The Strategic Management of the McDonalds Company - Math Problem Example

STUDY ON THE STRATEGIC MANAGEMENENT OF THE MCDONALDS COMPANY MISSION/VISION/OBJECTIVES McDonalds started in by 1954. McDonalds is a worldwide famous restaurant chain, with the vision to be the world’s best quick service restaurant. Being the best means providing outstanding quality, service, cleanliness and value so that we make every customer in every restaurant smile. McDonalds MISSION and VISION is focused on increasing and/or enhancing the company’s reputation building potentials. THE EXISTING STRATEGIES McDonald’s is a worldwide famous restaurant chain, uses the Successful Supplier Relationship Management or SRM strategy. It requires dedicated supplier managers effective processes to create standardized best practices, and tools to track and evaluate the results. The plan’s success can dramatically impact the value of a supply contract. In SRM, you need to measure your suppliers and then there’s need to manage your suppliers based those measurements. McDonald’s is increased its Global SRM initiative in May 2004. There were four prime measurements to manage its supplier relationship. First is performance measurement that evaluates a supplier’s efficiency in service and delivery. Then there is contract administration, which ensures an agreement is followed and double-checks for any changes or variations, keeping an eye on additional business prospects. Third is the element of financial management administration. It confirms that invoices are correct and the buyer is paying for the agreed service in the contract. Lastly, relationship management keeps both parties in close contract to maintain a healthy relationship. It also ensures that the end user of the purchaser is also benefiting from the supplier contracts. McDonald’s also used the so-called “get what you pay for” strategy. It is based on the Procurement Strategy Council, which provides best practices research and executive education to senior procurement executives. Most of the McDonald’s restaurants are franchised, others are joint ventures, developmental licensees and the rest is owned or managed by the company. The latter usually compromises just a small part of the statistics. Later on, McDonald’s began to see positive results from applying SRM methodologies. This gave them an idea to extend the strategies to other IT contracts. The original SRM plan included dividing its suppliers based on contract size, strategic value and risk. They proceeded to group network vendors, such as Verizon and MCI, and restaurant-level IT suppliers to its restaurants or point-of-sale (POS). McDonalds also created an executive sponsorship program, through which they assign executives to keep in close touch with all of its major suppliers. Once the company is satisfied with the applications of its SRM strategy with IT suppliers, it plans to move to other indirect materials suppliers. McDonald’s will proceed in that direction with the help of the Procurement services provider to implement a reporting tool to assess the performance of suppliers help desk operations. For example, should a McDonald’s restaurant manager call with a problem or question about a vendor’s product or technology, they would be able to something about it. The company emphasized that SRM must be coordinated with all levels, from sourcing executives to business unit staff to senior executives. In addition, the number of vendors selected as strategic will decrease as a company moves from transitional relationship with suppliers to strategic partnerships. INTERNAL/EXTERNAL AUDIT On the subject of a Successful Supplier Relationship Management, there is a need to measure the company’s suppliers and then there is a need to manage the suppliers based on those measurements. In the case of the McDonald’s, it increased its global Successful Suppliers Relationship Management System, initiative in May 2004. McDonald’s identified four prime measurements to manage its supplier relationship and they are as follows. 1. Performance measurement This type of measurement evaluates a supplier’s efficiency in service and delivery. 2. Contract Administration This group keeps keen eyes on each suppliers contract to make sure everything is met and followed. They double check the results for any changes and/ or variation and identify loopholes and recommend a temporary and a permanent solution to the problem that they have identified. They also keep an eye on possible business prospects (Forrest, 2006). 3. Elements of Financial Management Administration This group takes care of invoices or receipts and they make sure that everything is in order and makes it a point that the buyer would be receiving the proper service they paid for based on the contract (Forrest 2006). 4. Relationship Management Relationship Management keeps both parties in close contract to maintain a healthy relationship. At the same time, it also ensures that the end-user of the purchaser is also benefiting from the supplier contracts. STRENGTHS According to Leonhardt (1998), the best strength of the McDonald’s Company is its brand. The company has been successful in creating a brand that is powerful around the globe. The brand is continuously gaining huge success especially since a large number of clients have a high positive perception regarding the brand. This high regard for the brand has been translated to increasing revenue in the past years. The McDonald’s has the name. It also has the distribution. The company’s international operations have proven beneficial to the company too. They have contributed a lot in the success and sustainability of the company. To date, the company is observed to have the expanded at a fast pace. WEAKNESSES One weakness of the McDonald’s according to the BusinessWeek is that the company has been unable to harness the strength of its brand to grow beyond its basic formula of burgers and fries (McDonald’s: Can it regain its golden touch?”, 1998). The company is not keeping up with the strength of the brand by sustaining its fast growth in the company’s early years. The company has not capitalized well on its popularity. Its operations have otherwise failed to produce much in the way of results (McDonald’s: Hot, Fresh, and Later Failures Beget Opportunity”, 2002). McDonald’s demonstrated continuing weakness in its home market. That is, sales generated at the United States “restaurants open at least a year were 1.3 percent lower in the first two months of the fourth quarter than in the comparable period a year ago” (McDonald’s Expects Quarterly Loss”, 2002). It has also been observed that by offering a very wide variety of products, like ice cream, ice desserts and many others, it has lost its focus. It looks like it is now serving everything. Once a fastfood chain does this, it will become a generalist. Its positioning as the hamburger fastfood chain is not anymore the case. OPPORTUNITIES McDonald’s Company is popular among customers as one of the best known brands in many parts of the world. Its brand has been patronized well by a large base of customers from a wide market segments. This opens a lot to the company. The company can climb their way up to more success due to the power of its brand. The current move towards healthier food is one good opportunity for this company to improve on its products. Nutritional contents can be enhanced towards the current trend of adding health value to food products. Imaging of the McDonald’s can be geared towards this in the coming years. All these will also result to more franchising opportunities for the company, believes Owen. (2004). THREATS There are a number of threats to the McDonald’s, just like in the past years it is continuously meeting health problems. A good example of this is the past problem met by the company related to some complaints like linking the company’s meals to heart disease, diabetics and cancer. This company was also accused of despoiling the environment. There have been allegations also of this company exploiting the Third World. The resurgence of anti-commercialism activists likewise shows tendencies to celebrate by torching a McDonald’s. Likewise, the costly service system of the company has raised concerns by its franchisees (Erlinchman, 1994). There are also reported waylaid customers. Other possible threat to the company is the presence of fast emerging competitors such as Burger King, Taco Bell, Wendy’s, as well as the Sonic and Rally’s. In fact its price-war with competitors since 1997, the Burger King, has continued (McDonald’s Expects Quarterly Loss”, 2002). The numerous competitors are expanding their menus forcing McDonald’s to do the same. This possesses the threat for McDonald’s to lose its focus. One threat to the McDonald’s is the lack of growth opportunities as a result of well-saturated domestic market (McDonald’s Case Study, 2007). Another threat is its ubiquity. McDonald’s are practically on every corner but the dining experiences is never special. The promotional strategy of the McDonald’s by incorporation to tie-ups with its products is on the verge of inefficiency due to the high cost to run these promotions. STRATEGIC OPTIONS The strategic options of the McDonald’s are the usage of marketing and promotional tools inclusive of the use of the Internet ads conjunction with traditional media, and continuously address consumer needs through an in-depth understanding of the characteristics affecting the choice of products of its customers worldwide (Forrest, 2006). Vaughn’s Model, which is also referred to as the FCB Grid, presents an overview on understanding of people’s attitudes toward advertising based on involvement (high-low) and think/feel. Studies showed that the internet is for those consumers that are highly involved and rationally-oriented, and the study further noted that the internet is being used more high-involvement products rather than for low-involvement ones, notes Forrest (2006). But nothing can replace television as the most used advertising medium for all product categories studied in this paper. E-commerce is showing that brand management is nearing its end. Evidence from market studies supports this. However, there are some key factors make this scenario unlikely. This depends on a number of other factors. This can be the type of product and type of purchase. A Brand plays a different role in every scenario and the effect that the internet would identify varies according to the role that the brand plays. There are a variety of internet technologies which has a direct or indirect effect on brands in a variety of ways. The internet is providing secondary effects in the market structures that affects brand. Combining these factors, shows that the death of brand management. According to Mitchell (2001), brands are known as the product of the industrial age, and this gave-birth to brand management. The new era does not only change the ‘hows’ of brand management, it transformed the true nature of the beast itself. Brand management is sometimes known to be a sellers-centric monopoly (Mitchell, 2001). The existing strategies can be appraised. For instance, just like in any other company there is the need for a mission/vision to be workable ones for the business with reference to stake holders. This would separate the company from their competitors. A company should have its own image and build on it. And whatever they come up with, the company should make sure that they would do whatever it takes to uphold its mission/vision objectives. The company is thinking of aligning their business on the internet by inserting their mission and vision statements with their websites and products/service offered. The Twenty-First (21st) Century, but before doing so the company has to be pro-active and look at the implications on how they would approach and manage the e-reputation that it would produce. Companies are positioning themselves as well but their main concern is against competence. There are studies that show results on the substantial differences between companies competing in the same sectors. It also showed differences between the profiles of leading companies across sector as well. Aside from current strategies, there are numerous strategic options that McDonald’s can utilize. Using state of the art technologies can be utilized to further enhance their full potential. Mitchell (2001) notices that it is a matter of transforming their present strategy into a software based tool. With the help of this new technology and software tools, the company can see a dramatic change in how their processes and procedures affect the Supply Chain Management and at the same time protect their Brand Name. This goes without saying that when McDonald’s Company realizes and transformed their well renowned strategy into the 21st century technology, they would be a trendsetter in the fast-food chain and would be the company to beat with regards to its world class supply chain management standards should be the main focus of the company. Supply chain management plays a vital role with McDonald’s or for any fast-food chains that are widely distributed around the world. It is imperative to protect the Brand name of the company. Failure to do so would have a tremendous impact on consumers worldwide. McDonald’s is not only known in certain areas. This company has a lot of branches and franchises worldwide. So to protect its integrity and Mission/Vision statement, the company must devise a strategy to address the supply chain management. Since this is a restaurant or fast-food business, its product are patented with regards to its flavor and the type of service it offers. This product and services of the company are branched and its mission/vision statement would be used worldwide so that they would be identified as a single entity. The next objective of the company is to utilize the existing technology and transform them into their own type of processes and procedures. This way the company’s strategy would be intact and would be a basis for each franchise and branch in the way they operate. Having a standard tool where the processes and procedures are incorporated, the company’s integrity and Brand Name would be well protected. STRATEGIC OPTIONS: Short-Medium Term: When you say or hear McDonald’s, you would only think of one thing, a well known and famous restaurant/fast-food chain worldwide, the company uses a Successful Supplier Relationship Management System or SRM strategy. According to Forrest (2006), McDonald’s relies on suppliers, hence, this company realized that to be successful on the business, they have to introduce a scheme or system to help maintain their equality service and products. In lieu of that, management assigned dedicated supplier managers to efficiency process and formulate standardized best practices. They succeeded with the help of state of the art tools to track and evaluate the results. The system’s success would dramatically change the value of a supply contract. Long-Term: The fast food business environment is continuously and rapidly changing. To address McDonald’s objective to widen its scope and purpose of its business, the company is addressing the changing business environmental and global marketplace, high competition, rapid business pace and cost-conscious consumers. McDonald’s saw a more knowledgeable customer would be an ally partnered with ever-growing product expectations. The mission and vision of the McDonald’s Company is focused on increasing and / or enhancing the company’s reputation-building potentials. STRATEGY IMPLEMENTATION: McDonald’s, as multinational company need to know the local/native culture of each country, more consultants to help and check the formulation. They also need advertising company for other products. The market strategy should grow into a mass market type. In case of franchise operations, getting the right partners and the right support are beneficial. Finding a way to penetrate a global market which is very competitive. McDonald’s have to be strong to compete in the global market. The challenge is how to expand the brand. In case of a country with huge territories, its like having several countries in one country. If McDonald’s maintain and improve well, it can still have several thousand stores anywhere. Competing globally is difficult. Still, the real challenge is to grow internationally. Superior menu, creative marketing and efficient manufacturing and logistics facilities are the determining factors for McDonald’s as leading fast-food chain, and to maintain its monopoly of the global market. McDonald’s need to reinvent itself time and again, by developing new products, and by embarking on a system-wide drive for service excellence. McDonald’s lucky to be the leader in this category but its still a global competitive market. References Erlinchman, James. ‘Leaflet ‘A Threat’ to McDonald’s”. The Guardian, June 29, 1994. Forrest, Wayne. 2001, “McDonald’s applies SRM strategy to global technology buy”. Purchasing, September 7, 2006. Reed Business Information. Leonhardt, David. “McDonald’s. Can it regain its Golden touch?” BusinessWeek, March9, 1998.The McGraw-Hill Company Inc. Man, Bill. “McDonald’s: Hot, Fresh, and Later (Failures Beget Opportunity)”. Rule Maker Portfolio, May 1, 2002. The Motley Fool. McDonald’s Case Study. Retrieved 6 July 2007. http://home.comcast.net/-nelson1397/mcdonald’scase.htm. McDonald’s Expects Quarterly Loss. CBS, News, December 18, 2002, Chicago. Mitchell Alan. “The camel, the cuckoo and the reinvention of win-win marketing”. J Brand Management, vol. 8 no. 4, pp. 255-269 (2001). Palgrave Macmillan Ltd. Hampshire. Owen, Wilson. Kiwi McDonald’s Going On A Diet. New Zealand News, January 2004. Franchiseek Limited. Read More