Reference no: EM132900401

Read the following case study and answer the questions given at the end of the case study:

KFC's Franchiser-Franchisee Relationships: Not Very Good Recently, a battle over strategy divided top management and franchise owners at KFC. Many franchise owners became upset with KFC's new strategy that moved away from its Southern fried heritage and moved towards promoting grilled chicken and sandwiches. In early 2009, CEO Roger Eaton introduced grilled chicken in a move to target health conscious consumers in today's changing society. However, many franchise owners were disappointed with this strategy. Further, in January 2010, the KFC National Council and Advertising Cooperative (which represents all U.S. franchises), sued KFC to gain control of their own ad strategy. This 'civil war' erupted when the company introduced grilled chicken with the slogan "Unthink KFC." To make matters worse, after a year in the market, reports stated that grilled chicken accounted for only about 16 percent of all "on the bone" chicken sold. Also, an internal survey of 642 franchisees showed almost 50 percent of the stores' grilled chicken was thrown away! One glaring example of miscommunication regarding business strategy between management and franchise owners occurred when KFC launched a grilled chicken giveaway on Oprah, a wildly popular television program, in May 2009. Management told franchisees to expect a couple hundred customers to redeem online coupons at each store. However, thousands showed up expecting free grilled chicken. One franchise owner said, "The cost to the franchisee was much larger than they said," and that the promotion cost her almost $15,000! This started a continued downfall in trust between management and owners. KFC canceled the promotion, and CEO Eaton apologized to customers in an online video. Disagreements between KFC management and franchise owners over strategy led to decreased sales and store closings. KFC's franchisees were upset with the decision to push grilled chicken and claimed that it hurts the brand. They sued KFC and do lot of their own advertising to promote fried chicken at their stores.

1. Assess the company's strengths and weaknesses in light of market opportunities and external threats.
2. Explain how value chain activities affect a company's cost structure and customer value proposition.
3. Explain how a comprehensive evaluation of a company's competitive situation can assist managers in making critical decisions about their next strategic moves.
4. Identify the major avenues to a competitive advantage based on differentiating a company's product or service offering from the offerings of rivals.
5. Explain the attributes of a best-cost strategy-a hybrid of low-cost and differentiation strategies.
6. Identify how and when to deploy offensive or defensive strategic moves.
7. Explain the advantages and disadvantages of extending the company's scope of operations via vertical integration.
8. Determine how to capture the benefits and minimize the drawbacks of strategic alliances and partnerships.