To discuss the management competencies of KFC fast food chain, the essay has developed a relatively thorough analysis on its management activities in the fields such as workforce diversity, globalization and rapid change.
To present a relatively complete discussion on the three hot issues of today’s management practices, the essay not only emphasizes the importance and impacts of the three topics respectively for nowadays organizational managers, but also affirms the positive consequences for KFC in well management the three issues, which will be shown in the following.
2.0 Diversity management in KFC
2.1 Definition and importance of diversity
According to Kinicki and Williams (2008), diversity refers to all the ways which people are unlike and alike such as the differences and similarities in age, socioeconomic, religion, gender, race, sexual orientation, capability as well as ethnicity. In today’s business world, one of the most important challenges for management is to work with these stakeholders who vary in diversity widely, which require different functions and skills implemented by managers.
Firstly, these changes stemmed from the macro environment in the areas of economic aspect, sociocultural aspect, technological aspect, global aspect, demographic aspect, and legal aspect as well as political aspect all are pushing the issue of diversity workforce under the spotlight, which give organizations no choices but to handle the diversify requirements from employees and global market. Such kind of demands has contributed to the changes of the macro environment as well such as the diversity of workforce and diversified market demands. The workforce diversity, for instance, brings more female workers, immigrant workers, workers from various background and part time workers to organizations, which assists organizations to respond to risks and opportunities faced by them more flexibly with more innovative ideas and high creativity from the collective intelligence of diverse employees. (Valla 2007)
Secondly, one of the major benefits of the diversity management for organizations is to encourage the skills and talents development. As the one of the first supporters of diversity management, IBM has build its company philosophy on the basis of diversity, under which IBM has successfully attracted and retained talents from all over the world to meet to diverse needs of different market. Generally speaking, the effective diversity management has contributed to IBM’s business success a lot. Moreover, the diversity management also makes organizations own the flexibility and capability to adapt themselves to different markets worldwide with different cultural backgrounds and customers’ preferences as well as legal, economic, social, political differences, which enables organizations to be more competitiveness and profitable in the global market. (Kinicki & Williams 2008)
2.2 KFC’s management competencies on diversity issue
KFC is the world famous fast food giant with customers about 12 million in more than 109 countries with more than 50 years development. And as the above mentioned, diversity management is so essential for today’s business and in KFC its management is very professional and cohesive in managing the diversity workforce including gender diversity, culture diversity, sexual oriental diversity, religion diversity and so on of its business in the global market with the assistance of proper management functions and skills, which will be discussed in the following. (KFC 2011)
As KFC advocated, diversity is defined as a way of life as well as a way of running business. It always hold a positive opinion towards diversity which includes four aspects such as emphasizing the importance of searching out diversity from others actively, having the faith that every employee is able to make a difference, guiding and supporting every working individual to develop their full capacity. Such kind of opinioned is proposed by KFC’s managers who have noticed the importance of their diverse working teams can contribute to better solutions for current problems, offer more effective services to customers and create a richer context organization’s culture to every employee to appreciate. (Chavez 2001; Marimuthu 2009; KFC 2011)
The first issue for KFC’s manager to deal with is the recruitment issue which asks for applicable management competences. For example, the human resource manager of KFC is good at conceptual skill, who has a comprehensive view over KFC Company and the global market where there are different kinds of customers from different background with diversified requirements. On the basis of the comprehensive evaluation of KFC’s customers in the global region, the human resource manager has oriented its recruitment direction to the global field. For example, only 30% employees in KFC America are Caucasian and in the remaining, 70% employees are Hispanic, African American and Asian. This smart recruitment practices used by the human resources manager in KFC has attracted a world of diverse talents to join in KFC’s family. Till 2007, minorities and female employees took up nearly 64% of KFC’S external management recruitment and 41% internal management recruitment. And in the recent year, the human resource managers of KFC have been engaging in the diverse work force building to increase the weight of African Americans, Hispanics and women in its talents pool. (Burkhardt & Gerard 2006; KFC 2011)
The recruitment practice of KFC not only shows the professional conceptual skills of its human resource manager, but also the ability to uses the world talents resource to develop its business via planning function. Let take the human resource practice issue of KFC in Chinese market for instance. Because of foreign managers appointed by KFC in Chinese market often met the barrier in communication and culture shock with Chinese customer in the first time of KFC entered into China. To understand and reach more Chinese customers in this market, the senior human resource manager of KFC or we can say the whole senior management team make up the decision to attract more local management talents, who may understand the Chinese culture, people’s preference and other relative issues about China much better. Such kind of activity shows the managers’ planning function is well performed. In another word, they are so far-sighted to figure out the approach to recruit local talents into management team so as to enhance the effectiveness of its performance in Chinese market with properly allocating and using its resources in China, which is planned as one of the means to reach its goals – gain more market share in China. (Carpenter & Fredrickson 2005; KFC 2011)
Generally speaking, the above human resource practices of KFC in the global region give us a good example of diversity management of its workforce involved with management function of planning and conceptual management skills which often result in the great creativity of its workforce, more accesses to customers as well as better relationship with customers.
3.0 Globalization management in KFC
3.1 Globalization and its significance
Birkinshaw et al. (2005) indicated that globalization is like the umbrella under which the changes in these areas such as economy, society, technology, culture and politics may become interdependence on each other to accelerate the integration as well as integration among people and firms all the world around. As the more and more popular trend of globalization, the world economic affairs also become more and more interdependent. In the business world, there are also many gains from the influences of globalization.
In the field of trade within the context of goods and services, globalization makes trade more internationalized to ensure the different resources from nearly every corner of the world can be allocated consistently. Such kind of specialization in the resources allocation procedure may lead to the better productivity of those companies involving in the international trade. This kind of benefit can be well utilized by the emerging economies in the world market under the full utility of those resources. (Anderson 2003)
And in the field of capital movement, most of the developing countries can benefit from the capital flow from countries to countries with the guide of globalization. Let take the period of 19th century and 20th century for instance. The high investment potential and saving potential for the entire globe were exhibited by capital mobility. The development of a country began to depend not only on the domestic economic growth but also largely on the foreign capital flows. To make a conclusion, developing countries began to prefer FDI (foreign direct investment) a lot due to its benefits. (Anderson 2003)
When comes to the financial flows aspect, in the globalization process, one of the remarkable feature is the development of capital market. Resources across borders can be better transferred and foreign exchange markets can also be standardized and promoted by the capital growth and foreign exchange markets’ mobility availability. Under the impact of the financial flows, firms can be more flexible and profitable when they run their business internationally. (Carpenter & Fredrickson 2007)
Generally speaking, firms can gain several benefits from globalization when conducting international business. And KFC is a good example for us to discuss the importance of management competencies in deal with the issue of globalization.
3.2 KFC and globalization
As there are so many advantages globalization has bring to the business world as well as these risks, KFC as the player in fast food industry has also tried several ways to join in this trend in order to make more profit and meet those challenges brought by globalization as well. In another word, KFC has tried a variety of methods to globalize its business in the world market.
3.2.1 International franchising
International franchising is the globalizing strategy used by KFC to reduce its over- reliance on the demand of its home country and profit more with low risks in these foreign countries. This kind of strategy is to allow those franchisees to enter the already well established product as well as operation system in KFC’s business circle globally. (Miligan 2002; KFC 2011)
This kind of strategy offered by KFC is carried out by its senior management under the help of professional conceptual skills as well as the organizing function of management. There are several detailed places in this strategy organizing and designing process from KFC’s management in order to expand the business of KFC into a much more boarder world region with the overview of the entire market situation of the globe, in which the conceptual skills play significant role. For example, in Chinese market, KFC only endow this franchising to franchisees in cities with more than 15,000 but less than 400, 000, which is due to the big challenges for the franchising project in big cities and the initial fee for franchising is restricted in ￥8 million which is claimed as the investment in purchasing a well operated and profitable KFC restaurant in Chinese market. All of these details all reflect the deliberateness and strict evaluation of KFC management. In another word, it discloses the well applied conceptual skills and the well developed organizing ability of the KFC management team to take the whole situation into account and well manage its resource such as the well established KFC brand to broad its business all over the world. (Miligan 2002; KFC 2011)
With the successful operation of the international franchising strategy in its globalization process, KFC has expanded its business into 109 countries under relatively smaller risks and cost. For example there are nearly 2,200 KFC franchised restaurants in China with only 24 years’ development in Chinese market, which is really outstanding. (Miligan 2002; KFC 2011)
3.2.2 Suppier consolidation
Under the assistance of excellent conceptual skill and human skills as well as the well functioned planning function of its management, KFC has realized its supplier location strategy in many countries to meet the globalization trend and reach a consolidated supply chain in the global market, namely, globalizing itself more effectively.
Let’s still take Chinese market as an example. From the first restaurant open till now, KFC’s restaurants has expanded to more than 450 cities with the 100% local raw materials such as the chicken meat. Under the rapid developing speed, many KEC’s suppliers have also enjoyed a fast development in Chinese market. And there are nearly 85% products’ packages provided by local suppliers. Under the principle of progress together and profit together, KFC has built up a close and intimate relationship in Chinese market. In fact, several those local suppliers are KFC’s international partners such as Charoen Pokphand group, Nestlé, Pepsi and so on who own their factory in China and to consolidate its supply chain, KFC encouraged many of its suppliers such as its potato supplier Lambweston, Kitchen tool supplier Henny Penny and other important suppliers to build factories in China. Under such active relationship building, KFC has already realized it supply chain consolidation and localization, which has smoothened the future road for globalizing itself in the global market.
Such kind of close relationship building reflect the excellent human skills of KFC’s management, which refer to the managers’ ability to work together with others and build a proper and strong relationship to profit more (Daft 2010). For instance, the close relationship building by KFC required proper communication skills and conflict resolution skills such as how to persuade these international suppliers to come into China how to solve these conflicts from the consolidation and localization process of its suppliers which all require the strong persuading skill and the capacity to remove dispute with less profit loss.
Meanwhile, the supply chain consolidation strategy also shows the outstanding planning function and conceptual skills of its management. For instance, in order to consolidate its global supply chain with the same high standard, KFC carried out the supplier localization strategy which shows the well used planning function of the management to figure out the crucial steps in achieving that objective. And with the professional conceptual skills, KFC management team can properly make an evaluation on its strength and weakness to prepare these uncertain and inevitable factors in the global market depending on the use of contingencies. Because KFC can’t promote all its international suppliers into Chinese market, it also makes up another choice to reach its supply consolidation goal that is to build a steady working relationship with Chinese suppliers under the principle of advancing together and profiting together. KFC has been introducing brand new management concepts and advanced technology to its Chinese suppliers from the voluntary training to active support to these Chinese suppliers. KFC has already realized the supplier consolidation dream in Chinese market, which shows its excellent conceptual skills in problem solving and goal realizing.
Generally speaking, all of these measures KFC adopted to deal with the opportunities and risks brought by globalization in its globalizing road all shows its managements’ wisdom in properly using its management function and skills to promote its business into a wider scope in the global market.
4.0 Rapid change management in KFC
4.1 Importance of managing changes for managers
4.1.1 Definition of changes
According to Daft (2010) as well as Kinicki and Williams (2008), change refers to any alternation of the status quo which involve at least three major aspects.
At first, the fast development of technology world widely has largely decreased the cost on preparing and disseminating information, which contributes to the situation that technology become available at a cheaper price for customers at any consumption level and the past expensive hardware are also accessible for almost every customers with reasonable price. Thanks to the development of technology, the time, space as well as several other current issues for information have been cut down or eliminated.
Secondly, the trend globalization also causes several changes in the business world such as the faster transportation means, which makes the world become one big market. Due to the impacts from globalization, customers from all over the world can purchase goods from almost every corner of the world rather than only in a local store. Companies have to worry not only their domestic competitors’ moving direction but also the international competitors’ movement which gives firms more pressure but also a variety of opportunities in the global market.
Thirdly, the investors’ power in certain markets as well as the big mutual and pension funds becomes more and more concentrated which has largely enhanced the significance of these business players.
4.1.2 Importance of change management
Because these changes are so strong and inevitable which drive a variety of forces for organizations to make change and innovation, change management become an important issue for today’s managers.
Firstly, these eternal factors of an organization often include four points such as demographic force, market changing force, technology advancement force and social & political force. For instance, these environmental forces from the impact of earthquakes and floods to the pressures from government’s gradually strict regulations and furious competitions have drive many companies in the insurance field to consolidate with each other and enhance their innovation speed. Secondly, the internal factors such as the plans and strategies alternations, ethical dilemmas and pressure of decision making due to changes in organizational structure, leadership styles, culture shift, etc., all drive companies to fact these changes. For example, several manufacture companies such as Hach Company, a maker of the water analysis equipment, begin to focus their product quality more and more.
Based on the above information, change management becomes the inevitable issue for managers in today’s organizations to take into consideration.
4.2 KFC and rapid change
As these changes faced by KFC mentioned above, for KFC there is seemed no other choices but to meet these challenges and chances brought by the rapid change.
In the world fast food market, there is nothing to say against the fact that McDonald’s is the biggest rival of KFC, which owns the largest market share in the world which is shown in figure 1.0. Under the great pressure from McDonald’s and other competitors as well as changes in market place, KFC has implemented several activities to make it more adaptable to these changes. One successful example of KFC dealing with these changes is the practice in Chinese market via blending its brand with Chinese characteristics.
Figure 1.0 KFC’s market share in world market
Source： KFC annual report
4.2.1 KFC’S Chinese practice
In Chinese market, KFC has really done a gorgeous job which even enables this organization win more market share and profit in Chinese market than its biggest rival McDonald’s in dealing with the rapid change in the world market.
Let’s have a look at the location strategy of KFC in Chinese market by clothing its brand with more Chinese essence as one of the famous practices of KFC in managing changes in today’s business world.
The first good practice of KFC in Chinese market is to conduct a thorough investigation on the food culture of China such as the influences from the golden quintessence of Confucius, Taoism and so on. With the understanding of Chinese culture, KFC planned to cater some Chinese dishes timely to Chinese customers, which asked for the manager function and skill such as planning as well as conceptual skills. All although the requirements on the manager function and skill are relatively rigorous, KFC’s product manager did a well job. For example, KFC’s breakfast is the perfect combination of the western food and Chinese dishes which consist of burgers, French fries, fried chicken wings, mashed potato as well as Chinese porridge, meat roll and even deep-fried dough sticks from time to time which not only attract customers who want to enjoy the western style breakfast but also draw attention from customers who prefer Chinese dishes.
This idea is a deliberate design by KFC’s product manager who is so good at management planning that he made the wise decision to wrap KFC’s food with the cloth of Chinese style and with useful resource and then the goal of attracting more Chinese customers has been achieved. Moreover, this kind of decision also shows the conceptual skills of the product manager used effectively in the product designing which was built on the basis of a well understanding of the entire Chinese market such as the preferences of its customers, the current situation of Chinese fast food market, Chinese customers’ consumption power. And then the solution to deal with Chinese customers’ needs was made – injecting more Chinese elements into KFC’s products.
Another good practice of KFC in dealing with these rapid changes is the marketing promotion activities in Chinese market. These emotional appeals in the commercial advertisements have successfully attracted Chinese customers’ eyes via these positive emotions such as love, humor, patriotism, friendship, and care for the old and young. Furthermore, KFC has build an charity fund to assist poor Chinese students’ education showing the concern for the younger generation of Chinese society which has boosted the reputation of KFC in Chinese society a lot and gained more customers. And then its sponsorship on several famous events such as sponsoring Chinese men’s football team in the domestic and international competition did contribution a great attention and reputation for this organization.
The series of successful commercial practices may require management function and skill such as the planning function as well as human skills and technical skills which the marketing manager of KFC has well applied. In the first place, under the guidance of planning function, the market manager of KFC China has realized the importance of proper means and resources that is the eye attractive advertisements in realizing the organizational goal- attract more Chinese customers and enhances KFC’s reputation in Chinese society, so a range of advertisements have been carried out to promote KFC’s products and strengthen its reputation. In the next place, the means of how to successfully carry out the sequence of advertisements also indicate the market managers’ prominent human skills that he can develop an effective means for communication among his subordinates and entice them to come up with a practical and high efficient strategy to launch the ads. For instance, KFC often launch its ads in some medium with great reputation and popularity. And the frequency of ads playing is also well designed by the marketing team under the lead of its marketing manager. The thorough communication and close cooperation among the marketing team under the marketing manager with professional human skills often result in a rising number of customers on the advertising products. And in the meanwhile, the evaluation on the balance between the advertisement spending and receiving also reflects the marketing managers’ fine technical skills especially in the finance area that he can measure and evaluate the comparison between ads spending and receiving logically and systematically and then makes the right and most cost saving choice from these alternatives offered by his team members, which is praiseworthy.
As the above analysis, we can make the conclusion that workforce diversity, globalization and rapid change as the inevitable trends offers organizational managers with types of chances and challenges in the business world. In other words, the well management of the diversity workforce, globalization and rapid change become determinants of the success of a business.
For KFC, as the world famous fast food restaurant chain, there is no other choice but to face these issues. Meanwhile, with the effective steering of management functions and skills from its manager team, KFC offers us a wonderful example of a succession of management activities in handling the issues of diversity workforce, globalization and rapid change.