Burger King Beefs Up Global Operation
Burger King is the world??™s largest flame broiled fast food restaurant chain. As of mid 2009, it operated about 12,000 restaurants in all 50 states and in 74 countries and U.S. territories worldwide through a combination of company owned and franchised operations, which together employed nearly 400,000 people worldwide. Burger King is second to McDonald??™s in the fast food hamburger restaurant segment market.
4. 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
Burger King has taken a more systematic approach toward restaurant expansion. The U.S. still shows substantial growth opportunities and it is considered a mature market for fast food, especially for their hamburgers. I feel that Burger King is really looking for other countries and markets to enter and in doing so; they have a strategic plan in place. They look at the opportunities in places that have large populations and they market especially to the young people. Setting up shop in shopping centers is a great strategic move because they can market their products to a huge population. Consumers in a shopping center may not want to go home and cook after hours of shopping, so it??™s quicker to just stop by a fast food restaurant and eat instead of having to go home and cook. Marketing to the younger generation is ideal because they consume a large amount of beef and again after shopping, parents are tired and may want to just grab their kids a kids meal because it is a very inexpensive way to feed your family. Another reason would be that the availability of capital to franchises for growth, a safe pro business environment, growth in shopping centers, and availability of a potential franchisee with experience and resources.
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6. Evaluate Burger King??™s strategy of using the Brazilian experience to guide its entries into Russia
Many foreign fast food franchisors had entered the markets in Russia, many without success. For the most part, failure occurred because of underestimating what it would take to succeed in such a large country. However, Burger Kings success in Brazil has led it to use the Brazilian experience as a model for entry into Russia, which is expected in the near future. Burger King had a recognition advantage in Brazil because thousands of Brazilians fly into Florida, where there are so many Burger King Restaurants, so they know the name and the food. What helped Burger King out in Brazil is that there are about 300,000 Brazilians living in the South Florida area, most of whom have relatives back in Brazil, so when Burger King opened in Brazil, they had already heard of the franchise by word of mouth by their family members who lived in the United States. On the other hand, the failure of many prior fast food entrants into Brazil made potential suppliers apprehensive. By observing the mistakes of other fast food chains, Burger King forged a strategy that has proved successful. In fact, for the last few years, Brazil has been one of Burger Kings fastest growing markets. By mid- 2009, it had 68 restaurants in Brazil. This strategy can be summarized in five parts: 1. Develop an infrastructure before putting in restaurants, 2. Develop a local management team, 3. Focus development on major cities and adjacent geographies with established shopping mall location, prevalent in Brazils largest cities, instead of the whole country, 4. Establish a local office, and last but not least support continuous development and the use of local suppliers that meet Burger Kings global specifications. For smaller markets or those where all the restaurants are franchised, Burger King does not set up a regional restaurant support center or local headquarters. However, management deemed a Brazilian office necessary because of Brazils size (in both area and population), its language barrier (Portuguese), and the magnitude of investment that suppliers and franchisees would eventually need to make. At first, the office served to demonstrate the companys market commitment and to handle early supply- chain procurement and management. The result was that Burger King was able to initially secure about 80 percent of its supplies within Brazil and has since upped that figure to over 90 percent. By focusing initially on Sao Paulo, Brazils largest city, Burger King was able to develop economies in its marketing and distribution. Its subsequent expansion has focused on cities and states near Sao Paulo. Finally, by building a staff of Portuguese- speaking Brazilians, the company showed its commitment to the country and developed a competency to deal with external stakeholders. Burger Kings success in Brazil has led its management to follow the same strategy for expansion into Russia. It has offices in Moscow, where initial penetration is planned. In fact, duplication of the successful Brazilian strategy may be even more important for Russia because Burger King lacks the same pre-entry brand recognition that it had in Brazil. The Future At this point, Burger King has many opportunities for expansion, such as moving into new countries and growing operations within markets where it is already operating. Despite its international growth, it is still in less than 40 percent of the worlds countries. Thus, it faces the challenge of deciding where the best locations are for placing its future emphasis.
I honestly feel that no matter where Burger King goes, it will be successful, since technology with the internet is so far advanced; I feel every country knows about this fast food chain. Burger King may have to adapt there menu a little for certain countries but they can do so and still keep their high quality mission and values.
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