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Operational Difference – Major company stake is owned by franchises Essay

As I went through the historical span of Burger King History, the franchises of Burger King played a major part in expansion of the parent company from the early 1960’s till date. The relation of franchises and management has always been influential and significant in success and failures of Burger King History. Primarily, the company operated with major investment from franchises and minimal from the company, so the decisions and relationship with franchises was crucial.

Flame broiler a unique device that improved with decades in Burger King history

The company was set-up on the basis of the oven called ‘Insta-broiler’ for cooking burgers. The purpose had been inspired from McDonald’s speedy service. It was further mechanised into a gas grill without changing patties and self functional by means of a conveyor belt. Further, the device was also customised and technologically advanced to produce Chicken sandwich, Chicken Whopper, Veggie burger, etc.

Drive –thru service

The company though was working hard on franchises and unique device to meet operational needs; it was mainly oriented to meet demand of production at ‘Drive-thru’ restaurants. This was because the company had major part of its sales revenue i.e. 70 % from ‘Drive-thru’ operations.

Later this competence was adapted by McDonald and other competitors as well. However the effectiveness and efficiency of Burger King’s ‘Drive-thru’ was easily highlighted.

Competitive methods of Burger King

The purpose of its competitive strategy is to build a sustainable competitive advantage over the organization’s rivals. It defines the
fundamental decisions that guide the organization’s marketing, financial management and operating strategies.

As there were many significant changes in the history of Burger King, eventually there were different competitive methods used in different span in history. Some of the significant competitive methods are listed as follows:

1} Initial decade in Burger king’s history, ‘Insta-broiler’ a device competitive in making burgers and technological advancements in the same gave it a competitive advantage.

2} High amount of franchises worldwide executed major ownership stake and customised operations in the outlets. This was tightened and a new company structure was formed, followed by a new competitive aptitude. [Year 1963 -1967]

3} Push sale approach led increase in competitive breakfast market and thus improve in position in market. Burger King moved to second position in US fast food market after McDonald. [Year 1982-1985]

4} Launched a Burger King Kids Club program that help the company to increase sales and successful entry into a new market segment. [Year 1990-1995]

5} Introduction of a TURNAROUND PLAN named ‘Go Forward Plan’, which was significant to attain objectives like increasing profit, create a customer image, teamwork, etc.[Year 2000]. One more advantage Burger King introduced was ‘Revamped Chicken Whopper’, helpful to compete with other competitors.

Burger King < McDonald’s (BK is simply not as big as McD)

Some of the basic company facts and objectives of both the companies, help us understand how Burger King is not as big as McDonald’s in global terms.

Facts

Burger King

McDonald
Founder 1941 by Richard and Maurice McDonald 1953 by Keith J.Cramer Present chain 12,150 outlets in 50 states and US territories and 74 countries More than 31,000 outlets in 119 countries Revenue $2.5 Billion

Number of employees 360,000 employees 1,500,000 employees (1.5 million) Customers 11.8 million customers daily worldwide 58 million customers across the globe Products offered Flame-broiled burgers including the Whopper, Burger King also offers chicken sandwiches, fish sandwiches, French fries, onion rings, salads, chicken fries and Croissanwiches for breakfast. McDonald’s predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald’s offers salads and vegetarian items, wraps Calorie content A Burger King Double Whopper has around 920 calories A McDonalds Big Mac consists of 540 calories

Objectives

Burger King

McDonalds
Market share 21.9 % in US fast food industry 44% in US fast food industry Value for money More bigger product for reasonable price Product size is smaller with inexpensive price Franchising More than 90 % of the outlets are franchised A little less than 30 % Suppliers The suppliers vary with various franchise in different locations worldwide. McDonald chooses best suppliers and type and quality of meat varies with country culture. Advertising The BK adverts were quite confusing and sending wrong messages in potential market which affected cultural values and also brand image at times. McDonalds often had appropriate ways of advertising and were supportive to increase sales and popularity of the brand.

Issues relating to Burger King

The case study is very critical in understanding the issues related with Burger King’s history. Some of the prominent issues from past to present can be listed as follows:

Franchise management – The company found it difficult to manage more than 90% franchise in the business of Burger King products and services. Crucial reason was also the percentage of stake ownership , which was initially 38% and was improved to 42% by Donald Smith, former McDonald executive. Changes in leadership – The history of Burger King marked approximately 20 changes in management. The changes in short term span affected oragnisation focus over goals and objectives, affected brand image adversely and lacked consistency in operation. Unhealthy food – The Company came prominently in highlight during the era from 2003 as potential customers had responded to be health conscious. The period marked spread of mad-cow disease and obesity levels among children was a rising concern. Market recession – The US economy faced economic recession from 2006 and needs brand to take effective measures to sustain and avoid losing loyal customers to competitors.

Recommendations for future development in UK

The Burger King opened its first branch/outlet in UK in 1977 on Coventry Street in London. Since then till date Burger King has 654 restaurants in UK ( out of which 73 are owned) whereas it has 139 ‘drive-through’ restaurants. Considering the present fast food environment in UK, following recommendations come in lime-light:

HEALTHY FOOD – Burger King UK has currently many problems within the environment in company and surrounding, however one of the prime concern is healthy food. The company needs to produce fast food with less saturated fats and salt content. The problem of obesity in UK is high as well and addressing to this concern is the need of demand to survive over the competitors.

PRIME LOCATIONS and EVENTS – Burger King needs to increase its influence and market share in UK, by serving at prime hot spots as well as at travel destinations. The presence of Burger King on high streets and at various national rail stations and airport is reasonable, however it needs to be accessible at hot tourist spots and business oriented commercial areas.

SPEED – Burger King needs to increase its speed of delivering products and services to customers, as it has been competing with McDonalds over more than 50 years and still lacks speed during peak periods. Speed in operations helps to generate revenue in coping zone.

Schools of strategy – Burger King’s evolution (analyse critically)

Strategy formation is judgmental designing, intuitive visioning, and emergent learning; it is about transformation as well as perpetuation; it has to include analyzing before and programming after as well as negotiating during …” – Henry Mintzberg

However there is a difference in perspective leading to strategy arguments. Mintzberg identified this and tried to debate and answer different perspectives through his 10 Schools of Strategy/Thinking. The burger King History prominently highlights two of them, explained as follows:

1] The Power School – Strategy Systems as Processes of Negotiation

According to the power school, strategy systems are described to be mainly shaped by power and politics, whether as a process inside the enterprise itself or as the behaviour of the enterprise as a whole within its external environment. Strategies that may result from such processes tend to be emergent in nature, and take the forms of positions and actions more than perspectives. On the one hand parts of the power school (‘micro power’) see strategy making as the interplay, through persuasion, bargaining, and sometimes through direct confrontation, among narrow scope interests and shifting coalitions, with none dominant for any significant period. On the other hand other parts of power school (‘macro power’) see the enterprise as promoting its own welfare by controlling or cooperating with other enterprise (such as Franchises), through the use of strategic manipulation as well as collective strategies in various kinds of networks and alliances.

EXAMPLE – Burger King at different period in history, tried to take control over franchises by executing greater control over their operations and direct confrontation with various industry giants/ suppliers. These various processes implemented to achieve power through strategy highlights ‘THE POWER SCHOOL’.

2] The Configuration School – Strategy Systems as Process of Transformation

The school follows a formation approach wherein the organisation is transforming into one type of decision making structure into another. The school interrupts the period of stability by some process of transformation. It has configuration of strategy formation from other nine schools which are –

Design school – Strategy formation as an architecture process Planning school – Strategy formation as a formal process Positioning school – Strategy formation as an analytical process Entrepreneurial school – Strategy formation as a visionary process Cognitive school – Strategy formation as a mental process Learning (or Emergent) school – Strategy formation as an emergent process Power school – Strategy formation as a process of negotiation Cultural school – Strategy formation as a collective process Environmental school – Strategy formation as a reactive process

The school recognises a appropriate combination of any one or more of them taking into context a particular type.

EXAMPLE – Burger King history marks use of Positioning school in year 1980 -1983 to create a brand image and achieve second position in US fast food market.

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