Burger King Case

8/15/2019 Burger King Case

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Strategic Management

MBA Course Code: Winter 16111

Burger King

MBA Student Name: Sherif IbrahimSidhom

Dr. Mahmoud A. Moursi

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Burger King Case

This company was undiversifed - (Fast-FoodHamburger restaurant/FFHR which operated within

the quick service restaurant/ QR !

-Company Overview:

Burger King was originally known as Insta-Burge King. It was founded in Florida in1953 by Keith Kramer and Matthew Burns before they had finanial diffiulties and sold

the om!any to its Miami based franhisee" #ames M$amore and %a&id 'dgerton in

1955. (he new owner renamed the om!any to Burger King. (he first )ho!!er sandwih

was introdued in 195*. (he om!any again was sold to the other !arty" +illsbury

,or!oration during their e!ansion eerise to 5/ loations in 0nited tates.

In 1929" +illsbury ,or!oration was sold to rand Metro!olitan" whih in turn merged

with uinness to form %iageo" a British s!irits om!any. %iageo4s management

negleted the Burger King business" leading to !oor o!erating !erformane. (he business

was damaged to the !oint that maor franhises went out of business and the total &alue of

the firm delined. %iageo4s management deided to di&est the money-losing hain by

selling it to a !artnershi! !ri&ate e6uity firm led by (+ ,a!ital in //. (he om!any

beame re-energi7ed by a series of !romotional am!aign and ati&ities reated by the

in&estment grou!. In May //8" the in&estment grou! took Burger King +ubli by

issuing an Initial +ubli ffering :I+;. (he in&estment grou! ontinued to own 31< of

the outstanding ommon stok .

=s of #une /1/" the om!any owned or franhised 1"1*> restaurants in *8 ountries

and 0. territories" of whih 1"32* were om!any-owned by franhisees. f Burger

King4s restaurant total" 8/< were loated in the 0nited tates.



-Industry overview:

(he fast-food hamburger ategory o!erated within the 6uik ser&ie restaurant :?@;

segment of the restaurant industry. ?@ sales had grown at an annual rate of 3< o&er the

!ast 1/ years and were !roeted to ontinue inreasing at 3< from /1/ to /15. (he

fast food hamburger restaurant :FFA@; ategory re!resented *< of total ?@ sales.

FFA@ sales were !roeted to grow 5< annually during this same !eriod. Burger King

aounted for around 1>< of total FFA@ sales in the 0nited tates.

Burger King om!eted against M%onald4s" )endy4s" and Aardeess restaurants in this

ategory and against regional om!etitors" suh as ,arl4s #r." #ak in the Bo" and oni.

Indiretly" they also om!eted against the ?@ restaurant segment" inluding (ao Bell"

=rby4s" and KF,. =lthough the restaurant industry as a whole had few barriers to entry"

marketing and o!erating eonomies of sale made it diffiult for a new entrant to

hallenge established 0.. hains in the FFA@ ategory. (he ?@ segment a!!eared to

be less &ulnerable to a reession than other business as !ro&en during the 6uarter ended

May /1/" both ?@ and FFA@ sales dereased /.5<" om!ared to a 3< deline at both

asual dining hains and family dining hains. (he 0.. restaurant ategory as a whole

delined 1< during the same time !eriod.

=!art of all the abo&e" =meria4s inreasing onern with health and fitness was also

!utting !ressure on restaurants to offer healthier menu items. For eam!le" one ounty in

,alifornia had attem!ted to ban M%onald4s from inluding toys in its high-alorie

CAa!!y MealD beause legislators belie&ed that toys attrated hildren to unhealthy food.

The maor strate!i" issues that #a"in! Bur!er $in!:

(his ase ha!!ened in e!tember of the /1/

-$imited ontrol o&er franhisee

-+oor sales !riing strategy

-Aigh e!enses ost of Burger King4s om!any-owned restaurants

-$ow entry barrier - market beome saturated

-rowing health onsiousness

-low industry growth rate

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Company o%e"tives:

(o boost the brand image of the om!any.

(o !ro&ide measures to im!ro&e the om!any4s !erformane in the market.

Bur!er $in! Ana&ysis usin! The 'WOT Ana&ysis:

Strengths:

-trong market !osition.

-trong brand e6uity.

-trong brand finanial !erformane.

-Aigh 6uality !roduts.

-)ide &ariety of food !roduts.

Weaknesses:

-Aea&ily onentrated in the 0..

-Few or!orately owned stores.

-Inonsistent management and strategy- hanging eeuti&es.

- Earrow-based target market.

-,onfusing ads am!aigns.

-Aigh !ries

>



Opportunities:

- Eew !rodut de&elo!ment :breakfast;.

-Kee! building its brand through ads am!aign :who!!er &irgins;.

-'!ansion into emerging markets.

-)ide-based target market

Threats:

-,hanging onsumer habits towards healthier food hoies.

-Intense om!etition from M%onalds" other restaurants and e&en retailers.

-Inreasing labor osts !utting !ressure on bottom line margins.

-(he maor om!etitor M%onalds is way ahead in market share.

Industry ana&ysis: ana&y(in! the tas) environment

A strate!i" !roup: is a set of business units or firms that !ursue similar strategies

with similar resoures. ,ategori7ing firms in any one industry into a set of

strategi grou!s is &ery useful as a way of better understanding the om!etiti&e

en&ironment.

Business units belonging to a !artiular strategi grou! within the same industry

tend to be strong ri&als and tend to be more similar to eah other .

Burger King has a great deal in ommon with M%onalds in terms of their similar

strategy.

In analy7ing the le&el of om!etiti&e intensity within a !artiular industry or

strategi grou! it is useful to harateri7e the &arious om!etitors for !rediti&e

!ur!oses. = strategi ty!e is a ategory of firms based on a ommon strategi

orientation and a ombination of struture" ulture" and !roesses onsistent with

that strategy.

(his distintion hel!s e!lain why om!anies faing similar situations beha&e

differently and why they ontinue to do so o&er long !eriods of time.

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In this kind of firms are de#enders with a limited !rodut line that fous on

im!ro&ing the effiieny of their eisting o!eration. (his ost orientation makes

them unlikely to inno&ate in new areas. )ith its em!hasis on effiieny.

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'trate!ies:

A strate!y of a or!oration forms a om!rehensi&e master !lan that states how the

or!oration will ahie&e its mission and obeti&es. It maimi7es om!etiti&e

ad&antage and minimi7e om!etiti&e disad&antage.

(he ty!ial business firm usually onsiders three ty!es of strategyG

1-Corporate strate!y : tability " growth and retrenhment

-Business strate!y: om!etiti&e and oo!erati&e strategies.

3-*un"tiona& strate!y: @esoure !roduti&ity.

Business firms use all three ty!es of strategy simultaneously.

= hierarhy of strategy is a grou!ing of strategy ty!es by le&el in the organi7ation.

Aierarhy of strategy is a nesting of one strategy within another so that they

om!lement and su!!ort one another .

*



Customer per"eived va&ue:

(he differene between the !ros!eti&e ustomers e&aluation of all the benefits

and all the osts of an offering and the !erei&ed alternati&es.

A&ternatives #un"tiona& strate!i" options:

Firms that ou!y seond" third and lower ranks in an industry are often alled

runner-u! or trailing firms.

(hese firms an attak the leader and other om!etitors in an aggressi&e bid for

further market share as market hallengers or they an !lay ball and not rok the

boat as market followers.

Mar)et-"ha&&en!er strate!ies:

-eneral attak strategyG

1-Frontal attak

-Flank attak

3-'nirlement attak

>-By!ass attak

-!eifi attak strategyG

1-+rie-disount

-+rodut !roliferation

3-+rodut inno&ation

>-Im!ro&ed ser&ies

5-Intensi&e ad&ertising !romotion

ood marketing is no aident" but a result of areful !lanning and eeution.= om!any an win only by fine-tuning the &alue deli&ery !roess and hoosing"

!ro&iding and ommuniating su!erior &alue.

+ri"in! strate!y in mar)etin!G

Is the !ursuit of identifying the o!timum !rie for a !rodut. (his strategy is

ombined with the other marketing !rini!les known as the four +s :!rodut"

!lae" !rie" and !romotion;.

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+riing is one of the most im!ortant elements of the marketing mi" whih

generates a turno&er for the organi7ation.

(he suess in !riing strategies for businesses is heightened with larity on

market onditions" an understanding of the onsumers unmet desire" and the

amount they are willing to !ay to fulfill it.

Bur!er $in! +ri"e sends a stron! messa!e to its mar)et- it needs to %e

"onsistent with the va&ue you,re de&iverin!.

-'e&e"tin! the pri"in! o%e"tive:

1-ur&i&al

-Maimum urrent !rofit

3-Maimum market share

>-Maimum market skimming

5-+rodut-6uality leadershi!

-sin! +ri"e-Adaptation strate!ies:

1-+rie disounts and allowanesG

-+romotional !riing tatisG

A"tions shou&d %e ta)en to dea& with these issues:

1-Play it safe strategy. Make some appealing advertisement that makes fans

feel important.

Advantages:

Burger King fans i l l !e " attered !e#ause BK managementgi ve them importan#e and !e#ause of that$ the loyalty of the

fans ill !e lastly. At the same time$ they ill attra#t more

#ustomers and the BK fans ill !e happy and feel important.

Disadvantages:

%ostly at the same time$ it ill need some time to !e perfe#t

!efore it ill appear to the media.

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&-%ontinue making innovative produ#ts.

Advantages:

More #ustomers ill get into them and !e#ause of that' their

pro(t)sales ill in#rease.

Disadvantages:

* t i l l !e #ost ly and i t i l l take several t ime of

!rainstorm ing if the produ#t that they ill introdu#e ill !e a !ig

!oom to the #ustomers)pu!li#.

+-,ry to loer t heir p ri#e.Advantages:

Num!er of #ustomers ill in#rease at their sales)pro(t may !e

in#rease due to the volume ise !uying.

Disadvantages:

,his is partly hard to the management !e#ause this is ne to

them. And it ill have a fear atta#h.

'pe"i#i" re"ommendation:

o#us on its to !asi# strengths / 0"ame !oiled !urgers and

0food made

the ay #ustomers ant

2o operation analysis of the in-store ork and speed up the system

e.g.introdu#tion of multiple #ounters for taking orders.

*ntrodu#e and enfor#e #entral ly prepared detai led food

preparat ion g uid eli nes to !ring in uniformity and

#onsisten#y in the

taste$ ingredient proportion and overall 3uality of the food.

4emodel the less aestheti#ally appealing stores

1/



4e-evaluate promotional o5 ers. *ntrodu#e value meals

ith

dis#ount on !igger orders

*ntrodu#e home delivery fa#ility herever possi!le. 4etain i#e-#reams even if the ersthile menu is pruned. ,his is

!e#ause

the ma6or i#e-#ream !rands in 7S su#h as Baskin 4o!!ins do

not have the

kind of e8tensive net ork of stores l ike Burge r King .

9en#e i t is

poss i!le to gain a h uge #hun k of shares of i#e #ream

market in the

strategi#ally favora!le lo#ations 4 ;nter into a tie-up ith

i#e-#ream

!rands like 2unkin 2onuts has done ith Baskin 4o!!ins at

some stores.

%ondu#t an e8tensive audien#e analysis to assess the image of the#ompany <is -=-

<is its #ompetitors and !ased on it design the #ommuni#ation

strategy.

*f its proved that many #ustomers vieed it as a lo 3uality

produ#t

maintain lo pro(le temporarily to identify the root #ause of !ad

image and

address it. ,he #auses may !e anything from !ad servi#e to

#onstant image

#hange$ !ut it is ne#essary to address it !efore laun#hing another

#ampaign

Advertisements should !e relevant and su##in#t. %reativity and

humor are>el#ome !ut no !eating around the !ush.

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Brand images tend to !e sti#ky. ,ry to sti#k to a #onsistent

!rand image

instead of #hanging #ontinuously hi#h #onfuses the #ustomers.

%ontinue hands-on approa#h ith fran#hisees. ;sta!l isha

#ontinuous feed!a#k me#hanism from #ustomers and

fran#hisees and rea#t

on the feed!a#k.

Ne marketing #ampaign for healthier produ#ts.

;8pansion into high potential #ountries.

1



May " /11 by #ennydhel aramento Burger King o.

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Burger King Case

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Burger King Case