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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
effectiveness in attaining the aims in its mission statement and vision statement.
McDonalds vision statement is as follows: Our overall vision is for McDonalds to become a
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.
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.
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 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 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.
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.
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.
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 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.
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 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:
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 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:
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:
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.
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
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 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
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.
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:
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:
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.
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:
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.
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.
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:
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.
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:
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
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McDonalds Corporation Form 10-K 2014.
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United States Department of Agriculture Economic Research Service
(2015). Food Service Industry Market Segments.
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:
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.
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 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
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McDonalds PESTEL/PESTLE Analysis &
Recommendation
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:
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
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.
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.
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:
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
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
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McDonalds Operations Management, 10
Decisions, Productivity
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.
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.
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.
Productivity at McDonalds
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