Mc Donalds - Part 2 - McDonalds Essay Example
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McDonalds is the global market leader in the fast food industry. McDonald’s primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes and desserts. More recently, it also began to offer salads, wraps and fruit. Many McDonald’s restaurants have included a playground for children and advertising geared toward children, and some have been redesigned in a more natural style, with a particular emphasis on comfort and the absence of hard plastic chairs and tables (McDonald’s, 2008).
The business began with two brothers. In 1937, Dick and Maurice McDonalds opened a small drive-in restaurant east of Pasadena, California. They served hotdogs and shakes. This led to the creation of a bigger drive-in which operated successfully and by 1948, the brothers had a made a fortune they never expected (Gary and Audre, 2001). The extraordinary growth of McDonalds has greatly to do with their franchising system, more than half of McDonalds. Go into McDonald’s today, and you see a complex, well-operated business system operated by ordinary people.
Some of the problems and challenges facing the company is the increase in competition, poor management, bad marketing, and lack of response to the changes in the needs of franchises and customers. This resulted in the strategic issues that needed to be implemented to continue growing success for the company. Going global is critical in the expansion of McDonalds. Over the past couple of decades, the major chains have also begun to expand into the global marketplace and have opened franchises up around the world. McDonalds currently operates in over 120 countries around the world with over 30,000 stores (Oppapers.com, 2007).
McDonald’s employs more people than the mighty steel industry. It is one of the world’s largest employers. McDonald’s is the quintessential symbol of American capitalism.
McDonald’s management has a vision that encompasses employees and the surrounding communities. They believe that satisfied employees excel in quality customer service. McDonald’s also maintain commitment to stakeholders, and the environment. McDonald’s corporate culture is to do the right thing for their employees, the community and the customers they serve; this commitment is just as important to them as serving hamburgers and french fries. In addition, they provide support to local developmental projects, school and youth programs; moreover, the Ronald McDonald house provides support for the well-being of children around the world. “McDonald’s has a people vision to be the best employer in each community around the world. They believe that their people promise and people principles express their commitment to respect, recognition, openness, and employee development. Diversity is integrated into their business operations and planning around the world (McDonald’s.com).
Code of ethics
McDonalds have to some extent a code of ethics and a sense of moral responsibility. Some people have had a slanted bias against McDonald’s because they don’t know how they can actively market nutrient deficient foods to people in compromised positions.
This biasness is right since McDonald’s has been involved in a number of lawsuits and other legal cases, most of which involved trademark disputes (Fullstrength, 2007).
Fortunately McDonalds is striving to hold a high standard of ethical and moral responsibility to its customers that includes but goes beyond the bottom line of profits. It is still in a difficult path of redefining fast food (Oppapers.com, 2007).
One of the challenges being encountered by McDonalds is to successfully engineer the nutrition shake to deliver more nutrients in less calories that fuels your body and mind for longer than just about any other meal you can find in an economical way.
McDonalds is learning to deliver food that will ultimately serve the health, well being and performance of its customers with a taste that can rival the most delicious foods. Perhaps then it wouldn’t have to aggressively market its food to young consumers in disadvantaged positions. Why? Because in a few decades its once customers won’t be hospitalized or dead, instead they’ll be alive, healthy and strong living on its service instead of dying from it.
Some of the successful attempts to improve on its code of ethics and legal laws are when the public became concerned that product packaging was environmentally damaging, McDonald’s started a joint project with Friends of the Earth to eliminate the use of polystyrene containers, in the United States, to reduce the amount of waste produced.
Some of the techniques that has been used by McDonald’s to increase the sales of its products include: advertisement; maintaining quality of the food product ; maintaining price-value; accelerated store openings in hard economic times; maintaining safe, clean store image; found and developed all sites.
McDonald’s has for decades maintained an extensive advertising campaign. In addition to the usual media- television, radio, and newspaper, the company makes significant use of billboards and signage, sponsors sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company’s advertising strategy. To date, McDonald’s has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions (Oppapers.com, 2007).
McDonald’s also realized the changing world we live in and the need for healthier food, since there is an ever changing demographic group, who demand fast, top quality food that is low in calories. McDonald’s responded to this opportunity and introduced a new and innovative product. This new product was a regular hamburger that tasted like the real thing but was made of plant material like Soya beans. This same product also targets another demographic group, vegetarians. McDonald’s mostly uses psychographic segmentation targeting the working and middle classes.
McDonald’s faces stiff competition from three major competitors, Burger King, Wendy’s and Hardee’s. Hence to stay above its competitors it does everything that can bring success. For instance, practicing a backward vertical integration by replacing most of its suppliers. It has done so for two reasons, 1) To reduce costs, and 2) To ensure that its products are of top quality. These supplies include beef and milk to be used in its products, which it gets from its farms.
McDonald’s product value is also its greatest strengths. Customers know what to expect when they walk into a McDonalds store. It gives great emphasis to human resources by satisfying both the customer and the employees. Next is the innovation aspect wherein new products line up to catch up with the new trends and tastes of the people. Its diversity into other new business ventures can also be considered as its strengths. For instance, to accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald’s introduced McCafes. The McCafe concept is a cafe-style accompaniment to McDonald’s restaurants (Ruby, David and Les, 1997).
Recently McDonald has tested its drive through order facility. Wherein it makes sure that the order placed with the outlet is accurate. The order taken by the outsourced company is reverted back to the home restaurant. These call center has a digital camera which clicks the vehicle you drive through and the delivery man back home can integrate the order and the person who placed it using the image of the car. Outsourcing thus helps in the increase of the external suppliers and fills up the difficulties faced because of the lack of the latest technologies and other innovations.
What started of as a success story with McDonalds had to face a number of risks, competitions and major set backs. What makes it still strong and ranked among the top business concerns is its core competences and the sustainable competitive advantages both internal and external. Of course keeping up with the changing times the company has also set foot in outsourcing but the point to keep in mind here is not to be driven away by this outsourcing mania. This company has started to revert back to its golden glory recently because of large scale revamping of its organizational and structural changes being implemented.
The overall organization
The McDonald’s Corporation’s business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald’s may also collect rent, which may also be calculated on the basis of sales. As a condition of many franchise agreements, which vary by contract age, country and location, the Corporation may own or lease the properties on which McDonald’s franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants.
McDonald’s restaurants are found in 120 countries and territories around the world and serve nearly 54 million customers each day. The company also operates other restaurant brands, such as Piles Cafe.
Most standalone McDonald’s restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or McDrive as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined. In some countries McDrive locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts that offer Walk-Thru service in place of Drive-Thru (Oppapers.com, 2007).
In other countries McDonald’s restaurants are operated by joint ventures of McDonald’s Corporation and other, local entities or governments. As a matter of policy, McDonald’s does not make direct sales of food or materials to franchisees, instead organizing the supply of food and materials to restaurants through approved third party logistics operators.
How it became successful
Ray Kroc did not invent the original McDonald’s concept, but what he franchised and eventually bought from the McDonald brothers was not yet a real business system. The McDonald’s system that we see today is the creation of Kroc’s attention to detail, appreciation for consumer value, ability to solve problems, taking calculated risks that he could not afford to lose, and attracting talented people into the system.
(Ray Kroc, 1992).
Many analysts viewed McDonald’s rampant growth as unsustainable. But Kroc believed the company needed to continue to expand in order to survive. “I don’t believe in saturation,” he said. “We’re thinking and talking worldwide.” Kroc envisioned a world in which 12,000 sets of Golden Arches would stand as outposts of a mighty commercial empire. Sure, there was one store for every 90,000 citizens of the United States in 1972. But there were three billion people outside America’s borders who had never wrapped their mouths around a Big Mac. So just as Henry Ford sought foreign markets for the Model T, Ray Kroc embarked upon an ambitious campaign (Ray Kroc, 1992).
While Kroc dictated the size and shape of burgers, he gave franchisees wide latitude in other areas. He knew that McDonald’s had to simultaneously unleash the entrepreneurial energies of hundreds of operators while maintaining the standards and regulations crucial to the efficient operation of a far-flung industrial enterprise.
The growth of McDonald’s has not been on a silver plate. It has faced a lot of challenges from its competitors and other envious people. For instance, over the last couple of years it has been at the centre of anti-capitalism, animal-rights and environmental right protests. Protesters feel that McDonald’s is just one big money making business, which values profits at the expense of anything else. McDonald’s has been used as the symbol for anti-capitalism businesses for more than one reason. Everyone knows them, they threaten legal action on anyone who makes false allegations against them.
Despite all the challenges McDonald’s has continued to thrive all over the globe. One key to its continued growth is international expansion. With operations in more than 65 countries, McDonald’s now opens about one-third of its new restaurants outside of the United States.
Fullstrength (2007). McDonalds, Ethics & Health Care. Retrieved from World Wide Web as from 19th April 2008 from http://www.fullstrengthblog.com/2006/05/mcdonalds_ethic.htm
Oppapers.com (2007). Mc Donald Case Analysis. . Retrieved from World Wide Web as from 19th April 2008 from http://www.oppapers.com/essays/Mc-Donald-Case-Analysis
Gary Henriques, Audre Duvall, Audre Du Vall (2001) .McDonalds Collectibles: Identification & Values (Mcdonalds Collectibles) 2nd edition California: Collector Books.
Ray Kroc (1992). Grinding It Out: The Making Of Mcdonald’s. New York, St. Martin’s Paperbacks.
Ruby Richardson, David Irving, Lesley Irving (1997). McDonald’s Collectibles: Happy Meal Toys and Memorabilia 1970 to 1997. U.S.A., Collector Books.