Burger King International MBA 6601 International Business By Wendy B. Machana Burger King International Burger King, previously known as InstaBurger King in 1954, is the world’s largest flame-broiled fast food restaurant chain (Daniels, Radebaugh & Sullivan, 2011). Burger Kings core competency lays in the way it cooks its burgers- by its flame broiled method as opposed to grills that fry and also the option that it offers its customers as to how they want their burgers (“have it your way” theme), (Daniels, Radebaugh & Sullivan, 2011).
According to the Burger King Investor website (www. investor. bk. com), the companies’ basic strategy is to offer the lowest prices possible for its products and to continuously improve its menu to fit the needs of the customer. Burger King has also observed mistakes that have been made by other companies and used their mistakes as a learning experience and as a growth mechanism. This can be seen in through its use of Brazil as a model of entry into Russia (Daniels, Radebaugh & Sullivan, 2011).
Some of the strategies that they used include: development of infrastructure before putting in restaurants, development of a local management team, focusing development in established locations, establishment of local offices and headquarters and finally, supporting continuous development and use of local suppliers to meet Burger Kings’ specifications (Daniels, Radebaugh & Sullivan, 2011). Burger Kings’ core competency therefore falls in line with its strategies so that by offering a high quality product created at low costs, the company is able to create demand for its goods and generate higher revenues.
Value Chain I strongly believe that Burger King configures and coordinates its value chain according to the market into which it is entering. In regions where Burger King has been a late entrant into the market, they have been left to focus on improving the taste of their flame broiled menu items and also focusing on the ‘have it your way’ strategy without incurring any additional costs (Daniels, Radebaugh & Sullivan, 2011). The value chain activities that create the most value for the company include production and distribution.
According to David (1998), Burger Kings bold maneuvers are adding up to solid growth in the U. S and internationally thorough the opening of restaurants and franchising. Using Brazil as an example, Burger King set up locations where they could mass produce the items and supply to various restaurants in the chain, making them more efficient. As seen earlier, they also introduced a system of infrastructure before building their restaurants, making the areas more accessible for hem and their customers (Daniels, Radebaugh & Sullivan, 2011).
This distribution portion is very important in the fast food industry as it is a basic requirement. Global Expansion Burger King is the second largest fast food chain on the market and part of the reason is due to the fact that it was a late entrant into the market, which has its advantages and disadvantages. According to Daniels, Radebough & Sullivan (2011), late entry is a disadvantage in a small market as there might exist a small number of suppliers who commit to whosoever comes in first and may not have necessary infrastructure to work with more than one customer.
On the other hand late entry is an advantage in a large market where competition already builds in the necessary demand and infrastructure. As a result, Burger King has to just focus on product improvement without incurring development costs. Burger King made a positive move by venturing internationally. The company has experienced stiff competition domestically from McDonald’s and the market has also become saturated making it difficult to grow. According to Seid (2010), advantages that Burger King has taken advantage of from its expansion nclude increased market share, increased revenue generated form sales and the availability of cheap labor when compared to the U. S. Being that the Burger King brand is international, it has a lead over local competitors on the market. Some of the disadvantages seen with global expansion by Burger King include political unrest e. g. Colombia. Also, taxes and legal systems can also prove to be a barrier for Burger King as an entrant into the international market. Burger Kings’ Domestic and International Revenues Burger King earns about two- thirds of its revenue form operations in the U.
S and Canada and one third from other areas. I believe that this relationship should defiantly change. This is because if something catastrophic were to happen, the company would experience very serious losses. According to Zacs Investment Research, harsh weather conditions in the year 2010 affected sales in the U. S and Canada by 3. 9%. This is a substantial amount to money to the company and can cripple operations. Being that Burger King has shown significant success internationally, I believe that they should continue to expand and stop ‘putting all their eggs in one basket. Burger King prefers to enter markets with more youth and shopping centers. I believe this is so because generally, the youth tend to prefer fast food over traditional food. Also the age factors i. e. 18-35yr olds generally tend to known as the ‘busy generation’, making it more convenient to open locations where these people can grab food and go. Lastly, shopping malls are an ideal setting for a fast food restaurant because shoppers would prefer to spend more time shopping that waiting for food. Burger King Headquarters Burger Kings’ roots are in Miami, Florida, giving it a great advantage.
Global headquarters helps the company to be able to manage and control all its international locations centrally. Also, being that Miami is close to Latin American and the Caribbean countries, the management in these other countries can freely visit the companies’ headquarters for important consultations (Daniels, Radebaugh & Sullivan, 2011). I strongly believe that this has strengthened its global competitive position. As a CEO of Burger King, I would first look into the availability of resources when selecting the future locations of the company and how much revenue we would be able to generate being in that location.
I would also look to make sure that there are enough people who would purchase our products, i. e. the teenagers and young adults. I would also make sure that politically, the country that I pick be stable in order to have successful operations. Challenges and Implications Burger Kings presence in the market isn’t as prominent as its major competitor, McDonalds, resulting is its susceptibility to fluctuations in market conditions (Daniels, Radebaugh & Sullivan, 2011). It would therefore be beneficial for Burger King to keep growing globally to minimize risk from focusing primarily in the U. S and Canada.
According to the Wall Street Journal, Burger King can also indulge in some cost cutting measures as the company owned restaurants generate fewer profits than those operated by franchisees. Finally, I would recommend that Burger King come up with a strategy that targets all age groups, verses only teenagers. This can be done through the introduction of healthier, more appealing food choices. References Burger King Investor : Basic Strategy. Retrieved from http://www. investor. bk. com Web. 22 August 2011. Daniels, J. , Radabaugh, L. , & Sullivan, D. (2011). International business (13th ed). Upper Saddle River: Prentice Hall
Davids, Meryl. “Burger King regains its throne. ” Journal of Business Strategy Sept. -Oct. 1998: 18+. Academic OneFile. Web. 22 Aug. 2011. Earnings scorecard: Burger King. (August, 2010). Zacks Investment Research, Retrieved from http://wallstreetpit. com/42814-earnings-scorecard-burger-king Wall Street Journal. (September, 2010). BK’s strategy: play catch-up, Retrieved from http://online. wsj. com/article/SB10001424052748704206804575467370505104544. html Michael, Seid H. (n. d). International expansion-trends in the restaurant and food industry, Retrieved from http://www. msaworldwide. com/upload/International%20Expansion. pdf