PGDip in Business Administration maTWO Dynamic Strategic

Management

ASSESSMENT AND INTERNAL VERIFICATION FRONT SHEET (Individual Criteria)

Course PGDip in Business Administration (Cohort 4) Lecturer Name Ms Carmen Frendo
Title & Surname
Unit Number & Title (BCMGT 706 2000) Dynamic Strategic Management

Assignment Number, Title Major Assignment TWO Take Home Assignment

/ Type
Date Set Deadline Date 25/9/2020 @ 22:00 p.m.
14/09/2020 @ 9:00 a.m.

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Maximum Mark
Assessment Criteria Mark Achieved

S&E 2.4: Formulate a strategic plan for a given organisation 10

K&U 3.1 Discuss the different business strategies within profit making organisations 5

S&E 3.2: Evaluate the viability of implementing different strategies in a given scenario. 10

K&U 3.3: Describe the process of implementing strategy within profit making organisations 5

S&E 3.4: Evaluate the strategy implementation process in a given scenario 10

K&U 4.1 : Discuss the issues of morality in the running of a business. 5

S&E 4.2 : Evaluate the notion of Corporate Social Responsibility in a given organisation decision. 10

Total Mark 55

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CASE STUDY:
Is Burger King Improving For Sustainable Strategic
Growth?

THE COMPANY

Burger King is the third largest global chain of fast food

restaurants headquartered in Miami, Florida. At present,
McDonalds occupies the leading position in an industry
characterised by imperfect competition. The industry players
are large with big market shares, all competing to achieve the
leadership in the market. Other competitors include Wendy’s,
Subway and KFC. Each competitor attempt at attaining
competitive advantage based on differentiation related to new
products and customer service.

All these competitors guard the QSR business from new

entrants by investing in large-scale operation to benefit from
economies of scale, differentiation, new products and customer
service. The industry is not concerned of high quality
restaurants. These other competitors offer a more professional
customer service, but at a premium price.

The vision and mission statements of Burger King contribute to

its effective strategic management. Burger King’s vision
statement is “to be the most profitable QSR BUSINess,
thROUGh a strong franchise system and great people, serving the
best BURGers in the world.”

Its mission statement is to “offer reasonably priced QUality food,

served QUIckly, in attractive, clean SURROUNDINgs.”
These new statements were introduced in 2017, when Burger
King’s market position was being challenged by diverse factors.

The economic downturn had a strong impact on Burger King’s

sales. The economic decline in most of the developed countries,
including USA, led to declining consumer confidence and several
business setbacks. An environmental audit indicated concerns:
 A declining financial performance
 An unclear future strategy
 Scrutiny of its international operations from the
investment community
 Acquisitions unexpectedly, cancelled by the Chinese
government, putting Burger King at a disadvantage to
McDonalds in China
 Increasingly difficult relationships with franchisees –
Burger King’s inefficient franchise model is well-known in
the industry which makes it difficult for Burger King’s
management to control the operations of franchisees.
 Accusations by different Animal and Consumer pressure
groups of the ill-treatment of animals and the offering of
unhealthy food to kids.
 Lack of communication with stakeholders, particularly its
investors and franchisees
 A product portfolio which is easily imitated by competitors
 Lack of product innovation and diversification – its product
portfolio is limited and fails to attract customers who are
looking for a wide choice
 A volatile global fast food industry
 Strong aggressive competitors

As a result, the company embarked on a four-year turnaround

strategy, which has been based on the strength of the firm and
the market opportunities. The implementation of the strategy
required Burger King to take several initiatives.

The company initiated a research-based programme to reshape

its overall perception of the company which had suffered
following the increased health consciousness of the market. The
firm has a strong brand image which makes it easier for the firm
to open new outlets around the world, taking the opportunity of
globalisation. Burger King is unique in the industry, in that no
other competitor flame broils the burger, a competence which is
difficult to imitate. However, the firm’s marketing effort is
weak and does not promote this unique selling proposition enough,
even though customers admit that Burger King’s meals taste
better than McDonald’s. Burger King is excellent at customer
support. The human resource department of Burger King
coordinates with the franchisees so that training is given to all
employees about customer service

The expansion of the global business was made easier with the
new international trade agreements by the USA government.
Market development was also an opportunity to introduce new
products. Nonetheless, Burger King was not proactive enough to
introduce new products, especially to tailor-made its portfolio of
offerings to the new markets, an area where competitors were
fast movers.

Burger King adopted diverse best practices in the industry such

as employee empowerment techniques. It also improved its
channels to communicate the firm’s strategy and growth
prospects to its stakeholders.

Burger King implemented the necessary operational changes. The

disappointing financial results led the firm to implement cost-
cutting measures, including an emphasis on drive-tru’s, a
scheduling system to improve employee efficiency and the
closure of restaurants performing weakly. However, the global
number of restaurants is still a main competence of the firm,
making Burger King to excel in high market penetration.

Burger King engaged in a dissonant style of leadership, created

when there is a lack of harmony between potential leaders and
followers. This was the result of frequent ownership changes.
Burger King failed to manage change and to take a systems
approach towards the management of its business and
franchisees. It is an organisation in constant flux that needs
stability.

The appointment of a new CEO and a new management team led

to a change in the leadership style being adopted within the firm.

The firm has gone through a series of restructuring to improve

its internal operations. These were in response to its weak
control over franchisees due to lack of standardised operational
procedures.

The fast food chain introduced group decision-making and

collaboration with franchisees. From a centralised firm Burger
King has given enough independence to its franchises to make
decisions on a regional basis. The fast food chain has signed
agreements with regional suppliers that meet its standards.
Thus, local franchisees are allowed to order ingredients directly
from the certified suppliers. Franchisees are empowered to
introduce new products to meet buyer’s needs.

Historically, Burger King has always relied on monologic change

communication, identified as top-down, one-way instrumental
communication. As a result of its new vision Burger King has put
in
place policies to communicate directly with key internal and
external stakeholders. The firm employed a control mechanism
through benchmarking targets against comparable results.

In US Burger King increased customer loyalty by highlighting the

company’s roots in the country. This was needed not only because
of the rise in health consciousness, but also because of the
switching of customers to the other brands who were being more
innovative. Customers were becoming more sophisticated, asking
for more choice and innovation. The industry is not dominated by
large buyers, but the buyers are still powerful because of their
requests.

The company publicised its commitment to both sustainable

development and America’s well-being. It has taken measures to
carry out corporate image and marketing makeovers. Analysts
argue that Burger King could have done better in this regard.
Example, the firm failed to make use of mobile technology to
target mobile users and increase the market share. This was
another area where Burger King lost race with its competitors.

Another area which Burger King tried to improve is purchasing in

the US. In the USA Burger King works with an exclusive
purchasing agent, Restaurant Services Inc. (RSI), in order to
improve purchasing power. RSI negotiates the purchase terms
for most of the products such as equipment, food, beverages and
promotional toys. In the international regions there is no
designated purchasing agent to leverage Burger King’s global
purchasing power.

Management has introduced a system of Key performance

indicators, set for different areas of business. These areas of
business included marketing, sales, accounting, customer-care
and
supply chain. Corporate objectives were translated into specific
targets for different levels of the organisation.

BURGER KING’S ETHICAL ISSUES

Burger King strives to have good ethical practices included into

their business processes. The company’s code of ethics is based
on honesty, integrity and respect. Business practices are audited
to ensure adherence to these practices.

At Burger King it is expected that senior executives run

contests to engage employees in ethical behaviour. Senior
management is pressured to show that all employees’ rights and
values are highly respected. Employees undergo training sessions
to familiarise themselves with all ethical policies and codes
created at Burger King.

The sources of supply selected to do business with Burger King

are expected to comply fully with the ethical codes of Burger
King. As quoted in the Burger King corporate code: “OUR
philosophy is simple: integrity, honesty and compliance with
the law are not optional. When it comes to ethics there is
no compromise – BUSINess prosperity and social responsibility
go hand in hand”. However, the company does not have a
supplier’s code to promote and implement responsible business
practices.

The firm sees no threats related to suppliers. In fact, there are

many suppliers operating in the fast food industry. Buyers can
switch from one supplier to another, easily without incurring any
switching costs.

Nevertheless, the international fast food chain has been involved

in several ethical issues. The controversies and disputes can be
attributed to different groups ranging from the People for the
Ethical Treatment of Animals (PETA) whose main concern is
animal welfare to health agencies promoting healthy eating and
child obesity. The disputes have been related to issues related
to animal rights, corporate responsibility and ethics and social
justice.

A particular controversy was related to Burger King’s

involvement in the Middle East. A dispute arose between Burger
King and its Israeli franchise over the opening of a Burger King
outlet in the Israeli occupied territories. Eventually the dispute
erupted into a geopolitical conflagration involving Muslim and
Jewish groups on multiple continents over the application of
international law. The Islamic countries within the Arab League
arose a number of sanctions against Burger King, including the
revocation of the firm’s business licenses within the member
states’ territories

Burger King was involved in another issue involving Islam when

the promotional artwork on an ice cream in the United Kingdom
led to issues of cultural sensitivity. The artwork, a spinning
cream cone that when rotated on its side, resembled the Islamic
symbol for Allah. Burger King voluntarily recalled the product
and introduced a new label. The Muslim Council praised the firm
for its quick action in dealing with the matter.

The fast food chain uses various employees reward mechanisms.

It sponsors different educational and training programmes for
employees. However, Burger King has been accused of
unfavourable workers’ conditions. Most of the organisation’s
workers are either young people or economic migrants. Employees
rarely get beyond the basic starting wage and if they receive
benefits they are insignificant in comparison to the benefits
received by higher management employees. Cases of sexual
harassment have been witnessed in court.
BURGER KING’S CSR INITIATIVES
Although Burger King is involved in a variety of philanthropic
activities, the real practice as CSR is concerned appears to be
minimal. There is no CSR reporting and the available documents
do not relate to any international standards such as the Human
Rights.

Burger King limited the salt content within all kids meals
advertised to children under 12. The firm stopped the use of
trans fats. However, these measures were only taken after legal
pressures. Burger King introduced healthy dishes in an attempt
to revamp its menu such as Apple Fries which are skinless red
applies sliced to resemble French fries. This was done in
response to demographic changes that were affecting the sales
of Burger King.

Burger King has been reluctant to join the diverse initiatives

organised by the members of the fast food industry, such as the
Sustainable Agriculture Initiative Platform, the Sustainable
Packaging Coalition and The Concerned Children’s Advertisers.
But, in May 2008, Burger King joined other fast food chains in an
agreement to pay an extra penny per pound to aid tomato pickers
in Florida.

Lately the management of Burger King has appointed a task force

to analyse the use of alternative energy in Burger King’s outlets.
However, limited progress has been made by the firm on the
adoption of renewable energy.

Nevertheless, it appears that Burger King has not made any

effort to care for the well-being of society. The present CSR
policies
 have been triggered by external factors such as campaign group
pressures and new legislation.

Case adapted from “Burger King at a glance” by the Centre

for Research in Multinational Corporations available at
http://somo.nl/publications-en/Publication_2669.

Making again reference to the above case study, answer the following tasks:

Task One: (K&U 3.1, 5 marks; S&E 2.4, 10 marks)

a) Discuss the competitive strategy and the market share strategies being
currently used by Burger King. (K&U 3.1, 5 marks)
Word limit: 200

b) Select an appropriate set of strategies for Burger King, which will allow it to
improve its current situation, thus, building on its strengths, rectifying its
weaknesses, taking the opportunities and facing the threats (S&E 2.4; 10 marks)
Word limit: 400

Task Two: (S&E 3.2, 10 marks)

Evaluate the viability of implementing the strategic choice made in Task One
above. Your answer needs to include an evaluation of feasibility, suitability
and acceptability. (S&E 3.2, 10 marks) Word limit: 300

Task Three: (K&U 3.3, 5 marks; S&E 3.4, 10 marks)

a) Using the given case study, evaluate the strategy implementation process at
Burger King. (S&E 3.4, 10 marks)
Word limit: 350

b) Suggest the type of culture which can be adopted by the management of

Burger King to improve strategy implementation at their organisation. (K&U 3.3,
5 marks) Word limit: 200
Task Four: (K&U 4.1, 5 marks; S&E 4.2, 10 marks)

a) According to the given case study, Burger King has found itself in diverse
situations of immoral behaviour. This is also outlined in the given case study.
Select one of these cases and briefly discuss the impact on Burger King of this
situation. (K&U 4.1, 5 marks)
Word limit: 200

b) By utilising the theory of the Pyramid of Corporate Social Responsibility

(CSR), evaluate Burger King’s CSR approach. This link can be the starting point
of your research - https://www.bk.com/corp-respon
(S&E 4.2, 10 marks)

Word Limit: 400

NOTE: For this task reference your work appropriately.

END OF ASSIGNMENT