What Is Burger King's Core Competency? How Does It Relate to Its Chosen Strategy?

1. What is Burger King's core competency? How does it relate to its chosen strategy?

Daniels et al. define a core competence as "a special outlook, skill, capability, or technology that runs through the firm's operations, weaving together disparate value activities into an integrated value chain." According to Kotler and Keller (2009), the attributes of a core competence are that it is a source of competitive advantage while contributing to the perceived customer benefits and it is difficult for competitors to imitate. Burger King's core competency is its flame-broiled method of cooking hamburgers, opposed to its main competitor McDonald's which uses grilling as a preparation method. But for Burger King, it is not just about the way it prepares its burgers; it is also about giving the customers the opportunity to choose how they want their burgers, and so the company's promise to customers is: "Have it your way." This motto represents Burger King's strategy of offering customized menu choices to meet its customer's various diets and lifestyles.

Daniels et al. define strategy as the planning managers do to attract customers, operate efficiently, compete effectively, and create value. This effort helps managers to sustain the company's competitive position within the industry (Daniels et al., 2011). According to its website, Burger King's commitment is to food (customized, nutritious, quality meals), people (deliver value to shareholders, customers, and employees), environment (reduce the negative impact on the environment by finding solutions to reduce energy use and recycle, and involving all parts of its value chain in this process), and corporate governance (encourage ethical and lawful behavior, accountability and corporate responsibility in their policies).

It is indisputable that Burger King is one of the top fast food restaurant chains and that it has stood up by its commitments. Yet, in comparison with its competitor McDonald's, Burger King's strategy has not been helping the company remain very competitive. CNN Money points out how during the recession, Burger King's CEO John Chidsey chose to adopt a "barbell" strategy and sell a double cheeseburger for one dollar in addition to continuing to offer premium items on its menu, while its main competitor enlarged its value menu. This approach failed to have the outcome the CEO desired, and as a result enraged franchisees who filed lawsuits against the company for being forced to sell the burgers below their cost (CNN Money, 2010). This is just one of many examples of how Burger King has struggled in a tough competitive global market.

2. How would you explain how Burger King has decided to configure and coordinate its value chain? Which of Burger King's value chain activities create the most value for the company?

According to Daniels et al., a value chain is comprised of all "activities the company performs to design, produce, market, distribute, and support a product." The management of the value chain includes the configuration and coordination of these value creating activities (Daniels et al., 2011). In the case of Burger King, the value chain configuration revolves around providing "high-quality, great-tasting, affordable food" (Burger King, 2012). The company operates more than 12,000 restaurants in the Unites States and 78 additional countries. Of these restaurants, only 12% are company owned and the rest are owned and operated by independent franchisees. This type of operation adds a lot of value to the company which offers to their world-wide partners over 50 years of experience and achievements in the industry through a variety of support programs like training, advertising and operations. More than this, according to South Florida Business Journal, in early Aril 2012, Burger King announced that is planning to sell the majority of its restaurants and keep only 100 in the Miami area and focus more on international expansion, brand development and marketing, and capital allocation. The reason for this change was, according to William Ackman, the co-founder of Justice Holdings, which bough a 29% share in the company, that "Franchisees are better of running restaurants than big corporations. Franchisees have a better knowledge of the local market, are entrepreneurial and have skin in the game" (South Florida Business Journal, 2012).

It appears that Burger King has also learned some valuable lessons from its competitor's failures and from their own expansion in Brazil and other countires. In 2009, Burger King's strategy was to work on developing a supply chain infrastructure before entering its operations; to build a local management team which can better handle its relationship with stakeholders; to focus on expansion in and around major cities; to create a local office in major markets; to develop a base of local suppliers that meet the company's requirements; and to chose franchise operators which have capital and experience in the restaurant industry (Daniels et al., 2011).

3. Burger King globally expanded later than its main competitor. What advantages and disadvantages has this created?

Burger King started its international expansion later than their main competitor McDonald's, but nevertheless the company was able to use this delay as an advantage. According to Daniels et al., following a competitor into a new market may offer a company a "free ride" because the competitor will support the price of evaluating the market and building market acceptance. The competitor will also build the demand for a product and will create the supply chain infrastructure. In these instances, Burger King was able to concentrate on promoting its products. But, like with any strategy, there are also disadvantages to a late entry: few suppliers to choose from, the competitor(s) already gained leadership and loyalty from the local market, and it secured the best resources, like location, suppliers, and partners. It appears though that, Burger King was able to turn this situation around in its favor in Latin America and Caribbean, where is currently leading McDonald's in 15 of 27 markets (Daniels et al., 2011).

4. When entering another country, discuss advantages and disadvantages that an international restaurant company, specifically Burger King, would have in comparison with a local company in that market.

A fast food restaurant company, like Burger King, operating abroad will have some advantages but also disadvantages compared with a local owned company. These advantages are:

* Ability to transfer strong capital, technological and entrepreneurship capabilities;

* Ability