Good Strategic Management: Case Of McDonald’s Essay Example
A U.S. based corporation, McDonald’s is the leading international food chain of the world which was established in 1940. Today, operating with 35,000 different outlets in more than 100 countries of the world, the company serves almost 70 million customers on daily basis.
Impact of Globalization and Technology
Figure 1: Diversified Product Portfolio of McDonald’s
Globalization has created many opportunities for McDonald’s in many different forms including the creation of fast food culture in many part of the world. According to a survey, almost 40 percent American food are consumed outside the country, which allows McDonald’s to cater the target market of around 70 million consumers regularly. However, in America, after the introduction of McDonald’s, almost one fourth of the American people dine out in fast food restaurant on daily basis (Duffey, Gordon-Larsen, Jacobs, Williams & Popkin, 2007). On the other hand, due to globalization, the firm has extended its menu by adding variety of cuisines according to the need of different culture and consumer preferences such as healthy drinks, salads and coffees (Mourdoukoutas, 2012). Hence, diversifying its portfolio has helped McDonald’s to improve its market share. Figure 1 shows some of example of its extension of menu in different categories.
Moreover, in order to attract more potential consumers, technological advancement plays a vital role due to which McDonald’s has been able to improve the efficiency of its operations as well as widespread advertisement. In addition, it allows firm to reduce the cost which further helps to offer its menu in comparatively low prices. Also, due to technology, the company can better forecast the future demands to add more items in the portfolio. However, introduction of internet terminals, web-based games for children and Wi-Fi hotspots attract many people to visit the restaurants as they can easily access internet and do many important work and activities while eating.
Industrial Organizational Model
Figure 2: Industrial organizational model
Industrial organizational model refers to limit competition and create barriers for new entrants in a highly segmented market through the use of different tactics such as production and transaction cost, strategic government alliance and effective information of advertising. McDonald’s works in the industry where it has to face oligopolistic competition from few famous brands including Burger King, YumBrands and Wendy’s. However, due to the first mover advantage of introducing fast food culture in the industry, it limits competition through putting significant barriers on new entrance which helps firm to gain high share of fast food industry. Moreover, using game theory, McDonald’s can predict and determine the decision and moves of limited big player in the industry. As a result, it helps firm to make efficient strategies to make better return in the market.
Figure 3: Resource-Based Model
According to resource-based model, there are two aspects including capabilities and resources that help any organization to achieve superior performance. The diversified product portfolio of McDonald’s is its core competency through which, it is able to achieve competitive advantage over its rivals. When it comes to the profitability of the firm, McDonald’s takes its workforce as main resource to convey its objectives and build strong brand image. Employees are moved from different location to gain more experience of working environment. Moreover, the company uses a set of manual due to which, it is able to guide each of its employees regarding the practice of standardized system. McDonald’s has also made integration with its suppliers through which it is able to minimize its cost and improves the operation including delivery timing. Therefore, through reduction of cost and attract more customers help McDonald’s to enjoy above-average return in the industry.
Influence of Mission and Vision Statements on Firm’s Success
In order to become successful in fast food industry, customer satisfaction is the most important factor. The mission of McDonald’s is to be the most favorite place and way to eat for customer through delighting their every moment by their matchless services, quality, cleanliness and value. Therefore, their customer oriented mission helps the firm to earn the trust of millions of people through serving in safe and healthy environment. Moreover, due to quality and diversity of food according to culture such as vegetable menu, breakfast and salads allowed McDonald’s to increase its sales almost every year. On the other hand, due to the vision statement of the company to become the most quick service providing restaurant around the globe, it has practiced the advanced approach of operations since its inception. In order to satisfy its customer, McDonald’s has adapted advanced technologies and promoted corporate culture which makes sure the fastest delivery of orders. As a result, the firm is able to improve its performance as well as build better customer relationship.
Contribution of Stakeholder in Firm Success
The term stakeholder refers to the people who have direct or indirect interest in the organization. The stakeholders of McDonald’s are one of the most important assets of the company which contribute to the success of organization the most. The number of McDonald’s stakeholders includes the employees, suppliers, franchisers, investors and non-governmental organizations. Through providing adequate training to employees under its Staff Training Program, the company is able to gain the trust and commitment of its employees (Lashley, D'Annunzio-Green, Maxwell, & Watson, 2002). Moreover, promoting the team-based organizational culture in each of its store helps firm to improve the efficiency of its operations. Hence, the employees can easily communicate and corporate for the fulfillment of the orders successfully.
McDonald’s uses unique strategy of first making it partners stable through elimination of franchise charges which helps McDonald’s in the long term survival of the restaurants. On the other hand, in order to get right quality of raw material on right time, the firm has fixed suppliers who make sure the delivery of fresh vegetables to the restaurants. Moreover, the company has also done vertical integration with many of its suppliers including beef and milk which is now brought from its own farms. As a result, it allows the firm to ensure the high quality as well as reduce its cost.
After the analysis of the facts in this report, it is analyzed that the globalization and technological advancement has contributed the most to increase the market share of McDonald’s. Moreover, the key resource and stakeholder of the firm is its employees who make to achieve its mission and vision statement through maintaining quality of food and speedy services.
Mourdoukoutas, P. (2012). McDonald’s Winning Strategy, At Home and Abroad. Forbes. Retrieved 12 January 2015, from http://www.forbes.com/sites/panosmourdoukoutas/2012/04/20/McDonald’s’s-winning-strategy-at-home-and-abroad/
Duffey, K. J., Gordon-Larsen, P., Jacobs, D. R., Williams, O. D., & Popkin, B. M. (2007). Differential associations of fast food and restaurant food consumption with 3-y change in body mass index: the Coronary Artery Risk Development in Young Adults Study. The American journal of clinical nutrition, 85(1), 201-208.
Lashley, C., D'Annunzio-Green, N., Maxwell, G. A., & Watson, S. (2002). The benefits of training for business performance. Human resource management: International perspectives in hospitality and tourism, 104-117.