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McDonald’s is considered as one of the world’s leading company in the fast food industry. This company was invented in1940 by two brothers known as Maurice (“Mac”) and Richard McDonald The first McDonald’s was established as a drive-in restaurant in San Bernardino, California, United States. Years later, Ray Kroc who was the exclusive distributor of the Multimixer (a milkshake mixing machine) for the McDonald brothers decided to buy over McDonald’s. Ray Kroc visited them in San Bernardino and the salesman quickly became the buyer after seeing the potential in the business. Kroc bought the rights to franchise the brothers’ restaurants across the country, and in 1955 he opened his first McDonald’s in Des Plaines, Illinois. The restaurant then developed well and able to form a corporation on its own.
A firm’s corporate mission statement indicates the purpose and related activities of the business. In this case, McDonald’s mission statement pictured the company as an influential fast food chains favored by most of the people. McDonald’s corporate mission is “to be our customers’ favorite place and way to eat and drink.” This mission statement highlights the major influence that the business has on the customers’ purchasing behavior, while not forgetting that the significance of customers as the business focus. On the other hand, a firm’s corporate vision statement indicates the long-term aims of the business. McDonald’s corporate vision is “to move with velocity to drive profitable growth and become an even better McDonald’s serving more customers delicious food each day around the world.” This statement simply means that McDonald’s aim to expand the business in terms of a larger geographical area. With this McDonald’s expect an enhancement in the operational efficiency which can leads to higher profit margin and an overall improvement in all areas of business.
McDonald’s core competency is providing convenience when people need and want to eat fast food at prices that are competitive and provide best value for the customer’s money. One of McDonald’s competitive advantages is its emphasises on consistency of quality, production of food and use of raw materials all around the world. McDonald’s strives to achieve a comparative advantage by offering their products at a price which cannot be matched by the rivals. Another important competitive advantage of McDonald’s is the speedy delivery of their food. In order to maintain this advantage over other fast food chains, they must make the processes of cooking food simple for all the employees
The core objective and mission of McDonalds is to be the world’s premier consumer product organization mainly focusing on convenient fast foods. McDonald’s strives for Honesty, Fairness and Integrity as their working ethic. As such McDonald’s has to commit in a constant improvement of all aspects in the business, including internally and externally. Their main focus now is to emphasizes on the corporate social responsibility, by giving back to the society in every possible way and actively involved in environmental stewardship to prove that McDonald’s is a sustainable corporation. McDonald’s lays out a long-term growth plan that will focus on convenience and technology in an attempt to win customers from competing quick-service restaurants. From this statement we know that the main focus of the brand now is to work on the “Experience of the Future” concept by bringing in more modern, more exciting advancement in technology such as the ordering kiosk. “Through enhanced technology to elevate and modernize the customer experience, a focus on the quality and value of our food and redefined convenience through delivery, we have a bold vision for the future and the urgency to act on it,” Easterbrook says. “We are moving with velocity to drive profitable growth and becoming an even better McDonald’s serving more customers delicious food each day around the world.” Market Analysis
The McDonald’s SWOT Analysis explains how McDonald’s utilizes all its internal factors and external factors to stay ahead in the fast food industry. In this analysis it identifies all the key strengths, weaknesses, opportunities and threats that affect the corporation the most.
The second-largest restaurant network serving customers in over 120 countries As of 2018, McDonald’s is the second-largest restaurant network in the world. This indicates that McDonald’s is playing a dominant part in the international market. The sheer size of the company network is a strength that provides many advantages over competitors, including: 2) Huge gains from implementing best practices. The company can gain experiences from all the operations and figured out the best way of performing certain tasks or resolving conflicts. They might also get to learn the guideline of managing an operations when it comes to a different culture and environment.
Negative publicity McDonald’s has been receiving criticisms and negative voices on the issues of offering unhealthy food which prompt to obesity especially when McDonald’s target market is the children. Although McDonald’s has been trying hard to resolve this issues by introducing healthier choice, the menu is still mainly offering high calories burgers and fried chicken. This has results in protest by organization that stands against obesity and therefore affecting the McDonald’s brand reputation negatively.
Focus on an image revamp McDonald’s have come up with solutions trying to rebuild their reputation by projecting a socially conscious healthy store. By this it means McDonald’s is launching more and more healthier choice on the menu to promote low-calorie intake. McDonald’s also actively involved themselves in environmental activities to raise awareness of the environmental issues.
Trend towards healthy eating As government and non-government organizations have been encouraging people to eat clean and fight obesity, people are more aware of consuming healthy food rather than what McDonald’s has on its menu.
Political McDonald’s employees were sent for compulsory training and they are getting also promotion without receiving any biased treatment. It is all about their ability and performance. On top of it, McDonald’s is also highly resistance to workplace sexual and racial harassment. All employees were to strictly obey all the policies set by McDonald’
Environmental McDonald’s is working on the environmental issues by analyzing the impact they have on the environment. McDonald’s decided to reduce their waste by 50% and they will only partners with supplier who also practices ecofriendly. For this McDonald’s has appointed a manager role who are responsible for the environmental issues. McDonald’s is now replacing all its packaging material with recyclable materials in every possible way. It shows McDonalds is focusing on sustainability and trying to achieve higher sustainability in the long term.
Social-Cultural McDonald’s enforces a close relationship with the suppliers in order to make sure that the resources supplied is safe and clean. On top of that McDonald’s also decided to lay out all the nutritional and ingredient information on the packaging for the customers’ preferences. Thus businesses have to take customers’ preferences into considerations in order to survive in the aggressive competition. Therefore McDonald’s has to design their food menu according to the customers.
Technological Technology played a really important role in fast food industry. As such McDonald’s has been investing in technology in order to develop a more convenient way for the customers to order. For example McDonald’s has introduced their own delivery app and with just a few clicks customers ia able to get their food at doorstep without even driving out and waiting in long queue.
Economical Economic factors have a strong impact on the performance of a business in terms of profitability. Recently the world economy has always been at the recession state which results in increased unemployment rate and a drop in consumer spending. With low purchasing power people tends to spend less and therefore businesses will suffer from low profitability. McDonald’s then found itself in a recession in 2012 when there is a huge decline in sales. However McDonald’s is now ranked 7th out of the top 100 most valuable US brands
Legal The legal system incorporates that any organization in the Food & Beverage industry must not use material that is harmful and dangerous to the nature. In McDonald’s case they select their supplier carefully by carrying out inspection checks to make sure the input resources are directly from the farm. Global Environment & Culture
McDonald’s was started in San Bernardino, California during year 1940. McDonald’s Corporation is a fast-food international chain restaurant which incorporated on December 21, 1964, with its new headquarters in Chicago Illinois. This global restaurant today operates and franchises in around 117 countries of the world. Around 1.9 million employees work for the company in its different restaurants and serve 70 million customers per day. McDonalds’ as one of the globalized brand, decided to use the strategic marketing tactics such as target segmentation, positioning and target marketing. McDonald’s modifies the strategies and implement it differently according to the cultures of particular geographic area. Comparing the strategies for the American market, Japanese market and the China market for example, it clearly shows that McDonald’s is able to adapt its menu and business plans to each culture. It shows that it respects the differences between cultures and adheres to the country’s policy when they develop additional items for their menu. McDonald’s has gained enormous benefits from globalization and this is because of the two different marketing plan implemented in the company: 1. Standardization strategy Despite having franchisees all around the world, McDonald’s remains their iconic items on the menu. Items such as McChicken, McNuggets and Filet-O-Fish is available in all McDonald’s stores. As a result it helps creating a strong brand image for McDonald’s and it is also cost-effective and time-efficiency. 2. Adaptation strategy McDonald’s implemented this strategy effectively as it suits itself to different cultures and environment all around the world. McDonald’s listen to their customers’ needs and introduced various type of specialized items in that particular geographic area. This helps McDonald’s to gain customers loyalty and also enhance the acceptance of the brand around the world. Marketing
The marketing tactics used by McDonald’s has showed significantly growth since its inception in 1940. All these years McDonald’s main business strategy has always been investing in advertising. Ray Kroc, the former CEO of McDonald’s valued advertising and marketing. As he once mentioned he believed that advertising was an investment that would, in the end, come back many times over, and advertising has always played a key role in the development of the McDonald’s Corporation. The McDonalds brothers realized the importance of an eye-catching building that could raise the brand awareness. Therefore they redesign the stores with two yellow golden arches, indicating the alphabet “M”, which we are still seeing until today. The mascot of McDonald’s, Ronald McDonald’s was introduced in the year 1967 by one of the franchise owner. He realized that with the help of clown it is easier to attract the children. This is proven as Ronald McDonald was more familiar to 96% of American children than the name of their president. McDonald’s employs the Four Ps of Marketing
Price: McDonald’s uses their price strategy effectively as they marked the items at an affordable price which in not too cheap and not too expensive. They also offers promotion after working hours to encourage people from buying McDonald’s after works.
Product: McDonald’s focus on their products and demands of the consumer and offers certain items around a certain period of time for example McDonald’s launches the Prosperity Burger during every Chinese New Year. As such they emphasize on evaluating the customers’ preferences and introduced new product to satisfy them.
Promotion: In 1976, McDonald’s signed up as the official sponsor for the world recognized events such as Olympic. This helps creating strong brand image and also raising brand awareness at the same time. Thus, McDonald’s also utilize their public relations by constantly organizing new events, and promoting new products in order to stay in the market.
Place: McDonald’s intend to create an atmosphere which their customers desire. Therefore McDonald’s has built in playground and offers happy meal toy because the children would love visiting fun place. While a business person would decides to eat at McDonald’s because the whole process from order to getting the food is short and simple which can be said as time efficient for them. Teenagers are drawn to the items offered on the menu because it is mostly their preferences and on top of that McDonald’s offers free wifi service. Overview of the Organization
McDonald’s leadership team is headed by the President and CEO, who is aided by seven executive vice presidents and one senior vice president, each overseeing a specific aspect of the business. Mr. Steve Eastbrook is the President and CEO since early 2015. Eastbrook introduced substantial changes in McDonald’s organizational structure in July 1, 2015 in order to improve the efficiency of the global operations. The figure below illustrates McDonald’s organizational structure and the distribution of senior management roles within the company: McDonald’s Corporation has a divisional organizational structure. McDonald’s organizational structure has the following characteristics, arranged according to significance in affecting food service business operations:
McDonald’s, the most dominant player in the fast food industry, is protected by a bundle of trademarks, a smattering of patents and a sprinkling of designs. These can be any word, phrase, symbol, etc. that identifies the source of a good or a service in commerce. For instance, the word “McDonald’s” itself is a trademark and we call this a standard character text trademark. The Golden Arches is a logo, but this too is serving as a trademark. We refer to this as an image or stylized trademark. While the phrase “I’m Lovin It” is a tagline or sometimes called a slogan. This is treated as its own text trademark. The term “McNuggets” is a product name and any other products that include the “Mc” / “Mac” are also registered under McDonald’s rights.
Being a multinational corporation, McDonald’s is required to comply with various regulatory frameworks provided by the government in different countries. These frameworks ensure that company is ethically performing its duties. Following are examples of regulatory frameworks that apply to the operations of McDonald’s. Food Safety Requirement: The corporations which deal in food products can be held liable for casually handling the quality of food products; proper safety standards should be maintained by the firm to ensure that the food did not cause any health issues to the consumers. The regulations of food safety provide necessary security standards that are maintained by restaurants or fast food chains to ensure that their products are not detrimental to the health of customers. McDonald’s was sued by the government in 2012 for not maintaining appropriate standards for foods safety, and the company had to pay a penalty of $180,000. The corporation failed to maintain safety standards for food storage, cleanliness, and presence of pests. Environmental Protection and Biodiversity Conservation Act 1999: The requirement of environmental products regulations is growing, and multinational companies have to comply with such requirements to maintain their reputation. This act requires every domestic and foreign firm to maintain appropriate measure for disposing of the waste caused by them. McDonald’s operates in the food industry, and they deal with a significant amount of food waste, the company has to ensure that proper guidelines have been established for waste disposal system, so they are no pollution their local environment.
Rising veganism and awareness of the impact of meat consumption are driving demand for meat-free substitutes has also been a rising issues for McDonald’s. McDonald’s, which only offers plant-based burgers at its headquarters in Chicago, should be alert to the issues and take actions on it. Voices been coming out from the crowd as the management of McDonald’s has not make any statement on this issues yet. Meanwhile, nearly 160,000 customers have signed petition for the company to introduce a healthy, meatless option. Fortunately, McDonald’s made a stunning announcement of its new McVegan burger during fall 2017 in comply with the rise of veganism issues. The item is permanently added to the menu of McDonald’s restaurants. As such it clearly shows that McDonald’s wants to impact the world positively, while keeping updated with the fast changing consumer purchasing behavior. The downward slopping state in McDonald’s quality and services is another reasons for the decrease in sales. McDonald’s core competency was offering fast service with assured quality but recently McDonald’s has been making mistakes such as slow service, taking wrong order, impolite employees and unhygienic atmosphere. All these mistakes result in ruining the brand reputation and a drastic fall in sales. Therefore McDonald’s should enforce the rules and regulations strictly obey by all the operations around the world. Franchisees should also do regular checking once in a while to make sure they keep up with the performance. Penalties would also be imposed if franchisee does not follow the standard operation procedures. This will help McDonald’s to maintain a food reputation.
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