Essay on "Mcdonald's Corporation How Recent Economic Trends"

Essay 8 pages (2505 words) Sources: 4

[EXCERPT] . . . .

McDonald's Corporation

How recent economic trends are influencing the business

The recent global financial crisis that hit America the hardest affected almost all industries and sectors, including the fast food industry. However, looking at the financial performance of McDonald's the company only suffered slight decrease of revenue in 2007, but recovered the following year and has continued to show a positive growth. This means that strategies adopted by the company were successful. This section will examine these strategies and the role of the role human resource management plays in helping the company achieve its business goals.

McDonald's marketing strategy

As stated in the first part of this paper, McDonald's is the biggest fast-food restaurant, with over 30,000 restaurants in 119 countries. The company serves about 58 million customers daily. The success of the McDonald's can be attributed to its market strategies and human resource that have proved to be successful (McDonald's, 2012).

The general strategic plan of McDonald's is referred to as "Plan to Win." This strategic plan is focused on making McDonald's to be the best fast-food restaurant and not the biggest fast-food chain. Implementation of several strategic initiatives under this plan has resulted in superior McDonald's experiences entailed in the five aspects of remarkable customer experience, product, people, place, price and promotion (McDonald's, 2012) at the same time, McDonald's integrates geographical strategic plan. For example in the U.S.A. market, the company strategic plan has continued to emphasize breakfast, beverages as well as convenience. However, in European markets, the company applies a tiered menu strategy. The menu has premium selections, usual menu, and daily special offers. This is complemented with new food items and few promotions (McDonald's 2011 Annual Report). Within the Middle East, Asian and African markets, the company's strategic plan is centered on convenience, core menu value and breakfast. McDonald's general strategic plan in place and geographical plan has ensured its success in these markets.

Organizational strategies

McDonald's has formulated various organizational strategies that it uses. A number of these strategies entail superior restaurant operations, menu variety, convenience and more importantly, being customer focused. The company plans to remain successful in 2012 and beyond through leveraging main consumer demands, its international experience and its strength in innovation and brand name (McDonald's 2011 Annual Report). One approach the company uses to increase its financial performance is by fully exploiting the efficiency of its operations. Indeed, the McDonald's has strategically focused on expansion of menu and beverages as a way of increasing its self. Drive-through pick-up is also targeted for improvement in efficiency to ensure that speed is increased. In addition, many McDonald's restaurants close late to serve late nighters customers. The company operates fully owned restaurants, which offers competitive edges for the company, because of the global brand name their posses. Other organizational strategies taken by McDonald's include branded affordability, management leadership style and human resource strategies (McDonald's 2011 Annual Report).

The company's strategic plan has influenced its marketing initiatives by creating superior brand intelligibility. McDonald's wants its brand image to be recognized globally. Throughout its markets, McDonald's is making it simpler for its customers to experience excellent services. McDonald's continue to introduce drive-thrus to china and Russia, whose populations are slowly increasing their mobility. In the U.S.A. And Canada markets, McDonald's is increasing the efficiency of drive-thrus (McDonald's 2011 Annual Report). Similarly, McDonald's increased the number of McCafes in Germany market. Globally, McDonald's has renovated about 10,000 restaurants aimed at improving the value for customers (McDonald's 2011 Annual Report).

Marketing mix strategy

The marketing mix strategy adopted by McDonald's to attain its marketing targets includes longer operating hours, maximizing efficiency of drive-thrus, and daily value meals. The company as well employs marketing promotions. For example, to improve its lows sales in 2007, the company used Shrek movie to promote its children's food items (McDonald's, 2012). In addition, the company is using is improving its brand image by transferring innovative ideas across its markets and using its slogan of "I'm lovin'it" to expand its relationship with its customers (McDonald's 2012).

The company has definitely been successful in its strategies that it has adopted and implemented.

Competitive base

McDonald's Corp. competes in a very competitive and challenging industry by offering need-satisfying products and services to its customers. Within this industry, ineffective competitors with unsuitable strategies normally fail (Kerin). To survive the competition, McDonald's applies an effective competitive approach to ensure that it remains successful. Though, the company competes on various bases such as cost, and nutrition, its strongest base is 'making customer happy' (financial report). A few years ago, the company made radical changes by the induction of "Made for you system (Chase).

Speed

As stated before McDonald's competes on various bases with the main of making its customer happy, thus, McDonald's vision, which aims at "providing fast, friendly and accurate service" (McDonald's, 2012) McDonald's understands that the certain targets are required to assess the performance in view of set targets. To attain efficient service time, McDonald's uses established, standardized training procedures for its workers as well as new drew-thru designs to cut service time. A part from speed, McDonald's as well uses low cost to gain competitive advantage.

Cost

McDonald's understands that, for a company to provide high quality products and services at low price, it has to have efficient processes all through its operations, and it has managed to do this. Once more, this is established in its vision that states that "we will be the most efficient provider so that we can be the best to the many people" (McDonald's, 2012). This is provided using different ways, including:

Value meal: this strategy gives a discount to a customer who purchases a sandwich, French flies and beverage together. McDonald's offers its customers up to twelve value meals on their breakfast and lunch menus (McDonald's 2012).

Dollar menu: McDonald's offers its customers a dollar menu where certain menu items are priced at just $1.00 each. This offer was particularly successful during recession, and it remains successful (McDonald's 2012).

Special menus: different McDonald's restaurants offer varying daily special items on their menu. For instance, "0.55hamburger Mondays" where the hamburger is offered at a low price, this form of promotion has proved to be very popular (McDonald's 2012).

Nutrition

The third competitive base of McDonald's is nutrition. McDonald's knows that customers are increasingly seeking healthy foods. Thus, McDonald's has lately focused on promoting its new nutritious food items. For example, it offers Go-Active meals in its USA restaurants and packed fresh fruits in UK (McDonald's, 2012).

Operational strategy changes

Made for you,

Initial, McDonald's used to prepare a certain number of sandwiches and place them in a warming container and wait for customers to come and buy. This meant that the management had to use precise prediction to get the number of sandwiches that would be required, because if the sandwiches remained unsold, then it means the company would suffer losses. On other hand, few sandwiches meant that customers will miss out, and thus will have to wait long to receive their sandwiches. However, Made for You System, a customer gives an order and this information is send directly to the kitchen were its prepared in less than five minutes and send to the food loading section, where other items like French fries are added and the order delivered to the customer.

Revitalization plan

In the past, McDonald's concreted on opening more outlets to increase its sales. However, since recession, the company now focuses on increasing sales volume through current restaurants. This strategy aims at reducing expenditure and increase revenues and share capital (McDonald's 2011 Annual Report). The main objectives of revitalization strategy are to persuade existing customers to buy more, attract new customers and create brand loyalty.

Speed

An important aspect of quality management is reducing the time customers' waits before getting their orders. The company has continued to embrace information technology to improve accuracy and efficiency. For example the company uses Total Time in Line (TTL) to measure the time a customer waits in line after he orders until when he receives his order. The target of the company is 90 seconds, which it has achieved (McDonald's 2011 Annual Report).

In summary, the company has taken various operational and organizational strategies that enabled it to retain and even increase its market share in the very competitive industry of fast food.

The role HRM plays in helping McDonald's achieve its business goals

Chase, et al., (2004) posits that organization implement varying approaches and strategies to manage their employees, basing on how an organization competes within the industry. Chase, et al., (2004) points out that there are three major strategies to gain competitive advantage, these are quality, innovation and cost. Thus, strategies that apply quality and innovation tend to be linked with committed employees, while organizations that use cost as a competitive advantage are linked with control. McDonald's seeks control more than commitment. Control at the company is not simply attained through machines, physical design of the restaurants, direct supervision,… READ MORE

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