Competition analysis in the industry
The paper is based on understanding the threats and opportunities in the business market by choosing two companies (Alonzi, & Condon, 2015). The role of a business analyst is to organize and execute projects according to the needs of the clients by estimating the concentration of competition in the market ad advising them with efficient strategies. The chosen firms for the paper are Oporto and KFC who operate their businesses in several countries and have a strong competition against each other as both of them produce chicken which is slightly differentiated with each other.
The firms have expanded its businesses in many countries and have huge market capitalization with increased level of profits. As both the firms produce substitute goods, they might have the same customer base and a change in price may affect the profitability of the two producers. The aim of the paper is to compare the business prospectus of KFC and Oporto by using various parameters such as market strategies, rising competition, on price and non-price strategies and growth strategies (Anand, & Yeung, 2018).
Oporto
Oporto is an operator of fast food restaurants that is franchised with a Portuguese theme and have the speciality of serving Portuguese styled burgers and chicken. It has market operation with more than 100 restaurants in United Kingdom, Singapore, India, Sri Lanka and Vietnam with majority in Australia. Previously, Oporto has restaurants in China and is looking forward to expand operations in Dubai by 2020. The firm started its operation in 1986 which was named after FC Porto which was Cerqueria’s favourite football team (Omer, 2018). The first franchise store was introduced in 1995 and within 2005, Oporto became the fastest growing business in Australia By 2007, more than 140 restaurants were opened up and some of which served a special course named Oporto Express with arrange of small items such that no breakfast menu is served. Oporto has three categories of stores such as Strip stores, Shopping Centre and Drive thru. In 2007, Oporto was bought by Craveable Brands (Belaid et al., 2017)
Oporto has over 170 established restaurants that is operated with 3000 team members. The growth of millennial market has influenced the Australian food culture. It is engaged in the sale of flame grilled chicken with unique Portuguese chilli sauce.
KFC is a famous fast food sever and is reputed as the second largest restaurant chain in the world. It was created 89 years ago by an entrepreneur who sold chicken in a roadside restaurant. Sanders Court & Café saw the potential and opened up a big restaurant by naming it Kentucky Fried Chicken (KFC) in the year 1952 (Walchli, 2015). It has been the first food chain to expand its business in global markets with an originality of pressure fried chicken that is seasoned with eleven different herbs and spices. Larger pieces of chicken are provided in a cardboard bucket which is extremely popular since 1990s (Gong, 2015). Over time, KFC has included various food stuffs in its menu such as French fries and coleslaw, chicken fillet sandwich and wraps, rice bowls, salads and other side dishes. KFC has over 20,000 outlets around the world. Part of the franchise are owned by the company while the remaining is owned by the business holder with an average annual sale over 1.5 million dollars.
Growth strategies analysis
Oporto is paying focus on the reduction of waste generated and manage business with eco-friendly techniques. It shifted their franchise for dine-in experience instead of crockery to make the customers more comfortable and they feel as if they are at home (Teichert et al., 2015). This also reduces footprint on waste as 20 tons of waste was diverted and removed 727,640 from landfill. Quality is an important factor when it comes to food and so Oporto treats its birds rightfully by raising chickens in barn atmosphere with plenty of free space to roam about, perching, dust bathe and foraging. The firm has partnered with Foodbank in Australia to sponsor about 100 local sports teams with generous food facility. It pays importance for increasing its community because good food and quality service is an important factor for the growth of firms (Van Ittersum, 2015).
Oporto has the following market strategies
- Provide great quality food that has an unique taste, recipes, sauces with trading cooking styles
- Lower the amount of footprint on waste
- Treat employees and customers properly with the facility of good servicing
- Build large number of stores n street fronts, food courts and drive thru locations
- Expand business operations in new countries respective to the demand for grilled chicken and burgers
- Provide constant help and support with creation of training and programs for its employees
- Designing and renovating restaurants so that people get the best experience of buying and eating food by implementation of newly designed uniforms and table service.
In opposition to the strategies opted by Oporto, KFC has the following strategies that helps in the growth of businesses,
- Dominating the market with increased brand value
- Increase outlets and serving stores by having plenty of food available
- Serve fried chicken in various forms along with making it efficient
- Produce anything that will satisfy consumer demand
- Dividing the work according to various groups to work to make efficient handling of goods (Arli, Tjiptono, & Porto, 2015).
- To target each individual in the society irrespective age, caste and created.
- Updating the search engine tools so that people can order food
- Facility of providing food at any time of the day
KFC has good management teams who carefully handle needs of people and provide trainings for the employees and keeps changing the strategies efficiently to be in the markets. Oporto does the same thing in terms providing quality work culture for its employees, but does no put much focus to change menus because its prime focus is the serve the food in the traditional way.
KFC is well known for its brand value and remarkable sales. Even in the first half of 2019, KFC has opened 372 food outlets and restaurants by establishing the global footprint in 22,886 locations. Although KFC closed its operation in about 107 locations, yet a 6 percent of growth has been seen due to opening up of new units. Sales have grown more than what the company has expected with a 5% growth in the first half along with the rise in system sales (Kormin, Kamisah, and Rohaizat, 2016). The firm initiated with new techniques such as a la carte menu where 2 for $3 Chicken Littles were offered to customers and customers have the flexibility to build their own meals. It offered bulk food options like the $20 meal offerings and $5 fill up which drove huge sales for the firm.
KFC has been a very successful business over the years and owes its success to the dinner courses, bone-in chicken and big packs where the delivery has over-indexed most of the markets. KFC generated loads of revenue that helped the firm to open franchises in new locations as businesses require huge amount of investment for fixed cost of land. Capital assets. KFC generated a revenue of 5.9 billion dollars in 2017 with a brand value of 126 million dollars (Ludwig, & Schmid, 2015).
Pricing and non-price strategies analysis
Table 1: Sales of KFC per unit in thousand US dollars in between 2006-2018
Source: (De Oliveira et al., 2016)
From Figure1, it is evident that over the years KFC has a growing trend in the value of sales earned or the amount of revenue generated. The sales has been showing an upward trend because every year the sales seemed to rise in comparison with the sale of previous year except in few years like in 2007, 2010, 2013 where sales few by few amounts (De Oliveira et al., 2016). This rising trend says how efficiently KFC is growing and how effectively it has expanded its business. It is expected that the company will flourish in 2020 with huge profit margins. Thus, the company has a great future that is well perceived by the trending outcomes and market demand for KFC’s products. KFC has a strong market capitalization and dominate markets where they work. Its unique meal courses and its constant shifting of strategies has the firm to dominate the market are customers are attracted to see the changes made because nobody likes to have the same food on every occasion. People always find for variations and the market strategies of KFC goes hand in hand with the growth objectives of the firm (Marquis & Raynard, 2015).
The overall business market of Oporto is compared to be lower than that of KFC, yet it has a great dominating power in Australia. Oporto chicken is highly preferred by young adults who lie within the age group of 13-28 years. It is one of the fastest rising companies with specialised production of one unique good. Oporto has partnered with MICROS Simphony for programming of self-hosted IT based, cloud based computations to raise the efficiency of the firm and grow the maximized outputs to earn greater profits (Randhir et al., 2015). Oporto focuses on the health impacts of the firm for growing the per capita effective earning. Oporto is provided with all the requirements needed to run the business for sole purpose of earning maximized revenues. The company has successfully handed its turnovers by handling clients with a turnover about $70 billion from the initial $18 in 2018. It has about 25 trucks who delivers about 3,500 fresh and grilled chicken to schools, restaurants and fast food business stores.
The firm earns a calculated amount of 135.000 dollars each year and every year the value of sales is estimated to go up by four percent. Oporto has a strong brand value in Australia with the younger generation depending on chicken, for its branding in various markets. Oporto has great market efficiencies and employees who have good salaries ranging between 13-22 Australian dollars. Oporto is well known for its quick service of chicken with good hospitality that is given a deep focus. The average revenue of Oporto fluctuates between $50 to about $100 million US dollars and rises annually with a net return of 5 percent (Leão et al., 2015).
Oporto market strategies
Pricing strategies are those strategies which determine the best possible price for earning the maximum amount of profit margins. This price is determined by the amount that sellers want to sell and the price that buyers are able and willing to pay. The pricing strategy depends on the buyers of the good. A firm wants to keep price as high as possible without any fall in demand. In many cases pricing strategies are applied by keeping a very low price so as to raise the market demand for the good (Wu, & Cheng, 2018).
KFC generally targets groups of people rather than individuals. It has a reasonably higher price due to its brand value. However, KFC keeps allows special food courses and provides discounts for groups of people. They provide items that is served at a cheaper rate when given in bundles. Previously, KFC used to target only high classed people and so price was remarkably high. But slowly and steadily have lower the price rate and make the food available to every class of people. KFC calculates the behaviour of people and according they produce the products. All the retail outlets does not provide same category of food. This strategy has helped KFC to dominate the market with increased sale and revenue generations. KFC gives a free home delivery service that has raised the number of orders placed ach day. Oporto provides cost effective restaurant food that minimize the amount on waste.
The non-price strategies includes strategies that are not related to prices. These are marketing strategies of KFC and Oporto (Zhu, Anagondahalli, & Zhang, 2017). Promotion plays an important role in the sale of products because people in Australia re heavily dependent on digitalized platforms to gather information related to specific products. Both KFC and Oporto uses remarkable cloud competing techniques and software based program to raise the needs of customers as per the demographic segmentations which estimates the needs of the customers. KFC invests huge chunks of money for marketing and advertising strategies.
KFC has unique advertising standards and has very popular slogans such as “finger lickin’ good”, “Nobody does chicken like KFC” which are posted on social media and has been watched and re-watched by sole supporters. Also, KFC has cool logo which is red in colour with a differentiated font style that makes it special. Whereas, Oporto is marked by a logo of Sun and has unique slogans as well such as “Just Gotta Go” and “Legendary Sauce with Irresistible Forces”. Both the companies use advanced technologies by which customers are aware of the available products with usage of search engines and keywords. However, KFC has unique gradation system that can upgrade the systems and inform customers with an update eith in their laptop of PC (Hu, Wong, & Yiu, 2016).
KFC market strategies
Conclusion
Thus, it can be concluded that both KFC and Oporto has strong market competitions that is highly influenced by pricing, non-pricing, marketing strategies. It has been see that about 63 percent of Australians visit KFC for once during their lives, however the Australians prefer Oporto more than KFC due to its taste. KFC and Oporto are rival firms who have a strong domain in Australian market. Both the company have its market strategies effectively in order to raise the per capita output. KFC knows how to source its products and plan its strategies according to the demands of the market. KFC continuously keeps updating its strategies by changing its menu, combined courses and other policies to be in the market.
KFC uses innovative technologies to make faster production and output provisions (Belleflamme & Peitz, 2015). However, KFC does not look after adjusting the waste management tools like Oporto does. It does not look after the waste footprint, although it uses cardboard buckets to serve the food. Oporto needs to adapt advanced technologies to enhance the chained supply and delivery of products. Oporto targets people of middle aged group and operate in urban areas to mark the sale of the products. It is recommended for Oporto to grow business across borders like KFC. Oporto does really well inside the borders of Australia, however it effectiveness is much lower outside Australia in terms of revenue generation. Moreover, to be in the market and accrue long run profits, firms have to implement new menus and policies in the restaurants otherwise people will shift their preference towards KFC products that has range of substituites and complements. . KFC is recommended to put more focus on the quality and quantity of the product, as has been done by Oporto. Thus, Oporto and KFC runs successful businesses and have to keep in mind about the market conditions of each other and take actions accordingly.
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