Strategic Plan of McDonalds Corporation - Research Paper Example

Strategic Plan for McDonald's Corporation Introduction Strategic planning is an important aspect in the life of any organization that believes in staying ahead of the others in the competition. This is because the organization’s management has the opportunity of realizing its targets and the way the targets can be achieved. Analyzing the organization’s strengths, weaknesses, opportunities and threats gives any organization the go ahead about what must be done and when it has to be accomplished. The strengths that an organization possesses are crucial because they are used to counter the weaknesses and threats that the organization faces. McDonald's Corporation is not new in the market but that does not mean that its success cannot be challenged by emerging entities (Evans, 2011). McDonald's Corporation was started in the year 1940 and it has grown to become the largest hamburger and fast food outlet in the world. It serves more than sixty-eight million customers everyday in one hundred and nineteen countries. This implies that the outlets are the most frequented by customers across the world. The company was started by two brothers, Richard and Maurice McDonald but they were later joined by Ray Kroc in the year 1955 as a franchise agent. All McDonald's restaurants are operated by an affiliate, a franchisee, or the company. Furthermore, most of the company’s revenue comes from fees and royalties from franchisees, rent, or sales from the company operated restaurants. The main products offered by McDonald's restaurants are cheeseburgers, hamburgers, French fries, chicken, soft drinks, desserts, breakfast items and milkshakes. The world of business has been changing over the last few years and in a bid to ensure that customers are satisfied, the company has expanded its operations to include wraps, fruits, smoothies and salads (Evans 2011). The first restaurant to be opened under the name of McDonald's was situated at 398 North E Street at West 14th Street in San Bernardino. It was opened by the two McDonald's brothers mentioned above. The brothers noticed that restaurants operated by the name of the White Castle were making profits because of operating in the Speedee Service System. The brothers took advantage of the new phenomenon to make their name in the fast food industry. In addition, they used a mascot that was of a man with a chef’s hat, which was worn on a hamburger shaped head. Ronald McDonald replaced the mascot with a man shaped as a clown with his legs puffed out in 1967. The name McDonald’s became a trademark in the US after it was filed for the same status on 04 May 1961. After Kroc joined the company he later purchased it from the McDonald’s brothers and later transformed the business into international status (Evans 2011). Kroc’s way of doing business was very aggressive, which meant that he was incompatible with the McDonald’s brothers. Although the brothers contested the takeover, it is worth noting that Kroc won the battle and purchased the equity that the brothers owned. This was the second birth of the organization because Kroc had other ideas for the organization. In a bid to ensure that Kroc broke away from the founders’ way of doing business, he sold the first McDonald's Corporation’s outlet. The first restaurant, which was situated at San Bernardino, was sold to Juan Pollo restaurants after its demolition in 1976. Globalization and the American way of life are closely associated with the organization because of the way it has spread to several countries across the world. In addition, debates have been going about obesity, consumer responsibility and corporate ethics (Evans 2011). Although people are concerned about the products that are offered at the organization, it has to be noted that people make their own choices. This implies that most of the foods that are served at the restaurant have health concerns but the organization does not force any customer to take them. The organization’s focus is to open restaurants in as many countries as possible because globalization has made investing in foreign countries easy. It has to be noted that this does not come without challenges because some authorities are not ready to welcome the organization’s operations into its territories because of its corporate ethics. Although McDonald's Corporation is a leader in the fast food industry, its management ought to ensure that it uses the organization’s strengths to beat the weaknesses and utilize the opportunities in a bid to ensure that it maintains a competitive edge (Evans 2011). The world of business has become very competitive over the last years and this means that organizations have to make strategic plans in order to reach their targets. A strategic plan cannot be made without analyzing the strengths, weaknesses, opportunities and threats that the organization has. This is because an organization’s management ought to understand how it can utilize its strengths and opportunities in a bid to counter the weaknesses and threats (Evans 2011). SWOT Analysis for McDonald's Corporation Strengths McDonald’s is an established organization that has been in the business for around seventy-two years. This implies that the organization has loyal customers who are always willing to go back for the services. The existing customers act as advocates for any organization that offers quality products. This is because the customers recommend or even take their friends to those organizations, because they believe that the services of the organizations of their choice cannot be found anywhere else. This means that such an organization does not have to market its services aggressively because there are people doing it for them without any cost. This saves the organization’s finances and in the end increases profitability. Its products have brands, which are recognized across the world, such as Quarter Pounder, Big Mac and Chicken McNuggets. This implies that customers are always aware of what they are looking for when they enter a McDonald’s restaurant. Moreover, it has to be noted that the organization does not offer any brands, which are not authorized by the management (Evans 2011). Operating a business across the world is difficult. McDonald’s has realized that operating businesses in several countries comes with several challenges. In the end, the management realized that they could increase their profitability if they engage the services of franchisees, which makes the running of outlets located outside of the US easy. This can be attributed to the fact that the organization’s management does not have to micro-manage the franchises because all they need is to enter into a contract. The franchisees are managed by other people who are not employees of McDonald’s but they pay the agreed royalties because of using the McDonald's Corporation’s trademark. This implies that the organization has a competitive edge over the other organizations in the same business because of the investments that they have made in other countries apart from the United States (Evans 2011). In any business, diversification of risk is important because it ensures that the organization does not have all its investments in the same country. McDonald’s has taken advantage of this fact and diversified its risks by investing in several countries across the world. In addition, the organization does not operate all its restaurants, which means that some risks in its entities are not directly linked to the organization. Moreover, the needs of the customers have been changing and the organization has expanded its range of products to cover the needs of all customers. The organization adapts to cultural differences by developing products that suit the clientele. It has for example lamb burgers in the Middle East and India because the products are delicacies there. In addition, in the same countries, it provides separate entrances to families and single women because the societies do not allow the two groups to mix with other people. This shows that the organization is concerned about the welfare of the all its customers (Evans 2011). The organization has realized the importance of adjusting the ingredients of its products, in order to be in tandem with the US health standards. This has gone a long way in ensuring that the customers have increased their trust to the organization because they believe that the organization has the customers’ interests at heart. It has to be understood that the organization’s focus is giving customers the best quality products and services. This is the main reason why McDonald’s has chosen to offer the customers what they need to stay healthy. In this regard, the organization uses US Department of Agriculture (USDA) inspected beef, which is fresh from the farm. It does not use any additives or fillers on its chicken and beef. Furthermore, it ensures that all its eggs are first class. All the suppliers to the organization must be certified in order to ensure that what they supply is of the desired quality. Moreover, the organization works closely with suppliers, growers and ranchers in order to guarantee freshness and quality. This makes the customers happy because they do not risk been served stale foods (Evans 2011). Giving back to the community is a very important aspect in the success of any business. The organization is responsible socially and this is the reason why it operates Ronald McDonald House facilities, which are charged at $10 for families, which are in need of extensive hospital care. The centers are located in around three hundred communities across the world. These organizations do not target a specific community because it understands the importance of all communities, which provide customers for the organization. This means that all communities and customers are important to the organization irrespective of their culture, race, or religion. This is an important aspect in the customers’ mentality, because all customers feel good when they are appreciated. In addition, Ronald McDonald Care Mobile programs offer affordable dental, medical and education programs to children while sponsoring Olympic athletes. This implies that the customers are happy with the organization, for what it does to the community because of their loyalty. Weaknesses It has to be noted that most of the products that are served by McDonald’s have health concerns to the customers. This can be attributed to the fact most of the products have high levels of cholesterol, which means that they increase the risk of heart diseases and result to obesity to the consumers. The media has always being portraying McDonald's Corporation as an organization that targets at making its customers obese. This has led to a situation whereby, some customers do not want to be associated with products from the organization because they believe that the organization does not value their needs. In addition, most McDonald's advertisements target children based on the products that it offers, which means that the children grow, accustomed to McDonald's products (Evans 2011). On the other hand, the organization tried to launch its pizza but the venture failed miserably. This led to a situation whereby the main pizza supplier had an opportunity of making its name known in the pizza market. This is despite the fact that other names in the industry are well known by customers, which means that the organization spent a lot of money on a venture that did not materialize. The venture gave McDonald's Corporation’s competitors an added advantage in their bid to outdo it (Evans 2011). Employee turnover plays a fundamental role in the success of any company or organization. This can be attributed to the fact that new employees have to be trained in order to understand the organization’s fundamental roles. It has to be noted that training takes money, which means that the organization will have added expenses. In addition, the newly employed employees take time to adapt which leads to loss of business because of client dissatisfaction. At McDonald's Corporation, employee turnover has always been very high because other fast food chains offer better deals to any employee coming from the organization. This implies that McDonald's Corporation has been using a lot of money on training new employees and this has led to loss of enormous funds for the organization (Evans 2011). The world is changing in the way it used to operate in every sector of the economy. In the sector of fast foods, the world is leaning towards organic foods. It has to be noted that McDonald's Corporation has not embraced the technology because the management believes that customers do not appreciate these products. This is despite the fact that the organization’s managements knows that other organizations in the industry are buying and selling organic foods. It has to be noted that organic foods are cheap and this means that customers benefit when they are offered cheap products (Evans 2011). Investors are very important in the running of any organization. McDonald's Corporation has not been consistent in ensuring that net and operating profits are consistent. This has led to a situation whereby the company cannot attract new investors because it fears that its investments can be in vain. Without new investors, an organization cannot get the much-needed funds for expansion and investing in the emerging technologies. The organization ought to ensure that its finances are always on right position for the organizations to draw the attention of investors who are the bloodline of any organization (Evans 2011). Most of the products are targeted for consumers who have disposable income. The organization should come up with products that are necessities meaning that they will not be bought by the people who have access to excess money. This means that the organization ought to ensure that it develops products such as the main food products in all societies that it operates. Burgers and pizzas are not necessary in the developing countries but the organization’s franchisees can offer other necessities for their customers (Evans 2011). Opportunities In today’s world, the society is very conscious about what it eats at any given time. The US Food and Drug Administration (FDA), has issued statements on what is healthy for the country’s people. This implies that McDonald's Corporation would have a very good business deal if it were the first to adhere to the laid down rules. This can be attributed to the fact that the organization will be given the green light to offer the health products to the people by the government. This implies that the customers will be loyal to the organization because of the government’s assurance. Organizations that are approved by any government receive the highest rating from the public. Moreover, one should not forget the public offers the highest number of customers for any retail outlet (Evans 2011). Some of the packages that are used by McDonald’s are not environmentally safe. This can be attributed to the fact that global warming has resulted into many people believing that they should only support organizations that are supporting the green movement initiative. McDonald's Corporation has not endorsed this initiative in its packaging and adverts, which means that most of the environment savvy people do not appreciate its goods. The public, which makes up the majority of the McDonald's Corporation customers, has realized the importance of organizations and everyone going green. Going green means a greater future for everyone. The main target market for the organization is the middle earning person, which means that they can establish other outlets that target the upper market (Evans 2011). Threats The world of business has changed over the recent years. This means that McDonald's Corporation is at threat from the emerging organizations because they are threatening to offer better deals to customers than what McDonald's Corporation is doing. Although McDonald's Corporation is an established organization, it is faced with the challenge of beating the new entrants in the market. This can be attributed to the fact that customers’ needs are always changing, which means that the organization has to adhere to the changes (Evans 2011). The world’s economic recession places the company in a difficult situation because of the investments that it has made across the globe. This is because the businesses of the organization are spread across the world, which means that when the economy starts to rise up in some countries, other countries where it will be down will affect the organization’s overall performance. This will result in trickledown effect because of poor performance from the subsidiaries located across the globe (Evans 2011). It has to be noted that numerous casual dining restaurants have been coming up across the globe. This increases competition, which leads to reduced prices of products. This means that such restaurants will attract customers because of the financial problems that many people are facing today. On the other hand, all the people are being encouraged to adapt healthy-eating habits. This is despite the fact that McDonald's Corporation has changed the ingredients of what if offers to the customers but most people still believe that it is a leading cause of obesity crisis in America (Evans 2011). Most of the adverts that the organization offers are targeted to children including one-year-olds. The children are enticed with toys and other sweet meals, playgrounds and popular movies. This leads to children growing up and enjoying McDonald's Corporation’s meals into their adulthoods. Parents and other children advocates have been very vocal for these adverts. Several suits have been raised because Americans believe that the organization is a leading cause of obesity. This has led to the organization abolishing the Super Size bowl because the advocates portrayed negative effects towards it (Evans 2011). The Strategic Plan of Action Based on the Strengths, Weaknesses and Opportunities In the next three years, the organization should take advantage of its strengths in order to counter the effects of the weaknesses that it faces. The strengths of any given organization form the basis of making it successful. This can be attributed to the fact that strengths are used to counter any weaknesses the organization is facing. The fact that McDonald's Corporation is an already established organization means that it has brands which are well known by the customers. Having established a base means that it is able to compete with the other organizations in the same business. Moreover, it has to be noted that the organization has already established its brand to the people, which means that all the people know what they want whenever they enter any McDonald's Corporation’s outlet. People are very choosy when it comes to purchasing anything and this means that the products that are offered must be very appetizing (Evans 2011). In the past, most of the products that McDonald's Corporation was offering to its customers had health concerns but this changed when the U.S government enacted laws that prohibited any organization from selling any product that would pose a threat to the health of a person. This implies that the organization can take advantage of this and disapprove the media through adverts. The U.S media has always depicted McDonald's Corporation as an organization that does not care about the health of its consumers and customers. This is a weakness that the organization can fight and restore its dignity because the organization knows that it has complied with the laid down procedures (Evans 2011). A combination of strengths and weaknesses can lead to the realization of the given opportunities that any organization can undertake to remain ahead of the competitors. The world of business, thanks to globalization has resulted in tough competition in all sectors because companies can invest in any country of their choice. Moreover, McDonald's Corporation has not embraced organic foods which most people across the globe are running to buy. Many organizations across the world do not specify the source of their foods but customers still go and buy. Although McDonald's Corporation emphasizes on the importance of freshness and purely inspected foods, it has to be noted that today’s customers need an assurance of that whatever they are taking is purely organic. This can be attributed to the fact that the world of industrial food production has not been purely researched. Moreover, the organization has the opportunity of ensuring that all its products are packaged in a manner that does increase global warming (Evans 2011). Measurement of the Success of the Strategic Plan The main aim of the strategic plan is to ensure that the organization remains a leader in the business of fast foods. After implementation of the above strategic plan, it has to be noted that the organization has to analyze how it has countered the weaknesses that it had and utilized all the opportunities in a bid to ensure that its expansion is guaranteed. This can be measured according to the number of outlets that the organization will open in future and the increase in the number of customers visiting the outlets every day. In the end, it has to be noted that the organization’s profitability will increase because of the fact that sales will go up. The plan can not work without the participation of all players in the organization because the performance of the entire organization is pegged on the individual performance of each employee. This means that the organization has to ensure that all employees are aware of the changes that will be undertaken. Some employees may reluctant to implementing the changes but it has to be noted that with the right stewardship, everyone should be happy with the changes. Education to employees explaining why the changes are necessary will result in implementation of the plan because every employee will know his or her roles. In addition, the period should not be extended because the plan will be documented and each step assigned a definite amount of time (Evans 2011). Conclusion McDonald's Corporation is the leading seller of hamburger across the globe. This does not mean that the organization’s management should relax and enjoy its dominance in the market because other restaurants are emerging and they are employing the same skills to ensure that they outdo McDonald's Corporation. This implies that, for the organization to stay ahead of the others, it has to continue offering and improving the services, that it already has. This will go a long way in ensuring that the organization retains the competitive edge that it has over the other entities in the same business. The fact that suits and other complaints have been coming against the corporation does not mean that it should discontinue its venture. This is because the authorities have approved the products McDonald’s Corporation offers. References Evans, S. (2011). "McDonald's: The journey to health." Retrieved 20 April 2012 from http://news.bbc.co.uk/2/hi/business/3641603.stm Read More