Competition Between Mcdonald\'s, Burger King,

Competition Between McDonald's, Burger King, and Wendy's: The Finances of Fast Food

The following research proposal demonstrates the need for achieving greater consistency, accuracy, and reliability in the financial assessment of public traded corporations, and to this end develops a systematic way of achieving a model of prediction and assessment with the qualities. Noting the recent and ongoing economic turbulence caused by inconsistent and often fraudulent accounting and reporting practices, a literature review is conducted that identifies many of the complicating factors that affect financial reporting and corporation value assessment even when entirely legitimate practices are involved. Issues affecting firm valuation and company performance are also assessed. Following this review, the methodology for the proposed research of three companies in the fast food industry is presented, containing a mix of quantitative and qualitative data and methods.

Introduction

As dry and academic as accounting might seem to the average person, the preparation and publication of financial documents has actually led to headline-making news multiple times throughout the last several decades. From the series of financial and accounting scandals at Enron, WorldCom, and Tyco in the first years of the new millennium to the more recent global economic recession brought about by nefarious banking and lending practices at some of the world's leading financial institutions, the understanding and analysis of financial and accounting documents has proven itself time and time again to be of immense practical relevance and importance to every member of society in manners heretofore unimaginable. The financial strength of a company, an industry, and an economy as a whole is directly related to the quality of life the stakeholders in these bodies can experience, and when information is improperly understood, incorrectly displayed, or outright falsified, serious consequences occur for these stakeholders.

There are also still the more mundane and standard uses of these financial documents, of course, such as examination by institutional and individual investors to determine what areas of investment might lead to the greatest level of wealth creation and the most efficient returns on investments. Even in such applications, however, the need for increased scrutiny and care in the examination of these financial documents and their implications in a broader context of competition and industry performance has been highlighted by these financial scandals and breakdowns. Examining any company's financial position must include an assessment of its actual identifiable sales performance and real operations, and should generally include an assessment of competitor's financial and performance positions in order to contextualize and validate the statements and assessments made in annual reports and other publications. It is no longer enough, in other words, to simply take a company's word for its past and current performance, let alone its future projections of growth and profit. Instead, a broad array of tools and objective -- even skeptical -- perspectives must be brought to bear on the examination of any company.

The research proposed herein would work towards adopting a model for such inspection in the highly competitive quick-service restaurant (i.e. "fast food") industry. By examining financial statements and other publications produced by three of the industry's top competitors -- McDonald's, Burger King, and Wendy's -- produced over the past decade and comparing these internal assessments and projections with actual performance and with objective third-party analyses produced over the same period, a determination of accuracy, correlation, and context can be developed that will lead to a more comprehensive and valid interpretation of company-produced financial documents. In other words, this research will attempt to develop a model for financial document assessment in the context of external analyses as a means of developing better practical tools for investors, regulators, analysts, and the public at large in determining the strength of companies, industries, and economies. The following pages contain a brief literature review covering similar attempts and specific research areas of importance to the development of the research question at hand, as well as a methodological outline for the proposed research.

Literature Review

The idea that financial management and its implications for company and industry performance are complex and often nebulous at best is not new, and the vagaries and inconsistencies of certain concepts as they are understood and applied is a standard part of academic study in the area (Brigham & Erhardt, 2010). This does not mean that research into the area is complete, however, or that the current nebulous areas of financial management could not be brought into the light and made more concrete if there was real desire and effort to do so; understanding the actual machinations of financial management, financial reporting, and the growth of productivity and profit is essential from practical as well as academic viewpoints, and the problems should be addressed as such (Brigham & Erhardt, 2010). It is with precisely this dual goal of academic and pragmatic process that this research is being undertaken, and there are solid theoretical and practical foundations for such an investigation (Brigham & Erhardt, 2010).

Part of the problem experienced in the current era when it comes to the reasonable, accurate, and relevant analysis of financial statements and positions is the growing complexity of the financial tools and transactions that companies and investors utilize. This is made quite clear in an examination of the relationship between credit default swaps, bond markets, and stock prices, that finds a very complex and not always directly correlative relationship between these elements, all of which can be seen in various ways as market expectations regarding a company's strength and performance (Norden & Weber, 2009). The lack of consistency and correlation between these elements depending on the companies, industries, and markets selected for research -- and even within individual companies, industries, and markets -- is a clear and definite indicator that financial and investment analysis is a highly inexact science in need of more direct and comprehensive assessment if there is hope of gaining more stability and certainty through such assessments (Norden & Weber, 2009). The complications and uncertainties evidenced in such things as credit default swap trading and its relation to bond and stock markets are exacerbated by current research into basic macroeconomic assumptions that demonstrate current models of price, competition, and production might be fundamentally flawed, with operational capabilities and profits regularly directly contravening expectations based on the models (Carlin, 2009). This could suggest that an entirely new model of value and profit creation needs to be developed and adopted before the wider implications of more specific financial analyses can be made meaningful (Carlin, 2009).

What all this means for those trying to ascertain practical recommendations via financial analysis is, of course, a decrease in the reliability and the validity of projections binge made. The increasing complexity and unpredictability (at last according to current models, frameworks, and theories) of financial analyses based on company-produced reports, statements, and on industry and market movements can make it difficult if not impossible to determine what effective purchases and solid investments might be without a great deal of resource intensity (Barber et al., 2010). A comparison of individual and institutional investment performance in the Taiwanese stock market, for example, found that individual investors tended to have a three-and-a-half percent performance decrease as the result of aggressive and ill-informed trading, while institutions received a one-and-a-half percent performance boost as a result of the greater level of resources and scrutiny they are able to provide for each trade (Barber et al., 2010). While it will always be the case that those with more resources and skills for analysis will perform better analyses and that institutions will necessarily have more of these at their disposal than individual investors, it is also the case that a better-informed public would be able to make better decisions based on less simplistic and/or inaccurate modes of assessment. Furthermore, despite the negative nature of these findings, they also suggest that there is a definite means of appropriately and reliably assessing true strengths and performance capabilities of companies through comprehensive analysis; though investment institutions tend to perform such analyses on a case-by-case basis, the fact that these institutions have consistent performance improvements leads to the conclusion that a model could indeed be developed to align analytical tools with real past and projected performance (Barber et al., 2010).

In the fast food industry, an additional complicating factor is added to financial analysis, stock price analysis, and real performance projections -- brand recognition. Individual investors tend to be inordinately and irrationally attracted to headline-grabbing and other recognizable companies regardless of true performance capabilities (Barber & Odean, 2008). These behaviors have an effect on stock prices directly, and indirectly on the reporting of financial data and the making of internal projections about performance, and thus can have a real effect on competition (Barber & Odean, 2008). The three fast food companies listed are incredibly recognizable due to aggressive advertising campaigns and near-ubiquity throughout much of the developed world, and this will influence the model constructed for in-depth and accurate analyses and comparisons of these competitors.

Not only is the development and construction of this model necessary to achieve greater investor confidence, efficiency, and productivity, but could also help lead to more accurate and standardized financial reporting, which could actually improve company strength and performance (Graham et al., 2005; Biddle et al., 2009). Companies with more accurate financial reporting and greater control over reporting activities tend to perform better and demonstrate greater cohesion in their operations, as well, and also tend to lean towards more consistent profitability and stability, in addition (Graham et al., 2005; Doyle et al., 2007; Doyle et al., 2007a). Investment levels in firms with more consistent and accurate financial reports were also found to be more in keeping with expected results, signifying that models being used to make investment decisions were more well-founded and themselves more consistent, stable and reliable (Graham et al., 2005). While it is not exactly revolutionary to suggest that greater consistency in knowledge leads to a greater consistency in analysis and projection, the fact that this has been empirically evidenced argues quite strongly for the development of a more concrete and cohesive model of valuation.

Any such model must also take into account the effects that reporting standardization has on firm performance, and it is in this factor that a real problem of future projection and valuation can occur. Direct evidence from surveys and interviews with those in a position to have direct knowledge and influence on such decisions shows that executive and managers regularly make decisions that they know will lead to long-term losses (or diminished gains) for their firms in order to even out earnings reports and present an image of stable and sustained revenue to investors, in order to protect the value of current shareholders' ownership stakes in the company (Biddle et al., 2009). How this impacts competition and industries as a whole has yet to be thoroughly examined, though it seems clear that such behaviors make for complications in projecting based on current financial reports (Biddle et al., 2009). Though smaller companies tend to be more volatile and have weaker controls over their operations and their financial reporting, larger firms are more capable of manipulating both operations and financial reporting in attempts to increase stock value at the expense of real company value (Doyle et al., 2007a; Biddle et al., 2009). This type of activity is not likely to change without a fundamental change in the nature of publicly traded corporations however accounting for this trend in competitive industries such as the fast food industry is something that is both practically achievable and beneficial.

At the same time, research has shown a lack of correlation between accounting-specific weaknesses and overall firm weakness (Doyle et al., 2007). While weakness in accounting controls and reporting are often exploited to hide company-wide or operational weaknesses, and while reporting weaknesses can be the result of operational inefficiencies, the reverse relationship is not necessarily true (Doyle et al., 2007). Developing a model to determine more completely the connection between accounting and operational performance, and to equate this with competitive forces and realities in a specific industry, would assist analysts from all manner of perspectives and backgrounds in achieving more accurate and reliable results. By accounting for the factors in reporting and performance found in this literature review, it is hoped that this research will be able to yield such a model.

Methodology

A mixed-methodology approach will be utilized in this research, with both qualitative and quantitative aspects of company performance, industry performance, economic indicators, and financial reporting accounted for. Data collection will include detailed recording of all relevant financial reports from the three identified fast-food companies (McDonald's, Burger King, and Wendy's) over the past decade, including both the numeric figures provided in company balance sheets, earnings reports, and the like, as well as qualitative assessments and projections made in the textual portions of annual reports and other company-issued statements or publications. Recording of stock prices over the same period will be made, with monthly averages recorded as the initial means of assessment but with weekly and even daily averages included around the time of financial reporting or statement releases from each of the companies, in order to more directly and minutely ascertain the impact that such reporting has on stock fluctuations, investor assessment, and market performance. Additional information will be collected from outside analysts that produced assessments of current strength and projections of future performance for each of these companies over the period examined, and large institutional buying and selling trends will also be examined to determine how well such assessments and analyses matched actual practical changes in behavior.

In order to determine any correlations found between the various data examined, extensive statistical analysis will need to be carried out. The current SPSS software will be more than capable of handling the statistical needs of this research, which will include regression analysis on many sets of variables identified from the information above. Attempts to quantify certain qualitative data in order to facilitate further analysis will also be made, depending on the regularity and the specificity of the qualitative information obtained, leading to a more comprehensive and nuanced view of how reporting, performance, and value creation are related. Any initial statistical correlations suggested by a first round of analysis will be used to guide further data collection and more rigorous and multi-faceted statistical analysis, eventually yielding a model of influence and correlation that will enable investors and other analysts to determine real company value and future profitability with greater confidence and reliability. By taking into account not simply the information reported by companies such as McDonald's, Burger King, and Wendy's, but also the range of information described above and as further determined in a more extensive literature review, it will be possible to develop such a model and to describe its expected relevance and reliability in making practical and applicable decisions. After initial development of the model, testing will need to occur; it is not yet clear whether this will be achievable as a part of the proposed research or if subsequent research will be needed to fully ascertain the validity of the model once created. Certainly other researchers will be encouraged to utilize and test the model developed in addition to any testing completed as a portion of this research, and areas for further examination and clarification will also be identified.

Conclusion

The aim of the proposed research is to develop a more accurate and comprehensive model for the valuation of publicly traded corporations than can currently be achieved through standard examination of financial reports and other internally produced figures and publications. While this goal might be considered quite lofty by many standards, it is one that is certainly within the practical limits of achievability given sufficient time and resources, and the benefits of such a model to both the academic and the practical worlds would be substantial. Careful analysis and review of financial reports and of company performance has been conducted in the past, and efforts to establish appropriate models have met with a fair amount of success, however as ongoing scandals and problems have demonstrated current understandings and controls of financial reporting and valuations are not adequate to meet the needs of modern investors or the global interconnectedness of the modern economy. Ongoing research in this area continues to identify discrepancies and breakdowns in current theories and models, yet no research has attempted a comprehensive assessment of these identified problems and their underlying factors. It is with an eye towards this level of comprehensiveness and the increased reliability and validity that it will bring to the assessment of corporation value and performance essential that this research is proposed.

McDonalds

HISTORY:

The McDonalds corporation began as a drive-through in 1948 by two brothers, Dick and Mac McDonald. Businessman and entrepreneur, Raymond Albert Kroc, a salesman, sought a great opportunity in this market and advised Dick and Mac to expand their operation and open new restaurants. In 1961 Ray Kroc bought out McDonalds. Within 6 years, in 1967 this restaurant expanded its operations to countries outside the United States. Kroc permitted anyone to open a franchise, and took 1.9% of each franchise as profits. He pays 0.5% to the McDonald's brothers. In 1961, when Kroc purchased McDonald's from the brothers, he did so for the hefty sum of 2.7 million dollars. In 1968 the Ray Kroc expanded the McDonalds appeal and introduced a show to attract the children, named "Bozo the Clown." This was a hit for many decades and in 1990, McDonalds was one of the most profitable years ever. In this year Mcdonald's franchises expanded all over the world and has become the standard to which many other food chains aspire to achieve.

TIME TRAVEL:

1940: In 1940 Dick and Mac McDonald opened BBQ restaurant

1948: McDonalds became a self-service drive in restaurant and added 9 more items.

1949: McDonalds introduced world famous french fries and Triple Thick Milkshakes. 1955: On 15th April Kroc opened the first franchise of McDonalds

1958: McDonalds sold 100 million Hamburgers.

1959: In Fon Du Lac, the 100th restaurant of Mcdonalds was opened.

1961: McDonalds opened its Hamburger University.

1963: McDonalds opened its 500th restaurant in Toledo and the filet-o-fish sandwich was introduced.

1966: First television commercial was launched.

1967: McDonalds was introduced internationally. Today McDonalds restaurants are in about 118 countries.

1968: Big mac and hot apple pie was introduced

1969: Golden arches were updated

1975: Breakfast and first drive through was introduced.

1979: Happy meal for kids was introduced

1980: McDonalds celebrated its 25th anniversary

1983: Chicken McNuggets were added

1985: DES PLAINES store museum was opened

1987: Fresh salads were added in the Mcdonalds menu.

1995: A new advertising theme "Have you had your break today" debuted.

1996: McDonalds launched its official site McDonalds.com

1997: Chicken sandwiches were added

2001: A new burger Big 'N Tasty was introduced

2003: McGrilled burger was introduced, premium salads were added and the first global add campaign " I'm Lovin it" was launched.

2005: McDonalds clebrated its 50th anniversary

2006: Snack-wrap was introduced.

2007: Packaging of McDonalds was updated.

2008: Global packaging was changed and McDonalds labeled that all its food stuff contain 0 grams trans fat.

MISSION STATEMENT

McDonald's mission is "To be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."

PRODUCTS and SERVICES

Macdonald sells the following products in order to provide their customer with good and hygienic food:

PRODUCTS

Burgers Chicken sandwiches French fries Soft drinks Desserts Salads Breakfast items Milkshakes Coffee

SERVICES

McDonalds provides basic two services such as:

Self-Service System ? Drive-in through Service

AIMS & OBJECTIVES of MCDONALD'S'

"It's what I eat and what I do…I'm lovin' it" are the slogans

McDonalds wants to heighten their connection with the customer by providing great service and experience "in every restaurant, every time." The usage of different activities allows McDonald's and the customers to have a relationship amongst one another. They pioneered this type of relationship among employees and customers; particularly since many customers returned multiple times and enjoyed when employees called them by name.

McDonald's objectives are given as follows:

*to serve good food in a friendly and fun environment:

*to be a socially responsible company

*to provide good returns to its shareholders

*to provide its customers with food of a high standard, quick service and value for money.

HUMAN RESOURCE Management WITHIN the MCDONALDS CORPORATION

The human resource department at McDonalds operates as a separate department and holds an important place in almost all major operations of the organization but all managers across McDonald's are given responsibilities for hiring, motivating, cultivating and evaluating employees so that they can have a share in the organization's affairs. All managers must learn how to take on human resource responsibilities. Employees are the most important resources in McDonald's, particularly in creating a competitive edge.

FUNCTIONS of HR in MCDONALDS

The functions of Human Resources Management in McDonald's are:

POLICY-MAKING -- HR must establish major policies that cover the place and importance of people, both employees and customers, in McDonald's.

WELFARE - Concerned with looking after people at McDonald's and their needs. OFFER SUPPORT -- They must cooperate and help other managers do their best work. BARGAINING and NEGOTIATING -- HR acts as an intermediary to solve issues amongst different groups and their interests.

MCDONALDS JOB ANALYSIS

McDonalds has multiple employees that operate at different posts and work hard based on their level of capacity. Every position from cooks, to stage employees (Front of the House), drive thru employees and cashiers, up to assistant managers, managers, franchise owners and human resources are all working in sync to provide the best possible experience for the customers. McDonalds generally conducts job analysis so they are able to hire new employees on a yearly basis; occasionally this occurs on a quarterly basis. It enables management to have a better understanding of the jobs and duties being performed at every level and also helps them in training the people who are newly recruited.

RESTAURANT JOBS

Within the McDonalds chain of command, there is a clearly defined career path that begins with entry level crew members, advancing to crew leader, to floor manager, to assistant manager, and finally ending in restaurant manager. From there on, the opportunities for growth and career development are limitless including promotion to; Area Supervisors, Operations Consultant and possibly ownership of a franchise.

TRAINEE MANAGER

The entry level management position is the trainee manager within the McDonalds organization. This provides an opportunity to begin and excel the career based on the central business functions. They have a broad job description that gives them a solid base to move on to upper level management in the future. Trainee managers must handle several areas of professional excellence where sales, people, product and food safety and security are just a few of areas trainee managers must successfully accomplish.

CUSTOMER CARE REPRESENTATIVE

This is one of the lesser known areas of employment within the food industry, but no less important than any other position. It is a career opportunity, mostly for women, who must be responsible to organize birthday parties, special events & various activities within the local store level. This is a fun, but challenging activity for customer care reps and it prepares them to learn how to provide top notch customer services.

CREW MEMBER

Crew members are the core team members and central to the success of every local operation. They must be ready to serve the customers on the floor with a smile and friendly personality. There are three primary areas of responsibility for a McDonalds crew member:

* 1st class customer service

*Food and product preparation

*Cleanliness and hygienic practices

OFFICE JOBS

At McDonalds, managerial jobs are considered office jobs. These are generally obtained through a series of positions within the organization including; crew member, customer service rep, cook, etc.… at McDonald's office jobs are a perfect match once a particular employee displays the proper skill set up to excel in the areas of his/her local store. It is important to remember that while a manager is categorized as an office job within the McDonalds company, they are rarely in an office except to provide necessary paper work such as expense reports, food and product orders, balancing cash registers, etc.…They must also be on the floor supervising the crew and providing customer service to patrons.

PLANNING and FORECASTING PERSONNEL NEEDS

McDonalds uses the "Trend Analysis" technique/method for forecasting future personnel needs. This is where the firm studies its previous employment needs over several years, in order to predict future needs. The advantage of using this methodology now is due to the fact McDonalds has been operating for several decades. By now, they have full information of where it stands in people's minds. McDonalds forecasts its personnel needs according to what has been the trend of sales, revenue and labor needs during a particular time frame. For this they use two ways:

1. Management ESTIMATES

Managers are asked to forecast their staff requirements. They will do this on the basis of past, present and likely future requirements.

2. WORK STUDY TECHNIQUES

Work-study specialist's works out how long various jobs take, using available machinery and equipment. Provided they know what sales are likely to be, they calculate the numbers of employees required and the hours they will need to work. McDonalds forecasts the need of staffing employees by inside and outside supply of candidates.

INSIDE SUPPLY of CANDIDATES

In this forecasting method Information is collected on employees already working within McDonald's. For this purpose McDonalds uses Qualification Inventory system. A Qualifications Inventory of current employees gives the thorough information about current employees' skills, education, career, performance and other interests. HR requirements of McDonald's may be met by training and developing current staff rather than recruiting externally.

ECONOMY

The 2008 recession has had a major impact for McDonalds Corporation, and their competitors. Although the poor economy has impacted the industry, "the foreign currency translation had a negative impact on consolidated operation results primarily driven by the Euro, British Pound, Russian Ruble, Australian and Canadian Dollar."

DEMOGRAPHICS

The aging population is an external force that McDonalds has dealt with on a continuing basis. The baby boomer generation is a large major of the population, and McDonald's target audience of children is declining. The emphasis of society on the health conscious consumer is impacting the future marketing trends to a more conscientious consumer.

OTHER FACTORS

McDonalds is worldwide chain that operates in several different countries, which is always a political and legal challenge for them. Environmental influences within the corporation worldwide the sustainable and green lifestyle, and combating these problems are also at the forefront of McDonalds initiative.

CONSUMER TRENDS

Lately, the focus on healthy food and beverages has become paramount in our overweight society. The McDonalds corporation follows the consumer trends of a more health conscious diet, combined with value for the money spent, and the convenience their stores provide. By improving value by offering more items on the value menu has improved customer traffic. Innovating new menu healthy options has helped to customers returning. New technology trends have increased customer convenience, and timeliness of order transactions.

INTERNAL ANALYSIS

The McDonald's Corporation is governed by an Executive Board. "The Board itself determines its size within the range of 11 to 24 members required by the Company's Certificate of Incorporation. The Board believes that, at this time, the desirable number of Directors is between 11 and 15."[15] James a. Skinner is the current Vice Chairman and Chief Executive Officer. Currently listed are 26 members of the Board. Appendix N lists all board members and titles. "The Board is also responsible for promoting strong corporate governance principles and effective management oversight. Our team of directors, who bring a range of independent and experienced voices to our deliberations, is diligent in executing these responsibilities. And as always, we remain united in our commitment to deliver shareholder value."

RESEARCH and DEVELOPMENT

"The Company operates research and development facilities in the U.S., Europe and Asia. While research and development activities are important to the Company's business, these expenditures are not material. Independent suppliers also conduct research activities that benefit the Company, its franchisees and suppliers (collectively referred to as the System)." [23]

"One reason McDonald's is creating crowd-pleasers again is that it has become much more rigorous in product development. New ideas are generated in the company's food studio in Oak Brook by a staff of three dozen chefs, food technicians, and market researchers. Potential new products get tried out first in one market for six weeks. The company doesn't just assess sales. It also monitors costs and margins and judges how easy a new product is to prepare by a crew that is constantly changing."

BURGER KING

HISTORY

Burger king is a fast food restaurant, at the end fiscal year 2011, it has 12,200 outlet in 73 countries. Burger king began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain. When 1954, insta- Burger King face the financial problem and have two Miami-based franchisees, David Edgerton and James McLamore purchase the company and renamed it Burger King (Burger King, 2011).

The first Burger King started in Miami, Florida. The company vision is offering reasonably priced quality food, served quickly, in attractive, clean surroundings. When America was introduced burger king into market, BK basic offering of burger French fries, sodas and milkshakes, their burger was selling for only 37 cents. It was an instant sensation and immediately became our flagship product.

In 1957, burger build up dining room for customer can have a comfortable place to eat their food at a table inside the restaurant. In 1970s were the "Golden Age" of Burger King advertising, BK have do a lot of advertising to promote their company name and introduce their product and service into public. But beginning in the early 1980s, the company's advertising began to lose focus, BK not often to post advertising in to the public and less promotion in their product.

In 1975, burger king began to offer drive-thru service at its restaurants, appealing to increasingly mobile and time-conscious consumers. Burger king taking it public in 2002, at the end of the fiscal year 2012, burger king reported it have more than 12,200 outlet in 73 countries, those outlet have 66% are in the United state and 90% are privately owned and operated.

Data from BK profit statement, we research about their revenue fell 4.3% compare with 2010-year, their revenue at the end of August 2011 is $596.2 million. It data is not only for BK to know their revenue in year, it also show about BK have how famous in the world and their customer from all generation.

STRENGTHS

1. Burger King is going to be introduced in Egypt as a major threat to other competitors due to its popularity and positive feedback in other countries.

2. Burger King is the world's second largest operator of fast food hamburger restaurant (FFHR) chain.

3. Burger King is the first food restaurant to make a "drive thru" in Egypt

4. Burgers are flame broiled not fried, healthier.

5. Over 11,000 restaurants with Burger King name.

6. Market not saturated with Burger King Commercials; a new marketing campaign would have more effect on the consumers.

7. Compared to other burger joints, Burger King has the most professionally made burgers, since it is its specialty

WEAKNESSES

1. Many consumers argue that Burger King tastes better than McDonalds, but lacks the latter's polish, administrative strength and marketing muscle.

2. Failed advertising campaigns weren't the only problem's, they also had internal problems. Management lacked focus and direction and has struggled with marketing mix decisions.

3. Ads should have distinguished themselves from other ads by letting the people know that burger king isn't just another standardized burger.

4. Burger King's past advertising and corporate strategy failed because BK did the two biggest mistakes they could have done. First they don't listen to the customer and second they don't advertise their main product and maintain a target market.

5. Burger King's prices are high compared to other competitors in the market in Egypt.

6. 90% of Chain is franchised making it harder for sweeping image changes

OPPORTUNITIES

* International expansion, come to Egypt and other markets, such as Asia-Pacific and Indian subcontinent regional markets

* Only serving a small percentage of the market, can be enlarged.

* Growing dining-out market, can lead to higher sales, revenues & profits.

* Believes that there are many other new ideas it'll produce into new and existing markets.

THREATS

1. One major threat, as oppose to others, is McDonalds, for it is the first largest operator of fast food hamburger restaurants, worldwide and in Egypt.

2. Other competitors have more variety of food and beverages.

3. Burger King is new to the market therefore not a lot of people will respond quickly let alone buy the product.

4. McDonalds/Hardees gaining market share with innovative marketing strategies.

BK MARKET ANALYSIS

Market analysis is a strategy for the company analysis a market research to for the organization have a direction or mission to growth up the company and improve their services. Such components are consumer, company, competitor, and condition.

CONSUMERS

Consumers play a main role in determining the success of a business thus it is essential for companies to understand their consumer needs and wants. Burger King's customers are from all generation people and it has identifies the different types of Burger king customers, there are adult, women, teenager, and children. Burger king have doing using the cartoon in the advertising to promote their product and have the meal for children to attract them to eat the burger king. BK have do the drive thru for the working people have their lunch or dinner when they are driving and help them to save the time.

Besides that, BK have a provide promotion of dinner meal start form 1st April 2012, each medium set of meal cost RM 9.99 only, that is a good news for the teenager, because the price is cheaper to having the burger king for their dinner.

COMPANY CULTURE

According to Hawkins and Mothersbaugh (2010), it is important that a company fully understand its own ability to meet the customers' needs. This involves evaluating all aspects of the company from financial condition to marketing skills. Failure to do so will result in serious problems. Burger king have a strong brand name, image, and reputation in the world. their own strategy to training their staff be more morality and provide good service for the customer.

MAIN COMPETITION

Focusing solely on customers' needs and wants is not sufficient for a company to be success. In order for a company to be successful and dominate the market, company cannot overlook its competitor's capabilities and strategies. There are many fast food restaurants out there such as McDonald's, Wendy, and KFC. Their product is similar with the burger king and they have their own strategy to attract the customer. Burger King have their own strategy plan, such as special meal and provide the fast service and provide a lot of drink for his customer have a lot of choice in his meal and drink.

MARKETING STRATEGY

Product

A product is anything a customer acquires to meet a perceived need. They are generally buying need satisfaction, not the physical product attributes (Hawkins and Mothersbaugh, 2010). It is essential that a company sees the opportunity of the market and offer variety of products for customers to choose form in order to satisfy their needs. Fast food is main product of the Burger King, for example, have hamburgers, cheeseburgers as well as fries, salad, hash brown, onion rings, coffee, juice, shakes, cookies and pie. Other than that, burger king allows people individualize each order with many options including, fries or onion rings, cheese, bacon, mustard, ketchup, mayonnaise, lettuce, tomato, pickles, and onion. In addition, burger king was add the best coffee to all USA restaurants in the summer of 2010. There have selling coffee along with iced varieties that also come with a choice of plain, vanilla or mocha flavors and whipped topping.

PRICE

Price is the amount of money one must pay to obtain the right to use the product. The price of a product will affect one's purchase decision, thus company must carefully indicate their product price. Currently, burger king have a promotion is their new dinner meal. Their target are focus on student, and teenager, using low price to attract them to buy the burger king product.

Selling expensive burgers is a weakness and one of the barriers that stand in the way of burger king to increase its sales. So in order to increase sales burger king has 2 choices:

1. It has to decrease the price that it's selling with now. For example decrease its prices by about 18% or putting competitive pricing strategies in order to be able to compete with others.

2. To convince customers by one way or another that the high price they are paying for is for a very high quality of burgers, and customers should accept it.

Customer loyalty is when customers are willing to buy the product regardless of the high prices. This is what burger king should do in order to increase sales. It should build customer loyalty among its customers in order to attract and stop them from buying from competitive brands. This way customer's will buy the burgers over and over again.

MARKETING & ADVERTISING

A-Marketing strategies: in order to achieve the marketing objectives, Burger King has to imply two important strategies. But first we have to identify the...

Target markets:

Target Market 1: General population, with special emphasis on teenagers

Target Market 2: Franchisees.

The 2 strategies are:

1-Market Expansion: to increase sales with existing products or with new products.

This could be done by:

a) Lowering prices of the products.

b) Selling in new markets.

c) Emphasizing that all products are Halal with a high quality and taste.

d) Offering many varieties and innovation all the time.

e) Increase people awareness by doing a lot of advertising everywhere.

f) Convincing people with the high quality.

Actually Burger King has an effective slogan from 2004 till Present which is "HAVE it YOUR WAY"

2-Market share growth: to increase their share of the market, this means taking sales away from competitors.1 opening many branches in important areas, to be there when food is needed like to be in malls, main streets, universities, gas stations or festivals.

To draw sales from competitors they need to have a competitive advantage either in products or policies.

This can be done by assuring that this is the healthiest meal you can in comparison with the competitors. Also showing care can be an advantage, for example they can donate a part of the price to the cancer hospital 57357. Such tactics pull the consumer as he/she is having the best service and doing something good for the community at same time.

B- Marketing Mix:

1-Product: Burger King doesn't offer only a fine product but also a quality and service.

General characters: consumer product, high quality and tasty burger, with a worldwide known brand name. It can be developed by making everything customizable from the sandwich, the package till the way it is served. They also have a variety of other products which consist of: fries, onion rings, the whooper, soft drinks and different versions of burgers.

2-Price: Price is expensive for customers and higher than competitors, so it should be lowered to penetrate and target other segments. The value should meet the price.

3-Place: it is a direct service. Burger King should open more branches starting with City Stars and Nile City Towers so that the product is available to all potential customers also in private universities, which means to be selective, by targeting a small group of the society.

4-Promotion: mainly it is advertising, to increase people's awareness. Selective mediums should be chosen, specific TV and radio channels, specific places for street ads. They should focus on quality and taste in their ads.

Burger King SWOT

This SWOT analysis is about Burger King.

Strengths:

Geographic Diversification

Burger King has over 11,500 fast food restaurants located in over 70 countries. 7,207 of its restaurants are located in the United States (62%) and another 4,358 are established in international locations (389%) such as Asia, the Middle East, Africa and Canada.

Established Market Share

Among Fast Food restaurant chains, Burger King is second only to McDonalds and holds a 15% share of the United States market. The company's profitability has also increased in recent years. In the period 2006-08, its operating profit has increased from $170 million in FY2006 to $354 million in FY2008.

Globally Recognized Brand

Burger King is able to boast a brand that is widely recognized thanks to its flagship slogan "have it your way," the whopper sandwich and most recently enhanced by its mascot known as "the King." The company was recently ranked 7th in brand awareness.

Superior Growth Plan

Approximately 90% of Burger King Restaurants are owned and operated by independent franchisees, many of them family-owned units that have been in business for decades. The company is able to grow while minimizing large capital expenditure, meanwhile it collects fees and royalties from each franchise added.

ndustry Environment:

CONSUMER BARGAINING POWER

The Burger King's slogan is "Have it your Way" and it has almost 11 thousand and 5 hundred restaurant over 70 countries and it offers so cheap price for one burger so it is clear that in this case the bargaining power of buyers is relatively low.

SUPPLIER BARGAINING POWER

The Bargaining power of suppliers is high because number of burger companys are available in the market like McDonalds and other company.

NEW ENTRANT THREAT

Burger King company offers cheaper price and already it is known burger company so the threats of new entrants is low.

RIVALRY

Almost every burger companies are producing more innovative with scent flavor, so rivalry among competing firms are quite high.

Threats of substitutes products:

Threats of substitutes products is high, because burger it's a fatty products if one have every time then he or she will lead a fatty life and he or she cannot move easily that will harm for human being.

SUMMARY

So at the end of the discussion we want to say that Burger King is served globally according to fiscal year 2010 their revenue is U.S.$2.33 billion, operating income U.S. $363.0 billion, and their net income is U.S. $107.8 million and about 11,500 restaurant over 70 countries. In the near future they should invest more and more and develop good relationship with their franchisees. The history of Burger King shows that the founders wanted to create a warm feeling for the customers when they arrive in their restaurant and what better way of doing that than by handling the management over another family? It has been a little bit over 50 years now since its first outlet in the corporation is still running very strong. With a new competitor it becomes even harder and harder to create your own franchise and there is absolutely no sign of Burger King slowing down.

WENDY'S

HISTORY

It all began in November 1969, when Dave Thomas, inspired by the hamburgers that he liked so much in his old hometown, opened in Columbus, Ohio, the first restaurant from what would soon become a successful franchise. Naming it after his fourth child, Melinda Lou "Wendy," with "Quality Is Our Recipe" as its first slogan, Wendy's kept growing. After only a year, in 1971, Dave Thomas opened another restaurant in Columbus, creating the first modern "drive-thru window."

Stapling its square hamburgers and its soft ice cream mixed with frozen starches, the "Frosty," as its main products, Wendy's enjoyed a growing popularity among the people of Columbus. Its success determined Thomas to expand Wendy's to a full-sized chain, around North America, and soon spreading in more than 20 countries. While not having a "signature" sandwich like other fast-food chains do, Wendy's became known worldwide for its square burger patties. In the 1980's Wendy's improved their standing by being the first fast food chain to offer the "Salad Bar," where customers are provided all the salad components separately, to assemble a salad after their own unique taste.

Besides their tasteful hamburgers and salads, Wendy's also frequently rewards their customers with coupons which offer reductions or chances to win important prizes.

The growing expansion of the Wendy's franchise, climbed Wendy's on the third place worldwide among hamburger fast food chains with about 6.650 locations opened until March 2010. While almost 77% of Wendy's restaurants are franchised, employing over 46.000 people and leaving decorations and pricing to the individual owners, Wendy's headquarters in Dublin, Ohio (moved from Columbus in January 2006) still sets the standards for exterior appearance, menu, and most important of all food quality.

Vision Statement:

To continuously grow stakeholder value by leveraging the strengths of vibrant, independent restaurant brands.

Proposed Vision Statement:

Our vision is to be the quality leader in everything we do.

MISSION STATEMENT

We believe the most vital factor in the restaurant business is to take care of our customers. (1) as a global company, our goal is to provide our customers with the most enjoyable dining experience possible and be the quality leader in everything we do. (3, 7) .We will keep on bringing even greater variety, higher quality, more nutritious foods along with fresher menu choices into our restaurants. (2) We strive to continuously produce quality foods through food science technology and research. (4) Our company is committed to expanding and growing profits in order to sustain recognition while protecting the environment. (5, 8) Our philosophy is to provide for the needs of all our customers while creating a safe workplace for all employees. (6,9)

PHILOSOPHY

Self-concept

Concern for public image

Concern for employees

External Audit - Opportunities & Threats

Opportunities

1. 53% of household income is spent eating outside of the home.

2. The Canadian dollar is getting a stronger exchange rate resulting in higher EPS from 0.11 in 2004 to 0.15 in 2005

3. Quick Service Restaurants sales have increased by 5% in 2006 according to the National Restaurant Association.

4. Burger King's market share dropped from 15.03% in 2000 to 10.95% in 2006.

5. The U.S. Department of Agriculture states that consumption of eating out has risen 3.6% from 1990 to 2005

6. The breakfast food industry is a $77.6 billion industry.

7. McDonald's suffered an $8.5 million lawsuit and a decrease in sales due to not informing customers of trans-fats in their cooking oils.

8. Emerging markets and expansion abroad.

9. Product and services expansion

10. Competition is facing financial stress due to many factors including global economic condition resulting in competitors' outlets being closed down.

Threat

1. A 12% increase in beef costs over 2005 reduced Wendy's EPS by 0.07 cents

2. McDonald's new management team is returning them to a sales growth trend.

3. 60% of McDonald's are open 24 hours, worldwide.

4. McDonald's menu is expanding to offer more upscale coffee, and better quality chicken sandwiches

5. Natural disasters are causing vegetables to be in short supply for restaurant industry.

6. Burger King has invested $12 million in their United Kingdom restaurants.

7. Wendy's has restaurants in only 20 international countries compared to McDonald's and Burger King who have restaurants in 120 and 65 international countries respectively.

8. Burger King plans to implement a dollar menu for breakfast items.

9. Economic crunch is resulting in financial stress situation for the company itself.

10. The future of fast food industry is rapidly growing in Asia and south East Asia and Wendy's is not exploring into these markets as its competitors are.

Internal Audit - Strengths & Weaknesses

Strengths

1. First to introduce non-trans-fat fast food.

2. Improved goodwill from $19 million to $36 million.

3. Owns and operates 2 bakeries as apart of their vertical integration strategy.

4. Maintains industry-leading customer satisfaction scores.

5. World's #3 fast food chain controlling 14% of the fast-food market share.

6. 417 new restaurants in the U.S. & Canada.