Unit V Essay
Columbia Southern University
Functional strategy of McDonald’s like any other company is part of overall corporate strategy. This strategy is made focusing many functional areas of organizational structure such as marketing strategy, financial strategy and production strategy. Financial strategy focuses on the funds and budgeting plans. The production strategy of the McDonald’s defines the products offered by the company. Organizational strategy is referred to the activities and benchmark standards of the organization which ensures that the organizational is successfully achieving its long-term goals. (Hazen & Lewis 2014).
The stability strategy is the strategy of organization in which organization decides to focus more on maintaining the current market position, so it stops investing more on expansion strategies, organization do not venture in new markets and does not introduce new products. Stability strategies are of three different types., No-Change Strategy, Profit Strategy, Pause/Proceed with caution Strategy. The stability strategy of McDonald’s helps organization to maintain its same products offered in market by focusing on the important strategic decisions for improvement of functional performance of the company. The main focus is to retain and develop competitive edge which is reliable with current external environment and other market requirements.
The stability strategy has its own advantages. The McDonald’s company successfully maintains its current market position and the achieves its desired goals ensuring that the performance met the set standards. It is beneficial because there is less risk involved and company does not have to take risks normally when the situation is not too bad. The company does not provide any change in the external environment, no opportunity or threat. There are some disadvantages as well. The company is not offering any new product instead its maintaining its current position, there may be chances that company can have more growth and profits.
The competitive and corporate strategy are in line with process of integrated negotiation, where company is looking for a win-win solution. The company disputants will work together to settle on mutually beneficial option. When the organizations agree on the mutual profits its constructive solution process. Competitive strategy is the one in which there are no negotiations, and results in win-lose situation. McDonald’s is maintaining the competitive edge in the market for years now. McDonald’s use the market penetration strategy as a primary intensive strategy for the growth. McDonald’s generic strategy is Cost leadership which helped it to maintain the competitive edge in the market. According to the porter’s model this strategy helps to minimize costs and in this way the company can offer products at the low prices. McDonald’s is effectively using this strategy to be successful. McDonald’s products are cheaper than all of its competitors.
The trade-off is defined as the opportunity cost, that is the ideal possible alternative. The trade-off actually involves a sacrifice which is necessary to have a certain product. There are two strategies for the growth, internal strategy and external strategy. The internal growth strategy is the strategy which utilizes the organization’s resources for growth. The strategies are long-term, and requires the organization’s investment of time and money. These strategies allow businesses to have control, it also helps to maintain the quality of product offered as there is very less effect of external forces. The external growth strategy includes mergers and acquisitions; the extern al growth strategy is not like internal growth strategy where profits are reinvested in the business for expansion. The external growth strategies utilize corporate funds to buy other organizations. The external growth strategy is very risky because it is impacted by external environment, but the business expansion is much faster than internal growth strategy. There are many different complications which can result due to mergers & acquisitions. Many attempted corporate buyouts are unsuccessful as well. In addition to different cultural issues, many logistics problems are also possible. Failure rates for the external growth strategy are 50-70% though its much faster route to be successful. At the same time, it is very risky. (Gargasas & Mugiene, 2012).
The best strategy to operate business on international level is external growth strategy it is very risky but it is more profitable. Retrenchment strategy is the strategy adopted by organization where it aims to reduce one or more of its business operations to cut expenses and to maintain more stable financial state in the market.
Business policies if the organization directly affect the strategic growth of the company. The policies made by company should align with the set goals. McDonald’s is famous the speed to serve its customers, without even compromising the quality of food offered at the lowest prices in the market. It is the biggest competitive edge.
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