Unit VII: Case Study McDonald’s
Columbia Southern University
Case Study: McDonald’s
McDonald’s background and overview:
McDonald’s is the world’s largest retailer chain of fast food serving almost 35000 restaurants in more than 120 countries spread around the world. McDonald’s serves more than 50 million customers daily. “Golden Arches” is the most famous and easily recognized logo in the world. McDonald’s not only focused on expansion and becoming dominant in world but also focused on its existing restaurants to improve quality and satisfy its customers (David, 2011). McDonald’s effectively and successfully implemented all of its strategies and maintained its market position in 2015 as well and gained competitive advantage over all of its competitors in industry. Increased growth rates, Increase in earnings per share shows McDonald’s is successful to have increased profits as well. Approximately 90% of the McDonald’s fast food restaurants are operated by the independent franchisees. The typical terms for franchising are 20 years. But the franchisee needs to maintain the quality of food and other regulations also apply. The Franchisee must need the standards of McDonald’s to keep the franchise.
History of McDonald’s:
The company was started as a normal BBQ restaurant and was functioned by Richard and Maurice McDonald, who for the first time came up with the idea of restaurant in San Bernardino, California. In 1948, they restricted the business and finally added a new production line to their business i.e., Hamburger. In 1955, Mr. Ray Kroc a business man joined as a franchise agent and took over the right of McDonald brothers & founded the McDonald’s corporation on 15th April, 1955. According to the BBC Report, McDonald’s is the second largest private manager in world after Wal-Mart.
McDonald’s External Environment:
McDonald’s is facing challenges from its external environment so the company is changing in order to compete with the continuous changing environment. McDonald’s is declining slowly so now all their strategies are to slow down the decline stage of their life cycle. In 2017, McDonald’s was investigated by European Commission due to some tax issues. It was made clear after it that McDonald’s has paid their taxes fairly in the UK, but there are still some questions about the company related to taxes (Simpson, 2017). Another main issue is McDonald’s is facing from ethical point of view is obesity epidemic which is very high. McDonald’s has made very major changes to its food by reducing the calories and by adding less sugar and salt to its happy meal product line. McDonald’s is up to date with the current technology.
McDonald’s Objective and current strategies:
McDonald’s vision is to grow and become better every day by serving its customers delicious food every day. They are not only focusing on their objective to grow and expand in the developing countries but also to focus on health now. McDonalds is continuously working on its food quality to make healthier reducing the calories and providing healthier options. McDonald’s operate by competitive strategy and intensive growth strategy which is their long-term objective as well. The company is also working on improving the business operations to generate more profits.
If the company keep its focus on healthy food and continue to improve the quality, McDonald’s will successfully maintain its market share and competitive edge. The CEO of the company claims that in five years in of its major markets, McDonald’s will maintain its market position and expand in many different countries providing healthy options including allergen-free food too. Today, 75% of people lives within the distance of three miles from McDonald’s. This explains that how accessible McDonald’s is to every person. According to Forbes, McDonald’s is the 9th most valuable brand in the world and it can improve more by taking few big steps to deal with its external environment.
As a CEO:
As a CEO of the company, my recommendations would to focus more on Healthy food, by introducing gluten-free product line. Today, not only gluten intolerant people but a big population is switching to a gluten free diet because of the health benefits. As a CEO I would be taking steps to deal with the problems due to which there are many lawsuits against McDonald’s, these lawsuits not only damage the brand name but also take a big amount of profit to deal. McDonald’s has a very high employee turnover rate as a CEO I will rethink the strategy and should work on their employee retention strategies.
By offering high-wage rate McDonald’s can retain its employees and can save on training costs. I will also focus more on organic menu to satisfy the customers by providing healthier foods. It will be a big opportunity to introduce Organic products as there is increased health awareness & people are more concerned about eating healthy organic food these days. This will increase McDonald’s sales and create positive public image. One of the major changes would be more focus on recycling and helping to maintain green environment. So that the Company can start go green campaign and use products which are environment friendly and that can easily be recycled, playing an important role to control pollution.
McDonald’s Competitors and their strategies:
KFC is the biggest fast-food chain after McDonald’s making it McDonald’s biggest competitor. KFC is specialized for fried chicken (business insider, 2015). They also operate by the low-cost strategy. Their main edge is they offer fried chicken which is not as unhealthy as McDonald’s fries and other food items. KFC is also offering halal chicken because of which the big Muslim population prefers to go to KFC instead of McDonald’s because right now there is not a single McDonald’s in developed countries offering halal food. KFC also offers salads which are the healthy options. Customers have the image of KFC as it cares about the health and offers healthy food which is organic as well. There are many other top competitors of McDonald’s which includes, Burger King, Subway, Starbucks, pizza hut and few more. Burger King is taking McDonald’s market share by expanding its menu and by offering low prices on their menu (the sales lion, 2010). There is a changing trend of customers as they are switching to other places. McDonald’s can maintain its market position and even grow it again by focusing on organic healthy choices.
McDonald’s is no doubt the world’s leading fast food retailer. Every year McDonald’s profits are increasing and the company is expanding its business to new geographic area. The company is successful but it is also facing fierce competition with its competitors. According to 2018 statistics Subway is the biggest retailer and now McDonald’s has to compete with Subway to maintain its market position as in past. The biggest challenge company is facing is the unhealthy menu offered by them. Due to the increased awareness of healthy food, McDonald’s sales are cut down; people are nowadays more health conscious. The CEO of the company should rethink about food strategies make it healthier and attractive for people.