Discussion of the Key Trends, Industrial Strategy, and Impact on Ireland Burger King
Introduction
Early twentieth-century strategic business developments can hardly compare with the myriad impact and influences of major corporations today. The global economy is at once complex, fiercely competitive, and sits on a landscape filled with the unpredictability of any number of financial storms. Burger King Worldwide (BKW) as the world’s second largest fast-food hamburger chain, according to recent documentation, (Burger King Worldwide 2013) has expanded its presence in nearly ninety countries. With its main offices headquartered in Miami, Florida, BKW has led the industry’s sales in its niche of fast-food hamburgers thus accounting for 12 percent of market share in the United States. Burger King in Ireland charts the management path, studies industry trends that impact the key players and stakeholders, and offers a cogent analysis of various factors – internal and external – to better understand its position in the industry. This examination considers if Burger King Ireland will be able to withstand the challenges of the marketplace over the next decade. The question in the minds of key players is whether the company is pursuing a correct strategy to respond to unfolding threats and opportunities that lie ahead.
Discussion
A brief background of Burger King Ireland is in order, since a look at past conditions and records will help in understanding the present. Mulqueen (1999) reported that OKR, the financial holding group for Burger King Ireland, planned to initially hire 800 people in almost twenty restaurants as an expansion strategy, with the goal of opening fifty restaurants by 2005. Patrick O'Leary, the organisation’s chairman, indicated that the fast-food industry was reflecting an increasing demand. Less than ten years ago in 2008 Guider (2008) announced the slide of pre-tax profits reflecting €4.82 million, from €5.53m in the previous year. Obviously, trends were changing and the shift was a matter of concern for all stakeholders, including investors, shareholders, and the company’s directors. Moreover, a horse-meat contamination scandal-marred Burger King Ireland's reputation.
Aside from the common knowledge that scores of people, especially in Europe, have begun to value healthier foods, the incident interrupted the business model’s forward thrust on profits. King and Buckley (2013) in The Guardian documented that customers were disgusted by the discovery of meat labelling gone awry in Ireland, while the company apologized for the tiny trace bits of horsemeat found in several samples from restaurants. The repugnance from the public was unmasked. People emphasized that they did not wish to be unwittingly ingesting horsemeat. Ireland Burger King’s parent Company, BKW assured a an adequate inspection regime to rectify the situation. The food group responsible at the time, Silvercrest was sold to Kepak as a result. The Irish agricultural minister, Simon Coveney, promised to prioritise Ireland's important role in globally branded Burger King chain (Burger King Contract for horsemeat 2013). Additionally, a fairly current SWOT analysis of the international conglomerate indicated a strategy for growth to boost industry-wide sales of its fast food products.
A 2013 SWOT analysis tells a partial story. One business model strategy consisted in paying careful attention to industry trends. For example, industry sources had proclaimed sales growth to be related to proliferating activities of social caterers in commercially managed service accounts such as hospitals, nursing homes, and workplace industrial plants (Burger King Worldwide SWOT 2013). Further initiatives for key players was to engage more intensely in developing joint venture partnerships to promote the Burger King brands in places farther away from Ireland such Colombia and other parts of the Caribbean region. Thanks to the unfortunate horsemeat debauchery incident, which was a key external factor which impacted the Irish Burger King industry, more specified data about the Irish franchise is now available. Actual figures in Ireland’s Burger King industrywide situation demonstrate that the country’s commitment to fast food restaurants comprises a rather large food-service channel of about 37 percent of the entire market share (Fay, Lawlor, & Wilson 2015). Thus, after bouncing back from the global recession several years earlier, Ireland proved to be resilient. The fast food industry leads public preferences over pubs and cafes, and coffee shops in Ireland. Nevertheless, consumer tastes can be fickle, and the horsemeat scandal's fallout continues to haunt – and inform – company strategy to correct that past threat to its reputation. And this has sparked new marketing as a strategy.
Five Forces Model
Porter’s five force model refers to the external forces that affect the performance and success of an organization. The interaction of the five forces creates competition for organizations as well as businesses. Porter's five forces that might affect the competitive environment for Burger King include threats of a new entry in the Ireland market, the power of suppliers, threats of substitutes to Burger King's products and the power of buyers. All these factors affect the competitive environment of Burger King.
The supply power of Burger King is determined by the availability of ingredients to make brand products such as buns, meat and soft drinks. These ingredients can be supplied by various suppliers. The burger industry has witnessed low buying power with low switching costs and high availability of substitutes. Ireland has a large number of restaurants serving fast food similar to Burger King. Differentiation by Burger King offers it a competitive edge over its competitors. It is known to produce some of the tastiest burgers through the use of the flame grill.
Interactive strategy
Companies are increasingly using social media as a strategy, as shown by a series of cute video commercials on YouTube. This pathway reflects the new, ‘cool’ attitude of the larger corporations to make their image friendlier or even funny by using humour to win over the hearts and confidence of consumers. For example, one 20-second commercial segment sponsored and posted by Burger King Ireland is hilarious. It begins with a written ‘warning' emphatically stating that "Nobody Likes to Seem Cheap," and, "So, To Protect These People's Identities, We've Changed Their Voices" (Burger King: Euro King 2016). Straightaway appearing on the screen is a gruff-looking he-man type of guy explaining how he loves the menu, followed by an adorably delicate little girl who has the ridiculously deep voice of a robust man. The utilisation of social media to convey the corporate message regarding business strategy cannot be over-emphasized. Therefore, this strategy plays a crucial role in responding to key trends among both external stakeholders (investors) and internal players such as directors, and smartly provides an arena for feedback from Ireland’s business unit within the larger conglomerate of BKW.
However, commercial advertising, strategy, and marketing are not all fun and games. Burger King Ireland, like the rest of the global firm, takes its strategy very seriously. Besides the key players such as Irish governmental ministers and officials, top managers at the company are also under pressure to perform well. The key consideration contemplates whether Burger King Ireland will survive and thrive in the decade to come. The larger question is whether the whole industry, or its key players, will remain strong in the next decade. Of course, these types of predictions are hard to make and even more difficult to visualise, but the secret to the future success of a major corporation whose success largely rests upon consumer tastes – literally – is how it manages to approach responses to threats, and exploits opportunities which may lie ahead.
PEST analysis
Political
No management analysis would be complete without mentioning the rubric of governmental politic. According to Fay, Lawlor, and Wilson (2015) Ireland’s governmental powers reflect a recently elected body in February 2011 of the Fine Gael and Labour sectors, which shall remain intact until 2016. New initiatives have been placed in the public eye of Ireland to improve national health. In other words, the focus is on an active awareness to reduce heart disease, obesity, and diabetes particularly since the latter has risen to epidemic proportions. The government has made it mandatory to put labels of nutritional content on food packaging, which includes the fast-food outlets (Fay, Lawlor, & Wilson 2015). This could be a problem unless Burger King Ireland can manage to decrease dangerous levels of sodium and fats in their food items. Also, given the fact that Burger King Ireland effectively is a franchise, changing the food content or recipes, may not be the easiest feat to accomplish. Common knowledge dictates that large corporations are harder to change, or move into ‘revision’ mode.
Economic
The Burger King Ireland outlets are predominantly situated in the eastern end of the country along the coastal area. These Burger King Ireland restaurants’ locations tend to weaken the Burger King brand simply because they have not expanded throughout the country. By its very nature, the fast food industry needs to be located in central areas to promote more sales and make the branding more visible. Regarding age, the ongoing strategy correctly defines its target market audience as males aged 18-34 years (Fay, Lawlor, & Wilson 2015). The important thing to remember is that huge, worldwide businesses are a mixed blessing of sorts. On one hand, they have the huge financial resources. But on the other hand, they must endure weaknesses just as all other enterprises must. And of course, Burger King Ireland’s main competitor is McDonalds.
Technological
Burger King Ireland has found it difficult to recover from the horsemeat scandal. The other weakness is that the BKW Corporation does not have a strong presence in the European Union (EU) since 85 percent of its restaurants are located in the United States' system of the distribution network (Burger King Worldwide SWOT 2013). Another political weakness affecting business profits is the unpredictability of labour strikes or disruption/irregularities of suppliers. The supplier Silvercrest was at the helm when the outbreak scare of contaminated horsemeat hit news lines. At the end of the day, the fast food service industry has continued to have substantial growth, worth bllions of U.S. dollars. For this reason alone, Burger King Worldwide should be able to support its Irish franchise, while branching out into its other strategic zones of planning for the future. One thing is certain. Social media can either be a friend or a foe to big companies who get their revenues from what is an undiversified business.
Appendix
This section evaluates Burger King Ireland on the application of business strategies in ensuring success.
Strategy clock
Differentiation
Burger King has employed this strategy to improve its competitive edge in the fast food industry. The brand has different and unique fast food products for different customer segments such as smoothies, special coffee drinks and salads. Burger King offers different products in different countries based on the tastes of each culture; this is one of the primary examples of differentiation in the business. This strategy has been demonstrated through unique taste in the brand’s fast food products as well as their unique customer service. Although there is a general model for Burger King around the world, the model can be tweaked to meet the needs of the public in a specific location, like Irelnad.
Low price
Burger King brand has effectively employed a low-price strategy. It has introduced a series of cheap deals through the sale of a five-meal for only $4. This price is fair as compared to the competition, thus aiding the brand in raising its competitive edge. By providing a meal for a family for a very low price and offering good value for the pricing, the company is able to better establish a presence. There are a number of competitors—including international competitors like McDonalds—who also offer low prices, so the company must be able to offer the best value as well as a low price.
Hybrid
Burger King has collaborated on a hybrid plan with various restaurants as a competitive strategy against its competitors such as Mc Donald’s. It has combined key ingredients from various restaurants such as Wayback Burgers, Giraffas and Denny’s to create one burger. In addition, the company has been able to hybridise its menu items based on the location: for instance, the wasabi burger that is offered in Japan is not offered in Ireland because of the unique tastes of the Japanese and the Irish people, respectively.
Non-competitive strategy
A non-competitive strategy has not been employed at Burger King, but it has been employed by other fast food restaurants such as the introduction of new school menu like chicken wraps. Burger King prefers to keep a competitive strategy to ensure that it can retain competitive advantage.
Game theory
In most cases, Burger King Restaurants are located close to their main competitor: McDonalds. The Burger King brand uses the game theory to research locations that are convenient for the consumers, so as to increase their competitive edge. The company offers regular deals such as two-for-one offers to ensure brand loyalty among its customers.
References
‘Burger King Contract for horsemeat-scandal factory’, 2013, Belfast News Letter, 22 May, Regional Business News Plus, EBSCOhost, viewed 25 February 2016.
Burger King: Euro King, 2016 (video file), Available from: <https://www.youtube.com/watch?v=zMaXqT28QeE>. [25 February 2016].
‘Burger King Worldwide, Inc. SWOT Analysis’ 2013, Burger King Corporation SWOT Analysis, pp. 1-8, Business Source Complete, EBSCOhost, viewed 25 February 2016.
Fay, M, Lawlor, B, & Wilson D 2015, ‘Burger King Marketing Management’, Available from: <http://www.slideshare.net/MarkFay2/brand-audit-finished>. [25 February 2016].
Guider, I 2008, ‘Profits drop 13% at Burger King Franchise operator’, Irish Examiner 26 March. Available from <http://www.irishexaminer.com/ireland/profits-drop-13-at-burger-king-franchise-operator-58745.html>. [25 February 2016].
King, M & Buckley, J 2013, ‘Horsemeat scandal leaves Burger King facing a whopping backlash’, The Guardian 1 February. Available from:<http://www.theguardian.com/money/2013/feb/01/horsemeat-scandal-burger-king>. [25 February 2016].
Mulqueen, E 1999, ‘Burger King to invest £7m in Irish expansion’, The Irish Times 17 February. Available from: <http://www.irishtimes.com/business/burger-king-to-invest-7m-in-irish-expansion-1.153888>. [25 February 2016].
