EXAMINATION : INTERNATIONAL MARKETING (M3)

Transcription

1 Page 1 of 5 EXAMINATION : INTERNATIONAL MARKETING () DATE : 24 MAY 2013 TIME ALLOWED : 3 HOURS TOTAL MARKS : 100 MATERIAL SUPPLIED: BURGER KING CASE STUDY INSTRUCTIONS TO CANDIDATES 1. Please refer to the examination rules and regulations as found in the examination answer book. 2. Answer ALL the questions. 3. Read each question carefully to determine exactly what is required before attempting to answer. 4. Set your answers out in a systematic way under appropriate headings and subheadings. 5. Number your answers clearly. 6. IMPORTANT: Indicate the questions attempted by drawing a circle around the question number on the front cover of the answer book. NOTE: Examination answer books are the property of the IMM GSM and may not be removed from the examination hall. Answers to examination questions should not include appendices in the form of personal notes to the examining panel.

2 Page 2 of 5 Read the attached case study carefully before answering the questions Answer ALL the questions References are to the prescribed textbook: Ghauri, P.N. & Cateora, P.R., International Marketing. 3 rd ed. McGraw-Hill. QUESTION 1 [23] 1.1 As a newly appointed international marketing manager at Burger King, analyse the six (6) elements of culture and how they affect the penetration of a global company into the South Africa market. Use examples to enhance your answer. (18) 1.2 List any five (5) ways, means or strategies that an international marketer can use to lessen or minimise political vulnerability and risk. (5) QUESTION 2 [35] Corporate identity is considered one of an organisation s most important assets and therefore deserves management s constant attention. Furthermore, corporate reputation has been characterised by managers as being the most relevant, which has led to a growing interest in the measurement and management of the company s assets. 2.1 Discuss the following models while giving relevant examples from the Burger King case study: a) Brand adoption model (10) b) Brand value model (10) 2.2 Using the brand adoption model and the brand value contents, create a corporate branding strategy to be used in the South African market from a global brand point of view. Discuss the elements chosen and give examples from the Burger King case study to validate your answer. (15) QUESTION 3 [24] Markets need to adhere to their individual as well as collective responsibilities. (Ghauri & Cateora, 2010, pp.341). Provide your understanding of the following elements: positioning, product, price, promotion, and place, from an ethical point of view. In your answer address the ethical need of the South Africa market when introducing a global brand/product, such as Burger King, based on the above case.

3 Page 3 of 5 QUESTION 4 [18] A recent report from Miami Florida on November 8, 2012 Burger King Worldwide, Inc. today announced that it has entered into a new joint venture agreement for the Republic of South Africa with Grand Parade Investments, Ltd. focused on aggressively expanding the Burger King brand presence in this high-growth emerging market. 4.1 Briefly discuss the matrix of skimming versus penetration pricing strategies in international marketing. (12) 4.2 Choose a pricing strategy that in your opinion will assist Burger King in achieving growth and increasing market share within the first few years. Support your answer by using the matrix and give examples to support your answer. (6) EXAM TOTAL: 100

4 Page 4 of 5 BURGER KING CASE STUDY Every day, more than 11 million guests visit Burger King restaurants around the world. And they do so because the restaurants are known for serving high-quality, great-tasting, and affordable food. Burger King s business dates back more than a half-century, having been founded in 1954 when James McLamore and David Edgerton opened the first Burger King restaurant in Miami, Florida. The Whopper sandwich was introduced in 1957 and became an instant success, leading the founders to develop the "Burger King, Home of the Whopper" campaign in In 1967, the Pillsbury Company acquired Burger King Corporation, which became a fully owned subsidiary. James McLamore joined the board of directors of Pillsbury and continued be involved with Burger King until his retirement. At the time of the acquisition, the Burger King system was comprised of 274 restaurants with 8,000 employees in the U.S.A. and abroad. As of September 30, 2012, the BK system consisted of 12,667 restaurants in over 80 countries and U.S. territories. Of these restaurants, 5,214, or 41%, are located outside the U.S. and Canada. Franchisees owned and operated 12,072 restaurants, or 95%, with the remaining 595 owned by BK. The restaurants feature flame-grilled hamburgers, chicken and other specialty sandwiches, French Fries, soft drinks and other affordably-priced food items. The Original Whopper, introduced in 1957, is one of the best-known hamburger sandwiches in the world and remains a perennial favorite. BK generates revenues from two sources: (1) retail sales at Company restaurants; and (2) franchise revenues, consisting primarily of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees as well as property income BK derives from properties that are leased or subleased to the franchisees. BK believes that the high percentage of franchise restaurants provides the company with a strategic advantage because the capital required to grow and maintain the Burger King system is funded primarily by franchisees. The franchise dominated business model also presents a number of drawbacks and risks, such as the limited control over franchisees and limited ability to facilitate changes in restaurant ownership. In addition, the operating results are closely tied to the success of the franchisees, and BK is dependent on franchisees to open new restaurants as part of the growth strategy. BK believes there are significant opportunities for the company which identified the following pillars that will enable BK to drive future sales and traffic: MENU: The strength of the menu has been built upon the signature flamegrilled cooking process, which BK believes results in better tasting burgers. The menu strategy seeks to optimize the menu by focusing on the core products, such as the flagship Whopper sandwich, while enhancing the menu to broaden the appeal to women, parties with kids and seniors. BK s recently launched initiative to focus on the food expanded the product platforms and introduced 21 new or improved menu items in BK believes that the renewed focus on the food will provide the opportunity to meaningfully increase same store sales and margins around the world.

5 Page 5 of 5 MARKETING & COMMUNICATIONS: BK has established a data driven marketing process which is focused on driving restaurant sales and traffic, while targeting a broader consumer base with more inclusive messaging. Through the food-centric marketing communication strategy, BK believes that they can refocus the consumers on the food, which is a core asset and competitive differentiator. OPERATIONS: BK restructured the field teams through "field optimization project," to significantly increase the field presence and restaurant visits by reducing the span of control of the field teams. BK believes that this reduction in the number of restaurants for which a field employee is responsible will improve all aspects of restaurant operations, including food quality, guest service, speed of service and restaurant cleanliness. BK also redefined the role of a field employee to be that of a "business coach" who is responsible for closely working with the restaurant teams and franchisees to achieve their sales, profit, and operational goals. The field employees variable compensation is linked to the performance of those franchise restaurants. BK also believes that this "business coach" approach will ensure accountability and alignment with the franchisees. BK has also launched standardised operational metrics to evaluate restaurants that focus on those core competencies that they believe will maximize the guest experience. BK believes that enhancing guests experience increases traffic to restaurants and provides the franchisees the opportunity to improve sales and margins. The expansion of the international restaurant network is an integral part of the global portfolio realignment project. As part of this project BK expects to accelerate the international development with strategic partners and joint ventures. Generally, these strategic arrangements grant one or more franchisees the exclusive right to develop and manage Burger King restaurants in a specific country or region in exchange for commitments for substantial new restaurant development and a minority equity interest in the joint venture. BK would like to develop its international expansion plans predominantly in high-growth emerging markets where they believe the current penetration is low relative to its potential. During BK entered into joint venture and master franchise agreements in Brazil, Russia, and China. They expect to introduce the Burger King brand in additional new markets during 2013 and beyond. In addition, they are aggressively pursuing opportunities to refranchise the domestic and international Company restaurants to new and existing franchisees, with the goal of approaching a 100% franchised system. They believe that a highly franchised business model will make their business less capital intensive and enhance the profits and margins. Sources: Burger King Investor relations. [Online] Available at: [Accessed 26 February, 2013] Book Rags Research Burger King. [Online] Available at: [Accessed 26 February, 2013]