Category: McDonald’s

Introduction

One of the paramount pointers of the achievement or fiasco of a company is their capability to acquire/merge or to be acquired/merged. Businesses that can acquire or merge with other corporations have an opportunity to develop their capacity to furnace enterprises with other business frontrunners. They frequently enlarge their facilities internationally to obtain more incomes and spread their trademark.

Companies, such as McDonald’s Corporation, have an opportunity to profit from attainments in methods that such companies as Sonic Corporation, could not. After evaluating the approaches that were exploited by McDonald’s Corporation to obtain Boston Market, its influence on the company, and its worldwide business-level and corporate-level stratagems, one is presented with an opportunity for better comprehension of the schemes that Sonic Corporation could advance to upsurge their incomes by the means acquisitions and mergers, along with business-level and corporate-level strategies they can advance to spread their facilities worldwide (Sonic Corporation, 2012).

The Strategy that Led to the Merger or Acquisition

Originated in San Bernandino almost 60 years ago, McDonald’s Corporation has progressed from a minor burger shop making to an eating place domain with system-extensive trades that has reached forty billion dollars (Funding Universe, 2012). The company had encountered a rapid extension in their trades during the last twenty years and conducted other attainments to upsurge their reserve and produce larger incomes for the company.

McDonald’s wanted to endure its accomplishments by exploiting upon this strategy with the attainment of Boston Market Corporation fifteen years ago, which was slowly recovering from the lack of sales (Funding Universe, 2012). McDonald’s used a chance to apply their capitals and escalate their incomes along with the triumph of the newly introduced Boston Market trademark.

At the moment of attainment, Boston Market still recollected more than eight hundred openings and the company produced an income of six hundred million dollars, demonstrating to be an astute gaining for McDonald’s on that stage. “Though McDonald’s experienced success with Boston Market Corporation as an acquisition, McDonald’s was unable to make the profits that they anticipated” (Funding Universe, 2012, para. 3).

McDonald’s Made for You scheme that delivered personalized snacks to the consumers amplified the excellence of foodstuff that was provided; however, it augmented the amenity interval and became work concentrated as well. This occasion was of assistance to drop trades, and McDonald’s received even more complications when “it was discovered that the corporation was adding beef extract to the vegetable oil used to cook the fries, despite the fact that it had been advertised that McDonald’s used 100% vegetable oil” (Funding Universe, 2012, para. 4).

With lawsuit growing from the fraud, McDonald’s mislaid more commerce as they turn out to be attached as an unnatural eatery, which triggered them to rearrange their list of options in order to reveal a more health-aware customer populace. McDonald’s was enforced to reduce Chipotle Mexican Grille and Donatos Pizzeria in an exertion to center their struggles on fortifying the worldwide achievements of the eatery (Funding Universe, 2012).

It was after the transaction of Boston Market Corporation and McDonald’s other attainments that the company could recover incomes to recollect their place as the major food service marketing chain worldwide by the means of a invigorated emphasis on improving their trademark, rather than escalating their facilities (Cartwright & Cooper, 2012).

Despite the fact that it looked like an intelligent choice for McDonald’s to obtain Boston Market Corporation, the conclusion showed to be less beneficial to its accomplishment, as the company encountered too many matters to retain to the realization that could have been acquired from the attainment. For a corporation as huge as McDonald’s, the major encounter for the company should have been the changeover extent of time, while the workers amend to fresh management and rules (Vaara, Sarala, Stahl, & Bjorkman, 2012).

The subjects that ensued after McDonald’s have assimilated Boston Market Corporation failed to provide the company with the chance to prosper, and showed to be a depraved scheme. Remembering the difficulties that McDonald’s experienced after obtaining companies for enlarged income, one can better comprehend the policies that could be implemented by Sonic Corporation, who at this time functions exclusively on the territory of America and have not learned other corporations.

A Profitable Candidate for the Corporation

“Sonic Corporation, which originated as a root beer stand called Top Hat restaurant, was founded in 1953 by Troy Smith” (Sonic Corporation, 2012, para. 1). Since its foundation, the company has collected almost two hundred and sixty million dollars in trades and is recognized as the fifth biggest burger conglomerate (Sonic Corporation, 2012). The corporation had the opportunity to appreciate several years of triumph because they have concentrated their exertions on decreasing income amounts through generating settings where employees feel appreciated.

For instance, Sonic Corporation permits administrators in their numerous settings to become marginal associates rather than squad frontrunners for their numerous settings, which consents administrators to generate a timetable that is best suitable for them and, as a result, give a better performance. Latest years have carried difficulties, which have triggered the company to advance the Repurchasing Program that would consent stockholders to trade shares in the company (Sonic Corporation, 2012).

Despite the fact that the company has obtained excessive accomplishment with almost twenty-two hundred eateries in twenty-seven states, there is an unlimited chance for the corporation to produce more incomes by the means of the acquisition of a corporation that equals their objectives to offer superior drive-in provision with an exclusive attitude for their devoted consumers.

After perceiving the difficulties that McDonald’s suffered from obtaining several restaurant chains, it would be beneficial for Sonic Corporation to combine with Ruby Tuesday, who proposes the similar excellence of package to consumers in the formula of home-made food. Ruby Tuesday presently possesses 850 localities not only in the United States but worldwide and has the ability to produce a little more than a billion dollars.

This fact could assist as an improvement for Sonic Corporation, who has not extended their facilities worldwide. The union would consent Sonic Corporation to obtain important associates that could enable their development and promise that the corporation would upsurge their income over the following few years (Faulkner, Teerikangas, & Joseph, 2012).

Business-Level and Corporate-Level Strategy for McDonald’s

McDonald’s can uphold attainment in the worldwide marketplaces exploiting both business-level and corporate-level approaches that center on supplying their foodstuffs and facilities to the principles of the consumers. One of the key business-level approaches that McDonald’s Corporation exploits is the diversity of their production in dissimilar countries to guarantee that the demands of the consumers are encountered despite the alteration in principles.

For instance, the McDonald’s in Germany serves McRib burgers during all year, while it is sold as a seasonal thing in the United States (Funding Universe, 2012). “McDonald’s in India does not serve beef, which made it important for McDonald’s Corporation to apologize to the Hindu population when it was discovered that the corporation added beef extract to the vegetable oil that cooked the fries. Contrary to the traditional apple pie that are served in the United States, the McDonald’s in Brazil offers banana pies for their dessert” (James, 2009, para. 3).

One of the corporate-level approaches that McDonald’s implements to gather global triumph is the intensification of the excellence of production that is sold in other countries. One technique that they have engaged to guarantee that this issue is approached is to acquire stock from ‘Pret A Manger’, a corporation located in England that is devoted to selling organic food to their clients. While this emphasis triggered McDonald’s Company to sell the businesses assimilated outside the burger commerce, it has augmented their productivity globally and permitted them to raise the excellence of their foodstuff in these extents.

Business-Level and Corporate-Level Strategy for Sonic Corporation

Remarking the attainment that McDonald’s Company has preserved over the years with worldwide commerce, there are business-level and corporate-level approaches that Sonic Corporation could apply to assure their accomplishments upon intensifying their trade (Sonic Corporation, 2012). Sonic Corporation had an opportunity to benefit from generating an exclusive atmosphere for consumers by the means of proposing drive-ins with attendants and servers on roller skates and selling decent quality snacks. This exclusivity will permit them to prosper transnationally.

One business-level approach that can be implemented by Sonic Corporation is price management, which involves generating costs that are little sufficiently for consumers to appreciate. Sonic Corporation has previously engaged this method in America by proposing Happy Hour, during which consumers can buy beverages twice cheaper on a particular hour of the day. This approach would seizure the devotion of many worldwide clienteles, who are familiar with buying beverages at comparatively high costs.

One corporate-level approach that Sonic Corporation can implement while intensifying their facilities worldwide is their strategy of upholding low reversal degrees. Sonic Corporation views a lot of their executives in their eatery places as sectional associates, which permits the employees to advance more bendable timetables and consequently enables an enhanced efficiency from the executives and their workers.

If this strategy is implemented transnationally, the corporation has a chance to upsurge their incomes because the persons who are handling the eatery locations in the numerous countries will sense they are conferred in the triumph or fiasco of the corporation. The frontrunners are more expected to receive guidance from the employees who will be able to offer techniques towards modernization of the facility of the eatery, and clienteles will be given service that is exclusive to the country or the scene where they live.

Conclusion

In summary, acquisitions and mergers usually assist companies in increasing their incomes and business prospects in other sites around the globe. Despite the fact that the experience of McDonald’s Company was exclusive, there are a lot of instances that can be observed when the situation requires a successful acquiring and merging of two companies composed. When the appropriate business-level and corporate-level approaches are implemented, companies can effectively upsurge their accomplishments and openings for development.

“Through the evaluation of the strategies used to acquire Boston Market Corporation as well as the impact that McDonald’s Corporation’s acquisition of Boston Market Corporation had in their profits and success” (James, 2009, para. 5), one can better comprehend how Sonic Corporation might acquire new knowledge from this practice to obtain and combine with Ruby Tuesday, Inc. and enlarge their facilities worldwide.

References

Cartwright, S., & Cooper, C. (2012). Managing mergers acquisitions and strategic alliances. London, United Kingdom: Routledge.

Faulkner, D., Teerikangas, S., & Joseph, R. (2012). The handbook of mergers and acquisitions. Oxford, England: Oxford University Press.

Funding Universe. (2012). McDonald’s Corporation history. Web.

James, R. (2009). McDonald’s abroad. Web.

Sonic Corporation. (2012). Sonic announces new $40 million share repurchase program. Web.

Vaara, E., Sarala, R., Stahl, G., & Bjorkman, I. (2012). The impact of organizational and national cultural differences on social conflict and knowledge transfer in international acquisitions. Journal of Management Studies, 49(1), 1-27.

Introduction

CRM, customer relationship, is a group of processes by which an organization gains the ability to organize the contacts it has, including the customers as the top priority. For the proper organization of these valuable contacts, it has been seen that many organizations are using CRM software. Project management is counted among some of the most effective strategies adopted by the organizations aiming to succeed in the competitive markets. Program Evaluation and Review technique is n analytical technique implemented by the project management to analyze the risks and the profits involved in a project.

Main Body

CRM strategies that have been implemented by Mcdonald’s have proven to be quite profitable. Mcdonald’s has been using CRM software to make the customers’ best customer service relationships. In addition, CRM software has been helping Mcdonald’s in maintaining the records of contacts of worthful customers (Anderson, and Kerr, 2001, p. 33). All the employees at Mcdonald’s belonging to different departments such as sales, professional development, human resources development, as well as performance management, and marketing departments are the ones who can update the customer information daily by using CRM technology.

All the crucial business information that is necessitated to improve the market shares and sales volume is stored within the software database. By making use of this critical data, employees and the higher authorities at Mcdonald’s have been making sure that the customer relationships are made more robust as the primary rationale to be stronger in the market has been realized by Mcdonald’s that the customers, rather than the employees and employers make an organization successful and competitive.

Project management at McDonald’s has been achieved by proper implementation and usage of resources, ensuring that the best innovative and risk-taking capabilities are utilized by departments such as marketing, human resources, and training and development. In this case, it has been seen that the project analysis is the first step carried out at Mcdonald’s that analyses the outcomes of a particular project. The human resources department makes available the workforce that can make the project a success by using all the risk-taking abilities in the project team. The resources, even if in a limited amount, need to be, organized and utilized adequately to give the best of profits, not only in the cost and financial terms but also in the market share and sales volume (Lewis, 2002, p. 32).

Although PERT has been recognized as one of McDonald’s main strategic techniques, it still comes with some limitations that need to be overcome. Strategically defined and well-organized activities in the project are the ones that PERT assumes in the case of the more significant projects. Moreover, the beta distribution is the activity time that PERT follows. The main limitation being faced in the case of all the greater level projects is the dependence and over-emphasis on the critical path of a project.

In the case of CRM, it has been seen that an integrated form of customer relationship management achievement is even more difficult with CRM, especially in the case of more prominent organizations, including Mcdonald’s. It is not considered a profitable investment regarding the critical stakeholders for Mcdonald’s. The more excellent investment being made on the CRM by the organization has not been noticed to be much lucrative. As has been seen that building the best customer relationships with the customer can give a competitive edge to the organizations, CRM does not help in attaining this competitive level (Anderson, and Kerr, 2001, p. 55).

Conclusion

For any organization, the main goal is to keep the shareholders and the stakeholders in their hands. It has been realized that the customers are the stakeholders for all the successful organizations, including Mcdonald’s. An example of the success that has been gained by the CRM and PERT implementation in Mcdonald’s has been shown in a survey that showed that a majority of the teen consumers are the ones who like the brand. The brand marketing has been done effectively by Mcdonald’s, and it has been noticed that the teens are the target customers case of the marketers at McDonald’s.

References

Anderson, Kristin., and Kerr, Carol. (2001). Customer relationship management. McGraw-Hill Professional.

Lewis, P. James. (2002). Fundamentals of project management: developing core competencies to help outperform the competition. 2^nd edition. AMACOM Div American Mgmt Assn.

Business Overview

McDonald’s Corporation is the world’s largest fast-food chain that serves over 69 million customers in approximately 34,000 outlets that are spread across more than 115 countries. Founded in 1940, the company is highly reputable because of its globally recognized brand.

It operates on a franchise business model where majority of its businesses are operated through franchises that are spread across the world with few of its outlets being company owned. With a revenue of over USD$2.56 billion in the 2011/2012 financial year, the company continues to dominate in the fast-food industry, despite the increasing competition from other players.

The company’s fast food business is characterized by high efficiency of running its operations and serving its customers. This paper provides a strategic analysis of McDonald’s Corporation with the aim of presenting strategic management recommendations that will give the company a competitive advantage to retain its leadership position in the fast-food industry.

External Environment and Competitive Position

Industry Analysis

McDonald’s Corporation operates and competes in the fast food industry. The industry is characterized by a high level of competition, sale of cheap food products, and different regional growth rates. The high competition in the sector is due to the extremely low barriers in the industry’s operations.

For example, while McDonald’s has the largest market share in the USA, this share is only at 26% while the smaller fast-food restaurants hold a combined market share of 55%. The global fast-food industry is a multibillion dollar industry with over USD$ 500 billion of revenue that is recorded annually. In the United States, the fast-food sector accounts for USD$120 billion of USD$ 600 billion restaurant sales.

The industry has been affected by a change in social and economic trends across the world. For instance, in the last five years, the sector has experienced a slow growth of 3.5% due to the global economic meltdown of 2007/2008, which greatly reduced the disposal incomes for customers across the world.

Further, the rising awareness on health risks that are associated with the intake of high fat, salt, and sugary foods has also been a blow to the growth of the industry. However, it is projected that the industry will continue to grow through 2019, with more growth activity in the emerging markets such as China, Asia, and Africa.

Another important industry trend is the increasing cost of doing business because of soaring food and energy prices. For example, after labor, food, and beverages account for the biggest share of costs in the fast-food industry, representing 33% of all costs. An increase in the prices of food and beverage has a significant impact on the bottom-line of fast food companies and that McDonald’s is no exception.

International expansion is increasingly playing an important role in bringing revenues for fast food companies, which are experiencing slow or stagnated growth rates in the mature markets of the US and Europe.

For instance, international business franchises for McDonald’s account for 60% of its revenues and 50% for a McDonald’s competitor, namely ‘Yum Brands’ . Another important trend in the industry is the growing middle class in developing countries. The trend represents an expanding ready market for fast-food industry players (Thompson, Strickland, & Gamble, 2008).

Five Forces Model Analysis for McDonald’s

Porter’s five-force model describes an organization’s strategy as the steps and actions that are geared towards attaining competitive advantage in its industry. Five-force model analysis allows an organization to study competition in five different areas, including providers’ negotiation authority, clientele bargaining command, threats of substitutes, pressure of latest entrants, and opposition.

In the case of McDonald’s, the threat of new entrants and rivalry is very high due to the low barrier of entry. Establishing new restaurants requires a relatively low capital outlay and no existing customer base. Further, with the option of leasing premises and equipment, the cost of establishing new business in the sector becomes even lower.

In addition, the industry’s saturation is high, although it has monopolistic tendencies where few outlets dominate the market, with the rest sharing a minimal percentage of the remaining market share.

However, despite the easy entry into the market, new entrants do not find it easy while competing with the already established companies such as McDonald’s and Yum Brands, which have strong brands, strategic locations, and financial resources to roll out extensive marketing and advertising campaigns.

Further, with well-established relationship with suppliers, established brands have a relatively advantaged position in the access of raw materials.

Secondly, the threat of substitutes is very high in the fast food industry. For instance, many people can opt to prepare and eat food from the comfort of their homes. Secondly, there is minimal differentiation between the products offered in different fast-food restaurants.

Further, since there are no switching costs for consumers to other substitutes, the threat is very high. To curb these threats, McDonald’s must focus on price competition, quality of service, and a reduction in operation costs in order to reduce the threats of substitutes.

Thirdly, the bargaining power of customers exerts moderate to low pressure on the industry. For example, McDonald’s is increasingly promoting differentiated products such as “Big Mac” among others.

However, although there are many substitutes and no switching costs, industry leaders such as McDonald’s position the process of their products in relation to their major rivals and within the prevailing market price elasticity and competition. High brand value and customer loyalty play an important role in reducing the bargaining power of buyers.

Fourthly, the bargaining power of suppliers is moderate due to the presence of a global supply chain. However, some areas of supplies such as the supply of soft drinks that are dominated by few suppliers such as Coca Cola and Pepsi mean that such companies have a considerable bargaining power over the fast-food industry players.

Fifthly, competition rivalry in the industry is moderate to high. For instance, although McDonald’s and Burger King hold a higher share of the ‘burger segment’, the market as a whole is dominated by small fast-food companies spread across the world.

The competition is majorly cost-based where firms are continuously investing in cost effective production and service processes to gain competitive advantage over rivals. With low costs of exit and the capacity to expand through franchising, the competition is cutthroat for industry players.

However, the most popular tact of fighting competition is through branding. For instance, McDonald’s spends approximately USD$650 million each year in its branding activities.

Internal Environment and Competitive Position

SWOT Analysis

Value Chain Analysis

The value chain analysis identifies the mix of activities that allow an organization to remain competitive in its industry. Through the value chain analysis, an organization is able to categorize the generic value-adding activities that it undertakes. The model consists of an analysis of organizations’ activities that are categorized as primary and support activities.

The primary value chain activities include inbound logistics, operations, outbound logistics, marketing and sales, and service. These activities are supported by other activities that include technology, cost advantage, infrastructure, human resource management, procurement, and infrastructure.

At McDonald’s, inbound deliverables represent the goods and products that are coming into the company for the production of its final products. The company purchases its inputs such as raw vegetables and beef from fixed and pre-defined suppliers.

The company is actively involved in the activities of its suppliers to ensure quality and reduced costs, which ensure value addition for the final products for its customers. In terms of operations, McDonald’s has a well-established operations management apparatus that touches on all areas of production, including inventory management, food production operations, and logistics management.

In terms of outbound operations, McDonalds strives to provide the highest quality products and services at the greatest value to customers. Further, the company seeks to provide its services in a clean and welcoming environment. For instance, its close involvement with its suppliers, employees, and franchisees serves its commitment of offering the highest quality products for its customers.

Its focus on energy conservation, sustainable packaging, and waste management further illustrates the company’s dedication and desire of building a sustainable, environmentally friendly, and profitable business.

In terms of marketing and sales, the company’s activities are spread across more than 115 countries worldwide, serving more than 69 million customers daily. The company also employs more than 1.5 million people, thus making it one of the world’s leading employers. McDonald’s has increased its shareholder dividends for 25 consecutive years.

This observation is a clear indication of its success in its core business and desire to offer value to its shareholders (Thompson, Strickland, & Gamble, 2008). Its extensive advertising campaigns cover the mainstream media, billboards and signage, and sponsorships of sports among others.

The support activities for the company are important in helping the successful implementation of the primary activities. For instance, the company strives to have modern and sophisticated infrastructure, which also involves the use of ICT. The company also strives to offer welcoming and environmentally friendly restaurants in all its locations.

It provides services such as free Wi-Fi and other services such as kids play areas to ensure that customers feel well attended. On human resource management, although the company has one of the highest employee turnovers, it remains one of the leading employers in the world.

Looking to the future, technology will play an important role in the company’s growth. Currently, the company has successfully applied technology in some areas of its operations such as the management of procurement through its E-Procurement portal for all its restaurants, a plan that has made it cut costs by 85%.

Competitive Strategy

McDonald’s competitive strategy is built on three key strategies that include cost leadership, differentiation, and focus. In terms of cost leadership, the company strives to offer its products at the best rates in the industry. To achieve this goal, the company has invested heavily on technology and innovation to help cut the cost of production of products without compromising on quality, hence creating value for its customers.

In terms of differentiation, although the company works in an industry that has little differentiation of products, McDonald’s strives to offer differentiated products in terms of quality and cost. For example, its Big Mac is one of the most popular products. Further, by striving to ensure cleanliness and environmental friendliness, the company strives to offer differentiated high quality services for its customers.

Strengthening Competitive Position

It is important for McDonald’s to find ways of strengthening its strategies to remain in its prevailing competition position. One of the strategies that McDonald’s company uses is the cost effectiveness strategy to ensure that the costs of doing its business do not erode its strong financial base. For instance, through close involvement with its suppliers, the company is able to cut the costs of input products by a large margin.

Further, the usage of technology plays an important role in driving cost effectiveness. For example, the company’s E-Procurement system, which has seen a reduction of costs of purchasing by 85% ensures that its franchises are able to remain profitable and hence ensuring that the company’s operations across the world last longer.

The company responds defensively to competition as it is evident through its USD$500 million marketing and advertising programs that are aimed at cementing the company’s leading position. Further, through innovation and response to health concerns by customers, the company has responded effectively by introducing products such as ‘light meals’ that are aimed at attracting and maintaining its health-conscious customers.

The Global Market Place

McDonald’s is a global company with operations that are in line with its international expansion plans of establishing its presence in all corners of the world. Franchising is the main method through which McDonald’s enters new market. So far, the company has been highly successful. For instance, 60% of the company’s revenues are from international markets, a clear indication of its success in international markets.

The company has attained a competitive advantage over its rivals through its global expansion. Firstly, with the mature markets such as the USA and Europe having little space for expansion, venturing into international markets has allowed the company to achieve its much-needed growth to segment its market position.

Further, with revenue source distribution, the company has been able to achieve revenue growth through major crises such as the 2007/2008 financial meltdown. To continue its expansion trajectory, there is a need to visit more regions in its already established international markets, which it has not been able to serve completely.

Corporate Strategy: Business Diversification

In the last 10 years, McDonald’s has focused on expansion and diversification within its core business of fast foods. For instance, in 2003, the company sold Donatos Pizzeria, which it had operated for four and half years, citing increased operational costs of running the company. This situation was in line with its revitalization plan of seeking to increase operational efficiency, product development, and marketing and advertising.

In response to increasing health concerns regarding the company’s products, McDonald’s has sought to diversify its menu by adding new healthy food options for its increasingly healthy customers.

Such approaches have allowed the company to achieve not only high profitability but also retain its customers by responding effectively to their preferences. Looking ahead, the company must strive to introduce new products or redesign its existing products to reflect the health culture that is threatening to affect the fast-food industry.

Ethical, Social Responsibility, and Environmental Sustainability

McDonald’s ethical, social, and environmental sustainability is built on the desire of ‘making a difference’. The organization pledges on ensuring that its business is ethical, truthful, and dependable. This pledge is reflected in the company’s mission and values. The company’s brand mission is to be it clients’ preferred choice and way to get food and drink.

Further, the company’s “Plan to Win” statement indicates its commitment to exceptional customer experience. The company’s values reflect its ethical, social, and environmental responsibility where it is committed to giving back to community, operating its business ethically, and growing its business profitability. The company conforms to its ethical statements by practicing honesty, fairness, and integrity.

On social responsibility, the company is involved in many community projects whenever it operates. For instance, through its Ronald McDonald House Charities, the company has supported over 7 million children and families. On environmental sustainability, the company understands that its activities have the possibility of affecting the environment due to the high quantity of products that are consumed each day.

In this case, the company has an elaborate set of standards that its suppliers must adhere to while producing the company’s inputs. The company also has initiatives that focus on energy conservation, sustainable packaging, and waste management.

To remain competitive, the company must increase the level of community involvement in areas where it operates. Further, through the adoption of technology, the company can reduce its energy consumption and wastage as a way of promoting environmental sustainability of its activities.

Strategy Execution: Building the Capability to Execute Strategy

The execution of a company’s strategy can only be achieved through its people. It is important for McDonald’s company to build its capacity to execute the proposed strategy. Firstly, the company has a large financial base, a well-trained human resource, and a well-established structure to support the execution of the product (Aaker & McLoughlin, 2010).

The company has a clear and streamlined decision-making structure at every operational level. Further, the company’s support and involvement with its franchises makes it easy to execute and implement strategic decisions. One of the key strengths of the company is its hiring and training practices, which allow it to attract highly trained and experienced top-level management personnel.

Further, the elaborate training that new employees undergo ensures consistency, which is effected throughout the organization’s services. However, a different structure will work best for the company. For example, a structure, which focuses on improving the sharing of information and motivation for the employees, will ensure a clear understanding of the requirements of the strategy.

Further, the right motivation will promote employee loyalty whilst reducing the high turnover of employees, which may derail the organization’s ability to implement the strategy successfully.

Strategy Execution: Managing Internal Operations

McDonald’s employs over 1.8 million employees, making it one of the leading employers in the world. The company’s compensation program is aimed at attracting, retaining, and engaging highly talented individuals at all levels. However, the high rate of employee turnover at the low and middle levels is a cause for worry.

There is a need for the company to motivate its employees by providing better compensation and working environment. However, the company provides benefits and compensations, including medial, vacation, incentives, recognition programs, profit sharing, and employee and dependent insurance cover.

Despite the power of an effective information system, the company has been unable to effectively identify and understand its employee needs. Such understanding can help it to best execute its strategy.

The executive packages for the company’s decision-making team are some of the highest in the industry. The top three executives earn more than USD$ 25 million in combined annual monetary benefits. For instance, the CEO earns approximately USD$9.5 million annually.

However, there is a big disparity between the earning of the executive and the lowest employee earnings where the CEO earns approximately 380 times more than what the lowest employees earn. For the company to eliminate this disparity, there is a need to increase the wages of its lowest employees.

Conclusion: Strategy Execution: Leadership

The following is a summary of the recommendations that the company must adopt to improve its strategies that are aimed at maintaining its competitive advantage and leading position in the fast-food industry. The company must put in place a 5-year strategic plan through which it will execute the goals of its strategy.

In putting a calculated plan in place, the company will ensure that it sets its eyes on achieving the goals of its strategy. The fast-food industry is very competitive and dynamic. It is important for the company to strive to retain competitive advantage in the sector.

There is a need to replicate the success of the company’s E-Procurement across other areas of operations in order to cut operational costs and hence gain competitive advantage in the industry. This observation represents the potential of technology in promoting the success of the company’s strategy.

Further, as the company’s customers become health conscious, it is important for it to offer healthy alternatives of its products. The leadership of the company must also recognize that its strategy can only be successful through its people and hence the need to put in place measures that will bring onboard all the company’s personnel.

Reference List

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Best, J. (2009). Market Based Management: Strategies for Growing Customer Value and Profitability. New York, NY: Prentice Hall.

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Meaning of Organisational Culture

• To ensure that all stakeholders of an organisation focus on common goals and objectives, it is important for them to have to a common way of thinking and interacting, values, and norms (Goldman, Santos & Tully, 2008, Para. 3).
• Organisational culture elements form some basic assumptions that when adopted and observed by all stakeholders of an organisation, especially the diverse workforce, can aid in enhancing the success of the organisation.
• McDonalds’ organisational culture emphasises the importance of employees and customers (McDonalds, 2012, Para.1) as the source of organisational success.

Organisational Culture assumptions for McDonalds

• When the company’s stakeholders tie together and fix the common differences between employees to act as strength as opposed to an organisational weakness, the assumption for the company is that it can attain its objectives, goals, and mission.
• Another assumption is that McDonalds can gain a competitive edge by providing better customer services in relation to its rivals through the effort of all employees. Therefore, customer service is assumed as an incredible tool for differentiation of McDonalds.
• By doing things in the rights way and putting in place efforts to improve efficiency of the organisation, it is assumed that McDonalds can succeed in the market place.
• Employees are important elements for the achievement of the above two assumptions. Hence, they are important to McDonalds (McDonalds, 2012, Para.2).
• Another assumption is that, without goods customer service, it is incredibly hard for McDonalds to have a repeated sale.
• The company also assumes customers as the source of organisational growth.

Sources of the assumptions

People employed by McDonalds come from different backgrounds

• The organisational culture’s assumption deployed by McDonalds originates from the large number of people it employs from different nations.
• The company serves about 52 million people in more than 30,000 restaurants and franchises located in more than 100 countries (Goldman, Santos & Tully, 2008, Para. 1).
• From the perspective of the company’s mission of being a leading fast-food dealer not only with the regions from which the company first opened its doors but also in the international fronts (McDonalds, 2012, Para.1), the company plans to identify the risk factors to achievement of its mission.
• Risks alleviation mechanisms are included in the organisational culture. This strategy ensures that all the workforce of the company remains observant besides always ensuring that they do not fall into a pothole that would compromise the position of the company in the future by allowing their individual characteristics including their personalities to affect the manner in which they work.
• McDonalds plans to combine all diversities of the employees into one culture.

Employees as the source of organisational success

• Using the culture of approaching employees as the most important resource the company has for its success ensures that the employees remain motivated in their work (McDonalds, 2012, Para.2).
• Permitting McDonalds’ employees to communicate freely with other employees at the work places highlights the significance of the assumption that McDonalds needs to tie together the differences between the employees to attain organisational success (Goldman, Santos & Tully, 2008, Para. 5). This strategy involves a breakdown of management structures so that they are less centralised.
• Decentralisation helps to ease the employees’ fear of the supervisors and other managerial staff, which might make the employees less motivated.
• Motivation is an essential tool in the development of the McDonalds’ organisation culture’s assumptions since the company considers less motivated employees as likely also to offer poor services to customers.

Reference List

Goldman, E., Santos, T., & Tully, S. (2008). Observation of leadership and organisational behaviour at McDonalds. Web.

McDonalds. (2012). Mission and Value Statement. Web.

Overview of the Case

McDonald’s, the first food chain known for its strong performance in a very competitive industry is facing stiff competition from other firms. The firm’s breakfast offerings are not as competitive as they were before due to strong performance by products from other market players such as Taco Bell, White Castle, Dunkin Brands Group, Burger King and Starbucks.

These firms have new breakfast products which have been received well by consumers in different areas they are operating in. As a result, these firms’ improved performance in the industry has negatively affected McDonald’s market share (Jargon, 2014, p. 1).

McDonald’s poor competitive position can be seen through its declining sales and profit revenues in the past six months. This paper is going to discuss the main marketing issues that McDonald’s faces in its operations and how they can be improved to help the firm regain its competitive position in the industry.

Key Issues

McDonald’s weakening position in the industry is due to its failure to come up with effective marketing strategies that respond to the needs of young consumers. In the past, the firm’s breakfast offerings performed well in the market but it has been losing customers gradually to new firms.

Low innovation in the firm has made it difficult for the firm to attract new consumers who are willing to try out the product it sells in the market (Jargon, 2014, p. 2).

The firm has also failed to come with an effective product development strategy to help it sell new high quality products that satisfy consumers’ expectations. As a result, this has affected the company’s competitive position in the market because it has failed to keep up with modern market trends that are crucial for its long term performance.

The firm also needs to improve the relationships it has with its franchisees. They feel that the firm’s marketing strategies are not effective and fresh ideas are needed to help the firm regain its footing in the industry. In addition, they insist that more needs to be done to improve the quality of the firm’s operations in the industry.

The main actors that need to be analyzed are: McDonald’s, its competitors and franchisees. McDonald’s has not been able to come up with important strategic changes to help it maintain its market share in the industry. Other fast food firms have developed efficient market processes that are responsive to current consumer trends in the market.

Therefore, McDonald’s competitors have been able to institute higher operational standards that position them well in the industry (Jargon, 2104, p. 3). The firm has also been unable to develop beneficial partnerships with its franchisees. They feel that it needs to come up with innovative promotional strategies to attract new customers to sample its products.

Definition of the Problem

McDonald’s faces various problems such as: a weakening brand, low sales, ineffective promotions and the inability to keep up with its competitors. The main problem the firm needs to address to solve all these issues is its marketing mix functions. The company needs to review the four P’s of the marketing mix which are: products, prices, promotions and place.

This will help the firm to improve the value of its internal systems of operations to help it attain high standards of performance in the long run (Bradley, 2010, p. 75).

In addition, the firm needs to understand issues related to the quality of service it offers that need to be improved to help it attain its objectives in the industry. This approach will help the firm to focus on priorities to regain its market share in the industry to help it register good performance in the long run.

Product improvements and developments are a crucial part of any marketing strategy. McDonald’s needs to carry out research to find out specific types products that customers prefer to consume for breakfast. This approach will enable the firm to stay in touch with its customers to anticipate their needs and expectations by providing products that satisfy them.

At the moment, the firm has failed to create appropriate menus that attract customers to make them more willing to try out its product offerings (Bradley, 2010, p. 79).

The pricing of products should be maintained at current levels to make customers have positive perceptions about the quality of products they are purchasing. This requires the firm to develop effective customer relationship management systems that increase the value of its products in the market.

Promotional aspects of operations need an overhaul to enable the firm to regain its competitive position in the market. The firm needs to rethink its strategy of offering customers give away products because this is likely to increase its costs of operations in the long run.

The current strategy of offering give away products has caused disagreements between the firm and its franchisees, a situation that is likely to have a negative effect on the firm’s operations in the long run.

In addition, the firm needs to look at the internal atmosphere in its outlets to find out if it is suitable for consumer’s eating patterns (Rue & Byars, 2003, p. 43). It may be compelled to redesign its restaurants to enable them to offer a memorable service experience to customers.

Alternative Solutions

The firm needs to carry out market research to find out new products which can be introduced to improve its performance in the industry. The firm needs to test some of its product concepts in some franchises to find out how they are likely to be received by customers. This approach will enable the firm to evaluate how they are likely to perform in the firm in the long run.

The main benefit the firm will get out of this strategy is that it will be able to create new revenue streams for its operations and this will help to increase its profits in the industry.

The firm will also be in a position to establish relationships with new customers to make them more interested in consuming its products (Rue & Byars, 2003, p. 49). However, the main disadvantage associated with such a strategy is that the firm may end up experiencing losses especially if the new products do not appeal to customers’ interest effectively.

The firm needs to improve the quality of service it offers to its customers. It needs to come up with new ways of engaging with its customers to make them understand the benefits they can get from its services.

The firm needs to rely more on innovative technology solutions to market its offerings and attract young consumers in the industry. As a result, this will enable the firm to understand new market trends and how they affect its long term operations in the industry (Panda, 2008, p. 37).

The benefit of this approach is that the firm will be in a position to satisfy the needs of its customers because it will sell appropriate products that conform to specific market conditions. The disadvantage the firm is likely to experience from this approach is that it may take a long period of time before it yields positive results.

Another solution the firm needs to use is to change its promotional strategies. The firm needs to engage with people in their communities to make them have positive perception towards its operations. It needs to go out and conduct promotions in schools, colleges and other places to encourage young people to try out some of its breakfast products (Panda, 2008, p. 43).

This approach is likely to yield positive results in the long run because the firm will be able to understand how to elicit positive consumer sentiments that favor its products in the market.

The advantage of changing its promotional strategy will enable the firm to attract new consumer segments that are willing to sample its products. On the other hand, the main disadvantage associated with this strategy is that it may increase the costs incurred by the firm in its operations.

Selected Solution to the Problem

New product concepts will enable the firm to regain the market share it has lost to its competitors. The firm should consider using popular accompaniments with its products to make them more appealing to customers. As a result, this will help the firm to increase the value of its brand in the market to take advantage of new opportunities which exist.

In addition, the firm needs to develop new menus that attract consumers to make them more interested in various products that are on offer.

Customers should be given more consideration when new product concepts are developed to enable them to satisfy their needs and expectations (Salisbury, 2014). This approach will help the firm to increase the value of its brand in the industry making it well prepared to capitalize on various opportunities that exist.

The firm needs to differentiate services offered to customers who consume breakfast in its outlets. It needs to come up with new ways of appealing to their lifestyles. Moreover, the firm needs to find out conditions that exist in its restaurants to find out if they satisfy the high standards it has set for itself in its operations.

Customers’ perceptions towards a particular product are influenced by the quality of service they get whenever they consume it. Therefore, the firm needs to come up with ways of ensuring that its customers have positive experiences whenever they visit its outlets to consume breakfast (Salisbury, 2014).

This entails retraining its employees to ensure they offer prompt and high quality services to customers in different outlets. As a result, the firm needs to empower its employees to make them more willing to satisfy customers who visit its restaurants.

The firm needs to rebrand its breakfast service offerings to differentiate them from other products that are sold during the day. This approach will help the firm to direct customers’ attention to new quality improvements in its operations that make it stand out in the market. As a result, this will improve customers’ perceptions towards the firm’s products because they will feel that they connect with them on a personal level.

The firm needs to use focus strategies to increase the value of its important products in the market. In addition, the firm needs to redefine specific customer segments it will target with its new breakfast products. This will enable the firm to find out specific methods it can use to attract them. Consequently, the firm will be in a position to turn around its operations to by increasing its profit revenues (Vrontis & Pavlou, 2008, p. 299).

There has been an increase in the number of customers who are interested in consuming healthy diets that have low sugar and fat content. The firm needs to engage young people and make them aware about healthy diets it is going to offer for breakfast as part of its menu. As a result, the firm will be in a position to diversify its product offerings to enable it to attract new customer segments in the industry.

In the long term, this will help the firm to increase various sources of incomes for its operations to increase its competitive edge in the industry. Many people are conscious about what they eat due to the high increase in lifestyle diseases which are mainly caused by poor eating habits revenues (Vrontis & Pavlou, 2008, p. 301).

Therefore, this approach will help the firm to demonstrate that it takes seriously the health and wellbeing of its customers and as a result, it will be in a position to turn around its operations.

Expected Results and Rationale for the Solution

McDonald’s new product development strategy will help it take advantage of future opportunities in the industry. This will allow the firm to appeal to younger consumers to make them more loyal. As a result, the firm will be in a better position to grow its revenues to overcome the challenges it has been facing in the industry.

The firm’s business model will focus more on adapting to market conditions to increase its competitive advantage in the long run. As a result, this will enable the firm to use efficient methods to respond to external market conditions that have caused it to lose its market share to competitors (Marder, 1997, p. 47).

For a long time, the firm has focused more on standardizing processes in different markets where its operations are based. However, this strategy will enable the firm to be more flexible in its operations to enable it to achieve higher levels of service excellence in the industry.

An effective product development strategy will enable the firm to improve quality perceptions that are associated with its products in the market. As a result, the firm will be in a position to increase the value of its brand in the industry by ensuring that its operations focus more on customer service excellence.

More importantly, the firm will be able to institute learning processes that enable its staff to acquire new skills to make them satisfy customers’ needs and expectations (Marder, 1997, p. 52). This will increase revenues obtained by the firm from its operations in the industry. In addition, this will help the firm to share information with its franchisees regarding specific improvements that need to be made.

The rationale for this solution is due to the fact that the firm is losing its competitive edge in the industry. Therefore, this requires the firm to make its external and internal processes more innovative so that it can be well prepared to satisfy the needs of its customers in different markets. In addition, the firm’s current strategy has the potential of causing conflicts with its franchisees who are important stakeholders.

As a result, this solution will enable the firm to improve the relationships it has with its stakeholders to ensure that they understand the importance of its new strategies.

The firm needs to review the manner in which it conducts its operations by coming up with new ways of engaging young consumers (Kotler & Armstrong, 2007, p. 72). As a result, this will enable the firm to develop strong and reliable relationships with them and this will help it attain good long term performance in the long run.

Positive and Negative Results

The firm needs to implement effective brand management strategies to safeguard the product life cycle of their current and potential new products in the market. This approach will enable the firm to find out how to regulate the growth of its new products in the market to maintain high levels of interest from consumers.

The firm needs to be careful about fads that are driven by high levels of customer excitement which do not last for a long period of time. Therefore, the new product development processes must be guided by information obtained from the targeted customer segments in the market (Kotler & Armstrong, 2007, p. 75). This will to find out how its new products are likely to fare in the market in the long run.

Therefore, the firm needs to rely on forecasting tools to predict expected changes in consumer behavior that are likely to impact on the performance of new products which are sold in the market.

The firm also needs to be careful about becoming complacent in the industry after it starts to register good results from its operations. The firm should institute learning processes that make all employees and other key stakeholders aware about constant trends in the industry that have an impact on its operations.

As a result, this approach will help the firm to focus its attention on organizational priorities that affect the manner in which it performs its functions in the industry. Therefore, this will help the firm to come up with proactive solutions to various challenges it is likely to face in the industry in the long run (Kotler & Armstrong, 2007, p. 82).

Moreover, it is important for the firm to adopt risk management strategies to protect it against situations that are directly caused by poor financial performance. This will increase the stability of its operations in the industry in the long run.

Conclusion

McDonald’s needs to take urgent measures to protect its market share in the industry. The firm needs to develop new products that can satisfy the needs of its customers in the industry. In addition, the firm should come up with new service improvements to help its clients obtain high quality services from its operations. This approach will improve the firm’s advantage over its competitors in the industry.

References

Bradley, N. (2010). Marketing research: Tools and techniques. New York, NY: Oxford University Press.

Jargon, J. (2014, Apr. 20). McDonald’s faces sharper competition in breakfast battleground. The Wall Street Journal.

Kotler, P., & Armstrong, G. (2007). Principles of marketing. Upper Saddle River, NJ: Pearson.

Marder, E. (1997). The laws of choice: Predicting customer behavior. New York, NY: Simon and Schuster.

Panda, T.K. (2008). Marketing management. New Delhi, India: Excel Books

Rue, L. & Byars, L. (2003). Management: Skills and applications. New York, NY: McGraw Hill.

Salisbury, P. (2014, Feb 20). The globalization of “fast food”. Behind the brand: McDonald’s. Global Research. Retrieved from https://www.globalresearch.ca/the-globalization-of-fast-food-behind-the-brand-mcdonald-s/25309

Vrontis, D., & Pavlou, P. (2008). The external environment and its effect on strategic marketing planning: A case study for McDonald’s. J. International Business and Entrepreneurship Development, 3(3/4), 289-307.

Introduction

McDonald’s is one of the largest companies that specialize in fast food in the world (Vrontis & Pavlou, 2008). The company has experienced a lot of expansion in its operations. Its expansion has been facilitated by the need to have several restaurants all over the world.

Just like any other business, McDonald’s Corporation has a number of challenges that tend to pull the company’s operations backward. However, the company has several strong points and strategies that enable it to maintain a large market share. Thus, this paper will look at the SWOT and Space matrices of McDonald’s Corporation.

SWOT Matrix

The table below outlines the SWOT matrix of McDonald’s.

SPACE Matrix

The table below outlines the SPACE matrix of McDonald’s. The matrix involves both the internal and external outlook of the company.

Recommendations and Conclusion

From the SPACE matrix of McDonald’s, as well as its SWOT analysis, it suffices that McDonald’s has the responsibility of making sure that it maintains its market share within the fast food industry (Deng, 2009). This can be achieved by ensuring that it improves customer loyalty, product quality, increase the amount of cash available in circulation for the business, and resource utilization. Evidently, MacDonald has a number of weaknesses and threats.

As such, the company should use its strengths and opportunities, as outlined in the SWOT analysis, to reduce the number of risks involved in the business. It should also put in place strategies to enhance its competitiveness. Such strategies will help the company to gain a higher market share in the fast-food industry.

In order to ensure that McDonald’s is highly valuable in this industry, it is recommendable that it continues expanding. In this context, the fast-food sector in Asia will be a suitable market to consider.

According to Deng (2009), the company can remain at its position, with the potential of expanding further if it adds several restaurants to take care of the Asian market with zero fat content in its meals. In addition, McDonald’s is required to improve the quality of meals and drinks it offers in order to reduce competition from other companies offering healthier foods.

References

Deng, T. (2009). McDonald’s new communication strategy on changing attitudes and lifestyle. IJMS, 1 (1), 1-2.

Vrontis, D., & Pavlou, P. (2008). The external environment and its effect on strategic marketing planning: A case study for McDonald’s. JIBED, 3 (3/4), 289.

Introduction

All businesses, irrespective of their industry, require strategies in order to be successful. High competition resulting from globalization and technological advancement has necessitated clear-cut strategies in order to survive. Strategic management has never been as important as it is today.

Through strategic management, organizations are able to identify and implement the best practices to gain competitive advantage, increase profit margin and grow (Hubbard, Rice, and Beamish 2008). Fast food industry is one of rapidly growing and competitive industry.

A company in this industry has to develop and implement successful business strategies in order to gain competitive advantage. In this report, a case study for McDonald’s is provided. The report reviews the strategies that McDonald’s has adopted in order to maintain its global position in fast food industry.

Organization Overview

The McDonald’s has been in operation in food industry since 1954. The US based company operates a chain of fast food restaurants in more than 119 countries. Though initially established by McDonald’s brothers, McDonald’s success is attributed to its later owner: Ray Kroc. Over years McDonald’s has emerged to be a strong brand in the fast food industry. Most of its restaurants across the globe are operated as franchises.

McDonald’s chain of restaurants is renowned for its uniform and standardized menu. McDonald’s menu across its chain mainly consists of burgers, milk shakes, French fries, sandwiches, Ice cream sundaes, vegetable salads and desserts (McDonald’s Corporation 2010). The menu however changes slightly from country to country depending on culture and customer taste.

The company is renowned for its innovative products. Some of its successful products include Big Mac, Chicken McNuggets, Quarter Pounder with Cheese and the Filet-O-Fish (McDonald’s Corporation 2010). McDonald’s main target for its products over years has been children and mothers. The company has therefore adapted its products and restaurants to its main target. Besides its ‘Happy Meals’, some of McDonald’s restaurants serve breakfast offering that include coffee, Egg Sandwiches, Sausage McMuffin, biscuit and hotcake.

Though McDonald’s is generally successful, it has encountered various challenges along the way. High competition in fast food industry has been one of the main challenges in its global strategy. Apart from high competition, the company has been involved in controversies over its contribution to obesity. Increased health concerns especially in the US and UK has been a major concern to McDonald’s management.

Strategies

McDonald’s has adopted various strategies in order to be successful in global fast food industry. Although McDonald’s is one of the most experienced companies in the fast food industry, established and upcoming companies have been a threat to its market share. Wendy’s is just one of the fast food companies that have been a threat to McDonald’s.

Through adopting certain strategies, McDonalds have been able to withstand competition and increase its number of restaurants across the globe. Strategic management should define an organization’s position, its desired position in the future and actions to be taken in order to achieve the desired goal.

Through its ‘plan to win’ global strategy, McDonald’s has been able to remain highly competitive despite of negative publicity over health concerns.

Increased health concerns and negative publicity resulting from health related controversies have been a major challenge to McDonald’s (Wilsher 2010). To address this, McDonald’s has adapted various business strategies. To create a healthy image for itself, McDonald’s plan to do away with soft drinks and Super French fries.

Besides, the company plans to make changes to its menu in order to reflect increases health concern. For instance cinnamon roll with a sausage burrito is considered to be the major breakfast offering in United Kingdom.

McDonald’s has been able to establish a strong brand over years. With negative publicity resulting from health concerns, the company has increased its effort to protect its brand. “Be our customers’ favourite place and way to eat” is the company brand mission (Ganapathy 2009). To ensure the mission is achieved, the company has taken firm actions from improving products, customer service to promotion.

The company has implemented a new cooking system aiming at improving quality of products served in its menu (Howard 1999). Restaurant décor to brand icon has been improved across the globe in order to ensure consistent image to its customers. In addition, McDonald’s has consistently increased its promotion effort through conventional channels as well as new technology such as the internet.

Customer service is core to success in hotel and hospitality industry (Prakash and Olsen 2003; Tse and Jogaratnam 2008). McDonald’s has taken strategic actions to ensure high customer feel. Part of the strategies includes recruitment and training of right staff.

McDonald’s staff is trained to treat customers with respect and maintain a smiling face while serving. High standard of hygiene is maintained including restaurants’ bathrooms. To show its concern for environment, McDonald’s collects dropped burger wrappings and cups using its three-wheeled vehicle (Livesey 1999).

Strategic Recommendations

The principle objective of strategic management is to boost an organization’s competitive advantage. It enables the management to establish plans to address current and future needs of an organization (Thompson, Strickland and Gamble 2007; Carpenter, Sanders, Rice and Martin 2010). Fast food industry has attracted many players that try to address various customer needs.

Most of these competitors exploit customers’ needs and concerns not well served in McDonald’s. McDonald’s therefore needs to put more effort to maintain its market share in the industry. Some of strategic actions that McDonald’s should take include:

• Enhance promotion and advertisement in order to overcome negative publicity
• Progressively expand its menu in order to accommodate increased customer needs and tastes, including health concerns
• Invest more on product development in order to come up with competitive products for different cultures

Conclusion

Strategic management approach is a necessity in all industries in the global economy. Hotel and hospitality industry is one of the industries that most require strategic management. Companies in this industry must align their products and services to rapidly changing customer needs and taste. McDonald’s success in fast food industry can be attributed to its adherence to strategic management principles.

The company is able to overcome its challenges by following clear-cut plans. Though clouded by controversy over health concerns, the company seems to maintain customer loyalty and still has high competitive advantage over other players in the industry.

Reference List

Carpenter M. A., Sanders W., Rice J. and Martin N., 2010, Strategic Management: A Dynamic Perspective, Concepts and Cases, Pearson Australia, Frenchs Forest.

Ganapathy, S., 2009, McDonald’s International Strategy: Squander Brand Equity? Web.

Howard, T., 1999, The Over-Arching Strategy-McDonald’s Global Brand Strategy Task Force. Web.

Hubbard, G., Rice, J. and Beamish, P., 2008, Strategic Management Thinking Analysis, Action, Pearson, Sydney.

Livesey, S., 1999, McDonald’s and the Environmental Defence Fund: A Case Study of a Green Alliance, The Journal of Business Communication, Vol. 36

McDonald’s Corporation 2010, Travel through Time with Us. Web.

Prakash, K. and Olsen, M., 2003, Strategic alliances: a hospitality industry perspective, International Journal of Hospitality Management Vol. 22, pp 419-434.

Thompson, A., Strickland, A., and Gamble, J., 2007, Crafting and Executing Strategy, McGraw-Hill, New York.

Tse, E. and Jogaratnam, G., 2008, From the top down: strategic management in the Hospitality Industry, SAGE Handbook of Hospitality Management, SAGE London, pp165 – 191.

Wilsher, S., 2010, McDonald’s in Hot Water over Marketing Tactics. Web.

Introduction

The case revolves around the main peculiarities of the McDonalds entry to the new Indian market. It could be defined as a complex process that demands the comprehensive investigation of the unique features of the area. First, the company has to create the unique strategy that will meet the requirements of local people. For this reason, Big Mac is replaced with Maharaja Mac as 80% of population do not eat beef (Pangarkar & Subrahmayan 2011). Additionally, for 12% pork is also taboo and the products that are made of it are replaced with other dishes (Pangarkar & Subrahmayan 2011). For vegetarians who comprise 40% of the population of India, a special McAloo Burger made of potato is introduced (Pangarkar & Subrahmayan 2011). Altogether, the companys main strategy is the creation of the products that will satisfy local peoples needs and attain a certain competitive advantage. McDonalds also could explore significant resources available for it at the moment.

These are great funds as the company is the leader of the fast-food restaurants (Why McDonald’s sales are falling n.d). Additionally, being a unique franchise, the company could also use the experience and equipment that might improve its functioning in any region or state. Finally, McDonalds is also able to guarantee the acquisition of a certain competitive advantage by emphasizing its unique approach that rests on the satisfaction of customers current needs and desires. The combination of these facts contributes to the appearance of a significant gap between the company and its rivals. McDonalds considers the payment capacity of local people and implement the pricing strategy in the way that might satisfy diverse needs of local population. India could be characterized by the significant oscillations in the level of incomes, Being oriented on people with the average income, McDonalds will also provide an opportunity for poor people to buy its products by making their price low enough for them to be able to afford at least something from the menu.

Nevertheless, there are also several risk factors that should also be minded when working in the new market and under the new conditions. First, the significant part of the population is vegetarian while the majority of products prepared in McDonalds contain meat. Second, Buddhists and Moslems do not eat beef and pork which means that the approach to the menus composition should be altered. The introduction of the new product might demand the great reorganization of the whole supply chain which could demand extra spending. Third, there are still strong anti-West moods in the country as for the long time India had been suffering from the British rule (Rangnekar 2014). These factors should obviously be taken into account. However, when analyzing the case, one could understand that the company has already introduced several important changes to the strategic management process to be able to face the new challenges.

First, it added the new products in terms of its strategy that is aimed at the satisfaction of current needs. Moreover, having analyzed the peculiarities of the local environment, McDonalds also created two different menu boards for vegetarians and non-vegetarians. Finally, to convince Indian people that they will not eat beef, special brochures that explained this fact were created. Besides, the company is going to devote significant sums to guarantee the success of this new business venture and become an important actor who functions in the local market. That is why it explores the unique features of the franchise that bring success in all states all over the world. McDonalds proclaims popularity its main priority in the area as it recognizes the great potential of the local market that is conditioned by the great paces of Indian economys growth.

The exploration of all available sources will obviously have the great positive impact on the companys success. Altogether, the company sees its mission in the acquisition of a great competitive advantage and winning the rivalry to become the most popular and beneficial restaurant in the region (Kannan 2014). Its unique purpose is the creation of the new approach to customers that will combine previous unique experience altered to satisfy needs of local people and attract them by introducing products that have never been seen here before. The given mission preconditions the choice of the strategy, resources, approaches, managerial styles, etc. McDonalds is considered the most popular franchise at the moment, and it wants to become successful in this new market to obtain extra revenues.

SWOT analysis

Analysis

Competitor analysis

Forces analysis

PESTLE

International strategy

Altogether, the current McDonalds international strategy could be defined as successful as it managed to become one of the leaders of fast-food restaurants in the world (FT 2015). Its huge revenues and recognizable image also evidence this fact. For this reason, it is also possible to conclude that its attempts to develop Indian market will be successful. Mc has already changed the approach to the menu by excluding beef and pork and adding a special set of dishes for vegetarians. It is obvious that these actions will help to suit the current markets needs and attain success by increasing its popularity and attracting new customers. Moreover, the new approach to the pricing strategy that rests on the consideration of local peoples paying capacity guarantees the increased number of individuals who will be able to use the given restaurant and by some food.

Conclusion

In conclusion, McDonalds attempts to develop the Indian market and find new customers could be considered successful as the company managed to alter its strategy in the way that suits the peculiarities of the local market and satisfies needs of people who live there. Moreover, this statement could be proven by the significant revenues obtained by the company due to its attempts to create the attractive image and find new customers. Yet, the comparison of incomes provided in the table could also be used to support the idea and emphasize the importance of the alteration of the companys strategy for it to be able to meet new challenges and continue its rise.

Table 1. Comparison of revenues (Pangarkar & Subrahmayan 2011).

Reference List

FT 2015, ‘McDonald’s and its challenges worldwide: a market-by-market look’, Financial Times, Web.

Kannan, S 2014, ‘How McDonald’s conquered India’, BBC, Web.

Pangarkar, N & Subrahmayan, S 2011, Beefing up the beefless Mac: McDonalds expansion strategies in India, Web.

Rangnekar, A 2014, McDonald’s India Entry Strategy, Web.

Why McDonald’s sales are falling n.d., Web.

Introduction

Ray Kroc initiated Mc Donald Corporation (in 1955) and by 1960, the man had acquired the (exclusive) rights to the company’s name. Ray Kroc’s aim was to establish a restaurant system that would pride itself in consistently high quality foods with a uniform mode of preparation (McDonald, 2010).

The company was committed to quality service delivery and its every single ingredient was tested and perfected to meet the restaurant’s high standards. Ray Kroc died in early 1984 but his passion for efficiency, quality and innovation continues to inspire many people in different fields of life to date and remain an integral part of McDonald’s policies (McDonald, 2010).

Burger king firm was founded (in 1954) by McLamore and Edgerton. It is a chain of hamburger fast food restaurants that has evolved over the years from an initial menu that served only burgers, fries, sodas, and milk shakes to the inclusion of different variations of chicken, fish, and salads among other things.

The food and beverage sector is very competitive as new restaurants are being established almost on daily basis. These companies therefore have to plan strategically to increase their sales and maintain their customers.

The rival companies have to extensively advertise their products, improve the quality of their products and establish new markets in order to achieve and maintain high returns. McDonald’s, the world leading fast food chain operator has penetrated markets in most regions around the world and its close rivals among which is Burger king holdings, are adopting the same strategy to keep up with the competition.

Strategies Pursued by McDonalds in 2010.

McDonald has achieved remarkable success over the years due to its utilization of the franchise business model. 92% of McDonald’s stock value can be attributed to the contribution of franchised stores while the remainder comes from McDonald’s owned stores (Skytop1, 2010). The ultimate strategic plan of the McDonald is the plan to win by being the best fast food restaurant in the business. The company ensures that their entire system is made up of the best franchisees and employees in the industry.

This has seen the company achieve great success due to its improved customer service. McDonald’s annual report (2009) indicated that there were tremendous increases in revenue to a record of $23.5 billion and earnings per share rose to 15% enabling the company’s shareholders to earn $5.8 billion through share repurchases and dividends.

With more than 32000 fast food outlets world wide, McDonald further seeks to expand its market to as many regions of the world as possible. Baertlein (2010), in an article in Reuters, indicated that the company plans to have 2000 stores in China by the end of 2013.It has also penetrated into the Russian and the Indian market. However, its main aim is not just being bigger, but also being better than all its competitors.

To achieve the end the company concentrates on providing its customers with a wide range of food choices to choose from, improving its operations as well as providing a convenient and more inviting environment for the consumers (Annual report, 2009). The company also intends to adopt longer working hours to include breakfast and late night in the Western market in order to optimize efficiency and increase returns.

McDonalds intends to venture more into the growing market for specialty coffees, cappuccinos and espresso drinks. However, it is faced with the challenges of convincing reluctant franchises to jump on board.(Associated press, 2009). The company intends to transform the beverages sector from just being an accompaniment to a beverage destination.(Associated press, 2009)

The company also has a well established supply chain that enables them to obtain quality ingredients at competitive prices due. This gives them comparative advantage over the other companies in the industry and is one of the major reasons why McDonald continues to achieve leading profitability in the sector (Annual report, 2009). The company also utilizes strategic marketing plan that has considerably increased its consumer base.

One of its marketing campaigns used the Shrek movie to target kids where they gave them a choice between milk, fruit or vegetable to form part of their happy meal. Their brand name ‘I’m loving it’ has also deepened connections with existing customers. The brand image emphasizes on five factors of customer service which are people, products, place, price and promotion which ensure that there is quality service delivery in its restaurants.

The company also aims at catering to each consumer group needs. For example in the Indian restaurant, the hamburger is excluded from the menu since cows are considered as sacred animals. The company conducts an extensive research on the target population to establish their likes and dislikes. This has resulted in increased profits and the company intends to continue with the same trend through 2011-2013.

Conclusion

Since the food industry is saturated, the Companies aim at captivating more consumers as well as maintaining their regular customers. This is because in the absence of extensive marketing and promotions, consumers are likely to shift to other newly established restaurants.

The food and beverage companies should therefore invest on extensive advertising to promote their products in the market. Criticisms have been raised regarding the effects of McDonald’s food to human health. The company should therefore ensure menus promote healthy nutrition.

They should also promote consumer education to ensure that customers do not fall victim of negative information being spread by their competitors since this significantly reduces demand. The company should also prioritize quality service and deliverance and also ensure that the services are up to per with the contemporary consumer needs.

Reference List

Associated press. (2009). Coffee clash at McDonald’s. Morningstar Inc, 2009. Web.

Baertlein, L. (2010). Yum sees china costs weighing on the fourth quarter margins. Web.

Mc Donald’s website. (2010). Our story, our history. McDonald’s. Web.

McDonald’s. (2009). McDonald’s annual report 2008. Web.

Skytop1. (2010). Mickey has the best menu, highest percentage of franchisees producing profits. (Long recommendations). Web.

McDonald’s is one of the most successful fast-food restaurant chains as an example of the practical implementation of Fayol’s principles. The company pays attention to most of the above principles, but the most important in this organization has acquired principles such as division of work, centralization, and esprit de corps. Thus, McDonald’s successfully implements the principle of division of work.

Smith et al. (2020) note that there are several departments in the restaurant, including the front desk and cashier, food preparation shop, packaging department, and dispensing department. Accordingly, each department is specialized, which allows to perform work more efficiently and quickly. McDonald’s also uses a centralized structure to maintain control over thousands of branches, which is also one of Fayol’s principles. According to Ike (2017), the main reason is the need to ensure consistency in the customer experience and the quality of each restaurant. It simplifies the implementation of standard policies and practices for the business as a whole and makes it easier for McDonald’s to coordinate and control many issues from a central office.

The Esprit de corps principle deserves special attention, the application of which is also the key to the company’s success. Although each employee performs his function and bears responsibility for it, there is unity and harmony among the employees in the restaurant team. Lynch (2017) claims that the assistance of each employee contributes to success. Indeed, when an organization works with enthusiasm and is built as a family, it will rise to the top.

McDonald’s prefers some principles to others since its implementation depends on the specifics of the company’s activities. For example, the company does not use the scalar chain principle. According to Rodrigues et al. (2016), branches have only one boss – the branch manager, to whom all employees are accountable. However, this does not prevent the company from reaching heights. Chenoy (2017) asserts that since the branch consists of a small number of employees, one boss is enough to coordinate the work of all personnel.

The Esprit de corps principle correlates with the organizational role because only truly loving job success can be achieved. Ge (2020) notes that the encouragement of Esprit de corps by the leaders in the organization is the key to the solid foundation and future triumph of the organization. Thus, the increase in productivity, efficiency, and effectiveness of McDonald’s results from using Fayol’s principles in its work.

References

Chenoy, C. (2017). Service quality and branding strategies at McDonalds. Web.

Ge, L. (2020). Report on critical analysis on operation management for McDonalds, International Core Journal of Engineering, 6(11), pp. 386 – 392.

Ike, L. (2017). International management: Principles & Practices, Xlibris UK.

Lynch, C. (2017). Love, leadership and McDonald’s, Journal of the European Pentecostal Theological Association, 38(2), pp. 113-125.

Rodrigues, J., Nikhil, S.,& Jacob, S. (2016). Promotional strategies of McDonalds and market effects, Journal of Management Research and Analysis, 3(1), pp. 53-55.

Smith, P., Yellowley, W., & McLachlan, C. (2020). Organizational behaviour: Managing people in dynamic organizations, Routledge.