Competitors and Strategic Performance Management - Essay Example

Competitors and strategic performance managementCompetitors and Strategic Performance Management is one of the crucial strategies for the success of organizations operating in competitive environments. McDonald has built a competitive edge through robust Strategic Performance Management that aligns the performance of its employees to the corporation’s strategic objectives and organization’s vision. McDonald is without any doubt making significant strides in innovation, business expansion, and cost reduction to outmatch its competitors and increase its market share.

Proactive approach in managing its business threats keeps McDonald remain valued in the market. In addition, the corporation understands that, there is a need to keep continuing monitoring its business external environment (competitors) to ensure that it formulates the most relevant strategies to promote and cope with stiff competition (Love, 1999).In order to understand its business environment, McDonald analyses its business competitors as those that compete with its “customers spending power.

” Some of the identified competitors are; brand competitors, industry competitors and form competitors. The industry competitors are regarded as the most critical ones since they offer almost similar products and services. The corporation further analyses competitors’ characteristics as serving the same customers, having superior or same technologies in products preparation, similar distribution channels, and same target market. McDonald further recognizes the need to examine their competitors existing strategies and objectives.

The corporation analyses competitors’ strengths and weaknesses in regard to its business (McDonald, 1996). By undertaking competitors’ analysis, McDonald understands that it will be able to do business forecasts on the competitors’ plans and strategies. Competitors AnalysisMcDonaldYumBCKFast Food ServiceSBUXSpecialty Eateries IndustryEmployees400,00050,40041,0005,700176,0002,140Market Cap61.17B15.57B2.45B161.69M10.1B1.64BRevenue22.99B11.08B2.55B403.14M10.04B1.13BGross Margin37.09%24.53%33.13%21.51%54.24%32.2%Net Income4.

35B928M192MN/A88MN/AEPS3.8271.9141.4020.090.1190.12P/E14.3517.6513.0117.91114.7922.33Where:YUM= YUM BRANDS, Inc.BCK= Burger King Holdings, Inc.SBBUX= StarbucksBased on the Cohesion Case analysis of MCD, its three major strengths include; large/strong customer base covering approximately 118 countries. For example in Europe, there is an increase in the number of restaurants from 6,650 to 6,485 which reflects a considerable increase in customer base. Strong financial base is also another strength.

In 2008 and 2009 MCD’s financial performance was relatively better compared to its competitors. Having a strong financial base has also helped the corporation to operate in different countries. MCD’s strong leadership as well as a diversified range of professionals is also a strength, which has helped the corporation to spearhead operations as well as strategic decisions.The three major weaknesses include negative publicity, low differentiation, and Mac Job and High Employee Turnover. Negative publicity as a weakness is illustrated in the manner the company has more often been criticized for offering foodstuffs that have stimulated obesity.

The company has drawn criticism from different sectors due to its target on children. Mac Job and High employee turnover are due to its low pay and low skilled labor required. This has led to high employee turnover leading to high costs of training hence affecting the overall costs. McDonald’s inability to differentiate itself substantially from the other Fast Food Chains is seen as a weakness of low differentiation even although it engages price differentiation.Its three major opportunities include changing customer habits, increasing demand of its healthier food, and home delivery of meals.

The changing customer habits represents new needs and hence opportunities. The increasing demand of healthier food means the company has an opportunity to open more branches especially in India. Home delivery implies the company can now be able to reach out many customers. Some of the major threats include currency fluctuations since it’s an international company, competition from local Fast Food restaurants, and trends towards the healthy eating as shown by many organizations to fight obesity, through creation of public awareness.

ReferencesLove, J.F. (1999). McDonald’s: Behind the arches.McDonald, J. (1996). Strategy in poker, business and war. New York: W. W. Norton.