Sunteți pe pagina 1din 31

McDonalds Vision Statement & Mission

Statement Analysis
McDonalds Corporations mission statement and vision statement are guides for the

companys leadership in the global fast food restaurant industry. Founded in 1940 and

established as McDonalds Corporation in 1955, the firm follows its mission statement to

design and develop its goods and services. On the other hand, McDonalds follows its vision

statement to continue its top position in the global fast food restaurant market. With more

than 36,000 locations worldwide, McDonalds shows resilience and success through

innovation and aggressive marketing. McDonalds success is an indicator of business

effectiveness in attaining the aims in its mission statement and vision statement.

McDonalds mission statement guides the companys strategies and strategic


objectives for developing business operations. McDonalds vision statement
guides the companys overall strategic direction toward its current leadership
position in the global fast food restaurant market.

McDonalds Vision Statement

McDonalds vision statement is as follows: Our overall vision is for McDonalds to become a

modern, progressive burger company delivering a contemporary customer experience.

Modern is about getting the brand to where we need to be today and progressive is about

doing what it takes to be the McDonalds our customers will expect tomorrow. To realize this

commitment, we are focused on delivering great tasting, high-quality food to our customers

and providing a world-class experience that makes them feel welcome and valued.

McDonalds vision statement covers a number of business aspects. The


company implies innovation to satisfy current market needs, as stated in the
contemporary customer experience component of the vision statement. Also,
McDonalds characterizes its products in the great-tasting, high-quality food
component of the vision statement. In saying modern, progressive McDonalds
shows that its vision statement defines the kind of business approach it uses for
organizational development. A strategic objective linked to this vision statement
is the innovation of McDonalds goods and services to match consumer
preferences and expectations.

McDonalds Mission Statement

McDonalds mission statement is officially stated as follows: Our mission is to


be our customers favorite place and way to eat & drink. Were dedicated to
being a great place for our people to work; to being a strong, positive presence
in your community; and to delivering the quality, service, cleanliness and value
our customers have come to expect from the Golden Arches a symbol thats
trusted around the world.

In its mission statement, McDonalds includes details about its market position,
as shown in the favorite place and way to eat & drink component. Also, the
human resource management approach is highlighted in the great place for our
people to work component. In addition, McDonalds mission statement covers
its corporate social responsibility position in the positive presence in your
community part. The rest of the mission statement indicates McDonalds brand
image and the character of its products. A strategic objective based on this
mission statement is global brand development to strengthen the companys
ability to attract customers and investors. A related financial objective based on
McDonalds mission statement is cost minimization to optimize value.

McDonalds Mission & Vision Statements Recommendations

McDonalds vision statement reflects the overall strategic direction of the


company. The different aspects of the business are covered and characterized in
the vision statement. Thus, McDonalds comprehensively states what it wants to
achieve, making the vision statement satisfactory. A satisfactory vision
statement helps unify the aims in the different areas of the organization.

McDonalds mission statement is also comprehensive. For instance, the aspects


of human resource management and corporate social responsibility are included
in the mission statement. However, a point of interest is the aspect of
innovation. For example, how does McDonalds ensure that it addresses
consumers expectations? Thus, it is better to include innovation in the mission
statement, as well. McDonalds mission statement can specify research-based or
technology-based product innovation as a general approach to ensure customer
satisfaction. Through this additional detail, the mission statement could be more
relevant to McDonalds business condition, which actually involves product
innovation.

References
Bartkus, B., Glassman, M., & McAfee, B. (2006). Mission statement quality
and financial performance. European Management Journal, 24(1), 86-94.
Long, C., & Vickers-Koch, M. (1994). Creating a vision statement that is
shared and works. The Journal for Quality and Participation, 17(3), 74.
Lucas, J. R. (1998). Anatomy of a vision statement. Management
Review, 87(2), 22.
McDonalds Corporation (2015). Company Information.
McDonalds Corporation (2015). Company Profile.
McDonalds Corporation (2015). McDonalds Career Information.
Mullane, J. V. (2002). The mission statement is a strategic tool: when used
properly. Management Decision, 40(5), 448-455.

McDonalds Generic Strategy & Intensive


Growth Strategies
McDonalds generic strategy determines its basic approach to developing its business and
competitive advantage. As the biggest fast food restaurant chain in the world, McDonalds
uses its intensive growth strategies to support continued business development and
expansion. The related strategic objectives dictate the companys operational activities,
especially in responding to economic changes and the actions of competing firms.
Variations in market conditions impose pressure on the business to adapt or reform its
strategies. As such, McDonalds generic strategy and intensive growth strategies change
over time to ensure long-term business viability.

McDonalds generic strategy defines the firms overall business approach for
competitiveness. The intensive strategies determine McDonalds approach to
growing its business in the global fast food restaurant industry.

McDonalds Generic Strategy (Porters Model)

McDonalds primary generic strategy is cost leadership. In Porters model, this generic
strategy involves minimizing costs to offer products at low prices. As a low-cost provider,
McDonalds offers products that are relatively cheaper compared to competitors like Arbys.
However, the company also uses broad differentiation as a secondary or supporting generic
strategy. This secondary generic strategy involves developing the business and its products
to make them distinct from competitors. For example, through McCaf products, McDonalds
applies the broad differentiation generic strategy.

Vertical integration is a strategic objective linked to McDonalds cost-leadership


generic strategy. For example, McDonalds owns facilities that produce
standardized mixtures of ingredients. Also, cost minimization is a financial
strategic objective based on the cost leadership generic strategy. In addition,
product innovation is related to McDonalds broad differentiation generic
strategy.

McDonalds Intensive Strategies (Intensive Growth Strategies)

Market Penetration. McDonalds uses market penetration as its primary


intensive strategy for growth. In applying this intensive strategy, McDonalds
grows by reaching more customers in markets where it already has operations.
For example, McDonalds opens new restaurants in North America and Europe by
franchising, joint ventures or corporate ownership. A strategic objective
connected to this intensive growth strategy is global expansion through new
locations. McDonalds generic strategy supports this intensive growth strategy
because low costs and low prices empower the firm to easily penetrate markets.

Market Development. In its early years, McDonalds used market development


as its primary intensive strategy for growth. However, market development is
now a secondary intensive growth strategy because McDonalds already has
restaurants in most regions around the world, except Mongolia, some parts of
the Middle East and west Asia, and the majority of African countries. A strategic
objective for this intensive growth strategy is to establish new locations in new
markets, such as new McDonalds restaurants in African or Middle Eastern
countries where the company currently has no operations. Based on its generic
strategy of cost leadership, McDonalds supports this intensive growth strategy
by using low prices to compete in new markets.

Product Development. McDonalds uses product development as its tertiary or


supporting intensive strategy for growth. In applying this intensive growth
strategy, McDonalds develops new products over time, such as new McCaf
products. These new products may be variations of existing products, or entirely
new products. The strategic objective for this intensive growth strategy is to
capture more consumers by attracting them to new products. This intensive
growth strategy agrees with McDonalds broad differentiation generic strategy in
terms of new products that make the company distinct.

Strategic Analysis and Recommendation for McDonalds

McDonalds generic strategy of cost leadership enables the company to sustain


its market leadership. The companys broad differentiation strategy also helps.
However, a possible strategic direction for McDonalds continued growth is to
establish more locations in developing economies and in countries where the
firm has no market presence. The recommended strategic goal is to fuel
business growth through a combination of the market penetration and market
development intensive strategies.

References
Gargasas, A., & Mugiene, I. (2012). Intensive growth strategy development
trends in logistics services for agricultural organization providing
companies. Management Theory and Studies for Rural Business and
Infrastructure Development, 34(5), 47-53.
McDonalds Corporation (2015). International Franchising.
McDonalds Corporation (2015). McCaf.
McDonalds Corporation Form 10-K 2014.
Merchant, H. (2014). Configurations of governance structure, generic
strategy, and firm size. Global Strategy Journal, 4(4), 292-309.
Miller, D. (1992). The generic strategy trap. Journal of Business
Strategy, 13(1), 37-41.
Parnell, J. A. (1997). New evidence in the generic strategy and business
performance debate: A research note. British Journal of Management, 8(2),
175-181.
Varadarajan, P., & Dillon, W. R. (1982). Intensive growth strategies: A closer
examination. Journal of Business Research, 10(4), 503-522.

McDonalds Organizational Structure


Analysis
McDonalds organizational structure was reformed in July 1, 2015 to improve the companys
handling of its global operations. A firms organizational structure defines the system
through which organizational components coordinate to achieve business objectives.
McDonalds organizational structure facilitates managing markets based on performance
levels. As the largest fast food restaurant chain in the world, McDonalds keeps evolving to
address current and emerging market issues. The firm rolls out new products to maintain its
performance in satisfying customers. These endeavors are supported through McDonalds
organizational structure, which is designed to adapt to the changing business environment.

McDonalds organizational structure establishes the arrangement or pattern of


interactions among various business areas. Through its corporate structure,
McDonalds succeeds in managing efficiency and performance in its operations
in the global fast food restaurant industry.

Features of McDonalds Organizational Structure

McDonalds has a divisional organizational structure. Each division handles a specific


operational area. The aim of this organizational structure is to support autonomy and
organizational flexibility. McDonalds organizational structure has the following
characteristics, arranged according to significance:

1. Global hierarchy
2. Performance-based divisions
3. Function-based groups

Global Hierarchy. McDonalds has a global hierarchy to cover all its operations
worldwide. This feature of the organizational structure emphasizes corporate control. For
example, McDonalds CEO directs the activities of all business areas. Mandates are passed
from the CEO down to middle managers, and to the restaurant managers and personnel.
This characteristic of McDonalds organizational structure is typical of most global business
organizations.

Performance-Based Divisions. The performance-based divisions are the most


distinct feature of McDonalds organizational structure. The company reorganized its
structure on July 1, 2015. Before the reorganization, the geographic divisions in McDonalds
organizational structure were (a) U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East and
Africa (APMEA) and (e) Other Countries & Corporate (OCC) including Canada, Latin
America and Corporate. After the reorganization, McDonalds used performance as basis for
the new divisions in its organizational structure: (a) U.S., (b) International Lead Markets, (c)
High Growth Markets, and (d) Foundational Markets and Corporate. The U.S. accounts for
more than 40% of McDonalds revenues, and the lead markets for 40%. The high-growth
markets account for 10% of revenues.

Function-Based Groups. McDonalds maintains function-based groups in its


organizational structure. For example, under corporate operations, the company has a
human resource management group, a supply chain and franchising group, and a legal
group. This characteristic of the organizational structure enables McDonalds to address the
basic functions in its business.

McDonalds Organizational Structure Advantages & Disadvantages

An advantage of the hierarchy in McDonalds organizational structure is its support for


monitoring and control of global operations. Also, the performance-based divisions have the
advantage of enabling McDonalds to implement strategies based on market performance
similarities. For example, the firm applies similar strategies for all lead markets. However, a
disadvantage of McDonalds organizational structure is that it tends to generalize strategies
for the performance-based divisions. The company has limited flexibility because of this
feature of the organizational structure.

References
Child, J. (1972). Organizational structure, environment and performance:
The role of strategic choice. Sociology, 6(1), 1-22.
Markides, C. C., & Williamson, P. J. (1996). Corporate diversification and
organizational structure: A resource-based view. Academy of Management
journal, 39(2), 340-367.
Martin, R., Muuls, M., de Preux, L. B., & Wagner, U. J. (2012). Anatomy of a
paradox: Management practices, organizational structure and energy
efficiency. Journal of Environmental Economics and Management, 63(2), 208-
223.
McDonalds Corporation (2015). Company Profile.
McDonalds Corporation Form 10-K 2014.
McDonalds Organizational Culture Analysis

McDonalds organizational culture supports the companys industry positioning goals. As the
biggest player in the global fast food restaurant market, McDonalds uses its organizational
culture to attract customers and qualified employees. A firms organizational culture defines
the traditions, habits and values that influence workers behaviors. To ensure business
efficiency in production and service, McDonalds organizational culture encourages learning.
In a way, the continuing evolution of the organization reflects the firms effectiveness in
applying its corporate culture to achieve the desired levels of human resource capabilities.
This condition highlights the significance of organizational culture as a success factor in
McDonalds international business.

McDonalds organizational culture supports operational efficiency to maximize


productivity. Service quality is also enhanced through the effects of McDonalds
corporate culture.

Features of McDonalds Organizational Culture

McDonalds organizational culture emphasizes human resource development and efficiency.


It supports business growth and success in the international fast food restaurant market.
This organizational culture has the following characteristics, arranged according to
McDonalds prioritization:
1. People-centricity
2. Individual learning
3. Organizational learning
4. Diversity and inclusion

People-Centricity. McDonalds organizational culture prioritizes employees needs and


development. The companys Core Values and Standards of Business Conduct emphasize
the importance of supporting people. This is understandable, considering that McDonalds is
a service business. To ensure support for people, the companys organizational culture
encourages employees to engage management to help improve processes and procedures.

Individual Learning. McDonalds organizational culture highlights the importance of


lifelong learning. The belief is that individual learning promotes productivity, quality, and
business effectiveness. To facilitate individual learning, the company offers training and
development opportunities through Hamburger University, internships, global mobility, and
leadership development programs. These efforts ensure that McDonalds maintains an
organizational culture that motivates employees to keep learning.

Organizational Learning. McDonalds organizational culture also supports


organizational learning. The firm aims to use individual learning to develop organizational
knowledge to push the business forward to new heights of performance. McDonalds applies
this feature of its organizational culture through policies, programs and meetings that
encourage employee feedback and knowledge sharing.

Diversity and Inclusion. McDonalds official human resource management policy


states that diversity and inclusion are key factors in the firms organizational culture.
McDonalds recognizes the importance of diversity and inclusion in optimizing HR
capabilities to deal with an increasingly diverse market. To ensure support for diversity and
inclusion, McDonalds organizational culture encourages employees, suppliers, franchisees,
and customers to give their feedback and engage in meaningful conversations to improve
the business.

McDonalds Organizational Culture Advantages & Disadvantages

McDonalds organizational culture has the advantage of enabling the company to improve
quality of service through people-centricity, individual learning, and organizational learning.
However, excellence and high quality are considerations not effectively covered in the
corporate culture. While McDonalds highlights learning and support for people in the
organizational culture, there is no emphasis on excellence in individual performance. Thus,
a possible improvement is for McDonalds to emphasize excellence and high quality output
in its organizational culture.

References
Cameron, K. S., & Quinn, R. E. (2005). Diagnosing and changing
organizational culture: Based on the competing values framework. John Wiley
& Sons.
Denison, D. R. (1990). Corporate culture and organizational effectiveness.
John Wiley & Sons.
McDonalds Corporation (2015). People.
McDonalds Corporation (2015). Training and Development.
OReilly, C. A., Chatman, J., & Caldwell, D. F. (1991). People and
organizational culture: A profile comparison approach to assessing person-
organization fit. Academy of management journal, 34(3), 487-516.
Schein, E. H. (1984). Coming to a new awareness of organizational
culture. Sloan management review, 25(2), 3-16.

McDonalds SWOT Analysis &


Recommendations
McDonalds maintains its position as the top player in the global fast food restaurant industry
through strategies that address the internal and external factors in this SWOT analysis. The
SWOT analysis framework identifies the most relevant internal and external business factors
that determine the firms success. McDonalds uses a variety of strategies to deal with these
factors. However, the company faces considerable issues based on emerging conditions in
the global market. This SWOT analysis points out the most pressing concerns that
McDonalds must address to keep its leadership in the industry.

This SWOT analysis of McDonalds Corporation shows that the company must
address diversification and process flexibility, as well as business expansion and
innovation.

McDonalds Strengths (Internal Strategic Factors)

McDonalds strengths make it a leading contender in the fast food restaurant market. This
aspect of the SWOT analysis shows the internal strategic factors that contribute to
organizational viability. McDonalds main strengths are as follows:

1. Strong brand image


2. Moderate market diversification
3. Standardized processes

McDonalds has a brand image that makes the business competitively strong. Another major
strength is market diversification based on the firms presence in most regions around the
world. This factor reduces market-based risks. In addition, McDonalds has a comprehensive
system of standardized processes, which is a strength that contributes to business efficiency
and product consistency. This aspect of McDonalds SWOT analysis shows that the
company has the capability to maintain effective operations.

McDonalds Weaknesses (Internal Strategic Factors)

McDonalds weaknesses are linked to the companys market focus, products and processes.
This aspect of the SWOT analysis indicates the internal strategic factors that limit firm
performance. McDonalds main weaknesses are as follows:

1. Limited process flexibility


2. Low product diversification
3. Vulnerability to Western market decline
McDonalds standardization ensures consistency but also reduces the companys flexibility
in responding to market variations. Low product diversification corresponds to the firms
focus on food and beverage products, which is a weakness that makes the business highly
vulnerable to slowdowns in the restaurant industry. In addition, majority of McDonalds
revenues are from the U.S. and other Western economies. This is a weakness because it
makes the firm easily vulnerable to economic decline in the Western world. This aspect of
McDonalds SWOT analysis shows that the company needs to globally expand, improve
flexibility, and widen its product mix.

Opportunities for McDonalds (External Strategic Factors)

McDonalds opportunities are linked to its product mix and global growth. This aspect of the
SWOT analysis points to the external strategic factors that support business growth.
McDonalds main opportunities are as follows:

1. Expansion in developing countries


2. Market development in the Middle East
3. Product diversification

Considering its dependence on Western markets, McDonalds has the opportunity to grow
and expand in developing countries, such as Asian economies. The company can also use
a market development strategy to establish operations in Middle Eastern countries that it
has not yet entered. In addition, to address market-based risks, McDonalds has the
opportunity to develop new products or enter new industries. This aspect of McDonalds
SWOT analysis shows that the business has significant opportunities for global growth and
expansion.

Threats Facing McDonalds (External Strategic Factors)

The threats to McDonalds are based on competitive rivalry and sociocultural trends. This
aspect of the SWOT analysis deals with the external strategic factors that limit business
development. The main threats to McDonalds business are as follows:

1. Aggressive competition
2. Healthy lifestyles trend
3. GMO trend and regulations

The restaurant industry is highly competitive. Aggressive competitors threaten McDonalds


status as the market leader. Also, the healthy lifestyles trend is a threat because it
discourages consumers from eating at McDonalds, which is often criticized for unhealthful
products. In addition, GMO regulations are a threat because they have the potential to limit
McDonalds products. The firm currently does not have a comprehensive policy on GMO
ingredients. This aspect of the SWOT analysis shows that McDonalds needs to develop
new policies regarding GMO ingredients, as well as new products to attract health-
conscious consumers.

McDonalds SWOT Analysis Recommendations

This SWOT analysis shows that McDonalds can improve its business viability through
continued global expansion, especially in high-growth markets. Also, the company can
reduce risks by developing new products or entering new industries related to the fast food
restaurant industry. These are the most relevant actions McDonalds can take based on its
SWOT analysis.

References
Hill, T., & Westbrook, R. (1997). SWOT analysis: its time for a product
recall. Long Range Planning, 30(1), 46-52.
McDonalds Corporation (2015). Are genetically modified organisms (GMO)
ingredients in your food?
McDonalds Corporation (2015). Company Profile.
McDonalds Corporation Form 10-K 2014.
Pickton, D. W., & Wright, S. (1998). Whats SWOT in strategic
analysis? Strategic Change, 7(2), 101-109.
Piercy, N., & Giles, W. (1989). Making SWOT analysis work. Marketing
Intelligence & Planning, 7(5/6), 5-7.
Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal
of Marketing Theory and Practice, 54-69.
McDonalds Stakeholders: A CSR Analysis
McDonalds stakeholders affect the firm, especially by way of consumer perception. The
company has a variety of corporate social responsibility (CSR) programs to address its
stakeholders interests. In theory, stakeholders affect business and are affected by business.
This condition points to the importance of McDonalds corporate social responsibility efforts
as a way of optimizing the companys position relative to its stakeholders. As the leading
firm in the global fast food restaurant industry, McDonalds has developed corporate social
responsibility strategies to minimize the negative effects of stakeholders while satisfying
their interests. McDonalds success is partly based on its corporate social responsibility
efforts.

McDonalds corporate social responsibility policy and programs address most


stakeholders to ensure prudent relationships with them. The company includes
stakeholders interests in its CSR efforts, especially in programs for investors
and communities.
McDonalds Stakeholder Groups & CSR Initiatives

McDonalds top stakeholders are its employees and customers. However, the firms
corporate social responsibility status is also subject to the influence of other stakeholders.
The following are McDonalds main stakeholder groups, arranged according to significance:

1. Employees
2. Customers
3. Investors
4. Communities

Employees. McDonalds prioritizes employees as its top stakeholder group. The


interests of these stakeholders include career development and fair
compensation. McDonalds addresses these interests through a number of
training and development programs. For example, the company maintains
Hamburger University, which is a training facility for its personnel. McDonalds
also has a global mobility policy that supports leadership development.
However, the company pays low wages that are almost down to the level of the
legal minimum wage, even when employees keep demanding for higher wages.
Thus, McDonalds corporate social responsibility efforts only partially satisfy the
interests of employees as a stakeholder group.

Customers. McDonalds Corporation views its customers as its second-priority


stakeholder group. The interests of these stakeholders include affordable and
healthful food choices. McDonalds corporate social responsibility initiatives
ensure affordability of products through standardization and supply chain
streamlining. However, the company is widely criticized for the health effects of
its foods. In this regard, McDonalds corporate social responsibility efforts only
partially satisfy the interests of customers as a major stakeholder group.

Investors. McDonalds strives to fulfill the demands of investors as a major


stakeholder group in the business. The interests of these stakeholders include
profitability and growing revenues. McDonalds addresses these concerns
through stable business operations. The company currently has a low but stable
growth rate. The introduction of new products, such as through McCaf, also
helps address such interests. Thus, McDonalds corporate social responsibility
efforts effectively satisfy the interests of investors as a major stakeholder group.

Communities. McDonalds supports communities as one of its main stakeholder


groups. The interests of these stakeholders include community development
support and environmental programs. McDonalds has sustainability and support
programs for this stakeholder group. The Ronald McDonald House Charities
provides financial support for families in need. The firms sourcing policy
prioritizes sustainable production, such as in farms. Also, the McDonalds Global
Best of Green recognizes and rewards innovative environmental ideas and
contributions. Thus, the company has a wide variety of corporate social
responsibility programs to support these stakeholders. McDonalds effectively
satisfies the interests of communities as a stakeholder group.

McDonalds CSR Performance in Addressing Stakeholders


Interests

McDonalds corporate social responsibility initiatives are considerable. They are


effective in addressing the interests of the stakeholder groups of investors and
communities. However, McDonalds only partially satisfies the interests of
employees and customers as major stakeholders in the business. Thus, it would
be better for the company to improve its corporate social responsibility efforts.
For example, McDonalds can improve its compensation strategy to satisfy
employees concerns about their wages. Product innovation for more healthful
foods can also help satisfy the concerns of McDonalds customers.

References
McDonalds Corporation (2015). Sustainability.
McDonalds Corporation (2015). Training and Development.
McDonalds Corporation Form 10-K 2014.
Miles, M. P., Munilla, L. S., & Darroch, J. (2006). The role of strategic
conversations with stakeholders in the formation of corporate social
responsibility strategy. Journal of Business Ethics, 69(2), 195-205.
Peloza, J., & Shang, J. (2011). How can corporate social responsibility
activities create value for stakeholders? A systematic review. Journal of the
academy of Marketing Science, 39(1), 117-135.
Vos, J. F. (2003). Corporate social responsibility and the identification of
stakeholders. Corporate Social Responsibility and Environmental
Management,10(3), 141-152.
Werther Jr., W. B., & Chandler, D. (2010). Strategic corporate social
responsibility: Stakeholders in a global environment. Sage Publications
McDonalds Five Forces Analysis (Porters
Model)

McDonalds position as the global leader in the fast food restaurant market is partly a result
of the firms effectiveness in responding to the Five Forces in its industry environment.
Michael Porters Five Forces analysis model identifies the most relevant external factors that
influence business organizations. In McDonalds Five Forces analysis, the focus is on the
fast food restaurant industry. The environment of this industry interacts with McDonalds to
affect the firms potential and success. Nonetheless, its current global success indicates that
McDonalds remains effective in addressing these five forces and in overcoming related
issues.

McDonalds Five Forces analysis gives insights about the companys strategic
direction. McDonalds strategies must align to the external factors in the global
fast food restaurant industrys environment.

Overview: McDonalds Five Forces Analysis

In this Five Forces analysis, McDonalds experiences the effects of external factors at
varying intensities. The company must implement strategies to meet these external factors
and minimize negative impact. In summary, McDonalds Five Forces analysis yields the
following intensities of the five forces:

1. Competitive rivalry or competition (strong force)


2. Bargaining power of buyers or customers (strong force)
3. Bargaining power of suppliers (weak force)
4. Threat of substitutes or substitution (strong force)
5. Threat of new entrants or new entry (moderate force)

The results of the Five Forces analysis shows that McDonalds needs to prioritize the issues
related to competition, consumers, and substitutes, all of which exert a strong force on the
company. A possible course of action for McDonalds to address these issues is product
innovation. New McDonalds products can attract and keep more customers. Also, this Five
Forces analysis shows that McDonalds can implement higher quality standards to address
competition and substitution in this saturated market.
Competitive Rivalry or Competition with McDonalds (Strong Force)

McDonalds faces tough competition because the fast food restaurant market is already
saturated. This element of the Five Forces analysis tackles the effect of competing firms in
the industry environment. In McDonalds case, the strong force of competitive rivalry is
based on the following external factors:

High number of firms (strong force)


High aggressiveness of firms (strong force)
Low switching costs (strong force)

The fast food restaurant industry has many firms of various sizes, such as global chains like
McDonalds and local mom-and-pop fast food restaurants. Also, most medium and large
firms aggressively market their products. In addition, McDonalds customers experience low
switching costs, which means that they can easily transfer to other restaurants, such as
Wendys. Thus, this element of the Five Forces analysis of McDonalds shows that
competition is among the most significant external forces on the business.

Bargaining Power of McDonalds Customers/Buyers (Strong Force)

McDonalds must address the significant power of customers. This element of the Five
Forces analysis deals with the influence and demands of consumers. In McDonalds case,
the following are the external factors that contribute to the strong bargaining power of
buyers:

Low switching costs (strong force)


Large number of providers (strong force)
High availability of substitutes (strong force)

Because of the ease of changing from one restaurant to another (low switching costs),
customers can easily impose their demands on McDonalds. In relation, because of market
saturation, consumers can choose from many fast food restaurants other than McDonalds.
Also, there are many substitutes to firms like McDonalds. These substitutes include food
outlets, artisanal bakeries, as well as foods that one could cook at home. Based on this
element of the Five Forces analysis, McDonalds must develop strategies to increase
customer loyalty.

Bargaining Power of McDonalds Suppliers (Weak Force)

Suppliers also influence McDonalds. This element of the Five Forces analysis shows the
impact of suppliers on firms. In McDonalds case, the weak bargaining power of suppliers is
based on the following external factors:
Large number of suppliers (weak force)
Low forward vertical integration (weak force)
High overall supply (weak force)

The large population of suppliers weakens the effect of individual suppliers on McDonalds.
This is especially so because of the lack of regional or global alliances among suppliers. In
relation, most of McDonalds suppliers are not vertically integrated. This means that they do
not control the distribution network linked to McDonalds facilities. Also, the relative
abundance of materials like flour and meat reduces suppliers influence on McDonalds.
Thus, this element of the Five Forces analysis shows that supplier power is a minimal issue
for McDonalds.

Threat of Substitutes or Substitution (Strong Force)

Substitutes are a significant concern for McDonalds. This element of the Five Forces
analysis deals with the potential effects of substitutes on firm growth. In McDonalds case,
the following external factors make the threat of substitution a strong force:

High substitute availability (strong force)


Low switching costs (strong force)
High performance-to-cost ratio (strong force)

There are many substitutes to McDonalds products, such as products from artisanal food
producers and local bakeries. Consumers can also cook their food at home. It is also easy
to shift from McDonalds to these substitutes (low switching costs). In addition, these
substitutes are competitive in terms of quality and consumer satisfaction. In this element of
the Five Forces analysis of McDonalds, substitutes are a major issue that the company
must address through approaches like product quality improvement.

Threat of New Entrants or New Entry (Moderate Force)

New entrants can impact McDonalds market share. This element of the Five Forces
analysis refers to the effects of new players on existing firms. In McDonalds case, the
moderate threat of new entry is based on the following external factors:

Low switching costs (strong force)


Moderate capital cost (moderate force)
High cost of brand development (weak force)

Because of the low switching costs, consumers can easily move from McDonalds toward
new fast food restaurant companies. Also, the moderate capital costs of establishing a new
restaurant makes it moderately easy for small or medium-sized firms to affect McDonalds.
However, it is expensive to build a strong brand that could match the McDonalds brand.
Thus, this element of the Five Forces analysis shows that the threat of new entrants is a
considerable issue for McDonalds.

References
Burke, A., van Stel, A., & Thurik, R. (2010). Blue ocean vs. five
forces. Harvard Business Review, 88(5), 28-29.
Dobbs, M. (2014). Guidelines for applying Porters five forces framework: a
set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Grundy, T. (2006). Rethinking and reinventing Michael Porters five forces
model. Strategic Change, 15(5), 213-229.
Maybury, M. T., & Belardo, S. (1992, January). Five forces. In System
Sciences, 1992. Proceedings of the Twenty-Fifth Hawaii International
Conference on (Vol. 4, pp. 579-588). IEEE.
McDonalds Corporation Form 10-K 2014.
Roy, D. (2011). Strategic Foresight and Porters Five Forces. GRIN Verlag.
United States Department of Agriculture Economic Research Service
(2015). Food Service Industry Market Segments.

McDonalds Marketing Mix (4Ps) Analysis


McDonalds marketing mix (4Ps) involves varied approaches that meet business concerns in
different markets around the world. The marketing mix defines the strategies and tactics a
firm uses to reach target customers. McDonalds has corporate standards that its marketing
mix applies globally. The company also uses some variations of its marketing mix to suit the
local conditions of markets. For example, McDonalds promotion focuses on print media in
countries where such media are most popular. The companys effectiveness in
implementing its marketing mix contributes to the leading performance of the McDonalds
brand and business in the international fast food restaurant industry.

McDonalds marketing mix facilitates effective reach to the target market. This
marketing mix supports the companys leading global industry position, as well
as the strength of its brand.
McDonalds Products (Product Mix)

McDonalds provides mainly food and beverage products. This element of the marketing mix
covers the various organizational outputs (goods and services) that a company provides to
its target customers. McDonalds product mix has the following main product lines:

1. Hamburgers and sandwiches


2. Chicken and fish
3. Salads
4. Snacks and sides
5. Beverages
6. Desserts and shakes
7. Breakfast/All-day breakfast
8. McCaf

McDonalds is primarily known for its burgers. However, the company expands its product
mix through time. At present, customers can purchase other popular products like chicken
and fish, desserts, and breakfast meals. This element of McDonalds marketing mix
indicates that the firm innovates new products to attract more customers.

Place/Distribution in McDonalds Marketing Mix

McDonalds restaurants are the most prominent places where the companys products are
distributed. This element of the marketing mix indicates the venues or locations where the
firms products are offered. McDonalds main places for distributing its products are as
follows:

1. Restaurants
2. Kiosks
3. Postmates website and app
4. McDonalds mobile app

McDonalds restaurants are where the company generates most of its sales revenues.
Some of these restaurants also manage kiosks to sell a limited selection of products, such
as desserts. Some kiosks are temporary, as in the cases of kiosks used in seasonal events
and professional sports competitions. In addition, customers can place their orders through
the Postmates website and mobile app. Moreover, the companys mobile apps for iOS and
Android OS let customers claim special deals and find McDonalds restaurant locations. This
element of the marketing mix supports McDonalds intensive growth strategies,
especially market penetration.
McDonalds Promotion (Promotional Mix)

McDonalds promotes its products to attract more customers. This element of the marketing
mix defines the approaches used to communicate with the customers. McDonalds uses the
following tactics in its promotional mix:

1. Advertising
2. Sales promotions
3. Public relations
4. Direct selling

McDonalds advertisements are the most notable among its promotion tactics. The company
uses TV, radio, print media and online media for its advertisements. McDonalds also uses
sales promotions to draw more customers to its restaurants. For example, the company
offers discount coupons and freebies for certain products. In addition, McDonalds public
relations activities help promote the business to the target market. For instance, the Ronald
McDonald House Charities and the McDonalds Global Best of Green environmental
program support communities while boosting the value of the corporate brand. Occasionally,
the company uses direct selling, such as for corporate clientele, local government or
community events and parties. In this element of its marketing mix, McDonalds emphasizes
advertising as its main approach to promote its products.

McDonalds Prices and Pricing Strategy

McDonalds pricing strategy involves price bundling combined with psychological pricing. In
price bundling, the company offers meals and other product bundles for a discount. In
psychological pricing, McDonalds uses prices that appear to be significantly more
affordable, such as $__.99 instead of rounding it off to the nearest dollar. This element of
McDonalds marketing mix highlights the importance of price bundling to encourage
customers to buy more products.

References
Dominici, G. (2009). From marketing mix to e-marketing mix: a literature
overview and classification. International Journal of Business and
Management, 4(9), 17-24.
Goi, C. L. (2009). A review of marketing mix: 4Ps or more? International
Journal of Marketing Studies, 1(1), 2.
McDonalds Corporation (2015). Food.
McDonalds Corporation (2015). Mobile App.
Rahmani, K., Emamisaleh, K., & Yadegari, R. (2015). Quality Function
Deployment and New Product Development with a focus on Marketing Mix 4P
model. Asian Journal of Research in Marketing, 4(2), 98-108.
Van Waterschoot, W., & Van den Bulte, C. (1992). The 4P classification of
the marketing mix revisited. The Journal of Marketing, 83-93.
Yun-sheng, W. (2001). Perfection and innovation of 4P Marketing Mix How
to evaluate 4P Marketing Mix. Commercial Research, 5, 6.
McDonalds PESTEL/PESTLE Analysis &
Recommendation

McDonalds Corporations strategies address issues identified in this PESTEL/PESTLE


analysis. The PESTEL/PESTLE analysis model determines the various external factors that
present opportunities or threats to the business, based on its remote or macro-environment.
In the global fast food restaurant market, McDonalds is focused on economic and
sociocultural factors. Nonetheless, the companys success is indicative of its effective
strategies to deal with all of such external factors. As the biggest fast food restaurant chain
in the world, McDonalds must keep adapting its strategies based on the conditions of its
industry environment.

This PESTEL/PESTLE analysis of McDonalds shows that there are many


opportunities and considerable threats that the firm must address to keep its
viability in the rapidly changing global economy.

Political Factors Affecting McDonalds Business

McDonalds considers the impacts of the political environment on its industry. This aspect of
the PESTEL/PESTLE analysis refers to the effects of governmental action on the remote or
macro-environment of businesses. In McDonalds case, the most significant political external
factors are as follows:

1. Increasing international trade agreements (opportunity)


2. Pending tax reform (opportunity)
3. Evolving public health policies (threat and opportunity)

McDonalds has the opportunity to expand its business based on improved international
trade, which can enhance global supply chains. McDonalds also has the opportunity to
reform its practices and strategies to lessen the impact of taxation on the business without
violating the law. However, public health policy increasingly tends to discourage people from
consuming fast foods from firms like McDonalds. Nonetheless, the company has the
opportunity to address this external factor by improving the healthfulness of its products. In
this aspect of the PESTEL/PESTLE analysis of McDonalds, the political external factors
present opportunities that outweigh threats.
Economic Factors Important to McDonalds

Economic changes around the world influence McDonalds industry environment,


considering its global nature. This aspect of the PESTEL/PESTLE analysis pertains to the
effects of economic conditions and trends on the remote or macro-environment of firms. In
McDonalds case, the following are the most notable economic external factors:

1. Slow but stable growth of the U.S. economy (opportunity)


2. Stable but risky European economies (threat)
3. Slowdown of the Chinese economy (threat)

McDonalds has the opportunity to grow, even slowly, in the American economy, which is the
firms biggest market. However, the current economic conditions in Europe could threaten
McDonalds growth in the region. Also, the slowdown of the Chinese economy threatens the
companys growth in Asia. In this aspect of the PESTEL/PESTLE analysis of McDonalds,
the economic external factors mainly threaten the business.

Social/Sociocultural Factors Influencing McDonalds Business Environment

McDonalds must respond to sociocultural changes in its remote or macro-environment. This


aspect of the PESTEL/PESTLE analysis refers to the social conditions that support or limit
businesses. In McDonalds case, the most significant sociocultural external factors are as
follows:

1. Widening wealth gap (opportunity)


2. Increasing cultural diversity (opportunity)
3. Healthy lifestyle trend (threat & opportunity)

Based on the external factor of the widening wealth gap, McDonalds has the opportunity to
grow because the companys target consumers are mostly from medium and low-income
households. Also, McDonalds has the opportunity to improve its products mix to satisfy a
more diverse target market. However, the healthy lifestyle trend is a threat because many of
McDonalds products are often criticized for their negative health effects. Nonetheless, the
company has the opportunity to improve the healthfulness of its products. In this aspect of
the PESTEL/PESTLE analysis of McDonalds, the social external factors create mostly
opportunities for business development.

Technological Factors in McDonalds Business

McDonalds success partly depends on technological applications. This aspect of the


PESTEL/PESTLE analysis pertains to the impact of technologies and related trends on the
remote or macro-environment of companies. McDonalds must address the following
technological external factors:

1. Moderate R&D activity in the industry (opportunity)


2. Increasing business automation (opportunity)
3. Increasing sales through mobile devices (opportunity)

McDonalds has the opportunity to increase its research and development investments to
improve business effectiveness and efficiency. Also, McDonalds can apply more automation
to maximize productivity, based on the external factor of increasing business automation.
Furthermore, McDonalds can improve its mobile services to tap more consumers via its
website or mobile app. In the technological aspect of the PESTEL/PESTLE analysis,
McDonalds has major opportunities for growth.

Ecological/Environmental Factors

Ecological external factors affect McDonalds consumers and, thus, the companys
performance. This aspect of the PESTEL/PESTLE analysis refers to the environmental
issues in firms remote or macro-environment. In McDonalds industry, the following are the
most significant ecological external factors:

1. Rising interest for corporate environmental programs (opportunity)


2. Increasing emphasis on sustainable business strategies (opportunity)
3. Climate change (threat)

McDonalds can expand its corporate social responsibility strategies to reach even
high performance in addressing environmental concerns. However, climate change remains
a threat because of its negative effects on farms and, thus, McDonalds supply chain. In this
aspect of the PESTEL/PESTLE analysis, the ecological external factors highlight corporate
social responsibility opportunities, although McDonalds also needs to further diversify its
supply chain to address the effects of climate change.

Legal Factors

McDonalds must follow legal requirements imposed on its remote or macro-environment.


This aspect of the PESTEL/PESTLE analysis pertains to the impact of laws or regulations
on firms. The most significant legal external factors for McDonalds are as follows:

1. New legal minimum wage levels in the U.S. (threat)


2. Local health regulations in workplaces and schools (threat)
3. Animal welfare regulation (threat & opportunity)
McDonalds faces the threat of higher minimum wages, which lead to higher costs and
prices. Also, local health regulations impacting food service in workplaces and schools
could reduce the companys revenues from these areas. In addition, McDonalds must
address animal welfare regulatory effects on its supply chain. For example, the company
can implement new policies to ensure animal welfare among meat producers. McDonalds
faces mainly threats based on legal external factors in this aspect of the PESTEL/PESTLE
analysis.

McDonalds PESTEL/PESTLE Analysis Recommendations

This PESTEL/PESTLE analysis of McDonalds Corporation shows that there are significant
opportunities for business growth. The company can capitalize on technological strategies to
enhance efficiency and productivity. McDonalds can also improve product quality to address
sociocultural and political external factors about health. This PESTEL/PESTLE analysis also
indicates that the company must deal with a number of significant threats. McDonalds can
address economic external factors by expanding into other high-growth economies, such as
Southeast Asian countries.

References
Gillespie, A. (2007). PESTEL analysis of the macro-
environment. Foundations of Economics, Oxford University Press, USA.
Housing Industry Association (2011). An Introduction to PESTLE Analysis.
HIA Ltd.
McDonalds Corporation (2015). Company Profile.
McDonalds Corporation Form 10-K 2014.
Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis.
PESTLE Analysis. Business Horizons, 17(5), 27-38.
Roper, K. (2012, November). BIM Implementation: PESTEL Drivers &
Barriers (Cross-national Analysis). In World Workplace 2012. IFMA.
United States Department of Agriculture Economic Research Service
(2015). Food Service Industry Market Segments.
McDonalds Operations Management, 10
Decisions, Productivity

McDonalds Corporations operations management (OM) supports the companys position


as the largest fast food restaurant chain in the world. The 10 decisions of operations
management represent the various strategic areas of operations that must be coordinated
for optimal productivity and performance. McDonalds global business entails a wide variety
of strategic needs for its operations management, such as strategic HRM and supply chain
development. McDonalds also needs to address the impacts of tough competition with firms
like Subway, KFC and Wendys. To do so, McDonalds must apply suitable policies and
strategies in all the 10 decision areas of operations management.
McDonalds maintains effective policies and strategies for the 10 strategic
decisions of operations management to maximize its productivity and
performance as a global leader in the fast food restaurant industry.

McDonalds Operations Management, 10 Decision Areas

1. Design of Goods and Services. McDonalds goal in this strategic decision area of
operations management is to provide affordable products. As such, the serving sizes and
prices of its products are based on the most popular consumer expectations. However,
some McDonalds products are minimized in size to make them more affordable.

2. Quality Management. The company aims to maximize product quality within


constraints, such as costs and price limits. McDonalds uses a production line method to
maintain product quality consistency. Consistency satisfies consumers expectations about
McDonalds and its brand in this strategic decision area of operations management.

3. Process and Capacity Design. McDonalds process and capacity design is


centered on efficiency for cost-minimization that supports the companys strategies. This
strategic decision area of operations management focuses on maintaining process
efficiency and adequate capacity to fulfill market demand. At McDonalds, the production line
method maximizes efficiency and capacity utilization.

4. Location Strategy. McDonalds goal in this strategic decision area of operations


management is to establish locations for maximum market reach. McDonalds marketing
mix includes restaurants, kiosks, and the companys website and mobile app as venues.
Through these locations/venues, McDonalds reaches customers in traditional and online
ways.

5. Layout Design and Strategy. McDonalds uses practicality for this decision area
of operations management. The strategy involves maximizing space utilization in
restaurants and kiosks, rather than focusing on comfort and spaciousness.

6. Job Design and Human Resources. McDonalds human resource strategies


involve training for skills needed in the production line in restaurant kitchens or production
areas. For this decision area of operations management, individual and organizational
learning are also emphasized to support McDonalds organizational culture.

7. Supply Chain Management. The firms global supply chain supports its various
locations around the world. McDonalds has a strategy of supply chain diversification for this
decision area of operations management. Such strategy involves getting more suppliers
from different regions to reduce McDonalds supply chain risks.

8. Inventory Management. McDonalds goal for this strategic decision area of


operations management is to minimize inventory costs while supporting restaurant
operations. The company does not directly sell products and ingredients to its restaurants.
Instead, local and regional intermediaries and distributors coordinate with McDonalds
restaurant managers to manage their inventory.

9. Scheduling. McDonalds uses corporate conventions for scheduling, based on local


market conditions and laws, as well as supply chain needs. For example, the companys
strategy involves regular and seasonal schedules to address fluctuations in local market
demand. Thus, in this decision area of operations management, McDonalds is flexible and
adapts to local market conditions.

10. Maintenance. McDonalds lets restaurant managers or franchisees select


maintenance service providers. However, for kitchen/production equipment, McDonalds
Corporation also has certified/approved maintenance providers. Thus, the company
addresses this strategic decision area of operations management through local and
corporate control.

Productivity at McDonalds

In the 10 strategic decisions of operations management, McDonalds works toward


maximum productivity in all of its business areas. The following are some notable
productivity measures or criteria used in McDonalds business:

1. Order fulfillment rate (McDonalds restaurant productivity)


2. Stockout rate (Intermediary/distributor productivity)
3. Timely delivery rate (McDonalds delivery productivity)

References
Lawrence, K. D., & Weindling, J. I. (1980). Multiple goal operations
management planning and decision making in a quality control department.
In Multiple Criteria Decision Making Theory and Application (pp. 203-217).
Springer.
Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green
Operations Management: An Integrated Perspective. INTECH.
McDonalds Corporation Form 10-K 2014.
Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for
strategic planning in operations management: a framework for executive
decisions. International Journal of Management and Decision Making, 9(3),
310-327.
Schrunder, C. P., Galletly, J. E., & Bicheno, J. R. (1994). A fuzzy, knowledge
based decision support tool for production operations management. Expert
Systems, 11(1), 3-11.
Verdaasdonk, P. (1999). Defining an information structure to analyse
resource spending changes of operations management decisions. Production
Planning & Control, 10(2), 162-174.
Wild, R. (1983). Decision-making in operations management. Management
Decision, 21(1), 9-21.

S-ar putea să vă placă și