with a operating at a rather than well defined minor level

partner level

market niche

Expertise

at Unable to deal Identified multi- market

Other

small

partner level in with HRM consultancy

for consultancies to the

disciplinary assignments

consultancy in looking areas other invade marketplace

because of size than HRM or lack of ability

Swot analysis - different applications SWOT analysis is a powerful model for many different situations. The SWOT tool is not just for business and marketing. Here are some examples of what a SWOT analysis can be used to assess:

A company (its position in the market, commercial viability, etc) A method of sales distribution A product or brand A business idea A strategic option, such as entering a new market or launching a new product

A opportunity to make an acquisition A potential partnership Changing a supplier Outsourcing a service, activity or resource Project planning and project management An investment opportunity Personal financial planning Personal career development - direction, choice, change, etc. Education and qualifications planning and decision-making Life-change - downshifting, relocation,

Whatever the application, be sure to describe the subject (or purpose or question) for the SWOT analysis clearly so you remain focused on the central issue. This is especially crucial when others are involved in the

process. People contributing to the analysis and seeing the finished SWOT analysis must be able to understand properly the purpose of the SWOT assessment and the implications arising.

CHAPTER: 4

Chapter: 4 SWOT of McDonald's Strengths

McDonald's has been a thriving business since 1955 and 20 of the top 50 corporate staff employees started as a restaurant level employee. In addition, 67,000 McDonalds restaurant managers and assistant managers were promoted from restaurant staff. Fortune Magazine 2005 listed McDonald's as the "Best Place to Work for Minorities." McDonalds invests more than $1 billion annually in training its staff, and every year more than 250,000 employees graduate from McDonald's training facility, Hamburger University.

2.

Ranks very high on the Fortune Magazine's food service companies that are most admired list.

3.

Approximately 85% of McDonald's restaurant businesses world-wide are owned and operated by franchisees. All franchisees are independent, full-time operators and McDonald's was named Entrepreneur's number-one franchise in 1997. They have global locations in all major airports, and cities, along the highways, tourist locations, theme parks and inside Wal-Mart.

4.

They have an efficient, assembly line style of food preparation. In addition they have a systemization and duplication of all their food prep processes in every restaurant.

5.

McDonald's uses only 100% pure USDA inspected beef, no fillers or additives. Additionally the produce is farm fresh. McDonald's serves 100% farm raised chicken no fillers or additives and only grade-A eggs. McDonald's foods are purchased from only certified and inspected suppliers. McDonalds works closely with ranchers, growers and suppliers to ensure food quality and freshness.

6.

McDonalds only serves name brand processed items such as Dannon Yogurt, Kraft Cheese, Nestle Chocolate, Dasani Water, Newman's Own Salad Dressings, Heinz Ketchup, Minute Maid Juice.

7.

McDonald's takes food safety very seriously. More than 2000 inspections checks are performed at every stage of the food process. McDonalds are required to run through 72 safety protocols every day to ensure the food is maintained in a clean contaminate free environment.

8.

. McDonald's was the first restaurant of its type to provide consumers with nutrition information. Nutrition information is printed on all packaging and more recently added to the McDonald's Internet site. McDonalds offers salads, fruit, roasted chicken, bottled water and other low fat and calorie conscious alternatives.

9.

One of the best brand recognition in the world, the golden arches and Ronald McDonald.

10. 11. 12.

Community oriented business models. Very socially responsible. Global operations all over the world.

13.

Cultural diversity in the foods that are provided based on location of the restaurant.

1. Weakness 2. Their test marketing for pizza failed to yield a substantial product. Leaving them much less able to compete with fast food pizza chains. 3. High employee turnover in their restaurants leads to more money being spent on training. 4. They have yet to capitalize on the trend towards organic foods. 5. McDonald's have problems with fluctuations in operating and net profits which ultimately impact investor relations. Operating profit was $3,984 million (2005) $4,433 million (2006) and $3,879 million (2007). Net profits were $2,602 million (2005), $3,544 million (2006) and $2,395 million (2007). 6. Not much variation in seasonal products that are offered. 7. Quality concerns due to franchised operations. 8. Focus on burgers and grease fried foods and not on healthier options for their customers.

Opportunities
1.

In today's health conscious societies the introduction of a healthy hamburger is a great opportunity. They would be the first QSR (Quick Service Restaurant) to have FDA approval on marketing a low fat low

calorie hamburger with low calorie combo alternatives. Currently McDonald's and its competition health choice items do not include hamburgers.
2.

They have industrial, Formica restaurant settings; they could provide more upscale restaurant settings, like the one they have in New York City on Broadway, to appeal to a more upscale target market.

3.

Provide optional allergen free food items, such as gluten free and peanut free.

4.

In 2008 the business directed efforts at the breakfast, chicken, beverage and convenience categories. For example, hot specialist coffees not only secure sales, but also mean that restaurants get increasing numbers of customer visits. In 2009 McDonald's saw the full benefits of a venture into beverages.

5. 6. 7. 8.

Opening more joint ventures with several different retailers. Advertising the capabilities of Wi-Fi internet services in the branches. Creating more play places for the children in more of the restaurants. Expanding on the advertising in regards to being more socially responsible in the environment.

9. 10.

Expansions of business into newly developed parts of the world. Creating a more upscale appearance to attract a more upscale clientele.

Threats
1.

They are a benchmark for creating "cradle to grave" marketing. They entice children as young as one year old into their restaurants with special meals, toys, playgrounds and popular movie character tie-ins. Children grow up eating and enjoying McDonalds and then continue into adulthood. They have been criticized by many parent advocate groups for their marketing practices towards children which are seen as marginally ethical.

2.

They have been sued multiple times for having "unhealthy" food, allegedly with addictive additives, contributing to the obesity epidemic in America. In 2004, Michael Spulock filmed the documentary Super Size Me, where he went on an all McDonalds diet for 30 days and wound up getting cirrhosis of the liver. This documentary was a direct attack on the QSR industry as a whole and blamed them for America's obesity epidemic. Due in part to the documentary, McDonalds no longer pushes the super size option at the dive thru window.

3. 4.

Any contamination of the food supply, especially e-coli. Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC and any mid-range sit-down restaurants.

Table no: 4.1

SWOT of KFC Strengths 1. Kentucky Fried Chicken is a very famous chain of fast food outlets that started from Louisville, Kentucky. The company is became a subbrand of Yum Brands in the year 2002 and benefitted greatly from the position and brand value of Yum foods. In the past the KFC chain of restaurants grew at a very fast pace and has become today one of the largest chicken restaurants chain in the world. 2. KFC has been known to be a leader in the chicken restaurant segment with an annual sale of more than a billion dollars. The KFC as a brand is well established in the dining out as well as delivery service provider in the fast food industry. 3. Despite the entrance and presence of many competitors in the fast food industry the company was able to retain its large loyal customer base because of its unique offering. Due to this reason the KFC ranks highest when it comes to chicken restaurant chains, convenience restaurants and variety food provide. 4. Over the years KFC has gained enormous recognition as a reputable brand for fast food and has globally positioned itself well in the industry. 5. Brand Equity is the major strength of the company. 6. It is second largest fast food sellers in the world, first being McDonalds. 7. Recognized and experienced all over the world and have strong markets in UK, Thailand, Japan, Korea, China, Mexico and Middle East.

8. KFC franchises and licensing fees earn huge revenue for the company. 9. Secret and trade mark of the recipes had maintained its supremacy in the fast food world. 10. The company is holding over 50% shares in the fast food industry because of its global brand recognition. 11. The company has deep concerns to hygiene, availability of the fresh products to the customer and establishing the environment friendly approach. 12. Profits of the company increases by almost $ 1 billion each year. Weaknesses 1. When other companies in the chicken industry were trying to increase its market share and were not able to compete well in the market or retain its customers. 2. Also the special paper buckets that is now used by the KFC for delivering large sized orders was originally introduced by Wendys restaurant 3. The company has entered so many markets in the past in the United States that its growth rate was about only one percent an year. 4. The company is said to not to pay attention to its resource and development. 5. Least concerned about the importance of research and development industry. 6. Quality comprise on few of its franchises that is harming the brand name and its image. 7. Inflexibility of prices makes it unaffordable to middle class people.

8. Unequal entrance of the franchises to different markets at one time especially in United States has tremendously decreased its growth rate. 9. Unable to work out for their original ideas, the thick paper bags used by the company were initiated by Wendys restaurant.

Opportunities 1. KFC has been trying to enter new markets and position itself in some of the hard to enter markets like the South America. With more investments the company can definitely make its position stronger in the food industry. 2. More spending on the resources and development as well as introducing new food items and products the company can increase its market share and profit. 3. Entrapping and tempting the young customer between 18 to 24 years of age. 4. Reliability of the chicken meat used as the people are scared of diseases from eating cows meat internationally. 5. Replacing home meals very speedily. 6. Increased and efficient services specially home delivery and office orders. 7. Updating the restraints with facilities like play stations for kids, LCDs and booking the outlets for parties. 8. Induction of new products other than chicken including fish in almost all the items in which chicken is present, corns, salads etc, in fact the whole menu is balanced and attracts the customers considerably.

9. Trying to position itself strongly in the markets of South America, with a view of increasing market value as well as share.

Threats 1. The competitors of KFC have successfully captured a large market share. According to findings McDonalds has about 35 percent of the share in Sandwich Segment whereas the Burger King owns about sixteen percent of the market share in fast food industry. The local restaurants in different countries where KFC has presence pose a threat to the company. 2. The baby boomers formed the major part of the loyal customers of the company that now have ages between 35 to 50 years and are likely to move towards healthier foods. 3. The other entrants in the industry are continuously improving and trying to enter new markets and increase their market share and sales. 4. With the lifestyle of people changing due to growing awareness about healthier food people now look for something healthy, low calories and delicious at the same time. 5. High rates on the prices as compared to the other brands selling same items may cause the customers shift. 6. Less economical packages and deals are being offered in comparison of its biggest competitor McDonalds, which work on the strategy of seasonal induction of tempting deals.

7. Shift of customer demand to more healthy and fresh food, avoiding the all fried items. 8. Less variety of products pose a threat to the company, as they have very few products other than their portfolio Fried chicken.

Strengths Brand Equity

Weaknesses

1. Recent drop in sales 1. 2nd Only to McDonalds in Foreign Sale. 2. Strong Cash Flows 2. Failed to rank in top 20 in growth in 3. Generate year. 4. Same 4. Very Internationally UK, Middle East, 5. Lack of point of scale scanning system strong declined Store sales $1B each 3. 2000. for KFC

Thailand, China, Japan, Korea, Mexico

6. Admitted inability to 5. Strong Franchise and License Fee revenues for cash flow. 8. Lack 6. Interactive marketing 9. Lack of relationship 7. Strong recipes trademarks building employees, customers 8. Ranks highest among all chicken restaurant chains for its suppliers Chick-fil-a and i.e. with relationship of knowledge provide quality 7. service

about their customers

convenience and menu variety.

10.

Question

of

over franchising leads to

9. Largest

multibranded

11.

loss of control

restaurant in the world 100 KFC and Pizza Hut combos 600 KFC

and quality

12.

Lack of focus

and Taco Bell combos

on R&D

Opportunities 1.Growth of 18-24

Threats age 1.Rated 83 out of 100 in terms of competitiveness. wage rates

demographic

2.Increase in U.S. median 2.Increasing income

directly affect menu prices food

3. International beef scare 3. 85% annual employee from mad-cow and hoof and turnover mouth disease. market for fast

4.Home Meal Replacement 4. Supermarkets and new Market estimated 2020 will exceed billion an competitors threaten HMR by market International

$577

Exchange Rates.

5.Targeting to growing ethnic 5. Health Trend away from markets Asian American fried foods. and Hispanic 6.Changing customer

6.New Leadership Domestic markets Updating restaurants Balanced menu Customer focus Increase delivery service

demands 7.Quality of Service Focus

Table no: 4.2

Chapter: 5

Chapter: 5 Conclusion As per the swot analysis it is seen that kfc has more of non-vegetarian items in its menu whereas mc.d has an equal combination of both. The menu of mc.d provides a variety of vegetarian as well as nonvegetarian items. As a result more people are attracted as the menu is comparatively large. Mc.d is more successful in India as compared to kfc because Indian population consists of many vegans. Kfc has faced certain problems in India as organizations like peta interfered in its business. Also the prices of kfc are comparatively higher as compared to that of mc.d. Also there are quality concerns due to franchised operations with kfc. Also the market share of mc.d is much higher than that of kfc. Mc.d has high scope for development by properly using its opportunities like expanding on the advertising in regards to being more socially responsible in the environment or expansions of business into newly developed parts of the world. Whereas the opportunities of kfc of kfc are limited as companies like burger king are big players in this sector.

So mc.d should see to it that they use the opportunities they have and actualizing these opportunities would help them have a major gold over the market. Also kfc can include more of vegetarian items in its menu and thus can attract more customers. Also they can they as lower their prices initially so that they can have a hold over the market and then increase the prices as per the market conditions.

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