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McDonald’s Business Strategies

McDonald’s Business Strategies

Production and Purchasing Strategies

To remain as competitive in the fast-food industry as it is today, McDonald’s has employed and adapted some effective production strategies. Their peculiar strategy includes the following elements. Permanent set of dishes - some basic offers in McDonald’s menu have been stable for years and have never changed, for example, they include a cheeseburger, hamburger, and Big Mac. Even after the introduction of newer items, these dishes have remained in the menu. Through adopting this strategy, the company ensures that its loyal customers can always find something familiar in the menu.

In addition to the permanent products, McDonald’s employs the temporary product strategy; from time to time, the company introduces new items into their menu so that every time customers visit a restaurant, they can have the option of trying something new (Mattern, 2011). An example of this is the Big Ocean burger that was offered seasonally back in 2007.

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According to its local product development and adaptation strategy, McDonald’s operates many restaurants internationally. In each country, the company offers new dishes for every market in order to satisfy the taste of the locals. The McLobster is a good example that the corporation developed in New England and some parts of Canada to meet the demand from the lobster sandwich lovers. McDonald’s also uses an adaptation strategy for modifying national or regional dishes in order to satisfy the tastes of the local population. In such a manner, for example, in India, the Big Mac is made of vegetables and other ingredients that replace beef (McDonald’s Corporation, 2012).

Today, the fast-food industry is overcrowded meaning that it is highly competitive and demanding. This extreme competition has caused a lot of pressure on McDonald’s to re-examine how the company manages its suppliers and supply base. In this regard, building partnerships with big suppliers at negotiable prices is an excellent purchasing strategy for the company as it can cut on costs and get raw materials in time.

Human Resources and Information System Strategies

When it comes to HR, McDonald’s strategic framework is to encourage a higher level of the employee commitment and customer satisfaction through the execution of the Restaurant People Strategy. The company is also geared to providing their employees with a positive working experience by treating them respectfully complying with the relevant employment and labor laws. Giving rewards, retaining the staff, and nurturing employee talents is also among the main strategies of McDonald’s, which aim to develop a strong employment brand that will not only build respect for the corporation in the industry but also support creativity. McDonald’s believes that its success hinges on the employees (Siddhanta & Gopal, 2014).

In terms of embracing new technologies, McDonald’s has always been at the forefront. Since the company serves a large number of customers every day, manual calculations and orders are impossible. Therefore, it has been using different information systems in order to serve customers in a faster and more efficient way. These information systems help in collecting, storing, analyzing, and disseminating data for any particular purpose. Examples of the information systems being used by McDonald’s are the point of sale system, touch interface operating system, and management information system among many others. The purpose of these systems is to reach out to more customers as quickly as possible. Moreover, the company effectively incorporates new technological trends such as Wi-Fi and reaching its clients, especially the youths, via popular social media platforms. Consequently, these information systems strategies allow McDonald’s attract more clients and understand their needs.

McDonald’s SWOT Analysis

McDonald’s SWOT Matrix

Strengths

Weaknesses

  1. Extensive geographical and demographical presence.

  2. Advertising budget of $2 billion.

  3. Adoption of local menus.

  4. Partnership with the best brands.

  5. Targeting children.

  6. Management and franchise network support

  1. Lack of differentiation.

  2. Unhealthy food menu.

  3. Negative publicity.

Opportunities

Threats

  1. Rise in the demand for healthy foods.

  2. Dynamic customer habits.

  3. Home meal delivery.

  4. Increasing number of franchises.

  5. Company’s commitment to providing health-conscious meals.

  1. Stiff competition.

  2. Food contamination.

  3. Saturated fast food markets

  4. Healthy eating trends

  5. Currencies fluctuations

Strengths

Extensive geographical and demographical presence. McDonald’s operates 34,000 restaurants worldwide; they serve more than 69 million consumers every day. The company is present in 119 countries all over the globe with the prospects of penetrating into new markets. This intensive geographical coverage gives it an added advantage over other fast food companies. It is one of McDonald’s most crucial strengths (McDonald’s Corporation, 2012).

An advertising budget of $2 billion. McDonald’s as a company spends a lot of money on advertising. The sum is more than that of its four greatest competitors combined.

Adoption of local menus. With the penetration into new foreign markets outside America and Europe, McDonald’s extends its service to diverse cultures around the world that have very different food tastes. Adapting to these various tastes remains McDonald’s enormous strength. Partnership with the best brands. In most of its restaurants, McDonald’s offers only the most popular brands that have won the hearts of many consumers, such brands include Heinz Ketchup, Coca-Cola, Dannon Yogurt, and many others.

Targeting children. The company has been successful in targeting children by offering attractive playgrounds and toys alongside its meals and adverts. These steps have helped the company attract more customers; thus, it remains one of its core strengths.

Management and franchise network support. 80% of McDonald’s restaurants are owned by independent franchisees. This strategy makes it easier for the company to focus on perfecting the service system and marketing strategies.

Weaknesses

Lack of differentiation. With the current competition in the market, McDonald’s has not managed to differentiate its products from those of its competitors. The company, therefore, cannot gain some extra markets; instead, it has opted to compete in terms of the price rather than providing additional features.

Unhealthy food menu. The current global trend is choosing healthy foods. However, a big part of McDonalds’ menu consists of unhealthy dishes and drinks. A menu of the kind attracts the negative attention of many organizations that fight obesity; thus, the popularity of the brand significantly reduces.

Negative publicity. There are many criticisms on McDonald’s for offering unhealthy foods that cause adverse health conditions, for example, obesity. The company is also intensively criticized for targeting young children.

Opportunities

The rise in demand for healthy foods. With the current trend of many people switching to the rightlifestyle, McDonald’s can improve its menu by adding more healthy foods to it. With this step, the company will be able to turn its weaknesses into strengths. Today, McDonald’s is at the forefront of seizing the new opportunity, and it is fulfilling its plan of opening vegetarian restaurants in India (“McDonald’s Case Study,” 2012).

Dynamic customer habits. When customers change their habits, new requirements arise, and they should be met by businesses. McDonald’s has been doing great in studying and satisfying these new expectations. The company has been successful in introducing new services such as McExpress, McCafe, and McStop restaurants in order to meet the emerging customer needs. Home meal delivery. There exists a new market of people who want to dine in the comfort of their homes. Therefore, McDonald’s can exploit this untapped opportunity in order to reach more customers.

Increasing number of franchisees. This opportunity exists since the company has a strong own brand. Therefore, because of the goodwill of the company, more restaurants can be opened and gain instant popularity. Moreover, McDonald’s commitment to providing health-conscious meals has created an excellent opportunity for it to attract even more customers from all over the world.

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Threats

Stiff competition. It is a considerable threat to McDonald’s as it faces very stiff competition from other food chains such as KFC, Burger King, and other mid-range local restaurants offering the same meals but selling them at a far lower price than McDonald’s does.

Food contamination. This issue remains a crucial threat to McDonald’s because it can cause an epidemic as raw food is always handled in mass and then, through a distribution center, it is canalled to every part of the country.

Saturated fast food markets. In most developed countries, there are numerous fast food chains that offer similar products. This issue makes competition in the industry very stiff and can affect McDonald’s sales and its financial reports.

Healthy eating trends. Most foods in McDonald’s menu are deemed unhealthy. National governments and public organizations are fighting against unhealthy eating so as to curb some health issues such as obesity.

Currencies fluctuations. Most of the businesses operated by McDonald’s are foreign. The profits generated by these enterprises are sent back to the United States and converted into US dollars. Therefore, they are affected by the exchange rates. In the financial year of 2012, McDonald’s profit was adversely impacted by the dollar appreciating (McDonald’s Corporation, 2012).

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