CASE 18: BURGER KING (MINI CASE)

TABLE OF CONTENTS

1. Case Summary....................................................................................................................................... 1
2. SWOT Analysis....................................................................................................................................... 2
A. Strength: Company Internal .............................................................................................................. 2
B. Weaknesses: Company Internal........................................................................................................ 2
C. Opportunities: Environment External ............................................................................................... 3
D. Threats: Environment External ......................................................................................................... 4
E. EFE Matrix ......................................................................................................................................... 4
F. IFE Matrix .......................................................................................................................................... 5
G. CPM Matrix ....................................................................................................................................... 6
3. Problem Statement ............................................................................................................................... 7
4. Alternative Strategy .............................................................................................................................. 7
5. Evaluation of Alternative Strategy ........................................................................................................ 8
6. The Best Strategy and Justification ....................................................................................................... 9
7. Implementation .................................................................................................................................. 10
a) Short Term .......................................................................................................................................... 10
b) Long term ............................................................................................................................................ 10
 Case 18: Burger King (Mini Case)

1. Case Summary

Burger King previously called as Insta-Burger King, it was the second largest hamburger
franchise chain in the world after McDonald. As per June 2010, it is recorded that burger
king has 12174 outlets in 76 countries, which is 66 percent of them are in the US and 90
percent are privately owned and operated worldwide. This fast food chain was established
by Keith Kramer and Matthew burns on 1953. In 1955, after facing financial difficulty this
company was sold to Miami based franchised and being renamed Burger King by its new
owner called James Mclamore and David Edgerton. In 1989, this company bought by
Deigo a British Spirit Company. Under Diego management BK has fall off in the business
because of poor performance. To avoid from further loses, Diego has sell it to a
partnership private equity firm led by TPG capital in 2002. Burger King is the Second
largest chain of hamburger fast food restaurant in terms of global location, behind industry
bellwether McDonalds. Based on resources, company income was generate mainly from
three sources that is retails sales at company owned restaurant, royalty payment from
sales and fee from franchise and also property income from restaurant leases to
franchisees. Management has used a business strategy that can help boost sales and
production performance and investing on promoting the brand. The company also
specifically plan on growing its chain and focus on international expressions. Expansions
are done only at selected market for example a country that has potential on positive
growth and attractive new market for instants the Middle East or Asia markets. According
to industry analysis, burger king share price had fallen by half from 2008 to 2010, this is
according to them burger king is having significant management problem.

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 Case 18: Burger King (Mini Case)

2. SWOT Analysis

A. Strength: Company Internal

1. Burger King Second largest Fast Food Hamburger is known for its strong
brand: Throughout the years it has survive in the industry and has built a strong
brand in the US and worldwide since was founded in Florida in 1953.
2. Solid market position: Which measured by the total number of restaurant and
system wide sales as well as Burger King also being the second largest fast-food
hamburger restaurant chain in the world.
3. Lower capital requirement: This is provide burger king with a strategic
advantage as the capital required to grow and maintain the burger king system is
funded primarily by franchisees. When compared to competitors causing burger
king to have high percentage of franchise restaurant (90%).
4. Owned distribution cooperative: which is, restaurant service Inc. that manage
and act as the purchasing agent for the Burger king a system in the U.S. this
ensure items move smoothly and efficiently from supplier through regional
distribution centers and each restaurant across the country.
5. Long term exclusive contracts: Burger King have exclusive contract with the
other strong brand name which is Coca-Cola and with Dr. Pepper, seven-up, to
purchase soft drinks for its outlet.
6. Boost efficiency by reduce cost: Burger King installing point-of-sale cash
register system and flexible batch broiler to maximize cooking flexibility and
facilitate a broader menu selection while reducing energy cost.

B. Weaknesses: Company Internal

1. Rely on franchisees: The revenue sources is two from its three source of
revenue.
2. The changes of management: over the years may undermined its ability to
establish and communicate a consistent and motivational vision to its franchisees.
For example, when Diageos management took over Burger King Business, the
performance was poor to the point that major franchises went out of business and
the total value of the firm declined.

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 Case 18: Burger King (Mini Case)

3. The high percentage of franchise: cause Burger King to have limited

management control.
4. Concentrated in the US: Burger King concentrated in the US is 60% and has
small or less percent presence internationally as compared to McDonalds.
5. Unable to adapt suitable marketing strategy: During the fiscal years and
marketing to the wrong target market. For example, while McDonalds strategy is
to put more emphasis on woman and older group by offering healthier salads and
upgraded its already good coffee, Burger King continued to market to young men
offering high calorie burger and advertisement featuring dancing chickens and a
creepy looking king. This marketing concept not only promotes an unhealthy diet
but also targeting the wrong target market, which was the men, that having
difficulties and was hit hard on employment and such during the fiscal year.
6. Torn apart its existing sales by too much rely on value meals: which they
sell it in lower price compared to its production cost. Thus, causing them to lose
money.
7. High calories food: Some food item for example Pizza Burger, contains 2530-
clories. This served as a concern as Americans opt for a more healthy living.

C. Opportunities: Environment External

1. International Expansion: The potential growth and new market of other
countries led to Burger King to focus on exploring new grounds and international
expansion.
2. Developing Health conscious: Burger King should also take advantage of the
growing health conscious community where people are more concern on their
health by offering and introducing more healthy items on the menu.
3. The FFHR were projected grow: The fast-food hamburger restaurant (FFHR)
category in the quick service restaurant (QSR) segment of the restaurant industry
were projected to grow 5% annually during 2010-2015. This positive remarks is
advantageous to Burger King and a good time to market Burger King Products
according to consumers needs.
4. Market Share: Marketing and operating economies of scale made it difficult for
new entrant established U.S chains in the FFHR category. With this, burger king

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 Case 18: Burger King (Mini Case)

have the competitive advantage to further increase its market share in the
industry.

D. Threats: Environment External

1. The economic recession 2008 to 2010: has caused the declining margins in
Burger King.
2. Legislation for unhealthy fast food: threatens not only Burger King but the
quick service restaurant as a whole. For example, a health reform bill passed by
the US congress in 2010 required restaurant chains to list the calorie content of
the menu.
3. Competitors: Burger King Competitor such as McDonald and indirect competitor
such as Taco Bell, KFC, and Pizza Hut etc. Burger King may face other small
growing competitors as the barrier for the entry is low.

E. EFE Matrix
Weighted
No Opportunities Weight Rating
Score
1 International Expansion. 0.20 3 0.60
2 Developing Health 0.20 3 0.60
conscious.
3 The (FFHR) were 0.10 2 0.20
projected to grow.
4 Market share. 0.10 2 0.20
Weighted
No Threat Weight Rating
Score
1 Economic recession 2008 0.20 2 0.40
to 2010.
2 Legislation for unhealthy 0.10 2 0.20
fast food.
3 Competitors. 0.10 2 0.20
Total 1.0 2.4

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 Case 18: Burger King (Mini Case)

F. IFE Matrix
Weighted
No Strength Weight Rating
Score
1 Strong brand name. 0.13 4 0.52
2 Solid market position. 01.0 3 0.30
3 Lower capital requirement. 0.08 3 0.24
4 Own distribution 0.07 3 0.21
cooperative (RSI)
5 Exclusive contracts. 0.06 3 0.18
6 Boost efficient by reduce 0.03 3 0.09
cost.
Weighted
No Weaknesses Weight Rating
Score
1 Rely on franchise as 0.13 2 0.26
source of revenue.
2 The changes of 0.09 2 0.18
management.
3 Limited management 0.07 2 0.14
control.
4 Concentrated in US only. 0.08 2 0.16
5 Wrong marketing strategy. 0.10 2 0.20
6 Too much emphasis on 0.03 2 0.06
value meals.
7 High calorie food. 0.03 2 0.06

Total 1.0 2.6

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 Case 18: Burger King (Mini Case)

G. CPM Matrix
McDonalds Wendy Hemberger Burger King
Critical Weighted Weighted Weighted
Success Weight Rating Rating Rating
Score Score Score
Factor
Brand 0.15 4 0.6 2 0.30 3 0.45
Name
Product 0.09 2 0.18 3 0.21 3 0.21
Quality
Public 0.07 2 0.14 2 0.14 3 0.24
Image
Market 0.10 4 0.40 3 0.30 3 0.30
Share
Price 0.05 3 0.15 3 0.15 2 0.10
Competitive
Innovation 0.04 3 0.12 2 0.08 2 0.08

Advertising 0.06 4 0.24 2 0.12 3 0.18

Market 0.08 4 0.32 4 0.32 4 0.32
Expansion
Financial 0.06 4 0.24 2 0.12 3 0.18
Position
Sales 0.08 3 0.24 3 0.24 3 0.24
Distribution
Strategic 0.04 3 0.12 2 0.08 3 0.12
Partnership
and
Alliances
Number of 0.10 3 0.30 3 0.30 4 0.40
Logistic
Geographic 0.08 3 0.24 2 0.16 4 0.32
coverage
1.0 3.29 2.52 3.14

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 Case 18: Burger King (Mini Case)

3. Problem Statement

Poor leadership and management, and loss of brand vision that leads to weak marketing
strategies, wrong target market and lack of innovations.

Poor Management by its previous predecessor.

Weak marketing strategies and wrong target market.
Lack of product innovations.
Limited management control.
Reliance of franchisees as revenue source.

4. Alternative Strategy

1. Rebranding
Brand is important asset to the company, when company has confident, well-positioned
brand, opportunity grows you are perceived as more credible, get more unsolicited leads,
close higher percentage of business and can charge more for your services. Rebranding
is marketing strategy in which a new name, term, symbol, design, or combination thereof
is created for an established brand with the intention of developing a new, differentiated
identity in the minds of consumers, investors, and competitors. Often, this involve radical
changes to a brand logo, name, and image, marketing strategy, and advertising themes.
Such changes typically aim to reposition the brand/company, occasionally to distance itself
from negative connotations of the previous branding, or to move the brand upmarket,
furthermore they may also communicate a new massage a new broad of director wishes
to communicate.

2. Setting new product and marketing strategies.

Burger King has successfully differentiated from its competitors when it launched the Have
It Your Way advertising in 1974. But the constant take-over of the company has caused
it to loose direction of its market segment and target. The inflexibility of its marketing
strategies has led to unnecessary menu development and targeting the wrong market.
The product development should take into account the current demand of the market. At
times like this where the community re more concerns on their health, they will think more
of their family and protection against having high calories food. In short, burger king must

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 Case 18: Burger King (Mini Case)

be able create a product that caters the community concerns and needs. Which include
more healthy food items on the menu as well as targeting a wider market segments and
consumers. The marketing campaign that will be used must be able to reach certain target
group for certain products.

3. Market expansion
For the organic growth (slow and steady growth) of the company, Burger King must
expand its market to potential countries like to Kuwait, Bahrain. Qatar and united emirates
and South Africa while the existing market should be concentrated more to compete with
the rivals. Modernization and the vast cultural impact of western culture to the other parts
of the world can be an advantage for BK to expand its market in other market outside
Europe. Guerrilla style tactic can be used to open outlets in international major airports.
This is easier for BK to reach worldwide market. BK must have an outlet at every airport
in every capital around the world for the worldwide expansion.

5. Evaluation of Alternative Strategy

Evaluation of
No Alternative Pro Cons
Strategy
New and fresh image of Required took into
Burger King will be account the resources
introduced with the new and the high cost for
takeover. rebranding.
Can help understanding
more of the brand, due
to help in hiring more
1 Rebranding suitable staff and target
the right sort of client.
The franchisees will be
involved in this process,
this will boost morale
and make them
ambitious to take on
new level.
Aim to promote more Requires the company
Setting New product
healthy food items, due to have a well define
2 and marketing
to passing of the health rod map and
strategies.
reform bill in US. commitments to rise

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 Case 18: Burger King (Mini Case)

their service standard

Will makes the cost of
doing business less on
pre-customers basis,
which improve the
Marketing
3 potential to profit by
expansion.
adding new customers.
to customers.
Will involve lots of
spending toward a new
marketing campaign.
Requires to access the
limitation of entering
into new geographical
location particularly on
the government
regulation and the
social climate or trend
of the people in those
countries.

6. The Best Strategy and Justification

The best strategy for burger king is to combine the two alternative which are rebranding
and setting new product and marketing strategies. The poor management and
constant leadership change in burger king has hurt the brand name. Furthermore, it also
provide this line and limited control over the franchisees and their uptake on their
restaurant. With rebranding, it can strengthen its management policy along the way as
rebranding takes time and effort from all parties in Burger King including the franchisees.
This can further strengthen the connection to its franchisees and expand its control.
Rebranding can also reintroduce burger king to the masses and shows a conviction to the
consumer that they are ready for change and further position and strengthen its place in
the market.

For the second strategy. Burger King has to change their marketing strategies
in order to be survival in the fast-food industry. Changes on the burger king infrastructure
will gain positive respond from customers because basically new trend attract more new
customer. Burger king need to change the target market from younger people to family
segmentation in order to increase their market share. Targeting on the children and
working parents help burger king to define its target market not only for younger people
but also for the family-oriented population. Thus, every new marketing trends evolve by
burger king will promise the company a good return in term of increase in market share,
customer loyalty, brand popularity and competitive advantage. In order to survive, Burger
King need focusing on its marketing strategies, Burger King Need to develop new

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 Case 18: Burger King (Mini Case)

marketing plan as creating more family-oriented menu for the restaurant, deliver new
marketing campaign through different medium such as loyalty customer programs,
limited-time offers menu strategy, kids menu package, festival offer and slightly change
the concept from a high calorie menu to healthier or low calorie menu.

7. Implementation

a) Short Term
1. Rebranding
With rebranding, a new and fresh image of burger king will be introduced with the new
takeover. Burger king need to rebrand its outlet which is more focus and specific and goal
direct kind of image due to consumer may confused on what burger king may offers.
Burger king also may merge with another fast food operator to learn Service skills or fast
operation knowledge able to transfer between both operators, choose operator which is
one of the top major quick service restaurant is US. Furthermore, with this move Burger
King can gain more market share in the quick restaurant industry. Apart from that, HRM
department also need to restructure its staff and employee into a more organize group
and this will involve extra cost through the upgrading of certain system.

2. Advertising
Burger king may establish new marketing strategy. Burger king may opt to invest in its
commercial advertising by getting healthy celebrity who enjoys burger king new healthier
food. Burger king need to showcase its various new menu item, which include smoothies,
salad and specialty coffee drinks. The commercial video must strike a humorous tone and
should be more fun than the old one. To attract more children consumer burger king may
introduce mascot. To attract the busy and always on the move consumer they may
promote a video that showcase the food is ready to eat and prepared in just a minute.

b) Long term
1. Introduce healthier Menu
People nowadays are more concern on health, thus burger king can take a chance to
promote and introduce a healthier food and drink. For example include a fresh fruit or
fresh vegetable salad to its menu. Not only that, to promote healthier foods which also

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include the current food ingredient for example reduce or remove all usage of mgs in
food, or reject on preparing burger that have pickles. For its drinks, they can introduce
organic fresh drink and cut off the use of sugar in its drink.

2. A consistent company ownership

Based on history of this company, the ownership is changed on regular basis. This
may bring to a negative consumer perception on its company. Its only show how weak
burger king in its management and its unstable top management position. Burger king
needs a leader who can specifically direct its company to a clearer direction or vision.
A leader that can articulate clear vision of the company and compelling picture of
future condition that the staff and franchisees feel committed to achieve. A strong
formation in top management is very important so that can bring a positive aura to
the franchises or the worker itself.

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