Burger King Beefs Up Global Operations - Essay Example

The corporate headquarters of Burger King is located in Miami, Florida. Miami is often referred to by Latinos as the capital of Latin America. The firm’s reputation in Miami which is one of the cities in the United States with the highest population of Latinos spilled over into the rest of Latin America (Uts, 2011). In terms of geographic considerations the proximity of Miami to the South America and the Caribbean region enhances the ability of Burger King’s management to visit these countries and for franchisees to visit corporate headquarters.

Marketing is the value chain activity that adds greatest value to the company. The success of Burger King is highly dependent on its ability to attract return customers. Advertising has been used by the company to build the brand value of the firm. The company finances a lot of its marketing budget by charging its franchisees a 4% marketing fee on all sales which is independent of the 4.5% royalty fee it charges (About, 2011). 3. The international expansion of Burger King came at a slower pace than its main competitor in the fast food industry, McDonald’s.

An advantage of being the first to the market is that first entrants create greater brand value recognition than followers (Kotler, 2003). A second advantage of entering a market first is the ability to obtain a greater market share. Companies that follow have to invest a lot of money in advertising to steal market share away from the first entrant. A third advantage of being first in the market is the ability to lock up contracts with suppliers. This is very important especially in markets that have a limited amount of suppliers.

The most important supplier for a hamburger chain is the slaughterhouses that provide the meat. On the other hand it is advantageous to enter the market later because the first entrant takes all the risks of the market not being suitable for the product the company offers. Another advantage of entering later is that the first entrant spends large amounts of capital to build up the demand for the product and is also responsible for creating the supplier network. 4. An advantage for a company such as Burger King in comparison with local merchants is that Burger King has greater purchasing power than the competition.

Burger King can take advantage of economies of scale and as a consequence the firm can implement a lower price structure to attract customers. The local merchants have advantages over Burger King such as having a fixed customer base and greater knowledge of the customers eating preferences. 5. Burger King has more than 2/3 of its stores located in North America. The company has to move away from this strategy due to the fact that the fast food industry in this region is very saturated particularly in the United States.

There are over 160,000 fast food restaurants located in the United States of America (Numberof, 2010). The company’s strategy must change to achieve greater international penetration. Burger King currently has a physical presence in only 40% of the 210 countries worldwide (Garabain, 2008). Emerging economies should be the prime target of Burger King particularly the BRICS (Lukyanov, 2011). The BRICS is composed of Brazil, Russia, India, China, and South Africa. The population of China and India combined represent 36.

66% of the world’s population. 6. It is advantageous to penetrate countries that have large numbers of youth and shopping centers. The main consumers of fast food are teenagers, generation