Understanding McDonald’s Strategies In The International Fast Food Industry

Defining business processes

Discuss About The Consumers Preference And Consumption Towards.

McDonald’s strategies are developed on the basis of gaining competitive advantage in the international fast food industry. McDonald’s is known as the biggest fast food restaurant chain in the international fast food industry. In order to maintain its acquired position in the target market, organization has adopted intensive growth strategies. These strategies are also useful in the development of business and expansion in the global market (McDonald’s, 2018). Strategic objectives of McDonald’s dictate their operational activities which are directly linked with enhancing organizational performance in the target market along with meeting with the dynamic needs of its target and potential audience. In this report, McDonald’s current strategies will be discussed along with their mission, vision and objectives. Apart from this, their strategies will also be compared with their primary competitors i.e. KFC and Hungry Jack. Further, report will focus over the evaluation of external and internal environmental forces’ impact over the McDonald’s performance and over their strategies. The last part will discuss the strategies through which the organization could improvise its performance in order to gain desired goals and objectives.    

The McDonald’s corporation is a centralised corporation which works along with the franchise as well as joint venture partners with National and international cooperation agencies.

The fundamental business process includes the corporation of the company knowledge which pertains to the transportation as well as diffusion of the product to the various foreign markets.

The business chain includes the delivery of information from the corporate to the various perspective franchisees on the basis of the working as well as division of labour which encourages the implementation as well as differentiation process under the concrete supplier chain network. The manufacturing unit works on the principle of down to top approach in which all the information starts spreading from the Corporate Corner and gets disbursed to the respective foreign markets as well as franchisees to which the McDonald Corporation is engaged. McDonald’s have adopted generic and intensive strategies for accomplishing their tasks and for developing an effective position in the international fast food industry. McDonald’s is engaged in continuous improvement process in relation with improving their policies and the strategies to meet up with the market trends and customer requirements (Aaker, 2010).

These are the only two major business requirements that McDonald’s Corporate incorporate are some flexibility by deviating from the tight grasp that they hold over international restaurants.  Now, that is not to say that the countries and local markets have complete freedom to add to the menu and promote their products how they wish. McDonald’s prides itself in the consistency of its products and taste around the world and would not allow complete autonomy.

1. Consistency in the delivery of product
2. Maintenance of the public relations
3. Product mix
4. Market mix
5. Creditability of the business essentials and components pertaining to increase sales and promotion

Developing business requirements

McDonald’s generic strategy relates with the cost leadership strategy. This strategy is one of the effective models of Porter’s model. Under this strategy, prices of the final products are reduced by reducing the profit margins or by minimising the cost of production. In relevance to this, McDonald’s delivers their products and services at cheaper rates as compared to its primary competitors i.e. KFC and Hungry Jack. Though, McDonald’s also uses product differentiation as supportive of alterative generic strategy. This strategy is useful for making one company’s products distinct from its primary competitors’. Apart from this, product differentiation strategy is effective enough to enhance organizational performance along with gaining competitive advantage in the target market. For example: McDonald’s McPuff, McVeggie, etc. are its unique products and with this, organization has developed its unique image in the competitive business environment. Vertical integration is another generic adopted by McDonald’s to strengthen its strategies and this strategy is linked with the cost-leadership generic strategy (Akaka et al, 2013).

The increasing competition in the fast food manufacturing industry is becoming incredibly saturated.  When McDonald’s first began expanding into international markets, their main focus was altering eating habits.  This was primarily because there was an absence of major competitors overseas.  However, over the last decade, the international market is beginning to mirror that of the heavily saturated United States market.  Profits are shrinking, same store sales are down, and the overall market growth has slowed tremendously.  This has prompted McDonald’s to continue to cut costs by announcing the closing of 175 underperforming outlets in 10 countries.  As the international markets become more competitive and saturated, McDonald’s must continue to analyse and make adjustments accordingly.  

The various types of strategies that are encompassed to fulfil the systems requirements are as follows-Intensive strategy adopted by McDonald’s is also known as intensive growth strategy. Following are certain crucial growth strategies which makes McDonald’s biggest fast food restaurant in international market:

• Market Penetration: This is the primary strategy of intensive growth strategies utilised by McDonald’s. The organization accentuates its customer base in the existing market by launching new and innovative products for other customer segments. The primary objective of adaptation of this management case is to strategize the growth of the business market as per the price and costing analysis to make the process convenient to enter into the huge range of markets.  
• Development of the market Environment: When McDonald’s entered the fast food industry initially, market development was their primary strategy in terms of intensive growth strategy. But now things have been changed because now McDonald’s is present is every part of the globe where market development is used as the secondary strategy in terms of intensive growth strategy. The main motive of this intensive growth strategy is to establish organizational image in the new locations such as expansion of McDonald’s in African and West Asian countries (Angeloska et al, 2017).
• Product Development: This strategy has been used by McDonald’s to support their intensive growth strategies. In order to execute this strategy, McDonald’s needs to produce new and innovative products time to time such as McCafé. This strategy is also used as the defensive strategy so as to maintain the acquired position in the market as well as to uplift its position in the same market by producing unique and innovative products (Armstrong, et. al., 2015).McDonald’s Vision, mission, values and objectives
• McDonald’s Brand vision is “To be the best quick service restaurant experience”. In relation to being the best means providing high quality, service, cleanliness, and value, so that every customer in every restaurant smiles. Apart from the vision, organization mission is “Is to be our customer’s first choice, when it comes to, top quality products, outstanding service / cleanness and great value for money ” (McDonald’s, 2018). MacDonald’s objective list includes serving delicious and qualitative food items quickly so that customer could experience friendly environment. Apart from this, organization has also expanded and diversified their product offering in relevance with targeting new customers. For this, they have concentrated over producing healthy food items such as healthy burger in the name of McVeggie. Customisation has also been adopted by the organization so that consumers could consume what they prefer to. Their all new range in breakfast is another attractive option for their target audience which has helped the organization to gain success and growth related objectives (Oana et al, 2011). Values of the organization also relates with the customer’s satisfaction and their choices. As customers are crucial factor for the organization to attain success and growth, thus, it is essential for them to fulfil their needs by providing quality along with their choices (Cornelissen et al, 2017).

These strategies, goals and aims of the McDonald’s differs it from its competitors i.e. KFC and Hungry Jack. Whereas KFC and Hungry Jack fulfils its target audience’s needs but the prices of their products are quite high as compared with the McDonald’s (Czepiel et al, 2012). Though, McDonald’s strategies and policies make him stand separate from its primary competitors because they have adopted cost leadership strategy and this is the major reason for them to enhance their customer base (Fischer, et. al., 2011).

Determining the systems requirements

McDonald’s pays faster as per their competitors to its suppliers which have helped them to develop appropriate relations with the suppliers. Organizational internal communication system and approach to analyse customer feedbacks are another crucial factor through which organization proves that they are the deserving candidate for being on the top on the international fast food industry. As per this approach, customer’s feedbacks and complaints are taken seriously and quick resolutions are also being provided to them in order to maintain effective customer relationship (Greer, 2011).

There are many types of raw materials that are required as ingredients in order to make the finished product in the McDonald’s management stock company. The requirements includes the various types of paper cups which are required to hold the various stuff along with the packaging as well as storage materials. The requirement of burns is maximum in number as well as when a delivery is to be made to any of the customer if the frequency detected is 3 to 5 times in a week and the raw materials depart as well as arrive all together on the truck or any lorry in order to make the transportation of the finished products and the storage is also looked after thus maintaining the optimum temperance requirements. There are three major sections which are looked after they are the frozen the ambient which means the food storage as well as their maintenance and the last one is it chilled atmosphere pertaining to the most important section of the applied components.

The work- in – progress also comprises of the various stock exchanges which are included in the processing made into the finished product and thus sold out to the buyers. The another component is the big Mac which comprises of the varieties of cheese and onions along with this sauce as well as burns to make the seasoning in the small amount. The company also looks after the combination made before the customers in case of the placement of the orders in contacts with the big Mac serving department. After the achievement of the finished goods they are being transported immediately to the dedicated buyers and once the restaurant expresses the diverse range of products in order to be ready for the selling mode. 

The selected segment of management tasks which are adjusted in the ongoing communication between the central authority of the Planning team and between the individual restaurants that are engaged in the management stock in an efficient manner. The Assurance is made that the working 80 restaurants should accomplish the predetermined mission vision and goals and also there is an engagement of 14 regional planners in order to communicate as well as advocate all the issues and problems pertaining to the daily management case. Examination of potential security risks, data breaches. The research on the Market Mix and the dedicated marketing strategies with regard to the risks confrontation-

• Price
• Product
• Place where there can be an account of manufacturing process as well as storage unit’s allocation
• Promotion

Software and vendor selection

The information is also worked out in the form of several queries such as-

1. What product should be manufactured so as to meet the increasing demands of the customers
2. How to promote the products in an efficient manner.

McDonald’s have acquired the position of global leader in terms of international fast food industry. With the help of Porter’s five forces analysis, organization will be able to determine its market image and position as compared to its competitors (Gregor et al, 2013).

Due to saturation of the fast food market, McDonald’s faces aggressive competition from KFC and Hungry Jack. With the help of this force, organization could determine how its competitors are affecting organizational performance and image in the marketplace. The major factors due to which McDonald’s needs to face intense industry rivalry are:

• Large number of firms in fast food industry (Helms, 2010).
• Aggressive competitive strategies used by them
• Low switching costs

In order to gain success and growth in the fast food industry, it is necessary to address the buyer’s needs and their barging power. This is because large number of firms is available in the markets who are dealing in almost same type of products. Following are the elements through which buyers have strong bargaining power:

• Low switching costs
• Large number of firms in the market
• Huge substitutes (Johnston, 2013).

• Large number of suppliers
• High overall supply

Substitutes have a great impact over organizational performance and this is due to large number of firms involved in the fast food industry. High substitute availability and low switching costs are certain factors involved in the threat of substitutes for McDonald’s (Rothaermel, 2015).

New entrants in this industry would impact over the organizational market share. This is because, every new organization will offer diversified products at low rates for setting up their position in the market which will create negative impact over the existing companies. In order to avoid this type of issues, organization needs to adopt certain strategies through which their acquired position does not get affected.

Political: International trade agreements, taxation policies, changes in the regulations by the government, etc. factors should be considered while developing strategies because organization is engaged in the international market, thus, consideration of all governmental rules and regulations is necessary (Kim et al, 2011).

Economic: Economic factors such as inflation rate, economic growth, purchasing power of consumers, etc.

Social: Social factors such as customers demand, tastes, preferences, etc. carries huge weightage in fast food industries. Thus, McDonald’s needs to consider these aspects in order to develop appropriate relationships with the customers along with gaining desired goals and objectives.

Technological: Moderate technological developments, business automation are several aspects related with the technological factor which needs to be adopted by the organization so that the desired goals could be attained (Chemat et al, 2011).

Detailed analysis of the stock Management at McDonald’s

Environmental: McDonald’s needs to contribute their earning towards environmental programs, adaptation of sustainable business strategies and over protection of environmental conditions. This will create better image of the organization in front of the society as well as the chances for sustainable growth and development will increases for the organization (Mohammed, Rashid & Tahir, 2014). Hungry Jack’s and McDonald’s target audiences are quite similar because their product and service offerings quite match with each other (Habib et al, 2011).

It has been recommended the McDonald’s to improve their strategies and expansion in their product offerings. The major reason behind this is the similar product offering by Hungry Jack. Following are certain recommendations through which organization could improve its performance:

• Service differentiation: With the help of service differentiation strategy, organization will be able to provide superior services to its target customers. This will help the organization to make a distinct position in the target market along with making better customer relations (Helms, 2010).

Hence, investment in training and development program is necessary for attaining its desired goals (Mohammed et al, 2014).

Conclusion

The above illustrations pertains to certain findings under the business management case of McDonald’s business management case are effective enough out of which one can move towards the fulfilment of the mission, vision and other objectives listed in the above findings and discussions. In relevance with the performance, evaluation of their current strategies has been done in this report. McDonald’s is situated in almost all parts of the globe except in some of the African, West Asia and Middle Eastern countries. IN order to expand their business in those parts, product development and certain other generic and intensive growth strategies have been discussed in this report. External and internal fit, porter’s five forces and the PESTLE analysis has also been evaluated so that the organizational policies and standards could be made up as per the external environmental factors.

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