A study on the growth mechanism of Burger King based on dynamic models of success and failure of businesses

다국어 초록 (Multilingual Abstract)

Purpose – This study is to propose a creative idea for constant business growth and development by examining characteristics of business outcomes by phase, which are “growth” and “erosion and stagnation,” respectively.
Research design, data, and methodology – It is necessary to identify an occurrence of crisis and its diffusion with a dynamic model in order to identify a success and failure of businesses in an organic way, not on a binary structure. According to “Dynamic Understanding of the Success and Failure of Businesses” published in 2007 by Samsung Economics Research Institute (SERI), the success and failure of the business can be analyzed largely by dynamic and static perspectives. The static perspective is to understand a crisis as a simply one-time event or as a linear causation. Thus, it has a limited understanding of the overall situation and has limits to investigating a foundational cause and developing long-term countermeasures. On the contrary, the dynamic perspective is to understand the crisis as circulation process of the overall system. Thus, it divides elements of the crisis as external and internal ones to understand it as the causal relationship of each element. Considering that the crisis is caught in a viscous circle and triggers a chain reaction amid the internally accumulated fear factors interacting with the external threat-causing ones, there is no option but to take the dynamic perspective which is more valid than the static one in organically identifying the success and failure of businesses. In the dynamic model of success and failure of businesses, the “growth” means the virtuous cycle, where the strength of corporate system enhances management achievement/performance, which consequently reinforces the system capacity. Next, the “erosion” is the stage where the growth loop goes habitual and lose suitability, which progresses with the growth loop at the same time. “Resonance”, which is the pre-stage of the decline, is where both internal erosion elements and external threat factors interact, which leads to deterioration of business performances and disturbance of the system. Lastly, the “decline” is the changing process where the shock from the resonance goes beyond the absorption and control capacity of the initial system, which becomes vicious circle from the virtuous cycle.


Results –- During the growth period of Burger King, the company promoted its brand very successfully with aggressive and creative marketing activities. However, due to the founder’s disposal of management rights and the following changes in the management, the company had no choice but to lose focus on its business philosophy and brand management, and eventually it had to face the big crisis (resonance) which was delisting from the stock market because of the external threat; well-being trend. However, Burger King resumed lifting on the stock exchange by making great efforts to clearly identify the current issues and seek solutions. Under the spirit of “perseverance” and its slogan “Have it your way” the company is now going head to head with McDonald’s in the North American region and emerging countries.


Conclusions – Then, what is the most crucial factor in the success and failure of businesses? Answers may vary, however, as learned from the case study of Burger King, corporations should inspect the present and focus on developing a long-term strategy for the future and actively fulfill the actions. McDonald’s may not be able to innovate by itself in the future as it may become routinized to the growth. There will be chances of winning if we change conditions of individuals or organizations to an organic system in terms of being creative. There is a hopeful message here that an individual or small business may have more advantages in the era of the idea and innovation.

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