1. Identified Risks:
a. Burger King faces tough competition from McDonald's, which is larger,
more profitable, and has a higher brand presence. McDonald's outperforms
Burger King on a consistent basis, making it difficult for the latter to acquire
market share.
b. Changing Consumer Preferences: As consumers become more healthconscious, the fast-food business is being pushed to provide better menu
options. Burger King's menu, which is recognized for its high-calorie
alternatives, may face difficulties in adjusting to changing consumer tastes.
c. Franchisee Management and Control: Due to the significant amount of
franchise-owned stores, Burger King's management has limited control.
Franchisees' inconsistent performance, disagreements, or noncompliance can
have an influence on the brand's reputation and revenue.
2. Method of Risk Assessment (SWOT Analysis):
Strengths:
Established Brand: Burger King is a well-known global brand.
Low capital needs and extensive presence due to franchising result in a high
percentage of franchisees.
Menu Innovation: The ability to offer new products to the menu.
Weaknesses:
Competition is fierce: McDonald's and others dominate the market.
Concerns about health: The food is seen as unhealthy, which may alienate
health-conscious customers.
Share Price Drop: The share price has dropped, indicating financial difficulties.
Opportunities:
Healthier Menu Options: Adding items to the menu to appeal to healthconscious customers.
International Expansion: Targeting unexplored markets for expansion.
Restaurant Renovations: Improving the design and experience of the
restaurant.
Threats:
Domination of competitors such as McDonald's.
Legislation: Potential calorie content and unhealthy menu items regulations.
Economic Conditions: The target market is experiencing an economic
downturn.
3. Responses to Risks:
a. Competition with McDonald's:
- Risk Reaction: Distinction and Innovation
- Take action by introducing healthier menu items, focusing on distinctive and
premium products, investing in marketing campaigns that emphasize
differentiation, and considering expanding into specialized areas.
b. Consumer Preferences are Changing:
- Risk Management: Menu Variation
- Action: Expand your menu offerings to include salads, low-calorie selections,
and transparent calorie information to appeal to health-conscious customers.
c. Management and Control of Franchisees:
- Risk Management: Training and Standardization of Franchisees
- Take action by providing intensive training and assistance to franchisees,
establishing clear operational standards, and strengthening compliance
monitoring.
4. Risk Assessment and Recommendations for Control:
a. Competition with McDonald's:
- Control: Constant market research to uncover consumer preferences and
trends, aggressive introduction of new products, and targeted marketing
strategies in order to stand out from competitors.
b. Consumer Preferences are Changing:
- Control: Conduct market research to understand consumer preferences,
invest in research and development to offer healthier menu options, and
educate consumers about nutritional information.
c. Management and Control of Franchisees:
- Control: Implement a thorough training program for franchisees, implement
frequent appraisals of work performance, and enforce compliance with
operational standards. Enhance the franchiser-franchisee connection through
open discussion and compliance incentives.