Burger King case
1. Resources:
Burger King (BK) re-franchised almost all of its company-operated restaurants during 2013, bringing its business model to nearly 99% franchised and by the end of 2013, the company was left with only 52 company-operated restaurants. The advantage of the franchised model is that the company does not have to incur operating costs and can enjoy the royalties paid by the franchises. The margins for this type of model are very high, but it comes with number of disadvantages and risks. Also, BK has strong, long-term partnership and exclusive joint ventures nationally and internationally.
2. Capabilities:
Burger King has limited influence over the operations, marketing and advertising decisions and ownership of the franchised restaurants. Moreover, the franchises are sometimes unable to participate in strategic initiatives such as investment initiatives in re-imaging and remodeling. Furthermore, a franchise’s bankruptcy could have a huge negative impact on the company’s revenue from that restaurant, as the franchisee agreement can be cancelled in case of bankruptcy with no further royalty payments. Lastly, in times of difficult economic conditions, franchises can reduce the royalty rates.
3. Core Competencies:
Burger King’s core competencies are promoting sales in the US and Canada, accelerating international development, aggressively pursuing refranchising opportunities and maintaining strong focus on corporate-level cost structure. For instance, BK decided to focus on 4 points to drive sales: the menu, marketing and communication, image and operations by preparing their hamburgers on a flame broiler, an expanded menu to appeal to a wide range of demographics, accelerating international development in various forms such as joint ventures, and by maintaining a "Zero Based Budgeting" program and tying a portion of management‘s incentive compensation specifically to G&A budget (Burger King, 2013) BK maintains a strong focus
Burger King (BK) re-franchised almost all of its company-operated restaurants during 2013, bringing its business model to nearly 99% franchised and by the end of 2013, the company was left with only 52 company-operated restaurants. The advantage of the franchised model is that the company does not have to incur operating costs and can enjoy the royalties paid by the franchises. The margins for this type of model are very high, but it comes with number of disadvantages and risks. Also, BK has strong, long-term partnership and exclusive joint ventures nationally and internationally.
2. Capabilities:
Burger King has limited influence over the operations, marketing and advertising decisions and ownership of the franchised restaurants. Moreover, the franchises are sometimes unable to participate in strategic initiatives such as investment initiatives in re-imaging and remodeling. Furthermore, a franchise’s bankruptcy could have a huge negative impact on the company’s revenue from that restaurant, as the franchisee agreement can be cancelled in case of bankruptcy with no further royalty payments. Lastly, in times of difficult economic conditions, franchises can reduce the royalty rates.
3. Core Competencies:
Burger King’s core competencies are promoting sales in the US and Canada, accelerating international development, aggressively pursuing refranchising opportunities and maintaining strong focus on corporate-level cost structure. For instance, BK decided to focus on 4 points to drive sales: the menu, marketing and communication, image and operations by preparing their hamburgers on a flame broiler, an expanded menu to appeal to a wide range of demographics, accelerating international development in various forms such as joint ventures, and by maintaining a "Zero Based Budgeting" program and tying a portion of management‘s incentive compensation specifically to G&A budget (Burger King, 2013) BK maintains a strong focus