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Business Strategy "Burger King" Essay

3654 words - 15 pages

Describe the company’s profile. Identify the industry that the firm is operating in. Carry out an internal analysis of the firm (organization audit) using a range of sources and producing a reference list. P2.1, M2

The American Burger King Worldwide Holdings Inc. is a global franchising company operating in the fast food industry. Burger King is a well known brand all over the world. It is the second largest fast food burger chain with their main product being hamburgers.

Originally founded in 1954 by Keith Kramer and Matthew Burns, but was subsequently acquired by two franchisees, James McLamore and David Edgerton. The first restaurant was opened on December 4th in 1954 in Miami, ...view middle of the document...

The plan is to refranchise it all and strategically strengthen relations with franchisees.

One of Burger Kings greatest competitors in the similar burger chain McDonalds.
Conduct an environmental audit (you may use Porter’s five forces or any other relevant framework). P2.2,
Based on the organization and environment audit and stakeholder analysis, develop several strategic choices/directions that the firm should take in the future. D3

Environmental audit

Environmental audit is a management tool, that helps specify in what kind of business industry Burger King is operating in. It helps Managers to make good decisions, when applying future strategies. Burger King has made big changes in the past few years, to maintain their position in the fast food industry.

Porter´s five forces:

Porter five forces analysis is a framework for industry analysis and business strategy development. It was developed by Michael E. Porter of Harvard Business School, in 1979. It consists of five “forces” which are bargaining power of customers, threat of new entrants, threat of substitute products, bargaining power of suppliers and competitive rivalry within an industry.

The bargain power of customers is quite high in this industry. As usual in this industry Burger King is not able to rely on high volume. Burger Kings biggest competitor McDonald’s is an exception to this. Low switching costs and difficulties to differentiate are the industries issues that the customer can benefit from. The customers high power can create challenges that Burger King tries to overcome with changes, for example in their menu, to reach a higher range of customers.

The threat of new entrance is medium level in the fast food industry. But the barriers for entrance is low and a big number of suppliers make the threat higher. With new entrance there is the risk of them stealing some market share with differentiation. Still, the entrance for fast food industry is very difficult and the economies of scale is hard to attain in short term. Low profitability has decreased the interest of the business.

The threat of substitutes is high. With the industries growth and changes it is only growing. Today there are multiple different choices for fast food and healthier options are a rising trend. Also the low switching cost keeps the competition hard.

Bargain power of suppliers is low. Suppliers are expected to follow all the healthy regulations and operate according to the rules. Burger King has the advantage of a huge number of suppliers. For example, Burger King has the franchisee owned cooperative called Restaurant Service Inc. which expands to over 7500 restaurants. The RSI negotiates the price for goods and services. Also cooperativeness is a smart way to reduce costs.

The competition in the industry is very high. New strategies to sustain the growth and fight against the competitors price war are essential issues in the future-plan. The growth of the industry is at...

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