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Burger King Centralizings Organizations February 7, 2007

Posted by wilson7 in Organizational Design.
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John Dasburg, CEO and president of Burger King Corporation, implemented a new corporate structure which eliminates division barriers and combines the company’s senior leaders into a single management team. Dasburg would like to eradicate these divisional barriers to make the company more centralized in
North America, he also is constructing new reporting positions that will not be geographically but functionally. Some of the new positions that John plans on creating are chief operating officer (COO), chief financial officer (CFO), chief marketing officer (CMO), and General Counsel. Dasburg is preparing a strong management team to oversee the company’s restaurants as a whole rather than different products for different areas of
North America.  Do you think this is the correct move for Burger King? Is it better to be centralized or decentralized?
 

Benefits to being Centralized

Reduction in number of systems required to handle corporate learning.

Ability to easily align employee objectives with corporate objectives.

Realization of significant cost savings advantages. 

Benefits to being Decentralized

Increased control at the local level.

Local training departments tend to understand the specific needs of their areas of responsibility much better than corporate.

Control over local resources.

http://www.clomedia.com/content/templates/clo_feature.asp?articleid=128&zoneid=30 

Even though Burger King is focusing on centralizing its restaurants in America, there restaurants internationally are more decentralized and will maintain there previous organizational structure. I believe that this centralization of Burger King could effect the company in a negative way. Since BK is a fast food restaurant with people’s taste varying from location to location it is better for them to be more decentralized. My reasoning for this is that managers in different regions know the likes and dislikes of their customers in that specific geographical area. These managers can then order the needed supplies rather than every BK getting the same amount of products when some are selling out quickly and others are never selling out. I am very interested in seeing how this decision turns out for Burger King. What do you think will happen?

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Comments»

1. Janine - February 7, 2007

Hmm. I seem to recall a similar situation in the book with McDonald’s(page 112). In that example, the fast food chain went from highly centralized, to attempts to be more decentralized and flexible. The article does state, however, that this decentralization was not as effective in some areas as was expected. Therefore, McDonald’s “moved to recentralize control over quality and take back control in this area”(112).

So I think if Burger King does the research and learns from the studies of its competitors, then the move to decentralize could work. But also keep in mind, people go to Burger King expecting a certain taste of food. Tastes may vary from location to location, but Burger King is a fast food staple; people go there wanting the certain foods they offer.

2. collage9 - February 7, 2007

The main concern I would have with centralizing a company like Burger King, is not recognizing changes in customer needs and addressing these issues efficiently. If Burger King can do this, they should be fine. I feel as though people all over North America go to Burger King knowing what to expect, and their menus probably don’t vary too much from location to location in NA. Therefore, I don’t know if this would be too big of a problem for BK. However, I do believe it is import for the company to remain decentralized with regards to their foreign operations. Tastes differ greatly from country to country, and it is important that BK is flexible in these areas and is able to meet individual countries customer needs.

3. silviamocanu07 - February 7, 2007

Given the nature of Burger King’s operations , I believe that centralization might be a good way to enhance efficiency. burger King’s offer is standard and does not have many differences across the US, therefore I believe it makes sense for them to make this move. Although this decreases control at a local level, I do not think that this would be a problem within the country, however, I agree that when looking at their operations world-wide, it would be smart to keep things decentralized at a global level. Understanding local preferences and adjusting the menu to include certain country-specific options is important. An example of such an approach is McDonald’s. The company has products that reflect the local cuisine and that appeal to the customers in the respective country.

4. Jordi - March 27, 2007

I agree that BK’s move seems to go against prevailing trends towards DEcentralizing in fast food. Look at how McDonald’s has shifted decision-making to national level. Look at how new entrants into fast food, like au bon pain, Starbuck’s, Baja Fresh, and in-and-out burger deal with scale and local variation.

On the other hand, if Fast Food is a stable, mature niche, you expect to see price competition and competition for scale. So, perhaps BK is strategically astute to lower costs and standardize to gear up for a price war.

5. David L. Smith - December 4, 2010

The BK’s in San Angelo,Texas are in need of repair and major upkeep. They are very dirty and have no customer friendly atmosphere. We took our Grandchildren there for lunch and the floors and bathrooms were horrible. Please do something about this situation!!!

6. concerned employee - January 3, 2011

if burger king is to win the public over they first of all need to win their staff over yes the customer must come first but not to the extent that the restaurant team are under trained and are second thoughts you get what you pay for when it comes to staff Hmmm wonder why all staff have horrible attitudes


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