Burger King’s core competency may be seen as the ability to effectively manage a brand from a central location which helps to support franchisees in distinguishing the mass customisation strategy (differentiation) (Porter, 2004) from those of Burger King’s key competitors.
The value chain may be seen as composed of a range of activities which are both outsourced and conducted in house through a network of suppliers and franchising agreements (Jones and George, 2011). The most valuable value chain activities of Burger King which are conducted centrally may be seen as those linked to the marketing aspect of the value chain.
Burger King’s slower range of global expansion may have lead to the company making better investment decisions, avoiding entering risky markets merely for the sake of expansion in itself and thus giving the company a more stable portfolio. However, such a strategy may also have seen that competitors such as McDonald’s have been able to take advantage of the first mover advantage (Jobber, 2007).
The major advantage for a chain such as Burger King may be seen as the large economies of scale which the company is able to enjoy generating significant cost savings (Johnson et al, 2008). However, local competitors are likely to have a better understanding of the local conditions and customer needs in comparison to larger chains from overseas.
Given the current belief that the US and Canadian markets are saturated or mature, it would be advisable for Burger King to look to overseas expansion in order to continue to generate additional sales. Such a strategy may be realised by the use of a range of expansion programs including franchising, joint ventures or FDI (Griffin and Pustay, 2010).
The conditions described may be seen as creating a good potential market environment for Burger King based upon the theories of market segmentation (Brassington and Pettitt, 2006) and the fact that Burger King’s product and market offering is aligned to such a large young and affluent audience.
Burger King’s HQ location in Miami may be seen as pushing the brand into expanding into countries which have a close geographic proximity to the HQ location. In some ways this may be seen as a limiting factor for Burger King which by its own standards may have looked at alternative markets sooner such as Russia, India and China.
There are a whole range of strategic tools which the CEO of Burger King should make use of when making a decision to invest in global markets. Here it is recommended that a selection of tools should be used which consider both factors within the micro and macro level environment such as a PEST analysis which considers macro level conditions and a Porter’s five forces analysis which considers industry level conditions. As such, a range of tools allows a comprehensive picture to be built up of the market (Grant, 2008).
On the whole, the current challenges faced in Burger King’s existing US and Canadian markets suggest that the company must look to a more internationalised strategy if high levels of growth are to be maintained. However, expansion must be undertaken carefully if the company is to avoid problems associated with high levels of competition from both other multi-national enterprises as well as more specialist local producers.
Brassington, F, Pettitt, S. (2006). Principals of marketing. 2nd ed. Harlow: FT Prentice Hall.
Grant, R, M. (2008). Contemporary strategy analysis. 6th ed. Oxford: Blackwell Publishing.
Griffin, R, W, Pustay, M, W. (2010). International Business. 6th ed. Boston: Pearson.
Jobber, D. (2007). Principles and practice of marketing. 5th ed. London: McGraw Hill.
Johnson, G, Scholes, K, Whittington, R. (2008). Exploring corporate strategy Text and cases. 8th Ed. Harlow: FT Prentice Hall.
Jones, G, R, George, J, M. (2011). Contemporary management. 7th ed. New York: McGraw Hill.
Porter, M, E. (2004). Competitive advantage. Export edition. United States: Free Press.