Case Study- Burger King

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China markets

Economic factors

There are two major economic factors affecting the acceptance of Burger King.

The first factor is that the per capita consumption of urban residents in China increased rapidly. Based on the Beijing Municipal Bureau of Statistics, it shows that the per capita consumption of urban residents is $17893 RMB and there is $5936 RMB is food expenditure during 2009. This creates a favorable business environment for Burger King. Moreover, due to the recovery of the China’s economy, the employment data show that there are 7.25million new jobs in 2012, resulting in the increase in the nominal income and the disposable income of the consumer. More capital flow enables consumers to pay more money in food expenditure, it also create a positive business environment to Burger King.

The next factor is the mode of Chinese food expenditure changing greatly. During 2013, the national foods and beverages revenue has been increased by 8.9%. However, it is the first time that the increasing rate was single-digit growth in 20 years. According to the China Hotel Association representative, Mr. Han Ming, said that, the catering trade faces to source of structural adjustment and the new generation has gradually become the main consumer markets. The result is high level catering trade will turn into medium and low level. Applied to the study, Burger King can thus establish their business in China easily.

Social factors

As each country has its own cultural environment which results in different behavior, so there are some cultural factors that will affect the acceptance of Burger King in the Great China Market. The first factor is living standard. Since the Burger King is a fast food restaurant that is a bit more expensive than its rivals. So the living standard of people may affect the acceptance of Burger King. As people in China unlike the people in United State, they will not eat fast food all the time; people with a poor living standard would rather use their money to buy rice other than fast food. However, the people with a better living standard, although they will not eat fast food all the time, they may buy few times a week and they do not mind to pay more money to have a better quality food. So we can see that living standard is one of the factors that will affect the acceptance of Burger King in the Great China Market.

The second factor is because of discrimination. There may be some people in the Great China Market do not like the culture of foreign countries, they will think that if the foreign enterprises enter into the China Market, it will affect the traditional culture of China, so some people do not fond of the fast food restaurants enter into the Great China Market, and this will also affect the acceptance of people.

The last factor is that due to the religious, in the Great China Markets, there are some people believe in Buddhism and those people are vegetarian. However, the food of Burger King and other fast food shop have meat inside, so the vegetarian will not buy the food from them, so that the acceptance of the Burger King will be lower.

Political factors

As we conclude from the survey results, the acceptance of Burger King is relatively low; it is believed that the differences between China and America’s political system caused great difficulties for Burger King to increase the acceptance as well as manage their business in the Greater China markets. Although Mainland China started changing their political system, from the early stage of Socialism into increasing freedom and human rights nowadays, it is still a far way to become a political system with high level of individualism and democracy. While on the other side, America has been maintaining a high level of democracy and become one of the typical cases of individualism. As Burger King was founded in America, such great discrepancy may results in barriers for multi-national enterprise like Burger King to gain acceptance and reputation in Greater China markets. For example, due to more restrictions and law protections for foreign corporations than in America, Burger King may be necessary to experience great change to fit in the market.

Moreover, the political problems had become one of the most important issues between the two countries to deal with, while other countries and parties also pay attention to this issue, such as the controversy of the South China Sea border, America and China has different stance in this issue, which may greatly affect long-term development and future direction of the globe. If the relationship between the two countries becomes worse, it may cause barriers for multi-national enterprise, especially the American-based company like Burger King, to invest in China, such as increasing profit tax, in the worst scenario, it reduce the chance of Burger King to build up their business in China and even being rejected from setting up business in China.

Recommendation of Global Strategy

In order to capture the demand in the Greater China markets, with reference to the survey results and analysis, it is suggested that localization should be used. In other words, we believed that more customized products and marketing strategies in accordance with local responsiveness should be provided by Burger King for the most effective way to capture Greater China markets.

Localization Strategy means that the company using this strategy extensively customizes both its marketing strategy to match the tastes and preferences in different national markets. It tends to establish a complete set of value creations activities – including production, marketing and R & D- in each major national market.

From the survey results, we identified that Burger King is not in the advantage position in the market as the statistics shows most of all people listed McDonalds as their favorite fast food restaurant (Q.1), and the majority of the interviewers will not go (Q.2) and spend (Q.5) at Burger King in the following month, it implies that the interviewers did not impressed by the products and marketing strategies provided by Burger King. The huge differences in customer tastes and preferences between America and China led to strong pressures for local responsiveness. The production and marketing messages have to be customized to appeals to the tastes and preferences of local customers. From question 7, more than 60% of the interviewers prefer more food options by Burger King; therefore, it is necessary for Burger King to increase the number of customized products, it is