SWOT ANALYSIS FOR BURGER KING IN VIETNAM

While fast-food newcomers in Viet Nam are seeking ways to gain a foothold in the market, others companies that have been here for years, such as KFC, Lotteria and Jollibee, are making changes to maintain their customer base. In fact, Vietnamese consumers are not really familiar with fast food, while the products of these shops are quite similar. However, by style quick service, friendly, fresh product, hot drinks and stylish modern decoration restaurants, Burger King believes to serve Vietnamese diners to experiences the best of everything whenever step at the restaurant. This report aims to explore Burger King through SWOT Analysis, as represent for one of the most successful fast food chain in the world and its positioning strategy in Vietnam to be successful in new market.

i Abstract While fast-food newcomers in Viet Nam are seeking ways to gain a foothold in the market, others companies that have been here for years, such as KFC, Lotteria and Jollibee, are making changes to maintain their customer base. In fact, Vietnamese consumers are not really familiar with fast food, while the products of these shops are quite similar. However, by style quick service, friendly, fresh product, hot drinks and stylish modern decoration restaurants, Burger King believes to serve Vietnamese diners to experiences the best of everything whenever step at the restaurant. This report aims to explore Burger King through SWOT Analysis, as represent for one of the most successful fast food chain in the world and its positioning strategy in Vietnam to be successful in new market. ii Table of Contents I. Executive Summarize 1 II. Fast food industry and Burger King Market in Vietnam 2 III. SWOT Analysis for Burger King 5 3.1. Strengths 5 3.2. Weaknesses 6 3.3. Opportunities 7 3.4. Threats 10 IV. Products positioning 13 V. Conclusions and Recommendations 14 References 16 Appendix A 18 List of Figures Figure 3.1. Six global trends, interconnected by three keys drives of change 8 Figure 3.2. Time use on an average work day for employed persons ages 25 – 54 with children 9 List of Tables Table 2.1. Burger King Restaurants chains in Vietnam 4 Table 3.1. Summarize of SWOT Analysis for Burger King 12 1 I. Executive Summary Despite of the global crisis continuously affect on such countries in the world, Vietnam keep remaining a profitable investment for Western fast-food chains. In 2011, fast food continued to register rapid growth of 26% in current value terms due to various reasons (Eromonitor International, 2012). Firstly, while food prices have been generally increasing, fast food was able to maintain stable prices that making dishes more affordable to consumers. Secondly, Vietnamese people were leading trend of busier lifestyles and habits, which helped to increase the demand for fast food. The fast food outlets with modern decoration also attracted many teenagers and young working adults. In 2011, the environment also welcomed the entry of international chains – Carl’s Jr, Subway and Popeyes Chicken & Biscuits. The end of the year 2012, Burger King entered to Vietnamese fast food market making contribution to the competitive environment for other presenters of fast food brands such as KFC, Wendy’s or Lotteria. Currently, Burger King (BK) is the second largest fast food hamburger chain in the world with more than 12,700 outlets in 73 countries. Among those, 66% are in USA and 95% BK restaurants are owned and operated privately by independent franchisees (Wikipedia, 2013). The name BK becomes global brand and all credits must go to two men are James McLamore and David Edgerton – the founders of BK, beginning the BK legacy of flame-broiled beef and commitment to quality ingredients and friendly services. In 2010, a global multi-million dollar investment firm known as 3G Capital focused on long term value creation purchased Burger King Corporation, making it a privately-held company. The original Vision of BK is “Offering reasonably priced quality food, served quickly; in attractive, clean surroundings” with specific commitment is “Our commitment to premium ingredients, signature recipes, and family-friendly dining experiences is what has defined our brand for more than 50 successful years.” Besides that, BK also set up their own Mission as is: “We will prepare and sell quick service food to fulfill our guest's needs more accurately, quickly, courteously, and in a cleaner environment than our competitors. We will conduct all our business affairs ethically, and with the best employees in the mid-south. We will continue to grow profitably and responsibly, and provide career advancement opportunities for every willing member of our organization”. 2 II. Fast Food Industry and Burger King Market in Vietnam “Vietnam is seen as a promising market for foreign fast-food companies due to its young population and fast income growth” (Viet Nam News, 2012). Even though the price of foreign fast food is higher than two to four times comparing to the regular price of rice or noodle shop, many Vietnamese are still willing to spend more on fast food restaurants. In order to cater to local tastes, such Western fast food chains tend to introduce menu items to increase sales. A market research by company AC Nielsen has shown that only 8% of Vietnamese eat at a foreign fast food restaurant one to three times a month. The company says that because of Vietnam’s population comprising of 65% under the age of 25, it still remains a profitable destination for Western food chains (Tamaraboorstein, 2012). In Vietnam, fast food is expected to record a Compound Annual Growth Rate (CAGR) of 6% in constant value terms over the forecast period (Eromonitor International, 2012). Since the economy of Vietnam continues developing, Vietnamese people become being very busy lifestyle and habit, thus increase their demand for fast food. Furthermore, nowadays Western lifestyles and cuisine have influence on their life, as many young consumers considered fast food as fashionable and high-class, also contributes greatly to the growth of fast food. The government has the policies of open market to encourage investment from outside, it also helps with franchising regulations to allow fast food operators to enter in and operate more efficiently. Currently, there are many foreign fast food brands presence in Vietnam. KFC is considered the largest chain with 156 outlets, while Lotteria has 146 and Jollibee has 30. The three big guys in the market themselves have been challenging violently with each other. The first one, KFC was one of the first international players in entering into fast food market in Vietnam. KFC is believed to have higher growth rates and turnover. In 2011, KFC Vietnam remained the leading player in fast food in the country recording 15% value share, gaining two percentage points (Eroumotional Inernational, 2012). A report of Euromonitor showed that KFC led the fast food industry in Vietnam in 2011. The company’s main competitive advantage lied in its affordable price and its localised Vietnamese taste. The company has successfully built its outlet network throughout the country, all located in prime locations of central districts and cities. In 2011, KFC focused on expanding its network outlet in Vietnam by increasing its number of outlets in big cities such as Ho Chi Minh City and Hanoi as well as continuously launching various 3 promotional programs such as Tuesday Special. As a result, KFC Vietnam also posted strong growth in terms of value sales in 2011. The second one, Lotteria has boomed the market in obtained the turnover of VND 39 billion just within 10 days, from the first day of the Lunar New Year to the 11 th day of the year. For the meantime, it has reported the 30% increase in the turnover in 2012 over 2011. The business performance of the Lotteria chain in Ho Chi Minh City is better than in Hanoi. In fact, Hanoi Capital is not an easy market for Lotteria because of the culture factors and to some extent due to KFC is holding the superior hand in the capital city. The third one, Jollibee Foods Corporation is the Philippines’ largest fast-food chain, has announced its expansion plans in the country by adding another four stores in Ho Chi Minh City and the surrounding areas. Jonx Jongko, Marketing head for Jollibee Vietnam told Thanh Nien News that the Vietnamese have been gradually embracing Western fast food although “it’s still something new for them”. Those fast food brands in Vietnam now want to expand their outlets in some big cities around the country. Head of the Marketing Division of Lotteria Vietnam, Truong Ham Liem said that they plan to open 50 more shops in 2013, while 30% of which would be not in Ho Chi Minh City, but in other localities such as the western part of the southern region and Da Lat City. Lotteria Vietnam is not only striving to increase the coverage, but also has put a high hope on the development of hamburger, hoping that this would be a potential menu benefits from reasonable price and good taste. Not only Lotteria, KFC and Jollibee have also been pushing up the development of their chains in Vietnam. Graham Allen, President of Yum! Restaurant International said about the plan to develop 180 shops in Vietnam by 2014. Jollibee Vietnam also wants to have 500 shops in Vietnam. However, to implement the plan to expand the networks, the big guys have been moving heaven and earth to look for retail premises, firstly they have to find out the answer to the question: “where would the first McDonald’s shop be located?”, before going ahead with their plans since representatives for two other fast-food companies, Johnny Rocket and McDonalds, have visited the country to study the market of Vietnam. They will be very competitive competitors in fast food industry for sure must be scare by some big guys did represent in Vietnam at the present. Other fast food brands serve with different taste such as Pizza Hut, Domino, BBQ or event local brand like some companies focus on bread such as Duc Phat Bakery, ABC Bakery also occupy percentages of fast food pie make the market becoming more and more competitive. 4 Turn back to Burger King, after opening four stores at airports in Vietnam in one year, the American fast-food company Burger King launched its first store in the centre of Ho Chi Minh City recently. Now the numbers of outlet gain to 13 stores in Ho Chi Minh City, Ha Noi and Da Nang. Owner of the Burger King franchise in Vietnam is the Blue Kite Food and Beverage Services Company Ltd, a member of Imexpan Pacific (IPP Group). The company would invest about US$40 million to develop the Burger King trademark in the country and with the hope to open as many stores as possible (Le Hong Thuy Tien, chairwoman of the Blue Kite Food and Beverage Services Company Ltd said). Location Address Ho Chi Minh City Outlet 1: 26 – 28 Pham Hong Thai, Ben Thanh Ward, District 1 Outlet 2: 347 Le Van Sy, Ward 13, District 3 Outlet 3: 152 Nguyen Van Troi, Ward 8, Phu Nhuan District Outlet 4: 283D – 285 Cach Mang Thang 8, Ward 12, District 10 Outlet 5: 833 Tran Hung Dao, Ward 7, District 5 Outlet 6: 134 Cao Thang, Ward 14, District 3 Outlet 7: 212 Phan Xich Long, Ward 2, Phu Nhuan District Outlet 8: 1B-1B1 Cong Hoa, Ward 4, Tan Binh District Outlet 9: 039 Nguyen Van Linh, My Khanh 1-H5-2, Tan Phong Ward, District 7 Da Nang City Outlet 1: Da Nang International Airport, Hoa Cuong Ward, Hai Chau District Outlet 2: 438 Hung Vuong, Vinh Trung Ward, Thanh Khe District Ha Noi Capital Outlet 1: IPH 239 Xuan Thuy, Dich Vong Ward, Cau Giay District Outlet 2: 12, 14B, Trung Yen – Trung Hoa, Trung Hoa Ward, Cau Giay District Source: ProGuide.vn, 2013 Table 2.1: Burger King Restaurant Chains in Vietnam 5 III. SWOT Analysis for Burger King In order to implement competitive strategy to compete with other fast foods competitors in Vietnam currently, BK should conduct a good marketing plan. A part from this, SWOT analysis for BK needs to be paid attention to. The following table is the summarize SWOT analysis for BK. 3.1. Strengths - Strong recognized brand, wide international presence: More than 59 successful years since BK appeared in the fast food market with original name was Insta-Burger King. Till now BK has their presence in 73 countries in six continents with about 12,700 outlets by franchises operated and owned privately (See Appendix A). Every day, there are above 11 million guests visit BURGER KING ® restaurants around the world. At the end of fiscal year 2012, BK is the second largest chain of hamburger fast food restaurants in terms of global locations, behind industry bellwether McDonald's (32,400 locations). - Unique recipes with machine-paced assembly process: People know BK for many years by its fresh, tasty, high quality foods. Other than that, uniquely-prepared burgers and sandwiches with named Whopper sandwich tailored to customer and Flame-broiled foods with 100% beef are make BK products differentiate from others. Accompanying these new broilers is new food-holding equipment, by using a computer-based product monitoring system for its cooked products. The monitoring system allows for shorter tracking of product quality, while giving the company and its franchisees a method to rationalize costs by specifically projecting sales and product usage. - Quick service: BK assures to customers a fast service and let customers do not need to queue for long time with “Three-minute service standard”. 6 - High social status by charitable contribution and services: BK has two of its own in-house national charitable organizations and programs. One is the Have It Your Way Foundation, as its slogan “Have it Your Way”, a US-based non-profit corporation with multiple focuses on hunger improvement, disease prevention and community education through scholarship programs. The second one is the McLamore Foundation, also a non-profit corporation that provides scholarships to students in the USA and its territories. Besides that, BK and its franchises have aligned themselves with several charitable organizations that support research and treatment of juvenile cancer, support organization for the families and friends of cancer patients. 3.2. Weaknesses - Lack of control over franchisees and violence of quality standards: It is in fact that, such franchises around the world with different location and culture makes it more difficulty in controlling. Although the majority of the restaurant locations are privately held by individual owners and its financial dependence on those owners, BK's relationship with its franchises has not always been harmonious. Occasionally, there are disagreements between the two have caused numerous issues, and in several instances the company's and its licensees' relations have degenerated into precedent- setting court cases. Furthermore, to suite with local customers in where franchises are operated, such changes in menu structure, advertising, demographic targeting creates the violence of BK’s quality of product. - Narrow target segment and does not serve its purpose of attracting kids: BK appears for everyone but main target market is Superfan. They are primarily men, from 18 to 49 years old. The characteristics of this group are voracious appetite, love to eat meat and eat out often, “who would visit a fast-food restaurant five times a month and eat fast food 16 times a month” (Emily Bryson York, 2010). They occupy only 18% of total customers (bkfinalbook). By focusing its marketing and advertising programs on men, BK alienated women and children. John Glass stated, "Maybe catering to the super fan was the correct strategy to kick relied on that for too long " ( Journal, 2010). - Increasing vulnerability Although BK operates in many international locations, but 65% of restaurants are in the United States. This concentration of operations in one geographic area increa ses company's exposure to local factors such as labor strikes and the influence of regulatory changes. - Ineffective advertising and PR campaigns BK has launched advertising and PR campaigns that proved to be ineffective. Some advertising and picture of B 3.3. Opportunities - Continue to grow global business and continuous products and services expansion: The global financial system remained fragile affected by crisis for many years, but economies around the world began moving toward recovery. Some, especially those in emerging markets, hardly broke stride, continuing their rapid growth, said by interconnected that force companies, governments and industries to cooperate each other from internal and external nation. Offensive advertisement super fan was the correct strategy to kick - start the business, but maybe they relied on that for too long " ( Julie Jargon , as cited from Th Journal, 2010). vulnerability to Labor and Regulatory Influences: Although BK operates in many international locations, but 65% of restaurants are in the United States. This concentration of operations in one geographic ses company's exposure to local factors such as labor strikes and the influence of regulatory changes. Ineffective advertising and PR campaigns : BK has launched advertising and PR campaigns that proved to be ineffective. Some advertising and picture of BK appeared as crude and unacceptable. Opportunities Continue to grow global business and continuous products and services expansion: The global financial system remained fragile affected by crisis for many years, but economies around the world began moving toward recovery. Some, especially those in emerging markets, hardly broke stride, continuing their rapid growth, said by Ernst & Young. Global economies are so tightly interconnected that force companies, governments and industries to cooperate each other from internal and external nation. Offensive advertisement Earie mascot 7 start the business, but maybe they , as cited from Th e Wall Street Influences: Although BK operates in many international locations, but 65% of restaurants are in the United States. This concentration of operations in one geographic ses company's exposure to local factors such as labor strikes and BK has launched advertising and PR campaigns that proved to be ineffective. K appeared as crude and unacceptable. Continue to grow global business and continuous products and The global financial system remained fragile affected by crisis for many years, but economies around the world began moving toward recovery. Some, especially those in emerging markets, hardly broke stride, continuing Global economies are so tightly interconnected that force companies, governments and industries to Earie mascot 8 Figure 3.1: Six global trends, interconnected by three key drivers of change - Prosperous developing markets such as China, India, Brazil etc.: The world leading trend that China, India and Brazil are expected to be among the world’s largest economies by the year 2050. They are among the biggest and fastest-growing emerging markets with significant long-term growth potential. These countries encompass a significant percentage of the world’s land coverage, 30% of the world’s population and amount to a combined gross domestic product (purchasing power parity) of USD16.3 trillion dollars (David J. Lynn, et al, 2011). Furthermore, those countries have an expanding middle class which massive rise in the size will double in number within three years and reach 800 million people within a decade. The abandon number of the middle class in these nations will create demand for a wide range of economic goods. It is reasonable to believe that a huge increase in demand will not be restricted to basic goods but result in greater demand for all consumers segments. High economic growth combined with the enormous populations of these nations will translate into a large aggregation of wealth, creating ever more attractive world markets. While China is clearly the most important overseas market, India is seen as the next major emerging markets opportunity. [...]... Consumers look for a healthier lifestyles  Cross-cultural differences products and services purchasing Table 3.1: Summarize of SWOT analysis for Burger King 12 IV Product Positioning in Vietnam of Burger King From the situation of fast-food market and Burger King in Vietnam, respectively, plus the SWOT analysis for Burger King in around the world, Burger King Vietnam find the way to build the brand in this... their marketing policies, Microsoft advertising: The Windows 7 Whopper is a Burger King Whopper sandwich distributed in Japan for the promotion of Microsoft's Windows 7 operating system The hamburger contains seven stacked beef patties and measures 13 cm (5 inches) in height It was originally planned to be available for only 7 days starting on October 22, 2009 Due to their success in selling 6,000 sandwiches... http://www.leadershippinnacle.com/articles/productpositioning.html 10 Tamaraboorstein (2012) Vietnam s Fast-Food Industry Continues to Attract Foreign Investment Retrieved from http://talkvietnam.com/2012/11/vietnams-fast-foodindustry-continues-to-attract-foreign-investment/ 11 The Wall Street Journal (2012) As Sales Drop, Burger King Draws Critics for Courting “Super Fans” Retrieved from http://online.wsj.com/article/SB10001424052748703410004575029130114102118.ht... Retrieved from finance.yahoo.com/news/pf_article_108728.html 7 Kanapriya (2010) Burger King Holding [Powerpoint slides] Retrieved from http://www.slideshare.net/kanupriya2502 /burger- king- holdingsppt-final 8 Kick It with the King. com, BKfinalbook 9 Leadership Pinnacle (2007) Fast food market forecast – the subway example of strategic product positioning Retrieved from http://www.leadershippinnacle.com/articles/productpositioning.html... sandwiches within the first 4 days, Burger King decided to extend the promotion period to 16 days, ending on November 6 In 1994 Disney switched to Burger King, signing a ten film promotional contract which would include such top ten films as Aladdin (1992), Beauty and the Beast (1991), The Lion King (1994) and Toy Story (1995) - Changing of lifestyles and habit: People switch to fast food due to increasing busy... mutually beneficial promotion (For example: Burger King has successes with George Lucas Film Ltd in 1977 and Walt Disney Company in 1994); - Speed of services increase, maintain loyalty of impatient clients Production of innovative products 15 References 1 Anton et al (2012) Burger King Corporation [Powerpoint slides] Retrieved from http://www.slideshare.net/xiu2k /burger- king- corporation1 2 David J Lynn,...  Prosperous developing markets (China, India, Brazil, etc.);  Decrease in consumers’ power due to crisis;  New partnership programs (due to crisis companies reconsider their marketing policies);   Changing of lifestyles and habit (switch to fast food due to increasing busy life, less time spent cooking & eating) Increasing popularity of fitness and healthy trend; Increasing interest to healthy... Mehlum (2011) Investing in Emerging Markets: China, India and Brazil, Real Estate Issues, Volum 36, Number 2, 2011 Retrieved from http://www.cre.org/memberdata/pdfs/China%20India%20Brazil%2036_2.pdf 3 Emily Bryson York (2010) "Burger King' s 'Superfan' Might Just Be Your Grandma" Ad Age Retrieved from http://adage.com/article/news /burger- king- s-superfangrandma/141964/ 4 ERNST & YOUNG (2013) Tracking global... general and Burger King in particular are facing the problem of cross cultural different in where the representative or franchises restaurants operated This creates the issues of how to adopt the different culture and it affect on the strategies of the company such as business strategies or communications ways For example, India is considered a potential market for Burger King to enter into However, Indian... six key developments are shaping the business world Retrieved from http://www.ey.com/GL/en/Issues/Business-environment/Six-global-trends-shapingthe-business-world 5 Eromonitor International (2012) Country Report, Fast Food in Vietnam Retrieved from http://www.euromonitor.com/fast-food -in- vietnam/ report 6 Julie Jargon (2010) "As Sales Drop, Burger King Draws Critics for Courting 'Super Fans'" Wall Street . Positioning in Vietnam of Burger King From the situation of fast-food market and Burger King in Vietnam, respectively, plus the SWOT analysis for Burger King. ProGuide.vn, 2013 Table 2.1: Burger King Restaurant Chains in Vietnam 5 III. SWOT Analysis for Burger King In order to implement competitive