Pest Analysis and Porter Five Forces Analysis of Burger King in Malaysia

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In fact, the self-service kiosk benefits Mc Donald’s from various perspective. First, the self-service kiosk able to make the process of food ordering become more efficient and faster. Next, the self-service kiosk could handle the customized order better and decrease the possibility of human error. But, the implementation of Mc Donald’s self-service kiosk does not mean that Mc Donald’s will reduce the human force in their branches. (Hayley Peterson, 2015) So, the issues of retrenchment will not happen in Mc Donald’s branches. Hence, Burger King may follow the trend of self-service kiosk in order to improve the satisfaction of consumers and customers and improve the efficiency of food ordering process.

2.2 Porter Five Forces Analysis

2.2.1 Competitive Rivalry

In Malaysia market, there are a lot fast food franchise companies who compete directly or indirectly with Burger King. Based on a research done by Statista, it examines the fast food restaurants that usually visited by Malaysians. The results of this research was shown in appendix 4. Based on the results, the Burger King was not chosen by as the fast food restaurant that usually visited by Malaysians. Besides, KFC was ranked number 1 in the research results, followed by Mc Donald’s and Pizza Hut. (Statista, 2016)

Other than that, the largest competitor of Burger King is Mc Donald’s. Both of these fast food franchise companies are focusing on various burgers. Besides, the price range of Burger King and Mc Donald’s are similar and target on the same group of consumers. (Sean Ross, 2015)

Burger King entered the Malaysia market by 1997. But, the product adaptation of Burger King are not as good as their largest competitor, which is Mc Donald’s. In order to compete with the competitors, Burger King should improve their product adaptation in order to accord with Malaysia culture and preferences of Malaysian.

2.2.2 Threat of Substitutes

Based on the information provided by Passport, Burger King falls under number eight of the ranking of brand share of fast food industry in Malaysia. Appendix 5 and 6 shows the brand share of fast food restaurants in Malaysia.

There are some reasons that caused customers switch to other fast food brands or companies instead of Burger King. First, the switching cost is low. Next, customers may switch to other brands or companies due to change of their preferences. Besides, customers are having numerous of substitutes for Burger King and these substitutes induce the customers to switch brand. Other than that, customers switch brands due to their dissatisfaction towards Burger King as well. (Lawrence Gregory, 2017) All the Burger King branches in Malaysia do not provide delivery services and it causes the substitutes of Burger King gain a competitive advantage over Burger King.

Hence, Burger King should follow the trend of providing delivery services to customers in order to make sure that customers are served well. Moreover, Burger King should gain some competitive advantages over those substitutes in order to retain their customers and gain more market share.

2.2.3 Threat of New Entrants

Malaysian are dissatisfied with the ordinary fast food companies that only provide some ordinary foods, such as burgers, fries and fried chicken. In recent years, Malaysians’ preferences towards fast food were changed and Malaysians are seeking for more variety of fast food.

So, there are some new fast food companies who are providing some special, unordinary yet affordable foods entered Malaysia market. In 2015, one of the high competitiveness fast food companies, 4 Fingers entered the Malaysia market. 4 Fingers is a fast food companies founded in Singapore by 2009 and it specializes in Asian-style fried chicken. (4 Fingers, -) When 4 Fingers was first introduced in Malaysia market, it went viral and a lot of Malaysians would like try it. In 2017, 4 Fingers expanded to 4 branches in Malaysia. Based on the news reported by New Straits Times, 4 Fingers is planning to keep on expand in Malaysia market and will expand to 20 outlets in next five years. (NST Business, 2017)

Malaysians are bored with Burger King and seek for some variety and unordinary fast food. Hence, Burger King should conduct a research regarding to the Malaysians’ preferences towards fast food. Then, Burger King may create some new menu based on the research results in order to accord with the Malaysians’ preferences and gain back their market share.

2.2.4 Bargaining Power of Supplier

Suppliers of Burger King act important roles in the operation of every single branch of Burger King. The quality of goods supplied by suppliers will affect the reputation, sales and the future of Burger King in long run, either positive or negative.

The bargaining power of supplier of Burger King considers as weak due to there are a lot of suppliers that can substitute each other and Burger King can switch to other suppliers while Burger King dissatisfied with the quality of goods provided by a supplier. (Lawrence Gregory, 2017) While Burger King decided to switch to another supplier, Burger King should analyze the terms and conditions that applied in the contract with previous supplier in order to avoid any lawsuits or losses.

As the suppliers of Burger King may bring a lot of effects to Burger King, either positive effects or negative effects. In order to avoid the negative effects that cause by the suppliers, Burger King should implement backward implementation to produce their own products and supply to each branches. Burger King may need to purchase processing plants in Malaysia in order to make sure that the supply of goods is according with the demand of Malaysia market. Purchase of processing plants may cost millions or billions Ringgit Malaysia; but in the long run, Burger King need not to pay for the supplied goods and Burger King able to examine the quality of goods produce by processing plants as well.

2.2.5 Bargaining Power of Buyer

Buyers are those who able to affect the performance, sales and profit of Burger King directly. There are some reasons that caused the buyers or customers have high bargaining power.

The first reason is buyers or customers can switch to other fast food brands or companies easily due to low switching cost. While the buyers or customers switch to the other brands or companies, they are having the enjoyment of different food and discovering for their preferences towards fast food as well. Next, the