MANAGEMENT AND INTERNATIONAL BUSINESS - INTERNATIONAL BUSINESS ASSIGNMENT

MA MANAGEMENT AND INTERNATIONAL BUSINESS

INTERNATIONAL BUSINESS ASSIGNMENT

The customers and their needs define markets. The extend to which a market is global will depend upon the extend to which customer needs for a product or service are similar throughout the world. “Technological changes, social, political and economic developments have driven the world towards Globalisation.” Globalisation is an important emerging business mandate relevant to virtually all businesses. “Global businesses have the ability to undercut the prices of more nationally oriented competitors. The modern meaning of "globalisation" implies a global perspective of the particular area of study, a perspective that arises from the increased interdependence of national institutions and national economies. Under Globalisation we find a homogenised unified global market in terms of consumer taste and product preferences. The global environment is increasingly complex and requires more sophisticated approaches to strategy. Globalisation has enabled businesses to gain a global competitive advantage by configuring its activities by take advantage of the differences arising around the globe and coordinating global activities effectively.” Several organizational structures have emerged to meet the growing demands of globalisation. While markets are becoming more global consumers are becoming more sophisticated demanding goods and services that are differentiated rather than standardised. One such organizational form is the Transnational Corporation (TNC). The defining characteristic of transnational companies is their geocentric orientation.

HISTORY OF BURGER KING

“Burger King was formed in 1954 by James McLamore and David Edgerton in Miami, Florida. The introduced by Burger King in 1957 was sold for only 37 cents. It was an instant sensation and immediately became their flagship product. Today the WHOPPER® is world renowned for its fire-grilled taste. The great success of the early restaurants made the BURGER KING concept a natural for selling franchises. The concept spread rapidly throughout the1960’s. The first international franchise restaurants opened at Puerto Rico in 1963. The vision for the BURGER KING brand hasn't changed over time but the restaurants have. The early BURGER KING restaurants distinguished themselves from others by their self-serve ordering and outdoor patio seating. In 1974 the memorable 'HAVE IT YOUR WAY' campaign was created. In total there are more than 11,220 BURGER KING restaurants worldwide representing 61 countries. The success and size of Burger King Corporation is the result of a tradition of leadership within the fast-food industry in such areas as product development, restaurant operation, decor, service, and advertising. The Burger King Corporation uses over 50 years of experience as it moves proudly into the future. As a brand, the company has never been stronger.”()

BURGER KING As A TRANSNATIONAL COMPANY

GLOBAL CO- ORDINATION

LOW HIGH

LOW LOCAL INDEPENDENCE AND RESPONSIVENES

HIGH

(JOHNSON& SCHOLES,1999)

“Transnational corporations combine the local responsiveness of the international subsidiary with the advantages available from co- ordination found in global product companies by creating an integrated network of interdependent resources and competences. In transnational companies, each unit operates independently, but is a source of ideas and capabilities for the whole corporation. The success of transnational corporation is dependent on the ability to achieve global competences, local responsiveness and organisation- wide innovation and learning.” (JOHNSON& SCHOLES, 1999, pg 420). “When Burger King started 50 years ago the world was a very different place. Over the years, society has become more diverse and the BURGER KING system has, and continues to embrace such change. Burger King values, honours and respects differences in their employees, customers, franchisees, and suppliers. That is why The Changing Face of the Burger King Corporation describes Burger King Corporation's commitment to workplace diversity and economic empowerment. Burger King Corporation also maintains an ever-expanding tradition of good corporate citizenship. Diversity represents three equally important things. First, it is a goal to create an environment where every individual has a chance to impact the organization as part of a workforce that celebrates individual differences. Second, it is a strategy valuing different perspectives and backgrounds to create innovation and a stronger business. Third, it is culture. A culture of diversity is one whose fabric is woven with the threads of integrity, communication and inclusiveness. Understanding, practicing and supporting diversity will make Burger King a much stronger company because we are committed to the communities that we are privileged to serve. The Burger King Corporation believes that diversity is part of their foundation. By sharing a common vision, they will create a premier company with a harmonious working environment that achieves its business and diversity objectives. This is their mission statement.”().

The impact of international business on burger king can be understood using the following parameters:

STRATEGY

Burger King is customer- oriented. They take great efforts to analyse the needs and wants of the customers. They focus on customer feedback and accordingly necessary alterations are adopted. There is a direct interaction between the senior management executives and the customers at Burger King. This is mainly because customers are positively associated with the increase in sales growth. Direct involvement of the senior managers helps in better decision-making process.
Ray Kroc of McDonald’s Corp pioneered the franchising format. Soon it was adopted by Burger King to reap benefits. Ninety percent of BURGER KING restaurants are owned ...

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STRATEGY

Burger King is customer- oriented. They take great efforts to analyse the needs and wants of the customers. They focus on customer feedback and accordingly necessary alterations are adopted. There is a direct interaction between the senior management executives and the customers at Burger King. This is mainly because customers are positively associated with the increase in sales growth. Direct involvement of the senior managers helps in better decision-making process.
Ray Kroc of McDonald’s Corp pioneered the franchising format. Soon it was adopted by Burger King to reap benefits. Ninety 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. McLamore and Edgerton acquire national and international franchising rights in 1961. But Burger King had been hampered by an insufficient franchise system that was finally, in 1977, entirely remade based on the McDonald’s model and took sometime to successfully implement. Franchising is a good strategy to implement provided the company makes sure that the quality standards are maintained throughout. As far as Burger King is concerned maintaining high standards of quality is their basic motive. One factor that has helped to increase the Company's expansion and growth has been the franchising of restaurants to individuals.
Another strategy adopted by Burger King is to focus on the school dropouts. Burger King Corporation launches 14 across the U.S. Burger King Academies are alternative schools for children at risk of dropping out set up in 1989. Through partnerships with area businesses, local universities and other organizations, students receive employment skills, on-the-job training, tutors, and internships. The Academies are supported through corporate contributions and franchisee commitments.
Burger King has a comparative advantage. Comparative advantage resides in the factor endowments and created endowments of particular regions. Factor endowments include land, natural resources, labour and size of the local population.
Burger King has successfully introduced a number of innovations to the fast food industry. An early innovation was the continuous- chain broiler, which was an alternative to the fried hamburger. Burger King was the first hamburger chain to cater to nutritional trends by publishing a guide that include information on the calorie, fat, salt, and protein content of menu items.

When talking in terms of International Business, Burger King needs to look further and not just concentrate on the customers. Undoubtedly customers are the key yet there are several other factors, which affect their business on an international perspective. They need to have clear idea about their international competition. Their strategies must be developed baring in mind their international competition.

Joint ventures are an easy way entering a foreign market and on gaining an advantage in a domestic market. Burger King entered the Japanese market through a joint venture with Japan tobacco Inc. that is two thirds owned by Japan’s ministry of finance to form burger king Japan. This joint venture gives burger king a fighting chance in competing against 2000 outlets of McDonalds in Japan. ()

In the product life cycle, Burger King could be placed at a point just after maturity and at the start of decline stage. If proper attention is not paid then it will continue moving towards the decline. It is at this point that Burger King should take some innovative steps to recapture the market. Though some efforts have been taken (which have been mentioned later), adequate timely measures are not adopted. At the maturity stage the market reaches its saturation point. Promotion becomes more widespread and there is a greater use of variety of media. At this stage the product features may be enhanced to differentiate it from that of the competitors. As it moves into the decline stage, measures must be taken to maintain its market by rejuvenating the products offered by Burger King by adding some thing new and attractive.

THE PRODUCT LIFE CYCLE

(Source:http://www.marketingteacher.com/Lessons/lesson_plc.htm)

TECHNOLOGY

Burger King pioneered drive-through window service and provided inside sit- down eating trend. Approximately 58.8% of BURGER KING business is drive-thru. The major success of Burger King was on the fact that they were able to make a burger in 15 seconds. This is possible only with the help of proper use of technology.
Burger King has effectively used technology for their benefit. For instance; the Burger King IT department introduced the Palm Inc. devices to help district managers automate the programming of warming bins in multiple restaurants making multiple food products. The bins hold cooked burgers and chicken. The use of technology has helped in reducing the programming time from 30 minutes in several stores to perhaps only seconds.(http://www.computerworld.com/mobiletopics/mobile/handhelds/story/0,10801,73016,00.html)
Burger King has signed a multi year contract with Perot System Corporation to provide IT services for its critical business systems, where Perot Systems will provide data centre management, help desk support, enterprise system management and global network management.()
In collaboration with Elo Touch Solutions, Burger King has introduced a Virtual Fun Centre- interactive kids computer games with a touch screen. This was done to attract children along with their parents into their restaurants. ()
Burger King has been able to maintain good co- ordination and communication with all its departments worldwide. This is necessary for the smooth functioning of all the Burger King outlets. It is the efficient use of technology that helps them to achieve this.
Burger King uses technology to a great extends in its heating and cooking activities also.
From the above examples it can be understood that Burger King uses technology not only to achieve efficiency in it’s functioning but also to strengthen its market stand.

When looking at the impact of technology from a global perspective, Burger King needs to understand wholly depending on the drive-thru will not do any good. They must be able to analyse the mindset of people elsewhere too. In places where there is less use of private vehicles, this would prove to be a hindrance. It is essential that there is proper use of technology as this helps to make optimum use of resources. It also helps to manage the activities of the various outlets around the globe efficiently. Efficient co- ordination of activities is of prime importance as this has a direct influence on the performance. Measures must be adopted to make use of technology is all possible ways, which would help to serve the needs of customers more economically and resourcefully.

MARKETING

Burger King has been able to create a very strong Brand image in the minds of its customers. For instance, the word WHOPPER is always immediately associated with Burger King. Efficient use of the Brand name has also been undertaken.
Burger King created a viral marketing mascot, the Subservient Chicken. For this they hired a man to dress in a feathered costume and act out 400 different functions in a seedy basement apartment reminiscent of an amateur '80s porn set. It appeared on 63 broadcast segments, including five separate segments on the Apr 17 edition of Fox & Friends. As of October, the site had generated 338 million hits from 12 million unique visitors averaging six minutes per session. This is a marketing strategy
Burger King Corporation's advertising campaigns has also effectively contributed to the Company's success. The first advertising punch line for Burger King,” Burger King, HOME OF THE WHOPPER®” was developed in the year 1958. Burger King spends about $300 million in advertising every year. The latest punch line is “HAVE IT YOUR WAY®".
Burger King’s marketing strategy concentrated on product differentiation I in the 1980’s by offering a more diversified menu. Efforts were made to attract new market segments by including broiled chicken on the menu and by offering Haagen- Dazs ice cream bars. But sometimes Burger King’s advertising campaigns appeared to have missed their mark in several instances.
Sometimes the consumers get used to a particular brand or product. This is referred to as Routinized Response Behaviour (RRB). But this does not necessarily mean that the company does not have to take steps towards innovation. As far as Burger King is concerned, the customers are happy with the Whopper burger and it has also proved to be profitable for the company. But Burger King should look at things in a wider perspective. They must also be aware of what their competitors are providing and accordingly alter their marketing.
There are 1535 ways of ordering a Whopper burger. This helps to meet the need of the customer in the best possible manner, as they can decide what they want to have in the burger. Paradoxically customers are unable to decide on the best combination. On a global perspective, this might prove to be a disadvantage. Infact in countries like India a major section of the population is unaware of the term Whopper burger. Such people would find it difficult to find the best combination from the 1535 combinations provided. Burger King must keep in mind that not all people worldwide are familiar with the Whopper burger.
Burger King must takes steps to develop advertisements in the local language of the country were it is set up. This will help the general public to relate to it more easily. This will also help to attract more children, as they are able to grasp more from advertisements that they can relate to easily.
Burger King also tried to introduce carrots and grapes as a healthy alternative to fries. But this did not work out. Though children were aware of the fact that carrots and grapes were healthier than fries, they did not want to stop consuming fries. This clearly indicates lack of proper market research on the part of Burger King. Before introducing the new option, they should have researched on the requirements of children. Had they targeted the same menu at middle-aged women /men, probably they would have done better. It is essential that before any changes are introduced proper market research is conducted and the ideas are clear. One point to be remembered is that though the market segment that is targeted is the same, they still have differences across national boundaries. For instance, if a new strategy is targeted at teenagers, it should be noted that there are differences in the needs and tastes of teenagers in different countries. Therefore proper market research should be undertaken before new strategies are implemented.
People admire Burger King's Kid's Club for featuring not only a mix of gender and races, but also abilities and disabilities. The marketing concept of firms should be to identify and profitably satisfy customer needs
“Both McDonalds and Burger King are looking towards changing their image in the business. Burger Kings changes involve a new look logo, different store designs and new marketing strategies; while still growing its core business McDonalds is planning to examine ways to expand in other businesses. The new Burger King has an open kitchen that allows customers waiting in line to view the flame broiler. This is a prototype that they have created.” (Cornell hotel and Restaurant Administration Quarterly, June 1999, Vol 40, Issue 3, Glenn Withiam)

Proper marketing is the key to success of every organisation. Burger King must adopt marketing strategies that suit each country. Marketing strategies must be developed cautiously after proper market research and analysis. Unless Burger King markets itself properly, customers will be unaware of the various innovations implemented. This will negatively influence the business. There must be a clear idea about the needs and wants of the target segments before new decisions are implemented. If not, it may result in wastage of time and resources.

OPERATIONS

Value chain analysis describes the activities within and around an organisation, and relates them to an analysis of the competitive strength of the organisation. One of the key aspects of value chain analysis is the recognition that organisations are much more than a random collection of machines, money and people. These resources are of no value unless deployed into activities and organised into routines and systems, which ensure that products or services are produced which are valued by the final consumer or user. It is these competencies to perform particular activities and the ability to manage linkages between activities, which are the source of competitive advantage. (Harris and Moran, 1996,pg156).
Burger King must be able to identify their core competencies and move accordingly. They must be able to make efficient use of their resources, machinery and manpower to meet their customer needs.
At Burger King, operations are streamlined. Workforce and management are committed and motivated to achieve the common mission at Burger King.
Great efforts are taken to maintain the quality of the product throughout all the outlets of Burger King. This is important because ninety percent of the Burger king outlets are franchised. It must be made sure that the output at all the outlets maintains the same level of quality. They must be vigilant about the functioning of their supply- chains.
The country managers at Burger King act as team players. The management control systems are standardised and decision- making powers is shifted to the regional mangers. The country mangers develop the lead market in his/her country and transfers the knowledge gained to other similar markets. This is one strategy adopted for expanding.
Efforts are also taken to maintain high levels of hygiene and cleanliness in their outlets. Though they have been able to maintain high levels of hygiene in some of their outlets, it lacks totally in some others.

CULTURE and PEOPLE

“Cultural differences were assumed to be barriers that hindered and impeded communication and interaction. But global leaders, today, believe that cultural differences are resources if managed properly and handicaps if not.” (Harris and Moran, 1996,pg 19). A clear-cut line of differentiation cannot be drawn between culture and people. They cannot be viewed as two distinct entities. People are part of culture and culture a part of people.

Each day Burger kings caters to the needs of different kinds of customers. These are people who have their own unique taste and opinions. The basis for the success of Burger King throughout the world has been and continues to be the diversity of their high quality workforce. There is a lot of transparency found in the work environment at Burger King. The manager’s work along with the kitchen staff during busy hours. This acts as a great source of motivation to the employees. The managers are always around talking to the customers. () “To be effective in working with people from different cultures requires that we make isomorphic attributions of the situation i.e., we put ourselves in the other person’s shoes. The intercultural skills of isomorphic attributions are vital to appropriate protocol and effective technology transfer.” (Harris and Moran, 1996, pg 29)
Burger King needs to adopt a paradigm shift. Burger King is Burger King all around the world. They do not make changes or alterations to meet the individual needs of the various countries. For example, when McDonalds entered the Indian market they had to make several changes to their menu. They had to take away beef and pork burgers from their menu, instead add mutton. This was done only in India so as to suit the needs of the Indian market. But, unfortunately Burger King does not take any such efforts. Such efforts help to create a better image about the company in the public. This has a direct positive influence on the profits on the company. “When we travel to another culture or interact with people from another culture, companies cannot base their predictions on their cultural rules and norms. This will lead to misunderstanding and wrong decision- making.”(Harris and Moran, 1996, pg23)
Burger King has adopted the Dual Language point of purchase material. Burger King is to add a Welsh flavour to its Aberystwyth branch, with shop signs and menus to be displayed in Welch and English. (Copyright 2004, Liverpool Daily Post and Echo Ltd.). From a global viewpoint, such steps will help the company to gain more acceptances in the market.
High quality service products often depend on the service firm’s culture, and maintaining a consistent culture when expanding globally is a challenge, which is critical in service businesses. Burger king has been able to maintain this.

Corporate strategies have to be seen in a global context. Management has to look at an international business environment, in which actions of competitors, buyers, sellers, new entrants of providers of substitutes may influence the domestic market. Information technology is reinforcing this trend. The diagram indicated below is the PORTERS DIAMOND, which was developed by Michael Porter. It helps to analyze why some industries within nations are more competitive than others.

There are certain factors that are necessary for a company to be a perfect transnational corporation. These can be related to the Porters Diamond. The company needs to have firm strategies for marketing and general functioning. They should also have knowledge about their competitors and strategies they follow. Companies should also have awareness about the demand in the market for their products. This can be done only through proper market research and analysis. They should also be pay due attention to their supporting and related industries. This includes the suppliers, transportation, storage, packing etc. Any flaw in these will have adverse effects on the company. Factor conditions include the raw material, manpower availability etc. This is also another important consideration. If the company is set up in a place where there is scarcity of good quality raw material and lack of skilled or semi skilled labour, then it’s functioning will be disturbed. This will extend a negative impact on the cost, efficiency and quality of company’s productivity.

A transnational like Burger King, must carefully analyze all these factors and accordingly develop strategies. They must evaluate their strengths and weakness and adopt necessary steps. This will help them the with stand the ever-growing competition.

CONCLUSION:

Burger King is a well established transnational company which extends its working to different parts of the globe. But at the same time, they need to take measures to innovate and bring about changes to their strategies of functioning and marketing. Redefinition of the issues allows managers of the transnational company to develop a broader perspective and leads to very different criteria for making choices. On a global perspective, the transnational managers at Burger King need to encourage a shared vision and personal commitment to integrate the organization at the fundamental level of individual members. This is vital in order to maintain similar standards of quality and efficiency in all their outlets. Elements of the company's administrative heritage must be considered on equal terms with the economic, political, and other external pressures while deciding on configuration, strategies, marketing policies etc. In the current international environment, the company's ability to innovate is rapidly becoming the primary source of competitive success. They must be able to develop a competitive edge in comparison with the others to maintain their market stand. ‘Organisations must become intelligent and remain focused upon the creation and management of knowledge, which forms, forms the basis of competitive advantage.’ (Stonehouse et el, 2001, pg 364) Being a transnational, Burger King must be able to reconcile the diversity, of perspectives and interests, it deliberately fosters. Structural changes need to be adopted wherever necessary. But bearing in mind that it is a blunt instrument that can have a devastating effect on established organisational processes and managers motivation if improperly implemented. ( Bartlett and Ghoshal, 1998)

REFERENCES

BOOKS:

1. George Stonehouse, David Campbell, Jim Hamill, Tony Purdie “Global and Transnational Business-Strategy and Management.” 2nd edition, John Willy and Sons Ltd, England, 2004.

2. Ronald D Michman and Edward M. Mazze, “The Food Industry Wars-Marketing Triumphs and Blunders” Quorum Books United States of America, 1998.

3. Philip R. Harris and Robert T. Moran, “Managing Cultural Differences Leadership Strategies for New World of Business”, Gulf Publishing Company, Texas, 1996.

4. Gerry Johnson and Kevan Scholes, “ Exploring Corporate Strategy Text and Cases”, 5th Edition, Prentice Hall Europe, London, 1999.

5. George Stonehouse, Jim Hamill, David Campbell, Tony Purdie, “Global and Transnational Business-Strategy and Management.” 2nd edition, John Willy and Sons Ltd, England, 2001.

6. Christopher A Bartlett, Sumantra Ghoshal, Julian Birkinshaw, “Transnational management Text, Cases and Readings in Cross Border Management” 4th Edition, McGraw –Hill Companies Inc, Singapore, 2003.

7. Michael L. Tushman and Philip Anderson, “Managing Strategic Innovation and Change A Collection Of Readings”, Oxford University Press United States of America 1997.

8. David C. Thomas, “Readings And Cases In International Management A Cross-Cultural Perspective” Saga Publications Inc, United States of America, 2003.

9. Christopher Bartlett and Sumantra Ghoshal, “ Managing Across Borders” Harvard Business School Press, 1998.

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