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Current Strategy Followed by the McDonald’s

Discuss about the Strategic and Environmental Analysis for McDonalds Corporation.

McDonald’s Corporation founded in 1940 is recognised to operate several franchises restaurants chain in United States, Latin America, Asia/Pacific and Middle East. The main operation of the company is seen to be headquartered in Oak Brook, Illinois. The primary products of the company have been identified with Hamburgers, chicken, milkshakes, French fries and coffee. The various ranges of other products offered by the company have been seen with beverages, soft drinks, food products and coffee. As per the recent records published on December 31, 2016, it has been seen to be operating in 31,230 franchised restaurants (Corporate.mcdonalds.com, 2017). 

The main purpose of the report has aimed to analyse on the present strategy followed at McDonald’s. Some of the main form of the strategies has been identified with Business-Level Strategies, Corporate-Level Strategies, Networks, Partnerships and Alliances. The study will further identify the Global Strategies with various types of the Multinational Corporations. The study will be further able to interpret the firm’s current strategy and the most significant factors affecting the firm’s performance, and your understanding of strategy. The latter part of the report will be further able to identify the drawbacks of the present strategy and recommend alternative strategic initiatives which the firms should pursue. The study will be also able to provide the various types of the measures which will be used to monitor the strategies in the organisation.

The various levels of the strategy adopted by the company have been identified in terms of the corporate strategy, business strategy, marketing strategy and financial strategy.

The expansion strategy adopted by the company has been seen to be mainly evident in form of the expansion initiatives in the developing economies such as Asian countries. The Golden Arches have been seen to be consisting of a high potential for income. The expansion strategy has been already seen to be successful in regions such as “Tokyo, Seoul, Beijing, India, and UAE”. In addition to this there have been several other markets in the Asian region which has been seen to be offering the commitment of high sales along with market share and opportunities for profit for the fast food centre to setup the operations there (Rooney, 2014).  

The expansion strategy adopted by the company has been seen to be used as worldwide strategic measures. The company has been able to replicate the business model not only in U.S. but also internationally. At present more than 80% of the restaurants in the company have been able to maintain their operations via franchises (Anaf et al.,  2017).

Corporate Strategy

The existence of the different rules in the International regions, the company is not able to follow standard practices. This particular instance can be seen in Russia due to the various types of the local regulations. The standard adaptation process has been further seen to be based on the meeting the legal and cultural demands. The McCenter located in Russia was mainly used for purchase of the raw materials for McDonald's meals, which now got entered into the section of vegetables, milk, buns, vegetables and soft drinks products which are seen to be purchased from the wholesalers (Pagani, 2013).

McDonald’s primary target has been mainly seen with the price sensitive customers with the use of value for money meals which are mainly seen to be identified with “Buffalo Ranch McChicken and the Jalapeño McDouble”. During the initiation, the main target of the company was based on the items with higher value, however in the recent times, it has shifted it’s product to lower priced products (Mithas, 2013). 

McDonald’s has always maintained the reputation by providing higher quality of the food services to the customers with clean surroundings. Although, the increasing demand has been evident with complexity in the food menu and the same has been evident with longer duration of preparation along with the time for preparing the items in the food menu. The speed of the service has been seen with the crucial aspects of the time required. Due to these identified issues McDonald's has been able to realize that former reputation for serving the quality fast food at the earliest will involve the elimination of the specific menu items and a greater emphasis on the traditional items such as French Fries, Quarter Pounders, Big Macs, Fish products and chicken (Verbeke, 2013).

The brand marketing has been seen to adversely affect the increasing health concerns for the consumers all around the globe. The main product of the company has been considered as junk food and it is seen to be unfit for everyday consumption. McDonald’s has been seen aim for increasing trust among the customers in terms of the food quality and the brand of the products as healthy option of food. In order to do so the company has been seen to offer salads, fruit juices, iced teas along with this some of the some of the other options has been seen with the products with low in calories and carbohydrates (Kane et al., 2015).

Business Strategy

The financial strategy maintained by the company has been seen with the focus on the leaner organisational objectives and key process for the business. For the purpose of focusing on the growth initiatives and creation of more customer value, the company has been seen with the plan of refranchising of the restaurants. In 2015, the company took the initiative to refranchise plan based on 50% more return in compare to the previous three year. In the same year the capital expenditure has been forecasted as $ 2 Billion. This has been seen to be lower by $ 1 decrease from the previous year (Quek & Ling, 2013).

On January 2015, the Chief Marketing Officer (CMO) of U.S. has been taking new initiatives to meet the demands of the customer. McDonald’s has been shifting the Billions served strategy to Billons heard strategy. The Billions Heard strategy has been further seen to adhere to the meet the changes in the products. It has been further seen that these demands are to be addressed based on the new offerings and having policy for the improved food practices (Butler, 2013).

The negative perception of the company has been identified with blogs and various types of the educational videos to inform about the various types of the business. Some of the new marketing policies of the company have been seen in terms of creating a platform for creating new taste among the consumers. The main form of marketing strategy adopted by the company has been observed in terms for giving the option to the customers on making a new order from the scratch without need to refer to the menu list. In addition to this, the customers of the restaurants have been seen to be having an open conversation of where the food is coming from. The main marketing motto of the company has been identified with informing the customers about the new product enhancements (Forbes.com, 2014).

The evaluation of the present strategy of the company has been able to state on the worst decline in the sale. The various types of the new restaurants have been seen with more attractiveness among the modern consumers. The company has been able to come up with an effective solution for the customizing price sensitive options along products which can be seen to be healthier. The company has been seen to be finding a way to restore the trust which has been based on the quality of the various items offered (MarketLine, 2016).    

Financial Strategy

The adaptation strategy followed by the company in corporate strategy section has been seen to be suffering from several challenges which are associated to the maintenance of the uniformity in quality and the expenses from the Russian outlets. This has been particularly seen to be affecting the quality of the profit procured and total amount of the market share to the cost of the food (Nandini, 2014).           

The suitability of the business has been further identified with the customization based across countries operations and simplifying the menu. In addition to this, the company has been seen to add several products to the products which has been able to be prepared quickly. Moreover, in order to suit with the needs of the customer, the company has introduced several products such as “Big Macs, Quarter Pounders, McFish, McChicken, French Fries, sugar-free drink options, juices, and breakfasts” (Crawford et al., 2015).

In order to adapt with the present needs, McDonald’s has been seen to emphasize on the strategy for digital marketing. Based on the various types of the interpretations it has been discerned that the strategy for the digital marketing, which shows young people visiting the store. The drop off in the sales and the market shares is seen among the families which has been identified as the main problem with the company (Ghezzi, 2013).

Based on the various strategies adopted by the company some of the new additions have been identified in terms of the making new additions in the breakfast items. Some of the different types the other products of the company have been further seen to be based on the coffee, pastries and milkshakes. This particular strategy has been successful among the brand and the demand for the demand for the breakfast items. 

Some of the benefits of the present strategic measures adopted by the company has led to the aforementioned benefits:

  • It has been discerned that after the strategic measures franchising is seen to require lesser amount of capital than the growth methods. The various measures for the franchising have been able to permit for the growth with the capital invested by the franchise owners (Raju et al., 2015).
  • The present initiatives taken by the company has been able to present opportunity along with the unique concept for the business. Franchising has been able to allow for the multiple units which can be opened simultaneously.
  • The company has been able to increase the recognition of the name which has been seen to be based on the newer strategies (Gerhardt et al., 2014)
  • The present strategies have been able to source the new revenues streams. Some of the main form of the revenue stream has been identified with franchise fees, rebates from the suppliers, reduction in the training fees, more service options to the franchises and providing marketing and advertising in the regional and the national media based on the franchise network (Hazen & Lewis, 2014).

The various types of the recommendations of the company have been seen to be based on the consideration of demand in the specific items which has been identified with the compatibility with the regional competitors. The company should be more proactive with the popularity of the Golden Arches' breakfasts. By the adoption of the process company will be able to increase the sales and the profits. Some of the main recommendations have been identified with the various types of the options for simplifying the menu of the company. The present strategies have been identified with the customization process which will be able to address the different types of the requirement based on the regional preference of the customers. In order to do this, the company needs to set the strategies to understand the present taste and preference of the individuals in a particular region. It has been further discerned that the present strategies needs to implement various types of the product development strategy. This will be able to support the different types of the products based on the supporting various types of the intensive growth strategies along with the various types of the differentiation strategy.

Marketing Strategy

The company has been strategic objective seen to be having the main scope which has been able to address the various demands of the customer. As the company has been able to draw more revenues from all the international locations except for Middle East locations, it needs to put an augmented focus on the Middle Eastern Countries.

Conclusion

The analysis of the present strategy followed by McDonald’s has been already seen to be successful in regions such as “Tokyo, Seoul, Beijing, India, and UAE”. In addition to this there have been several other markets in the Asian region which has been seen to be offering the commitment of high sales along with market share and opportunities for profit for the fast food centre to setup the operations there.The expansion strategy adopted by the company has been seen to be used as worldwide strategic measures. The company has been able to replicate the business model not only in U.S. but also internationally. At present more than 80% of the restaurants in the company have been able to maintain their operations via franchises. McDonald’s primary target has been mainly seen with the price sensitive customers with the use of value for money meals which are mainly seen to be identified with “Buffalo Ranch McChicken and the Jalapeño McDouble”.  McDonald’s has always maintained the reputation by providing higher quality of the food services to the customers with clean surroundings. Although, the increasing demand has been evident with complexity in the food menu and the same has been evident with longer duration of preparation along with the time for preparing the items in the food menu. The evaluation of the present strategy of the company has been able to state on the worst decline in the sale. The various types of the new restaurants have been seen with more attractiveness among the modern consumers. The company has been able to come up with an effective solution for the customizing price sensitive options along products which can be seen to be healthier. The company has been seen to be finding a way to restore the trust which has been based on the quality of the various items offered.The company should be more proactive with the popularity of the Golden Arches' breakfasts. By the adoption of the process company will be able to increase the sales and the profits. Some of the main recommendations have been identified with the various types of the options for simplifying the menu of the company.

References

Anaf, J., Baum, F. E., Fisher, M., Harris, E., & Friel, S. (2017). Assessing the health impact of transnational corporations: a case study on McDonald’s Australia. Globalization and Health, 13(1), 7. https://doi.org/10.1186/s12992-016-0230-4

Butler, S. (2013). McDonald’s burgers “free of horsemeat” due to close ties with farmers, firm says. The Guardian. Retrieved from https://www.guardian.co.uk/uk/2013/feb/28/mcdonalds-free-horsemeat-link-farmers

Crawford, A., Humphries, S. A., & Geddy, M. M. (2015). McDonald’s: A Case Study in Glocalization. Journal of Global Business Issues, 9(1), 11–18.

Corporate.mcdonalds.com. (2017). Company Overview & Segment Information :: McDonald’s. [online] Available at: https://corporate.mcdonalds.com/mcd/investors/company-overview/company-overview-segment-information.html [Accessed 3 Oct. 2017].

Forbes.com. (2014). McDonald’s Corp.

Gerhardt, S., Hazen, S., & Lewis, S. (2014). Small business marketing strategy based on McDonald’s. ASBBS E - Journal, 10(1), 104–112. Retrieved from https://search.proquest.com.library.capella.edu/docview/1534501086?accountid=27965%5Cnhttps://wv9lq5ld3p.search.serialssolutions.com.library.capella.edu/?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&rfr_id=info:sid/ProQ:abiglobal&rft_val_fmt=info:ofi/fmt:

Ghezzi, A. (2013). Revisiting business strategy under discontinuity. Management Decision, 51(7), 1326–1358. https://doi.org/10.1108/MD-05-2012-0388

Hazen, S., & Lewis, S. (2014). Small Business Marketing Strategy Based on McDonald’s. ASBBS Annual Conference, 10(1), 104–113.

Kane, G. C., Palmer, D., Phillips, A. N., & Kiron, D. (2015). Is Your Business Ready for a Digital Future? MIT Sloan Management Review, 56(4), 37–44. Retrieved from https://search.proquest.com/docview/1694712931?accountid=8144%5Cnhttps://sfx.aub.aau.dk/sfxaub?url_ver=Z39.88-2004&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&genre=article&sid=ProQ:ProQ:abiglobal&atitle=Is+Your+Business+Ready+for+a+Digital+Future?&title=MIT+

MarketLine. (2016). McDonald’s Corporation. McDonald’s Corporation MarketLine Company Profile, 1–33. Retrieved from https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=118890675&site=ehost-live

Mithas, S., Tafti, A., & Mitchell, W. (2013). How a Firm’s Competitive Environment and Digital Strategy Posture Influence Digital Business Strategy. MIS Quarterly, 37(2), 511–536. https://doi.org/10.1257/jel.50.4.1051

Nandini, A. S. (2014). McDonald’s Success Story in India. Journal of Contemporary Research in Management, 9(3), 21–31. Retrieved from https://access.library.unisa.edu.au/login?url=https://search.proquest.com/docview/1624963909?accountid=14649%5Cnhttps://www.library.unisa.edu.au/applications/findit/??ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&rfr_id=info:sid/ProQ%3Aabiglobal&rft_val_fmt

Pagani, M. (2013). Digital Business Strategy and Value Creation?: MIS Quarterly, 37(2), 617–632.

Quek, G. C., & Ling, P. (2013). McDonald’s apology over a pig toy: A cultural territorial clash. Australasian Marketing Journal, 21(4), 228–233. https://doi.org/10.1016/j.ausmj.2013.08.002

Raju, N., Singh, S., & Tariyal, M. (2015). Service Quality of McDonald’s. Global Journal of Enterprise Information System, 7(3), 1–8.

Rooney, J. (2014). [VIDEO] Cannes CMO Interview: McDonald’s Steve Easterbrook. Forbes.com, 3. Retrieved from https://search.ebscohost.com/login.aspx?direct=true%7B&%7Ddb=bth%7B&%7DAN=97104997%7B&%7Dsite=ehost-live

Verbeke, A. (2013). International Business Strategy: Rethinking the Foundations of Global Corporate Success. Zhurnal Eksperimental’noi i Teoreticheskoi Fiziki. https://doi.org/10.1007/s11575-013-0196-x

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