Strategic Analysis Portfolio: McDonald's and Burger King Decisions

This report provides a comprehensive strategic analysis of McDonald's and Burger King, examining their key decisions and their impact on the companies' performance. The report delves into the strategic choices made by both companies in areas such as pricing, product development, target customers, and acquisitions. It compares their approaches to strategic decisions, evaluating their profitability, brand image, and adaptability to market trends. Furthermore, the report assesses whether the companies operate in a 'blue ocean' or a 'red ocean' market, highlighting their competitive advantages and market positioning. The analysis includes a strategic framework to understand the decisions and their outcomes, along with a discussion on how they gain competitive advantages. The report concludes with an overview of the key findings and implications for both companies.

Strategic Analysis Portfolio

Table of Contents
INTRODUCTION...........................................................................................................................1
Company's overview...................................................................................................................1
TASK 1............................................................................................................................................1
Strategic decisions taken by McDonald and Burger King..........................................................1
TASK 2............................................................................................................................................3
Impact of strategic decisions on selected business organisations...............................................3
TASK 3............................................................................................................................................5
Strategic choices made by selected companies led them in 'blue oceans' or are they grappling
for space in 'red ocean'................................................................................................................5
TASK 4............................................................................................................................................6
Competitive advantage gained through decisions made by McDonald and Burger King..........6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

Index of Tables
Table 1: SFA model for McDonald and Burger King.................................................................6

INTRODUCTION
There are many business organisations providing various goods and commodities in the
market. On one hand it satisfies needs and desires of the customers while on the other hand
companies are benefited by increased profit margin and brand image in the marketplace. The
management often make use of strategic analysis portfolio concept in order to attain desired
outcomes. The principle involves identification and evaluation of all products and service groups
offered by the company in a market(Hollensen, 2015). Marketing team prepares specific
strategies for every group according to relative market share and actual or projected sales growth
rate.
Company's overview
In order to identify key strategics issues facing industries globally there are two business
organisations taken in consideration. First company is McDonald which is world's largest chain
of hamburger fast food restaurants. In addition, it also provides products like French fries, soft
drinks, coffee, milkshake, salads and desserts. A McDonald restaurant is operated by either an
affiliate, franchisee, or the corporation itself. On the other hand, Burger King which is often
abbreviated as BK. It is an American global chain of hamburger fast food restaurant. Their
production model was based on one of the machines they had acquired an oven called the 'Inst
Broiler'. The company has globally forty subsidiaries conducting operations through
acquisitions and financial obligation.
TASK 1
Strategic decisions taken by McDonald and Burger King
In order to operate successfully in the market business enterprises need to take certain
decisions. These decisions are generally in the form of plans and strategies formed by
management of the company. These strategic decisions are concerned with whole environment in
which the business organisation operates and the way it makes optimum utilisation of its
resources. It deals with harmonizing organisational resources capabilities with upcoming threats
and opportunities faced in the market place (Reilly and Brown, 2011). Strategic decisions are
long termed base and prepared for future planning of business entities. It relates to organisational
mission and vision of certain enterprise. Now, there will be comparison of strategic decisions
made between above mentioned business corporations:
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McDonald's strategic decisions
Generally, there are four key areas on which business enterprise prepare strategies which
are as follows: Pricing strategy decisions: The managerial team of concerned business entity focuses on
preparing appropriate pricing policy for the company. McDonald make use of price
skimming policy where it involves charging high prices for a product in introductory
phase of the business (Dess, Lumpkin and Eisner, 2010). Although, the company avails
food products at both premium and economical level taking in consideration demands of
every segment of customers. Product strategy decisions: According to this strategy, they prepare plans to modify
existing products or introduce new food items in the market. With changing consumption
pattern and practices McDonald extended its product line from hamburger to other
products like French fries, beverages, milk products. It follows the principle of product
differentiation so that it can exist in the market. Target customer decisions: Concerned food organisation believes in expanding it
business operations in both developed and developing nations (Wheelen and Hunger,
2011). It ensures to cover market area of both elite class and middle or low level income
group of people. The company believes in establishing strong customer relations by
communicating effectively with its schemes and policies. It is exploring new markets on
the global map to increase its profitability. Acquisitions strategy decision: In order to gain competitive advantage the company
makes good use of franchising policies. As the company deals in international market
and to operate successfully it affiliates various local firms that perform business
transactions on their behalf (Johnson and et.al., 2013). These franchises avail products in
supermarkets or as retail outlets in small and big cities.
Burger King strategic decisions
Now, considering strategies made by managers of Burger King are little different form
above mentioned business group which is as follows: Pricing strategy decisions: Price is an essential element considered by customers while
making purchasing decision for a product. Burger King adopts economy pricing policy
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where it takes very basic and low cost approach to marketing. It lays positive impact on
consumers and they ultimately prefer to have Burger King products. Product strategy decisions: The cited company is popular for availing hamburgers in the
market. With passage of time, management also decided to introduce other fast food
products in the market (Yamakawa, Yang and Lin, 2011). But the idea was not accepted
much by customers, therefore, the company decided to provide only hamburgers in
market. The company adopts economic pricing policy so that it resist existing customers
and increase the number of new users. Target customer decisions: Now, considering target customer decision the marketing
team of company give emphasise on developing nations. Its target market is focussed on
middle and low level income group that is why it keeps economical price of its
hamburgers. The company does not focus much on extensive advertising and promotional
tools to attract customers (Grant, 2015). As it is increases their cost of production which
will cause increase in prices of commodity.
 Acquisitions strategy decision: Burger King make use of mergers and acquisitions policy
to resist in the international market. They acquire small or medium food enterprises that
already have existence in the market. Along with this, they also have knowledge about
market trends and customers expectations from business organisation. Thus, it is able to
make optimum utilisation of resources available to mentioned business entity.
TASK 2
Impact of strategic decisions on selected business organisations
McDonald and Burger King make effective use of decision making policy to attain
desired organisational objectives for the company (Salo, Keisler and Morton, 2011). They are
able to make optimum utilisation of resources so that organisations are able to gain better results.
Strategic decisions requires research and development work in the company. This helps to
understand current expectations of customers along with future needs of market. Different plans
and procedures are prepared accordingly so that they are able to satisfy expectorations and
desires of the customers. In order to understand the impact of strategic decision on mentioned
business entities various parameters are taken in consideration which are as follows:
Profitability of two companies
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Strategic decisions have a great influence on profitability of the company. If plans and
procedures are effective enough they provide better results to the organisation (Mun, 2010). It
increases their profit margin along with revenue that provides opportunity to invest more capital.
McDonald earns greater profit with use of strategic decisions in the company. They prepare
plans and policies with help of detailed market research. On the other hand, burger king also
generated higher profits with the help of strategic decisions. It acquired better results from
strategies like pricing, acquisition, products and target customer. The concerned business entity
acquired better opportunities of expansion in global market.
Brand image in the market
Brand image refers to goodwill established by the company in a market. It is the current
view of customers regarding a products and it helps to develop customer loyalty in the market.
McDonald's has made extensive and rigorous use of advertising tools to build strong image in the
market (Theißen and Spinler, 2014). It provides quality products for all types of consumer
segment and avail effective serving techniques to make consumer comfortable. While, Burger
King does not adopt extensive marketing strategies although it still posses good market value
among customers. They are satisfied with its product and services. The marketing team of Burger
king make use of effective pricing policy in order to develop brand image of the company.
Adaptability to market trends and pattern
With changing market trends and pattern organisations modify their plans and policies.
Business entities are able to grow and develop with changing expectorations of customer or any
technological development (DeFusco and et.al., 2015). McDonald follows adaptability feature in
order to ensure that customers consume food products according to their needs and demand. For
this it has introduced many new products, improved infrastructure of restaurant and availed
offers and discounts time to time for their customers. Although, Burger King is slow at this pace,
they adopt changes with dilatory speed. Management needs to explore better opportunities by
identifying upcoming market trends and techniques.
Operational management of two companies
It refers to efficiency and capabilities of human resources of the company that conducts
various operations. The administration of business practices create higher level of efficiency for
the company. Managers and their respective employees are responsible to execute policies in
company's favour (). According to this parameter, Burger King posses effective professionals to
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frame and perform strategies in its favour. As the company adopts merger and acquisition policy
it is equipped with already trained and experienced manpower which guides organisation in
better way (Killen and et.al., 2012). Here, McDonald posses efficient human resources still not
as experienced as Burger King posses. It reduces efficiency of the company and hampers
performance of the organisation in the market.
TASK 3
Strategic choices made by selected companies led them in 'blue oceans' or are they grappling for
space in 'red ocean'
Every organisation operates in a competitive environment where other firms are also
producing similar, homogeneous or heterogeneous resources. Consumers are benefited because
they posses many options to while purchasing a product. Competitive environment helps
organisations to grow and develop their operations in such direction that they are able to cover
wide range of market area. Management make detailed evaluation of market conditions so that
policies and procedures could be framed in this respect. Generally, there are two theories in this
reference first is blue ocean theory and other is red ocean theory.
The blue ocean theory is based on the view that market boundaries and industry structure
are not given. They are restructured by actions and beliefs of industry players (Shroff, Deneen
and Ng, 2011). The Blue ocean perspective rests heavily on identifying new and innovative
operations for the company. The theory promulgates that strategic management could extend its
scope beyond competition. It focuses on generating new value that is acquired with four
perspectives eliminating, reducing, raising or creating.
On the other hand, red ocean theory relies on the fact that competition based strategies
require firms within an existing industry to compete within the confines of that marketplace. The
companies have to make effective use of competitive strategics to survive in the market. It
requires generation of competitive advantage over other incumbents essentially understanding
competition and identifying ways to outdo them in some particular value creating component of
their operation. In order to sustain business entities in the marketplace, practitioners of red ocean
strategy focus on building advantages over competition (Gutjahr, and et.al., 2010). Grabbing a
bigger share of market is seen as a zero-sum game in which one enterprise gain is achieved at
another company's loss.
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Nowadays, food industry is growing at greater pace which resulted in increasing entry of
new firms in the market. There are numerous small and large business enterprises availing food
products to the customers. The consumers are at beneficial position as they have wide range of
options. Although, firms face cut throat competition in the market and they need to adopt
effective strategies to achieve marketing objectives. McDonald and Burger King are operating in
red ocean. But to acquire certain position in red ocean market they need to introduce new
products or marketing strategies to retain their position. Blue ocean policy is quite difficult for
both business entities as it will be attained for short term only. If McDonald introduced new
range of food product in the market and consumers appreciated it. This will ultimately attract
their attention for few months but then other rivalries like Burger King or Subway will either
produce similar product or make use of offers and schemes.
McDonald and Burger King needs to adopt effective production and marketing
techniques so that they develop certain position in red ocean market. The cut throat competition
between organisation somehow hamper their growth and profitability (Aldehayyat, Al Khattab
and Anchor, 2011). Production and marketing teams should adopt technological changes to
attract consumers with their innovative product line. Product differentiation policy and effective
pricing policy are key factors to be undertaken while framing policies for the company. It will
ensure favourable results for mentioned companies in food industry. Moreover, to seize new
profits and growth opportunities they also need to create blue ocean situation along with red
ocean strategy.
TASK 4
Competitive advantage gained through decisions made by McDonald and Burger King
Both the business entities are strong competitors of each other and posses effective
market position. The managers will use SFA model and BCG matrix to conduct these operations.
SFA model
It is a tool to assess strategic options and weigh them against each other. It makes use of
three approaches that are suitability, feasibility and acceptability. The following table reflects
SFA model of concerned business enterprises:
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Table 1: SFA model for McDonald and Burger King
Parameters McDonald Burger King
Suitability Yes No
Feasibility Yes Yes
Acceptability No Yes
 Suitability: It determines fitness of strategies framed for business enterprise. McDonald
makes use of extensive and rigours marketing policies that is suitable for cut throat
competition taking place in food industry (Sutrtle, 2016). Although, Burger King
managerial team requires to adopt better strategies to sustain in the market. Feasibility: This factor stands for possibility of policies to be executed. Both the
companies are framing and implementing authentic policies which will avail higher
profits to the company. Acceptability:Another parameter for measuring strategies is its acceptance in the market.
McDonald make extensive use of marketing strategies which is often not accepted by its
stakeholders while Burger King is at advantage. Its polices are widely accepted by
management, employees and customers.
BCG matrix
It is a portfolio planning model based on observation of company's business units that can
be classified into four categories based on combination of market growth and share. Here there
are four quadrants to measure market growth rate and share of companies like McDonald and
Burger King.
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 Stars: McDonald comes under this category as it operates in large market share in a fast
growing industry. It may generate cash but because the market is growing rapidly they
require investment to maintain their lead. Question marks: It is small market share in a high growth market. The business entities
require resources to grow market share but whether they succeed and become stars is
unknown. Cash Cows: burger King has cash cow nature as it has large market share in mature and
slow growing industry. The company requires little investment and generate cash that can
be used to invest in other business units (Butner, 2016).
 Dogs: It reveals business unit with small market share in mature industry. It does not
require substantial cash, but ties up capital that could be deployed elsewhere.
CONCLUSION
The above report make strategic analysis of two business enterprises that are McDonald
and Burger King. Management of both companies prepare plans and policies related to pricing,
product, targeted customers and acquisition strategy. Further, it reflects that they are operating in
red ocean environment and in order to retain their position they will make use of various
advanced production and marketing techniques. This will ensure higher profit margins along
with developing brand image in the market place. It also evaluates impact of these stratergic
decisions over concerned firms.
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Illustration 1: BCG matrix of
McDonald and Burger King.
Source:(Killen and et.al., 2012)

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