Case Study

QUESTION 1

understand writing (the Case) below and answer all the questions that pursue The Challenges Facing Burger King Buyer 3G Capital or resources by Diane Brady When it comes to the pitfalls of functioning of a junk food chain, Burger King has experienced them all: falling profits and sales, annoyed franchise owners, mediocre novelty growing competition, and a razorlike focus on the very clientele who have been hardest hit during the slump. So when a little-known investment outfit called 3G Capital said it would buy the Miami-based chain for about $4 billion on Sept. 2, an obvious query was: why?

Burger King may be the world's No. 2 hamburger chain, but it's a far-away runner-up, with 12,174 eatery's' worldwide vs. 32,466 for McDonald's. McDonald's standards concerning twice the sales volume per U.S. outlets, and its stock has far outperformed that of its contestant on the strength of new create such as coffee drinks and smoothies.

Burger King, in comparison, has seemed fixated on hawking a $1 double cheeseburger-now $1.29 subsequent a bitter lawsuit with franchisees who preserve it's a money loser. The progression has also narrowed its target audience, chasing young men with cheeky ads, while McDonald's has disappeared for broad family plea.

Reserves close to 3G say the partners are betting they'll be able to orderly costs (though no more than 10 percent) and incline up international extension to make the deal work. (3G has also been in the information lately as the employer of Marc Mezvinsky, Chelsea Clinton's new husband.) Most of 3G's currency comes from three Brazilian billionaires: Jorge Paulo Lemann, Marcel Herrmann Telles, and Carlos Alberto da Veiga Sicupira. They've offered shareholders $24 per share, 46 percent more than Burger King's Aug. 31 closing price. If the contract goes through-which is likely, given the hold of the board and the private impartiality firms that hold 31 percent of shares- the chain will go private for the second time in less than a decade. (TPG Capital, Goldman Sachs Capital Partners, and Bain resources bought Burger King from Britain's Diageo for $1.5 billion in 2002 and took it public in 2006.) Financiers then expect 3G to expand in faster-growing marketplace such as Latin America and Asia.

Burger King turned down to mention beyond public releases (PR). In a letter to franchisees, 3G Capital Managing Partner Alex Behring, who will be co-chairman of the series once the deal closes, wrote about 3G's "hands-on management approach" and intention to advance in the brand.

Cost-Cutting Expected

Yet the first priority, given the Brazilian investors' past record, is likely to be a quick push to cut costs. That's positively been the case at Anheuser-Busch Inbev, the world's largest brewer, which Lemann's collection helped create when InBev, the Belgian brewer it had a stake in, completed a hostile takeover of the American brewer two years ago. Lemann, Telles, and da Veiga Sicupira all sit on the board of the merged business. After the merger, former Anheuser-Busch employees soon lost perks ranging from business-class trips and Blackberries' to free cases of beer. About 1,400 quickly lost their jobs. Gone were the lush supplies and private planes. Even Brazilian-born Chief Executive Officer Carlos Brito flies economy class (set).

From side to side a spokesman, 3G issued a statement saying "any latent opportunities for cost efficiencies will be managed with the overall benefit of the concern in mind, without compromising the franchisees." A person familiar with 3G's plans for Burger King says the company is ready for cost-cutting, especially at company-owned bistros, which are typically less profitable than those activated by franchisees.

This person says employment costs are high at these restaurants, as is overhead at the Miami headquarters.
Burger King has had a chaotic history. Under Diageo, a former chain decision-maker says, it was largely left unaccompanied and milked for ready money with the unit treated as an outpost for leaders in training. Once it stride into private equity's hands, the centre of attention switched to differentiating the brand from McDonald's, with a centre of attention on young men, for whom high-calorie burgers and ads with dancing chickens or a creepy-looking king seemed cool. The shareholders also focused quickly on returns: They initially kicked in $325 million of their own money, collecting more than that in extraordinary dividends. With added fees, funds from the initial public offering, and ensues from the current sale, Burger King has been an speculation winner even as its sales lagged following rivals.

Franchisee Woes

Franchisees say they've shouldered the load of efforts by Burger King Management to keep the chain competitive accompanied by the recession. That includes the contentious double cheeseburger. "Margins were crushed," says Steve Lewis, who functions 36 Burger King franchises in the Philadelphia area. Moreover, he says, sales of new, first-rate-priced menu items like the Steakhouse XT burger haven't kept up once the brand stops the publicity of them. "Overall menu expansion has been horrible," Lewis says, adding that the chain has approach up with little besides the bargain burger to woo customers into stores: "We disregarded teenagers, we disregarded families, we disregarded moms." Franchisees have also forgotten about their aging bistros, says Jordan Krolick, president of consulting firm Tound & Drowth, who has supposed senior positions at Arby's and McDonald's. "You can modify the menu, you can change the advertising, but you're not going to get clientele to see those changes devoid of fresh, new, clean-looking facilities," he articulates.
Brand experts put in the chain doesn't match McDonald's for customer loyalty.

Chris Malone, chief advisory officer at Relational Capital Group, recently completed a study that demonstrated McDonald's significantly outperformed in both "warmth" and "competence" in consumers' minds. He argues that Burger King has "put a lot of energy into gimmicky advertising" at the expenditure of products and service. Mark Kalinowski, a forecaster at Janney Montgomery Scott, insert that the brand merely isn't unique in consumers' eyes, noting "it's not sufficient these days to be an alternative to McDonald's."
In spite of its challenges, there are some positives for 3G. For the reason that the chain has stable cash flow and modest capital speculation needs, 3G was able to get JPMorgan Chase and Barclays to lend it about $2.8 billion of the $4 billion price. It's also taking over at a occasion when Burger King is innovating more: On Sept. 7, the chain declared nine new breakfast items, including blueberry biscuits and apann cake platter. And 3G's experience and connections in Brazil could help Burger King make bigger in that market, where many U.S. chains have had complexity finding qualified franchisees.

That won't happen overnight. Yet, sources close to the corporation say, unlike typical private equity firms that often try to squeeze a return on their investment in five years, 3G's investors are enthusiastic to wait a decade to get their money out.
(Source: http://www.xyz.com/magazine/)

Question1

a) Converse the four main types of generic strategies that are available for businesses and identify the generic strategy adopted by Burger King. Sustain your answer with materials from the case.

b) Evaluate Burger King's way of doing business with that of McDonald's, and, propose how the former could improve.

c) Make out and converse the grand strategies and tactics that 3G Capital would most likely adopt for Burger King. prop up your answer with materials from the case.

QUESTION 2

You have recently attended a course on strategic planning. Your director would like you to perk up his knowledge on mission statements. You are therefore expected to prepare a paper covering the subsequent aspects:

(i) What is a Mission statement?

(ii) The purpose of a mission statement, and,

(iii) Necessary components of a mission statement.

QUESTION 3

Using the Value Chain Analysis concept, converse how you would manage the cost competitiveness of a company in its quest to achieve competitive benefit.

QUESTION 4

The Porter's five forces model helps the manager to have an assessment of competition and the strength of the competitive forces. Using suitable instances, converse the five forces model of competition in analyzing the industry.

QUESTION 5

The SWOT analysis is a key tool in determining the company situation analysis. As a good strategist converse the issues that you would look for in conducting a SWOT analysis.