Introduction to McDonald's
McDonald's is one of the largest and successful fast food companies in the world. It established its business operations in the year 1955 and has been providing best fast food in the world. McDonald's was originally started in USA but now they are serving 118 countries with 31000 restaurants in the world (Arnold, 2003). On an average, 1 in every 4 American eats in McDonald's. From decades, American citizens enjoy fast food chain. Quick services and quality products are the core focus of the generation today (Howard, 2009).
McDonald's is facing fierce market competition from retail food giants such as Domino's, KFC, Burger king, Subway, Pizza Hut etc. In addition to this, high risk of new market entrant is also posing high business challenges for the business. However, the cited company has adopted the process of continuous improvement and they develop new products and concepts which provide the customers with more personal experience and also give value to their money (McDonald’s Corporation UK, 2008). In the current market, competition has been increased and the basic problem is small food centres are copying the idea.McDonald's has adopted measures of continuous innovation and development to enhance consumer and experience for the products and services offered by the business unit in the present competitive market. The stated strategy has helped the company in building a competitive advantage within the economy.
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Global strategy of McDonald's
McDonald's incorporates various strategies which help to derive wide success measures. It operates on continuous emergent strategies by analyzing the environment on global and local levels, mainly by introducing new items and defending its existing products (Mcdonalds, 2015). The strategy of McDonald's is to remain competitive in the global market while maintaining an edge in the economy. Products like BIG MAC and EGG Muffin are the successful innovative products of the company and they are also very successful in the market. These products have high demand in the consumer market (Shen and Xiao, 2015). Another successful innovative idea was the happy meal which captures children market. The menu of the company is consistent and it includes variety of hamburgers, cheeseburgers, fries, desserts, shakes etc. In addition, there are also products like salad and juices and chicken based snacks which adds spark to the monotony. It also offers breakfast meals which helps the business to compete with the brands like subway. Moreover, the company regularly tests its new products and sells wide range products on offers (Pinedo, 2013). The target market for McDonald's is children and young individual. There are some issues raised against the company however company is in the process of innovation and competition, the organization is improving the performance and the company have used multiple strategies to attain the competitive advantage in the market. There are certain issues about the company which needs to be developed.
The mission statement of the firm is to become modern and progressive burger company which delivers modern customer services and experience. The company focuses on delivering greater taste and high quality along with the world class experience to their customers so that they can feel valued and welcome. Moreover, to sustain the competitive advantage, McDonald's has divided its strategy into three forms (customer value, customer convenience, optimal operations) (Sharma, 2013). The company also improves its manufacturing system so that it can develop its overall operations of the company and also give support to the staff.
Hence, it can be effectively analyzed that the global business strategy of McDonald's is to manage competition while managing its competency through innovation and development as well as strategic planning.
Value added services
In order to achieve the customer value, the company is focusing on real time value and information which will help in redefining menus and prices for enhancing customer preferences. To achieve the customer convenience, major focus of the business is on the improving stores with advanced facilities like WIFI, relaxing environment and entertainment sources (Jones, 2014). McDonalds is a highly flexible organization and its major strategy while entering the foreign market is product differentiation and product modification. Think global act local is the strategy which has helped the business in delivering high value to consumers of every part of the world. Teriyaki burger in Japan, Mc tempeh in Indonesia and Mc Lox Salmon in Norway are the clear examples of product modification and value orientation approach of the company (Essays, 2013).
By adopting the globalization strategy, the company can transfer their global products into a new market with new packaging and prices and this results in increasing the appeal of product by consumers and retailers. Quick and well defined distribution has helped the business in claiming the tag of the fastest food service chain of the world. Different promotional strategies are also used by the company to attract more people towards the business. These promotional tactics include internet cards, concert tickets, CDs, t-shirts, caps etc. The strategy represents McDonald's as family oriented image (Bassous, 2013.). McDonald’s business strategies was successful because the general focus of the strategies was people and in order to make strategies successful by adhering to people needs and preferences. The business unit clearly represents that customers are their utmost priority and because of that McDonald's has merged with the culture where they are selling. This has helped the business in delivering valuable services to its consumers globally.
Issues Faced By the company
McDonald's has been targeted continuously for its unhealthy menu and issues related with the same. There are issues raised against the company regarding the products contributing towards weight gain. A study which was published in lancet medical journal shows that people who are eating at fast food restaurant are more likely to gain weight than those who do not eat there regularly (Crouch, 2004). Moreover, there are many comparisons of subways and McDonald's product reflecting calorie content and health issues related to the product. These issues have caused a direct impact on brand image of the business. The company faced a direct drop in consumer demands as well (McDonald’s is testing a ton of new ingredients including chorizo and Greek yogurt, 2016). In order to deal with the issues, McDonald's slim down its menu and made changes in its deals. The changes were the part of business strategy. Strategic direction of the company was to identify, scale and implement the ideas which match the customers’ expectations, changing needs and preferences (Watson, 2006).
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Competitors of McDonald's
According to the market realistic report, the biggest competitors of McDonald’s are Burger King, Subway, and Starbucks, Wendy’s, Yum Brands, Popeye and Chipotle. These global food chains are posing high threat to the sustainability and growth of the company. Though McDonald's is a market leader and has developed strong supply chain and business tactics in the economy, yet it lacks in valuation. The company has low valuation as compared to Burger King (McDonald's doubled the price of a popular promotion and many customers are devastate, 2016). This has developed high impact on financial viability and global positioning of the business. Intense rivalry also decreased the profit margin of the fast food industry and there are lots of substitutes available in the market. Despite of all this competition, McDonalds is still the market leader. The company competes on international, national and regional bases on the basis of price, services, products, quality and convenience (Watson, 2006). Food industry is developing and growing widely and the barriers to entry of new entrant are extremely low. In addition, consumers make choices on the basis of price, quality and taste so that buyer have complete power. Hence, rising local and small scale competition also has a direct impact on business growth and development.
Apart from this, cultural background, changing choices of the consumer, market changes, and new trends in the industry will continue to emerge. While taking this into consideration McDonald's have to design and implement new strategies. The company is required to undertake the market research to get the update of the market and latest trends which are going around In addition; identifying new segment to capture will also help the business in developing competitive edge (Sharma, 2013). Market research is a useful tool for the company to obtain industry data and use in strategic planning and development. The company also needs to apply the integrated marketing to advertise themselves in different ways. This will help the company in making best utilization of counter information. Thus, McDonald's will be able to combine the forms of communication with the core strategies to gain more marketing advantage. Integrated marketing also enable it to find out the most appropriate method of communication to maintain the good relationship with the customers. Business unit can maximize the use of mass media, direct and online marketing with the use of integrated marketing strategy.
McDonald's is quite successful in fast food industry with efficient strategies and quality standard products and because of it has enabled to gain competitive advantage. It can be witnessed because of the international market growth of the company. The organization is also successful in entering new market and gaining the market share such as china. With the help of product modification, the company is able to get customer satisfaction. Well there are some other remarkable things which McDonald's has adopted to gain the support of local community which is the basic reason of its success
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