Corporation

Team#1:Anton Milukov

Ksenia ForshenevaEkaterina Molyukova

Natalia KolganovaAnna Badovskaya

Company background

• Burger King (NYSE: BKC) is the second largest fast food hamburger chain in the world with more than 11,200 restaurants in all 50 states and 69 countries and U.S. territories worldwide. Approximately 90 percent of BURGER KING® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades.

• The first restaurant was opened in Miami, Florida in 1954 by James McLamore and David Edgerton.• In 1963 BK opened first store outside the US - in San Juan, Puerto Rico• In 1967, after eight years of private operation, the Pillsbury Company acquired Burger King and its parent

company Burger King Corporation.• Other international locations: Oceania in 1971,in Europe in 1975 Madrid, Spain. Beginning in 1982, BK and

its franchisees began operating stores in several East Asian countries, including Japan, Taiwan, Singapore and South Korea.

• 1989 Burger King was sold to British alcoholic beverage manufacturer and distributor Grand Metropolitan PLC.

• In 1997, Grand Metropolitan merged with Guinness to form a company called Diageo. Diageo maintained ownership of BKC until 2001.

• In 2002 TPG Capital, L.P with associates Bain Capital and Goldman Sachs Capital Partners purchased BK from Diageo.

• On May 18, 2006, Burger King began trading on the New York Stock Exchange under the ticker symbol BKC and generated $425 million in revenue, the largest IPO of a US-based restaurant chain on record.

“AS-IS”BUSINESS STRATEGY

• BUSINESS SCOPE

o Products / Services: fast food o Customers / Clients: approximately 11.4 million customers daily worldwide

(children, teenagers, adults 18-34)o Competitors: McDonalds, Yum! (Taco Bell, KFC, Pizza Hut), Wendy's, SubWay

• DISTINCTIVE COMPETENCIES: Three-minute service standard; the Whopper sandwich; sandwich tailored to customer, a machine-paced assembly process

BUSINESS GOVERNANCE• DECISION - MAKERS: Board of Directors, CEO, Regional managers • STRATEGIC PARTNERS: global (e.g. Coca-Cola) and local (e.g. Regional farms)

suppliers

BUSINESS INFRASTRUCTURE• ORGANIZATION STRUCTURE: headquarters and network of company-operated

and franchises • KEY PROCESSES: procurement, order proceeding, sales• H/R: more than 340,000 employees worldwide (including franchisees and their

staff)

“TO-BE”

BUSINESS STRATEGY• BUSINESS SCOPE

o Products / Services: healthy menu; diet menu; regionally localized menu; kids-oriented programs

o Customers / Clients: adults 35+ (including pensioners)o Competitors:

• DISTINCTIVE COMPETENCIES: non-bun burger; compliance with healthy standards; additional services (Wi-Fi, TV); Bluetooth headset communication device

BUSINESS GOVERNANCE• DECISION - MAKERS :• STRATEGIC PARTNERS : Food Standards Agency (FSA), The American Heart

Association, local communities, corporate clients

BUSINESS INFRASTRUCTURE• ORGANIZATION STRUCTURE :• KEY PROCESSES : new products and services implementation control• H/R:

SWOT Analysis STRENGTHS WEAKNESSES

Strong international brand Unique recipes (uniquely-prepared burgers and sandwiches); Flame-broiled food; Sandwich tailored to customer, Machine-paced assembly process Three-minute service standard; Wide international presence;Wide chain of local suppliers (e.g. farmers) “Have It Your way” Foundation (charity)

Lack of control over franchisees; Violence of quality standards; Poor outside & inside appearance; Ineffective advertising and PR campaigns; Poor service (judging by customers’ feedback) Bottlenecks during rush hours Narrow target audience

OPPORTUNITIES THREATS Increasing interest to healthy food Prosperous developing markets (China, Hong Kong, Russia etc.) High demand for BK in Latin America New partnership programs (due to crisis companies reconsider their marketing policies); Raising loyal clients from childhood

Decrease in consumers’ purchasing power due to crisis; Increasing popularity of fitness and healthy trend; New programs (promo & new menu items) of rivals; Cross-cultural differences Loosing part of clients (unsatisfied)

Key Stakeholders# Stakeholder

(Name)Desired Role

Current Role Current State of Affairs

Desired State of Affairs

1 John W. Chidsey Sponsor CEO & Executive chairman

Though BK is #2 in the fast food industry, company still faces internal and external problems

Positive business development

2 Russell B. Russell B. Klein Klein

Champion President, Global Marketing Strategy and Innovation

BK has launched advertising and PR campaigns that proved to be ineffective

Reconsidering of current marketing strategy. Introduced changes into brand positioning strategy

3 Julio A. Ramirez Champion Executive Vice President, Global Operations

Poor control over franchisees, bottlenecks, poor outside & inside appearance

Compliance of franchisees with company’s quality standards. Integrated TQM system. ?? Надо ж использовать теорию…

4 Strategic partners Business Partners

Influence pricing policy, key processes, publicity

High dependence of BK on strategic partners . Not always positive influence on BK’s activities

Developed relationship models with SP. Mutually beneficial work with SP

5 Customers Loyal customers

Partially loyal customers, partially brand switchers

Company has pool of loyal clients, but most part of the Target audience are brand switchers, or are not fully satisfied with BK products/service

Initiated and leveraged brand loyalty, improved customers patronize

Alternatives# Description Responsible

stakeholderPros Cons

1 Not to prolong franchising agreements and implement all the changes in company-operated restaurants

•John W. Chidsey•Russell B. Klein

• Easy implementation of improvements;• better control over restaurants;• atmosphere of exclusiveness (less restaurants);

decrease in profits; still cross-cultural differences; risk that former franchisees will implement BK’s methods/approach;Losing of loyal clientele in communities where stores will be closed

2 Implement all the changes in the company-operated restaurants and franchisees; widening international presence

John W. ChidseyRussell B. KleinJulio A. Ramirez

stable market position; pool of loyal clientele;Widen customer base;Refreshed image;widen international presence; positive publicity

requires reforming of internal operations; investments needed (human as well as capital); need to find and build relationship with business partners

3 Reacquire BK franchises in and outside the US. Become vertically-integrated company

John W. ChidseyRussell B. Klein

easier control over the stores; increase in profit from company-operated companies; ???

very costly; increased staff Investments in employees training (to work in different cultural environments);Complicated management structure

Recommendations

Prioritized

Recommendations

Expected

Benefits

Why Better

than Other Alternatives

Responsible Stakeholder

Implement all the changes in the company-operated restaurants and franchisees; widening international presence

1.Increase of clientele

2.Increase in profits

3.New image of restaurants

4.presence in new regions

1. Not so huge changes in corporate structure

2. Requires not so huge expenses in comparison with the 3rd alternative

3. In future the profit is expected to be increased due to wise strategy (in comparison with the1st alternative)

4. In comparison with the 1st alternative – no lose of clientele, but increasing of it

John W. ChidseyRussell B. Russell B. KleinKleinJulio A. Ramirez

Next StepsStep Step Description Assigned

ResponsibilityTarget Completion Date Objectives/Issues/Comments and Dependencies

Menu reconsideration: healthy menu, diet menu, region/season tailored menu offers

John W. ChidseyRussell B. Klein

1 year from current state

Following the healthy trend, attracting the anxious clients, cross-culture differences mastering, taking advantage of prosperous developing markets’ opportunities

Development and integration of new special client-oriented programs: «Jolly Sunday Mornings» for kids, discount-hours for pensioners

John W. ChidseyJulio A. RamirezRussell B. Klein

9 months from current state

Raising loyal clients from childhood (e.g. successful experience of partnership in association with Pokemon franchise in 1999), pensioners attraction (low-prices + healthy items)

Establishing partnerships: FSA, American Heart Association, PepsiCo, telecom services providers (including Wi-Fi equipment pruducers)

John W. Chidsey 9 months from current state

Taking advantage of healthy trend opportunities, benefits from suppliers rearrangement, attraction students and businessmen

Corporate clients relationship enhancement: breakfast and business-lunch sets’ delivery

John W. ChidseyJulio A. Ramirez

on a permanent basis

Delivery should either be outsourced or introduced by own fleet (relatively expense item but at the same time additional advertising function as well)

Advertising campaigns: introduction of a new mascot/slogan, contracts with media industry majors Russell B. Klein on a permanent

basis

Hiring top brand consultants, employment of experience for mutually beneficial promotion (success with George Lucas Film Ltd. In 1977 and Walt Disney Company in 1994)

Introducing additional internal services (Wi-Fi coverage, displays within each restaurant of BK)

Julio A. RamirezRussell B. Klein

2 years from current state

Local area network with free access to the Internet, a number of TV-sets with scheduled internal exclusive programs, improvement of poor inside appearance

Debottlenecking: walk-through implementation: growth of a number of simultaneously served clients during rush hours Julio A. Ramirez 2 years from

current state Maintain loyalty of impatient clients

Internal staff communication: Bluetooth headsets distribution among BK staff and managers Julio A. Ramirez 1 year from

current state

Breakthrough in accuracy due to undistracted attention of the staff in the production area(individual orders extraction), effective managers instrument for staff reassigning staff as volume changes

Increasing the level of automation & IT-solutions standards: new versatile flexible broiler

John W. Chidsey Julio A. Ramirez

2 years from current state

Speed of services increase.Maintain loyalty of impatient clients. Production of innovative products

Total Quality Management with respect to new menu diversity, product quality, speed of services delivery (establishment of a Quality Committee)

John W. Chidsey Julio A. Ramirez

on a permanent basis

Particular focus on franchised chains: sudden inspections practice worldwide, regular reporting to the Quality Committee, tough policy for license withdrawal

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