Burger King is a fast food chain that operates globally, offering various meals with a specialization in selling hamburgers. It was founded in 1954 by David Edgerton and James McLamore in Florida. Some of the early products that created an identity for the company include whooper sandwich, which became part of the companys products in 1957. The company started its global presence in 1963 when two its restaurants in Puerto Rico. It was acquired by Pillsbury in 1967. This event led to McLamore becoming a board member of Pillsbury. By the time Burger King was acquired, 274 restaurants had been opened in both the United States and international markets. Burger King reached a significant milestone in 1975 because it opened its first restaurant in Europe. In 1985, the company introduced the croissanwich, which brought variety to the menu. In the following year the chicken tenders were introduced and 546 restaurants were opened around the world. Pillsbury and its subsidiaries were acquired by Grand Metropolitan PLC in 1988 including Burger King. The acquisition triggered a renewed zeal for international growth and led to market entries of Burger King in various countries. The Grand Metropolitan PLC merged with Guinness, which resulted in the creation of Diageo PLC. The merger between these two initiated several changes that shaped the future of Burger King. One result of the merger was the decision of the new company to dispose Pillsbury food divisions which included Burger King. Burger King was sold as part of the disposal strategy to Goldman Sachs Capital Partners, Bain Capital and Texas Pacific Group in 2002. The company became a public entity in 2006 and was listed in New York stock exchange. However, the company did not remain public for long because it was acquired by 3G Capital in 2010 and changed its ownership to private. A business combination between Burger King and Justice Holdings led to an agreement as the result of which Burger King was listed in the New York stock exchange. IAccording to the agreement, 3G Capital retained 70% shares of the company.
Product, Locations, Operations and Management Team
Burger King offers a variety of fast food items that include french fries, flame-grilled hamburgers, specialty sandwiches, chicken and other food items. Among the favorite items on the menu is the whooper sandwich hamburger. Since 1954, the company has grown to become the second largest company in the fast food industry in the world. The company operates in more than 95 countries and is presented in 6,231 units outside the United States. Out of all the restaurants operated under its brand name, 13,615 are owned by franchisees while the rest are owned by Burger King. Its operations that generate revenues include the sales from various restaurants and loyalties paid by franchisees. In addition, the organization owns property that is leased to generate extra income. Therefore, its operations grow at a fast speed because the money required for growth is provided by franchise businesses, which reduces the organizations costs.
The management is composed of the Chief Executive Officer, eight executive vice presidents, one senior vice president and one vice president. Although the members of the management team hold these titles, each one of them has separate roles. The Chief Financial Officer, the Global Chief Marketing Officer, the Chief Information, Performance and people Officer are classified as executive vice presidents. In addition, the President of North America, Europe, Middle East and Africa, the Global Development and President of Latin America and the Caribbean, the President of Asia Pacific and global operations officers are all executive vice presidents. The general counsel and secretary bears the title of senior vice president while the controller and Chief Accounting Officers are vice presidents. Therefore, despite having the titles of either chief executive officers, executive vice president, senior vice president or vice president, each member of the management team plays a distinct role.
Global Branding and Product Positioning
Burger King has underlined the importance of focusing on customer needs and their preferences in its various global markets. As such, the firm started creating a global branding initiative based on the menu, image, operations, marketing and communications. The restaurants communication and market strategy focus the attention of the consumers on the quality of its food. The food quality emanates from the flame-grilled process, which is the companys signature cooking process. The branding aims to broaden the choices on menu by adjusting it to fit the tastes of local customers. To increase the effectiveness of its brand image, Burger King decided to remodel all its businesses using its 20/20 design. The designs objective is to increase sales from same stores and broaden profit margins. The corporation motivated its franchises to adopt the remodeling process by lowering the costs associated with it. In the United States, it has linked the franchisees with a financing program provided by a third party to ensure that the new brand will be effective. The remodeling activities will improve the brand image and appeal to the customers needs. Despite various activities at Burger King, the overall brand message emphasizes the importance of taste through the slogan taste is king.
In terms of product positioning, the restaurant chain has introduced a large sandwich called new Big King. This product aims at edging MacDonalds Big Mac out of the market by suggesting that its product is bigger than Big Mac. Therefore, it alludes that Big King provides customers with quality they pay for. Another product positioning strategy is the provision of low-fat Satisfries. This product put the company in a favourable position in the market because the current focus of customers is on healthy food.
Global Competitors and Challenges
The main competitor that threatens the performance and dominance of Burger King is MacDonalds. MacDonalds is the largest fast food restaurant in the world. It is wider presented all over the globe than Burger King. Therefore, its economies of scale and early market entry may make Burger Kings entry challenging in some markets. Since Burger King ventured into the global market, local restaurants have become a challenge because of the knowledge of indigenous food. Since chefes are all experienced natives, Burger King may not succeed in acquiring market share of the global market, especially through local food items.
The challenges that the organization faces include the change in eating habits around the world. People concern about the state of their health and are selective in what they eat. Consumers are consciously avoiding fat-containing food and seeking food with fibers. As a result, Burger King is likely to experience a decline in sales, unless it can reduce the fat content of its products to the consumers expected levels. In addition, the presence of numerous franchises that operate under Burger Kings brand name can jeopardize its performance. The company has limited control over the operations of the franchisees. As such, when swift changes are required, it faces the challenge of convincing the franchisees that the change is relevant and should be adopted. Therefore, decision making becomes a major challenge that limits firms flexibility.
Company Strategies with Globalization
One of the companys global portfolio realigning strategies is to enter global markets through joint ventures and strategic partnerships. The agreements with strategic partners ensure that the partners get exceptional rights to manage and develop restaurants in a given region or country. In return, the operator must meet certain level of restaurant development in the market. In the recent past, Burger King entered such ventures and was able to penetrate markets in China, Brazil, South Africa, India, Russia and France. Future plans include the intrusion into other countries where the company is presented at a low level and where its potential can be maximized.
Another strategy to enter the global market is capitalizing on refranchising opportunities in the global market. The company controls some of the restaurants while others are taken over by franchisees. The current strategy is to ensure that all restaurants under its brand name are fully franchised. The companys authority believes that such strategy will make its business model less capital intensive in the future than today. Operating the whole business as a franchise shifts the financial burden from the company to franchisees. Consequently, business will reap profits with little capital investment.
Company's Successes and Failures with Global Marketing, Manufacturing, Operations
The organization has experienced tremendous success in global marketing as demonstrated by its successful entry into various foreign markets. Currently, the restaurant operates in more than 95 countries. Recently, it entered South Africa, China and Russia with high chances of success. The source of its success is its franchising system that uses local players to run its business. Conducting business transactions in foreign market is challenging for any organization. Barriers that are created by local governments to shield local businesses from unfair foreign competition hinders the success of foreign firms in the international market. To overcome this problem, the choice of market entry mode is essential. The franchising system allows Burger King to access foreign markets through local dealers. These local dealers have market knowledge and have established structures and networks. Through franchising system, Burger King has achieved success in each market segment over a shorter period of time than the one it would have taken through a direct entry mode. Coupled with its superior products, the superior brand name has increased the companys success in its markets.
Despite the success in marketing, it has experienced setbacks in the same area over the years. In 2008, it started selling its burgers in the United Kingdom at expensive prices of up to $ 190. High prices were to raise awareness of the products quality and the companys ambitions. However, the prices created a negative perception that Burger King was out of reach for many. The superfans marketing campaign elicited excitement from men between 18-34 years because they were the target consumers. However, the promotion alienated women and created an outrage from them, which negatively affected the companys image. In 2009, a marketing campaign infuriated the Mexican government by using stereotypes and showing disrespect for its flag.
The manufacturing success of Burger King lies in the production of its superior products. One of the product creation successes is the whopper sandwich that has become the companys signature product. BK Croissan'Wich and broiled chicken sandwich are other successful products that the restaurant has created over the years.
Current Issues Facing Company
Among the issues facing the restaurant chain are legal matters, labour relations, welfare organizations, cultural, political and currency issues. Many products offered by the chain contain animal proteins, especially beef and chicken. Organizations that fight for animal rights have condemned the expansion of the company because it has increased consumption of animal products. The main concern of these animal rights groups is the manner in which animals are treated by the restaurants suppliers prior to slaughter. They claim that animals are kept in unhygienic and inhumane conditions. In addition, the activists were advocating for a humane procedure of killing poultry. The effect of such campaign is that it taints the positive reputation of the company and may reduce the number of its customers because the rights groups demonstrate even outside the restaurants.
Labour relations problems that the chain faces involve unions and employees who work for their suppliers. For instance, the company had a conflict with the tomato pickers association who wanted the chain to compel its suppliers to raise the pay for the pickers. The company was in a dilemma on whether to comply, given that there were legal issues involved. The situation escalated when some of its employees were found spying the unions. Such issues created a conflict that may have involved the government. Consequently, the organization might lose the goodwill of the public and its customers to competitors.
Welfare organizations criticized the sensitivity of fast food restaurants considering nutrition aspect of their products. The major concern arises from the high fat content of the products sold by fast food restaurants. In addition, fast food restaurants are accused of failing to label their products and showing the ingredients so that consumers appears unable to make informed decisions. This is a great challenge for Burger King because when consumers change their tastes because of health concerns, the organization needs to change its menus and ingredients to meet the customer needs. The problem with such rapid changes is that it may become so costly that the sales may not cover the costs and retain a profit.
Differences in cultural norms around the world have challenged the application of a uniform strategy for Burger King. The menus that have worked perfectly in some countries may perform differently in others. This happens because of cultural aspects that regulate peoples eating habits in different cultural settings. For instance, in 2005, Burger King created a pre-packaged ice cream, the silhouette of which resembled the name of God in Islam. This infuriated Muslim people who started prompting the corporation to recall and repackage it. Such issues are likely to occur as the firm undertakes an expansion strategy on the global scale. The cultural aspect of operations is complex and unpredictable. As such, it may consume large amounts of resources such as recalling costs and repackaging costs of the ice cream product.
Geopolitical issues include political instability and the relationship between countries within which the restaurant operates. Burger King has faced such issues in the Middle East, where its establishment of a franchise in West Bank was perceived as a gesture of support for the occupation of Israel in Palestinian territories. The Arab league threatened to cancel licenses of Burger King franchises in 22 countries. Consequently, the company closed down the franchise in the West Bank, leading to outrage by Jewish organizations in America. Other geopolitical issues of this type may arise in various regions of the world and make operations difficult.
Currency exchange rates vary from one region of the world to another and affect the amount of profit companies earn. Burger King is not an exception since it operates in different parts of the world. When the value of dollar is weak as compared to other world currencies, the company's revenues and profits are low. On the other hand, when the dollar value is high, the profits and revenues increase.
Companys Future Outlook
The company is likely to become more competitive than it is when its global expansion strategy becomes a success. The increased market share in the world is likely to translate to increased earnings and positive changes in economies of scale. Its refranchising campaign will boost its financial strength, enabling it to outperform competitors.