Case Study: Burger King

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Burger King Beefs Up Global Operations

Having perfected the relatively complex process of make-to-order and precisely cooked hamburgers to customers' specific requirements, Burger King established itself as a leader in the Quick Serve Restaurant (QSR) industry in the North American market. The concentration on consumers having the opportunity to "have it their way" Burger King was ahead of the mass customization trends now so prevalent throughout many industries that are profitably operating today (Daniels, Radebaugh, Sullivan, 2011). This strategy of mass customization is known for its exceptionally high percentage of variable costs and unpredictability of quality levels due to wide variation of processes in the preparation of food and delivery of services (Taylor, Lyon, 1995). Despite these significant obstacles to making mass customization work in the fast food industry, Burger King has been able to achieve a high level of process optimization that continues to keep their operating costs low and performance levels above industry average (Terry, Forrest, 2008). The mastery of this core set of processes has also given Burger King a defensible competitive advantage in one of the most competitive industries globally (Daniels, Radebaugh, Sullivan, 2011). A closer analysis of this core strength of Burger King indicates that the level of integration several layers back in their supply chain makes this flexibility in customizing customer responses possible. Burger King has one of the most diverse and well-integrated supply chains that includes quality management and periodic audits of delivery schedule and profitability performance (Terry, Forrest, 2008). Having this level of insight into their supply chain and its relative levels of quality has also given the company exceptional levels of control over how it expands regionally and globally. Burger King, unlike other QSR competitors in this area of the industry, have concentrated in a holistic approach to managing their value chain at the supplier level. By relying on supplier qualification standards and processes to ensure a consistency of product performance on the one hand, and a focus on agility in responding to market needs on the other has given Burger King a significant competitive advantage. Control over product quality to the supplier level on the one hand and greater agility in managing growth has made Burger King more adept and agile at managing global expansion efforts, as evidenced by their success in Latin America (Daniels, Radebaugh, Sullivan, 2011).

Burger King Case Analysis

Burger King is concentrating its global expansion efforts into nations that have comparable cultures where it has been successful in the U.S. With its headquarters location in Miami, Florida being a model, Burger King seeks out Latin American nations with comparable demographic and psychographic profiles to their native city. It is evident after analyzing the case that Burger King has extensive expertise fulfilling the expectations of consumers in Latin American nations for fast food. Following this logic and framework for global expansion, it is not surprising that Burger King initially chooses to expand into a series of smaller Caribbean nations that are familiar to their company (Daniels, Radebaugh, Sullivan, 2011). Based in Miami, Burger King executives, planners and managers have a depth of insight and understanding into these smaller yet very lucrative markets that larger, more diverse competitors including McDonald's cannot match. From this standpoint, Burger King has a potent competitive differentiator in the depth of their local market intelligence and knowledge they have over larger and less focused competitors who only chase larger markets that are easier to quantify and research (Daniels, Radebaugh, Sullivan, 2011). While these smaller nations don't offer the exponentially higher levels of sales growth and potential for rapid profit gains as do the high-profile nations of Brazil, Russia, India and China (BRIC), Burger King does have the potential to establish highly profitable and stable operations in them (Daniels, Radebaugh, Sullivan, 2011).

Burger King has been able to learn so much about these smaller Caribbean nations by having locations in neighbors and suburbs of Miami where immigrants from these countries have settled. In addition there is a high percentage of Caribbean visitors to Miami on vacation, and over time Burger King has been able to learn what their specific preferences, wants and needs are. As the case indicates, the low price menu initially attracts tourists from Caribbean nations visiting Miami to their locations, and the flexibility of having their burgers cooked just as they want, along with ingredient quality makes them loyal. Any QSR-based business could attain this level of success by concentrating on their supply chain and cost control on mass customization strategies (Taylor, Lyon, 1995). What separates Burger King in this regard is the deliberate effort to adoption many of the cultural perceptions, values and needs as these consumers. This commitment to meeting and exceeding these expectations pervades how, where and what Burger King sources for supplies, how they produce meals and their decisions for managing customer service. All of these attributes and elements of the customer experience contribute to Burger King's success over the long-term.

The decisions that Burger King has made with regard to regional and global expansion can also be analyzed using the Hofstede Model of Cultural Dimensions to gain greater insight into how they are successfully choosing specific markets (Hofstede, McCrae, 2004). The well-known Model of Cultural Dimensions was invested by Dr. Hofstede while working at IBM, where he was tasked with giving senior management greater insights into variations across cultures to lessen culture shock as the company expanded rapidly on a global scale. After much cultural, empirically-derived and ethnographic research, Dr., Hofstede created the Cultural Dimensions Model, which is in use today in well over eight hundred different organizations who rely on global operations as part of their business model (Hofstede, McCrae, 2004). Dr. Hofstede completed the analysis across fifty nations and continues to perfect the analysis throughout Asian nations that have rapidly become economic powers in the global economy. Analyzing the cultural congruence Caribbean and Latin American nations and their influence on Miami, it's clear that it is inherently easier for Burger King to expand into these smaller nations that risk the high levels of uncertainty expanding into BRIC nations. As the case alludes to and provides support for analytically, it is a far more efficient strategy to expand into the smaller Caribbean nations vs. attempting to compete in unfamiliar BRIC nations. Paradoxically choosing to expand into the smaller nations is more potentially profitable and less risky than going up against globally entrenched competitors who are focusing on BRIC nations to the exclusion of all others. Basing their decision of expansion on cultural congruence over the "big bang" numbers represented by the BRIC market figures will also make brand awareness and market share growth much easier than attempting to penetrate an entirely new segment.

The high level of cultural congruency will also lead to a higher levels of trust with new customers in these nations as well. Combining trust and consistency in their planning and execution of expansion strategies in these nations, Burger King can emerge with a leadership position relatively quickly as consumers will see cultural congruency and the trustworthy nature of the company (Pizanti, Lerner, 2003).

In contrast to its larger competitors who invest heavily in large, high potential markets including the aggressive expansion strategies of McDonalds', Burger King chooses smaller markets they can quickly establish a market leadership position in. Burger King looks to dominate a given nations' quick service restaurant (QSR), convenience and fast food markets extremely fast compared to its larger and slower-moving competitors (Daniels, Radebaugh, Sullivan, 2011). While this quickness and agility in expanding into new markets is a definite advantage in time-to-market and beating larger competitors to market share dominance, it puts an exceptionally heavy responsibility on its supply chain operations to find and source from local suppliers (Daniels, Radebaugh, Sullivan, 2011). While Burger King in the context of the case study shows remarkable agility at executing quickly in foreign nations, a shortcoming of this rapid expansion strategy is not being able to find high traffic locations in popular areas of the largest cities in the nations they are expanding into. As the case indicates, Burger King uses the strategy of locating in regional, suburban and urban shopping malls where pre-teen kids and teenagers congregate, who are one of the best customer bases the company has. Burger King has found that eating out together is a major social events for kids and teenagers in this age group, and have worked to create an experience around their QSR locations in each nation they operate in (Daniels, Radebaugh, Sullivan, 2011). Burger King has been one of the leaders in transforming QSR purchases of fast food into a social experience (Thomadsen, 2007). What continues to give Burger King significant competitive advantage in emerging markets is the ability to tailor their "have it your way" value proposition and service techniques while also picking up on the nuances of individual cultures and peoples' needs within them.

Conclusion

Despite all of their strengths at global expansion, Burger King is still generating the majority of their… [END OF PREVIEW]

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