Wednesday, April 25, 2012

Bulking Up or Slimming Down?

This week's Wall Street Journal article "Fast Food Franchises Bulking Up" echoes a similar sentiment of this week's articles.  Burger King struggling to maintain its footing as a major fast food player is continuing to feel the effects of the economic downturn and is selling many of its company-owned assets (stores) to franchisees.  Coined "refranchising" this is an industry effort to lighten the load as franchisees are likely to run a tighter ship maximizing cost-effectiveness.  While shifting the risk and responsibility to franchisees make appear like an easy quick solution, it can backfire if the brand experience is diluted by poor management.

Portfolio analysis certainly played a role in Burger King's assessment of shifting risk while also staying relevant against competitors and to customers by introducing new menu items like smoothies.  This would likely put their strategy on the lower end of the Business Strength axis and more solidly in the middle of Industry Attractiveness.

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