1. How would you summarize the case and its key findings?
The mini case describes the current situation in Burger King and the recent challenges that the company had to face over the past years. It starts by outlining the milestones of Burger King’s history and describing their business model as well as emphasises the unique selling propositions of the company, such as product customization, innovative menu and restaurant design. The case further describes the quick service restaurant industry that Burger King operates in, discusses major trends in consumer preferences and in related legislation as well as shows Burger King’s position vis-a-vis its competitors. In particular, the comparison with McDonald’s, the industry leader both in North American and International markets, illustrates the key issues that Burger King is facing at the moment and demonstrates that its current market position may not be sustainable in the long-run. The case concludes with the purchase of Burger King by the 3G Capital investment group and opens the discussion on whether this deal could become a turnaround moment in the company’s strategy and would help Burger King to remain successful.
2. What course of action do you recommend to the case organization?
The purchase of the company by 3G Capital could be a unique opportunity for Burger King to change its strategic direction and to ensure long-term growth and success. However, in order to take advantage of this opportunity the company should take several steps and to change its current operations. Firstly, it is important to keep in mind the unique selling propositions that helped Burger King to differentiate themselves from competition: process efficiency and customer focus through product customization. Customer focus will give Burger King competitive edge over more efficient producers, such as McDonald’s, that nevertheless offer mostly standardized products to their customers. Process efficiency is essential to keep costs low that is essential in the Quick Service Restaurant industry, where margins are relatively low and the competition is high.
Further changes should be made to the strategy of the company with regards to the menu and target segments. Although advertising should continue to be emphasized as Burger King increases its international presence and strives to raise its brand awareness in the new and growing markets, further investment focus should be shifted towards new product development and repositioning. Targeting a wider customer group could be beneficial both in terms risk reduction through diversification and in response to the changes in customer preferences and healthier lifestyles. New product development and an inclusion of new customer groups could also facilitate internationalization strategy and reflect the cultural differences across countries.
3. Why is this particular case relevant for strategy and business policy? How might strategic leaders and managers apply the learning from this case to their situation?
The case may be very valuable for leaders and managers as it offers a comprehensive overview of the company situation and links these aspects to market dynamics and competitor analysis. The outcomes that are described in the case can be viewed in light of the strategies that the company used throughout its history, thus showing what the potential success strategies in the business as well as illustrating the possible pitfalls that even very good strategies could entail. Another important point that the case helps to demonstrate is the dynamism of the business world and the fast food industry in particular. Although some strategies may be extremely successful at a certain time, they may become completely obsolete or even destructive for the company in the long-run. Thus, the inability to foresee the shift of customer demands towards healthier products as well as the narrow focus on the young male population made the company vulnerable in the times of crisis as this group was most affected by the recession.
4. How will you apply the learning to the Capstone business?
The learning from the Burger King mini case could be very useful for the development of the Capstone business. Firstly, it shows the importance of the reacting to the rapid changes in the market environment and emphasizes the need to reconsider company positioning over time, especially if it operates in a mature and a very competitive industry, such as Quick Service Restaurant. Secondly, it demonstrates that benchmarking against competitors could help to reveal potential issues and to identify market trends. Lastly, the case shows the importance of customer and product diversification as a means to address industry volatility and to lower associated risks.