The McDonalds Restaurant - Case Study Example

Mc Donald’s

The McDonalds restaurant was founded in the 1940 by two brothers Maurice Mc Donald and Richard. The first outlet was in San Bernardino in California USA. By 1955, Ray Kroc joined the business as a franchise agent and later proceeded to purchase the restaurant from the Mc Donald brothers. The restaurant remains one of the largest in the world serving more than 69 million customers every day. The restaurant has developed more than 36,900 outlets in more than 100 countries as at 2016.

Mission statement

“Our mission is to be our customers’ favorite place and way to eat & drink. We’re dedicated to being a great place for our people to work; to being a strong, positive presence in your community; and to delivering the quality, service, cleanliness and value our customers have come to expect from the Golden Arches – a symbol that’s trusted around the world.”

Economic Climate

The year 2017 has been one characterized by weak investment, and weak economic growth in many countries. According to the United Nations the world’s economy only expanded by 2.2 percent in 2016 while the projections of 2017 and 2018 are 2.7 and 2.9 respectively. The biggest challenge of a business like the Mc Donald’s is the pricing of products. The drought in many areas of the world has led to the increase in the prices of products in the market. Considerably this has had an effect on the profitability of the organization. In references to an analysis by the United Nations, the labor productivity has slowed in the major developed economies resulting to the low profitability of the organization.

In the year 2014, the company had dwindling profits due to concerns on food safety. An undercover television investigation developed the relationship between the Mc Donald’s and Mainland supplier. The supplier had scandals with the rebranding of expired meat for the consumption. The safety fears of the products sold by the company emerged due to this. The profitability of the organization fell by 4.8% in that year. Consequently, the company has taken up measures for the analysis of their suppliers for the stability of the organization. However, the results are not doing the best with regard to the competition in the environment.

Ethics

The latest news is on the conduct of the security guard who told a Muslim student to remove her hijab. The news has led to an uproar in social media platforms calling it an act of racism. The act that was caught on tape, the guard tells the 19-year-old Muslim to take off her headscarf on the Seven Sisters Road, Holloway northern London branch. Fundamentally, this was an unethical contact on the part of the security guard. However the cases of terrorism have been on the rise in the 21st century, subsequently what is the best method of handling such a situation without infringement of people’s rights? After the incidents, the company has subsequently suspended the security guard pending investigation on the case.

Through the standards developed by the company on contact of their employees, adhering to human rights is the basis of every policy. On the other hand, the proper management of the business while effectively managing customer service will provide the best results for the company. Mc Donald’s is a Global giant with over 36000 outlets; fundamentally, the proper management of the clientele of the company is important for the sustainability of the organization. The organization only suspending the Guard is not enough. The organization based on its policy commitment should take full responsibility for the occurrence and prosecute the guard to assure the best for other customers who are Muslims.

Financials

The income statement above provides certain information on the current state of the company and its sustainability in the end. The revenues of the company have been dropping since the year 2014. The reduction in profitability of the company is highly seen on the restaurants operated by the company as compared to those of franchised outlets, which show a more stable outcome. The lower income of the company can be attributed to challenges in the economy as well as the effects of the food safety scandals in many parts of the world. Notably the operating cost of the organization increased as compared to the decrease in the revenue. The prices of commodities increased due to climate change that cause sporadic rains and drought in parts of the world.

The current stock price of the company in the New York stock exchange is 172.87 US dollars. The stock has had a high of 173.15 dollars and a low of 170.39 dollars. The company average volume of shares traded is 3,389,833 while the volume in the stock market is 4,279,176 shares. An analysis on the prices of the stock is relatively low. However, most of the investors are alive to the fact that the company is experiencing a reduction in the profitability. Fundamentally, this fact may inform their decision in the future.

Marketing

The company is alive to the fact that the customers have a range of choices of products and places to spend their money. Consequently, the company has consistently studied fashionable products for the customers faced out other while introducing others. The company ensures a product goes through its life cycle for full profitability before it is shelved out. The company has developed an effective process for the determination of the prices of a product. Note that under pricing a product gives the impression that the quality is compromised. Considerably the profit margins have to be established based on the brand, psychological pricing of the product and market indicators.

The promotion of a product implies the development of an effective communication strategy for the consumer of the product. Development of a promotion by the company is done through the development of the right message, using the right medium and reaching the target market. However, the place involves the product mix. Mc Donald’s defines place as the location of the store together with effective delivery of a good service for the consumer. Fundamentally, the company has developed an elaborate team that manages the marketing of the company.

Management of the company

The management team is made up of experienced and educated people. Subsequently, most of the staff in the management team are young.

• Steve Easterbrook - President and Chief Executive Officer
• Lucy Brady - Senior Vice President, Corporate Strategy and Business Development
• Francesca DeBiase - Chief Supply Chain and Sustainability Officer
• David Fairhurst - Executive Vice President, Chief People Officer
• Robert Gibbs - Chief Communications Officer and Executive Vice President, Corporate Relations
• Jerry Krulewitch - Executive Vice President, General Counsel and Secretary
• Silvia Lagnado - Executive Vice President, Global Chief Marketing Officer
• Kevin Ozan - Executive Vice President and Chief Financial Officer
• Jim Sappington - Executive Vice President, Operations, Digital and Technology
• Mason Smoot - Senior Vice President, Strategic Alignment and Chief of Staff, Office of the CEO
• Chris Kempczinski - President, McDonald’s USA
• Joe Erlinger - President, High Growth Markets
• Doug Goare - President, International Lead Markets & Chief Restaurant Officer
• Ian Borden - President, Foundational Markets

Sustainability of the organization

The changes in consumer preferences, company management styles, and increase in competition in market have put the company in a state of oblivion. Considerably, the company is not able to articulately develop a progressive agenda that will capture the consumer’s imagination in the food industry. Imperatively mistakes in the management of food safety have put the future of the company on a landslide. The company ought to embrace the changing environment of food and the young people for the improvement in the profitability of the organization. In my opinion, the future of the company is dim. Just like many multinationals, the company is slowly collapsing due to the mismanagement of the brand by the conservative management. The lack of the willpower and drive for the management to risk and invest in more exciting products results to lower profitability. Technology has now become a key pillar in the food industry. However, the company has not invested in research for the development of a tailor made technology for the reduction of labor cost for the company.