Introduction to McDonald’s
McDonald’s is a prolific business chain that has gained a large market share over the globe. The business operates as fast food restaurant. The business has expanded its business and has grown in to multiple businesses operating more than 120 branches worldwide. I have a privilege of working as a Barista in McDonald’s. As a Barista, my duty is to serve clients with snacks, hot drinks, cool drinks, alcoholic, and non-alcoholic beverages. The company has outshined many competitive companies in the world by emerging has the second largest private company employer (comes second after Walmart with 1.9 million employees) (Guthrie 2001, p. 185).
Despite the prevalent performance and dedication to offer high quality services and generating high revenues, the company can never operate without one or two challenges that pose a threat to its operation. Just like any other company, McDonald’s come across challenges and is likely to face tough challenges in future because the business industry is very dynamic (what seems good today might be declared useless tomorrow). As such, the management team keeps on re-adjusting and making strategies to counter the challenges at hand.
Indeed, it is clear in the recent past McDonald’s has been experiencing pressing challenges that are posing a threat to the future operation of the company. By this I mean, the problems have been growing and taking root over time. When a problem is realized in an organization there are many facets that contribute to the problems and if the Chief Executive Officer in charge is not keen, the company might be on a downfall. As for the case of McDonald`s, the CEO might not be at the center stage of the problem but is some way he might show the inability to provide solutions to some problems which could otherwise be suppressed or mitigated completely.
To start with, one of the challenges that is likely to put the company out of market is tough competition from other companies like Chipotle Mexican Grill and Panera Bread. Apart from that, other nontraditional companies like bakeries, convenience stores, cafes, and ready to eat supermarket meals have contributed to the adverse of the company`s sales. Martínez & Stuart, 2011, p. 657), says, Mc family is no longer at a position to control the market has it previously used to determine even the market price of products.
I connection to the above sentiments, on analyzing the market trends there is a pre-assumption that the European taste is changing predominantly. There is a steady change or shift of the taste and appetite of some chunky foods. Most people are preferring foods with little butter content. Hence, they prefer meals from local competitors who are selling foods with less fats content. The problem which the CEO of MC family is not approaching in time. Over time, it has been difficult to win back the customers who have fallen out or have ceased using the products of McDonalds.
Challenges Faced by McDonald’s
Also, researchers have found out that the European economy is generally bad on Burger foods. In a report published by the McDonald`s earnings, the economic uncertainty is the underpinning factor that is compromising consumer spending. If this trend continues (cutting down of the spending of the burger) Mc Donald`s is at the forefront to face the issue which could affect the revenue of the company. From the statistics of last quarter, the Europe sales fall by 0.1 percent due to the negative results observed from Germany and France (Porter 2008, p. 18). Notably, the McDonald`s fast-food outlets have contracted reasonably faster in Germany than the rest of the fast-food vendors in the country (Nankervis & Compton 2006, p. 123). This is an indication that the black spots have been identified and the future of the fast food cafes in Germany and other European counties might reduce drastically.
Furthermore, the clients are not shifting because the products are bad but because there is no improvement of the existing products. By this I mean, the customers are going for products that have are optimized such that there is an improvement on the quality and the value of the products. Consequently, the MC family have been losing customers because they have turned away their heads to the competitors or ware offering better products than them.
Notably, another factor that is contributing to this problem is a debate over the cost of the products. (Truss et al. 2012, p. 26), notes that most people assume that competitors offer the same products at a cheaper price hence they don`t see the reason why they should pay for a product at an expensive cost whereas the same product can be acquired from another company at a cheaper price. From the other end of the spectrum, the cost of most products by the company is high hence low income people cannot be able to affords the products. As a result, the people with low income go for products that are made my local competitors. In the long run, MC family will lose many customers because of the high costs. Therefore, McDonald`s needs to ensure they embrace a strategy of not only sustaining their customers but also attracting more customers instead of losing the customers to the traditional rivals like Burger King.
Another major problem amid the slumping sales poor performance of the company in the global market is the issue of salaries and remuneration of workers. Actually, this is a problem that has been there for quite a long period of time. For the people who have worked with the company they can attest that the salaries are low. This is evidenced by the protest of workers demanding for increment of their salaries. It is observed that most workers receive minimal pay despite working for the company for many years. It is unfortunate the employees never realize any tax holiday or give better compensation as most of their workers operate under minimum wage even after serving the company for many years.
Tough Competition from Other Companies
McDonald is described by a reputation of not paying their workers promptly. It is realized there is an imbalance or a huge gap between the salary of the top management team and the average employee in the company. If the same trend has to continue then we rest assured the company will realize poor results in the next quarter because it is losing its public relation by giving workers poor compensation. The compensation scheme should be streamlined to ensure reasonable money is paid and at least there is fair compensation of the work done (Whittington 2006, p. 620). In some scenario, the shareholder activist compelled the concerned team to cut off the salary of the Outgoing CEO Don Thompson because they realized a huge gap between his salary and the average workers. If the company does not tackle the issue by paying more to its workers it is expected to have a crisis of workers or have a high employment turnover which is not a good idea.
All these problems are likely to make the investors to shy off from injecting their capital to the company. If the problems are addressed in good time, the performance of the company would be rejuvenated and the employees are likely to stop bad mouthing the company hence the external image of the company would seem attractive to the general public. Besides, in another perspective if the company concentrates and analyses the global factors and the demographic market among other facets McDonald`s is likely to improve its performance in the long run.
Nowadays most companies are using Strategic Human Resource Management tool to measure the effectiveness and efficiency of their performance (Wall & Wood 2005, p. 431). The Human resource is integrating and playing a great role in decision making in almost all the levels of management. This is as result of using the Strategic human resource management tools to ascertain there is proper coordination between the various departments for effective and more efficient services.
In this scenario, using the Strategic Human Resource Management model, we recognize some faults within the business process. Using the alignment strategy, we are able to integrate the decisions of people about the results that the organization is likely to obtain (Rimanoczy & Pearson 2010, p. 123). Our research indicates that the business process of McDonald`s indeed was facing the challenges mentioned earlier on; poor wages and salaries and competition from other companies in the industry. Basically, the basis of this alignment started by scrutinizing the market performance and the kind of employee being absorbed to the company.
Shifting European Taste
Most companies have initiated reforms in their information technology, financial, and procurement aspects (Agarwala 2008, p. 71). Actually, the alignment of Key administrative functions has proven that the comprehensive package that is lacking to facilitate the performance of McDonald`s is the lack of administrative link within the business process of the company (De Feyter 2006, p. 28).. The private sector has recognized that human capital or people alongside the financial capital can give a company a competitive edge.
According to Porter (2011, p. 11), without absorbing the right people, with the right skills of various capacities and providing proper training this might be dangerous to the organization at large in the long run. Therefore, it is important to articulate and recognize people as the most important assets for any organization. Another aspect that is driving McDonald`s towards gaining a competitive edge is the employee turnover. Mello (2006, p. 58) indicates that, retaining hardworking employees can be important the organization. As for the case of MacDonald`s the rate of employee turnover is very high because of the unfavorable prevailing working conditions. Therefore, the change of or failure to retain their employees has an adamant effect on the output of the company and the competitors are taking advantage of this to offer better services hence beating them in the global market. Not only this does not impact the result of the company but also lack of innovation and adding value on the products has also cost the company in that customers are preferring substitute products or the same products generated by the other companies.
Also, another facet to ascertain the truth about the problem of poor salaries is that most workers keep on complaining for pay rise. It was observed there is a huge imbalance between the compensation of the top management and the average employee within the company. (Chia & Holt 2006, p. 638), denotes that Human Resource practices are usually meant to increase the quality of output and increase the HR lens of identifying the customer needs hence enabling the business to achieve its goals and objectives. These results helped us to draw a correction that exists between the compensation and the general performance and output. Notably, employees who are well motivated with proper remuneration scheme, and performance appraisal are likely to be productive and engaged in providing the best services hence increasing productivity.
One of the predominant solution to the problems is that McDonalds should work on product optimization through innovation. By this I mean, they should check on adding value to the products that they are producing and adjust to the changing tastes and preferences of their customers. As much as McDonald`s team is bringing in new products in the market, they do not carry out market intelligence to determine if the product will be accepted by their customer. Quit a number of products like bona fide blockbuster were produced but seemed unappealing to the customers and have contributed significantly to the decline of sales (Daley 2012, p. 23).
High Costs of Products
Another controversial issue that is sidelined but important is the issue of pricing. The prices for the products of this company are generally high hence only the rich can be able to afford the products. For the low-income people, they just go for those products produced by other companies that are disposed at a cheap price. McDonald`s can experience an upscale of profit is they adjust their prices are streamline the overhead cost of the products to determine the real gain from a product. As such, the company will start gaining a competitive edge and retaining more customers as well as attracting other new customers to the market.
Finally, McDonald`s should engage its employees of fair wages. There should be dialogue on the best wages to be offered. In essence, the management and stakeholders should create a good rapport between the top management and average workers by providing reasonable salaries. As such, the public relation of the employees and the external parties could have been streamlined. The employees could speak good things about the company hence promoting its public image. As a s result, potential investors will be attracted to invest in the company.
References
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