CASE SUMMARY

Burger King previously known as insta-burger king, currently was the

second largest hamburger franchise chain in the world after Mc Donald. This fast
food chain was established by Keith Kramer and Matthew burns on 1953. In
1955, after facing financial difficulty
franchised and being

this company was sold to Miami based

renamed Burger King by its new owner called James

Mclamore and David Edgerton. In 1989, this company bought by diego 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.
As per June 2010, it is recorded that Burger king has 12 174 outlets in 76
countries, which is 66 percent of them are in the US and 90 percent are privately
owned and operated worldwide. Burger King is the second largest chain of
hamburger fast food restaurants in terms of global locations, behind industry
bellwether McDonalds. Based on resourced, company income was generated
mainly from three sources that is retail sales at company owned restaurant,
royalty payment from sales and fee from franchises 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 expansions. Expansions are done only at selected
market for example countries that has potential on positive growth and attractive
new market for instants the middle east or Asia markets.
According to industry analysis, burger kings share price had fallen by half
from 2008 to 2010, this is according to them burger king is having significant

management problem. In this study case we will recommend several strategic

management in other to solve its problem.

SWOT ANALYSIS
STRENGTHS: COMPANY INTERNAL
a. Burger King is known for its strong brand. Burger King, formerly known as
Insta-Burger King was founded in 1953. Throughout the years it has
survived in the industry and has built a strong brand in the US and
worldwide.
b. Burger king has a strong market position, being the second largest fastfood hamburger restaurant chain in the world as measured by the total
number of restaurant and systemwide sales.
c. Has lower capital requirements compared to competitors causing Burger
King to have a high percentage of franchise restaurants (90%). This
provides Burger King with a strategic advantage as the capital required to
grow and maintain the Burger King system is funded primarily by
franchisees.
d. Has its own distribution cooperative which is, Restaurant Services Inc.
(RSI), that manage and act as the purchasing agent for the Burger King
system in the U.S.. This ensures items move smoothly and efficiently from
suppliers through regional distribution centers and each restaurant across
the country.
e. Has a long term exclusive contracts with other strong brand names which
was Coco Cola and with Dr. Pepper/Seven-Up, to purchase soft drinks for
its restaurant.

f.

Reduce its costs and boost efficiency by 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.

WEAKNESSES: COMPANY INTERNAL

a. Too dependent and heavily relying on franchisees as revenue sources,
which accounted for two from its three sources of revenue.
b. The continuous leadership changes 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.
c. Its high percentage of franchisees also cause Burger King to have limited
management control.
d. Its restaurant mostly concentrated in the United States (60%). And has a
small or less presence internationally as compared to McDonalds.
e. Failure to adapt to more 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 women and older group by offering
healthier salads and upgraded its already good coffee, Burger King
continued to market to young men offering high calorie burgers 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.

f.

Cannibalized its existing sales by putting too much emphasis on value

meals, which they sell it in lower price compared to its production cost.

Thus, causing them to lose money.

g. Some food items, for example Pizza Burger, contains 2530-calorie. This
served as a concern as Americans opt for a more healthy living.

OPPORTUNITIES: EXTERNAL ENVIROMENT

a. The potential growth and new market of other countries led to Burger King
to focus on exploring new grounds and international expansion.
b. 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.
c. 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.
d. Marketing and operating economies of scale made it difficult for new
entrant to challenge established U.S. chains in the FFHR category. With
this, Burger King have the competitive advantage to further increase its
market share in the industry.
THREATS: EXTERNAL ENVIRONMENT
a. The economic recession (2008-2010) has caused the declining margins in
Burger King.
b. 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 U.S. Congress in 2010 required restaurant chains to list the
calorie content of the menu.

c. Aside from its main competitor, which is McDonald, and indirect

competitors such as Taco Bell, KFC, and Pizza Hut etc. Burger King may
face other small growing competitors as the barrier for entry is low.

EFE MATRIX
Rating indicates how effective the firms current strategies respond to the factor.
Rating of 1 indicates the response is poor, 2 indicates the response is below
average, 3 meanwhile indicates its above average and rating of 4 means
company is superior in responding to the factors. Weights are industry-specific
while ratings are company-specific. Total weighted scores well below 2.5 point
to internally weak business. Scores significantly above 2.5 indicate a strong
internal position. The total weighted score of 2.40 indicates that the business has
slightly less than average ability to respond to external factors.
No

Opportunities

Weight

Rating

Weighted

1
2

International expansion
Growing health conscious population

0.20
0.20

3
3

Score
0.60
0.60

FFHR potential growth in QSR segment

0.10

0.20

4
No

Increase market share

Threats

0.10
Weight

2
Rating

0.20
Weighted

Economic recession (2008-2010)

0.20

Score
0.40

Legislation for unhealthy fast food

0.10

0.20

Competition from well-established fast

0.10

0.20

food companies
Total

1.0

2.40

IFE MATRIX
Rating captures whether the factor represents something major or minor. A
rating of 1 represent a major weakness while a rating of 2 represents a minor
weakness. A minor strength will represent a rating of 3 while a major strength
will be rated as 4. Since we are using the rating scale 1 to 4, then strengths must
receive a 4 or 3 rating and weaknesses must receive a 1 or 2 rating. Total
weighted scores well below 2.5 indicate to internally weak business. Scores
significantly above 2.5 indicate a strong internal position. Burger King company
score of 2.60 shows that the company has an internally strong business.
No

Strengths

Weight

Rating

Weighted

Strong brand name

0.13

Score
0.52

Strong market position

0.10

0.30

Lower Capital requirements

0.08

0.24

Has its own distribution cooperative (RSI)

0.07

0.21

Exclusive partnership

0.06

0.18

Cost

0.03

0.09

No

operation
Weaknesses

Weight

Rating

Weighted

Reliance

0.13

Score
0.26

revenue
Continuous leadership changes

0.09

0.18

Limited management control

0.07

0.14

Concentrated in US only, less presence in

0.08

0.16

certain country
Wrong marketing strategy

0.10

0.20

Too much emphasis on value meals

0.03

0.06

efficient

of

kitchen

franchisee

and

as

registry

source

of

High calorie food items/menu

0.03

Total

1.0

0.06
2.60

CPM MATRIX
The overall competitiveness of a firm can be evaluated on the basis of its overall
strength rating. If the difference between a firms overall rating and the scores of
lower-rated rivals is higher then the firm has greater net competitive advantage.
Whereas, if the difference between a firmss overall rating and the scores of
higher-rated rivals is bigger then the firm has greater net competitive
disadvantage. The competitive profile matrix shows that the total weighted score
of McDonalds is higher than Yum Brands and Burger King which means that it
has the strongest competitive position. While Burger King has the net
competitive disadvantage compared to the other two brands.

Critical

Weight

Success

McDonalds
Ratin
Weighted

Yum! Brands
Ratin
Weighted

Burger King
Ratin
Weighte

Score

Score

d Score

Factors
Brand Name
Product

0.15
0.09

4
2

0.60
0.18

3
3

0.45
0.21

2
3

0.30
0.21

Quality
Public Image
Market Share
Price

0.07
0.10
0.05

2
4
3

0.14
0.40
0.15

3
3
2

0.24
0.30
0.10

2
3
3

0.14
0.30
0.15

Competitive
Innovation
Advertising
Market

0.04
0.06
0.08

3
4
4

0.12
0.24
0.32

2
3
4

0.08
0.18
0.32

2
2
4

0.08
0.12
0.32

Expansion
Financial

0.06

0.24

0.18

0.12

Position
Sales

0.08

0.24

0.24

0.24

Distribution
Strategic

0.04

0.12

0.12

0.08

Partnership
and Aliances

Number
Locations
Geographic

of

0.10

0.30

0.40

0.30

0.08

0.24

0.32

0.16

coverage
1.0

3.29

3.14

2.52

PROBLEM STATEMENT
LIST OF PROBLEMS
1. Poor management by its previous predecessor
Burger King has gone through different management style and companies
since it was founded in 1953 by Keith Kramer and Matthew Burns. Even
though Burger King has established itself as a well known brand over the
years, its history of poor management has put a toll on its brand name.
Even suffering declining in revenues along the way.
2. Weak marketing strategies and wrong target market

Certainly the changes of its strategies do led to a profitable quarters and

re-energized Burger King after the take-over of TPG Capital in 2002, but
when the advertisements and campaigns stopped, the sales of its items
also declines. Furthermore, Burger King led by TPG Capital invested too
much on acquiring male consumers as their target market. During the
2008-2010 recession in the U.S., Burger King showed the lack of flexibility
in changes of its market strategies. Male consumers was not a really
suitable target market at that time as they were the ones having
difficulties and was hit hard on employment and such during the fiscal
year.
3. Lack of product Innovations
The barbell menu strategies that was introduced at both the premium
and low-priced ends of the product continuum did not really help much in
the growth of Burger King. Since fast food often associated with low price.
Furthermore, the premium items need to be constantly advertised.
Moreover, its menu development was deemed as horrible and too much
emphasis was given on value meals which causes dissatisfaction among
the franchisees.
The growing concern of health and fitness in the U.S. as well as the
passing of the health reformed bill in 2010 by the U.S. Congress is one of
the most important issues to be taken into consideration for the quick
service restaurant (QSR) including Burger King. Burger King should be
flexible in its approach of product offerings but failed to do so by
promoting and creating high calorie and unhealthy food items on the
menu.
4. Limited management control
Approximately 90% of Burger King restaurants were franchised. This
means a lower capital requirements but it also meant Burger King had

limited control over franchisees. The limited control by Burger King

management can cause distortion in relaying the right management style
as well as adhering its vision and mission of the company to the
franchisees. For example, mismanagement by franchisees was they
disregard their aging restaurant. And this will led to the downgrade of its
brand name.
5. Reliance of franchisees as revenue source
According to management, the company generated revenues from three
sources. Two of them are from the franchisees. This posed as a threat to
the company as revenue will be lost if there are declines in franchisees.
Based on the listed problems above, we can conclude that the main problem is
poor leadership and management and loss of brand vision that leads to
weak

marketing

strategies,

wrong

target

market

and

lack

of

innovations.

ALTERNATIVE STRATEGIES
1. Rebranding
A firm's brand is its most valuable asset. When your firm has a confident,
well-positioned brand, opportunity grows: you are perceived as more
credible, get more unsolicited leads, close a higher percentage of business
and can charge more for your services. Rebranding is a 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 involves radical changes to a brand's logo, name,

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 message
a new board of directors wishes to communicate.
2. Setting new product and marketing strategies
Burger King has successfully differentiated from its competitors when it
launced the Have It Your Way advertising campaign in 1974. But the
constant take-over of the company has caused it to loose direction of its
market segments and targets. 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 are more
concerns on their health, they will think more of their family and
protection against having high calories food. In short, Burger King must be
able to 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 Arab 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 market expansion.

EVALUATION OF ALTERNATIVE STRATEGIES

1. Rebranding
Burger King has lost direction with the constant changes of management
and leadership style. With rebranding, a new and fresh image of Burger
King will be introduced with the new takeover. With rebranding it can help
in understanding more of the brand itself. A more defined purpose and
value of the brand which will be of help in hiring more suitable staff and
target the right sort of clients. Furthermore, with rebranding, the
franchisees will also be involved in the process. This is a great way to
boost morale and make them ambitious to take on a new level. The cons
for this are to rebrand, we must took into account the resources and the
high costs for rebranding.
2. Setting new product and marketing strategies
Burger King put all its energy into targeting 18-35 year old males, but they
only represent only 17% of the fast food market. Wider range of
consumers can be achieved with new marketing strategies that target the
whole gender and age group. With the new product development aiming

to promote more healthy food items, it does not only fit to the current
trend of health and fitness but also in line with the passing of the health
reform bill in U.S.
Customers who are frequent to Burger King will always have newer needs,
they often wish that new product or services could be more than what is
has today. Therefore, the introduction of the new product development
that focuses on the need of the customers and change in the companys
image and services could establish the company as industry leader. The
company could rely on the existing customers to provide input to
determine the effective way to enhance loyalty and to attract new
customers and ultimately, increase profitability. However, this strategy
requires the company to have a well define road map and commitments to
raise their service standard to customers. In terms of new marketing
campaign, it will involve a lot of capital and spending too much into
marketing is quite a gamble, as it is never literally proven that high
marketing cost helps to increase sales.
3. Market expansion
Market expansion would raise customers awareness to the existence of
the company. Market expansion strategy at new geographical locations
such as Eastern European countries, some parts of the African countries
and Middle Eastern countries would enable the company to bring in
previously untapped customers markets and allow the company to spread
the costs of doing business across more markets and customers. This
makes the cost of doing business less on per-customer basis, which
improves the potential to profit by adding new customers. However, the
company needs to assess the limitations of entering into the new
geographical locations particularly on the government regulations and the
social climate or trend of the people in those countries.

THE BEST STRATEGY AND JUSTIFICATION

The best strategy for Burger King is to combine the two alternatives which
are re-branding 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 a thin 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 and promotion strategies in order to survive in the fast food industry.
Focusing on its marketing strategies, Burger King need to develop new marketing
plan such 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 and slightly
change the concept from a high calorie menu to healthier or low calorie menu.
Apart from that, changes on the Burger King infrastructure will gain positive
respond from customer 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 increases their market share. Targeting on the children

and working parents helps 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 terms of increase in market share, customer loyalty, brand popularity and
competitive advantage.

IMPLEMENTATION
SHORT TERM
1

Rebranding

Burger King need to rebrand its image, to have a more focus and specific and
goal directed kind of image, currently consumer may confused on what
Burger King May offers. With rebranding, a new and fresh image of Burger
King will be introduced with the new takeover. Burger king also may merge
with another fast food operator for example DOMINO Pizza, service skills or
fast operation knowledge able to transfer between both operators, as Domino
Pizza is one of the top major quick service restaurants in US. Furthermore,
with this move Burger King can gain more market share in the quick service
restaurant industry. Last but not least, HRM department will need to
restructure its staff and employee into a more organize group and this will
involve extra cost through the upgrading of certain system.

Advertising/ marketing campaign

Burger king may establish new marketing strategy. Burger king may opt to
invest in its commercial advertising by getting a healthy celebrity who enjoys
burger king new healthier food. Burger king need to showcase its various new
menu items, which include smoothies, salads, and specialty coffee drinks.
The commercials video must strike a humorous tone and should be more fun
than the old one. To attract more children consumer burger king may
introduce a 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.

LONG TERM
1

Introducing healthier food & drink

People nowadays are more concern on health, thus Burger king can take a
chance to promote and introducing a healthier food and drinks. For example
include a fresh fruit or fresh vegetable salad to its menu. Not only that, to
promote healthier foods which also include the current food ingredient for
example reduce or remove all usage of msg in food, or reject on preparing
burger that have pickles. For its drink, they can introduce organic fresh drink
and cut off the use of sugar in its drink.

A Firmed and consistence company leadership/ 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 a 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 its self.