Understanding The Pestle Factors Affecting Burger King

Burger King is the second largest hamburger severing chain in the world (Burgerking, 2017). There more than 11 million guests who visit the restaurants daily across the globe. Founded in 1954, Burger King is also known by the abbreviation BK. It has grown to over 14,000 restaurants worldwide, and about 50% of those stores are located outside the US. Burger king's commitment has defined the brand for over 50 years by having "premium ingredients, signature recipes, and family-friendly dining experiences" (Burgerking, 2017).

As of 2010, Burger King Cooperation is now a privately-held company as it was bought by 3G Capital who are a global multi-million dollar investment company (Burgerking, 2017).

Despite the market constantly changing and intense competition, Burger King's marketing strategy has been successful as 2016 forecast shows, Burger King's revenue has grown over the last three years to 1.14 billion US dollar.

They have the diverse menu with items such as burgers, milkshakes, drinks, etc. being sold (Marketing Mixx, 2017).

Burger King's vision statement is "to be the most profitable QSR business, through a strong franchise system and great people, serving the best burgers in the world" (Lucas, J. R., 1998).

Burger King's mission statement is "offer reasonably priced quality food, served quickly, in attractive, clean surroundings" (Swales, J. M. & Rogers, P. S., 1995).

As you can see above, the UK burger market has been growing consistently over the last few years. The market is currently valued at £3.18bn and is predicted the market will reach £3.3bn by 2019. While a large section of those billions is from large burger giants such as Burger King and McDonald's, Childe, a senior food service analysis at Mintel, says the desire for better food in casual locations and quality of the burger has gained momentum within the couple years (Mintel, 2016).

Once upon a time, Burger King and McDonald's were the main choices, but now there are much more competitors with a multitude in premium burgers. Five Guys, Shake Shack, Byron and Honest Burgers are amongst the few growing rapidly in the UK market (Sedghi, 2015).

• Strength in the industry- Strong franchise network in the UK is considered as the key strength of Burger King in the industry (Lang & Heasman, 2015). Furthermore, efficient acquisition policies and oversees operation have helped the brand to attract more customers in the country. The Strong product line of Burger king is the strength of the company in UK fast food industry.     
• Position in the industry– Strong franchise network in the UK is considered as the key strength of Burger King in the industry. Furthermore, efficient acquisition policies and oversees operation have helped the brand to attract more customers in the country. The Strong product line of Burger king is the strength of the company in UK fast food industry.     

Understand of their market share, competitors and customers

The brand holds a strong share of the market in the UK and its key competitor includes McDonald's, KFC and The Wendy's company. Over the past few years, Burger King has also started facing intense competition from US based burger brands such as Fatburger, BurgerFi, and Smashburger (Nestle, 2013). The brand's key customers include children and youngsters which fall under the category of the middle and upper-income group.    

Analysis External Environment

In the modern era, analysis of external environment has become very important for the growth and success of a business enterprise. External factors such as social, political, legal, environmental etc. are beyond the control of a company and have direct or indirect impact on operations and practises. For examples changes in laws and regulations force businesses to carry out changes in existing practises and adhere to the same in best possible manner.  

Situation

The fast food industry is growing drastically throughout the United Kingdom as well as the number of competitors in the industry. To stay on top of this, analyzing the external environment is significant to ensure the business runs smoothly and long-term profits continue. Evaluating the fast food industry as a whole, detecting the attractiveness of the market, overcoming threats and seeing possible opportunities. Burger King is getting indirectly affected by different macro environmental factors. For example, the changes in tax rates and government policies encourage the brand to make some modification in its existing practices (Bernhardt et al. 2013)

Pestle

In order to examine macro environmental factors and their impact on organization, tools such as PESTLE analysis can be taken into consideration. Furthermore, the tool lays emphasis on examining six different factors which can have either direct or indirect impact on operations and practises of a business. The main benefit of using PESTLE analysis as a tool is that it helps companies to reduce the negative impact which can be caused by macro environmental factors. On the other side of this, the tool is also effective in understanding the overall potential of new markets.

The PESTLE analysis is one of the most vital analytical tools to use when analyzing the external market of an industry. It consists of political, economic, social, technological, environmental and legal analysis. It can then identify the trends and key drivers of the fast food industry.    

For instances, political factors could be the threat to the fast food industry due to government regulation on the packaging. Economic factors would lead the financial instability inside the industry through the recession of joblessness rate and high housing cost.

Social factors could introduce the health awareness tendencies among customers, technological factors increase the publicity about the fast industry through social media and relaxation level among customers, environmental factors could lead people to use environmentally friendly material and legal factors would promote campaign regulations and health complaints among consumers.

Table 1 - Analysis’s the macro

Sourced by: (Harrington et al. 2017).

The two most important factors Burger King has to consider is the social, legal and political aspects.

Political – It can be stated that political changes such as modifications in public health policies have affected the sales and profitability of Burger King. The brand is now required to promote products which are healthy.

Social – the changing lifestyle of people, has also affected the plans and operating policies of the selected business enterprise (Eades et al. 2017). In the market such as the UK, Burger King is affected by increasing health awareness and wealth gap.    

Legal – legal practices such as the introduction of new minimum wages rate have forced the brand to make sure changes in existing policies related to pay. In addition to this, Burger King's operations are also affected by Health regulations in local schools and workshops.

Changing customer needs and demand can be considered as the key driver of change for the brand like Burger King. In the modern era, people in the market have become very conscious and careful about their eating habits. Nowadays, people usually avoid consuming food which contains fat, high oil, and cholesterol. Furthermore, burgers and buns are also avoided by individuals (Boje, Haley and Saylors, 2016). It has forced Burger King to carry out certain changes in its existing product line and come up with products which are healthy.

Situation analysis

 Changing environmental policies has also emerged as a key driver of change for burger king. The brand is now required to change its existing operations and adopt for practices which do not have any negative impact on the environment. Here, Burger King needs to focus on low energy consumption, waste reduction, and eco-friendly packaging. These changes will help the brand in long term sustainability and will also provide the competitive advantage over the other market players.

For instances political factors could be threat for the fast food industry due to government regulation on packaging, economical factors would lead the financial instability inside the industry through the recession of joblessness rate and high housing cost, social factors could introduce the health awareness tendencies among customers, technological factors increase the publicity about the fast industry through social media and relaxation level among customers, environmental factors could lead people to use environmentally friendly material and legal factors would promote campaign regulations and health complaints among consumers.

The trend is referred to the upward or downwards direction through the modification or development based on the preferences. The identified patterns (shown in figure 3) are analyzed in the fast food industry through the application of PESTLE tool.

The key drivers can be driven the consumers to make the profit and running the fast food business smoothly. The following primary key drivers (shown in figure 4) push the consumers to the fast food industry.

There are numerous firms in the fast food industry in the United Kingdom. McDonald's, KFC, Domino's Pizza, Burger King, Pizza Hut, many Subway are the most typical firms within the fast food industry in the United Kingdom. Each firm generates their key drivers based on their business strategies model. However, every company follows appropriate strategies to attract the consumers to their firm to run their business successfully along with profit. It is also noted that fast food industry is demanding rather than traditional restaurant due to quick service and ready to eat where consumers save their time. Hendry et al. (2015) reported that recently fast food industry customized their menu (not using Trans Fatty acids) to avoid dropping out the number of consumers in their industry due to lifestyle diseases for instances Coronary Disease, Obesity, and Diabetic Mellitus. Moreover, lowering the food price could be adopted in term of the recession of the economy or employment rate. Therefore, the fast food industry would be stable, and further market growth could be feasible with the changes of the population age group. 

The internal review of Burger King Corporation is vital as well as identifying the quality and core competencies to distinguish them from the competitors.  

Porter Five force model can be defined as a useful framework which is used to identify the overall competitiveness of a particular industry. Furthermore, it assists in determining the attractiveness of the industry and how different factors affect operations of a business enterprise.   

Table 1 – Porter five forces

Analysis External Environment

Analysis of internal environment

The analysis of internal environment helps organization to identify its key strength and weakness. It can be stated that business should carry out internal environmental analysis at regular intervals in order to stay competitive in the marketplace. On the basis of information collected through analysis strategies can be developed to maintain existing strengths and overcome identified weaknesses.   

The strategic resource and capability analysis helps companies to identify the effectiveness of existing resources and overall capabilities. The tool provides information about the fact that how capable a firm is in terms of converting resources into capabilities to gain advantage in the marketplace.

This table leads to

• understanding the core competency then competitive advantage
• Ability to survive
• Attractiveness in the market
• Innovation
• CC core competency turned into CA competitive advantage
• Something that cannot be copied over night 

Value chain analysis 

Primary activities

• Inbound logistics: Burger King purchases raw materials from its fixed suppliers. The key suppliers offer all the items used in the production of burger, fries, etc.
• Operations: A well-designed kitchen where employees are assigned different responsibilities  such as one individual prepare burger through machine, preparation of French fries, milk shake machine, counters where customers place order.
• Outbound logistics: Burger King is committed to delivering high quality of food items such as hamburger fries etc. The company has taken a large number of initiatives to reduce its environmental impact (Saad &  Badran, 2017).  Burger King works with its suppliers, employees and franchisees for satisfying customers need
• Marketing and sales: The campaigns developed by Burger King are capable enough in attracting customers. Advertising with the help of print media has supported in enhancing sales
• Service: Scratch card offers and free Wifi service has allowed in serving customers.

Support activities

• Firm infrastructure: Burger king's infrastructure is quite advanced where it provides eco-friendly restaurants which are convenient for customers.
• Human resource management: The work environment delivered by Burger King to its employees is quite convenient where they prefer to serve customers in the way they expect (Zabeen, Wei & Lu, 2016).
• Technological development: In near future, Burger King will focus on modernized restaurants
• Procurement:Burger king relies on effective procurement programs through which supply chain of business is also managed.

VRIO framework

• Valuable: The resource which values a lot in case of Burger King involves human resource, infrastructure, technology and the quality of products offered.
• Rare: All the resources present with Burger King are limited where they cannot be used by other organizations for serving customers (Zafar, Ghazi & Akram, 2016).
• Costly to imitate: Core competency present with Burger King to imitate as company has well maintained its reputation in the market and is known for its quality products.
• Organized: All the resources are arranged by the company in a proper manner so that its competitors may not take advantage of it.  

SWOT and TOWS analysis  

(Sourced from, Sedghi, 2015 and Mintel). 

From the above mentioned table, it can be inferred that Bryon and The Gourmet Burger has emerged as two major competitors of Burger King. Since, their establishment, the above mentioned two brands has grown really well in the UK market. At present Bryon is operating with 50 stores whereas The Gourmet Burger has 66 stores in the country. Furthermore, both the brands have adopted for low price strategy and this has affected sales and profit of Burger King to a great extent. Apart from this, Five guys, Shake shack and Honest Burger are other competitors of Burger King. It can be stated that these brands are carrying out effective marketing of their products and services. Furthermore, the above mentioned brands are also focusing on enhancing the overall quality of services and products delivered.   

Ansoff analysis 

Above shown is the applicability of Ansoff matrix on Burger King which represents that the new strategy of the business is product development where the company has to bring changes in its existing product range (Hurwitz, Montague & Wartella, 2017). Apart from this, promotional tools have to be changed so that customers can be attracted in short period. Further, expanding into the Indian market will also provide ample of opportunities to business, and in turn, all the desired goals can be accomplished quickly.

Segmentation: In UK market Burger King has segmented its market by age and their lifestyle. This segmentation criterion has allowed Burger king to target its customers properly. The company is not able to target people of every group, and due to this reason, youngsters are targeted by Burger King (Kotler, Kartajaya & Setiawan, 2016).

Audience: The primary target market of Burger King is youngsters who prefer to consume products such as hamburger, fries, etc.

Positioning: Burger King has positioned itself traditionally with the help of statements such as ("Have It Your Way"). This positioning statement has allowed the company to attract a large number of customers and in turn has enhanced the level of brand loyalty also (Daabes & Kharbat, 2017). So, this represents the effectiveness of positioning statement where products of Burger King are most popular in the market. The company can compete with its major competitors such as McDonalds etc.

Pestle

Based on the above analysis, the following short term objectives have been put in place to achieve the objectives by 2018.

• To increase the healthy choices available for customers by 5% amongst the target audience of 18-30yrs in major cities like London, across the UK by July 2018.
• To increase the delivery option for customers by 10% amongst the target audience of 18-30yrs in major cities like London, across the UK by July 2018.

Marketing objective 

• To increase the market share in the UK by 3% by the end of July 2018
• To increase the revenue (sales) by 2% by the end of July 2018

Financial objectives 

• To increase the net profit increase in the UK by 2% by the end of July 2018
• To reduce the operational cost in the UK

7p’s table 

• Product: The key products offered by Burger kind involve hamburgers, fries, hash browns, onion rings, shakes, cookies, etc. The ranges of products offered are effective enough in attracting customers.
• Price: Company has adopted competitive pricing strategy so as to compete with the major competitor such as burger king in the market. Burger King has set prices which lie under consumer purchasing power in the UK (Harrington et al.  2017).
• Place: Burger king has outlet everywhere in the global market. All the stores are operated by the company, and it has become one of the main sources of attraction.
• Promotion: Different strategies for development have been undertaken such as the advertisement, refurbishment of agencies. Along with this, the company has launched many campaigns with the slogan "Have It Your Way." Scratch card schemes of Burger King in the UK are also popular
• People: All the employees working in Burger King UK are well trained where they know the way to serve customers (Kraak et al.2017). It is one of the main reasons behind the rise in the level of customer satisfaction.
• Processes: Burger King methods are flexible through which services are rendered to customers in the lesser period. Customers are not required to be in the queue for the longer period, and their orders are delivered in minimum time.
• Physical evidence: The internal structure of Burger King's outlet is quite attractive where ambiance and another sort of facilities attract customers.

For smooth functioning of business operations, Burger King is required to take measures. Firstly, company to search for the areas where cost can be monitored, and this can allow in enhancing the profit margin. Further, another control measure that can be taken involves optimum utilization of resources such as human and technology. Taking control measures can allow in serving customers and can act as the development tool for the business in the market. Apart from this, some other measures that can be taken involve training of employees, conducting market research, etc.  

• It can be recommended that Burger King should carry out market research at regular intervals to identify changing customer demand and market trends
  
  
• · It can also be suggested that aggressive marketing should be carried out by Burger King to create demand for its products and services among UK market
  
  
• · It can be recommended that Burger King can introduce the new range of burgers which are free from fat, cholesterol and are healthy. It will help in attracting more customers.

Conclusion 

From the above research, it can be concluded that Burger King is getting affected by macro environmental factors. Furthermore, the bargaining power of customers and competition among fast food industry of UK is very high. It has affected the sales and profits of the selected business enterprise. It can also be concluded that customers are now looking forward to products which are healthy and causes less harm. Therefore, Burger King needs to make certain changes in its product line and should come up with healthier products.

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