Internal And External Factors

Affecting Burger King

BURGER KING ENVIRONMENTAL ANALYSIS
 INTRODUCTION

• Burger King is a global chain fast food restaurant which was founded in 1955 in United Sates in Florida owned by David
Edgerton and James McLamore. By the year 2011, 12,400 outlets were opened by Burger King in 73 countries including New
Zealand. Since its opening in 1955 the menu for the Burger King has evolved from basic offering of French fries, sodas,
milkshakes, and burgers to more diverse and lager set of products.
• Between 2002 and 2010, Burger King targeted large products that carried large amounts of unhealthy fats to 18-34 male
demographic. In 2011 Burger King moved away from male oriented menu to new menu items with packing and product
reformulations (The Free Encyclopedia, 2012). Burger Kings franchise is one of the means of expanding its operation.
• Burger King acts as a franchisor laying down precisely procedures and rules for other franchisee to follow. To achieve volume
growth Burger King associated itself with multinational expansion for a large saturated market place.
BURGER KING INTERNAL ENVIRONMENTAL ANALYSIS THROUGH SWOT

• Burger King’s ability to keep its position as one of the biggest players in the quick service/fast food restaurant
industry is partly based on the business strategic balance shown in this SWOT analysis. The SWOT analysis model
examines the strengths, weaknesses, opportunities and threats most significant to the firm.

• As a food service business, Burger King must use its strengths to compete against giants like McDonald’s. In
addition, the company must consider the threats and risks linked to the global fast food restaurant market.

• It is expectable that Burger King will remain one of the major players in this market.
 BURGER KING’S STRENGTHS (INTERNAL STRATEGIC FACTORS)

• Burger King’s strengths are based on the company’s business capabilities. This part of the SWOT analysis determines
the internal strategic factors that create business capacity for continued development. Burger King’s main strengths
are as follows:
• Strong brand image
• High market penetration
• Moderate differentiation of products
• Burger King has one of the strongest brands in the industry. This condition makes it easier for the company to open
new restaurants and introduce new products. Higher market penetration is a strength based on the large number of
Burger King restaurants across the globe. Also, Burger King’s moderate differentiation (e.g., grilled burgers) is a
strength that allows the company to ensure uniqueness of some of its products. In this part of the SWOT analysis,
Burger King’s strengths are mainly based on branding and market penetration.
 BURGER KING’S WEAKNESSES (INTERNAL STRATEGIC FACTORS)

• Burger King’s weaknesses are linked to its business model and general strategic approaches. The internal strategic
factors that reduce or limit the firm’s effectiveness are identified in this part of the SWOT analysis. The following are
Burger King’s main weaknesses:
• Easily imitable business
• Limited product mix
• Low control on franchise model
• Even though Burger King has moderate differentiation, one of its weaknesses is that its business model and products
are easily imitated. For example, other firms could offer similar grilled burgers. Also, Burger King’s limited product
mix is a weakness because it prevents the company from attracting customers looking for more options. In addition,
even though Burger King grew internationally through franchising, the franchising model is a weakness because it
limits corporate control on franchisees’ approaches to management. In this part of the SWOT analysis, the limited
product mix is the weakness that Burger King can most easily address.
 OPPORTUNITIES FOR BURGER KING (EXTERNAL STRATEGIC FACTORS)
• The opportunities for Burger King present options for business growth and development. This part of the SWOT
analysis shows the external strategic factors that the firm can use to improve its performance. Burger King’s
opportunities are as follows:
• Diversification/product mix widening
• Market development
• Service quality improvement
• Burger King has the opportunity to widen its product mix by adding new product lines to attract more customers. Also,
the company could establish new businesses or subsidiaries as part of market development to gain more revenues while
reducing the effects of market risks. In addition, Burger King has the opportunity to increase service quality as a way of
differentiating its business from competitors like McDonald’s. In this part of the SWOT analysis, Burger King’s
opportunities require new strategies, especially for diversification and market development.
THREATS FACING BURGER KING (EXTERNAL STRATEGIC FACTORS)

• The threats against Burger King emphasize market conditions. The external strategic factors that limit or reduce
business performance are shown in this part of the SWOT analysis. The following are the main threats against
Burger King.

• Aggressive competition

• Imitation

• Healthy lifestyles trend

• Burger King faces the threat of aggressive competition, considering other firms like McDonald’s and Wendy’s. The
company’s business model is also imitable, leading to the threat of imitation by new entrants. In addition, the
healthy lifestyles trend is a threat because Burger King’s products are criticized as unhealthy. In this part of the
SWOT analysis, Burger King can easily address the threats of aggressive competition and the healthy lifestyles
trend.
BURGER KING EXTERNAL ENVIRONMENTAL ANALYSIS THROUGH PESTLE

• Burger King strives to become the top player in the quick service/fast food restaurant industry. To do so, the company must
strategically address the main issues highlighted in this PESTEL/PESTLE analysis. The PESTEL/PESTLE analysis
framework identifies the most significant factors in the firm’s remote or macro-environment.

• In Burger King’s case, these external factors include the influences of governmental and nongovernmental organizations,
as well as trends or changes in technologies, among others.

• Effectiveness in addressing these issues raised in the PESTEL/PESTLE analysis helps optimize Burger King’s global
business performance in the long-term.
 POLITICAL FACTORS AFFECTING BURGER KING’S BUSINESS

• Political conditions are determinants of business performance. This part of the PESTEL/PESTLE analysis identifies
governmental influence on firms’ remote or macro-environment. In Burger King’s case, the following are the main
political external factors:
• Governmental support for globalization (opportunity)
• Political stability in major markets (opportunity)
• Governmental support for e-commerce (opportunity)
• Governments continually support globalization. Burger King can take advantage of this condition through global
expansion. Also, the external factor of political stability helps reduce challenges to the company’s growth and expansion.
In addition, Burger King can improve its e-commerce capabilities. In this part of the PESTEL/PESTLE analysis, the
external factors present significant opportunities for Burger King to grow and expand internationally.
 ECONOMIC FACTORS IMPORTANT TO BURGER KING

• Economic conditions directly affect Burger King’s remote or macro-environment. This part of the PESTEL/PESTLE analysis
outlines the economic changes and trends that influence business performance. The following are the main economic external
factors that affect Burger King:
• Expanding international trade agreements (opportunity)
• Economic stability of the U.S. (opportunity)
• High economic growth in developing markets (opportunity)
• As countries implement more and expanded international trade agreements, Burger King can grow through global supply
chain enhancements. Also, U.S. economic stability enables the company to gradually grow in the country. In relation, Burger
King has the opportunity to rapidly expand in developing economies. These conditions show that, in the political dimension of
the PESTEL/PESTLE analysis model, Burger King must focus on external factors that present opportunities for growth and
expansion, especially in developing economies.
SOCIAL/SOCIOCULTURAL FACTORS INFLUENCING BURGER KING’S BUSINESS ENVIRONMENT

• Burger King must always account for sociocultural influences in its remote/macro-environment. The social trends and
changes and their effects on consumers and employees are considered in this part of the PESTEL/PESTLE analysis.
The main sociocultural external factors affecting Burger King are as follows:
• Increasing consumer diversity (opportunity)
• Higher health consciousness (threat & opportunity)
• Increasing support for animal rights (threat & opportunity)
• The increasing population diversity presents the opportunity for Burger King to innovate its products to attract
consumers of various backgrounds. Higher health consciousness threatens demand for Burger King’s products, which
are sometimes criticized as unhealthful. However, the company has the opportunity to improve the healthfulness of its
products. Animal rights advocacy continues to attract attention, threatening the main products of Burger King.
• Still, the firm can implement new supply chain policies to address concerns on animal rights and welfare. This part of
the PESTEL/PESTLE analysis points to Burger King’s opportunities to improve despite the threats linked to
sociocultural external factors.
TECHNOLOGICAL FACTORS IN BURGER KING’S BUSINESS

• Burger King’s business partly relies on technologies. In this dimension of the PESTEL/PESTLE analysis,
technologies and related trends are considered in terms of their influence on the remote or macro-environment of the
firm. The following are the major technological factors affecting Burger King:
• Higher availability of automation technologies (opportunity)
• Higher popularity of mobile technologies (opportunity)
• Low R&D activity in the quick service restaurant industry (opportunity)
• More automation technologies are now available for businesses. Burger King can apply these technologies to
improve operational efficiency. Also, the company can tap mobile users to gain a bigger market share. Relative to
the low R&D activity in the fast food restaurant industry, Burger King has the opportunity to boost its R&D
investments to improve performance.
• In this part of the PESTEL/PESTLE analysis, Burger King has major opportunities for performance improvements
based on technological external factors.
ECOLOGICAL/ENVIRONMENTAL FACTORS

• The environment can impose limits to Burger King’s business. This dimension of the PESTEL/PESTLE analysis
covers the impact of ecological conditions on firms’ remote or macro-environment. In the case of Burger King, the
following are the most notable ecological external factors:
• Climate change (threat)
• Emphasis on business sustainability (opportunity)
• Increasing popularity of low-carbon lifestyles (opportunity)
• Climate change threatens to reduce the stability of Burger King’s supply chain. However, the company has the
opportunity to improve its sustainability status. Also, Burger King has the opportunity to improve efficiency to
attract consumers who advocate low-carbon lifestyles. The ecological external factors in this dimension of the
PESTEL/PESTLE analysis indicate that Burger King can realistically work on sustainability and efficiency.
LEGAL FACTORS

• Burger King must comply with legal requirements. The effects of legal systems on firms and their remote or macro-
environment are considered in this part of the PESTEL/PESTLE analysis. The major legal external factors
influencing Burger King are as follows:
• Import and export regulation (opportunity)
• Environmental protection laws (opportunity)
• GMO regulation (threat)
• Burger King has the opportunity to grow based on import and export regulations that support new international trade
agreements. Also, the company can enhance its sustainability performance to exceed expectations and requirements
based on environmental protection laws. However, GMO regulations, especially in Europe, limit the performance of
Burger King, considering the widespread availability of GMO ingredients used in the industry. This dimension of
the PESTEL/PESTLE analysis emphasizes growth and sustainability based on legal external factors.
CONCLUSION

• Burger King’s current focus is on market penetration, with a considerable degree of product innovation. However,
based on this SWOT analysis, the company needs to adjust some of its strategies to maintain competitiveness.
• Burger King’s PESTEL/PESTLE analysis raises various issues, not all of which can be realistically addressed. With
regard to the remote or macro-environment of the fast food restaurant industry, Burger King must prioritize the
following concerns:
• Growth and expansion, especially in developing markets
• E-commerce and mobile transactions
• Product improvement for health-conscious consumers
• Business sustainability