Burger King SWOT Analysis
Strength: Burger King serves a lot of burgers that is typically not available in other fast foodrestaurant. Some of the examples are, BK Mushroom Swiss which serves beef patty and topped withmushroom sautéed sauce, Grilled Chicken burger which is prepared by grilling the chicken patty andothers. Most of the burgers prepared in Burger King are cooked by properly grilling them over fire. Burger King also serve varieties of side dishes in their restaurants such as mozzarella sticks, apple pie,Hershey’s pie and others.
Weakness: Burger King does not advertise their products like their competitors do. Muslims who arenot familiar with Burger King would hesitate to try out their burgers as they are not sure whether it ishalal or not. Burger King also could not produce more sales than McDonald’s because of lackmarketing strategy which would place them in a disadvantage spot in areas dominated byMcDonald’s.
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Opportunity: Burger King could improve their sales by producing more advertisements on theirproducts. They could also open new branches in major city all around the worlds and some ruralareas.
Some of the state in Malaysia doesn’t have Burger King in their city so, Burger King could tryand open new outlet which will greatly improved their sales. Threat: Burger King faces threat from other major burger fast food restaurant such as McDonald’s andWendy’s. McDonald’s produced the highest percentage sales among the three which is a threat forBurger King. The cost to produce the burger during inflation and lack of sales puts Burger King in atough spot and other burger fast food restaurant could take advantage to advertise new product andhence raising their sales.
Burger King Introduction Burger King is the world’s largest flame broiled fast food restaurant chain. As of 2011, Burger King operates restaurants in 12,300 locations serving over 11 million guests daily in 76 countries and territories worldwide (Burger King , 2011). Burger King’s core competency is its unique flame-broiled burgers. This process is difficult to imitate and helps differentiates Burger King from other fast food chains that fry their burgers instead.
So much so in fact, no other fast food provider flame broils their burgers. In addition, Burger King allows and encourages consumers to customize the unique flame-broiled burgers with options to their liking. This creates a win-win situation for both Burger King and the consumer. Burger King has the benefit of offering a different product and the consumer benefits by having numerous burger options. Although Burger King has expanded its menu selections, they have remained true to their original flame-broiled burgers.
This product gives them an advantage over other fast food chains. Facing intense competition and limited growth opportunities domestically, Burger King hopes strengthen their competitive stance through international expansion. By mid 2009, Burger King was not in any of the following countries: France, India, Nigeria, Pakistan and South Africa. Compare these countries as possible future locations for Burger King. In looking for new countries to enter, Burger King needs to identify countries that fit its ideal demographic profile.
Ideally Burger King would expand in areas that fit its ideal demographic profile. They need to find countries with higher populations (preferably youth) and concentrations of urban activity. Local diets consisting of high consumption of beef would be encouraging as their signature products are made of beef. Additionally, areas which are safe, maintain politically stable pro-business environments and have available capital are ideal. Burger King employees a franchising model as a method of growth and expansion.
Burger King has strengthened its franchise agreement to ensure standards of product quality control and brand image are adhered and maintained. While all of the aforementioned locations hold promise in most areas of the ideal demographic, subtle nuances present unique challenges. Competitive research would need to be done to explore the feasibility of each location. Or at least provide a complete picture for expansion into the respective countries. Burger King could learn from their own past errors in the countries they had retreated from as well as the mistakes of competitors.
Due to a long standing agreement with the United States military, Burger King has been able to enter into numerous international locations relatively risk free by their placement of restaurants on military installations. This enables Burger King to get an inside look at foreign locations and test products with locals. It can also help create demand and recognition. Variations in Burger King’s practices and strategies result from differences in markets, institutions and culture. Successful globalization is often synonymous with successful localization.
France: Burger King previously had locations in France but withdrew from the market in 1998. One of the unique challenges of France is the apparent disdain for Americans and American products. Sensitivity to local sentiments and possibly embracing local alternatives might be necessary. Given the high degree of tourism in France and their relative success in the rest of Europe, Burger King would benefit from international recognition making reentry easier. India: Beef consumption in India is very low and almost nonexistent. Burger King’s signature burgers may not be very successful in India.
Burger King would probably have to alter their menu to more familiar vegetarian dishes. Nigeria: Burger King opened a restaurant in Nigeria in 2011. Pakistan: Political stability and safety in this region of the world is always a consideration. Adaptation to local culture would require modification of food offerings, in particular in regards to pork based offerings. South Africa: Burger King entered South Africa in 2010. (Burger King , 2011) 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.
Burger King is a large company with vast resources. In comparison to a local company, Burger King could have inherent advantages when entering a new market. While people are familiar with fast food chains, Burger King differentiates itself not only in the products they offer but in the way they market their products. As an international company, Burger King could benefit from this brand recognition. This recognition helps ease the transition into new markets and could help stimulate sales. They can bring the benefits of economies to scale to bear in dealing with local suppliers.
Burger King is able to adapt and experiment in the local environment given their expansive resources. Burger King can enhance their product mix to cater to local culture as well as demographics. The reception and ease of operation in foreign countries is generally favorable as they are investing in the local economy and providing jobs and services. Conversely, they may be unfamiliar with or understand the customs and culture of the indigenous people. Burger King may not be truly aware of what it is required to be successful in a particular country. Local competition can be contentious.
Local companies learn from foreign fast food companies. Burger King will have to compete against local enterprises that are being developed both locally and globally. Local companies are able to rapidly alter their menus and flavorings to appeal to local tastes. Local companies tend to be more sensitive to local customs and exhibit genuine passion for local interests. Additionally, there may not be enough suppliers to support both Burger King and local restaurants. About two thirds of Burger King’s restaurants are in its Americas region (United States, and Canada) and one third elsewhere.
Should this relationship change? If so, why and how? The burger market in North America is considered mature. Given the heavy competition and saturation of similar products, the opportunities in North America may be significantly less than in other parts of the world. Similar competitors, notably McDonalds, have experienced success in markets outside of the United States and Canada. Likewise, Burger King has experienced success in certain international markets as well. Outside of Burger King’s America’s group (United States and Canada), the majority of Burger King restaurants are in Latin American and the Caribbean.
Despite the heavy concentration of restaurants in these areas, these countries accounted for only 13. 5 percent of the non-Americas group revenue in fiscal year 2009. This is attributable primarily to the relatively small populations of these countries. In order for Burger King to remain competitive and strengthen their market share, taking advantage of opportunities in other markets may make sense. Expansion in other countries could increase revenue and improve visibility in the international market place.
Expanded market share could help strengthen strategic alliances with suppliers and stimulate competition. Expansion could also help diversify Burger Kings holdings. Diversification would help Burger King become less susceptible to local economic conditions. Burger King also needs to learn from past mistakes as they evolve their franchise system. Past failures have identified circumstances when Burger King has been forced to leave a market. Inadequate franchisee investment and performance as well as ill suited market demographics have led to the exit from certain markets.
The case mentions that Burger King prefers to enter countries with large number of youth and shopping centers. Why do you think these conditions would be advantageous? Burger King prefers to enter markets in foreign countries with large populations of youths and shopping centers. This demographic profile represents the ideal target market for Burger King restaurants, both domestically and internationally. Fast food and shopping centers tend to be marketed more directly to the youth population. Youth are accustomed to and show a preference for fast food and constitute the largest consumer group of fast foods.
Older consumers tend to shy away from fast food restaurants and prefer more traditional foods and eating at home. Youth are less likely to go home and cook and are more likely to pick up food on the go. Shopping centers are an ideal setting for a fast food restaurant as they attract younger people. Offering fast food makes it convenient for consumers to obtain food while shopping or to take on the go. How has Burger King’s headquarters location influenced its international expansion? Has this location strengthened or weakened its global position? The Burger King chain has always had roots in the Miami, Florida area.
The original Burger King restaurant first opened in the Miami area and the company headquarters has always been located there. The global headquarters helps Burger King manage and control all its international locations from a central location. Miami is a large metropolitan area and frequent tourist destination for travelers from all over the world in particular from Latin America. Due to a heavy concentration of Latinos, Miami has been labeled the “Capital of Latin America”. Additionally, Miami is a frequent destination for snow bird travelers thus gaining additional exposure for the Burger King brand.
Burger King has benefited from this exposure and gained recognition in international communities. Familiarity with the Burger King brand helps ease the expansion in certain international markets and has strengthened its global competitive position. The close proximity to Latin America demonstrates their global commitment and helps ensure their continued presence in the Latin American community. It has facilitated the ease of oversight and allows Burger King’s management to easily “visit these countries and for franchisees to visit Burger King headquarters”.
Additionally, Burger King is able to locally test products on the indigenous Latin community. The location in Miami has simplified their entry into the Latin countries. Burger King can use the experiences in South American countries as a basis for consideration for expansion in other countries. Evaluate Burger King’s strategy of using the Brazilian experience to guide its entries into Russia. Burger King’s 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.
This can be seen in through its experiences in Brazil which serve as a model for entry into Russia (Daniels, Radebaugh & Sullivan, 2011). Burger King observed the mistakes that have been made by other companies and used their mistakes as a learning experience and as a growth mechanism. The failure of many prior fast food entrants in the Brazil market made potential suppliers apprehensive. By observing the mistakes of other fast food chains, Burger King forged a strategy that has proved successful. Brazil has been one of Burger King’s fastest growing markets.
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 Brazil’s largest cities, instead of the whole country, ( 4) establish a local office, and ( 5) support continuous development and the use of local suppliers that meet Burger King’s global specifications(Daniels, Radebaugh & Sullivan, 2011).
Typically Burger King does not set regional restaurant support center for smaller markets or those where all the restaurants are franchised. Management deemed a Brazilian office necessary because of Brazil’s size (in both area and population), its language barrier (Portuguese), and the magnitude of investment that suppliers and franchisees would eventually need to make. From the beginning the office served to demonstrate the company’s market commitment and to handle early supply- chain procurement and management (Daniels, Radebaugh & Sullivan, 2011).
Burger King’s success in Brazil based on this model has encouraged management to use 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 (Daniels, Radebaugh & Sullivan, 2011). Conclusion Burger King has many opportunities for expansion, in particular opportunities in foreign countries.
Despite its more recent international growth, Burger King still operates in less than 40 percent of the world’s countries. Burger King faces the challenge of indentifying and deciding which locations are best suited for expansion. However, growth for growth’s sake is the mentality of a cancer cell. Burger King needs to engage in strategic expansion and only expand when the circumstances are favorable and demographical requirements have been met. Sources Burger King . (2011, November 10).
Retrieved November 10, 2011, from Burger King: http://www. bk. com/en/us/international/index. html Daniels, J. , Radebaugh, L. , & Sullivan, D. (2011). International Business. In J. Daniels, L. Radebaugh, & D. Sullivan, International Business. Upper Saddle River: Pearson. Our Commitment to Corporate Governance Our codes and company policies encompass not only our core ethical principles, but specific issues that our employees and business partners face on a day-to-day basis.
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