Hotel Business Environment - MacDonalds - Case Study Example

Hotel Business Environment University Student Id Course Date Executive summary The report is exploring the internal and external environment of MacDonald’s chain of restaurants. Theoretical frameworks have been used in the process of analysing the business environment of the MacDonald’s chain of restaurants. The weakness and the strengths that can be related to the management of the hotel in the industry are also analysed. The analysis of the business environment entails discussing the various factors that are affecting the operations of the company in the process of achieving competitive advantages. The necessary strategic, analytical and theoretical tools that are important in making the interpretation of the business environment are utilized. The hotel and tourism industry is explored to analyse the different aspects that can affect the success of MacDonald’s in the process of offering its services and products to the customers. The industry has been considered unique due to the constant changes that are linked to the preferences of the consumers. The customers are looking for the best services hence the organizations that are unable to meet the changes are likely to lose the market share. In the industry, the relevance of the services and products is considered very crucial in making sure that the customers can be met in the organization. Lastly, recommendations are provided that can help the management of MacDonald’s in making the operations competitive. Introduction The report explores the business environment of MacDonald’s chain of restaurants. MacDonald’s is among the leading fast food organizations globally where it makes sales of more than 40 billion. The hotel has opened more than 30,000 outlets in more than 118 nations globally offering services and products that are standardized (Ahrens and Chapman, 2002). The products provided by the company include fast food like chicken, milkshake, fruit salads among other foods and drinks. The strong financial base of the company has been considered important in the process of adopting competitive strategies. The internal and external environments of MacDonald’s are explored with the aim of understanding how the company operations are affected. MacDonald’s has been operating in the hospitality industry where it has expanded its operations in different regions globally. The strategies adopted by the management of the company has been crucial in helping the organization achieve competitive advantages. Hotel and tourism industry The industry is characterized by customers who are very sensitive to the changes in prices. The demand for services in the industry is said to be elastic where a slight change in prices has a great impact on the demand. The organizations that can offer competitive prices in the market are considered to be successful as they are likely to experience an increase in sales volume. As a result, efficiency in the operations is considered critical in making sure that affordable prices are offered as the costs of production are lowered (Nelson, 2001). Besides, the taste of the customers is said to keep changing making t to ensure the constant development of the products. The failure to realize the changes can make an organization irrelevant in the industry hence losing its market share. MacDonald’s in the process of making sure that it remains relevant in the industry has constantly been developing its products to meet the consumer needs (Olsen, 2008). The industry changes have been driven by the increased competition where the firms are competing to increase their market share. The high competition level is making organizations come up with strategies that are geared towards meeting the industry demand better than the other firms. As a result, they are offering different services that make the customers change their taste. The companies that are not in a position in offer competitive services are likely to lose their market share (Macdonald, Cummins and Macintyre, 2007). Besides, technological advancement has been considered crucial in the process coming up with unique services in the industry. Many firms are working towards making sure that they automate their operations with the aim of achieving competitive advantages. Technology is considered important in making sure that efficiency in operations is achieved making it easy to adopt a competitive pricing strategy. External environment analysis MacDonald’s has been operating in a competitive environment as various firms offer similar products. However, the company has managed to survive the high competition through making sure that the products are differentiated. Considering the Olsen’s model, the strategic management of MacDonald’s can be regarded as crucial in the process of making sure that the necessary strategies are in place to achieve the set objectives (Okumus, 2010). According to the Olsen’s model strategies are crucial in making sure that an organization can gain competitive advantages. The management of MacDonald's has been considering the external factors that can affect the company operations in the course of making sure that the necessary strategies. Considering the business environment makes sure that the strategies adopted are in a position to make the company deliver products that are competitive. The management of MacDonald’s makes sure that the external environment is considered in the process of implementing the company strategies. MacDonald’s uses porter’s five forces in the course of achieving competitive advantages. For instance, the management has been working towards achieving cost advantages in the market. The hotel embraces technology to make sure it can manage the cost of production with the aim of achieving efficiency. It is through efficiency that the costs of production can be minimized making it possible to adopt competitive strategies. Reducing the costs of production has made it able to offer low prices to its customers leading to increasing in the sales volume (MacDonald and Aaronson, 2006). Besides, McDonald's has been differentiating its products with the aim of coming up with unique features of products that can guarantee success. Differentiating products assists in eliminating the ease of substitution hence making the company able to survive the intense competition in the industry. The management considers the level of rivalry in the market with the aim of assessing the best way it competes well in the market. The management of McDonald's makes use of STEEP model in the process of evaluating the external factors affecting the performance of the organization. The model has proved to be important in helping the management in evaluating different decisions taken. Some of the factors considered by McDonald's include the social factors that are used in assessing the religion of the customers, lifestyle, demographics and the values of the customers (Lynch, 2012). Technological factors are also among the factors that affect the decisions of McDonald's, and the management has ensured that they are put into consideration. The technological advancements have been considered important in improving the performance of MacDonald’s where the operations of the company are automated. The other factors include economic factors, entrepreneurial factors and the political factors that have proved to be important in the process of making decisions that can help in achieving the set objectives. The cultural environment affects the strategies and decisions adopted by MacDonald’s in the management of its operations. The company has a diverse workforce as the employees are said to be from diverse backgrounds making them have different experiences. According to SPECTACLES Analysis, it is important for the organizations operating in complex cultural environments to come up with strategies for managing the complexities. The management of MacDonald’s has ensured that the diversities existing among the employees are properly managed to achieve competitive advantages in the market (Chow, et al. 2007). Considering the fact that McDonald's has many outlets in various regions globally, the diversity management is critical to the success of the company. MacDonald’s been comparing the operations of the competitors in the process of assessing its competitive position in the industry. The assessment of the competitiveness assists MacDonald in coming up with the best strategies that can guarantee success in the market (Knowles, et al., 2004). According to Strategy Clock Model analysing the competition level in the industry is crucial in formulating competitive strategies. The model makes use of differentiation advantage and cost advantages in the process of assessing the competitive benefits of an organization. MacDonald’s has managed to achieve differentiation advantages in the industry as the company products have been made different from those of the competitors (Thornton, Bentley and Kavanagh, 2009). The tourism industry is constantly changing forcing MacDonald’s adopt strategies that are future oriented. The policies taken are necessary for the process of determining the future course of action that can be taken by the company. However, the understanding of the motivation of the competitors and the strategies being taken for the future is crucial (Burch and Lawrence, 2005). According to the analysis of Porter’s Four Corner model, the understanding of the internal culture of the competitors, mind-set, value system and the possible assumptions. MacDonald’s has been ensuring that it is aware of the possible reactions of the competitors in certain situations in the future. Internal environment analysis The internal environment in MacDonald has played a crucial role in the process of achieving the set objectives. For instance, the physical resources of the company are important sources of competitive advantages where the corporation uses its physical resources in the process of achieving competitive advantages. The physical resources of MacDonald’s include the excellent reputation that has been crucial in improving its performance, intellectual property, material, and building among others (Bleich and Pollack, 2010). The physical resources of MacDonald’s have been considered important in the process of achieving competitive advantages. Considering the financial analysis of MacDonald’s, the company has the necessary finance for implementing competitive strategies in the market. Financial resources are important in the tourism industry as only the firms that can implement competitive strategies can survive the high competition in the industry. For instance, MacDonald’s has the necessary financial resources for adopting the technological advancements. Technology in the company has been considered important in the process of coming up with the necessary services and products that can assist in achieving competitive advantages (Alviola, et al. 2014). It is through offering innovative products and services that a company can be in a better position to increase its market share in the tourism industry. The human resources of MacDonald’s have helped the company in competing well in the hotel industry. The company has high skilled employees who can guarantee quality products and services hence helping in increasing the competitiveness of the organization. Human-based resources are very critical in meeting the needs of the customers as services offered can be relevant and in line with the organizational goals. MacDonald’s has been training its employees with the aim of making sure that they have the necessary skills and expertise that can make the company competitive (Holcombe, 2003). It is the expertise and skills of the employees that determine the level of quality of the products and ability to offer excellent services. In the hotel industry, offering high-quality services and products is important in the process of making sure that customers are satisfied. The process and operations of MacDonald’s are important in the process of achieving its set objectives. The processes of MacDonald’s has been geared towards improving the quality of services and products offered. The operations have led to the improvement of the customer satisfaction where the management of MacDonald’s is focused on achieving efficiency and high quality. The porter’s value chain views an organization as a system that is comprised of inputs, outputs, and transformation process. The systems are geared towards acquiring and consuming organizational resources that can include materials, money, labour, land and equipment (Hassanien, Dale, and Clarke, 2010). The value chain activities are crucial in determining the costs and the profitability. According to porters, the primary activities include inbound logistics, operations, marketing and sales, outbound logistics and services. Strategy management has been considered important in the achievement of the set goals. MacDonald’s has ensured that the strategies adopted can make the company competitive (Tesone, 2010). For instance, Macdonald’s has ensured market expansion and product development through formulating strategies that consider the business environment. According to the strategic options model, an organization targets the existing clients to increase consumption, enter a new market and win customers of the competitors. MacDonald’s has been penetrating to new markets globally through making sure that the products offered can meet the needs of the consumers (Harnack and French, 2003). The management of MacDonald’s has ensured products are expanded to give the consumers greater choice through adding new features. Besides, MacDonald’s has ensured intensive distribution and advertising in the process of increasing its chance of penetrating into the market further. The TOWS models can be used in analysing the internal environment of MacDonald’s. Macdonald’s has some strengths that can include a brand image, hotel facilities and skilled workforce that can be crucial in the process of achieving the set objectives. The weaknesses include low awareness and cultural diversity that has been challenging the management in penetrating in new markets (Currie, et al. 2007). The opportunities that are available for MacDonald’s include technological advancements that can be crucial in product development. However, MacDonald’s is facing some threats that can include increased competition in the tourism industry leading to declining in the market share. Recommendations The management of MacDonald’s need to invest greatly in research and development. Considering the changes that have been taking place in the industry market research can be important in ensuring the changes in the taste of the customers can be traced. As a result, the company can be in a position to make sure that the operations are aligned with the market changes hence offering services and products that are relevant (Allder, 2008). Besides, through research, the company can be in a better position to make sure that the product features that can be considered competitive are added to the products. Besides, MacDonald’s need to invest in technology with the aim of improving quality and achieving efficiency. Technology can be important in the process of lowering the costs of production hence making it possible to achieve cost advantages (Campbell, Evans and Stonehouse, 2003). It is through the cost advantages that the company can then be in a better position to adopt a competitive pricing strategy. Also, technology can be important in differentiating the products by adding new innovative features that can help in making the products competitive. Conclusion MacDonald’s operates in an industry which is very competitive. The firms entering the industry are coming with innovations that are driven by the technological advancements. As a result, McDonald's has adjusted its operations to remain relevant in the industry. Keeping pace with the industry trend can sometimes be challenging as it is costly and affects the organizational operations (Tribe, 2016). The management has ensured that the necessary change management strategies are in place to achieve competitive advantages in the market. The preferences of the customers in the tourism industry have kept changing. The constant changes of the preferences can be attributed to the efforts of the firms entering the industry to achieve competitive advantages. The new companies in the industry are constantly adding new features to the products to make them meet the customer needs better. MacDonald’s has responded to the customer needs by making sure that the consumers are engaged in the product development process. As a result, the products of MacDonald’s have remained competitive in the market due to the ability to meet the industry demands. References Ahrens, T. and Chapman, C., 2002. The structuration of legitimate performance measures and management: day-to-day contests of accountability in a UK restaurant chain. Management Accounting Research, 13(2), pp.151-171. Allder, J., 2008. uk takeaway health: how takeaway restaurants can affect your chances of a healthy diet. Alviola, P.A., Nayga, R.M., Thomsen, M.R., Danforth, D. and Smartt, J., 2014. The effect of fast-food restaurants on childhood obesity: a school level analysis. Economics & Human Biology, 12, pp.110-119. Bleich, S.N. and Pollack, K.M., 2010. 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