According to Omahe (2005), over the past 20 years, we have been gradually noticing the emergence of a global village. The world is becoming increasingly global: major examples are the trends, the way of thinking and the needs. Nowadays, it is easier to have products and services from other countries due to this globalization. The competition was never so hard, or the price war so fierce. Companies had to change strategies. According to Porter (1987), a global company is one in which competitive advantage can be achieved by integrating and leveraging operations on a worldwide scale. There are many reasons for a company to be global. Worldwide expansion brings new and more profitable areas, encourages a boost of the firm's competitiveness and helps access to new creations, manufacturing innovations and the latest technology (Hollensen). The company has to find and satisfy global customers' needs, better than other competitor companies, and coordinate its activities according to the global environment.
This essay will focus on the American fast-food company, Burger King. We will examine if there is an opportunity for the company to be setup in the French market. Before starting the analysis of the market and opportunities to be set up in France, we need to explain the particularity of Burger King in France. The company used to be in France in 1980 for 17 years. But in 1997 they decided to leave the French market. There are many reasons behind this failure: firstly because Burger-King restaurants were mostly around Paris and secondly because they were few and small in comparison to its competitors. Burger-King was not enough strong against its competitors so it had to leave France. But, in business, we say that nothing is impossible. Through this essay, we will see if Burger-King could be able to return to France.
Burger King is an American company, the world's second largest company of fast food hamburger restaurant chains. It employs 39.000 employees, in about 76 countries. It is worth noticing that 2/3 of Burger King Restaurants are located in North America. In addition, in 12,174 restaurants across the world, 10,787 are owned by independent franchisees (Datamonitor). Burger-King is located in many countries in the world. This globalization brings many advantages such as demand spillover, global customers and scale economies (Johansson, p. 443, 2009).
Burger King's revenue (global) was $2,502.2 m in 2010. We can notice that this is less than 2009. This can be explained by the global crisis, which affected all activity sectors. People have less money than before to spend on eating-out, and for this reason they prefer to eat at home (cheaper, in general). Burger King is the second worldwide largest fast-food company, followed by Subway and Yum! Brands. The leader is McDonald's Corporation (Datamonitor).
[...] With a lower rate, Burger King will be able to offer lower prices, creating jobs and increase salaries (Euromonitor, 2009). With a GDP per capita (ppp) of $33,000, France has got the 39th position in the Central Intelligence Agency (2010) (in comparison to it, UK is 37 and US are 11). Unemployment rate in 2011 is and is forecasted to decrease. In 2011, France recorded an inflation of Chained fast food market value is forecasted to increase by from 2009 to 2014 (Datamonitor, 2009). [...]
[...] By using franchising, Burger King has low risks of failure, with “high power of control over its marketing and brand image” (Johansson, p 161, 2009). Franchising is a great opportunity to enter in a country. According to Hollensen (2007), «hierarchical mode is the entry mode where the firm completely owns and control the foreign entry mode and organization”. Furthermore, franchising brings a standardisation in order to promote globally advertising, product lines and customers services (Johansson p 161, 2009). But, country culture can be a brake at this marketing globalisation. [...]
[...] Burger King has to be very careful with what had happened 10 years ago in France. The company shouldn't do the same mistakes as Mc Donald's did. Burger King will have to find French suppliers, with high quality products, if they want to succeed in French market. As we observed previously, power of suppliers is low. This means that Burger King will be able to choose the more efficient supplier. The company had some difficulties with regards to its suppliers in US with the PETA according to the way of producing its meat, and the treatment of animals. [...]
[...] Burger King can be defined as a “quick service restaurant”, specified by Datamonitor as “locations where the primary function is to provide full meals but where table service is not offered”. The fast food market is segmented into four categories: QSR, takeaways, mobile and streets vendors and finally, leisure locations. QSR represents of the French fast food markets. The other three food retailers can be defined as Burger King's direct competitors. QSR, Takeaways, Mobile & street vendors are the main competitors for burger King. [...]
[...] Burger King will have feroce competitors, espacialy Mc Donald's which is good positionned and has a great market share. Burger King will have to find its market share between many competitors and substitutes. (Burger King lost its market share in favour of Mc Donald's and Quick restaurants). By my own assumption, I think that Burger King will try to come in France. But if the company stays as it is at the moment (same products, way of thinking, management), there is no possibilities to succeed in the French market. [...]
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