Micro Environment Factors
Discuss about the Introduction to the Hospitality Industry.
McDonald’s is an American hamburger and fast food restaurant chain, founded in 1940 as a barbecue restaurant (Jonathan, 2011). Its outstanding information systems, skilled management, customer-friendly policy among others have given this company a unique value in the highly competitive industry. Considering that this company operates in a very competitive industry, there are different challenges which it faces. It also has different opportunities which can make it grow. Like any other organization, McDonald also has micro and macro environment which influences its business operations.
The micro environment covers internal factors which influence day to day activities in this company (Claviez, 2013). McDonald’s micro environment is complex in nature. Micro environment affects this company in either positive or negative ways and plays a role in creating value and relationship with the consumers. McDonald’s micro environment comprises of suppliers, intermediaries, customers, and competitors.
This company has its own suppliers and works closely with them to ensure everything goes as expected. The supplier plays a significant role in delivering the value to the consumers (Lubica, 2011). The company divides its suppliers into two categories, namely the direct and indirect suppliers. The indirect suppliers play the role of delivering ingredients to the direct suppliers. On the hand, the role of the indirect suppliers is to produce food for the company.
Supplier issues can greatly impact the marketing strategies used by this company. Therefore, marketing management should keep an eye on the supplier availability and costs (Kearney & Semonovitch, 2011). Issues like supplier delays, shortage, and unreliability among others can negatively impact consumer satisfaction in the long run and sales volume.
McDonald has different strong competitors who are always struggling to attain the biggest market share. Some of these competitors include Haagen Dazs, Pizza Hutt, subway, burger king, 7-Eleven, deliverance, KFC among others. Most of these competitors have a strong brand image, long business history, and significant market share (David, 2011). This means McDonald should come up with better marketing strategies so as to continue maintaining its market share.
According to business analysts, this company should provide higher customer value and satisfaction than its competitors to continue being the market leader in the fast food industry. The company should not assume its reputation is strong enough to prevent it from being challenged by other companies because the aim of its competitors is to dominate the largest market share (Shohab, 2013). McDonald should always conduct market research to analyze changes in consumer buying behavior, changes in business context, strategies used by its competitors and other factors which can assist it to come up with better marketing decisions.
Customers are among the most important actors in McDonald’s micro environment. Its management believes customers are the major reason why the company is on operation (David, 2011). This company serves millions of customers each day and aims to sever more as time goes on. The company has a unique strategy of targeting customers because in the first world’s nations it targets people of all kinds.
Suppliers
This company creates a strong relationship with its customers and does its best to ensure their needs are met. Over the years, McDonald’s has been conducting extensive research with the aim of obtaining information which can assist it to maintain customer loyalty (Nuno, 2013). The management believes that one of the ways which can assist the business to remain in operation is developing its products based on the customer expectations, and serving them in a manner which can make them realize the importance of being associated with the company.
Because operation of fast food chains differs from that of other hospitality organizations like for example tour operators, airlines and so forth, intermediaries are not required by this company (Mi-Ran, 2011). To promote its business, the promotional activities are undertaken the company. This is attained through using its restaurant as distribution centers.
The macro environment factors which influence McDonald include economic factors, technological factors, political factors, and cultural environment.
Economic factors
Economic environment depends on the nature of economic system of the country, policies used by government to regulate economy, structural anatomy of the economy, and the nature of factor endowment (Tsai, 2015). Economic factors influence this company in the fact that consumer spending depends on the house hold income. Prices are also impacted by economic conditions of the country.
Technological factors
Technology plays a role in operations of McDonald. All departments in this company keep an eye on technological changes so that they can be able to base their operations in a manner which can assist the company to deliver customer satisfaction (Lubica, 2011). Over the years, technology has been playing a significant role in this organization because it assists it to minimize production cost and develop high-quality products.
Political factors
Political factors influence McDonald because it must operate based on the law. Frequent Changes in rules especially those related to food production affects McDonald because it must adjust its operations based on those rules (David, 2011). Other political factors which impact this company include political instability, foreign policy, and so forth.
Cultural factors
The cultural environment of a country influences the value system of the community, which in turn influence some of the marketing strategies used by this company (Kearney & Semonovitch, 2011). Cultural beliefs also impacts people perception towards some foods which in turn impact this organization because it deals food and beverages.
Because of good reputation, McDonald has the opportunity of expanding its business to different countries. The company has the potential of succeeding in many countries because its brand name is famous across the world. The company also has the opportunity of improving customer loyalty because of its upgraded Menu (Ivan, 2015). Over the years, McDonald has been introducing new products in its menu hence providing its consumers with new experience.
One of the challenges faced by this company is dealing with pressure from new entrants. Over the years, new companies have been emerging, hence affecting McDonald’s profit, market share, and its overall value. Another challenge faced by this company is excess competition. McDonald competes with companies which have high competitive power (McWilliams, 2012). Some of these companies include KFC, subway, burger king among others. These companies make McDonald to always establish strategies which can assist it to maintain a competitive advantage.
Competitors
The increase in consumer health issues is also another challenge faced my McDonald in the recent days (Lubica, 2011). As time goes on, people are become sensitive to some foods because of increase of various illnesses related to diet. This factor makes McDonald to experience the challenge of amending its line of production from time to time to ensure it produces products which health friendly.
McDonald operates in food and beverage industry. The company deals with a wide variety of products which are categorized as foods and beverages. Some of foods include burgers, chicken, and sandwiches. The company also provides Breakfast snacks like egg McMuffin, sausage biscuit, bacon & cheese biscuit among others. The beverage line comprises of chocolate shake, vanilla shake, strawberry shake, Dasani water, coca cola beverages, among others.
The company seeks to continue expanding its line of production with the aim of producing products which can make consumers to have new experiences and also to make the company remain competitive (Fereidoun, 2015). Since its inception, this company has been having high profile brand image because of excellent customer service, cleanliness, high-quality products, everyday value among others.
To stay competitive and maintain its market share, McDonald promotes its products to attract more customers and also to maintain their loyalty (Jonathan, 2011). Conducting promotions enables the company to communicate with its customers, learn their expectations and also inform them concerning what they offer and the reasons they should choose McDonald’s products.
The current promotional tactics used by this company include advertising, sales promotions, direct selling and public relations. Advertisements are the most notable promotional tool which this company uses. Some of the channels used for advertisement include print media, radio, and TV (Ivan, 2015). In the recent time, the company seems to have shifted from using these channels to the use of social media. The reason why the company has shifted to this medium is because it wants to reach as many people as possible.
McDonald also uses sales promotions to attract more customers to its restaurants. Some of the sales promotions in this company include providing discount coupons and freebies on purchase of particular products. Additionally, its public relations assist it to promote the business to the target markets. For example, the McDonald’s global best green environmental program as well as the McDonald house charities provides support to the society hence enhancing the value of corporate brand.
Because customers are among the most important assets in McDonald, the management is always working to improve their experiences. Some of the strategies used by this company to improve customer experience include introducing kiosks in different restaurants where customers can order customized meals (Murray, 2013). Introduction of these kiosks which is indeed the latest strategy used by this company to improve customer experience helped not only in improving the customer experienced but also made the company to attain its goal of personalizing customer experience.
Because McDonald believes that happy and more empowered employees yield better customer experience, its management has recently taken the decision of improving customer experience through improving employee experience (Lubica, 2011). The company has attained this through proper training of its staff members, better pay, encouraging team work, and rewarding employees who perform better.
McDonald is committed to ensuring sustainability in its business operations (Amruta, 2016). Some of the initiatives implemented by this company include best of green sustainability program, which is associated with various aspects like energy consumption, recycling and waste management, sustainable sourcing, communication and engagement, and greening the McDonald restaurants.
This initiative is aimed at enabling the company to use proper strategies which can lead to sustainability throughout operations. It is also aimed at enabling the company to improve its corporate social responsibility through environmental conservation (Lubica, 2011). The best green initiative has been playing a significant important role in assisting this company in attaining positive relationship with the public and also to attain reputation globally. Another sustainability initiative is McDonald’s beef sustainability program which is aimed at ensuring the company has enough beef which can meet customer demand.
Amruta, T. A., 2016. Keep Calm and Carry On: A Crisis Communication Study of Cadbury and McDonalds. Management & Marketing, 11(1), pp. 111-123.
Claviez, T., 2013. The Conditions of Hospitality: Ethics, Politics, and Aesthetics on the Threshold of the Possible. New York: Fordham University Press.
David, B. I., 2011. Word-of-Author Advertising in Textbooks: The Role of Brand Familiarity and Placement Repetition on Recall and Recognition. Academy of Marketing Studies Journal, 15(1), pp. 123-134.
Fereidoun, Z. P., 2015. Undesirable Cardiometabolic Outcomes of Fast-Food Patterns. Iranian Journal of Public Health, 44(8), pp. 456-467.
Ivan, I. S., 2015. Impact of Technological Development on Business Efficiency in the Food and Beverage Department. UTMS Journal of Economics, 6(2), pp. 45-67.
Jonathan, C. E., 2011. The Ongoing Transformation of the McDonald’s Logo: A Semiotic Perspective. Journal of Visual Literacy, 30(2), pp. 34-45.
Kearney, R. & Semonovitch, K., 2011. Phenomenologies of the Stranger: Between Hostility and Hospitality. New York: Fordham University Press.
Lubica, H., 2011. The Effectiveness of Loyalty Programs: An Application in the Hospitality Industry. International Journal of Business, 16(2), pp. 23-56.
McWilliams, M., 2012. The Story behind the Dish: Classic American Foods. Santa Barbara, CA: Greenwood.
Mi-Ran, K., 2011. The Importance of Customer Satisfaction and Delight on Loyalty in the Tourism and Hospitality Industry. European Journal of Tourism Research,, 4(2), pp. 23-55.
Murray, V. S., 2013. Understanding Parental Health Literacy and Food Related Parenting Practices. Health Sociology Review, 22(2), pp. 45-54.
Nuno, G., 2013. Marketing Management Trends in Tourism and Hospitality Industry: Facing the 21st Century Environment. International Journal of Marketing Studies, 5(3), pp. 34-56.
Shohab, D., 2013. An Analysis of the Competitive Marketing Strategies of the Hospitality Industry in UAE. Desai, Shohab Sikandar, 12(2), pp. 34-56.
Tsai, C.-H., 2015. Organizational Strategy toward Core Competency Workforce in Hospitality Industry. International Review of Management and Business Research, 4(2), pp. 234-245.
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