Management of Organizational Behaviour

Project

Samuel Jaya Abishek

Roll. No: 131

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Table of Contents
CONTENT Page.no.
Introduction to Burger King 3
Mission, Vision, Objectives and 5
Goals.
Main Organizational Characteristics 6
SWOT Analysis 8
Organizational Challenges and 12
Leadership (case study)

Analysis of Leadership challenge 15

Competing with MacDonald’s as 16

Detrimental Priority of Burger King’s
Organizational Management (case study)

A Strategy for Overcoming the 20

Challenge

Conclusion 23
Resource 26

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Burger King Corporation

Burger King originated from Jacksonville, Florida,

in 1953, after Keith Kramer and Matthew Burns
created an idea inspired by the McDonald's
restaurant. Burger King was initially named by
Keith and Matthew with Insta-Burger King after
buying a special grill machine or the Insta-Broiler.
The restaurant has since grown into several
locations, and James Macklemore and David
Edgerton started purchasing franchises in 1954 in
Miami. These two individuals have made Miami,
through the success of their franchise, an attractive
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location for business owners. Furthermore, they
have invented the flame broiler and eliminated the
original Insta-Broiler (Daszkowski, D., 2018) On
the other hand, Kramer and Burns have
experienced financial trouble because their overall
sales have declined in 1959. As a result,
Macklemore and Edgerton bought the entire
company to sustain the operation. Later, in 1961,
Burger King was created with its new signature
product, the Whopper. The new burger has spread
popularity all over the United States. However,
Burger King was bought by the Pillsbury
Company for 18 million USD. The chain has since
come second to McDonalds (Daszkowski, D.,
2018).
Burger King is constantly encountering
competitors, such as Wendy's and Kentucky Fried
Chicken. Launching a new line of a product would
also cause other companies to launch their own.
The company partnered with Walt Disney
Company including its Disney Films. Burger King
has now changed its focus and expands on a
worldwide scope. In 2009 the franchised Burger
King restaurant is 10,656, and 1,422 company-
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owned restaurants. However, in 2019 the
franchisees have grown to 18,786, and the
company-owned branches were reduced to 52
(Lock, S., 2020). This allows the core of the
Burger King Corporation to focus on its growth
and major decision making and allow the
franchisees to generate revenues. In the
Philippines, the Burger King franchises were
bought by the Jollibee Foods Corporation. As of
2011, with 23 restaurants, Burger King has
generated annual revenue of 800 million

Mission
Offer reasonably priced quality food, served
quickly, in attractive, clean surroundings.

Vision
To be the most profitable QSR business, through a
strong franchise system and great
people, serving the best burgers in the world.

Objectives
• Achieve leadership in the global quick service
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restaurant (QSR) industry.
• Establish a franchise system.
• Market the best burgers in the world.
• Employ and work with great people.

Goals
• Offer quality food with premium ingredients and
signature recipes under reasonable
prices.
• Provide quick services and a family-friendly
dining experience.
• Create a surrounding that is attractive and
hygienic.

Three main characteristics:

Global centralization, Functional groups, and
Geographic Divisions

Global Centralization is the core management of

the organization; it conducts the major decision
makings. Burger King aims to improve its
management effectiveness and performance.

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Functional Groups or the departments of Burger
King. It includes the Senior Vice President (SVP)
for Global Operations, Executive Vice President
(EVP) for Finance, and EVP as the Global Chief
Marketing Officer.

Geographic Divisions is the division of Burger

King's operation based on its geographic location,
which is headed by the EVP. The Asia Pacific,
Latin America and the Caribbean, Europe Middle
East, and Africa, and North America are the
operational division of the organization.

Burger King’s strategy is to dominate globally –

goal- in the fast-food market –scope - by having
low cost and premium food items and efficiently
producing them -competitive advantage (Mitchell).
They believed that low prices would create a
higher demand for their product - logic. Before
they decided to restructure Burger King was
structured traditionally with a full executive team,
cubicles and daily cross-functional meetings. The
company decided to change the architecture of

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their firm and use that to alter their company
culture. They combined their global brand
marketing department and their operations
department. They believed that this would lead to
“faster decision-making, increases regional
accountability, and” would ensure…show more
content… This being said, Burger King’s
restructuring followed both theories of change –
Theory O and Theory E. Theory O was more
prevalent and a larger objective for Burger King,
as the key goal was to develop organization
capabilities and culture, which would ideally
produce sustained high performance. One way
they tried to accomplish this was by changing the
desk layout, to make it simple and informal, with
no dividers or ‘special’ offices. While Theory O
was the key objective for Burger King, it cannot be
ignored that they also used the Theory E approach,
which is based more on results-driven actions and
economic value. Burger King assumed this theory
with their layoffs of several hundred employees.

SWOT Analysis
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Strength
 Partnership with well-known companies
Burger King is in a partnership with Coca-Cola,
Dr. Peppers and Seven up. The drinks that they
serve in their restaurants are the products of the
company they collaborate with.
 b. High rank position in the market
Burger King is well-known in all countries
because of their products and specialties and the
company have/had lots of branches. It is ranked as
the second largest fast food hamburger chain in the
world.
c. Low-capital Requirement
Because of high percentage of franchise, burger
king requires a lower capital compared to their

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competitors. The Burger King system is funded by

franchisees.

 Weaknesses
 Not as Internationally-known as Mc Donald’s
Unlike McDonald’s, the Burger King’s
International presence is very weak. 60% of their
restaurants are only located in the United States.
They’re not as known as McDonald’s in other
countries like in Asia and Middle East.
 b. Limited Marketing Strategies Burger King has
always been focused on marketing to young men,
with their high- calorie menu. On the other hand,
McDonald’s had always emphasized marketing to
families.
c. A Smattering of revenue resources
Burger King generates revenue mostly from
franchising their brand. They generate revenue
from three sources:
(1) retail sales.

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(2) franchising.
(3) income from leased franchise properties.

Opportunities

a. Collaboration with better partners

Burger King may be partnered up with stronger
companies to reach new customers. This is
possible by organizing joint marketing
programmes and promotion.

b.Market Development
Burger King is planning to expand its business
internationally especially on Asia and Middle East.
They have the potential to attract new consumers
in places where it has a small presence.

c. Diversification of Menu
Burger King should take advantage of the growing
numbers of health-enthusiasts by offering low
calorie menu, like salad and sugar-free drinks. By
introducing a healthier menu.

Threat
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Poor management
Burger King has been handled by too many people
making the consumers doubt their consistency
with the company goal and objectives. It always
leads to poor operating performance which results
to financial difficulties because of poor leadership
and negligence by the management.
 b. Increasing number of competitors.
Burger King must fight to stay in their position as
the second largest hamburger chain in the world
because of increasing number of competitors
making it hard for them to introduce new menu
items because of the vast choices already provided
by their competitors. It also makes it hard for them
because some of the competitors serve high quality
foods with lower prices.
c. Increasing concern to health and fitness.
 A health bill has been passed requiring restaurants
to list the calorie content of menu items. This is
considered a threat to Burger King because of their
high-calorie menu. If health-conscious consumers
see the calorie count of their menu, they might go
to other local competitors who serve the same
items as Burger King but with healthier benefits.
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Organizational Challenges and Leadership
(case study)
Burger King Company’s history began in 1953
with a restaurant chain called Insta-Burger King in
Jacksonville, Florida (Smith, 2006). Insta-Burger
King encountered financial problems in 1954, and
two entrepreneurs David Edgerton and James
Macklemore acquired the company and renamed it
to “Burger King” (Smith, 2006). In the next half of
the century, the company changed owners four
times. The third owner was a group of TPG
Capital, Bain Capital, and Goldman Sachs Capital
Partners in 2002, who made the company public
(Smith, 2006). In late 2010, a Brazilian company
3G Capital has acquired a controlling stake of
Burger King of 3.26 billion US dollars (Smithson,
2015). The new owners immediately began to
restructure the company to improve its condition.
As a result, 3G, together with its partner company,
Berkshire Hathaway, merged Burger King and the
Canadian network of eateries Tim Hortons. Capital
investment fund 3G, owned by Brazilian
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businessman Jorge Lehmann and partners, has
acquired 100% of Burger King Holdings Inc.
Immediately after that, Burger King left the stock
exchange, as the new shareholders decided to
restructure the company (Smithson, 2015). The
network felt to the third place among the fast-food
restaurants and was behind Wendy’s and
McDonald’s after a year of being under the
leadership of 3G Capital. However, But soon it
gained promising indicators: the net profit of the
company grew by 34% up to $ 118 million
(Smithson, 2015).
One of the reasons for success was innovations in
the menu. As a part of the new strategy, the
network management has decided to abandon
high-calorie foods and to attract a wider audience
of supporters by introducing a healthy lifestyle. So
new things appeared in the menu such as salads,
rolls, chicken nuggets, smoothies, and frappe, as
well as low-calorie potatoes Satisfies, which
allegedly contain 40% less fat and 30% fewer
calories than comparable portions of potato in
other fast-food establishments (Smithson, 2015).

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By the end of fiscal year 2013 Burger King
reported that it had 13 thousand restaurants in 79
countries (Smithson, 2015). Among them, 66% of
restaurants were in the US, and private traders
controlled 99% of them. In 2013, new owners of
Burger King Restaurants have turned to a model of
complete franchise (Smithson, 2015). In order to
expand the scale of activities the company
historically uses different versions of the franchise.
Methods of franchisees licensing differ depending
on the region. At the same time, some local
franchisors (referred to as master franchisors) are
responsible for the sale of sub-licenses on their
own behalf. The company’s relationships with its
franchisees are not always harmonious. Sometimes
there are numerous problems, and in some cases,
the company and its franchisees solve their
conflicts in the court.

Analysis of Leadership challenge

Currently Burger King has several problems that
the leadership of the organization encounters.
They include decrease in popularity, because the
company does not propose to the young generation
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the things it wants (healthy dining options); issues
with franchisors; lower quality or service in
comparison to the competitors; instability in
leadership, constant changes in it; numerous law
issues.
However, the main challenge that is detrimental
for Burger King is discrepancies in top
management, concerning the future strategy of
Burger King on the world market. The company
does not have a clear vision, and even historically,
it has had constant changes. Since 1954, the
company was sold to Pillsbury, Grand Met, TPG
Capital, Goldman Sachs, so the style of
management was constantly changing. The very
first vector of development was aimed at
competition with MacDonald’s. It prevented
Burger King from elaborating its own unique
strategy and focusing on it.

Competing with MacDonald’s as

Detrimental Priority of Burger King’s
Organizational Management

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Since 1958, people began to recognize Burger
King through advertising on television
channels and radio. The first commercial was
on air in Miami. Then the company started to
establish a series of network extensions, so
only by 1967, the company has already had
274 restaurants (Smith, 2006). At the end of
the 1960’s franchise restaurant chain Burger
King began to decline, as the company
provided different levels of service and quality
of the products. It was a serious drawback to
the entire network, which claimed that in any
of the restaurant’s visitors would get the same
level of service. At the same time, many
network partners tried to buy the company, but
after receiving a series of refusals, they started
to buy the franchises.
There was an attempt of total control by Burger
King that the company’s leadership started to
impose after the main competitor hired a talented
manager, Donald Smith. It should be noted that in
a short time McDonald’s has developed rapidly
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and quickly reached the top in this market
segment. Only when Burger King’s manager
allowed a complete freedom of action, the
company started to create uniform standards for all
its products and services. When Donald Smith
moved to Burger King, he immediately faced the
problem of land ownership, as at that moment only
a third of all stores belonged to the network,
therefore, it was impossible to establish control
over all the restaurants, which placed the company
in a difficult position.
For a success and quality control, Burger King
designed supervising regional offices, which
observed the work of several restaurants, ensuring
that they have the finest performance. When Smith
was a CEO, Burger King Chain began to expand
and has become a world-wide network of fast-food
restaurants. During 10 successful years of Smith’s
working as a leader, new restaurants have
appeared in 30 countries around the world
(Sharon, 2010). Since 1974, Burger King’s
management system implemented unplanned two-
week test operation of each franchise, the system

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of which has been rewritten from the McDonald’s
network. In 1980’s, Burger King was expanding
its range of products, so there appeared breakfasts
immediately after their introduction into another
network. When in 1980, Smith left the Burger
King, the company was in a stagnant position, the
managerial system was changing and all that had a
negative impact on the atmosphere in the Burger
King team and the ability to move forward in the
fast-food market (Sharon, 2010).
Since 1985, the company has been gaining
momentum in the structure of healthy and
beneficial food, so it opened sat bars, and an
assortment of fresh vegetables appeared in more
restaurants. The company under the leadership of
Donald Smith transformed the network and
became strong enough to introduce uniform high
standards for its services and the overall style of
the work, but Burger King still could not reach the
level of McDonald’s. The problems of the past
continue to bother the company today, but not to
such an extent.

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Subsequent advertising of Burger King Company
was not so successful. Moreover, many of the
commercials, shown on TV, became failures, even
those, in which celebrities participated. Perhaps it
was the worst time in the history of the existence
of the chain. In 1989, the restaurant chain Burger
King was sold to the Grand Met Company, which
was a good deal for both sides (Danker, 2013). Of
course, Grand Met had practically ruined the
condition of the largest fast-food chain, but after a
while, it managed to adjust operation of the entire
network, which made it possible to open new
restaurants in 50 countries, which greatly
increased the total income (Danker, 2013).

A Strategy for Overcoming the Challenge

The challenge of instability of leadership that leads
to the absence of a company’s strategy is quite
difficult to overcome. First, Burger King has over
15000 restaurants in many countries. Then, it is the
unstable financial situation, which makes the
company to look for new investors. Finally,

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changing the whole strategy of the company may
mean rebranding that is quite risky. However, the
company should take certain measures in order to
maintain and improve its position.
First, the company should have unchangeable
CEO’s, leaders and stakeholders. There should be
one leader or several leaders with the same vision
of the company. Nowadays, Burger King is in a
difficult condition that requires constant
reorganization, modification, and innovation.
These requirements are put forward primarily by
factors of the environment such as the stiff
competition with other fast-food chains, the
globalization of business, changes in legislation
and legal requirements, changes in technology, and
the reduction of products life cycle. Skilful use of
new realities and adequate response to the
challenge of the environment is favourable for the
development, but the same factors can lead to a
disaster, when the managers of organizations
incorrectly interpret them, so that they do not lead
to the formation of rapid responses. In order to
survive, Burger King needs to focus on achieving

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the highest quality, high market mobility, and
lower prices. Providing only one or two of these
key components does not usually lead to success.
In addition, the company must also consider the
changes of values and interests of today’s
employees, who demand a greater involvement in
the affairs of the organization, greater flexibility,
and greater autonomy. The modern leader of the
organization should focus on inspiring employees
to achieve a common goal. The leader of Burger
King needs to master the skill of creating a unified
team out of many talented and ambitious
individuals, who work in the company.
Additionally, Burger King should create a code of
quality and behaviour. All staff members should
learn it, and there should be a constant supervision
of adhering to the rules and regulations written in
the code. The customer must be confident that
when going to Burger King Restaurant, he or she
will receive the best service and food quality, and
it will not differ from other Burger King
restaurants. Stability in meeting customers’
expectations and high quality is necessary for

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success. Moreover, code with written regulations
may include rules on environment sustainability
that would prevent from having legal issues. In
general, becoming sustainable is a must for
modern organization. Probably, these innovations
may demand painstaking efforts from the
company, but it is now in a financial and
organizational deadlock. Successful advertising
will be required.

Conclusion
Through this case study about the major business
process of Burger King, I was able to determine
that the growth of an organization is a significant
effect of properly formalizing the processes of an
organization. Burger King improved its franchising
process to acquire a revenue
earning that was made by their client; as a result,
the core of Burger King is only required to focus
on planning and making major decision to further
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improve Burger King, such as its operation,
technology implementations, and global presence.
If Burger King would still own a huge part of
Burger King branches, they would need to deal
with further problems of a branch owner.
On the other hand, I have also learned that a
successful company does not start big; for
example, Burger King started as a small two-
person owned inspiration from McDonald's. The
succeeding owners of Burger King were able to
capitalize on its brand to the American local
market and outplay its inspiration McDonald's
through the launch of creative and marketable
products, such as the Whopper. Additionally,
serving the local market of America was not the
endpoint of Burger King, they further focused on
expanding globally and improving their global
presence, they have expanded to multiple

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continents, South America, Europe, Africa, and
Asia. Significantly, I have ascertained that the
growth of Burger King has to do with its
adaptation to evolving technology the efficiently
improves its business processes. For instance, if
Burger King Corporation did not start to approve
and implement POS vendors, such as Oracle and
Secom Systems Inc., the franchise owners of
Burger King will have difficulty in processing
customer orders, and at the same time managing
their inventory and cash records auditing.
Incorrect auditing will lead to an incorrect report
that will alert the head Burger King Corporation
and will damage the franchisees' relationship.
BKC might assume that anomalies are occurring in
the branch.

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Resource
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