Local Problem of McDonalds Company - Case Study Example

About McDonalds McDonald’s Corporation, commonly known as McDonald’s is one of the largest fast food chains operatingacross the globe. With its main Headquarters located in USA, it was actually incepted back in the year 1940 when it started off as a Hamburger fast Food pioneer Restaurant. Maintaining its flight through the thick and thin it currently has spread out to more than 120 countries while serving around above 200 million customers daily all over the world. It has gained the expression of McDonalization, because its prominence and major contribution to globalization (Royle and Towers, p. 11).The founder and co founders of the restaurant have contributed to the development of production line in general and to the overall fast food industry in particular. The credit for the success and long race accomplishments of the fast food chain goes to a row of primary variables, amongst which passionate founders, quality food and highly motivated employees float at the top of the list. McDonald’s offers counter service, Take away, Drive through and Home delivery. Starting off as a hamburger specialist, it has developed its name with many of the fast food items including quality French fries, big range of chicken, beef and fish burgers, wraps, salads, rice, deserts and cold drinks. Loving up to the expectation of all segments of society, McDonald’s has always been very popular name with the children. It has introduced productive and consumer friendly policies that are pulling it both vertically and horizontally for both the growth and expansion. Mission Statement The Mission statement of the restaurant is to be the favorite place of its customers for eat out and the manner to eat. Values The core values of the restaurant for cross the glob practices are Customer Commitment, growth of McDonald’s organization, Charities for the communities and continuous growth and improvement (Nina, p.98) Problem Issue: Firms normally find the price discriminating act and segmenting their market based upon demand sensitivity very convenient. McDonald’s experienced a drop in its sales during October 2012, which influenced its profit margin. It has set out an alarming situation since the drop in sales has occurred for the first time during the past nine years. The global economic crisis has moved the people psychologically as well as financially (Choi, 2013). The sales set back affecting the profits has been as a response of customers towards a new strategic change that McDonald’s has incorporated; a new trend in pricing strategy. They started charging customers through Barbell Pricing strategy where both the price sensitive customers and those considered paying high end dollars are catered. Situation Analysis: McDonald’s sales have fallen some more than expected. Prices are believed to behave in the format expected by most of the world class economists. And thus so have the spending patterns of the people globally. After McDonald’s s had invaded the third world Asian countries like India, Sri Lanka and Pakistan in the end 1990’s, they all of a sudden experienced good sales. By early 2000, they realized to boost the sales they need to change their product types for certain zones. To keep this idea in flow, they introduced vegetable meals for the religious strict and health conscious people. Since 2005, they have enjoyed hikes in the expected sales. The relationship marketing brings in better customers and buys off their attention which is specifically more applicable to hotel industry. Since McDonald’s holds a global presentation, its customers belong to different income segments. The nature of the McDonald’s food was that of easy to grab food which appeals regardless of class, gender, race or income group. Thus to accommodate financially weaker customers and students who dine out on pocket money, McDonald’s introduced low paid deals. As a general practice, businesses should depart themselves from the areas they are not operating as big players and divert their resources to the zones they hold strength in (Koksal and Engin, pp. 326-342). McDonald’s, the world’s largest fast food chain operating across Africa, America, Asia, Canada, Europe and middle east countries since more than past 50 years. It has had a fool proof record of outstanding against its rivals. Somehow, since April 2012 the sales started experiencing an unexpected drop down. Analysts had anticipated the sales to be 0.48 percent lesser than the usual, which, however turned out to be 0.6 percent. Sales in Europe fell by 2.4 percent and in Asia, Middle East and Africa by 2.9 percent. However, the sales in US fell by .07 percent. Observation and Evaluation: However, the sale decrease is not probably because of the pricing strategy. The attribution of sales drop to pricing in my view point is a result of misled analysis. The year 2012 posed sale threats to a lot of fast food operating businesses because of globally social issues. For instance, China was suffering from a bird flu issue during the year 2012. Other fast foods with chicken specialties equally suffered during the year 2012. Another big issue could have been third world countries have counterfeited copies of fast food chains that provide foods like McDonald’s. This has made people bore of the routine food deals of McDonalds’. Another big reason could be the entry of many other international food chains to the Asian and Middle Eastern countries. Their food specialties have brought a change to the fast food world. For instance, they serve food in baskets rather than paper bags and self refill of cold drinks. Recommendation Bigger Business chains have important resources at their disposal for developing and executing large scale promotional activities than the mere survival struggling tighter profit margin businesses. The sales influence that has been created by the change in pricing strategy can be combat revising this strategy, alongside with the introduction of other promotional strategies. When firms are in perfect completion and posses neither long run nor short run power, price discrimination cannot exist and single price strategy is followed. McDonalds is a large scaled business and as mentioned above, incorporation of price discrimination is actually not as bad as it has been made to sound. McDonald’s need to assess which part of the world is their business suffering the most. Once the areas have been located, which, as mentioned earlier according to the latest newspaper articles is mainly from Middle East and Asia, their cultural changes should be monitored and the target segments should be sorted. Following strategies could be used to boost the sales: Ask the Customers What they Want: McDonald’s need to stop assuming about what the people want, they need to inquire their potential customers about what they expect to see at McDonald’s for regular visits. To make the customers talk about their desires, make them talk protectively. Questionnaires and feedback forms are not filled with full honesty. They should rely on observation cues at other fast food out lets that are being run more successfully. Add appeals to your Marketing: Depending upon the area you are working on, attract some prominent media personalities to talk about McDonald’s as the best off the work option. Involve any religious scholars o justify consumer indulgence that would make people feel secure about the product. Target the best Potential Customers: They should assess the surroundings for the most frequent visitors and launch new meals to gratify them and introduce delightedness. For instance, the office workers who visit during lunch breaks introduce tea break meals for them. To create delightedness, attach some easy bimonthly payment instead of daily payment schedule. Introduce an option of low carb diet meals for Moms as a co joined meal with Kids meal. Launch some eat healthy food chain for kids that would equally be appreciated by parents or school lunch boxes that can directly be delivered to schools (Schlosser, pp. 111-120). Find What your Close Competitors and Rivals are on with: McDonald’s management should give a detailed look to what their competitors are up to. They should view their competitors’ advertisements in detail and visualize as a customer how it attracts and overcomes their advertisements. Conduct a SWOT analysis of your competitors and try to overcome their weaknesses and threats and see what strategies are needed to overcome their strengths and weaknesses. This gives a road to pull in a customer with the logic of what you do better than the competitors. This would enable McDonalds to attract more customers without reducing the price and reasoning them to purchase at the same price (Ilbery and Maye, pp. 823-844). Focus on the increase in Frequency: Once the McDonald’s customer base gets redeveloped, customers need to be retained and their comeback has to be guaranteed. They can use bounce back coups. For instance, bring five friends and get one meal for free, if a customer eats twice in a week at your outlet, he gets one meal free. This could contribute to a raise in average sales. Few extra units a day will add up to huge amount by the end of the year. Conclusion: Thus price discrimination or charging barbell pricing does not show to be the prominent reason for sales drop. In fact, discrimination makes up for the losses that the low priced products bring in. When firms price their wares on discriminatory basis depending upon each segment’s price elasticity, this brings in sales surplus. It is only the costumers who make the business float; McDonalds’ needs to target the change in their taste and satisfy them, sales would automatically get boosted. References Royle, Tony, and Brian Towers. Labour Relations in the Global Fast Food Industry. New York: Routledge, 2002. Print. Jacob, Nina. Intercultural Management. London: Kogan Page Ltd, 2003. Internet resource. Choi, Candice. "McDonald’s ekes out higher profit on value focus - Business, Need to know."Macleans.ca. Rogers, 23 Jan. 2013. Web. 22 May 2013. Koksal, Mehmet Haluk, and Engin Ozgul. "The relationship between marketing strategies and performance in an economic crisis." Marketing Intelligence & Planning 25.4 (2007): 326-342. Schlosser, Eric. Fast food nation: The dark side of the all-American meal. Harper Perennial, 2004. Ilbery, Brian, and Damian Maye. "Alternative (shorter) food supply chains and specialist livestock products in the Scottish-English borders." Environment and planning A 37.5 (2005): 823-844. Read More