Burger King Beefs Up Global Operations. Burger King Since its inception over half a century ago, Burger King has been operating as a fast food restaurant. Burger King Beefs up Global Operations. INTRODUCTION Founded in by James McLamore and David Egerton, Burger King Corporation has grown to. Burger King is a worldwide and one of the leading chains of hamburger fast food restaurants with its headquarters in Miami, Florida in the US. The corporation.
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Incorporate into your analysis responses to the following questions. What is Burger King’s core competency? How does it relate vurger its chosen strategy? How would you explain how Burger King has decided to configure and coordinate its value chain? Which of Burger King’s value chain activities create the most value for the company?
Burger King globally expanded later than its main fast food competitor. What advantages and disadvantages has this created?
When entering another country, discuss the advantages and disadvantages that an international restaurant company, specifically Burger King, would have in comparison with a local company in that market. About two-thirds of Burger King’s restaurants and revenues are in its Americas region United States and Canada and one-third elsewhere.
Should this relationship change? If so, why ubrger how? The case mentions that Burger King prefers to enter countries with large numbers of youth and shopping centers. Why do you think these conditions would be advantageous?
How has Burger King’s headquarters location influenced its international expansion? Has this location strengthened or weakened its global competitive position? As CEO of Burger King, what tools and strategies would you use when deciding on possible future locations for the company.
What do the implications of the challenges identified in the case have for Burger King’s strategy today and in the future?
Burger King is the world’s largest flame- broiled fast food restaurant chain. Burger King plans to increase the number of net operating units by 3 to 4 percent per year in the kinng future, with most of that increase coming in international operations.
Two major ways in which Burger King differentiates itself from competitors are the way it cooks hamburgers? This latter distinction has been popularized with the ” have it your way” theme. The geographic distribution of Burger King’s restaurants is shown on Map Although the company began in by offering just burgers, fries, burgeg shakes, and sodas, the menu has expanded to include breakfast as well as various chicken, fish, and salad offerings. Nevertheless, burgers remain the mainstay of the company, and marked the 50th anniversary of the Whopper sandwich, which is considered Burger King’s signature product.
Burger King has also differentiated itself with some innovative advertising campaigns through the years, such as its use of a figure of a man who is the Burger ” King. The Burger King logo has changed slightly through the years; for example, going from two buns separating a burger to two buns separating the company’s name. Yet it has always been displayed and recognizable globally, as illustrated in the photo of a restaurant in Taiwan with Mandarin lettering.
Burger King can trace its roots towhen it started as InstaBurger King. Inthe company went public, and since then the company has operated independently. During its first five years, the private company grew to five restaurants, all in the Miami, Florida, area. Inthe name was changed to Berfs King, and it began domestic franchising.
InPillsbury, which had several other retail food groups? During the first few years of Pillsbury’s ownership, franchising increased substantially. Then in Pillsbury got out of the restaurant business and sold Burger King to the British company Upp Metropolitan, which then converted most of its Wimpy restaurants in the United Kingdom to Burger King restaurants. In MayBurger King consummated kijg initial public offeringbecoming a publicly traded company listed on the New York Stock Exchange.
The years opfrations transformed ownership took a toll on Burger King yp emphases changed and the company’s interests were sometimes made secondary to those of its parent company. For instance, in the period leading into the twenty- first century, operztions of Burger King’s franchisees experienced financial problems.
Despite Burger King’s evolving ownership, the company did expand internationally. In the early s, it entered the Bahamas and Puerto Rico. In the s, it entered markets in Europe, Asia, and Latin America. While some of these moves turned out to be highly successful, a few were not. It entered and then retreated from operations in such countries as Colombia, France, Japan, and Oman. We will see in later discussion that Burger King has re-entered some of these markets. Much of Burger King’s early international forays came about either because someone in another country approached Burger King or because someone in the company was familiar with a particular country and thought it would offer opportunities.
Two reasons have been prevalent in the decision to leave a market: Over time, especially since the company went public, Burger King has taken a more systematic approach toward restaurant expansion. While it still sees substantial growth opportunities within the United States, it sees the United States as a mature market for fast food, especially for hamburgers, in comparison with many foreign countries.
Burger King Beefs up Global Operations
In looking for new countries to enter, Burger King looks most favorably at those with large populations especially of young peoplehigh consumption of beef, availability of capital to franchisees for growth, a safe pro- business environment, growth in shopping centers, and availability of a potential franchisee with experience and resources. Overall, Burger King has expanded internationally later than its primary rival competitor, McDonald’s. This has resulted in both advantages and disadvantages.
On the one hand, later entry is a disadvantage beefe very small markets because there may be few adequate suppliers. For instance, there may be only one slaughterhouse, and the owners may be unwilling to work with more than one customer.
On the other hand, in larger markets, such as in the BRICs, being a later entrant may be advantageous because the earlier entrants have built demand for fast food and have created a supply infrastructure. In some later- entry markets, Burger King has been able to concentrate almost entirely on emphasizing its product have it your way, good taste of flame- broiled burgerswithout incurring the early developmental costs. For instance, in Latin America and the Caribbean, McDonald’s and Burger King compete in 27 country markets, with Burger King currently leading McDonald’s in the number of restaurants in 15 of those markets.
However, keep in mind that local companies also learn from the successes of foreign fast food ming, and they sometimes alter their menus and flavorings to appeal to local tastes.
Burger King Beefs Up Global Operations – Case Study Example
Some notable examples are Bembos in Peru, Mr. This is largely because many of these bruger have very small populations, such as the Cayman Islands, Aruba, and Saint Lucia. So why did Burger King develop a presence in these markets, even though at this writing it is not in countries with much bigger populations, such as India, Pakistan, Nigeria, Russia, and South Africa?
The answer is largely due to a location factor. Burger King remains headquartered in Miami, which is often called the capital of Latin America. Because so many people from Latin America and the Caribbean come to or through Miami, Burger King’s reputation spilled over to that area early on. This simplified gaining brand recognition and acceptance. Further, the nearness of the Latin American and Caribbean countries to Miami enhances the ability of Burger King’s management to byrger these countries and for franchisees to visit Burger King’s headquarters.
Although Burger King prefers to operate in markets through franchising, doing so is sometimes initially difficult because suppliers and prospective franchisees do not know the company well enough.
If such a market looks sufficiently attractive, Burger King will enter with its owned operations. Overall, Burger King owns 12 percent of its restaurants and franchises the rest. By owning, Burger King demonstrates market commitment.
For instance, there may only be one meat- processing plant, and the owners may otherwise be reluctant to invest in added capacity or the processing of ground beef. Further, if the country turns out to be as attractive as anticipated, then the owned operations may be more profitable for Burger King than royalties received from franchisees.
Throughout its long historythe company has consistently focused on expanding its global portfolio into new and existing markets. Since becoming a publicly traded company, it has entered a number of markets for the first time, including Indonesia, Egypt, Hong Kong, Suriname, and the Czech Republic. It has also re- entered several markets that it had earlier abandoned, including Japan, Curacao, Uruguay, and Colombia.
Let’s befs a look beefe the decision to re- enter Colombia. Burger King entered the Colombian market in the early s but pulled out after several years of operating in the market because it was not allowed to expatriate royalty payments.
In addition to the problem of expatriation of royalty payments, Colombia was going through a prolonged period of economic and political turmoil.
Burger King Beefs up Global Operations – Research Paper
Also, bjrger the turn of the century, the beef industry suf-fered from foot- and- mouth disease outbreaks and cattle rustling by guerilla groups. These con-ditions combined to make Colombia a less attractive market for fast food restaurants. Burger King re- entered Colombia in By this time, Colombian cities were considered safe for people to go out to eat. The beef health and rustling problems were largely under control.
Currently, Colombia accounts for about 2 percent of global beef production. With about 44 million people, Colombia is the third most populated country in Latin America, after Brazil and Mexico. The Colombian peso bfefs strong and, when coupled with a rise in two-income befs, there was more disposable income to spend on eating out. About 31 percent of the population was under 15 years of age. Although incomes were very unevenly distributed, the richest 20 percent of the population almost 9 million people had a per capita expenditure in of over U.
While all the above factors were favorable, there were some negative things to consider. From a political standpoint, there were potential problems with leftist- leaning governments in the neighboring countries of Ecuador and Venezuela, which could support a resurgence of birger unrest. Economic problems in the United States from the global recession and in Venezuela from fluctuating oil prices operxtions cause Colombia to lose sales because those two countries comprise half of the country’s export earnings.
Buregr, about 2 percent of Colombian GDP in came from remittances of Colombians working abroad, mainly in Spain. These were at risk because Spain was hard hit by the global recession.
In effect, economic burged could hit sales of fast foods. Burger King learned this lesson in Mexico and Germany, which in response caused the company to tactically develop a more relevant value proposition, including value meals. Overall, though, the Colombian situation looked bright. Thus both of these companies seem very compatible with Burger King’s criteria for selecting franchise operators with capital and restaurant experience.
Although Burger King’s operations in Colombia are still in the early stages of development at the time of this writing, Burger King’s management is optimistic about the future of Colombia and its own future therein. Burger King is no exception. The possibilities in these four countries are simply too great to uup.
By then, many foreign fast food franchisors had entered the markets, many without success.