The company operates and offers franchises of McDonald’s restaurants, famous for selling locally relevant meals of quality food and drinks at diversified prices. The company employs a global strategy of having both company-owned and franchised outlets. The company is estimated to serve over 68 million customers on a daily basis in over 119 countries having a total of more than 36,000 outlets. The company maintains franchise agreements as well as rent agreements for the properties where the outlets are found. As at 2016, the company had property valued between $16 to $18 million. From the time the company was founded in 1948, the company has continued to gain stature as the biggest and reputed fast food chain all over the globe (McDonald’s Corporation, 2015)..
The restaurants under the McDonald’s label offer substantially similar menu but with some variations placed to suit the local clients’ preferences and tastes. The company also maintains an innovative streak that allows development of new products on an ongoing basis. The famous menu served by McDonald’s include hamburgers, cheeseburgers, Big Mac, Fillet-O-Fish, Chicken sandwiches, French fries, McFlurry deserts, shakes, among others. The policy of the company on products is to ensure quality, choice, and nutrition are addressed in developing these menus (Dixit, 2017).
The company is operated primarily as a franchisor with over 80% of the restaurants being owned and operated by independent franchises. This model provides a chance of benefiting from the expertise gained in operating the company-owned restaurants and make it possible to oversee improvements in operations and success in the various branches.
The company is operated and run by a team of over 420,000 (the number as at 2015). The global number of employees include those from the franchises as well as the company-run restaurant employees. It is these employees who carry forward the McDonald’s agenda (Dixit, 2017).
McDonald’s and its supply chain acquires food and packaging, and other goods from different independent suppliers. The company stipulates high quality standards and product specifications to be fulfilled by the suppliers. The suppliers are reviewed on an ongoing basis and the adherence to quality and other set policies determined.
McDonald’s restaurants face competition globally, nationally, regionally and at the local levels. The company indulges in the competition with leverage of price, convenience, service, variety of the products served and quality of the food served in a global platform of restaurants that is highly fragmented. The company faces stiff competition from other fast food joints such as Taco Bell, Burger King, Kentucky Fried Chicken, Pizza Hut, Subway (McDonald’s Corporation, 2015).
Social Aspect- healthy issue
Over the past few years people have become more concerned about living quality and health lives. The common belief with this new concern is that fast foods, which make most of McDonald’s menu are not good for their health. The company has had to react and create a line of product that is in line with the healthy trend.
McDonald’s uses the management review data by Euro monitor International to determine its competitive position in the global restaurant industry. Euro monitor International categorized the primary competition facing McDonald as the informal eating out (IEO) comprised of quick-service eating restaurants, casual dining full service centers, street stalls, cafes, home deliveries and specialty cafeteria and coffee shops.
The company operates research and development centers in US, Europe and Asia. These centers lead activities important to the company’s business in terms of understanding the market, creating responsive products and understanding general economic conditions that may hinder growth and development of the company.
To gain a competitive edge in the world of fast food, McDonalds is known for focusing in offering fast service with matching consistent quality and low prices. This proved to be a winning formula that helped the company earn its spot as the largest fast-food provide in the USA.
The management style guided by the motto, “Think globally, act locally” sets McDonald’s apart from its peers. The company put a lot of consideration of the local traditional, culture, environment, and presence of local supplies to ensure that the businesses are accepted in different countries. The franchises are allowed to have their innovations tested, and when proven viable, are replicated across relevant restaurants. This ensures that the menus are continuously evolved to fit in the local perspective.
Measurement guidelines on verifying Strategy effectiveness
The company primary strategy is to face off competition in the informal eating out segment where there are renowned traditional and other competitors. McDonald’s understand that the competition is based on product choice, quality, affordability, service and location. The set guidelines by the company seeks to determine the ability to improve the products, come up with innovative and new products, manage complex restaurant operations and act upon the action of competitors.
McDonalds uses quality, service, and value as the pillars of ensuring that the customers are accorded a unique experience. To achieve this, the guidelines set by McDonald include high quality ingredients, maintaining strict hygiene standards in the locations, ensure accommodative customer service, and emphasis of family atmosphere where the children, youth and adults needs are all catered for.
The management style adopted by McDonald’s, commonly known as ‘tight loose” has allowed the company to set the overall quality standards but at the same time offer the franchises a chance to make localized decisions. This has seen the franchisees extend the innovativeness streak and come up with innovative products such as Fillet-O-Fish and Egg McMuffin. To address the ever growing customer need in healthy food alternative, McDonald increased the research for new product development in an effort of addressing the growing need of customers’ concern of health (Han, 2008)
McDonald understands that the pricing, promotional, and marketing plans need to be effectively to prevent a negative effect on the results. The company thus outs emphasize on the need of establishing quick response to the market and competitive conditions changes. The company also measures its effectiveness in operating in a complex and expensive advertising environment. This requires an assessment of the marketing and advertising programs meant to attract and retain customers. Customers’ loyalty programs are maintained for these purposes and this offers a chance to improve on customers’ engagement levels (McDonald’s Corporation, 2015).
In measuring the operational strategy, McDonald’s aims at establishing customer traffic patterns and food selection. This is made possible by carry out analytics of sales history and trends. The information is used to inform on the preparation of various menu items in the right quantity and specific times when the target customers arrive.
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