Burger King Case Study
Burger King’s global ambitions for growth haven’t been as successful as the company originally planned, especially in nations where supplies essential to their business model were not plentiful. The case, Burger King Beefs Up Global Operations, (Daniels, Radebaugh, 2011) shows how the company struggled to re-enter Columbia. What Burger King did do very well was capitalize on its core strengths from a cultural standpoint, which led to their having success in Brazil. Headquartered in Miami, Florida Burger King understands the Latin American mindset when it comes to food. This, along with the ability to understand the Brazilian fast food market better than their American-based fast food competitors, led to their success (Wall Street Journal, 2004).
Analyzing Burger Kings’ Success with Global Operations
At the center of what makes Burger King a unique business is how consistently each franchise and company-owned location is able to deliver consistently high quality food, grilled to order. Their core competency, or as the book often calls this aspect of businesses, their core competency (Daniels, Radebaugh, 2011) is delivering cooked-to-order burgers fast and inexpensively. Being able to make this core competency or strength of their business succeed in a variety of different nations is a challenge for all fast food companies (Patton, 2014). Burger King has been able to standardize the processes by which they produce burgers, fries, shakes and other fast food items while also working with local suppliers in the nations they are trying to expand into according to the case study. This approach to working with local suppliers, hiring local managers and executives to run operations, and being sensitive to the cultural differences in each nation they are trying to expand their business is why they are succeeding (Daniels, Radebaugh, 2011).
The value chain is mentioned often in our text shows how the primary and support activities of any business must all be aiming at generating gross contribution margin or profits over time (Daniels, Radebaugh, 2011). Burger King’s value chain relies on a strong series of supplier relationships and supply chain, effective marketing to get customers into their locations, and the ability to deliver a high quality burger on a consistent basis. Burger King as designed its value chain around delivering an excellent quality made-to-order burger, from aligning its suppliers to making the in-store experience reinforce this view (Wall Street Journal, 2004). The reason Burger King has been so successful is that it has deliberately designed its value chain to meet and exceed customer expectations for a quality cooked-to-order burger.
Burger King also expanded later than its main fast food competitor into international markets, which turned out to be a very good decision. The advantages included the following: first, the Burger King was able to learn from their competitors;’ mistakes: second, they were able to see where and how the local governments worked when it came to Foreign Direct Investment and most important, sending royalties back to Burger King headquarters in the United States (Daniels, Radebaugh, 2011); and third, nations where demand for fast food was not well-known, Burger King was able to capitalize on their competitors more clearly defining the market. Disadvantages included having to fight to get market share from competitors who are already established; second, trying to find additional suppliers in smaller nations where competitors may have already bought all their capacity; and third, competing for the attention of a smaller total available audience of consumers. Burger King did however have advantages relative to local companies in the international markets they chose to enter, and also experienced setbacks based on disadvantages of this strategy. Advantages vs. local companies included greater financial resources, more global brand recognition, and greater expertise regarding how to create stable supply chains (Daniels, Radebaugh, 2011). The disadvantages included lack of local knowledge and insight into how they could grow their individual stores faster, lack of influence over suppliers, and the challenge of hiring experienced managers from the nations they were expanded into (Daniels, Radebaugh, 2011).
With two-thirds of Burger King’s revenue from the Americas region, the company needs to consider how they can expand globally at the same rate as has been accomplished in the past. Ideally the mix of revenue from the Americas and remainder of the world should be 50% each. This will provide for a good balance of revenue for the company if the Americas markets face challenging times financially.
By concentrating on nations where there is a large base of youth and shopping centers, Burger King will continue to succeed. Burger King has been able to successfully position its burgers and the cook-to-order idea as also being part of social outings or gatherings of friends too. This has led to success with youth who want to have lunch together and socialize in shopping centers. Burger King has been able to get beyond the market for their fast food not growing nationally and globally by making a visit to their stores and locations an experience (Patton, 2014). Burger King’s location in Miami also is contribution to its success in Latin American countries. The case study points out that there are many families form Latin America living, gives them a ready-made test market for their new products. By having so many Latin Americans so close to the headquarters, Burger King’s senior managers and executives can learn more about how to best sell to and serve this base of customers. It has definitely helped them globally. The lessons learned regarding shopping centers and youth were initially learned from selling to Latin American consumers in Miami, according to the case study (Daniels, Radebaugh, 2011).
Assuming the role of CEO of Burger King, the tools and strategies that would be the most valuable come from Daniels and Radebaugh (2011). First, I would concentrate on what the total size of each international market Burger King is operating in and define growth objectives for each, showing how much more profits would be generated if more market share could be gained. Second, the concepts of localization that are discussed in the text (Daniels, Radebaugh, 2011) need to be better managed and implemented. Third, there needs to be greater focus on how to manage suppliers so that events like those in Columbia mentioned in the case don’t stop sales. Finally there needs to be more focus on how to make country-specific conditions in new markets become competitive strengths. This includes making the most of knowing how to be successful selling in shopping centers to youth, and making that a new core strength of the company.
The implications of the challenges identified in the case have for the future of Burger King include how to best move into nations dissimilar than the ones they have succeeded in. Latin America is very different than India or Asia for example. Burger King has plans to move into Asia (Updike, 1996). This will take a completely different series of skills that what they have had in the past. The recent decision to also attempt to sell into India (Sharma, Kurian, 2013) will also be challenging. Burger King will need to find a way to learn these cultures and their needs in order to be successful. This will include investing more in the countries first and getting a strong team together before actually opening any stores or locations.
Bibliography:
Daniels, J., & Radebaugh, L. (2011). International business: Environments and operations (13th Ed.). Upper Saddle River, N.J.: Pearson Education/Prentice Hall.
Patton, L. (2014, Sep). Have we reached peak burger? Business Week.
Sharma, S., & Kurian, B. (2013, Feb 01). Burger king in talks to revive India plans food]. The Economic Times (Online)
Updike, E.H. (1996, Nov 25). Burger king wants to build a kingdom in Asia. Business Week, 52.
Burger King Corp.: Incoming CEO Brenneman pledges global growth push. (2004, Jul 14). Wall Street Journal.
