Question

Explain the Promoting Growth through Acquisitions and Franchising of Berger King Services communication plan?

 

 

Answer 1

The increased competition in the fast food industry has presented tough challenges for big companies that have for a long time enjoyed market dominance. Entrants fast food outlets seems to be taking a large share of the market compared to large food stores such as Berger King. To effectively retain its status as a market leader in fast food services, Burger King through its management has devised a project that is meant to increase its market share and market growth. Berger King’s president believes that the best way the company can beat the competition is through acquisitions and franchising its services. Through making this move, the company will be in a position to acquire entrant food outlets that have recently become a threat to big food outlets.

After assessing the effectiveness of this project, the president saw that it is a worthy investment to make in the wake of addressing the ever-increasing competition. Through acquisitions, Berger King will be able to command a large market and even enter new markets that are served better by the small outlets. This project present the opportunity for growth for Berger King. The franchising part is essential as it will help the company to reduce the costs of operation. The benefit of this is that the company will be able to up its sales and benefit from oversees franchised outlets. Possible challenges of undertaking this project are; (1) increasing overhead and operation costs and (2) becoming ineffective in terms of service delivery compared to small fast food outlets. Nonetheless, the president believes that negative outcomes of the project can be averted through conducting a market research on outlets to be considered for acquisitions and franchising, their location and determining their alignment to Burger King’s goals.

Research

To effectively determine the viability of the idea, a qualitative research would be carried out. The aim of the research would be to assess the effectiveness of acquisitions and franchising by Berger King. It is important that an extensive research is carried out before effecting the plan so as to prevent what otherwise could be foreseeable risks. Small fast food outlets have been able to surprise the food market as they have proved effective and fast. Many customers have switched to these small outlets terming them more effective than large food vendors like Berger King. It is, therefore, a necessity that an extensive research is a conduct so as to provide information on how best Berger King can tackle the increasing competition. The research will also assist the company to determine the right approach to use in effecting its acquisitions and franchising goals.

The research will be done by first assessing the profitability of the outlets to be acquired. That is all firms that Berger King plan to acquire will be assessed first in terms of profitability, market share and opportunity for growth. The importance of this is that they should promote Berger King’s goal which is becoming the global leader in providing excellent food services. The company will too assess the profitability of franchising its services in overseas countries. After all the information has been obtained from the research, it will be analyzed and a sound decision will be made. The company will only acquire those food outlets with the possibility of future growth. The importance of this is to prevent investing in firms that have short terms profits which later after some years will easily collapse due to market forces.

Target Audience

The target audience for this communication plan is Berger King’s shareholders, prospective investors and customers. This information is critical to shareholders in that the acquisition and franchising are instrumental and they should be notified when important decisions as this are made. Essentially, this is due to the fact that acquisitions and franchising have the effect on stocks price and return on investment of a company. The information is also significant to investors in that it can attract them to investing in the company which will bring about more capital for a business that will translate to high profits. The information is also important to customers as they are the ones to benefit most from the project. Providing information to the customer is essential in that it will help them to know upfront that Berger King is more committed to providing excellent services and is still the leader in the fast food industry.

Goals:

The goals of the communication plan are;

1. To increase project knowledge and its significance.
2. Provide opportunities for feedback from stakeholders and giving prospective investors an opportunity to consider their investment options.

It is important that the project is well addressed so as that to promote support and investment. Through increasing project knowledge, all important stakeholders will be able to know the direction that the company is facing and this will help in policy formation and investment backup. Failure to do this will result in some stakeholders complaining of exclusion which might affect project implementation. On a similar note, it is vital that shareholders are given a chance to give their opinions and feedback on the project. Through feedback, the project management team will be able to determine the support and trust that shareholders have. Additionally, through providing this information to investors they will be in a good position to decide whether to invest in the company or not. If they decide to invest in the company, that will be a major boost.

 

Objectives

1. To use mass media in increasing project knowledge
2. To effectively use feedback from stakeholders in decision making.

It is essential that the medium used to increase project knowledge is effective in nature in that all targeted audience get the information. Mass media is very effective as most people use it for getting information. As for feedback, it is important that the project management team ensure that an efficient communication channel is created that will help it to get feedback from all stakeholders.

Strategy and Tactics

In the business world, strategy and tactics are essential in creating winning ideas. A business should be able to use strategies that will give it an added advantage in the market against its competitors. It is, therefore, an important element in project implementation. Similarly, tactics play a central role in realizing business goals, as such managers and project managers should work together to ensure that appropriate strategy and tactics are used. The following strategies and tactics were used in the implementation of the project.

Acquisition of Small Uptown Fast Food Outlets

From the research that was conducted, it was identified that small uptown fast food outlets have a high opportunity for growth. Basically, this is due to the fact that they offer convenient services at a fast rate compared to large fast food outlets such as Berger King. Considering that these food outlets are strategically located, they attract many customers and are highly profitable. It is, therefore, a great idea that Burger King in its move to increase market share considers acquiring thee small uptown outlets. Another advantage of the small food outlets is that they have low production costs. What this means is that Berger King will be able to run these outlets effectively. The company's strategy will, therefore, be acquiring small uptown outlets which are overlooked as being small and no possibility of growth.

One challenge that the company is sure to meet is that of resistance of these small outlets agreeing to acquisitions push. The reason for this is that most of this outlets are sole proprietorship of business and many owners will highly relinquish from selling them. But the company will be tactful in approach so as to have these outlets. Berger King will be tactical in that it will promise the managers and employees that they will retain their posts. But the employees will be incubated as Burger King’s employees and required to follow all rules and policies of the company. This strategy will be effective as the owners will double benefit. Through the use of this tactic, Burger king will be in a position to acquire many small uptown food outlets.

Acquiring Startups Food Outlets

One easy way of increasing market share and attaining market growth is through acquiring startups. This is due to the fact that most startups find it difficult to sustain market forces in their first five years. For this reason, most of them end up closing their businesses. It is, therefore, a brilliant idea that Burger King considers acquiring startups which might be struggling. Startups also provide a great opportunity to get new customers. Startups are seen as more effective and efficient by customers while other prefer to go to startups for preference to the existing outlets. The company aims at acquiring struggling startups food outlets in its bid to increase market share.

To acquire startups requires great tactics skills. This is due to the fact that most entrepreneurs do not readily agree to sell their businesses more when there are in early stages. Nonetheless, Burger king being a giant in the industry is capable of handling scenarios of this manner. The company will use the tactics such of future prediction and that of paying fair prices. With future prediction, burger king will convince startups that they have a better opportunity of selling their business to them at a profit other than holding them and later experiencing losses due to increased competition. While as for the buyout, the company will convince the startups that it will buy them at fair market prices. With these tactics, it will be easy for Burger King to acquire the startups.

Creating Mobile Fast Food Outlets.

Acquisitions of small fast food outlets are not enough in increasing market share and attaining market growth. Innovation is key. For this reason, the company will be innovative in that after it has acquired small fast foods outlets, it will use them to provide mobile services to those areas with demand or on occasions that demand Burger King Burgers and its fast foods. These are such as conferences, beach parties and gathering where customers might want to have Burger King's products. It thus will be profitable that the company considers adding innovation to the already acquired outlets. Research has it that many companies are paying much attention to product promotion and little attention to product innovation. Should Burger King combine both growth strategies with innovation, it stands a good chance of highly benefitting.

Nonetheless, it is vital that Burger King analyzes the effectiveness of adding innovation to the newly acquired outlets. This is due to the fact that some customers might not embrace the changes and thus might go to competing outlets. It is, therefore, a prudent idea that Burger king effects these with time. The tactic that the company needs to employ here to effectively make the mobile fast food outlets profitable is that of assessing the market needs. It is important to understand how people operate and at what time they want Burger King’s products. This understanding will help the company to avoid losses.

Franchising its Services in Emerging Markets

Several companies have tapped into the emerging markets which are India and China. These emerging market have proved to be probable and with their promise of increase. It is, therefore, a good idea that Burger King invests in these markets. The best way that the company can invest in these market is through franchising. With franchising, burger king will give local fast food outlets in these countries license to operate under its brand name. The advantage of this is that Burger king will be able to benefit in terms of proceeds while at the same time reducing operation costs. Considering that globalization has increasingly made business easier and faster, it is important that Burger king tap into the international market.

One tactic that will be effective in franchising is that of convincing local fast food outlets in emerging countries that through franchising they stand to reap more profits. Additionally, the fact that they will be trading under the name of Burger King is enough to make them get more customers. Franchising has proved to be profitable for many companies, it is still a viable idea that Burger king should invest in. however, it is important that the company in its research determine fast food outlets that are in strategic locations. This is essential in avoiding unnecessary losses. There is also the need to come up with rules under which the franchising partnership will be operational the important of this is to deal with the misunderstanding that might arise along the way. With rules in place, it will be easy to deal with any issue that might face the two outlets in the partnership.

 

Key Messages

The key messages of the communication plan are;

1. The project will take six (6) months to complete.
2. Project expense stands at US$300 million.
3. No dividends will be paid out for the financial year 2016/2017 to cater for the project.

Burger king intends to carry out the acquisition and franchising project within a period of six months. This will give it ample time to conduct the research and determine viable options. After the six-month period, the company should be done with the project and concentrate on increasing market influence and implementation of the project. The total project expenses stand at US$300 million. The company will hold the dividends for the financial year 2016/2017 which will be used in investing in the project. It is, therefore, important that shareholders consent on the issue is sought for sake of support.

Evaluation

Project evaluation is significant in that it enables the project management team to spot flaws and correct them in time. To determine if acquisitions and franchising of Burger King Project are on the right track, I would assess the profit of the acquired outlets and proceeds from the franchised outlets in a quarterly interval. I will scrutinize the financial records of the acquired outlets so as to gauge if indeed they are making the predicted returns and if not what measures need to be taken to avert the scenario. Additionally, I will personally visit the outlets to see their customer base and determine their efficiency and growth probability. After accessing these parameters, I will be able to determine the effectiveness of the project.

Evaluating the project quarterly will give me an opportunity to track small but significant changes which if not addressed might lead to losing business to competitors. It is thus important that projects are regularly evaluated to avoid getting undesired results. Considering the big size of Burger King, it is a challenge to effectively monitor all activities that take place. For this reason, creating a post of the general project manager will be essential to help the company in handling the oversight role. Failure to do so increases chances of project failure a fact that can make the company fail.

The increased competition in the fast food industry has presented tough challenges for big companies that have for a long time enjoyed market dominance.