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MANREP

The document discusses the importance of strategic management for businesses, particularly in the competitive fast food industry, using McDonald's as a case study. It outlines McDonald's history, its global operations, and the strategies it has implemented to maintain its market position despite challenges such as health concerns and competition. Recommendations for McDonald's include enhancing promotion, expanding its menu, and investing in product development to meet evolving customer needs.

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5 views5 pages

MANREP

The document discusses the importance of strategic management for businesses, particularly in the competitive fast food industry, using McDonald's as a case study. It outlines McDonald's history, its global operations, and the strategies it has implemented to maintain its market position despite challenges such as health concerns and competition. Recommendations for McDonald's include enhancing promotion, expanding its menu, and investing in product development to meet evolving customer needs.

Uploaded by

yagoy78972
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Introduction

All businesses, irrespective of their industry, require strategies in order to be


successful. High competition resulting from globalization and technological
advancement has necessitated clear-cut strategies in order to survive. Strategic
management has never been as important as it is today.

Through strategic management, organizations are able to identify and implement


the best practices to gain competitive advantage, increase profit margin and grow
(Hubbard, Rice, and Beamish 2008). Fast food industry is one of rapidly growing
and competitive industry.

A company in this industry has to develop and implement successful business


strategies in order to gain competitive advantage. In this report, a case study for
McDonald’s is provided. The report reviews the strategies that McDonald’s has
adopted in order to maintain its global position in fast food industry.

Organization Overview

The McDonald’s has been in operation in food industry since 1954. The US
based company operates a chain of fast food restaurants in more than 119
countries. Though initially established by McDonald’s brothers, McDonald’s
success is attributed to its later owner: Ray Kroc. Over years McDonald’s has
emerged to be a strong brand in the fast food industry. Most of its restaurants
across the globe are operated as franchises.

McDonald’s chain of restaurants is renowned for its uniform and standardized


menu. McDonald’s menu across its chain mainly consists of burgers, milk
shakes, French fries, sandwiches, Ice cream sundaes, vegetable salads and
desserts (McDonald’s Corporation 2010). The menu however changes slightly
from country to country depending on culture and customer taste.
The company is renowned for its innovative products. Some of its successful
products include Big Mac, Chicken McNuggets, Quarter Pounder with Cheese
and the Filet-O-Fish (McDonald’s Corporation 2010). McDonald’s main target for
its products over years has been children and mothers. The company has
therefore adapted its products and restaurants to its main target. Besides its
‘Happy Meals’, some of McDonald’s restaurants serve breakfast offering that
include coffee, Egg Sandwiches, Sausage McMuffin, biscuit and hotcake.

Though McDonald’s is generally successful, it has encountered various


challenges along the way. High competition in fast food industry has been one of
the main challenges in its global strategy. Apart from high competition, the
company has been involved in controversies over its contribution to obesity.
Increased health concerns especially in the US and UK has been a major
concern to McDonald’s management.

Strategies

McDonald’s has adopted various strategies in order to be successful in global


fast food industry. Although McDonald’s is one of the most experienced
companies in the fast food industry, established and upcoming companies have
been a threat to its market share. Wendy’s is just one of the fast food companies
that have been a threat to McDonald’s.

Through adopting certain strategies, McDonalds have been able to withstand


competition and increase its number of restaurants across the globe. Strategic
management should define an organization’s position, its desired position in the
future and actions to be taken in order to achieve the desired goal.

Through its ‘plan to win’ global strategy, McDonald’s has been able to remain
highly competitive despite of negative publicity over health concerns.
Increased health concerns and negative publicity resulting from health related
controversies have been a major challenge to McDonald’s (Wilsher 2010). To
address this, McDonald’s has adapted various business strategies. To create a
healthy image for itself, McDonald’s plan to do away with soft drinks and Super
French fries.

Besides, the company plans to make changes to its menu in order to reflect
increases health concern. For instance cinnamon roll with a sausage burrito is
considered to be the major breakfast offering in United Kingdom.

McDonald’s has been able to establish a strong brand over years. With negative
publicity resulting from health concerns, the company has increased its effort to
protect its brand. “Be our customers’ favourite place and way to eat” is the
company brand mission (Ganapathy 2009). To ensure the mission is achieved,
the company has taken firm actions from improving products, customer service to
promotion.

The company has implemented a new cooking system aiming at improving


quality of products served in its menu (Howard 1999). Restaurant décor to brand
icon has been improved across the globe in order to ensure consistent image to
its customers. In addition, McDonald’s has consistently increased its promotion
effort through conventional channels as well as new technology such as the
internet.

Customer service is core to success in hotel and hospitality industry (Prakash


and Olsen 2003; Tse and Jogaratnam 2008). McDonald’s has taken strategic
actions to ensure high customer feel. Part of the strategies includes recruitment
and training of right staff.

McDonald’s staff is trained to treat customers with respect and maintain a smiling
face while serving. High standard of hygiene is maintained including restaurants’
bathrooms. To show its concern for environment, McDonald’s collects dropped
burger wrappings and cups using its three-wheeled vehicle (Livesey 1999).

Strategic Recommendations

The principle objective of strategic management is to boost an organization’s


competitive advantage. It enables the management to establish plans to address
current and future needs of an organization (Thompson, Strickland and Gamble
2007; Carpenter, Sanders, Rice and Martin 2010). Fast food industry has
attracted many players that try to address various customer needs.

Most of these competitors exploit customers’ needs and concerns not well served
in McDonald’s. McDonald’s therefore needs to put more effort to maintain its
market share in the industry. Some of strategic actions that McDonald’s should
take include:

 Enhance promotion and advertisement in order to overcome negative


publicity
 Progressively expand its menu in order to accommodate increased
customer needs and tastes, including health concerns
 Invest more on product development in order to come up with competitive
products for different cultures

Conclusion

Strategic management approach is a necessity in all industries in the global


economy. Hotel and hospitality industry is one of the industries that most require
strategic management. Companies in this industry must align their products and
services to rapidly changing customer needs and taste. McDonald’s success in
fast food industry can be attributed to its adherence to strategic management
principles.

The company is able to overcome its challenges by following clear-cut plans.


Though clouded by controversy over health concerns, the company seems to
maintain customer loyalty and still has high competitive advantage over other
players in the industry.

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