McDonald's - Strategy Evaluation, Selection, and Implementation - Case Study Example

Strategic Evaluation, Selection and Implementation Section 3 Introduction The gap between strategic evaluation and implementation is fulfilled by performance. Through the approaches of strategic evaluation and selection, a business evaluates the performance and productivity of the current business endeavors and also for the future. Generally, the evaluation is carried out by a research study which focuses on the past records, current performances and the future targets that the business holds. After an evaluation of the business is done, a suitable strategy is selected which is feasible and applicable in the business. The strategic implementation and control is the part where the business adjoins the strategy to the resources, employees and culture of the business to ensure that it is successful (Quinn, 2011, p. 56). Comparison of limited growth, substantive growth and retrenchment: For many small scale or new companies, the basic principle for success is growth. The principle of growth would mean the company takes over greater market share, allows more sales, more profits and a greater return on equity. However, the growth strategies do not always focus on immense uncontrollable growth, some managers hesitate in growing too rapidly. Thus, they apply the limited growth strategy. Limited growth is both good and bad for a business. The companies that are small scale and new usually have less revenues to fund their growth and thus they avoid huge debts needed for growth. Limited growth would mean lesser debts for the company which they can easily regulate and pay off. Rapid growth also comes with increased operational challenges for the business bringing more complications for the managers. At times the limited growth strategies are also considered to be unsuitable for businesses as they lose their market share at the hands of competitors, decrease opportunities and gain pressure from the investors who want to invest in growing companies (Chernatony, 2012, p. 43). On the other hand, substantive growth brings much beneficial changes to the business and also helps to overcome other problems and lacking. Substantive growth may always help the business in their development stage. Substantive growth will increase the wealth of the business and help the business to fund its future projects from the wealth coming from growth. The wealth coming from the substantive growth is also helpful and considerable when a business carries out strategic evaluation and selection. With these strategies the business can become strong and competitive with a large market share. When larger businesses achieve substantive growth, it is not only beneficial for the company but also for the society in a social perspective. Substantive growth can help the business to set the priorities and fulfill the strategies by implementing them step by step (Sekhar, 2009, p. 205). In contrast, the retrenchment strategy in business is a strategy where the business cuts down the operational activities being carried out in order to become financially stable. The business would back out from certain markets and cut down expenses by reducing diversity and the size of the overall business. The goal is to achieve a beneficial turnaround to ensure the application of suitable strategies. This also helps the business to look at the future threats and opportunities for the business and then evaluate the strategies. This strategy must be beneficial for the business when it reaches a stage where it is not financially stable, too much debt and too little funds to pay them off. Alternative strategies for limited growth, substantive growth and retrenchment: On various occasions, the businesses need to adopt certain alternative strategies to limited growth, substantive growth and retrenchment. These alternative strategies to limited growth are market penetration, market development and product development. Alternative strategies to substantive growth are horizontal integration, related diversification, vertical integration and unrelated diversification. Strategic alternatives for retrenchment are turnaround and divestment. The market penetration strategy is a strategy which allows the business to lower the price for the product which is initially promoted in the targeted market. Through this the business can achieve more sales revenue through limited products in a defined market. Market development is a low risk strategy which is based on the strategy of specialization where a business specializes in a product, increases its range and applies possible modifications to reach customers in the specified market area. Product development is the strategy in which a business modifies its existing products for the specific market (Lundy, 1996, p. 226). Horizontal integration is the term used in strategic management to describe the control that one business takes over the other businesses at the same level of production. This is an alternative to the substantive strategy as it indicates the immense growth of a company and funds to acquire another business. Related diversification is when a business increases the activities in the same product line (Kazanas, 2003, p. 175). Vertical integration is a strategy in which a business combines the stages of production of a product and they are operated in different sections. Unrelated diversification is a highly risky strategy in which the business invests in new products that are not related to existing products and services at all (Martin, 2005, p. 487). A turnaround strategy is a strategy for those businesses that are making losses and operating negatively. The strategy implements to the business and allows the businesses to become profitable by coming out of the negative framework and entering the positive one. The divestment strategy is a strategic alternative for retrenchment and it defines the business activity of reducing a portion of their business by selling it or liquefying it. The unmanageable and unprofitable portions of the business are eliminated (Jeffs, 2008, p. 78). Future strategy for McDonalds: The future strategy which is appropriate for McDonalds is its ‘Plan to Win’ strategy. In 2003 the company adopted this strategy and till now it has been the best strategy for the company for profitable sales. The strategy was designed by the managers in a way that it fulfills all the areas of concern. The strategy should be continued because it is the key strategy which is successful since many years. This strategy has bought many successful outcomes to the company and thus the managers plan to continue this strategy. The strategy focuses on the main areas to improve the performance of the company which are people, product, price, place and promotion (Thomson, Fuller, 2010, p. 143). McDonalds improve their products every year, and in accordance to this strategy they launch new products which are better and attractive for their customers. They promote their new products effectively and give the customers the chance to taste something new every time. In future, they also plan to increase the number of franchises around the globe to increase employment and sales revenue. McDonald plan to serve more and more customers with the best variety of products. This strategy is also planned out under the framework of their mission statement: Quality, Service, Cleanliness and Value. The new products are made from quality raw materials, and are valuable. On the other hand the franchises opened maintain cleanliness and customer relations (Bangs, 2002, p. 97). This strategy is based upon the key factors considered by the company that are important for future success; these are Operational Excellence, Leadership Marketing and Innovation. The strategies they apply are based on the motives of achieving immense success and targeted goals of the future performance. McDonald’s suitable future strategy is the ‘Plan to Win’ strategy as it covers all the aspects of the company’s future plans and objective aims (Betz, 2002, p. 55). Section 4 Roles and responsibilities for strategy implementation: Although strategic evaluation and selection in an organization is carried out by the strategic planning manager, its implementation is the responsibility of the whole team. Strategic implementation is when the organization puts its selected strategy into action by developing, amalgamating, utilizing and organizing the structure, system and controls (Hubbard, 1999, p. 65). Strategic implementation shall be allocated amongst the employees according to their roles in the organization. The tasks are allocated to the employees so that the results are efficient, quality controlled and satisfactory in order to build a competitive advantage and increase performance levels. The overall control system which is required for the strategic implementation includes the manager’s equipment of motivational tools and incentives for employees and setting the organizational culture to collect values, norms and attitudes that are positive for the strategic success (Starik, 2004, p. 176). The roles and responsibilities for strategic implementation in different organizations vary according to their size, culture, norms, nature etc. However, it is not likely that all the organizations have the same structure of strategic planning and implementation. The way how the roles and responsibilities of the employees and other members of the organization vary is dependent on the type of organization it is (Prasad, 2006, p. 138). For example in a local authority the strategic planning is carried out by the head of the department while in a small commercial business the strategic planning is done by the owner because it might be expensive for a small business to hire strategic planning managers (Rieple, 2007, p. 23). On the other hand for global companies such as Microsoft, the strategic planning is done by the heads in different countries according to the customer needs and wants, availability of resources, and other factors. In a Charity such as Oxfam, the partners and allies work together to carry out the organizational functions and operations, thus the strategic planning is done by the board members and after their approval the strategy is selected and implemented. In Armed Forced, the strategic planning department is a separate department where the evaluations are made and strategies are selected. These are a group of specialized and experienced members who guide the army officers and shape the strategic environment around them (Jones, 2012, p. 214). No matter what type of a business it is, whether small or large scale, it requires certain roles and responsibilities to be passed on to the people associated with it. These responsibilities for strategic implementation are divided in the employees working at different levels. Allocating the roles and responsibilities of each employee in an organization is essential and helps in strengthening the business environment (Chau, 2010, p. 34). Specified roles for employees ensure that the records and data which are significant are kept safe and maintained properly. This is very important for the auditors, accountants and managers to analyze the condition of the business. Specifying roles and responsibilities in a business also maintains its ethical standards by determining those employees who are at a higher position from those who are working below them. Effective communication is one of the major benefits that are achieved by specifying roles and responsibilities of employees (Singh, 2008, p. 5). For the Plan to win strategy there are a number of roles and responsibilities included since McDonalds is a global organization. Even though the strategy is evaluated and selected by their Chief Executive Officer, every single employee of McDonalds throughout the globe has its own role in fulfilling the strategy. The franchise managers are responsible to ensure that all the employees are motivated and encouraged to work for McDonalds, the employees shall make sure they are serving the customers with the accurate orders and with a friendly manner to reduce customer complaints. Other employees ensure that cleanliness is maintained at all time in the restaurant. The marketing managers of every country ensure that the strategic planning is enforced and effective in the market, and how the promotion of new products shall take place etc. Resource requirements for McDonald’s ‘Plan to Win’ strategy: Since the strategy of plan to win adopted by McDonalds is a yearly strategy according to which the business sets out its whole year plans, it is necessary to know that the time factor is a necessary requirement for a successful strategy implementation. The strategic managers should plan the strategy in a way that they clearly indicate the time needed, time expected and manage the year’s strategy according to that. Every new product, new development and new innovation would be carried out in the allotted time in regard to the competitors, the market needs, the seasonal occasions and so on. Just as the time, McDonalds also have to pre-plan a budget and the expenses that are going to occur in implementing their strategy. The budget will include the marketing funds, the employee motivational programs, and the development of restaurants and on high quality raw materials. Furthermore, the employees are the major resource that is required to implement the plan to win strategy. The employees shall be motivated, trained, allocated with their role, skilled and responsible to carry out their independent role in the organization. Employees are the major need for McDonalds to implement this strategy successfully whether managers or low grade employees. From cleanliness of the restaurant to trainers of the employees, every employee should be dedicated and motivated towards the strategic objective carried out by the strategic planner. Equipment is also an important resource which is needed to ensure the strategies are effectively implemented. Computers, cash machines, furniture and cooking machines should be high quality and well maintained to avoid any disturbance in the operations. Targets and timescales for McDonalds Plan to win strategy: The yearly strategy allows the business to set their goals on yearly basis and plan strategies that ensure the fulfillment of short term goals. This way the goals are achievable and the timescale provided is manageable. The timescale is one year but the business makes sure that the time is allotted to every goal, achievement and function equally and wisely. The goals and objectives of the strategy are designed in a way that they are covered in the given timescale. This way it is easier for the managers across to globe to understand and achieve the short term targets. The frequently increasing number of franchises and changing employees may find it difficult to understand the long term plans of the organization. Thus it is important to plan achievable goals for the timescale planned. Although these strategies are planned yearly, they are primarily based on the principle of McDonald’s mission statement which is: Quality, Service, Cleanliness and Value. The targets of the plan to win strategy are to achieve better performances in the customer service, increase profits, enhance the products and reach a large market. These targets are set in order to achieve the future long term success through operational excellence, innovation and leadership marketing. McDonalds apply the plan to win strategy yearly to achieve their short term and long term goals. These targets and the timescale are necessary for all the employees to understand and remember in order to achieve the goals timely (Ward, Peppard, 2007, p. 75). Conclusion: However, it is essential to understand how important strategic evaluation and selection is and it is the responsibility of the strategic planning manager to carry out a detailed analysis about the company’s previous year, coming year, market trends, company’s resources and financial position to plan a suitable strategy (Lake, 2012, p. 167). McDonalds has however implemented a new strategy of pan to win ever since they had to see less profitable outcomes. Their key focus is on the quality of their products rather than the increasing number of restaurants and franchises. Implementing a strategy is essential to ensure that the strategy is transported to the organizational functions effectively. A strategy is implemented by the potential, resources, policies, employees, programs, structures, controls and effective leadership. A strategy may be evaluated and formulated in an excellent way but it will always fail if it is not implemented properly (Barksdale, 2006, p. 16). A strategy is to be stable for the organization and its structure. For a global organization such as McDonalds, the strategic implementation has to be carried out by all the employees associated with the company; otherwise it will pose a threat to the organizational success. References Bangs D. 2002. Market Planning Guide USA: Kaplan Publishing Barksdale S. 2006. 10 Steps to Successful Strategic Planning. USA: ASTD Betz F. 2002. Executive Strategy: Strategic Management and Information Technology. NY: John Wiley & Sons Chau V. 2010. Strategic Management: Principles and Practice. NY: Cengage Learning EMEA Chernatony L. 2012. From Brand Vision to Brand Evaluation. NY: Routledge Hubbard N. 1999. Acquisition: Strategy and Implementation. UK: Purdue University Press Jeffs C. 2008. Strategic Management. USA: SAGE. Jones G. 2012. Strategic Management: An Integrated Approach. NY: Cengage Learning Kazanas H. 2003. Strategic Development Of Talent. USA: Human Resource Development Lake N. 2012. 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