Category: McDonald’s

Financial analysis of the support activities shows that in the financial year 2019, there was a growth in the finances and revenues. According to MacDonald’s Corporation (2020), the company witnessed a 5.4% growth in product sales. This was accompanied by a 4% growth in consolidated revenues. Distribution is an essential aspect of value creation as shown by the 7.2% increase in sales in the International Developmental License Segment; a 5.0% increase in sales in the US and the 6.1% increase in the internationally operating segment. As such, looking at the financial dimension, distribution plays an important role in value creation.

The non-financial aspects are also vital in the company’s value chain. Because of the growth in the company’s market base, there is an increasing need to enhance the use of technology in the supply chain. The use of artificial intelligence (AI), as an example, will be important in reducing the waiting times at the company’s drive-through. The technology can also be used to improve customer satisfaction through menu recommendations. Additionally, through vertical integration, the company has eliminated the challenges associated with suppliers. It has enhanced service delivery by ensuring that the raw materials are per the company’s standard requirements.

Accordingly, the value created from the supportive activities can be analyzed through the VRIN framework. To begin with, using vertical integration, McDonald’s can manage the raw materials and the final product. This is valuable as it ensures that raw materials are consistent with company standards. Secondly, the use of AI to customize its food menu and manage the drive-through services is rare. For inimitable, the company’s product menu is unique and cannot be easily imitated by other companies. However, it is arguable that the company’s products can be substituted. This is due to the increase in the number of fast-food restaurants.

Reference

McDonald’s Corporation. (2020). Mcdonald’s Reports Fourth Quarter and Full Year 2019 Results and Quarterly Cash Dividends. Web.

Every year the development of fast-food restaurants is growing significantly. There are various types of coffee shops, restaurants, new outlets are opening. For McDonald’s, the number of consumers of fast-food products is of particular importance, as well as the convenient location of the organization’s points. McDonald’s occupies a leading position in the fast-food restaurant market. It sells products at average prices and has a large volume of sales of products (Kavyasri and Vaijayanthi, 2022). The company tries to focus on the quality of products and professional customer service. Unsuccessful behavior of competitors, such as a sharp decline in the quality of their products, can also become a major advantage. At the same time, their price cuts may become a threat to the company.

Such an environmental factor as the possibility of the appearance of substitute goods is determined, first of all, by the mood of the consumer and fashion. This entails the need for flexibility in the work of the McDonalds: quickly introduce new potentially popular dishes into production and just as quickly remove those that have not gained popularity from production, learn from they own mistakes and quickly switch to developing new ideas (Kavyasri and Vaijayanthi, 2022). The level of competition with a substitute product is determined by the degree of readiness with which buyers are able to prefer it to this product.

One of the important strengths of McDonald’s is reliable market monitoring. The company listens to its visitors and tries to meet their needs. It also adapts to the specifics of each country in which restaurants are opened. It is a decentralized company. For example, for the Indian division, only the main menu is formed, which includes the traditional Big Mac, French fries, and filet-o-fish (Hommerová et al., 2020). The rest is at the discretion of the regions. The service in restaurants is at a fairly high level, focusing primarily on fast service. restaurant price dish market

McDonald’s saves by increasing scale. For a single enterprise in the fast-food industry, the smallest effective output scale is very small. However, the company achieves significant savings by organizing a large number of eateries into a single system. McDonald’s also has a well-established distribution network. The company has created a local network of suppliers in all over the world. The company has one of the most recognizable logos in the world.

The ownership of the Ronald McDonald House charitable organization (a social rehabilitation complex for children with disabilities) has a beneficial effect on the image, which characterizes McDonald’s as a socially responsible company. As for the organization of the company’s work, the main drawback is the high turnover of personnel (up to 100% per year), since 75% of the service personnel are students who are not aimed at building a career in this company (Hommerová et al., 2020). This implies a rather low qualification of the staff.

Based on the above analysis of the external and internal environment, the final chart was obtained which is presented in Figure 1.

Figure 1.

References

Hommerová, D., Šrédl, K., Vrbková, L., & Svoboda, R. (2020). The perception of CSR activities in a selected segment of McDonald’s customers in the Czech Republic and its effect on their purchasing behavior: A case study. sustainability, 12(2), 1–17.

Kavyasri, S. J., & Vaijayanthi, P. (2022). McDonald’s entry into India. International Journal of Management and Humanities, 5(2), 1346–1363.

Introduction-MC Light

MC Light would be an innovative approach to McDonalds’ business enterprise. The reason is simple the company would be able to establish a separate fast-food chain that will meet the growing demand for healthy food options. It is possible to list several reasons to invest in this expansion strategy:

1. First is the growing population of young adults concerned with dishes’ health benefits in light of the growing percentage of obesity.
2. Second is the potential hidden in the market of Hong Kong, the city in which citizens propagate fast eating habits. Consequently, making room for an opportunity that will satisfy the demand for both fast and healthy cuisine at a premium price.
3. The third reason is the potential for high marketability and profitability and improving the main brand image.

Innovation

The reason for customers’ preference of MC Light could be hidden in the customers’ growing concern for sustainability and eco-friendly approach.

Combining the selling point of the main brand – tasty and fast delivery of food for the family – with healthy points of the MC Light would make it one of the key players on the market.

Although it is necessary to prepare diverse types of tasty dishes that would suit the goal of providing nutritious and healthy food.

The company may introduce three innovative points:

• MC Light will actively partner with trainers and gyms to provide people with real meal plans for workouts.
• The widespread availability of prebiotic and probiotic-rich beverages has prompted the development of functional beverages like kombucha and other related health drinks.
• Using a semipermeable membrane and the energy from osmotic pressure, the process of forward osmosis (FO) may purify water by removing dissolved solutes (Aquaporin, 2022).
• This process is more sustainable in comparison to conventional methods due to the lesser energy consumption and heat utilization which allows to preserve high quality of products (Aquaporin, 2022).

Market environment

Markets for health foods worldwide are broken down into submarkets defined by product type, sales channel, and regional/national markets. Natural health, functional, BFY, organic, and other segments make up most of the global health food market. The worldwide health food market may be divided into two broad categories: conventional grocery shops and internet marketplaces.

The market of healthy fast food is filled with various threats and opportunities.

Opportunities

Healthy food businesses have had to adjust to pandemic shutdowns. This raises worries about food availability and safety. The restriction of international borders has disrupted the supply chain, and food companies cannot get raw ingredients.

Many customers focused on health and nutrition in 2020. Several studies show that the pandemic increased interest in immune-boosting foods. This tendency is expected to continue in 2023.

Challenges

Two thousand twenty lockdowns boosted demand for different sales channels. Healthy food companies that could not handle different sales channels failed to adapt. Direct-to-consumer sales and customers eating at home increased in the business.

With the second wave of coronavirus in 2023, maintaining safety standards is vital to retaining customer confidence. Keeping employees safe and regaining workforce trust will be a struggle in 2023.

According to Yahoo Finance (2023) projections, the market for plant-based burger patties could grow by $2.13 billion through 2026.

Growth and strategy

In order to thrive in today’s fast-food industry, businesses need to expand by opening more restaurants at a quicker rate in prime locations. That is on top of constantly debating which eateries should be shut down and which should have facelifts to prevent sales from being siphoned off from one another. A franchise system’s ability to develop and improve depends on the management’s ability to handle intricate dynamics between sales success and patrons.

The 5-year plan includes several items:

• Analysis of countries to determine where people care the most about their diet.
• Preparation of a strategy for entering new markets.
• Gradual replacement of some of the company’s old restaurants.
• Increased presence in new countries.

MC Light would be an innovative approach to fast food which is typically unhealthy. However, it does not mean that typical marketing strategis for fast food will not be applicable. It is possible to integrate existing strategies of the brand to build customer loyalty to MC light.

These strategies would allow to build initial customer segment.

Combos allow for the sales of more product and attract customers in the similar manner to collectibles and kids menu. QR codes and single page menus allow for faster delivery and order reception while branded apps allow to expand the customer base. Unique promo options would be ideal way to attract new customer.

Conclusion

MC Light represents innovative approaches to food processing and fast food image which penetrates a new market opportunity. The market and the brand is expected to grow rapidly as customers adopt healthy eating habits. The strategy of expansion would start from the adoption of common marketing traits of the main brand name McDonalds. Consequently, it might be possible to rapidly expand the customer base.

References

Aquaporin. (2022). What is forward osmosis: Frequently asked questions. Aquaporin. Web.

Newsmantraa. (2023). Health Food Market to witness superb growth: Danone, PepsiCo, Amway, L T Foods. Digital Journal. Web.

Yahoo Finance (2023). Plant-based meat market size to grow by USD 12,532.87 million from 2022 to 2027; Growth driven by new product launches- Technavio. Web.

Introduction

Intellectual property is a complicated matter of human relations. People busy with artistic activities or scientific work often need to legally fix their right for this or that invention they make in order to be able to regulate the use of the invention and participate in any attempts to sell it and share its benefits. Accordingly, the countries of the international community develop laws that regulate intellectual property (IP) relations (Schaper and Volery, 2007). These laws are based on the same notions including patent, trademark, copyright, etc., but they differ from country to country. Australian IP laws have their specificity and the analysis of the proposed case study allows us to apply the Australian IP laws to the facts considered.

Case Summary

The very case under analysis touches upon several issues of patent law and trademark protection law as well. The point in the case is that Jenny and Garry McDonald have invented the machine for gathering horse manure from their land possessions (Backer, 2001). This machine is based on the loan mower technology, incorporates several other already existing agricultural techniques, and uses the computerized software solutions designed directly by Garry. The title chosen for the machine is McDonald’s Muckracker, and the family plant use the trademark of the McDonald’s fast food stores for their invention (Backer, 2001). Thus, several patent and trademark issues can be singled out in this case.

Intellectual Property Issues

The first issue about the case is the right of the inventors to use the inventions of other people, i. e. “a combination of known agricultural techniques”, for their machine (Backer, 2001). As the patent law states, “patents give effective protection if you have invented a new technology that will lead to a product, composition or process with significant long-term commercial gain” (Australian Government, 2009). Drawing from this, if the inventors of the unnamed agricultural techniques have patented them, Mcdonald’s has no legal right to reproduce or use those techniques in any way without the patent owner’s consent.

The point that might solve this controversy is the probability of the fact that the patents for the techniques used by Mcdonald’s have expired without the proper prolongation and fees contribution by their inventors (Backer, 2001). According to the Australian patent law, “the maximum term of a standard patent is 20 years” and beginning from the fifth year of the patent ownership, the owner has to pay annual fees that increase proportionately on every anniversary of the patent filing (Australian Government, 2009). In case if the term of the patent has expired or the owners failed to provide the annual fees for the patent maintenance, the invention by McDonald’s can be registered and used without any issues in this respect.

However, another patent-related issue arises from the promise made by McDonald’s to their neighbor old Clarrie. The issue here is observed in the fact that the neighbor might decide to register the inventions as his one before McDonald’s copes with this task or in case if they drop the idea of registration at all. According to the Australian laws, the procedure of filing and obtaining the patent is time- and funds-consuming; therefore many people decide not to patent their inventions. Without a patent, the invention is unprotected, and the Australian IP Office cannot provide any other help to such inventions but advice: “In that case, you would have to assess the risk of someone obtaining your invention through industrial espionage or, if your invention is a product, by reverse engineering” (Australian Government, 2009). Therefore, if McDonald’s fails to patent their invention, the latter might be patented by another person or used openly by all the competitors in the market.

Further on, the case under consideration presents a trademark-related dispute. The issue here concerns the wish of Mcdonald’s to use the trademark of the fast-food stores of the same title, i. e. McDonald’s, for marking their invention. Jenny and Garry plan to use the yellow letter M as their invention’s logo, but the letter of the color and form they want to use is already a registered trademark of the above-mentioned fast food stores network (Backer, 2001). The Australian trademark law states that “a registered trademark gives you the legal right to use, license or sell it within Australia for the goods and services for which it is registered” (Australian Government, 2009). Therefore, adopting the already registered trademark will cause legal issues for Jenny and Garry if they decide to market their invention openly in Australia or any other country. To avoid problems, McDonald’s should look for another logo for their invention, check it with the Australia IP Office for being already in use, and if it is free, register it before other inventors do it.

Conclusions

Thus, besides the obvious usefulness of the invention by the McDonalds, its registration and further introduction to the market are complicated by the evident patent and trademark issues that need to be solved before the invention is widely promoted or sold.

References

1. Australian Government. (2009). Patents. Web.
2. Backer, C. (2001). Intellectual Property Issues Case Study. School of Business, University of Ballarat.
3. Schaper, M. and Volery, T. (2007). Entrepreneurship and Small Business. 2^nd Pacific Rim Edition, Milton, Qld: John Wiley & Sons Australia.

The McDonald’s franchise is one of the best performing food service retailers in the world. This franchise has established outlets in various countries and serves a significantly large number of people.

It was Raymond Kroc‘s idea of franchising the McDonald’s, which was by then a single store, that catapulted it into the global scene. This considerable transformation attracts attention to the power of franchising if executed appropriately.

The McDonald’s franchise operates as a food service retailer with a particular interest in hamburgers, fries, chicken, breakfast items, salads and milkshakes. The business adopted the franchising concept upon the realization that the demand for their products was considerably increasing.

In this regard, it needed to expand its coverage and cater for more consumers. The McDonald’s uses agents to operate its outlets in different locations.

This strategy is crucial, especially concerning operations outside America, in reducing operation costs and maintaining the quality of products. In addition, it helps shied the business from various aspects of corporate exposure.

Despite the high demand for its products, the McDonald’s management ensures that prices remain affordable. Since even the low-income earners can afford McDonald’s products, the franchise has a huge customer base.

This has enabled the franchise to retain its market dominance. In addition, the management ensures consistency in all its outlets to maintain its products’ quality. This involves standard procedures regarding cooking and serving.

This strategy ensures the availability of labor as it is considerably easy for new employees to become acquainted with procedures and ensure timely services. The charges on franchisees are relatively low and thus favorable.

The McDonald’s policy requires franchisees to pay a commission of about 2 percent of their sales. This offer ensures the availability of labor for the business as it is attractive to a large number of potential franchisees.

Considering the rapidly changing market and consumer preferences, the McDonald‘s keeps revising its products to ensure they remain valid. Outside America, the McDonald’s ensures the integration of local cultures into its menu items.

To start a franchise in the food service industry, one has to incur various costs. The costs vary depending on factors such as the franchise type, location and equipments. In food retailing, the main consideration at entry is sufficient non-borrowed personal resources.

This is crucial concerning the setting up of an operation base. In addition, one has to pay the franchise fee, which ensures that the franchisee can use the franchisor’s brand and access support in various aspects such as marketing and training.

An Opportunity cost refers to the benefits forgone by producing a good or service. For example, considering a limited budget, allocating resources to a certain type of surgery means that other departments under the same pool of resources will operate under fewer resources and thus may not function effectively.

The Initial costs involved in purchasing a franchise are considerably higher than starting a business from scratch.

However, there are higher rates of return for operating a franchise since one deals with a product that is already in market, and the franchisor offers support in various aspects of business operations.

A startup business has to incur the costs associated with such options. The opportunity cost in this scenario is the benefits of a lower initial capital associated with a startup business that one forgoes owing to the long-term benefits associated with venturing into franchise business.

McDonalds has been ranked as one of the largest corporations in the world among the global restaurants that deal with fast food. The company was first established in 1948 in California by Dick and Mac (Gilbert 1999, p.2). it has chains of stores in more than 119 countries all over the world. From a careful analysis of statistical details, the company serves more than 68 million people daily (Gilbert 1999, p.2).

Notably, the company has experienced tremendous growth worldwide since it primarily deals with fast foods such as shakes, desserts, hamburgers, chicken and cheeseburgers. Research has revealed that the company has been able to accommodate numerous consumers’ preferences and tastes in their menu (Derdak & Jay 2004, p. 108).

Needless to say, the organization has developed strategies that have made it experience significant improvement since it first stated. It is against this backdrop that this paper discusses the evolution strategies, current marketing strategies and present details of the organization using the 7ps model.

Moreover, this paper will identify three issues facing the organization and make recommendations of what the organization should do in order to remain competitive.

Evolution of strategies

Right from the time the organization began to operate, it has experienced extraordinary growth specifically because it adopted a winning formula strategy (Gilbert 1999, p.11). In this case, the management opted to provide their customers with high quality food at a very low cost. Therefore, the organization adopted a “speedee service” strategy whereby they were able to offer quick services to customers (Love1997, p. 20).

This made the organization to flourish until 1955 when Ray Kroc joined this business organization (Gilbert 1999, p.12). Later on, the managers thought of exploiting the strategy on a larger scale all over US. In line with this, it adopted a franchising strategy whereby the company was licensed to sell its products within all regions in US (Gilbert 1999, p.15).

This gave the corporation an opportunity to open up many franchised restaurants. Evidence has shown that the majority of McDonald’s restaurants have been franchised. Needless to say, survey results has shown that due to the tremendous expansion, there are more than 1,150 restaurants serving approximately 2 billion people across the world (Gilbert 1999, p.23).

From a careful review of the organization’s history, it adopted the strategy of counter and drive through services that enabled it to conduct both indoor and outdoor seating (Love1997, p. 23). Empirical surveys have shown that the company has embraced the strategies to all its restaurants.

Other strategies include the Auto-Mac and McDrive services that enable consumers to have quick access to food (Gilbert 1999, p.38). It is imperative to note that these strategies make it easy for organizational operation such as paying, placing and picking orders in time (Love1997, p. 21).

It is imperative to note that after some decades, the organization’s management saw the need to adopt the trend of high quality drinks to capture more customers. Consequently, it adopted a café-style strategy through the introduction of McCafe (Love1997, p. 24).

This strategy was introduced in 1993 in Melbourne, Australia and majority of the chains in numerous states have adopted it. This strategy improved the overall sale by 60% (Talpau & Boscor 2011, p.56).

That notwithstanding, redesigning is one of the evolution strategies that was introduced in 2006. The restaurants have been designed with new flashy colors such as sage green, olive and muted red giving them a sunny look (Gilbert 1999, p.47).

Current marketing strategies

It is imperative to note that MacDonald has been able to market its products all over the globe. Notably, the organization has localized and multinational marketing strategies that enable it to link with local and international entrepreneurs (Gilbert 1999, p.52).

It is worth to note that the organization has a centralized structure and this enables it to make corporate decisions on marketing strategies. In line with this, the organization has numerous chains of restaurants all over the world and this makes it easy for it to reach out to consumers (Talpau & Boscor 2011, p.54).

Besides, most of the restaurants are franchised and therefore creates a good aura for joint ventures. In this case, it makes the company to market its products through local and international entrepreneurs.

In addition, the organization has employed a niche marketing strategy. This is whereby large share of products are split and distributed to small niches such as vendor shops or restaurants in different sites (Talpau & Boscor 2011, p.57). This enables the organization to reach out for numerous phases.

For instance, the restaurant operator target urban dwellers with high income and are able to order numerous varieties of food. Moreover, there are marketers who target small satellite towns especially those that act as major destinations for tourists (Derdak & Jay 2004, p. 108).

Beside, there are general shops and vending sites in crowd pulling centers such as highways, airports, railway stations and shopping malls. Needless to say, the organization has also devised a strategy on how to reach out to middle-class people whereby they sell low-priced products for similar quality and services.

Research has shown that the company marketers target young children of ages 3-11. This has ingeniously compelled the organization to rebrand its products (Talpau & Boscor 2011, p.58).

The organization has improved its advertisement strategies as a means of boosting its reputation. Evidence has shown that some of the adverts have flashy colors with appealing names such as Happy Guy, Happy Meal and Fry Guys.

In this case, one of the most evolutional strategies for marketing its products is by ensuring that they are pocket friendly and of high quality (Jargon 2011, p. 2). Moreover, the company has strived to promote consistency in their supplies and this has provided an entertaining atmosphere for their customers.

The organization’s 7Ps

It is apparent that the organization has 7ps which it uses to ensure that it emerges competent among other competitors. These include products, place, price, promotion, people and process (Derdak & Jay 2004, p. 109).

It is essential to note that McDonald’s is committed to create standardized and quality products in order to match with consumer’s tastes and preferences, By so doing, the company is able to establish a suitable menu in order to conform to the laws and customs in every state.

Additionally, the organization has been able to select convenient locations and establish numerous outlets for its products (Love1997, p. 22). This ensures that it is able to access its customers in a wider scale. In line with this, it has products with standardized prices and this makes them to be cost saving. Nevertheless, different states have various pricing strategies depending on the immediate environment.

Promotion is one of the key tools in marketing (Derdak & Jay 2004, p. 109). Therefore, the organization promotes its products through adverts, sales promotion, personal selling and direct marketing. Additionally, the company values the people since they are the major target audience for their products (Derdak & Jay 2004, p. 109).

Challenges facing the organization

One of the major challenges facing the organization is the issue of social changes. Numerous government policies encourage consumers to take balanced diet in order to have healthier lifestyles. In most cases, the organization has been forced to change its products due to differing religious values and customs in numerous states (Facella & Genn 2009, p. 45).

Moreover, the organization has to forego some products in order to avoid social protests. The other issue facing the organization is competitive pressures from other companies such as Burger King, Wendy’s, Five GUYS AND Krystal (Facella & Genn 2009, p. 45). Additionally, recession and economic crises have largely affected the operation and volume of retail sales. This is due to the fact that people strain their household budget and this reduces the sales.

Recommendations

Apparently, the organization has won a reputation as one of the largest and expansive organizations in the world dealing with fast food. Therefore, it is recommended that it should strive to develop and maintain the brand image through adverts and quality services.

Moreover, it should ensure that all the chains maintain high-level standards in order to create value in consumers’ minds. Regardless of the harsh economic conditions, the company should maintain premium prices for its products (Love1997, p. 28).

Moreover, the organization should strive to educate people on the benefits of their products in boosting their health. This will make the products more appealing, a factor that will increase the sale volume.

References

Derdak T. & Jay, P 2004, International directory of company histories, St. James Press, New York.

Facella, P. & Genn, A 2009, Everything I Know About Business I Learned at McDonald’s: The 7 Leadership Principles that Drive Break Out Success, McGroaw Hill, New York.

Gilbert, S 1999, The Story of McDonald’s, Creative Education Press, New York.

Jargon, J 2011, “Corporate News: How McDonald’s Hit the Hot Spot.” Wall Street Journal vol. 1 no. 1, pp.2-7.

Love, F1997, “Big Macs, Fries, and Real Estate”. Financial Executive. Vol. 2 no. 4, pp. 20–26.

Talpau, A. & Boscor, D 2011, “Customer-oriented marketing – a strategy that guarantees success: Starbucks and McDonald’s.” Bulletin of the Transilvania University of Brasov. Economic Sciences. Vol. 4 no.1, pp.51-58.

Introduction

Introductory Paragraphs

Marketing is a crucial part of a firm, business or financial institution. It determines the number of customers using services from the entity. As a result, it determines the profits that the business entity makes per unit time. Consequently, it determines the solvency and prosperity of the whole business.

The firms, in turn, struggle to improve their marketing and advertising strategies in their system. The strategies must compete favorably with other firms that offer similar products. It must aim at adopting a strategy that leads to customers and client satisfaction. This ensures that the firms maintain their customers and gain more customers than their competitors (Kotler, 1986).

In marketing, public relation officers carry out researches which aim at getting preferences from the customers. In these researches, they collect data on the perceptions and opinions of the customers. This helps the business entities to provide new services and improve the quality of current goods and services.

Consequently, they retain their customer and attract others. The demand and profit margin rise simultaneously. This paper will focus on designing a research that aims at collecting opinions of the customers. Particularly, it will design a research on a restaurant offering fast food. Specifically, it will use McDonald’s restaurant for the research.

History

McDonald’s restaurant is found in USA offering fast food. It was started in the year 1940 by Maurice and Richard at San Bernardino. In 1948, the restaurant improvised a speed serving system which increased efficiency and gained more customers than earlier. The company changed administrative bodies of management severally.

In addition, it has changed the logo for a number of times due to marketing and advertisement. The restaurant operates in 119 countries around the world. In the countries, it has thirty four thousand restaurants that operate under the headquarters in Illinois. The restaurant offers sandwiches, breakfast, soft drinks and desserts. The restaurants in other countries deviate from the standard menu fitting the countries culture.

For example, china serves soup while the Indian restaurants refrain from serving beef. This is due to the religious taboos that exist in the country. They have the outdoor and indoor serving that fits the customer’s choices and decisions. Therefore, the restaurant is an all-inclusive restaurant that fits every social class.

Statement of Problem

The restaurant has grown rapidly in accordance to history. However, various criticisms have been directed to fast food. The critics target the menu, practices of business and the expansion of the business. For example, Morris group had designed leaflets which aimed at criticizing the health status of the restaurants. In 2004, a documentary called Super-Size blamed the company for increased cases of obesity.

The criticisms that revolve around fast foods have affected growth of the restaurant. For the last two years, the restaurant has been progressing in a slower pace than the previous years. This has posed a serious challenge to the overall profitability and the solvency of the company. As a result, this problem needs to be addressed with urgency.

Purpose of the Study

The purpose of the study is to solve this financial and economic crisis existing in the restaurant. The research aims at involving the customers in improving financial status and services. It seeks to use the outside-in strategy to solve the internal challenges. In addition, the study will enable the restaurant to make additional inputs in the current menu. Lastly, it will help the management to add attractive and useful services in the restaurant. This will be fulfilled through various objectives.

Objective of the study

1. To understand their customers in details
2. To collect the relevant information pertaining to customer’s preferences
3. To make relevant recommendations and conclusions for improvement

Research Question

In this research, we seek to understand the perceptions and opinions of the customers towards the products and services offered. As a result, we need a query that will form the basis and foundation of the research. Therefore, we might seek to know whether restaurants perceive a negative change in the quality of the products and services offered.

• Do restaurants perceive declines in the quality of products and services?

This is a broad question that allows the development and design of the research. It provides sufficient space to get the opinions of the customers towards the improvements of products. It is a question which can form the methodological center of departure for the entire research.

Hypotheses

Although there is the research question, it is essential to speculate and make predictions before the actual research. Therefore, we could assume that there is no decline in the quality of the products offered by the restaurant. However, this hypothesis cannot be tested. We cannot carry out a research for the purpose of scrutiny. Scientifically, it is called the null hypothesis.

We could assume that there is a decline in the quality of food offered in the restaurant. The hypothesis will, therefore, state that restaurants perceive declines in the quality of products and services. The hypothesis could be broken down into sub-hypotheses to state that McDonald restaurant perceives declines in the quality of services.

It is, also, possible to research on the hypothesis stating that restaurants rarely perceive declines in the quality of products and services. All these could form alternative hypotheses. However, there is no research that dwells on more than one hypothesis simultaneously. Therefore, this research will dwell on the alternative hypothesis about McDonald restaurant. A research can be carried out to determine the validity of this hypothesis. As a result, the research will revolve around this hypothesis.

Background

Literature Review

The company has been offering products that have high calorie. The calorie products have been the target of criticism from many communities. Therefore, most customers feel that they should take food with fewer calories than the restaurant offers in the menu. Most of the current customers are aware of the dangers that the food bring to them. These dangers include obesity, high blood pressure and gaining unnecessary weight.

In addition, the restaurant does not offer bitter drinks that help in breaking down the fats they consume. The customers get cautious of this situation and prefer making food at home rather than visiting the restaurant. Employment of young staff has deterred the companies’ reputation.

The company was sued for the allegations of propagating child labor. Customers feel uncomfortable when they are served by staff members who are underage. The management has been overwhelming the staff for decreasing their efficiency during serving. Complains show dissatisfaction of service by the staff. This has been a crucial point of failure.

Definitions of terms

1. Qualitative analysis- This is an analysis that uses subjective reasoning on non-quantifiable data or information.
2. Qualitative analysis- It refers to the analysis of quantifiable data by mathematical calculations and deductions.
3. Sampling- Sampling refers to tactical selection of data sets from the target population
4. Methodology- This refers to the strategies that are used to collect records and represent data for analysis.
5. Instrumentation- Instrumentation focuses on the instruments used in the collection analysis of information.

Methodology

Population

The population is comprised of the customers’ visit to the restaurant for the meals. It includes customers from the 119 countries around the world in 34,000 restaurants. The total number of customers served by the restaurants is approximately sixty eight million per day. This is a huge population that makes it difficult to reach all customers. Therefore, the research cannot consider the whole population of customers. For the purpose of data collection, sampling will be carried out.

Sampling

During sampling, two data sets will be considered for the collection of views. The two data sets will include customers who make regular visits and those visiting the restaurant occasionally. Regular customers visit the restaurant for three meals daily. On the other hand, occasional customers visit the restaurant for one meal only.

On this sampling, the sample is not carried out in a manner that favors a desired outcome (Strauss, 1992). Therefore, the outcomes will be credible. The sample will randomize the respondent across gender, age and origin of the customers. Therefore, it will become extremely reliable and credible.

Instrumentation

The most crucial instrument of this research will be the questionnaires which will contain several questions aiming at understanding the perceptions of the customers. On this light, the following questions will be included in the questionnaires.

1. How many times do you visit the restaurant daily?
2. What is your most preferred food product in this restaurant?
3. What is your most preferred drink in the restaurant?
4. What do you think is omitted in the menu?
5. What should we add in the menu to suite the eating habit?
6. How do you rate the service by the staff in this restaurant?
7. Does the waiting time coincide with your time management?
8. Does the cost of products match with their quality?
9. What is your opinion regarding the health of the food you take on the restaurant?

Customers will be given the questionnaires to fill when they visit the restaurant. Therefore, the questionnaire should have a few questions. This ensures that the questionnaire does not consume much of the respondents time. Otherwise, it would lead to incomplete or unreliable formation.

On this light, the questionnaires should be flexible. They should be designed in a manner that allows modification. This implies that it can be modified to include arising themes during the research. In addition, it allows the removal of any questions that are irrelevant to the study. These modifications arise during the actual research.

A Facebook and Twitter account will be opened for the research. People will be invited to like the page and make their contributions. The questions will be posted on the page and customers invited to answer the questions. This will be a technological extension for the questionnaires. It will capture the customers who are in the social networks. As a result, the number of people considered will be sufficient to make conclusions.

The children will be interviewed orally by the selected staff from the restaurant. The staffs will record the information on the questionnaire for analysis. However, the interview will be recorded using audio recorders. The audio recorders will ensure that the information that is omitted in the questionnaires is captured. Video recorders will be used where visual presentation of information is required.

For example, a child who does not know the real name of certain food will tend to point at the food. The video recorder or camera will be used to capture the information. As a result, all the information that is required for analysis will be available. Therefore, the research will be all-inclusive and reliable. Consequently, the recommendations, conclusions, and solutions derived from the research will be credible.

A suggestion box will be used for the purpose of the research. For the period of research, a small advert will be hanged beside the box. It will urge customers to drop any opinions on the box. The opinions will be incorporated in the analysis. This will widen the scope of the research.

Procedures and Time Frames

The most significant procedure of data collection will be filling in the questionnaires. The questionnaires will have the nine questions. This will take a maximum of three minutes to answer the questionnaires. The questionnaire will have a section which will seek to capture additional information and opinions from the customers. This section might take about two minutes to write and express ideas. In total, a single respondent might take five minutes to fill in the questionnaire.

The oral research for the children might take a little bit longer. Each question might take a maximum of 1 minute. On the other hand, they might take one minute to give an opinion about their experience in the hotel. A child might take a maximum of ten minutes to interview and get information that can be used for analysis.

Analysis plan

Analysis can either be qualitative or quantitative according to the data being collected (Strauss, 1987). In this research, qualitative analysis will be used to analyze data. During the research, the collection of data and analysis will be done simultaneously. The simultaneous operations will ensure that the questionnaires are changed and altered to accommodate new themes rising during the research.

The data between the mature customers and the children will be done separately. In addition, the data between occasional customers and regular customers will be separated. This allows comparison between the two data sets. It ensures that the existing similarities are reconciled, and the differences appearing in the opinions are retained. The diversity of the opinions in those data sets makes the results reliable and credible.

Reliability and Validity of the Research

Reliability and credibility in this research cannot be ignored. The consideration of the two factors is mandatory and paramount. Violating the reliability of research makes it biased and incredible. For this reason, the research has employed various factors to ensure the validity and reliability of the results. First, sampling will be done randomly. This implies that the research is not biased or inclined to a desired outcome.

Secondly, the use of various data sets ensures that there is sufficient variation among the respondents. The variation occurs in reference to age, gender and level of regularity to the restaurant. Lastly, the use of flexible questionnaires, which allowed the incorporation of the arising themes, ensured the capture of much information. Also, it ensured that the research focused on the relevant information only. The three measures ensure full credibility, validity, and reliability of the information collected from the respondents.

Conclusions

This research will be a positive step towards solving the financial crisis that is facing the restaurant of McDonald’s. It will provide the necessary information which can be used to make recommendations and conclusions. The research described every step and detail that will be followed in collecting, recording, and analyzing the data and information. Consequently, it can be described as an all-inclusive research. In fact, it will be a crucial step towards solving the challenges that have been posed to the company.

Works Cited

Kotler, Philip. Principles of marketing. 3rd ed. Englewood Cliffs, N.J.: Prentice-Hall, 1986. Print.

Strauss, Anselm L. Qualitative analysis for social scientists. Cambridge: Cambridge University Press, 1987. Print.

Thompson, Steven K.. Sampling. New York: Wiley, 1992. Print.

McDonalds and Domino’s are the largest restaurant chains that aim to create exceptional dishes for people. Both chains belong to the fast food category, but each of them has its own specifics. Companies have various similarities and differences that are reflected not only in the organizational culture but also in the structure of the management of companies. The purpose of this essay is to trace the similarities and differences between top management in the reflection of financial and non-financial data.

Non-Financial Data

McDonald’s top management consists of the president and CEO, as well as nine senior managers. Each of these nine managers is aimed at leading a particular aspect of the company’s activities. The average tenure of management personnel in the company is 1.9 years, but the current CEO of the company, Christopher J. Kempczinski, has been in office for more than three years (Raj & Singh, 2020). During this time, Kempczinski managed to significantly raise the value of the company’s shares, as well as prevent a drop in the company’s revenues during the pandemic caused by Covid-19. McDonald’s has a high turnover rate of about 44% (Dudovskiy, 2022). Undoubtedly, this indicator may vary from country to country, but still, in general, the company does not practice specific strategies for retaining experienced employees.

Domino’s top management differs from McDonald’s, which makes the company much more efficient. Domino’s has a chief executive officer, as well as a chairman, a CFO, and a non-executive director (Trainer, 2022). The peculiarity of the company’s top management is that it is divided into four committees, which makes it possible to work more efficiently and effectively to achieve the goals of the organization. There is no specific data on the frequency of management personnel changes in Domino’s, but in general, the company is inclined to change significant persons of top managers upon their retirement. In Domino’s, there is a low staff turnover, which is because the company has a well-thought-out motivation system, and the roles of employees are distributed.

The similarity between the two companies lies in the fact that they both have an extensive system of management personnel that consists not only of CEOs but also of other heads of departments. The difference is that McDonald’s staff turnover is higher than that of Domino’s. Another difference is that Dominos tries to keep experienced employees in their places with the help of various tools that are unavailable at McDonald’s.

Financial Data

Despite all the advantages of the Dominos management structure, its financial component differs significantly from McDonald’s indicators. Thus, the final income of McDonald’s for 2020 amounted to $ 19,208 million, which is reflected in their annual report (McDonald’s Annual Report). This significantly exceeds the revenues of Domino’s company, whose revenues are also reflected in the annual report and for 2020 amount to only $ 4,117 million (Domino’s Annual Report).

Although Dominos’ incomes are significantly lower than McDonald’s, still, in comparison with the indicators of previous years, Dominos have increased their incomes, and McDonald’s incomes have fallen. Approximately similar are the revenues from franchise sales, which amount to $ 5,992 million for Dominos, and $ 5,261 million for McDonald’s (Domino’s Annual Report; McDonald’s Annual Report). In financial terms, the companies have almost no similarities since they are engaged in selling different types of products.

Although McDonald’s has been on the market for a longer time, it should still be noted that the structure of its management apparatus of Dominos is much more competitive and successful. This structure is more valuable because the company does not just have several managers who have specific goals and objectives, it divides managers into four groups, each of which is managed by one manager. In addition, other managers whose responsibilities are conveniently divided are part of the top management. In addition, the company Dominos has motivation for employees and does not set the duration of their work. This is a significant advantage over the more complex and less understandable structure of McDonald’s work.

References

Domino’s Annual Report. Web.

Dudovskiy, J. (2022). McDonald’s Leadership: A brief overview. Business Research Methodology. Web.

McDonald’s Annual Report. Web.

Raj, S. K. & Singh, N. K. (2020). Strategizing of fast food industries using a balanced scorecard approach: A case study of McDonald’s Corporation. International Journal of Humanities, Arts and Social Sciences, 6(6), 258-273. Web.

Trainer, D. (2022). Domino’s Pizza: Delivering a superior business model. Forbes. Web.

Every corporation has to deal with finances and the distribution of resources. The management and selection of priorities is what differentiates one business from another.

Investments and budgeting techniques must be advantageous in order for further development and growth. McDonald’s is a corporation that has been rather successful in managing its finances and other resources, as can be seen from its popularity and well established economical base.

It is obvious that McDonald’s Corporation has been wise in managing its resources and continuing its development worldwide. The fact that it can diversify and adjust to the environment and the demanding market shows that the management is able to figure out what consumers want. A rather straightforward employment has allowed for lower salaries which lead to more cash flow.

The capital is used to open up new locations over the world and the evidence is seen in the following: McDonald’s has opened locations “in over 118 countries serving approximately 48 million customers per day” (Plunkett, 2008). This means that a large amount of resources is spent on development of McDonald’s restaurants and the satisfaction of customers’ needs and wants.

In 2003, the corporation generated $23 billion but at the same time, there were some losses. A new strategy had to be developed to adjust to changes. As the work began, by 2008, “revenue rose 3 per cent to $ 23.5 billion, but profits jumped 80 per cent to $4.3 billion” (Plunkett, 2008).

This took place due to financial modeling and close observations, as the managers were able to determine the specific estimates and values that would be present in the market. Formulating strategies and close comparison to the assets available would yield best results in future expenditures and gains (Hitt, 2008).

Since 2010, the operating income has been steadily rising, from 8,780 it grew to 10,093 in 2012 and is estimated to be as high as 11,008 to 11,676 in 2014 and 2015. The key to success are the strategies that focus on bettering the working conditions and customer relations. As the capital is being increased, the company is able to output more resources and invest in potentially beneficial franchises or service modifications.

A key factor is the increase in the skills of employees which are bettered by training and constant upgrades to the environment. At the same time, the values and stocks have to analyzed, so that the money invested into the company will not lose in the future. When considering discounted cash flow in relation to the net present value, it is important to have in mind that money made can be worth less than money invested.

This happens due to market fluctuations and ever increasing expenses. Thus, a wise strategy would be to calculate the amount of finances made by investments and relate it to the rate of return. This would allow to see how much capital can be used and what the strong sides of investments are (Hitt, 2008). The market, especially on an international level, is a flexible entity that must be closely observed.

Just as many other large corporations, McDonald’s heavily relies on investments, future predictions, the market and the economy. An ability to predict any changes in consumers’ wants will define the criteria by which the financial resources of the business are spent and what policies are outdated and must be changed.

References

Hitt, M. (2008). Competing for Advantage. Mason, United States: Cengage Learning.

Plunkett, J. (2008). The Almanac of American Employers 2009. Houston, United States: Plunkett Research, Ltd.

Background information

The success of organizations that are established in different economic sectors depends on the managers’ effort in formulating and implementing effective strategies. Cox (2002) asserts that successful organizations have a clear vision and sense of direction and easily initiate major organizational changes. Moreover, successful managers have a comprehensive understanding of the prevailing market needs.

Hansen (2013) emphasizes, “The managers of successful organizations must have a strategic plan in order to ensure a strong competitive position on the market and therefore achieve desired outcome” (p. 95). This claim highlights the importance of adopting effective strategic management practices.

Aim

This report involves a strategic analysis on McDonald’s Corporation. The report provides a brief background information on McDonald’s by assessing its vision, mission, values and its strategic plan. Furthermore, the industry provides a description of the industry within which McDonald’s operates.

Company profile

McDonald’s Corporation is a public limited company that was established in the United States’ food and restaurant industry in 1940 at San Bernardino, California by Ray Kroc, Richard and Maurice McDonald. The firm has entered the global market by establishing over 35,000 outlets located in 119 countries.

The firm’s marketing expertise has increased its customer base to over 68 million customers. McDonald’s specializes in production and marketing of fast-food products such as cheeseburgers, chicken, hamburgers, milkshakes, french-fries, breakfast, salads and desserts (McDonald’s, 2014).

By the end of 2013, McDonald’s total human resource base was estimated to be 1,800,000. Moreover, its commitment towards strategic management has played a crucial role in stimulating the level of profitability. Between 2012 and 2013, the firm’s sales revenues increased from US$ 27.6 billion to US$ 28.1 billion.

Conversely, its operating income increased from US$ 5.5 billion to US$ 5.6 billion (McDonald’s, 2014). McDonald’s has positioned itself as the market leader in the global fast-food industry. Its success has originated from effective implementation of strategic management practices as illustrated herein.

Vision statement

McDonald’s is focused towards achieving long-term market success by positioning itself as the preferred place for customers to eat. Moreover, the firm’s global operations are guided by a ‘plan to win’ strategy, which emphasizes on creating exceptional customer experience amongst customers.

The strategy is based on the 4P’s of marketing [pricing, promotion, place, and product]. McDonald’s is also committed towards continuous improvement of its environmental and social performance in order to enhance customer experience (McDonald’s, 2014).

Mission statement

In its quest for market leadership within the fast-food industry, McDonald’s intends to position itself as the best employer in the world. Furthermore, the firm is committed towards achieving operational excellence in all its restaurants established in different countries.

Furthermore, the firm’s management team is committed towards sustaining the firm’s level of profitability through effective brand management, exploitation of technology and leveraging on the firm’s strengths (McDonald’s, 2014).

Values

In addition to the mission statement, McDonald’s operations are guided by a comprehensive set of organizational values. Gorenak and Kosir (2012) accentuate, “organizations can be successful when organizational goals are aligned with organizational values and those are aligned with personal values of people in the same organization” (p. 564). The firm’s values are evaluated below.

Customer experience

The firm recognizes the importance of customers in its quest for long-term existence. Thus, the firm is committed in creating unique customer experience by offering high quality products, customized services and a unique ambience in its stores.

The customer experience value is based on four main goals, which entail cleanliness, quality, service and value. McDonald’s ensures that its employees continuously adhere to these values.

Commitment towards its people

The firm is committed towards creating a strong and efficient workforce. Thus, the firm believes that a strong human capital base is paramount in achieving continued success. Consequently, the firm invests a substantial amount of resources in nurturing talent and developing leadership through training.

Additionally, the firm considers diversity to be a fundamental source of organizational success. Therefore, the firm fosters establishment of an environment conducive for working in order to drive engagement through teamwork amongst its workforce.

Business model

The firm has adopted an effective business model that recognizes three main components in its operation, which include suppliers, employees and owners/operators. In its business operations, McDonald’s ensures that the interests of these core groups are taken into consideration.

Giving back to the community

McDonald’s understands the strong correlation that exists between the firm’s success and the community within which it operates. Therefore, the firm is committed towards pulling its possessions, coverage, and magnitude in helping clients establish superior neighborhoods. The firm supports the community by establishing charitable organizations such as the McDonald House Charities.

Business ethics

The firm is focused towards adhering to the values of honesty, integrity and fairness in its business operation. These values are based on the philosophy that ‘we are individually accountable and collectively responsible’ (McDonald’s, 2014).

Continuous improvement

McDonald’s has positioned itself as a learning organization which is committed towards adjusting its operations in order to align with the changing system, customers and employees needs through continuous innovation and evolution.

Profitability

McDonald’s operates as a public limited company. Thus, the firm’s operations are aimed at maximizing profitability in order to satisfy its shareholders’ wealth maximization objective.

Comparison of mission statement

McDonald’s faces intense competition from Burger King Corporation, Yum Brands Incorporation. Burger King is focused towards creating an environment conducive or its employees to work in and to attract and retain a large number of customers. The firm also intended to achieve business excellence by ensuring consistency of its service provision (Campbell, 2008).

This mission statement is similar to that of McDonald’s Corporation, which seeks to achieve business excellence and fostering a favorable environment for working. This shows that working environment is one of the key aspects considered by major players in the fast-food industry (Thompson, Peteraf, Gamble, & Strickland, 2011).

Industry analysis

Pressures that originate from internal and external business environments affect McDonald’s operations. The internal forces are within the management team’s capacity to control while the external forces are beyond the management team’s ability. Regardless of the source of pressure, organizational leaders have a duty to ensure that the occurrence of such pressure does not adversely influence business operations.

However, this duty can only be accomplished if the organizational leaders understand the prevailing environmental issues. Some of the tools that organizational managers can utilize in evaluating the industry dynamics include the PESTLE, Porter’s five forces and the SWOT analysis.

PESTLE analysis

Political elements

Business processes are extensively determined by the guiding principles that are implemented by the administration of the country in which a company operates. Therefore, the degree of political risk varies from one country to another.

Thompson et al. (2011) assert that political risk can originate from different sources such as the incumbent government agencies and departments, social unrests, changing economic conditions, and the stakes of government and non-governmental organizations. McDonald’s has ventured into different countries in an effort to maximize profitability. Thus, the firm’s likelihood of the firm experiencing intense political risk is high.

In its European, the United States, and Indian markets, the firm is experiencing pressure from the respective governments concerning health implications that are associated with fast foods. These governments are increasingly being concerned with the high levels of cholesterol in fast foods.

Such cholesterol is associated with obesity. In its Indian market, McDonald’s is currently experiencing legal dispute because of its infringement of religious laws on food products. The firm’s operations are also affected by trade restrictions in some countries such as tax rates.

Furthermore, the political instability in some regions such as the Middle East and North Africa sections may affect the firm’s quest for growth through market expansion.

Economic factors

Businesses that operate in the international fast-food market are exposed to diverse economic factors that are unique to the respective markets. Some of these factors include tax, inflation, and exchange rates. Exchange rate fluctuation may negatively influence the production capacity of firms in the fast-food industry that depend on raw material imports.

Additionally, firms in the fast-food industry are also exposed to global economic changes such as economic recession. Such economic changes have adverse effects on the consumer purchasing power, and hence the firm’s ability to maximize its profitability. In 2012, McDonald’s earnings declined to $1.34 billion from $1.41 billion in 2011 (McDonald’s, 2014).

To succeed in such environments, businesses must adjust their strategic management practices to align with the economic environment. This goal can be achieved by adjusting marketing strategies such as the pricing tactics.

Socio-cultural factors

The fast-food industry is undergoing remarkable evolution because of the prevailing socio-cultural changes. One of the most notable changes relates to increased consumption of fast-food products because of increase in disposable income and high rate of urbanization. Another major socio-cultural trend relates to change in consumer behavior towards food products.

Thompson et al. (2011) are of the view that the development of information communication technology has increased the consumers’ level of product knowledge. Thus, consumers are inclining towards healthy and safe products. This trend has also affected the fast-food sector whereby consumers are seeking healthy food products (Gasparro & Jargon, 2012).

This trend presents an opportunity for firms in the fast-food industry to invest in new and continuous product improvement. For example, in 2012, McDonald’s announced its intention to venture into the Indian market in 2013.

The firm had to do away with its pork and beef products in its menus in order to adhere to the Muslim and Hindu religious practices, which prohibit the consumption of pork and beef. Gasparro and Jargon (2012) assert that McDonald’s respects cultural diversity in all markets that it has entered by diversifying its product portfolio.

Technological factors

The 21^st century has been characterized by remarkable technological innovations, which are affecting various business aspects. The development of diverse social media platforms such as Facebook, Twitter, Google Ads, and YouTube has transformed marketing activities.

For example, businesses in different economic sectors are adopting online marketing practices in their effort to create sufficient market awareness and/or to increase customer base (Thompson et al., 2011). Additionally, techno-savvy consumers are increasingly adopting diverse web-based technologies such as online purchasing in their consumption processes (Pipes, 2014).

Technological innovations have led to the emergence of technologies, which are aimed at cutting the cost of operation, achieving operational efficiency, and providing fast-food customers with a high degree of flexibility in their purchasing process.

Examples of such technologies include the inventory management software, which enables organizations to manage their inventories, for example through timely and efficient replenishment of raw materials.

Legal factors

The modern fast-food industry is experiencing numerous legal issues that are arising from government and non-governmental agencies. For example, fast-food companies are increasingly being compelled to reveal the ingredients of their fast-food products.

This issue has been fuelled by the high rate at which health practitioners and nutritionists are associating some diseases such as obesity, kidney diseases, high blood pressure, heart diseases, and diabetes with fast-food consumption (Tanamas, 2013). In an effort to cope with such legal issues, McDonald’s has a policy that requires the revelation of the raw materials that are used in producing its fast-food products.

Environmental factors

Firms have a duty of ensuring that their operations are environmentally sustainable. The high rate of climate change that is being experienced in the 21^st century has raised concern amongst governments and non-governmental groups on the role of businesses in protecting the environment in which they operate by adopting effective corporate social responsibility practices.

West (2014) asserts that “Currently, there are no federal laws or regulations targeting fast-food companies in the US; however, they have an obligation to protect the environment” (Para. 1). Some of the practices that are increasingly being advocated include adopting the concepts of reducing, reusing, and recycling of materials.

Porter’s five forces

The Porter’s five-force model is one of the strategies that organizational managers can adopt in understanding their organization’s competitive situation (Hansen, 2013).

The analysis below illustrates the competitive situation in the fast-food industry by assessing the threat of entry, degree of rivalry, buyers and suppliers bargaining powers, and threat of substitute products.

Source: (Abauwad, 2013)

Rivalry; high

The fast-food industry is experiencing significant increment in the intensity of competition because of its profitability potential.

The industry players are adopting diverse competitive strategies such as pricing, product quality, consistency of service delivery, diversified product portfolio, style, presentation, and store location (Abauwad, 2013). Furthermore, fast-food companies are increasingly developing new products in an effort to satisfy their customers’ tastes and preferences.

Threat of entry; low

Few large players such as McDonald’s, Taco Bell, and Tyson Food Incorporation dominate the global fast-food industry. The industry players have managed to attain competitiveness through technological advancement, economies of scale, and efficient product distribution.

Although the cost of entry is relatively low, new entrants cannot compete effectively with large firms. Subsequently, new entrants do not pose a threat to the large firm’s market share.

Threat of substitute; high

Fast foods are considered discretionary food items and hence can easily be substituted by other meals (Abuawad, 2013). The risk of replacement products amongst firms in the fast-food industry is increased by the high rate at which expediency warehouses such as large retail chains are offering consumers dissimilar foodstuffs within their retail stores.

Moreover, the restaurant market is characterized by the emergence of dine-in restaurants, hence minimizing the cost of switching from one product to another.

Additionally, consumers have become more knowledgeable on the importance of healthy eating. Abuawad (2013) asserts that the rate at which consumers are inclining towards consuming alternative food products that they consider healthier is high. Hence, it has increased the threat of substitute.

Supplier bargaining power; moderate

Most fast-food companies source their raw materials from the local and international markets. Thus, their relationship with suppliers is an essential element in the fast-food firm’s success. Abuawad (2013) asserts that suppliers have the capacity to influence product prices.

On the other hand, the fast-food companies have an opportunity to bargain the offered market price. Additionally, the evident large number of suppliers moderates the supplier bargaining power.

Buyer bargaining power; moderate

Despite their inability to influence the price of fast-food prices directly, fast-food customers have a significant impact on product pricing.

This power has been increased by development in information communication technology, which makes it possible for consumers to exchange ideas and opinions regarding product characteristics through online mediums. Subsequently, fast-food companies have an obligation to manage their brand reputation whilst developing a unique customer experience to make clientele feel satisfied (Abuawad, 2013).

SWOT Analysis

In addition to the aforementioned aspects, McDonald’s has managed to develop a number of strengths as illustrated by the below SWOT analysis.

Company strategy

McDonald’s Incorporation has adopted internationalization as one of the market expansions strategies. Cox (2002) asserts that internationalization increases the likelihood of achieving profit maximization because a firm is able to tap market potential in the international market in addition to coping with the intensity of competition in the domestic market.

To be successful in its internationalization efforts, McDonald’s has adopted the franchising strategy.

Cox and Mason (2007) assert, “Franchising is a proven business concept that many investors are adopting to maximize profitability compared to independent business start-ups” (p.1054). One of the benefits that are associated with franchising is that a firm is able to standardize its operations.

For example, in its Indian market, McDonald’s has introduced alternative hamburgers such as chicken meat hamburgers in an effort to adhere to the Hindu’s and Muslim culture, which prohibits the consumption of beef and pork. Consequently, one can deduce that McDonald’s Incorporation has adopted a winning strategy.

Strategic objectives and performance targets

Currently, the firm has ventured into a number of key international markets such as Germany, Australia, and Japan. However, the firm has experienced a significant reduction in the level of profitability in all its markets. Bagshaw (2014) asserts that the company’s global sales declined by 2.5% in June and July 2014. To restore its market performance, McDonald’s focuses on implementing the following objectives.

• Improving its value proposition-The firm intends to improve its market reputation and global recognition by improving the quality of its products. This goal will be achieved by integrating healthy items in its menus.
• Market expansion-The firm intends to attain growth by venturing into new markets through acquisition. Currently, the firm targets to acquire well established firms such as The Noodle & Company, Potbelly Corporation, and Chipotle Mexican Grill (Mourdoukoutas, 2014).
• Leveraging on its capabilities-McDonald’s intends to attain market growth by leveraging on its franchising capability and logistics. Furthermore, Mourdoukoutas (2014) asserts, “The company intends to create two separate units , one that caters for low-calorie cholesterol consumers and another that caters for the local and semi global segments of the world economy” (Para. 7).

The above strategic objectives are aligned with the firm’s vision, mission, and values. First, the objective to improve the company’s value proposition by integrating healthier fast food depicts the firm’s commitment towards creating a unique customer experience. This move will increase the chances of the firm appealing the customers’ demand for high quality and healthier food products.

Furthermore, this proposition is also aligned with the firm’s commitment to invest in continuous product improvement. On the other hand, the firm’s commitment towards leveraging on its capabilities such as franchising will increase the firm’s profitability.

This goal will be achieved by ensuring consistency in the firm’s product and service delivery processes. Moreover, the firm’s strategic objective to expand into the international market will enable McDonald’s to improve its market performance by increasing its level of profitability.

Conclusion

The firm’s vision, mission, and values illustrate its commitment towards diverse internal and external stakeholders. McDonald’s vision statement depicts that the firm focuses on achieving market success by fostering unique customer experience, hence developing a high level of customer loyalty. Moreover, the vision statement illustrates the firm’s commitment in adhering to social responsible business operations.

On the other hand, the mission statement shows the firm’s commitment in achieving a high level of profitability by creating a favorable environment for employees to work whilst achieving operational excellence, which means that the firm is concerned with efficient and effective business operations.

Similarly, the firm’s value propositions communicate its commitment towards satisfying the internal and external stakeholders, for example by satisfying the investors’ wealth maximization objective. Moreover, it also shows the firm’s commitment towards ethical business operations.

Recommendations

To achieve long-term success, McDonald’s should take into account the following aspects.

1. The firm’s management team should continuously assess the prevailing market environment to determine the most effective way of adjusting its operations, products, and services.
2. In its internationalization strategy, McDonald’s should consider investing in product adaptation to increase the likelihood of success of its franchise.
3. McDonald’s management team should effectively analyze the international market that it targets to access to understand the prevailing market situations.

Reference List

Abuawad, M. (2013). McDonald’s Corporation. New York, NY: MJ Neeley School of Business.

Bagshaw, E. (2014). McDonald’s sales worst in 10 years. Web.

Campbell, J. (2008). Burger King the facts about the second largest fast-food restaurant. Web.

Cox, J. (2002). Geographical dimensions of business format franchising, unpublished phd thesis. Southampton: University of Southampton.

Cox, J., & Masson, C. (2007). Standardization versus adaptation; geographical pressures to deviate from franchise formats. The Service Industries Journal, 27(8), 1053-1072.

Gasparro, A., & Jargon, J. (2012). In India, McDonald’s plans vegetarian outlets. Web.

Gorenak, M., & Kosir, S. (2012). The importance of organizational values for organization. Slovenia: International School for Social and Business Studies.

Hansen, H. (2013). Food economics; industry and markets. New York: Routledge. McDonald’s. (2014). Corporate information. Web.

Mourdoukoutas, P. (2013). McDonald’s; three strategies to reignite sales growth. Web.

Pipes, K. (2014). Fast-food franchise industry is rushing to acquire technology tools that will help it stay well fast. Web.

Tanamas, S. (2013). The Australian diabetes, obesity and lifestyle study. Web.

Thompson, A., Peteraf, M., Gamble, J., & Strickland, A. (2011). Crafting and executing strategy; the quest for competitive advantage; concepts and cases. New York, NY: Irwin Incorporation.

West, L. (2014). Progress is slow on reducing reusing and recycling fast-food waste. Web.