For a firm to be efficacious and remain in business, two factors have to be achieved, growth and profitability. These factors are essential for the firm to survive and remain attractive to the analysts and investors. In essence, the profitability of a company is critical to long-term survival and losses are in most instances detrimental to business growth. Making profit, for this reason, is the sole goal for any company, and in instances when the company does not have investors for financing purposes, profit is the only source of capital. Therefore, without sufficient capital or other financial resources for sustaining and running a firm, the business is on most occasions destined for failure. Therefore, the bottom line is no firm can perform over a significant amount of time without making profits. Therefore, with this being the case, measuring a firms profitability is essential both for current and futuristic decision-making and tracking the extent of growth, which is important for any organization. Therefore, evaluating the company's profitability is critical to ascertain what strategic business decisions should be taken to achieve financial targets.
The organization for analysis in this research project, Burger King, has had significant financial problems in its operations in New Zealand, with it not achieving the intended financial targets, and it has made losses in the past financial years. Burger-King, which is abbreviated BK, is a global chain of hamburger fast food restaurants. With the company having begun in 1953 with the brand name Insta-Burger King in Jacksonville, has expanded globally. It has its operations in New Zealand, but in the nation, the company has sustained a significant amount of losses. The financial year ending at 2015 saw the company having 15,000 outlets in over 100 nations, with 47.5 percent of the fast food restaurants located in the US and 99.5 percent being privately operated with new owners with a variety of franchising models. Burger King Holdings is the parent company to BK, and is abbreviated BKC, which is a Delaware Corporation that was initially formed in 2002 (Restaurant Brands International, 2015).
However, the company's New Zealand operations are of concern in this research. The company has 83 outlets in the nation and employs approximately 2,800 workers in its retro US 1950s fitting fast food chains that serve flame-grilled burgers. BK competes with other food chain restaurants, including McDonalds that has 164 fast food branded outlets. Other strong competitors include NZX-listed KFC, Pizza Hut, and Starbucks. BurgerFuel Worldwide, being listed in NZAX also operates in the country capitalizing on a franchise model. Each of these competitors has employed different strategies to increase their financial position in the New Zealands market. For example, McDonalds has in the past run promotions, including dollar seals, as well as adding espresso to its menu. Burger King, on the other hand, has used dollar specials on frozen drinks, limited time offers including Butchers stack Triple, and Winter Warmers seasonal range. However, with the reported financial losses, these business strategies have not worked, which signifies the need to change its strategic decisions.
b. Research Problem
According to Boot (2016), Blackstone Groups BK Chain within the New Zealand market made an annual financial loss, which was after it took charge against its Kiwi Pacific strategic move of joint venturing. In effect, it incurred higher raw material costs and finance. Besides, as the author pointed out, Burger Kings Tango Holdings NZ made a net loss of $7.6 million in the financial year ending December 31, 2015. In essence, this was a widening of the net loss from the previous year, which was 7.5 million. In 2013, the company also made a loss of $4.4 million, which means that the company has been making losses in three consecutive years (NZME Publishing, 2015). Also, the 2015 loss was the fourth consecutive one since the company was incorporated in 2011. Even though the chain is increasing sales in the 2015 financial year, the total sales were higher, which as the financial statements reveal, was $191.2 million, having increased from $185.9 million. The results also included a $529.765 impairment with Kiwi Pacific, which was a joint venture with Veritas Investments, and it is currently in the process of wing it up. In essence, the two were interlocked in a dispute over the interpretation of Kiwi Pacifics supply deal, which was to end on April 24 after Antares, who is Burger Kings immediate owner won a settlement, which Veritas intended to appeal before a change of mind. Therefore, it can be derived that Burger King is not performing excellently, at least on the financial aspect. It has made losses in three straight years, which means that its business strategies are not working effectively and as expected. Besides, it has had adverse relationships in its joint ventures, with the joint venture with Veritas not working and it is set to be dissolved.
2. Focus of the Study
a. Purpose of research project
The research aims at providing strategies for BK to better its financial position in New Zealand.
b. Research questions
i. What strategies can BK implement in New Zealand to increase profitability?
ii. How can the firm increase its innovativeness?
iii. What are the factors that contribute to success in the fast food industry in New Zealand?
iv. What is the best business model for BK in New Zealand?
c. Significance of the project
The study is important as it will help apply knowledge of the MBA in the real corporate scenario and help solve an organization problem. The recommendations will be vital for BK to better its financial position.
d. Project Feasibility
Since the study is qualitative and capitalizes on secondary data and information, it will be feasible based on cost. The research is convenient as the company is located in New Zealand. Besides, there are numerous successful companies that can be benchmarked from for better recommendations.
3. Project Related Literature Review
The strategy concept, having been pioneered by Chandler (1962), who defines it as the formulation and implementations of a firms long-term objectives and goals, has had tremendous development over the decades. Andrews (1971) and Hoffer and Schendel (1978) define it as a pattern that specifies organizational purposes, objectives, and goals coupled with a plan to implement them. However, Michael Porter has emerged to be a recognized scholar in the area of strategic management. Porter (1980) identified three types of generic strategies that are used by organizations, differentiation, focus, and cost leadership. These help organizations in achieving, building, defending, as well as sustaining its competitive advantages. While focus strategy entails concentrating on a specific market, product or service, and a group of customers, cost leadership ensures that a firm is a low-cost producer, hence operates cost-efficiently. On the other hand, differentiation involves offering the customers with unique products or services that allow the company to charge premium prices.
According to Teece (2010), when businesses are established, they either implicitly or explicitly employ particular business model based on business strategies to describe the architecture or design of the value creation, capture mechanisms, and delivery it uses. Therefore, strategies define how an enterprise entices customers to pay value, delivers value to them, and converts payments to profits. The field of strategy, as Masanell and Ricart, (2009) point out, has evolved significantly over the last 25 years, and firms have learned to analyse their immediate competitive environment, comprehend threats to gain sustainable competitive advantage. As the researchers point out, the various approaches include resource-based view, industrial organization, and dynamic capabilities. However, the changing markets, based on globalization, technological changes, and deregulation are profoundly changing how firms compete against each other (Masanell and Ricart, 2009). Many companies are changing their strategies to adapt to the changing needs of markets and to remain in competition, which is usually achieved via growth and profitability. For instances, Masanell and Ricart (2009) point out that advances in communication and information technologies have driven interest in innovation, and thus, organizations have increasingly constituted the e-business model. These strategies are important as they ensure that a company achieves its financial targets.
4. Research Methodology
This research will mainly adopt a qualitative study design. In essence, this research will capitalize on case studies and critical studies, which are mainly secondary data sources. In accordance with Merriam (2009), the case study approach used in qualitative research entails controlling the variables that of interest to the researcher. In this case, business strategies for achieving financial targets will be the dependent variables and firms financial performance will be the independent variables. Various initiatives will be scrutinized to gauge whether they will lead to an increased financial performance, and thus, this research will rely on evidence, which will originate from interviews, observation, and documents. A total of at least 20 resources will be used. Critical study, as McMillan (2012) points out, entails gathering qualitative data by following an iterative approach that refines the research question, while theoretically sampling from the available literature the various categorizations. As such, this method will appraise the quality of materials as well as critically analysing their contribution to theory development.
5. Ethical Considerations
Since the research entails the use of secondary data, consent is not required because the information is available on the internets, mainly via research journal databases such as Science Direct, Google Scholar, ResearchGate, and ProQuest among other databases. In addition, annual reports of the BK will be used to ascertain the financial performance, and thus, recommend the necessary business strategies that can be taken to achieve desired financial targets, which is achieving profits. However, since these secondary data sources are subject to intellectual property, they will be cited and referenced accordingly.
6. Schedule for Completion
Week 1-2 Gathering materials based on the quality of the content.
Week 2-3 Writing introduction section. Analysis of the information.
Week 4-5 Write up of Literature Review and methodology, and present the project proposal.
Week 6-10 Writing the whole project report including recommendations and conclusion. Present a draft project report.
Week 11-13 Editing, proofreading, and submission of completed project report.
Andrews, K., 1971. The concept of corporate strategy. Homewood, lll: Irwin.
Boot, S., 2015. Burger King NZ's losses piling up. [Online]. Accessed from: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11655617 [Accessed 7 Sep. 2016].
Chandler, A.D., Jr., 1962. Strategy and structure: Chapter in the history of the industrial enterprise. Cambridge, Massachusetts: MIT Press.
Hofer, C.W., and Schendel, D., 1978. Strategy formulation: Analytical concepts. St. Paul, MN: West Publishing.
Masanell, R.C. and Ricart, J.C., 2009. From strategy to business models and to Tactics (pp. 10-14). Working Paper: 10-036.
McMillan, J.H., 2012. Educational research: Fundamentals for the consumer. New York, NY: HarperCollins College Publishers.
Merriam, S.B., 2009. Qualitative research: A guide to de...
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