Burger King Case Study
What Is the likely strategy Burger King is pursuing? Answer- The likely strategy Burger King is pursuing is the broad-differentiation strategy. By acquiring Tim Horton, BC will gain access to a broad range of customers by offered not only burgers and sandwiches, but coffee and baked goods as well. By purchasing Tim Horton, Burger King will become the third-largest fast food restaurant company In the world, with about $22 billion In system sales (mostly franchised) and over 18,000 restaurants across 100 countries Burger King is known or using tax-cutting strategies.
They have been able to reduce their worldwide taxes by more than 60% over the last few years.
By purchasing Tim Horton, K can change Its tax domicile to Canada and save millions by switching to the favorable corporate Income tax rates. The US corporate tax rate Is 35%, whereas the Canadian corporate tax rate is 35%, before various deductions and loopholes. 2. What Is the likely reaction of competitors?
Answer- Although, the deal is good news for the Investors and the share prices of tooth the companies has gone up, the two major competitors- Mcdonald’s and Subway are likely to remain unfazed. Even if Tim Horton and BC merge locations, Mcdonald’s and Subway will still have more locations globally.
Mcdonald’s already offers its own cafe© line and Subway offers coffee and baked goods as well. 3. Do you think they will be successful? Answer- As there are no laws being broken in K acquiring Tim Horton and moving their WHQL to Canada, I think they will be successful in cutting their tax costs.