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Mcdonald's - Case Study Example

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Your name Subject Date Case Study on McDonald’s 1. Current short-term objectives and plans. McDonald’s has set the following objectives and plans to pursue opportunities and enhance corporate relevance: service enhancements, restaurant reimaging and menu innovation…
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Case Study on McDonald’s Current short-term objectives and plans. McDonald’s has set the following objectives and plans to pursue opportunities and enhance corporate relevance: service enhancements, restaurant reimaging and menu innovation. In 2003, McDonalds reinvented its mission/vision by implementing a “Plan to win” strategy that focuses on becoming “bigger, not just better”. Action plans in implementing this strategy are to increase sales in every geographic segment of the business; to offer relevant menu to its 60 million customers per day, and to gain the confidence of stockholders by the profitability of its operation. McDonald uses 5 key strategies in implementing this plan, i.e. product, price, people, place and promotion (McDonalds 2009 annual report). In increasing sales in every geographic segment of the business thru franchising. Focused on brand availability, menu variety, beverage choice, convenience and day part expansion. McDonalds introduced McCafe and premium Angus third pounder, focused on classic favorites like big Mac and Quarter Pounder, and emphasized affordability in the US market; and in mid-2010s introduced frappes and smoothies. In all areas of operations, reinvestment was done in the facilities and equipments, opened stores in convenient areas, extended store hours, build up its drive through systems and offered locally relevant selections. The strategy included advertising and promotions. In U.S, drive-through systems, and cafe-ambiance were developed; in Europe, the portable snacks were popularized; in Germany, breakfast time was introduced and designed the same strategies in other areas where McDonalds is present. 2. Functional tactics of McDonalds that made them successful are globalization, diversity and ethics. McDonalds joined the bandwagon of globalization and has developed franchised business in 119 countries. In 2010, McDonalds has 32,737 franchise units all over the world, an increase of 28% from 21,078 units in 2009 (McDonald’s Annual Report). This means the company has to work with franchise owners with diverse cultures, religion and ethnicity. The tactics of McDonalds is to adopt its menu to the culture and taste of the region, to hire and train locals to work in the company and to source its supplies from local suppliers that have similar diversity culture. This strategy allowed the company to understand the customs and traditions of the community and allowed McDonalds to stay in business in the area. McDonalds provided a standard framework for global operations, yet allows diversity that is needed in local adaption. The system of franchising which has been the business model of McDonalds allows the company to become an integral part of the community and be able to “deliver locally relevant customer experience”. For example, McDonald designed its menu to the cultures in the region. In India, beef or pork is not in its menu, but offers chicken and fish burgers and other vegetarian options (Noreen, 2009). 3. Policies the firm uses to aid strategy execution McDonalds considers people as its most valuable asset. Success is a direct result of people involved with McDonalds – the owner/operators; suppliers and company employees (McDonald’s Management). It strives to be the best employer in each community where they do business. McDonald’s has set People Principles that is committed to treat everyone with fairness and respect; to recognize good work with rewards; to become open and to listen in diverse opinions; to provide competitive pay and benefits; to support personal growth and development and to provide the resources to get the job done well (McDonalds Management Career Paths. N.d.) 4. The executive bonus compensation plans the firm is currently using is based on McDonalds policy that follows a “pay for performance policy: the better your results, the greater your pay opportunities” (McDonalds Management Career Paths). McDonalds provide incentive pay, long term incentives, recognition programs and company car programs. Aside from this, McDonald’s has a profit sharing plan wherein employees save 1% to 50% of their pay on a deferred basis in the 401K plan. Under this plan, the company matches the employees’ contribution with $3 for every $1 of the first 1% of pay they contribute and $1 for every $1 dollar contributed on the next 4%. Eligible employees also receive discretionary profit sharing based on their 0% to 4% contribution. Employees participating in the 401 K plans are limited to 20% investment in McDonald’s common stock. Excess of his 401 K contribution can be deposited in a supplemental benefit plan wherein an executive can make tax-deferred contributions; receive company provided allocations that is not possible under the Profit Sharing and Savings Plan because of Internal Revenue Service limitations. Under the supplemental benefit plan, investment alternatives and returns are based on certain market alternatives under the Profit Sharing and Savings Plan of the company. As of 2009, the liabilities of the company were $373.9 million (2009 Annual Report) The above strategies resulted to 3.8% comparable sales growth, 9% earnings per share growth and total cash returned to shareholders 2007-2008 $16.6 billion. Appendix 1. Historical events of McDonalds 2010 Introduction of McCafe Real Fruit Smoothies and Frappes in the U.S. on July 13 2009 McCafe goes national on May 5 2008 McDonald’s introduced its redesigned packages in all its global stores 2007 McDonald’s packaging update featuring 24 faces 2006 New menu introduced in US – the snack wrap 2005 50th anniversary of McDonalds 2004 Happy Meal turns 25 – introduced in 1979 to 2004 2003 Launching of Premium salads as part of national menu 2001 McDonalds new premiere lettuce and tomato big N’ tasty sandwich launched on Feb. 16 1997 Launched chicken McGrill and Crispy Chicken sandwiches Advertising theme changed to “Did somebody say Mcdonald’s?” 1996 Launching of internet website 1992 Opened restaurant in Warsaw, Poland, breaking records of opening day sales 1990 Opened restaurant in Moscow 1988 Fortune Magazine named McDonalds hamburgers among 100 products America makes best 1983 McDonalds located in 32 countries with 7,778 restaurants at year end 1981 International growth. First McDonalds restaurant open in Spain, Denmark and Philippines 1978 5000th restaurant opened in Japan 1967 First international restaurant of McDonalds opens in Canada and Puerto Rico. 1966 First television commercial appeared 1965 10th anniversary and first public stock offering at $22.50 per share 1958 Sold its 100 millionth hamburger 1954 Ray Kroc’s learned of the franchising opportunity and determined that his future is in hamburgers Source: McDonalds, Our Company Works Cited McDonalds 2009 Annual Report. 2009. 25 Feb. 2011 Read More
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