McDonald's - Target Market Segments, Service Concept, Operating Strategy, Service Delivery System - Case Study Example

McDonald’s Name Instructor’s Name Date Introduction The competitive nature of the business environment has forced numerous organizations to improve the services that it gives to customers. Different organizations present different services since the operational requirements are different. For example, the services within a medical facility and different from services in a hotel setting. McDonald’s is an organization that operates in fast food industry. The company has been operating for a long time and ahs been able to start franchises in many countries across the world. The purpose of this report is to review McDonald’s from the perspective of service and competitive position relative to competitors. Part A Target Market Segments McDonald’s has targeted different markets segments but have concentrated on demographic and geographical regions in making decisions (Hopkins, Hopkins & Hoffman, 2005). The teenage segment involves college and school going students who are after socializing and taking food while in groups (Combs, Ketchen, & Ireland, 2006). In addition, geographic dimension is used in setting outlets near the targeted consumers. Another important segment are the employees who need a quick food so that they can pursue their working requirements. McDonald’s food can be consumed at the outlet or can be takeaways (Tinnilä,2012). The needs of these two segments are similar to some extent since the persons working were recent graduates and have not changed their behaviors completely and still prefer the takeaways and fast foods. In addition, fast foods are comparatively cheaper compared to other foods (Inbar & Tractinsky, 2012). Service Concept In McDonald’s the service, the concept includes the quality of the products and the environmental conditions in the serving process (Hopkins, Hopkins & Hoffman, 2005). The ingredients used are of high quality since they are aimed at ensuring the customers enjoy the food. The outlet including the layout and design creates an impression of cleanliness and quality services (Inbar & Tractinsky, 2012). The customers are after good quality service and the management at McDonald’s have continued to invest in ensuring the customers’ experience is un-forgetful. The two different target market segments should be able to utilize the services provided and enjoy the services. The services should compliment the products that are provided. In addition, the public should be able to purchase the products and to enjoy the services rendered (Inbar & Tractinsky, 2012). The employees are supposed to understand the policies of the organization, fulfill the expectations of the customers and ensure the service experience is eventful. Other stakeholders involved in the process such as institutions overseeing the service industry should acknowledge and provide a remedial mechanism to address any problem (Combs, Ketchen, & Ireland, 2006). Hence, the service encounter from the perspective of the customers, stakeholders and employees should be perceived in a positive manner (Hopkins, Hopkins & Hoffman, 2005). The different stakeholders involved in service provision designs the product and service in a manner that the consumers are satisfied (Ryu, Lee & Gon Kim, 2012). For example, McDonald’s outlet layout and design make the customer feel comfortable, and the standardization process allows consumers to be attracted to other outlets across the world (Combs, Ketchen, & Ireland, 2006). The delivery experience is also important because the McDonald’s model is premised on faster services to the targeted customers (Schneider & Bowen, 2010). Therefore, the servers and other personnel in McDonald’s should advance these requirements in fulfilling the requirements of the organization and the customers. In addition, the standardization process ensures that the customer can associate with any outlet across the world (Inbar & Tractinsky, 2012). Keep most things standard makes the customer become comfortable and can maneuver easily through the outlet. Operating Strategy McDonald’s operating strategy include operations, organization, marketing, financing, control and human resource (Combs, Ketchen, & Ireland, 2006). Among all these operational platforms, the most important are human resource and control (Hopkins, Hopkins & Hoffman, 2005). Human resource is an asset to any company, and motivated employees contribute to the success of an organization. Most efforts should be on employees and control is also crucial since it determines the quality and other factors associated with accomplishing the requirements of the employees and customers (Söderlund & Rosengren, 2008). The business model of McDonald’s is franchising and through franchising, McDonald’s receive loyalties and goodwill fees. Hence, McDonald should concentrate on marketing and create effective policies that guide these franchise outlets (Inbar & Tractinsky, 2012). Moreover, if the employees are satisfied the productivity is improved, the motivational capability is improved, and the quality of service, in general, is also improved. Hence, the operational requirements should integrate numerous factors in advancing the service quality of an organization (Combs, Ketchen, & Ireland, 2006). Effective and employees that play their roles effectively also reduces the costs to the organization. For example, McDonald’s employees serve the customers well, and word of mouth is used to reach other customers. Through the process, the McDonald’s costs are reduced. Service Delivery System The layout and procedures play an important role in the way McDonald’s accomplishes its activities (Inbar & Tractinsky, 2012). Customers are usually attracted to the environment, and the layout defines the comfort the customers will have. The cleanliness and colors used should reflect the way the business operate and should be standard across numerous geographical areas (Gilbert & Veloutsou, 2006). McDonald’s has achieved this requirement through ensuring the franchises employ similar outlets and colors (Hopkins, Hopkins & Hoffman, 2005). The employees and management should adhere to both the legal, organizational policies and other requirements that are important to the success of a company. To fulfill these requirements, McDonald’s support provision of equipment and technology in advancing the requirements of the employees and customers (Combs, Ketchen, & Ireland, 2006). The demand for food at McDonald’s differs from the day (Chua & Luk, 2005). During peak time such as lunchtime, more employees are required to serve while, during normal times, the employees are required to address cleanliness and other functions within the outlet (Johnston & Sandber, 2005). The quality and differentiation mechanisms employed prevents or makes it difficult for smaller outlets to enter the business. It is attributed to the high costs and other factors that are hard to compete with established outlets (Combs, Ketchen, & Ireland, 2006). Model Describes the Services McDonald’s has been in the fast food industry for around sixty years, and the company has enough experience in the market (Inbar & Tractinsky, 2012). McDonald’s understand the requirements of customers and other stakeholders when it comes to quality of services and products (Johansson & Olhager, 2006). The current service model is important and has allowed the company to expand into more than 120 countries across the world with more than 30,000 outlets in these countries (Combs, Ketchen, & Ireland, 2006). The number of the outlets and country penetration illustrates the model is successful. In addition, the model describes accurately the service and presents reasons why the company has become successful (Hopkins, Hopkins & Hoffman, 2005). Part B Position within the Four Stages of Service Firm Competitiveness: 3rd Stage McDonald’s is in stage three, which is distinctive competence achieved. The vision and mission of McDonald’s guides the way activities should be accomplished and done. McDonald’s food and service are exemplary, and customers continuously seek for services from the company because of its positive reputations (Combs, Ketchen, & Ireland, 2006). The reputations are premised on meeting the requirements of the customers and ensuring any complaints are addressed promptly. Such practices ensure the customers are satisfied and can easily contribute to the continuous positive reputation of the organization (Hopkins, Hopkins & Hoffman, 2005). The McDonald’s operations continually excel because of the quality of the products and the quality of the service (Schau, Dellande & Gilly, 2007). The employees and personnel managers effective processes within the company and the organization has mechanisms to sustain these requirements. The policies and approaches to doing things in the company are focused on fulfillment of the customers’ requirements (Inbar & Tractinsky, 2012). The service quality at McDonald’s is unique and constantly exceeds the expectations of customers. The services provide are consistently based on numerous dimensions ranging from quality of services to the layout of the outlet (Combs, Ketchen, & Ireland, 2006). Quality is integral to McDonald’s and employees, and other personnel are encouraged to provide optimum services (Hopkins, Hopkins & Hoffman, 2005). The quality is coupled with the way McDonald’s views its employees. The employees are allowed to make subjective and independent decisions that are important towards the success of the company. This component is attributed to the way the management views the contribution of employees towards the business model (Inbar & Tractinsky, 2010). The management team acts as the coaches and informs the workforce on appropriate strategies to reduce reliance on management when the employees are making decisions (Hopkins, Hopkins & Hoffman, 2005). In service industry, faster decision making is important and employees informed about the procedures are important because they make sound and faster decisions based on the vision of the company (Combs, Ketchen, & Ireland, 2006). The back office aids the front office that includes the layout and how the customers are served. The back office usually makes decisions and employs different strategies to fulfill the requirements of the front office (Chase & Apte, 2007). For example, the back office deals with inventory and management process while the front office ensure the customers receive the services. The positive relationship between the front and back office are integral to the success of the service industry (Inbar & Tractinsky, 2012). The products and services that McDonald’s offer attracts different customers from different backgrounds (Combs, Ketchen, & Ireland, 2006). The products and services are not based on socioeconomic factors rather on encouraging and championing quality (Hopkins, Hopkins & Hoffman, 2005). The diversified consumer market that McDonald’s access improves its operations and contributes to the success of the company (Hopkins, Hopkins & Hoffman, 2005). Recommendations The following are some of the steps to improve service provision at McDonald’s: McDonald’s should introduce health meal to counter the negative aspects of fast food. This will diversify the customer segments and also improve the reputation of the company (Combs, Ketchen, & Ireland, 2006) Human resource development should be improved, and employees should be satisfied with the work they do. Training and developing employees in service provision expands their capacities to fulfill the requirements of the consumers Even though the current speed of service provision is commendable, the speed of the delivery should be improved to address the minimal complaints from the customers. Conclusion In conclusion, service provision is an important integral to success in entrepreneurship business requirements. In understanding service provision, four components are included, which are target market, service concept, operating strategy and service delivery system. These components are applied differently to ensure the company becomes successful. McDonald’s has employed the framework in advancing the requirements of the organization and ensuring the consumers and other stakeholders are satisfied. McDonald’s business model has been successful and has been copied over the world and especially in more than 120 countries. In the competitive front, McDonald’s is in the third stage based on its accomplishments and how customers associate with the company. Improvements should be done at the speed of service and integrating an array of products to the product provision. References Chase, R. B., & Apte, U. M. (2007). A history of research in service operations: What's the big idea? Journal of Operations Management, 25(2), 375-386. Chua Chow, C., & Luk, P. (2005). A strategic service quality approach using analytic hierarchy process. Managing Service Quality: An International Journal, 15(3), 278-289. Combs, J. G., Ketchen, D. J., & Ireland, R. D. (2006). Effectively managing service chain organizations. Organizational Dynamics, 35(4), 357-371. Gilbert, G. R., & Veloutsou, C. (2006). A cross-industry comparison of customer satisfaction. Journal of Services Marketing, 20(5), 298-308. Hopkins, S. A., Hopkins, W. E., & Hoffman, K. D. (2005). Domestic inter-cultural service encounters: an integrated model. 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