McDonald’s Corporation is the world’s leading food service organization. Thecorporation started out as a small drive-through in 1948 by two brothers, Dickand Mac McDonald. Raymond Albert Kroc, a salesman, saw a great opportunity inthis market and advised Dick and Mac to expand their operation and open newrestaurants. In 1961 Kroc bought out the McDonald brothers. By 1967 McDonaldsexpanded its operations to countries outside the U.S.A. This unyieldingexpansion led the Corporation to open 23,000 McDonald’s restaurants in 110countries in 1994, producing $3.4 bn in annual revenues. In addition, McDonald’sopens a new restaurant every three hours. Also, McDonald’s has twice the marketshare of its closest U.S. competitor, Burger King, representing 7% of total U.S.
eating-out sales. Similarly, McDonald’s serves about 1% of the world’spopulation on any given day through its 23,000 restaurants internationally.
“Big Mac”, the world’s most sold hamburger was developed by JimDelligutti in 1967 to feed construction workers. ‘Big Mac’ is the biggestattraction and backbone of the corporation. Moreover, McDonald’s maintains itscompetitive advantage by constantly creating new items to add onto its menu.
This shows us that McDonald’s practices an analyzer type of strategy,introducing new items and defending its existing ones. McDONALD’S MISSION ANDVISION: “We serve people with good quality food, fast and at lowcost.” McDonald’s vision is to dominate the global food-service industry.
Global dominance means setting the performance standard for customersatisfaction and increases market share and profitability through successfullyimplementing our convenience, value and execution strategies. THESIS STATEMENT:To have a clear picture of McDonald’s corporation we need to look at its TaskEnvironment, which includes its: .Customers .Competitors .Strategic Allies.Suppliers .Regulators We shall also explore McDonald’s Workforce Diversity andits Total Quality Management. CUSTOMERS: Customers are those who pay money toacquire an organization’s goods or services. For many years McDonald’s mostlytargeted the young people, however this has changed in this decade; McDonald’shas turned towards a more general market. By doing this McDonald’s concentrateson the family, targeting a diverse market which includes consumers ranging fromchildren to elderly people, using products such as the “happy Meal”for children and “Egg McMuffin” for the elderly. McDonald’s alsorealized the changing world we live in and the need for healthier food, sincethere is an ever changing demographic group, who demand fast, top quality foodthat is low in calories. McDonald’s responded to this opportunity and introduceda new and innovative product. This new product was a regular hamburger thattasted like the real thing but was made of plant material like Soya beans. Thissame product also targets another demographic group, vegetarians. McDonald’smostly uses psychographic segmentation targeting the working and middle classes.
These are the people that are more susceptible to enter a fast food restaurant,since these are the people that lead a fast moving life and thus require a fastmeal. In brief McDonald’s customers are of all classes, but largely working andmiddle classes, and people of all ages. COMPETITORS: A competitor is anorganization that competes with other organizations for resources. In ourfindings, McDonald’s has two types of competitors in the Lebanese market:..Indirect ..Direct Indirect Competitors: Indirect refers to firms producing oneor two products that compete with McDonald’s products and therefore be a threatto the company. We have identified four indirect competitors: Henry J. Beans,T.G.I. Friday, K. F. C. and Popeye’s. Henry J. Beans offers hamburgers and frieson its menu, therefore competing with McDonalds for customers of these products.
However, Henry J. Beans also known as Hank’s is a more of a bar restaurant andtherefore a hang out place, as a result charging more money for its products.
Hank’s targets middle to upper class customers, so where most of these customersoverlap are in the middle class. T.G.I Friday is another indirect competitorreflecting the same characteristics as Henry J. Beans. Other indirectcompetitors are K. F. C. and Popeye’s, both competing for the chicken nuggetsand fries customers. In brief, Hank’s and T.G.I. Friday’s competes withMcDonald’s by offering hamburgers and fries, whereas K. F. C. and Popeye’scompete with McDonald’s by offering chicken nuggets and fries. DirectCompetitors: Direct competitors refers to firms producing the same products orservices as McDonald’s does. Here we found that McDonald’s has three directcompetitors: Burger King, Wendy’s and Hardee’s. McDonald’s closest rival isBurger King, which operates a total of 9644 restaurants in 110 countries.
Wendy’s is McDonald’s second largest rival, which is also in the fast foodbusiness, where Wendy’s operates 6776 restaurants in 32 countries. Hardee’s,McDonald’s third largest rival is also in the fast food business and is the onlydirect competitor apart from Juicy Burger in the Lebanese market. Hardee’soperates 3080 restaurants in 20 countries. As we have illustrated McDonald’sfaces stiff competition from three major competitors, Burger King, Wendy’s andHardee’s. Suppliers: Suppliers is an organization that provides resources forother organizations. McDonald’s has practiced a backward vertical integration,by replacing most of its suppliers. It has done so for two reasons, 1) To reducecosts, and 2) To ensure that its products are of top quality. These suppliesinclude beef and milk to be used in its products, which it gets from its farms.
Other suppliers include local grocery stores that supply McDonald’s with freshvegetables. Soft drinks are supplied exclusively by Coca-Cola, which is also itsally. McDonald’s supplies also include raw material such as flour, sugar, yeast,etc.,. Strategic Allies: A strategic ally is an organization working togetherwith one or more other organizations is a joint venture or a similararrangement. McDonald’s has formed a strategic alliance with: Walmart, Chevron,Amoco, Disney and Coca-Cola. Walmart, which is a large shopping mall chain inthe U..S. and several neighboring countries, is allied with McDonald’s, whichoffers great opportunities for both companies. McDonald’s has restaurants ineach Walmart, offering its customers conveniences and excellent fast food at alow cost ease of accessibility. McDonald’s corporation describes it best in thisscenario: “Imagine a busy shopping day at your local Walmart and having theability to sit down with the kids and enjoy many of our McDonald’s favorites,like ‘Big Mac’ sandwiches, world famous fries and kids favorite ‘Happy Meal’.
McDonald’s understands your busy lifestyles and the demands on your time. That’swhy we are making it easier for you to do more things in less time.”McDonald’s is engaged in an alliance with two petrol companies, Chevron andAmoco. This alliance represents the ultimate in convenience. At these locations,one finds a full-menu McDonald’s restaurant with dining room service. Nothingcan be more convenient, because one can fill up the car with gas and get a mealall in one stop. Another important alliance that McDonald’s has is with Disney.
Here McDonald’s has the sole right to sell fast food in Disney’s theme parksaround the U..S. and other Disney operations in the world. Under the terms ofthe agreement, McDonald’s will operate restaurants and Disney will promote itsfilms through McDonald’s. Regulators: Regulators are groups or governmentalagencies that can control and influence the organization’s policies andpractices. An example is Lebanon a few years ago when the U..S. governmentbanned all U..S. citizens and organizations to come or operate in Lebanon.
Another good example would be the embargo imposed on Iran where U..S.
organizations were banned to operate in this country. Another group ofregulators called interest groups can and have influenced McDonald’s to treatits animals (cow and chickens) in a much more humane manner, which resulted inthe restructuring of McDonalds’ farms throughout its operations around theworld. The summary of the task environment which is by definition a specificorganizations or groups that affect the organization, which includescompetitors, suppliers, customers, strategic allies and regulators. Here wedescribed the task environment’s importance to McDonald’s, where McDonald’sfaces both opportunities and has threats in its environment. WorkforceDiversity: Diversity exists in a group or organization when its members differfrom one another along one or more important dimensions such as age, gender, andethnicity. Diversity is very important for McDonald’s. Here millions of teensstart out by working at McDonald’s. Here some of the teenagers move on to getvarious jobs such as movie stars, skilled workers, famous athletes, managementpositions and other educated positions in society. At McDonald’s two thirds ofmiddle and upper management started out as crewmembers in a McDonald’srestaurant. There are opportunities for everybody in McDonald’s from teenagersto elderly workers, and from people just entering or reentering the job market.
Moreover, McDonald’s offers special jobs for people who have disabilities, suchas people who are in wheel chairs and those who must use crutches permanently.
Furthermore, McDonald’s offers their workers flexible working hours. Forexample, hours for people seeking just a few hours of work per week and thosewho seek full time positions. The work force at McDonald’s also have some say intheir working hours, such as if they prefer the morning, mid-day, or eveningshifts in the restaurant. So, McDonald’s uses diversity to create a goodatmosphere in their work places among workers and management. Here they offerwork to all kinds of people without discrimination and the workers have flexiblehours that provides customer satisfaction. Top Quality Management: Quality isthe totality of features and characteristics of a product or service that bearon its ability to satisfy stated or implied needs. For McDonald’s, total qualitymanagement (TQM) involves that the employees are at work on time, are neatlydressed, and are clean. The employees must make sure that the customersconstantly receive safe food, which implies that the employees must wash theirhands often to remain clean. Moreover, the employees must follow certainStandard Operational Procedures, so the customers always receive exceptionalquality and service. This includes the employees using plastic gloves when theyprepare the food, that the meat and fries are properly fried, and that thevegetables are thoroughly washed when used in the food. Another TQM is that theemployees rely on teamwork and high energy to get the job done, so that thecustomers do not have to wait long for their food. Furthermore, McDonald’smanagement emphasizes that their restaurants should be clean. This involves thatthe restaurants are tidy, sparkling and spotlessly clean. As McDonald’sillustrates the quality is that the employees delivers fast, accurate andfriendly service with a smile. CONCLUSION: In conclusion, we have explored alarge corporation such as McDonald’s and shown how its Task Environment,Workforce Diversity and Total Quality Management can have a profound effect onthe organization. In order for such a corporation to remain a leader in itsfield, it must stay growth oriented and constantly have contingency plans toovercome turbulence. Another important factor is the type of strategy that itfollows. McDonald’s, Daimler Chrysler and Benz follow an analyzer type ofstrategy, constantly introducing new products while defending their existingproducts.
