Burger King has long been the second-most patronized burger chain in the US. It is seeking to use a global expansion strategy to improve sales and its brand image. Burger King has been slow to expand abroad in the past, but now it is speeding up its expansion of international operations, using its Florida headquarters as a base to expand into Latin America and the Caribbean islands.
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Burger King beefs up global operations
What is Burger King's core competency? How does it relate to its chosen strategy?
Burger King is a fast food chain that offers two unique components to customers regarding its 'burger experience': the ability of users to customize their burgers and also the fact that its burgers are flame-broiled (Brock 2012).
How would you explain how Burger King has decided to configure and coordinate its value chain? Which of Burger King's value chain activities create the most value for the company?
Burger King has expanded its offerings to include breakfast items and chicken, fish, and dessert options, although burgers remain the flagship product. It has branded itself as the 'better-tasting' burger that no one knows about, much in the same way that Pepsi has 'challenged' Coke drinkers to take the Pepsi challenge blindfolded. Burger King's Whopper Virgins campaign encouraged hardcore McDonald's users to try its sandwich by showing how people who had never eaten fast food liked Burger King's offerings better than Big Macs (Russell 2012). Even with a more diverse menu, Burger King has been able to generate value for itself with a differentiated strategy of using local suppliers in some countries and creating its own operations to provide supplies in countries with less plentiful resources.
Q3. Burger King globally expanded later than its main fast food competitor. What advantages and disadvantages has this created?
Most of Burger King's ventures have been in joint partnerships with other companies in the regions into which it expanded. This conveys the advantage of giving additional information about the desired customer base, and slower expansion allows Burger King to research the market and the various factors which will influence demand and require tweaking of the core product. Burger King may lose a first-move advantage, but theoretically a joint venture with slower expansion allows for fewer missteps in the local marketplace. According to the case study: "in looking for new countries to enter, Burger King looks most favorably at those with large populations (especially for young people), high consumption of beef, availability of capital to franchisees for growth, a safe pro-business environment, growth in shopping centers, and availability of a potential franchisee with experience and resources." Being a late entry allows existing competitors like McDonald's to generate a demand for the product and create relationships with local suppliers that Burger King can then capitalize upon.
Q4. 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.
Many companies, particularly fast food companies, suffer because of the negative image of American food abroad. Consumers may wish to 'buy local' out of national pride. Yet America also has a great deal of exoticism and cache internationally, and the American persona of Burger King may create rather than stymie business.
Q5. About two-thirds of Burger King's restaurants and revenues are in its American region (United States and Canada) and one-third elsewhere. Should this relationship change? If so, why and how?
Given the super-saturation of the American market in terms of fast food, global expansion seems to be an excellent strategy. Americans are also switching their fast food buying habits from burgers to fresher and healthier ingredients, as sold by chains like Panera Bread, Starbucks, and In-And-Out (Brown 2012). But even in small international markets such as Cayman Islands, Aruba, and Saint Lucia, Burger King has demonstrated its ability to capitalize upon its reputation in the United States and translate that into sales abroad. In countries with larger populations, Burger King has also been able to generate a successful business model through ownership of its suppliers as well as through franchising, and can thus tailor its approach to suit the needs of the marketplace within specific nations.
Q6. 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?
Fast food tends to be a commodity which people purchase out of convenience. Going to a shopping mall, people often want a quick, fast, and familiar bite, and a fast food restaurant like Burger King serves that need. Young people tend to be the most enthusiastic consumers of fast food. Fast food is often associated with youthful product tie-ins like films and cartoons. Young people often use shopping malls and fast food restaurants as places where they can socialize and work. The food is often sweet, salty, and fatty, and thus suitable to a teenager's palate, particularly a teenager who is not yet nutritionally conscious. And teens tend to have more mutable buying habits than their older counterparts, although children and teens through the 'nag factor' can often encourage parents to purchase fast food.
Q7. How has Burger King's headquarters location influenced its international expansion? Has this location strengthened or weakened its global competitive position?
Burger King's headquarters has strengthened its position. It has capitalized upon its Florida location to have a strong presence in the Caribbean islands and Brazil.
Q8. As CEO of Burger King, what tools and strategies would you use when deciding on possible future locations for the company?
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