Burger King is one of the leading fast-food restaurant chains at the global level with its presence in different developed and developing countries. Burger King is based in America and the success of the company has allowed it to expand internationally. To keep the competitiveness of the Burger King at the international level. Porter’s five forces analysis for the company is conducted.
Competitive Rivalry
The competition in the global fast-food industry is intense to the level of cut-throat competition. Several famous brands are competing in the same industry and having a large market share and value. In the list of most valuable fast food brands at a global level, Burger King comes at 7th spot with a value of 7,063 million USD. McDonald’s is on the top of the list with a value of 130,368 million dollars while Starbucks is on the second spot with a value of 45, 884 million USD. The KFC, Subway, Domino’s Pizza and Pizza Hut are on the 3rd, 4th, 5th, and 6th spot respectively with a value of 17,205, 17,124, 9,570, and 7,580 million USD at the global level (Statista, 2019). The presence of such high-value international brands in the fast-food industry shows the intensity of the competition in this industry. The competition is intense not only because of the availability of the number of players but it is intense due to the capacity of each player which is easily predictive through their brand values. Burger King despite having an international success is at 7th spot which shows that the company has to compete with 6 major competitors that are laying above the Burger King to come at the top or stay competitive.
Bargaining Power of the Buyer
According to Oraman et al. (2011), the bargaining power of buyers in the fast-food industry at a global level is high because of the options available for the buyers. Along with the mentioned international chains, there are several small level fast-food restaurants in different countries that are selling pizza, burgers and other fast food items. It provides a high range of options to choose from for the buyers which improve their bargaining power. The switching cost from one brand to another band in the fast-food industry is also near zero as the alternate options are available at the same cost and within the convenient distance. All of these options for the buyers make it highly easy for the customers to choose from different options and the customers would be switching easily in case of little dissatisfaction.
Bargaining Power of Suppliers
Like fast-food chains, the number of sellers for the different raw materials of fast food are high in number. This range of options for fast food companies improve their bargaining power and put them in a dominating position (Royle, 2010). Due to the scale of sales especially for the international brands of fast food, the suppliers give every advantage to get the contract from the international chain which further reduces the bargaining power of the supplier.
Threat of New Entrants
The threat of new entrants is high because the hurdles to enter the industry are low. A local fast-food restaurant can be started at a small level with minimum capital and labor required. The recipes are readily available to open the fast-food restaurants which further eases the entry of new entrants. It is also easy to attract the customers through low budget fast food business as they can compete on prices (Stuckler & Nestle, 2012). All of these factors ease the entry of new investors taking the threat of new entrants to a high level.
Threat of Substitutes
The globalization has made it possible to adapt the food and cuisine of other regions which is the reason for such success in the fast-food industry. Now, this is becoming a threat to the fast-food industry because the food from different countries such as China, Japan, and the Middle East is becoming famous and getting acknowledgment in different countries across the globe. This acknowledgment of different cuisines is becoming a threat for the fast-food industry to get replaced which is the reason for a high threat of substitutes for this industry at global as well as local levels.
References
Oraman, Y., Azabagaoglu, M. O., & Inan, I. H. (2011). The firms’ survival and competition through global expansion: A case study from food industry in FMCG sector. Procedia-Social and Behavioral Sciences, 24, 188-197.
Royle, T. (2010). ‘Low-road Americanization’and the global ‘McJob’: a longitudinal analysis of work, pay and unionization in the international fast-food industry. Labor History, 51(2), 249-270.
Statista. (2019). Brand value of the 10 most valuable fast food brands worldwide in 2019(in million U.S. dollars). Available at: https://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-brands-worldwide/
Stuckler, D., & Nestle, M. (2012). Big food, food systems, and global health. PLoS medicine, 9(6), e1001242.