For organisations to market their products and services, they need to adopt appropriate marketing strategies that are consistent with the dynamics of the industry in which they are established.
The goal here is to reduce the negative impacts that the weaknesses and threats surrounding an organisation may have on the success of the organisation.
Any marketing strategy that helps in the realisation of these concerns needs to lay out conspicuously an organisation’s market segments, target markets, target strategy and even the positioning strategy as in the case of McDonald.
Introduction
Marketing involves one of the noble activities an organisation does to create awareness of the value for its products and services.
In a broader perspective, marketing entails market research, market segmentation, setting of marketing strategies, evaluation of the marketing environment through SWOT analysis, and even positioning of marketing strategies among others (Kotler et al, 2009, p.56).
In an effort to set out a clear understanding of each of these elements constituting the marketing function, the case of McDonald is analysed in this paper.
Essentially, it is argued that a proper design of all these elements amounts to an incredible success of the placement of McDonald’s products and services: something that has made the organisation realise a global presence.
Industry Background
McDonald operates in an industry of fast foods. In this industry, the major target market includes all people whom the industry believes lack time to prepare food and hence opt for ready-to-eat foods. Such people include young people and working class persons (Surtherland & Sylvester, 2000, p.23).
Even though this target market constitutes a large market segment enough to sustain long-term operations of all the organisations operating in the industry, increasing concerns and association of fast foods with health challenges such as obesity coupled with its associated ailments such as diabetes and high blood pressure among others poses a threat to the industry.
This implies that the trend for continued growth for consumption of fast foods is challenged.
Company Background
McDonald opened its first store in 1971 in Yagoona in Sydney, Australia. However, the company had been in operation in the USA having opened its first store at Illinois, Chicago, in 1955.
Today, the organisation is one of the largest fast food retailers not only in the USA but also in other parts of the world such as China and Australia. It has about 30,000 stores across the world with new stores being established with time.
Research indicates that McDonald opens a store after four to five hours (Greco & Michman, 1995, p.12). Across the world, the presence of McDonald is experienced in about 119 countries. In Australia, the company has about 730 stores while it has about 800 stores in operation in China.
Additionally, McDonald employees about 390,000 people who serve about 54 million people across the world per day. In the year 2005, the company reported revenue of about 21 billion U.S. dollars.
Essentially, the company expands through opening of franchises whereby, in foreign nations, it reengineers its products to meet the needs of the local people.
Micro-environmental forces
Microenvironment forces involve those internal factors that are so close to a company to the extent that they affect directly the organisational marketing strategies. For MacDonald, some of these factors include customers, shareholders, employees, and the media.
Good advertising plays a central role in aiding an organisational marketing strategy to succeed (Kotler et al, 2009, p.19). Media attention on organisations’ operations may result to either building success of organisational marketing strategies or even destroying them.
For MacDonald, the company aims at achieving three fundamental aims by harnessing media to create customer awareness about the products of the company besides making them have a positive feeling about the products in a bid to remind them about the products offered by the company.
Customers constitute subtle microenvironmental factors that influence the company based on their preferences, choices, and even the reason why they buy them. On the other hand, MacDonald has a large number of employees constituting both young and old people from a multicultural population.
Therefore, the marketing strategies adopted need to ensure an increment of the profitability of the company so that the shareholders can reap maximally from their investments.
SWOT Analysis
In the daily operation of any organisation, situations are encountered, which act as strengths, weaknesses, opportunities, or even threats to the success of any organisation. For MacDonald, strengths include the company’s Global presence and the capacity to have developed a worldwide brand image and good reputation.
The company applies a global presence strategy in every market it enters globally. Still, it takes in the local cultures and preferences of people in the foreign market or country. An additional strength of the company is the capacity to be innovative besides offering of attractive products to woo customers.
Further, McDonald offers customers a great service, choice, and a reasonable value. Amid these strengths, McDonald encounters some weaknesses such as quality challenges across the franchise network globally. Arguably, consumers demand the same quality of food in all the franchises, something that is hard to realise.
Another weakness is the poor reception of its ads by some people. For instance, the company has had cases of under-par advertising or marketing particularly in the Asian market. In these incidents, the ads were taken as offensive by natives. This affects McDonald’s brand image negatively.
Opportunities available for McDonald to capitalise on to enhance its success include introduction of a new segment, which supports the latest trends of health conscious groups, fast growth of fast-food industry, and Joint Ventures with supermarkets.
Other opportunists are free Wi-fi for customers coupled with the deployment of environment friendly products and processes that can help achieve social corporate responsibility.
Nevertheless, the company also experiences some threats including stiff competition from other companies. Consumer spending is also adversely affected by global economic crunches.
Market segmentation
For a firm to succeed in placing strongly its brand, it needs to determine its market segment. Market segmentation involves dividing consumers into subsets comprising of common needs in terms of consumption of goods and services offered for sale (Dann & Dan, 2004, p.87).
Once segmentation is done, appropriate market campaigns are set to target the subsets. McDonald accomplishes segmentation in two main ways: demographic segmentation and psychographic segmentation. From the context of demographic segmentation, McDonald initially targeted young people.
However, with time, it included children and elderly people through happy meals in the case of children and Egg McMuffin for elderly persons. Psychographic segmentation is applied to middle and working class persons.
Target markets
McDonald’s target market embraces all demographic sections in the population. These sections encompass gender, age, race, nationality, and income among others. The services offered must satisfy this target market (Yelkur, 2000, p.109).
Essentially, MacDonald targeted youngsters with its attractive packages. Later, the company incorporated workers who had no available time to cook or even eat while seated at a restaurant as another target market.
Since it is after the success these two groups of people, McDonald took marketing strategies to seek out for genuine markets characterised by aspects such as culture and economy.
With the emerging dietary concerns, the company has also considered people impacted by concerns of the capacity of high calories to lead into health problems as a specific target market.
To satisfy the concerns of this target market, the company has created soya hamburgers. This particular product is a number one choice for many groups of people including the vegetarians.
Targeting strategy
McDonald utilises pricing and advertising as the main strategies for targeting. In terms of prices, McDonald has been known over a long period to offer competitive prices for its humbugger chains in comparison to all other chains both within the U.S. and in international franchises.
Consequently, the company has been able to attract and retain large family patronage. On the other hand, location is a targeting strategy that has led to the immerse success of the company.
In this context, Greco and Michman argue that McDonald is the first chain selling humbugger that has been able to grow even into suburbs and areas that are crowded in mega cities (1995, p.25).
In case of advertising, marketing strategies consider a particular target audience to help in designing of the target character.
Positioning strategy
To help in positioning of the McDonald’s products, ads essentially utilise children as the main audience besides incorporating parent characters. This helps in creating the impression that the products of the company are created with the needs of the entire family in mind.
Arguably, as a positioning marketing strategy for McDonald, it is possible for a single commercial ad to capture multiple audiences and yet create a sense of identification.
The company also positions itself through a global fundraiser that benefits Ronald McDonald to house children coupled with charities.
Recommendations and conclusions
McDonald remains to be the largest worldwide distributer of fast foods. Amid this centrality in the market, the company needs to take into cute consideration all the environmental factors that afflict it coupled with the marketing strategies that the company uses now.
Every strategy has its advantages and disadvantages. The implication here is that, to limit weaknesses and threats and capitalise on opportunities and strengths, the organisation’s management needs to determine what works best for the company so that all the constituents of the microenvironment are satisfied and harnessed appropriately to enhance the success of the organisation in the future.
Hence, the recommendation is that McDonald needs to ensure a careful planning, evaluation, and implementation of all marketing strategies since a change of strategies produces valid repercussions. Some of the repercussions may lead to a failure of the organisation while others may result to success.
The best repercussion is the one, which truncates into organisational success. Therefore, with the growing health concerns among children and other sections of population due to the consumption of fast foods containing high calories, McDonald needs to determine how healthy its foods are besides knowing the extent that its products meet the health concerns of its customers.
Reference List
Dann, S., & Dan, S. (2004). Introduction to marketing. Australia: Wiley.
Greco, J., & Mitchman, D. (1995). Retaining Triumphs and Blunders: Victims of Competition in the New Age of Marketing Management. New York: Quorum Books.
Kotler, P., Adam, S., Denise, S., & Armstrong, G. (2009). Principles of marketing (4thed.). Australia: Prentice Hall.
Surtherland, M., & Sylvester, K. (2000). Advertising and mind of the consumer: What works m, what does not, and why? New Jersey: Allen & Unwin.
Yelkur, R. (2000). Customer satisfaction and service marketing mix. Journal of professional services marketing, 21(1), 105-115.
The goals of the study include exploring the current financial issues faced by McDonald’s, determining the factors that define its performance, analyzing its current position, and suggesting improvements. The company has been operating in the global market for quite a while, yet it seems to have been facing difficulties over the past few years. Thus, new approaches toward marketing and product pricing will have to be explored.
Market Conditions
The current market conditions can be defined as favorable for McDonald’s. The company’s current shares are at the 163.34 mark and have been experiencing a rather steady rise, which can be deemed as a positive tendency (see Fig. 1).
As Fig. 1 provided above shows, despite a minor hiccup in 2016, McDonald’s has been experiencing a rather impressive success and has enjoyed gradual economic growth. The identified phenomenon can be defined as rather impressive given the vast range of competitors with which the company has to deal in the context of the global economy. The presence of firms such as KFC, Taco Bell, and Subway, makes the process of not only increasing the company’s revenues but also retaining its current profit margins rather difficult (see Fig. 2).
When considering the factors that condition buyers to purchase particular products, one must mention the efficacy of repetitions, as well as psychological approaches to pricing. Much to its credit, McDonald’s uses both approaches. However, in its attempt to attract its target audience, the company lacks subtlety. By using the approach that requires ending each price in.90, the company creates an impression of reducing its price by $0.10, which is believed to be perceived on a subconscious level and, thus, compels target audiences to choose McDonald’s products over the ones offered by other companies. However, seeing that the identified approach is used by a variety of other organizations, it can hardly be considered as an advantage for McDonald’s.
Marketing Plan
When considering the current Marketing Mix (see Fig. 3) used by the company, one must give McDonald’s credit for targeting a wide range of customers. Therefore, the issue of diversity remains one of the key areas on which the firm prefers to work. On the one hand, in light of the firm’s recent tendency to expand into new markets, the said choice is fully legitimate. On the other hand, it does not allow McDonald’s to invest in its R&D processes in order to explore new opportunities for introducing new and healthier products into its production line.
Fig. 3. McDonald’s: Marketing Mix.
The fact that the organization uses price building as the key step toward developing a coherent pricing strategy can be viewed as a touch flawed. It can be supposed that the organization would have benefitted significantly from the focus on the use of discounts for its loyal customers, as well as gift cards and other opportunities. As a result, buyers would be more eager to purchase the firm’s products.
It is assumed that McDonald’s is going to suffer certain losses in the future as far as its financial assets and profit margins are concerned (see Fig. 14). As the figure shows, the current 5-year projections indicate a steep drop in the P&E ratio, as well as a significant negative trend in cash flow from investing and financing.
Nevertheless, the general trend can be described as rather positive. The estimated rise in the revenue, as well as the EPS, can be considered a sign of the company’s readiness to operate in the realm of the global market.
It could be argued, however, that the propensity toward the consistent growth of the net debt of the organization should be viewed as a reason for concern. The current projected revenue correlates negatively with the rise in the debt levels; particularly, there is a tendency for the net debt to increase at a faster pace than the company’s revenue. Thus, the slightest hiccup in McDonald’s economic growth may impact the company negatively, therefore, leading to its untimely demise.
The projected increase in the rates of the free cash flow can also be interpreted as a sign of McDonald’s being able to enjoy a range of financial opportunities in the future. The identified tendency indicates that the organization will manage its expenditures successfully and be able to use its financial assets in a more sustainable manner. As a result, a gradual rise in the organization’s economic efficacy is expected.
Figure 4. McDonald’s: P&L (“McDonald’s: Stocks”).
As shown in Fig. 4, McDonald’s is also likely to experience a drop in capital expenditure rates. The identified information can be explained by the fact that the company will be able to introduce an enhanced waste management framework. As a result, a shift toward the use of the lean management principles and, thus, the development of an integrated approach toward key production processes will become a possibility.
McDonalds has experienced drastic changes in its revenue streak over the years of its existence in the target market. With the recent focus on healthy food and the promotion of healthy dieting choices, the organization is likely to suffer impressive negative changes in its revenue streak. As a result, the overall economic growth of the firm will be jeopardized. To address the specified concerns, McDonald’s may have to reconsider its current approach toward corporate management processes, particularly, the management of its financial assets.
Increasing store sales can be viewed as one of the possible steps toward increasing the changes for the organization to survive in the target market. Although the company’s current marketing strategy seems to be rather efficient, it needs an improvement to handle the negative effects of the drop in store sales. Particularly, rebranding the company as an organization that offers not only traditional fast food but also options for an especially healthy diet, should be considered a necessity
Conclusion
McDonald’s has seen significant changes in its economic growth over the past few years, yet it seems to have been improving its current score. With a closer focus on product differentiation, exploration of other markets, and especially on creating opportunities for people to experience options for healthy dieting, the company is likely to increase its profit margins extensively. Furthermore, the organization will have to reconsider its current approach toward its financial strategy by reducing the psychological pricing strategy and offering its customers discounts and other opportunities for saving their money.
McDonald’s is a world brand of fast food that occupies biggest part of the global market segmentation. McDonald’s has taken its place in Australian market. Thus, the sphere of fast food, like any other, needs to be both constantly controlled to avoid the mistakes and failures in work and improved to be on the same level or even on the higher one in the sphere of functioning. This paper will focus on two points, the issues in the organization of McDonald’s business in Australia and on the recommendations that may be offered to improve the quality and managing in the sphere.
McDonald’s in Australia as an Independent Structure
McDonald’s is an American brand and it is not surprising that fast food restaurants in different countries are perceived as the part of American heritage. According to Louise Fleming’s research that was conducted in 2000, “McDonald’s Australia is 90 per cent owned by United States parent companies and the remaining 10 per cent is owned by local management” (Fleming 60). Australia works hard to adapt McDonald’s image to national peculiarities and for now, McDonald’s in Australia “is no longer perceived as American import” (Bell and Hollows 89). Hard work has been provided to defuse global tension and implement particular actions to suit particular national Australian identities (Bell and Hollows 89). So, there is a tendency to nationalization of McDonald’s in Australia and cultural appropriation for it.
Group Viewpoints with Regard to Organization Issues
There are different issues that should be followed by any organization, thus, there are some problems the companies may face. The first issue that should be checked in McDonald’s in Australia is the staff and the functions it performs. There are great complaints customers express in the regard to McDonald’s staff. The problems may be connected with the crew member errors, as well as with overstaffing and understaffing. Understaffing is the problem that touched customers who have to stand long queues. Overstaffing means the double expenses for the head of the restaurant and problems with job performance as many people try to do the same work at the same time.
The evaluation of the work is to be provided in the sub-ordinate way. The McDonald’s in Australia is the company with hierarchical structure, so control and work evaluation should be completed only by the higher manager. Different controversial questions should be solved in the presence of the higher manager or other company representative. Inconsistency and other manager faults can occur, still, it does not mean that the problems should not be decided in time. The constant manager failures and inconsistency may lead to the change of the position or even dismissal. These problems should be considered straight by the head of the department. Stock and financial variance are the problems of the heads of the departments and restaurants. Simple workers should not meddle in. The productivity of the working process should be counted by the human resources management.
Recommendations and Improvements: Suggestions with Regards to McDonald’s in Australia
Such huge structure like McDonald’s in Australia needs to be controlled and improved all the time. Considering the main peculiarities of the structure and functioning of the organization, a number of different suggestions and recommendations should be given. First, McDonald’s should direct its services not only to customers, but also to product. The situation is that people in Australian McDonald’s are hired on the lower positions with the opportunity for career planning. Thus, the company should care of hiring people for higher positions with appropriate education and practical experience. The staff selection should be transparent to support the positive image of the brand in Australia. Moreover, as the company gives employees an opportunity for career planning, the appropriate training courses on different levels should be established. To improve the performance of the managers, the feedback session should be provided for encouraging them. Moreover, the training should be offered to all employees, without regarding to the time they occupied the position. One of the variants for training that may be offered is the reality role playing. Such technique will allow understanding the proficiency of the work performance of managers and their readiness to the achievement of the next level in career. 360-degree feedback system is a great opportunity for the managers to understand the level of cohesion of employees. Moreover, this system will allow employees understanding of the problems they have and to consider them from other people’s opinion (McDonalds Corporation).
Thereby, there are great many of different problems an Australian McDonalds may face with. In fact, all these problems may be easily decided. The paper represented a number of issues and recommendations that can be used for improving the quality of the services offered in Australian fast food sphere. The recommendations are connected with different problems, so the reorganization according to the presented pieces of advice may influence different spheres in the Australian McDonald industry.
Works Cited
Bell, David and Joanne Hollows. Ordinary lifestyles: popular media, consumption and taste. New York: McGraw-Hill International, 2005. Print.
Corporate social responsibility, also known as CSR, is becoming an essential element in the changing world due to the transformations led by globalisation to meet the expectations and demands of the stakeholders. Business corporations, civil organizations and public organizations are showing a strong commitment and promoting CSR by adopting CSR initiatives. In some organizations, they are in partnership with non-governmental organizations also known as NGOs. This paper discusses the subject of CSR and also studies how it is implemented by McDonald.
CSR Description
The wide-reaching effects of CSR in organizations have gradually become a marketing platform to reach out to the stakeholders around the world in a more approachable and sustainable way to promote and improve the public image. With more and more global corporations starting the CSR strategy, McDonald’s has started their CSR strategy by starting a CSR page on their homepage to improve the performance of social and environmental issues which is often placed by society at a given point of time.
McDonald is the leading global foodservice retailer with more than 30,000 local restaurants, serves 52 million people in more than 100 countries each day with an annual turnover of an average of more than $4 billion per year for the past 3 years (McDonald’s, 2007). Like other retail organizations, McDonald’s believed that they have a social and moral responsibility for the people around the world to produce a positive impact to the stakeholders although the bottom line is the concern of business in making profits. It even has its own corporate responsibility blog, which is dedicated solely to CSR.
“We want to open our doors to corporate social responsibility (CSR) at McDonald’s – to share what we’re doing and learn what you think,” Bob Langert, Senior Director for Corporate Social Responsibility at McDonald’s mentioned when asked about the purpose of the blog (McDonald’s blog, 2006). In McDonald’s social responsibility blog, McDonald’s focuses on five key areas: balanced active lifestyles, responsible purchasing, people, environment, and community. People are free to write their comments and engage in the discussion about the impacts of their business, responsibilities and performance provided they follow the terms and conditions stated in the blog.
Key Drivers of CSR
Haigh (Haigh et all, 2006) has argued that there are six sets of factors that are conventionally considered as promoting outcomes that are consistent with the core principles of social responsibility. They are intra organisational factors, competitive dynamics, institutional investors, end consumers, government regulators and non-governmental organizations. These four approaches to determining the justifications of CSR. Corporate entities are assumed responsible only for their own acquisitive behaviour and not for capitalism itself. This creates a number of undefined categories of obligations and forms that the social contract should take and rarely consider alternatives to neoliberalism, Self regulation is a proper normative ideal for corporate entities. Voluntary CSR reporting is assumed without examination to sufficiently acquit the firm of extra-legal responsibilities.
CSR Analysis
The unhealthy nature of fast food in McDonald’s maybe infamous which is commonly connected with obesity. McDonald’s tackles the problem by starting to put in nutrition information by using an iconic approach to display calories, protein, fat, carbohydrates and sodium on our food packaging. Dr Harvey Anderson, Professor of Nutritional Sciences, Physiology and Medical Sciences, faculty of medicine at the University of Toronto and member of McDonald’s global advisory council on balanced, active lifestyles claimed that the standardized approach to communicating key nutrient values to McDonald’s customers has been done in a way that is simple to understand, which he felt will make it a useful tool for those individuals looking to make more informed menu choices at McDonald’s (McDonald’s, 2006).
McDonald’s has been awarded by Black Enterprise magazine for its commitment to diversity for the third consecutive year. Black Enterprise named McDonald’s as one of the “40 Best Companies for Diversity” in its July 2007 issue. According to the magazine, McDonald’s excelled in the board of directors, supplier diversity, employee base and senior management. McDonald’s also received the highest mark in the advertising diversity rating category which assesses advertising dollars spent through media targeting black and ethnic minority audiences. (Black PR Wire, 2007).
“We continually strive to achieve an environment where everyone feels valued, accepted and rewarded. That dedication and unwavering commitment to diversity and inclusion allow us to recognize and appreciate the contributions that all individuals bring to our system including our employees, our franchisees and our suppliers,” said Don Thompson, President of McDonald’s USA (Black PR Wire, 2007).
McDonald’s CSR Offerings
McDonald’s CSR offerings include five thrust areas and are People, Products, Place, Price and Promotion. This section provides details of how McDonald’s has implemented CSR in the thrust areas. A status analysis is also given for each thrust area (CSR 2006, p 5).
People
CSR Statement: McDonald suggests that it has a responsibility to create and maintain a work environment where all employees have a feeling that they are valued and respected. The company also provides training and other opportunities for its employees so that they have personal and professional growth and this would consequently foster job satisfaction.
Products
CSR Statement: McDonald states that it has a responsibility to provide a relevant variety of quality product choices that the customers trust. It also states that it would partner with suppliers who agree to operate their own business ethically and meet the social responsibility standards that are prescribed by McDonald’s.
Place
CSR Statement: McDonald states that it has a responsibility to manage its business by integrating environmental considerations into daily operations and by constantly seeking ways to add value to the community.
Price
CSR Statement: McDonald states that it has a responsibility to maintain the values and high standards and provide food that is affordable to a wide range of customers.
Promotion
CSR Statement: McDonald states that it has a responsibility to maintain and build trust with all the stakeholders by ensuring that the marketing and communications efforts are truthful and appropriate.
Assessment of the Actions taken by McDonalds to meet the CSR objectives
McDonald has provided a report that shows how the CSR Statement have been met. These have been explained in the section for the key areas of People, Products and Price.
Assessment for People CSR
McDonald’s has been criticised in the press for the low prospects that employees have and derogatory comments such as ‘McJob’ have been giving, The company has stated that it has taken measures to identify talent and offer such promising people opportunities for career advancement. The CEO has suggested that leadership development and talent management are the top priorities and has initiated the leadership institute where employees are taught the finer aspects of being leaders. The company has provided handouts and literature on the social responsibility of the company to its employees and has also carried this information on the websites and at employee conventions. McDonald has introduced a training program in 18 countries to integrate CSR into the corporate structure. The communication between the top management and the employees has been strengthened by providing webcasts where the employees can interact with the management. Interactive websites with a facility for chat has also been provided.
Assessment for Products CSR
McDonald’s has been severely criticised for the health problems and obesity caused by its food products. The company has introduced several product innovations that are designed to meet CSR obligations. Menu items such as salads, milk, vegetables, food, beverages and side food items have been added to the Happy Meal food product. These products are designed to lower the obesity and high cholesterol constituents. The company has also introduced printed information on the packaging that will state the constituents in the food items. To train the staff and other employees on the benefits of maintaining an active lifestyle, videos have been made in seven languages and distributed to the staff to create awareness and educate them on the problems. McDonald has also given away 15 million step meters and these were part of the Olympic sponsorship. To stop the advertisements from misleading the public, the advertisement communications have been reassessed and the advertisement staff made aware of the accountability that they need to follow. McDonald has also made its fish, poultry, beef and pork suppliers to be accountable for their operations through Project Kaleidoscope. Many suppliers have expressed their willingness and have participated in this activity. The company has introduced a certification system for all suppliers who supply poultry products directly to the company. McDonald also conducts regular audits for abattoirs and meat processing plants that process beef, poultry and pork. It has launched the Agricultural Assurance Program that involves farm produce suppliers, suppliers of fish and meat products. The company has reported that it has shifted the procurement of over 18000 metric tons of fish produce since the existing suppliers were not sustainable in their commitment. It has also introduced the Sustainable Agriculture Initiative in Australia, UK and Europe to ensure that the farm produces suppliers comply with their requirements.
Assessment for Place CSR
The huge number of restaurants with their large demands of power have made McDonald frame the Place of work as a thrust area. The company has used certain electricity energy management tools in some leading restaurants to monitor the use of energy consumption. The company has started using renewable packing to the extent of 83% and out of this about 31% is made of recyclable material. It has adopted a forest policy in Europe and this is directed at consumer packaging products and designed to reduce the content of forest products. The company raised almost 61 million on Worlds Children’ Day through the participation from the restaurants, suppliers and employees. The company has introduced a number of programs for its local markets.
Comparison of CSR with Wal-Mart
For this paper, a study has been done for Wal-Mart (Wal-Mart CSR, 2004). The company has different thrust areas for CSR and they are Ecology, Education, Nutrition, Health and Others.
It is clear that while McDonald’s has initiated CSR measures to tackle its business activities and involves its employees and suppliers, Wal-Mart has taken up CSR measures that directly involve the public. These are explained in the next section.
CSR for Ecology
Wal-Mart has been accused of causing widespread damage to the ecology and the environment. In response to this, the company has introduced reforestation of woodlands and public parks where trees are planted. It has also taken up beautification work such as maintenance of traffic islands and has also introduced measures to clean up and renovate public gardens and parks (Wal-Mart CSR, 2004, p: 11).
CSR for Education
Realising that education was an important area, Wal-Mart has introduced measures to provided equipment to schools and helped in setting up Children’s libraries besides being involved in children’s sporting events. It has also helped in speech therapy activities, taken up maintenance of schools and helped in the learning and leisure activities for children. Understanding the need for small entrepreneurs, has extended help for them and conducted quality workshops and also promoted conferences for small entrepreneurs. The company has stated that 49, 758 people have benefited from its activities (Wal-Mart CSR, 2004, p: 11).
CSR for Nutrition
Wal-Mart has realised the importance of proper nutrition and has been involved in a number of food safety programs. It has started an awareness program called the child malnutrition program where the health of malnourished children is evaluated. It is the main donor for many food banks. Understanding the importance of nutrition among families in developing countries has created many backyard vegetable gardens and family farms. Wal-Mart stated that 721,435 people have benefited from its CSR campaign (Wal-Mart CSR, 2004, p: 11).
CSR for Health
Wal-Mart has given a lot of importance to health among the people and has introduced many programs for improving health. It has provided the facility for children suffering from cancer, care for physically challenged people, people suffering from diseases such as cerebral palsy, breast cancer, congenital cataracts and spina bifida. The company has promoted many fairs for a checkup of eyes, breast cancer detection, dental checkups, health and hygiene, female sexual health problems and so on. Wal-Mart has stated that a total of 32, 121 people have benefited from its health CSR(Wal-Mart CSR, 2004, p: 11).
CSR in other areas
Wal-Mart has introduced a number of measures in areas such as care for homeless and abandoned children and home construction activities. It has also extended marketing and administrative support for many organizations and supported brigades in food drives and disaster management. The company has stated that a total of 990 people have benefited from its activities (Wal-Mart CSR, 2004, p: 11).
Conclusion
A detailed study of CSR at McDonald’s has been done. The main thrust areas are People, Products, Place, Price and Promotion. The study has examined how the CSR vision is implemented. A comparative study of CSR at Wal-Mart has also been done.
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A seventy-nine-year-old lady, Stella Liebeck, purchased coffee at a McDonald’s drive-through and happened to spill it on herself, thus suffering burns. Consequently, she filed a suit against McDonald’s and hired a clever attorney in order to successfully convince the jury that Mcdonald’s was at serious fault for not making sufficient available warning that hot coffee is without a doubt hot and can burn you severely. The seventy-nine-year-old walked away with a multi-million dollar reward.
The case has illuminated the severely inadequate justice system with everything wrong prevalent in it, ranging from ‘frivolous lawsuits,’ immoral lawyers, untrustworthy judges, to insatiable petitioners who conveniently put their own blame on others and are aided by clever judges to support the entire foul practice.
Even after a gap of nearly ten years, civil justice and jury critics still ridicule the ‘Stella Lieback and McDonald’s case of coffee by terming it as ridiculous and frivolous!
What is very surprising, though, is the fact that the testimony and actions of McDonald’s’ very own staff proved instrumental in leading the jury to rule against it and subsequently in favor of the opponent. One cannot, however, ignore the third-degree burns that Stella had incurred across her groin, inner thighs, and even her buttocks.
Stella Liebeck, a resident of Albuquerque in New Mexico, was seated in the passenger seat of her grandson’s car, ordered a cup of coffee from the drive-through window of the local McDonald’s restaurant. The coffee was served in a Styrofoam cup with a warning on the lid indicating that the contents of the cup were ‘H.O.T.’ in small uppercase letters. Stella placed the coffee between her knees with the purpose of opening the lid and adding cream and sugar to it. While doing so, the entire coffee spilled on her lap and within a matter of ninety seconds spread to her groin and her inner thighs, and the sweatpants which she was wearing absorbed the coffee and held it close to her skin, causing third-degree burns on nearly sixteen percent of her skin.
The critics of civil justice very often press charges that either Stella was driving the car or that the car was in motion when the coffee was spilled, neither of which is actually true. When the grandson received the order, he had pulled the car forward and momentarily stopped it in order to enable his grandmother to add cream and sugar to the coffee.
Following this injury, Stella Liebeck was hospitalized, and a vascular surgeon determined that she had incurred third-degree burns over 6 percent of her body, including her inner thighs, the perineum, the buttocks, and the genital and groin areas. Stella was hospitalized for eight days for treatment, including the grafting of skin and treatments involving the surgical removal of tissue.
Initially, Stella had claimed $20,000, which was outright refused by McDonald’s.
McDonald’s reacted by producing documents showing that more than 700 claims had been made by people burned due to its coffee in the period between 1982 and 1992, including claims which involved third-degree burns significantly similar to Liebeck’s. This history which documented McDonald’s knowledge about the extent and nature of this hazard, considerably worked against them. During this discovery, McDonald’s also disclosed that its coffee is held between 180 and 190 degrees Fahrenheit (on the advice of a consultant) so as to maintain the optimal taste. There were reports and evidence of other establishments which sell coffee at considerably lower temperatures than at McDonald’s, and even the coffee which is served at home is usually between 135 to 140 degrees.
The quality assurance manager of McDonald’s confirmed that danger of burn does exist with any food substance which is served at 140 degrees or above, and as such, the coffee served at McDonald’s was unfit for drinking since it would burn the mouth and throat.
He additionally accepted that the company aggressively implements a prerequisite that coffee has to be held at 185 degrees, five degrees plus or minus, and further stated that while burns would take place, McDonald’s had no intention of dropping the “holding temperature” of its coffee. Stella’s expert, who was an intellectual in the domain of thermodynamics as applied to human skin burns, confirmed that liquids at 180 degrees would cause full-thickness burn to a person’s skin within two to seven seconds.
Other evidence proved that as the temperature reduces near 155 degrees, the degree of the burn also reduces significantly. Hence, if Liebeck’s coffee was at 155 degrees, it would have cooled, and she could have got sufficient time to circumvent a severe burn.
In view of all these facts, the jury decided to award Stella Liebeck a sum of $200,000 as compensation for the physical damages. However, this amount was reduced by 20% by the jury to $160,000 because the jury established that Liebeck also shared a 20 percent responsibility in the spill out. Liebeck was additionally awarded a sum of $2.7 million by the jury as to punitive charges, equating to about two days sales of McDonald’s coffee basically as the penalty of McDonald’s for its insensitive conduct towards Mrs. Liebeck and its years of overlooking hundreds of similar damages. The amount was, however, reduced by the trial judge to $480,000, but after further negotiation, Mrs. Liebeck eventually received $640,000.
A subsequent investigation after the verdict found that the temperature of the coffee at the local Albuquerque McDonald’s considerably dropped to 158 degrees Fahrenheit. The policies of the corporation as a whole ultimately changed, which now explicitly prohibits serving coffee at the scorching high temperature that damaged Mrs. Liebeck, thus directly preventing many potential injuries and certainly serving as a warning to many other restaurants too.
So the bottom line is that the case was not about a gold-digger or a defendant that was unduly penalized based on insubstantial ploys. In fact, a huge company like McDonald’s had intentionally wronged hundreds of people like the straight consequence of an unnecessarily hazardous company strategy and was at last held responsible by one of the sufferers.
Needless to say, the loss to McDonald’s rapidly vanished in its fiscal report, in which million is the unit of reporting and not the dollar. Mrs. Liebeck’s monetary gain barely enriched her but most definitely provided as rational recompense for her wide-ranging medicinal bills, not to mention the terrible pain and suffering that her injury must be caused her not only physically but mentally as well.
If I did own a small restaurant, I would most definitely change the policy of serving food at scorching temperatures, no matter how this change would affect the business or how much benefit the competitors would gain due to this, for the simple reason that providence of food serves not only as a profit-making business but is also recognized as a virtuous deed of feeding people even if by way of selling. In a business that directly involves people of all ages, from the young to the old, utmost care and attention needs to be paid to the policies and programs involving their safety. As such, harm arising due to one’s negligence, to any living being, in any possible way should at all-time be avoided; as the wise saying goes, ‘Prevention is better than cure.
References
ATLA fact sheet. 1995, 1996 by Consumer Attorneys of California Article “The famous/infamous “McDonald’s Coffee Spill Lawsuit” revisited”. Web.
Liebeck v. McDonald’s Restaurants, P.T.S., Inc., No. D-202 CV-93-02419, 1995 WL 360309 (Bernalillo County, N.M. Dist. Ct. 1994).
Wall Street Journal article (#1994 WL-WSJ 342815). Web.
McDonald’s is among the companies that once failed to adapt. In 1998, it launched the “Made for You” innovative process that involved customized food preparation considering the clients’ specific ingredient-related preferences (Pal & Mathew, 2020). It resulted in a major failure despite the management’s expectations. According to Weiss (2016), the five pillars improving change initiatives’ chances of success include strategy, structure, culture, systems, and leadership.
In the case of McDonald’s, culture and leadership were present in the form of employees’ openness to new practices and operation executives’ clear articulation of a vision for change (Pal & Mathew, 2020). Nevertheless, limited consideration was given to systems, structure, and strategy, resulting in innovators’ inability to predict customization’s impacts on waiting time for orders, queuing, and teamwork speed.
Also, there are multiple failure-promoting factors, some of which include employee opposition or resistance to change, inadequate focus, and change initiatives’ inability to go beyond promoting short-term local improvements. In the chosen case, there was no evidence of employee resistance. However, the leaders failed to treat innovation “as a strategic element for organizational success,” which resulted in customization at the expense of service speed (Pal & Mathew, 2020, p. 158). This exemplifies both the short-term/local nature of improvement and insufficient focus on the product delivery system in its entirety.
Employee empowerment (EE) can support productive partnerships between businesses and clients. EE in the form of flexibility and involving employees in decision-making is positively related to client satisfaction, which is achieved by increasing employee satisfaction (Shedid, 2019). Kanter’s structural empowerment theory posits that EE, being promoted by giving employees the resources, information, and opportunities for development, gives rise to employee commitment and accountability, which eventually results in better customer service (Shedid, 2019). In their EE theory, Bowen and Lawler argue that EE stems from authority delegation, knowledge, information sharing, and rewards (Shedid, 2019).
These factors can create organizational contexts that would be conducive to employee engagement, resulting in more effective customer care and communication. Agile organizations’ structures are non-hierarchical and allow for customer-centeredness and open communication (Balog, 2020). In line with the mentioned theories, these features promote data sharing and the delegation of authority, leading to empowerment and, consequently, effective partnerships with clients.
References
Balog, K. (2020). The concept and competitiveness of agile organization in the fourth industrial revolution’s drift. Strategic Management, 25(3), 14-27. Web.
Pal, P.P., & Mathew, J. (2020). The leadership essentials: A practical handbook for success. Blue Rose Publishers.
Shedid, M. (2019). Employee empowerment and customer satisfaction: An investigation from a UAE banking-sector perspective (Publication No. 842064) [PhD thesis, Robert Gordon University]. OpenAIR RGU Repository.
Marketing is a complex process that involves more than just promotional activities. In the contemporary business world, the need for marketing has significantly increased with increased level of competition. Marketing can be defined as a process of facilitating an exchange of something of value for something needed.
This implies that the marketing process is likely to come along with some costs. Marketing process is a very important part of any organization. It is therefore necessary to have a clearly designed marketing plan in order to have a successful organization. It is always necessary to understand the customer’s needs while conducting a marketing plan.
Industry Analysis
In the current world, the food retail industry has significantly developed. Many players have entered into the market, which has led to rise in the level of competition in the industry.
There are several international corporations which are engaged in food retail all over the world. Over the past, these organizations have been engaged in stiff competition with each of them aiming at winning the highest fraction of the market share.
For instance, there was a high level of competition in 1980s which was referred to as “hamburger wars”. This was characterized by price battle which led to a significant fall in prices. In the contemporary world, the level of competition has significantly increased which has led to intensification in competition in the industry.
There are several competitors in the food distribution industry in the world. Some of these includes the Burger King, Wendy’s International, Inc., Jack in the Box, Checkers Drive-In Restaurants, Sonic Corporation, White Castle system, Whataburger, CKE Restaurants, Doctor’s Associates and YUM Brands (Africa Awards for Entrepreneurship, 2011: par 20).
However, these organizations are in most cases engaged in numerous lines of products. Some does better in some while some are better in another line. However, some lines pose a high level of competition.
Company Background
McDonald’s is one of the most successful businesses across the world. This corporation is owned by a group of people who comes from all over the world. Among these people are the Muslims and the Arabs. McDonald’s is a neutral corporation which is independent of religious or political interference. McDonald’s is owned by Arab and Muslim business men in Arabian countries (McDonald’s, 2011: par 3). These individuals are responsible for the operations of this corporation in these countries.
McDonald’s is the world’s top leading organization in the food service industry (McDonald’s, 2011: par 1). The origin of this corporation can be traced back in 1930s when it started showing good performance in the market.
With time, the organization continued with a progress. In its early stages of development, some of the main foods produced were cheeseburgers, hamburgers, shakes, French fries, apple pie and soft drinks (Africa Awards for Entrepreneurship, 2011: par 3).
In 1960s, the company recorded a significant boost in the level of its performance. In 1965, the organization offered its shares in public at a price of $ 25.50 each (Africa Awards for Entrepreneurship, 2011: par 5).
This was one of the major steps in the process of taking off. Soon after the launch of these shares, the prices shot up to $30 per share. Over the past, the company has encountered a high level of competition from its competitors.
This has severally threatened the performance of the organization. However, the company has managed to retain its high level of performance. For instance, the company was faced by a major challenge in 1980s during the hamburger wars. This battle was between various companies in the hamburger chains. During this period, McDonald’s intensified its advertisement campaigns.
During this period, the market was characterized by aggressive advertisement campaigns and cut of prices. This reduced the level of returns significantly for McDonald’s. However, McDonald’s market share continued to expand during the time (Africa Awards for Entrepreneurship, 2011: par 7).
McDonald’s has a very close examination of the need of its customers. In connection to this, the company planned to diversify its menu in order to suit the changing needs of its customers. As a result of these changes, company introduced chicken McNuggets in 1983 (Africa Awards for Entrepreneurship, 2011: par 8). By the end of the same year, McDonald’s managed to emerge as the second largest chicken retailer in the world. This marked a tremendous growth soon after introduction.
One of the strengths of McDonald’s is the fact that its employees are very efficient in their jobs (Africa Awards for Entrepreneurship, 2011: par 9). This had a significant contribution in performance of the organization. For instance, it reduced the operational expenses. As a result of increased employees’ efficiency, McDonald’s to lower the prices of its key products (Africa Awards for Entrepreneurship, 2011: par 11).
In 1960s, McDonald’s high level of performance can be attributed to the organization’s skillful marketing and flexibility on response to customer’s demand. With time McDonald’s continued with its expansion where it opened several new restaurants in the region. For instance, the organization was opening its 1,000th restaurant in 1968 (Africa Awards for Entrepreneurship, 2011: par 12).
During this period, the chief administrative and president of the company was Fred Turner. The company also has a global presence and is considered a market leader in the global market. This simplifies the marketing process.
One of the main weaknesses of the company is that it faces high price competition or price wars with its competitors. This leads to reduction in the profit margins. Another weakness with McDonald’s is that it uses advertisement strategies which targets children. This denies the company a chance to reach many people.
Marketing Strategy or Problem
Marketing Strategy Overview
Marketing Strategy Statement
In the contemporary business world, the market is characterized by a very high level of competition. In order for any organization to survive in such a market, there is a need to have an effective marketing strategy. As already noted, the food retail industry in the world has been similarly faced with a very high level of competition. In order for any corporation to survive in such an environment, it must employ the most effective marketing strategy.
In this case, the aim of this strategy is to increase the level of sales in hamburger. This type of food product faces a high level of competition in the market. This has threatened its performance in the market. This strategy is aimed at helping in increasing the level of sales of this product.
Objectives
The main objective of this marketing plan is to increase the level of the sales of the McDonald’s hamburgers. From the results released towards the end of the year 2010, the sales rose by 4.8 per cent (Sodersmith, 2010: par 1). This increase was significantly attributed to addition of new items in the menu. In other words, very little of this increase can be attributed to sales from the existing products. Therefore, this strategy aims at increasing the level of hamburger sales by 4% by the end of this year.
This strategy is also aimed at increasing the company’s market share for hamburgers. Currently, McDonald’s is facing a very high competition from Subway. Subway is increasing its stores across the world rapidly. Therefore, the objective of this strategy will be to help the organization in retaining its performance. Despite of the high level competition, McDonald’s still remains ahead of Subway in terms of revenue with each recording $24.1 billion and $15.2 billion respectively in 2010 (Casestudyinc 2011: par 1).
Market Share for Top performing restaurants
2002
1997
McDonald’s
7.3%
McDonald’s
7.8%
Burger King
3.0%
Burger King
3.6%
Wendy’s
2.4%
Taco Bell
2.2%
Subway
1.9%
Pizza Hut
2.1%
Taco Bell
1.9%
Wendy’s
2.1%
Table 1. Market Share for different restaurants in 1997 and 2002. (Stewart, 2010: 20).
The table above indicates that McDonald’s has a significant market share. The company’s market share was 7.8 percent in 1997. Due to increased competition, this level fell to 7.3 per cent in 2002.
Strategic Marketing Components
In order to achieve these goals, several components of strategic marketing will be integrated. These will facilitate in realization of the above objectives of the marketing strategy.
Branding
Branding is one of the most important activities which can significantly determine the success of a particular organization. This is because it helps in creation of a unique name which differentiates a company’s products from those produced by its competitors.
This exercise plays a pivotal role in attraction and retention of customers in a competitive environment as well as winning their loyalty. However, the success of a brand will largely depend on the effectiveness of the branding process. In order for our company to sell the new product successfully, we need to have an effective branding strategy.
In the current business world, the level of competition has significantly increased. Similarly, the level of competition in the food retail industry has also increased. Bearing this in mind, there is a need to come up with a branding program in order to win more customers in the market. In this case, McDonald’s company faces a big challenge in the hamburger market which is faced by a very high level of competition.
The organization has a well developed reputation for its performance all over the world. As already noted, the company has also managed to conduct a close observation on the need of its customer’s hence managing to retain high level of consumer satisfaction. These achievements will significantly improve the effectiveness of the branding process.
Online branding will be of great importance in this case. In order to convince our potential customers about the quality of our company’s hamburgers over our competitors’, we need to use attractive images of the new product which can easily capture the attention of our potential customers. We are also going to consider the traffic such that the message reaches the right people. Otherwise, the effectiveness of the whole exercise will be impotent.
It is important to present on the website something that potential customers can see and believe (Randall 2000: 15). This image will be set that it will be moving across the page. This will significantly help in attracting the attention of our potential customers.
SMS Interactive
This is one of the most recently developed online advertisement method which can significantly help us in creating our brand. In our case, we are targeting families in all the middle and upper class. The SMS interactive method will help us to increase the level of sales of our hamburgers to this group.
According to Face Media Digital (2011: par 5), this method assists a business to engage directly with its potential customers through their mobile phones and getting the feedback instantly. This method will be very useful because it is more cost effective than the traditional methods of advertisement. Therefore, we are going to save a substantial sum of money for the organization. In this method, it will be easier to take queries from consumers. In the process, the company will be able to increase the level of sales.
The SMS Interactive combines various marketing communications tools which significantly help in development of an organization’s brand in a most efficient way. Through this method, we shall be able to read our responders mobile numbers which we can use in exchange of information about the product.
This will help us in cultivating loyalty from our potential customers. This method will also help us in concentrating on the traffic which we are targeting in the market. Again, this will also help us in conserving financial and time resources by only investing with potential customers.
In order for any business to able to sell its new product, it must be able to advertise and promote it (Business Resource Software, not dated: par 3). These exercises will be of great significance in our case. We are going to apply the push strategy. As the level of competition has increased in the market, we are going to use this method to push our new product into the market.
In brand development, communication also plays a pivotal role in promoting the effectiveness of the exercise. One of the main methods of communication to be used will be SMS. This method will help us to reach our potential customers in the shortest time possible. Another advantage of this method is that we shall be able to get the feed back from our customers. This close interaction will help us in creating a strong brand for the Premier Portraits. For instance, we shall be able to convince our client on the quality of our new product.
Another important method of communication which will be useful in this case is through email messages. This is another cost effective method that will help us in reaching our customers very fast despite of their geographical locations. This will also enable us in reaching our customers wherever they are.
Budget
This program will involve competition with already established organizations. Playing in the major league is more expensive than playing in the minor league. This implies that we have to make adequate investment in branding in order to compete successfully in the market. This program will involve an external company which will provide SMS Interactive services. It will also involve the internal branding through our website.
Image & Positioning
In order for any product to be successful in a competitive market, it should cultivate a good image from the potential consumers. We intend to build an image of high quality and low priced product. In such combination, we shall be able to win customers from our competitors.
The Target Market
The main target market will be both new and existing markets that have recorded low level of performance. In this case, we are targeting families since they are potential customers for our hamburgers.
Through collection of adequate information, we shall be able to calculate the consumer’s lifetime value. This calculation will be of great significance as it will help us in estimating the dollar value associated with our customers. This will play a pivotal role in making some critical decisions. By concentrating on these market areas, we expect to increase our market share for hamburgers significantly.
Sustainable Competitive Advantage (SCA)
In order to be able to come up with an effective marketing strategy, it is necessary to have a sustainable competitive advantage. The competitive analysis gives an analysis of the service or product’s position in the customer’s mind.
According to the Business Software Resource publication, it is very vital for the company to know its competitors. In order to be able to compete with its competitors, the company should be aware of its competitor’s strengths and weaknesses. It is through this understanding that the company will be able to formulate strategies to overcome their competitors.
McDonald’s hamburgers have been strong compared to those provided by their competitors. McDonald’s has managed to retain its competitive advantage through out its products line. One way through which a company can do this is through differentiation.
Differentiation makes the company’s products to appear unique from similar products provided by their competitors. By having a close examination of changing consumer needs, McDonald’s has managed to modify its hamburgers accordingly. This differentiates it from the one provided by its competitors.
Marketing Tactics
Product Issues
In the food industry, products have become so homogeneous that it becomes difficult for consumers to differentiate. In order to solve this problem, we are going to differentiate our hamburgers from those provided in the market by our competitors. This will help our consumers in differentiating our product in terms of quality and package.
Distribution
Distribution is another important component in marketing plan. The company should choose a distribution method which will facilitate efficiency by making its products available to its customers at the right place and in the right time (Time and place utilities). For instance, a company may decide to make direct sales which involves sale offering using a direct, in-house sales through the telephone, mail or through the internet (Business Resource Software, not dated: par 8).
In this case, the hamburgers will be sold through our restaurants. In case there is a need for external catering, appropriate arrangement will be made in order to deliver in required time and places. However, the company should make adjustments depending on the prevailing conditions to maximize sales.
Pricing
According to Westwood (2005), pricing is a key factor in marketing strategy (158). Pricing is a major factor which determines the realization of the company’s marketing objectives. Pricing significantly depends on the product portfolio, product’s life cycles and the objectives for sales turnover and the market share.
At McDonald’s, pricing of hamburgers will be determined in three main ways. These includes customer based pricing, Competitor based pricing as well as the cost based pricing.
Since the market for hamburger is concentrated with a large number of competitors, it will be important to consider first the prices they are offering in the market. For instance, in case we set a price that is too high, then we will most probably lose our customers to our competitors. On the other hand, setting too low prices may reduce the profit margins. Therefore, a clear understanding of the prices our close competitors are offering in the market will be of great significance in setting our prices.
Currently, the share of the market of hamburger is relatively low. Therefore, we shall use a penetrating price in order to expand our market share and then increase our profitability level in the long run. However, the cost of production will be of great significance in setting this price.
The price level and the quantity demanded are closely related. When the prices are very high, then the level of quantity demanded tends to be lower. On the other hand, when the prices are very low, more people tend to buy the product or service. However, the price at which the company sells its product or service and the quantity sold at these prices are the major determinants of the profits generated.
The point above raises a very critical issue in marketing planning. If a company increases the prices of its products, it is likely going to lose its customer. On the other hand, if it lowers the prices, then this is likely going to cut down its profits.
It is therefore very necessary for any company to come up with appropriate pricing procedures which are likely to maximize profits. While setting down the price levels, a company must determine cost of producing the items. For instance, a company cannot set its prices below the cost of production.
However, there is a high risk of creating price wars when one company sets its process below what its competitors are offering in the same market. As already noted, one of the main problem of unhealthy competition is the pricing wars.
When many players enters into the market while the number of consumers remains constant; this leads to a high level of competition as each player try to win more customers in the market (Bungert, 2003: 2). The only slogan in this case becomes the price. In this case, each company will be aiming at under pricing its competitors.
Consequently, this leads to fall in prices up to unsustainable levels. In case such a case takes place, it threatens the performance of McDonald’s company. As a result of fall in prices, the company’s total returns will automatically fall. Meanwhile, the company will be forced to increase its expenses on promotion in order to retain or win more customers in increasingly competitive market.
Advertising & Promotions
In order for any company to sell its offer effectively, it should be able to advertise and promote it (Business Resource Software, not dated; par 9). In this case we are going to use the push strategy. In this form of promotion, the company uses the promotion methods which tend to push its product or service into the market place. In order to achieve maximum results, we are going to use two main methods in our advertisement and promotions.
Advertising
Advertising plays a pivotal role in determining the success of an organization especially in the global market which is characterized by consumers with a diverse background and high level of competition. In advertising, we will apply several types of media to pass information to the Company’s potential customers.
This method of promotion can have huge impact especially when the company is extending its services in new market network. We shall apply variety of media including printed, broadcasting and display media. Television is one of the frequently used media by many companies. One of the main advantages of using television is because it will help the company to reach a greater number of its target audience.
This is more so important bearing in mind the fact that the company is involved in the global market where it may be very expensive to use other methods of advertisement. Therefore, this media lowers the promotion cost per head. Through this method of advertisement, the McDonald’s will manage to build its brand in the markets. Over the past, this method has yielded good returns through increased level of sales.
Another method of advertisement which is going to be applicable to McDonald’s is the display media. This method has also significantly contributed to increasing the level of sales in various organizations. Through the display media, the company is going to use eye attracting pictures which easily attracts the attention of the targeted audience in the market.
Consequently, the organization will manage to pass information more easily to the group. One major advantage of this medium of advertisement is that it is more cost effective. It does not require large sums of money like in the case of television.
Advertisement as a method of promotion is associated with a number of advantages. To start with, advertisement is effective in reaching a wide range of audience (Trehan and Trehan, 2009: 35).This is because when advertisement is conducted through a media which covers a large number of people, it will reach them more easily.
The method will help in reaching a greater number of people compared to other methods like the sales promotion. Another advantage of this method is that it is most effective in creating awareness. When the audience views a certain advert on television regularly, this increases their awareness of the presence of the product in the market. This builds their curiosity to try the new product.
In this case, this method will help the company in winning new clients in new markets. This significantly helps the company to increase the level of hamburger sales. Consequently, this will lead to a gradual increase in the market share for McDonald’s hamburgers. Again, advertising helps in building customer trust through repetition of the main brand and product.
Despite of these achievements of advertising as a method of promotion, it suffers some limitations. For instance, this method is impersonal and therefore it becomes impossible to answer the customer’s questions. However, when a product is introduced in a new market, customers usually have some questions about the product. In this case, some potential clients may be wishing to ask some questions from McDonald’s about its hamburgers. Thus, there is a need to have close interaction with potential clients in order to win them.
The company will also not be in a position to understand the needs of their potential clients. For instance, it becomes difficult to pick views from the potential customers through this method of promotion. However, the level of performance is improved by integrating it with sales promotion
Sales promotion
One way through which McDonald’s can invite a larger figure of customers is through sales promotion. Sales promotion can significantly help an organization in expanding the number of its customers or clients hence boosting the level of sales.
In addition, sales promotion has been of great importance in creating consumer awareness. Through promotion, the company will manage to bring its potential customers to awareness of the product in the market.
This method has been of great importance especially in increasing the level of market share. In some regions, most of the people may not be aware of the company’s product. In this case, it becomes very difficult to sell the product in such market. However, the company can overcome this barrier through sales promotion. This attracts customers hence increasing the level of sales.
One advantage of using sales promotion is that it can stimulate quick increases in sales by targeting promotional incentives on particular products. These can significantly help in improving the performance of the organization in the short run. This method has helped several companies in increasing the sales in their market networks (Trehan and Trehan, 2009: 57).
This method has been of great importance when the company is venturing into a new market. As already noted, McDonald’s has been spreading at a very high rate. For instance, the company has been extending its products in other parts of the world in a very high rate.
In such new networks, most of the people may not be aware of the company’s products. In this case, it becomes very difficult to sell a product in such a market. However, the company can manage to bring awareness to the potential customers through sales promotion. This attracts customers hence increasing the level of sales. In this case, McDonald’s will manage to expand its market despite the high level of competition.
Therefore, sales promotion will significantly help in increasing the market share for the McDonald’s hamburgers. Through sales promotion, we shall be able to bring awareness about our hamburgers to our potential customers. In the process, we shall be able to win them to buy our hamburgers.
One advantage of using sales promotion is that it can stimulate quick increases in sales by targeting promotional incentives on particular products. These can significantly help in improving the performance of the organization in the short run.
McDonald’s versus Subway
Table 2. McDonald’s versus Subway. (Case study Inc. 2011).
The table above gives a clear understanding of the nature of competition which MacDonald’s faces. It also helps us to understand the historical aspects in the food retail market.
Electronic Commerce
As defined by Bidgoli (2004), E-marketing is all about sale and purchase of goods or services through digital and electronic means (50). As argued by Aoudia (2009: par 3), internet has become the centre for conversations. Since marketing is about conversations, then internet becomes a favorable place for passing information to the customers.
In electronic commerce, most of business practices are conducted through computer networks. In the contemporary world, computer networks have become intensively integrated into business activities. More people can now access computer networks and therefore has become an important component in business activities.
In order to reduce our operational costs, we are planning to conduct most of our transactions over the web. For instance, the corporation incurs a lot of costs through manual operations. We are intending to reduce paper work by allowing consumers to make orders online. This will also facilitate the service process.
In order to maximize the level of consumer satisfaction, it is necessary to have enough information about consumers. In order to maximize the level of consumer satisfaction, we are going to use electronic means in gathering information from consumers. By so doing, we shall be able to understand our customer’s tastes and preferences.
E-marketing will be of great significance to McDonald’s in reaching their customers. As Dart (2002) comments, internet, SMS and WAP has significantly contributed to the success of the field of marketing (par 3). The marketers are now able to reach more customers, faster, and even more effectively than before. E- Marketing channels are more direct and it is very easy to make changes depending on the prevailing consumer tastes and preferences unlike the traditional methods where it is very difficult to make such changes.
Through e-marketing, we shall be able to overcome the geographical barriers. We shall be able to reach customers all over our market network without necessarily having to travel to these places. Consequently, we shall be able to reduce operational costs incurred through traveling. As a result, we will be able to under price our competitors effectively. In other words, our hamburgers will be relatively cheaper compared to those of our competitors. This will help in developing our competitive advantage.
Implementation
Resources Required
In order for this plan to be effective, it will be necessary for the corporation to dedicate the required financial and human resources necessary in execution of this plan. As already noted, this plan will require clear information about the customers. Although necessary information will be gathered electronically, there will be a need to have frequent field surveys in order to collect adequate information from consumers. This will require substantial funds in order to conduct such research.
In order to execute this plan effectively, there is also a need to train our employees. We shall therefore need some funds to cater for employees’ training. We also require some funds to give our employees some incentives to participate in the plan.
Time Line
July 2011: Budget preparation.
August 2011: Market and competition review.
September 2011: Development of the product’s image.
October 2011: Sales promotion and creating awareness.
November 2011: Advertisement.
Epilogue
In conclusion, this discussion has clearly shown that McDonald’s has a potential room for improving its market share in the hamburger market. From this discussion, it is clear that an effective marketing plan can significantly improve the performance of any organization.
The existing marketing plan has helped the organization in selling its products to its potential customers. However, there is still room for improvement because some of its products are declining in terms of the market share. There is a great need for the company to invest more in promoting its products in order to retain its high level of performance in an increasingly competitive market.
Without promotion, very few people will be aware of a particular product which is provided by an organization in the market. In other words, promotion will help the company in informing its potential customers on the presence of its product in the market.
Through this study, it has been revealed that most of the advertisement tools applied by the organization only mostly reaches only the children. This is so threatening bearing in mind the existing level of competition. The proposed plan will therefore be of great significance in improving the company’s level of sales.
There are a number of local business establishments which are characterized by a properly chosen JIT (just-in-time) philosophy and helpful approaches to manufacturing planning and obligatory control (Vollmann et al., 2005). Each industry develops considerably taking into account customers’ demands, expectations, and interests; and one of the most successful industries is considered to be the food one.
Modern business environment undergoes numerous changes day by day, this is why each establishment has to take particular steps in order to grow and gain prosperity required. McDonald’s is the fast food business establishment chosen for the analysis in this paper.
This company is one of the most successful examples of how JIT philosophy turns out to be helpful to organize services, satisfy customers, and create products in accordance with customers’ expectations.
The essence of JIT philosophy is all about minimizing waste that is possible during the process of manufacturing in order to “subdivide waste into time, energy, material, and errors” (Vollmann et al., 2005, p. 301).
The success of JIT is possible in case service operations remain repetitive, qualitative, and innovative. In other words, JIT philosophy that is used by the representatives of McDonald’s establishment has to involve all types of manufacturing-like operations and services.
For this organization, it is not enough to demonstrate the quality of services and products in one particular place and time but promote this quality in broader meaning: for example, “in order to ensure process quality, it industrialized the service delivery system so that all workers would be able to provide the same eating experience around the world” (Lai & Cheng, 2009, p. 16).
To make use of JIT philosophy properly and succeed in the chosen business, it is very important to identify what McDonald’s’ customers may expect from this establishment. Martin (2008) admits that “satisfaction is based on expectations” (p. 75). What McDonald’s’ visitors may expect is a high quality of food, fast services of good quality, and comfortable environment.
The evaluation of the production process steps helps to define strong and weak sides of McDonald’s. First, this company aims at providing the best quality of food at lower prices within a short period of time. It means that the main steps of the production process should be getting the order from the customer, transmitting information to the other department, using the best technologies to prepare necessary food fast, proper communication with customer, and satisfaction of customer’s need by providing the order.
The process of how the production is introduced to the customer looks like this:
The main point about this flowchart is the presence of standardized and non-standardized process steps which may influence the quality of service and its speed. High quality of services and fast speed provided are the major advantages of McDonald’s company. This is why to support the chosen way of service, it is very important to define standardized production and try to improve its quality as frequent as possible.
The organization under consideration makes use of standard production like hamburgers, cheeseburgers, or fish burgers (innovation). The customer who comes to this fast food organization is already aware about the variety of possibilities, this is why less time is spend to make a choice and to prepare the order. As for some non-standardized process steps, they are connected to the quality of food that may be required by the customer.
The effectiveness of the process that is demonstrated by McDonald’s is evident indeed. First of all, many people are eager to visit this establishment all the time. It means that they are satisfied with the services and the quality of food and that they have already done their choice and they are satisfied with it. As for my personal opinion about the effectiveness of the process and services presented, I think that McDonald’s is one of the most successful and caring organizations in regards to their customers.
They try to present fast services; they pay attention to each customer; and they work for people to save people’s time and efforts. The idea to create McDrive is another powerful attempt that helps to attract more customers and demonstrate that good and fast services are still possible and available for people. To improve the process, several ways may be used.
One of the most evident problems in many countries is connected to lack of places for customers. Very often, when people make orders and get their fast food ready, they are deprived of the opportunity to find a free table to enjoy the meal. This is why to attract more attention, it is possible to enlarge establishments and give people more space. In this case, all customers may come to this fast-food restaurant and be sure to get an order quickly and find a free space to have a rest.
In general, the quality of service in McDonalds is good indeed. People know what to expect from this establishment; they can even evaluate how much time they should spend at this restaurant; and what is more important they know that prices are stable there, and their costs may be evaluated beforehand.
McDonald’s is one of the leading fast food brands worldwide. The first McDonald’s restaurant was opened in 1955 in Illinois, USA. The restaurant has since grown and expanded its operations to more than 119 countries in the world. The number of outlets has also grown to more than 31,000 serving an estimated 47 million customers (Yang et al. 2010).
McDonald’s serves a variety of fast food cuisines such as hamburger, chicken products, French fries, cream deserts and coffee, just to name but a few (Rtel and Härtel 2012, p.6). The company is today viewed as a symbol of globalization, as well as the American way of life.
Introduction
McDonald’s is the first ever first food restaurant whose origin dates back to 1955. The restaurant has since emerged as the restaurant of choice among many customers going by its presence in many countries and the number of customers it serves.
However, the success of the restaurant has mainly been attributed to its best operation practices and supply chain management, which has given it a competitive edge over its rivals in the industry. This paper seeks to explore ways in which McDonald’s operations and supply chain management has given it an edge over its competitors.
To begin with, McDonald’s is a restaurant synonymous with famous hamburgers and other cuisines such as chicken McNuggest, Egg McMuffin, Quarter Pounder, Big Mac, French Fries and the recently introduced McCafe coffee (Boyer and Verma 2009, p.507). Despite the fact that other restaurants have also come up that serves similar cuisines, McDonald’s has since remained the most preferred restaurant of choice for many.
This is because its food and drinks and prepared based on quality and value for money. In this regard, the company has always ensured that its food meet the quality standards expected by customers. McDonald’s has been able to achieve this by employing professional chefs that ensure that quality standards are maintained (Boyer and Verma 2009, p.507).
Additionally, McDonald’s always seek for customer feedback as regards the quality and the manner they have been served so that adjustments can be made where necessary. Moreover, McDonald’s ensures that its food meet the health standards, which is one of the pillars in which the restaurant operates.
McDonald’s also ensures that its customers are served on time and not kept waiting for too long, as is the case among some of its competitors. This is because the management of the restaurant ensures that all foods are available all the time, and no customer is turned away for lack of food. The waiters and chefs of the restaurant are also very customer-friendly something that has made many customers prefers the restaurant to others that serve similar cuisines (Li 2007, p.216).
The success of McDonald’s restaurant is also attributed to its supply chain, which is arguably the best. This is because, despite selling millions of items on a daily basis, McDonald’s has always ensured that all its customers get what they want. It is worth noting that all the supply chain of McDonald’s are outsourced since the company owns neither a factory nor a distribution center. In addition, McDonald’s owns about 30% of the restaurant while the rest are franchised (Raj 2013).
Singh 2012 reveals that McDonald’s has 16 major suppliers for its raw materials. However, the company has been able to ensure that all items are available based on its supply chain principle which states that no items need to be out of stock (Vitasek, Manrodt and Tillman 2012).
However, to ensure that this is achieved, the company has developed supply chain strategies, which ensures that enough stock is available all the time. The company has been doing this through the application of JDA Manugistics 7, as well as conducting regular analysis of its stock levels.
In this regard, McDonald’s has instituted a daily point-of-sale (POS) data at the product list, item level, and inventory level (Singh 2012). The POS is also used shipment so as to aid in forecasting. The application of this supply chain principle has ensured that McDonald’s do not run out of stock, which might affect the operation of its restaurants.
McDonald’s supply chain also focuses much on understanding how their supplies are brought to the restaurant. To ensure that this becomes a success, McDonald’s has maintained a close relationship with its suppliers by trusting them to the extent that the company finds no need of signing contracts with them (Saravanan 2011, p.4).
Report indicates that, despite the fact that McDonald’s currently operate about 14,000 restaurants in the U.S., it has not signed any contract with its suppliers to ensure that the restaurant gets what it orders from its suppliers every day (Saravanan 2011, p.4). Indeed this is a very good strategy since it has given McDonald’s a competitive edge over other companies operating in the same industry.
In addition, McDonald’s ensures that the supplier’s products are not completely knocked out as this will make it hard working with such suppliers again. However, McDonald’s has been striving to ensure that it builds a positive and lasting relationship based on ethics, environment, and economies (Cheema 2010).
Another striking feature of McDonald’s supply chain pertains to how the company decides the menu items on offer. For instance, McGrath (2011) noted that McDonald’s served Blueberry Banana Nut Oatmeal over the summer as a breakfast choice. This is despite the fact that oatmeal has not been on offer for quite some time.
However, before this menu item could be adopted by other restaurants, McDonald’s sourced enough suppliers to plant blueberries, which was to be used in the restaurant during the summer. The adoption of this approach gave it an edge over other restaurants that were in short of the blueberries (McGrath 2011).
McDonald’s, unlike many other restaurants, have developed a peculiar Cold Chain, which ensures the integrity of food products are maintained, as well as ensuring that freshness and nutritional value of products are retained (Relph 2012). In addition, McDonald’s has also set up e-procurement, which allows the company to purchase and sell its products online.
The e-procurement has also made it easy for McDonald’s to find buyers and suppliers of its products with ease. Saravanan (2011, p.6) observed that the Emac Digital launched in 2001has given McDonald’s franchises all over the world the opportunity to purchase everything they need for the effective running of the restaurants, be it uniforms or hamburgers.
Edwards, the chief executive of McDonald’s argues that the installation of e-procurement has enabled the restaurant cut down its operation cost by over 85% (Saravanan 2011, p.6). This has also given McDonald’s a competitive edge over its competitors in the fast food industry.
Conclusion
The world has experienced unprecedented upsurge of restaurants in recent time. The high growth has mainly been experienced in fast food industry that has flooded many cities across the world today. Nevertheless, McDonald’s, being the first ever fist food restaurant has maintained a competitive edge over the rest of the restaurants that have come after it.
This is attributable to its strong operation and supply chain management principles that have helped in building customer loyalty, as well as ensuring that the company maintains a close relationship with its suppliers. Based on these principles, it will be very hard for any restaurant to edge out McDonald’s in terms of operation and supply chain management.
References
Cheema, P. 2010, The big idea; McDonald’s unravels its supply chain. Web.
Boyer, K. K., & Verma, R 2009, Operations & supply chain management for the 21st century [with access code]. Cengage Learning, London.
Li, L. 2007, Supply Chain management: concepts, techniques, and practices enhancing the value through collaboration. World Scientific, Oxford.
McGrath, J. 2011 How McDonald’s Works. Web.
Raj, R. 2013, McDonald’s supply chain. Web.
Relph, K. 2012, McDonald’s Entry into India. Web.
Rtel, M., & Härtel, M. 2012, McDonald’s supply chain management. GRIN Verlag, New York, NY.
Saravanan P. 2011, Supply chain management & distribution management. Perishable products (Restaurant Chain). McDonald’s, SS10-12/FinanceIIPM, Chennai. Pp.1-41.
Singh, A. K. 2012, McDonalds: Supply Chain Management. Jaipuria Institute of Management, Lucknow. Pp.1-17.
Vitasek, K., Manrodt, K., & Tillman, J. 2012, Compete: McDonald’s Suppliers are Vested for Success. Web.
Yang, L. Y., Heng, Z., Bo, L., & Jie, L. 2010. Supply chain management of MacDonald. Web.
The organizational structure of a company is the pattern according to which the company executives control and coordinate the affairs of the company on a daily basis.
The organizational structure is influenced by the objectives of the company and tailored by its marketing strategy (Berkowitz & Wolff, 1999).
The ideal organizational structure would require less stress for its smooth transition from one business year to another. McDonalds Burger King is a company that produces fast food around the world. Their control and management of production and sale are influenced by the organizational structure of the company.
The case of McDonalds Burger would be used to analyse the term. MacDonald’s Burgers supplies junk food globally and the chain of supply would be consistent if the company would have a competitive advantage (FAO Corporate Document Repository , 2003).
McDonald’s Organizational Structure
McDonald’s Burger utilizes a central strategic plan that operates on a geographic organizational structure. Thus, the operations of the company are centralized and similar in different regions.
However, implementing strategic decisions could be risky. For example the market survey in China requires that junk food should be served with plenty meat while this is different in the United State. By implication, the production department would be tailored according to the business strategy in a particular region.
The control of information, job description and responsibilities, communication between different departments and the smooth operations of the company are products of a good organizational structure (Unterman & Davis, 1984).
Features of an Ideal Organizational Structure
Control: It is a structured hierarchy that controls all the decisions and policy change of the company
Organizational culture: This consists of regulations and rules that bind the company. This rule regulates the operations of the employees in the company.
Job description and responsibilities: This aspect consists of the responsibilities of each employee and the division of labour for each department. The workforce could be temporal or permanent, full-time or part time. Division of labour influences the success of the organization.
Job description and responsibilities can be subdivided into four categories. They include:
Policy maker: These groups of individuals decide on the working conditions of the business and fashion out an alternative method of marketing through quality research.
Transformation point: The individuals in this job division transform the policy to market strategy.
Integration process: The job description of the group of individuals consists of integrating the policy and the market strategy of the company.
Support personnel: They render support to the entire workforce that drives the organizational mechanism.
Features of productive organizational structure
The common features of different organizational structure include organizational change. This is the process whereby the company changes plan and strategy over time in order to meet the desired objective.
Characteristics of organizational change
Adapt to the market trends.
The change can be constant or routine.
Weakness of Organizational structure
Lack of business idea contributes to an obstacle in implementing an organizational structure.
The size of the workforce influences the implementation of the structure. When the workforce of the organization is small, the expansion process would be limited.
References
Berkowitz, W. R, & Wolff, T. J. (1999). The spirit of coalition building. Washington, D.C.: American Public Health Association.
