International Journal of Business and Management Essay

As one of the to the highest degree successful fast-flying pabulum chain in the world, throughout the maturement of McDonalds, we could easily identify many an an new(prenominal)(prenominal)(prenominal) successful worry strategy implementations. In this paper, I bequeath discuss whatever critical work strategies, which linked to the companys structure and outdoor(a) environs. This paper is organized as follows In the original section, I will give brief introduction to the success of McDonalds. In the second section, I will analyze some grouchy strategies used by McDonalds and how these strategies ar suitable to their production line structure. I will then analyze why McDonalds choose these strategies in response to the changing out-of-door purlieu. Finally, I will summarize the approaches used by McDonalds to achieve their strategic goals. Keywords Strategy, McDonalds structureIntroductionMcDonalds, originated in California, USA, 1954, has become one of the well-ni gh recognized and respected brands in the world. The success achieved includes that they mystify established to a greater extent than 30,000 franchising shop classs in 119 countries, serving more than 47 million people each day, and generating about $15 billions revenues annually. McDonalds withal continuously enhances its brand imagine through divers(prenominal) social activities and the sponsorship of circumscribed events and sports i.e. as a major sponsor of the world cup since 1994 and the Champions League football in England from 1996 to 2000.(www.McDonalds.com)How nominate McDonalds achieve such(prenominal) success? There atomic number 18 many formulatingstrategies, which we could use for our analysis of their formula of success such as Porters competitive strategies model, which includes distinguishableiation and low-cost leadership or Miles and Snows strategy typology, which defined prospector, defender, analyzer, and reactor strategy. Obviously, it is extremely im portant for McDonalds to choose the nigh appropriate strategy to be successful. From my personal point view, to be an Analyzer is the most suitable strategic position for them to develop their business as a building block especially when they facing an extreme complex continuously changing world. As Miles and Snow defined that The analyzer tries to maintain a stable business while innovating on the periphery. It seems to lie midway between the prospector and the defender. Some products will be targeted toward stable environment in which an efficiency strategy intentional to go forward current guests is used. Others will be targeted toward new, more impulsive environment, where growth is possible. (Richard L.Daft) It is also very important to consider how McDonalds applies these strategies and how their strategies interact with their business structure and the external environment.1. How McDonalds business structure captivates its strategy? The McDonalds business structure i s based upon a geographic structure. When log on their website, you will be asked to choose the country that you argon interested in. Actually, McDonalds split its operations into five geographical divisions.(www.McDonalds.com) supranational Journal of Business and ManagementNovember, 2008As shown in to a higher place pie charts that around 65% of McDonalds restaurants and approximately 75% of its revenues are generated in the United State and Europe. So, to McDonalds, the most important strategic approach for maintaining its leading position is to keep their major markets at the same date expanding their business into the other emerging markets. However, variant consumer groups in different countries may gift very different tastes and/or requirements. So each full functional geographic unit of McDonalds was required to solely response for producing and marketing its products in that region. Through this regional structure, McDonalds could not lone(prenominal) fill the topic al anesthetic anesthetic consumers needs in different geographical areas hardly also pursuing maximum local development. Actually they produce and market slightly different types of products in different areas, and they even have different prices.As Jim Skinner, the vice-chairmen of McDonalds illustrated that if you are looking for a command center with one push waiver that operate our restaurant in every corner of the world, you wont find it. However, their philosophy of QSC&V-quality, service, cleanliness and appraise is same for everywhere. And McDonalds targets the similar consumer segments that need fast service, affordable price and good standard hygiene. So their main products are similar in most countries, where they provided service, including beef, chicken, bread potatoes and milk. As the consumers in different countries having different foods requirements, McDonalds keep launching new products for their regional consumers. In this case China and France can be very good examples.2. McDonalds in ChinaIn 1990, McDonalds opened their first store in shenzhen (near HongKong). But before they actually started their business, McDonalds had already carried out 5 years business research and all sorts of information gathering such as the income level of the Chinese people, the kind of foods they enthrall etc. Moreover, their re-design of the counter, chairs and desks also reflected their considerations of the height and body shape of Chinese people. They made lots of efforts to promote their American burgers, and wanted to repeat the same success in China market as they has done elsewhere. Unfortunately, they are not as successful as KFC, their biggest rival, in China now.There are lots of reasons to excuse it, one important issue which has once been ignored by McDonalds is that Chinese people are more prefer chicken dishes than beef burgers, which are their main products. After identified this problem, McDonalds has move to adapt more Chinese tastes by a dding more chicken repasts into their menu for attracting more customers.(Chinese website) 3. McDonalds in FranceIn France, where customers has been resentful of the fast-food chains incursion, McDonalds has boosted it changes by remodeling restaurants i.e. hardwood floors, wood-beam ceilings, comfortable armchairs, and also by adding new menu items such as espresso, brioche and more upscale sandwiches. Actually they have success richly replyed to the preferences of the local area. (Richard L.Daft)In the other countries the situation is the same. For example, in Canada, McDonalds has introduced new Canadian feature breakfast. In Belgium, the McCicken premiere has been added to the menu. Although McDonalds has been regarded as the ultimate example of standardization for the world market. 4. How the strategy is influenced by external environment?The external environment can be divided into several sectors. In this section, I will only discuss two important parts competitors, social concept (healthy problem) and uncertainty situation, which can greatly influence McDonalds strategies. Then at the last part of this section, I will discuss one particular strategy they used which served for their future development purpose.CompetitorIts unlikely that McDonalds can evermore be No.1. In an annual consumer satisfaction survey, McDonalds has been scored dead last among fast-food restaurants since 1992. In the fourth turd of 2002, McDonalds disclosed its first-ever quarterly loss, one reason why McDonalds is struggling is that the consumers began to switch to its competitors, such as Burger King, Wendys, and Subway.These companies emphasized on passporting fresher, hotter, high-quality foods at lower price with faster service. On the other hand, McDonalds decided to close 719 poorly performing restaurants around world. All of these simply proved that McDonalds might no longer be competitive in the fast-food market. And if McDonalds cannot adapt external environment c hange, they might be gradually diminished and even replaced by other competitors. In order to keep their market share, increasing sales and profits. McDonalds has to respond to the threat of competitors. In 2003, McDonalds offered the McGriddles sandwiches in the US and the Canada feature breakfast. Meanwhile, McChicken Premiere and a zesty chicken have been introduced in the UK, France, Italy and Belgium. McDonalds was trying to satisfy customers desire for premium products at affordable prices.Furthermore, McDonalds is providing more choice with respond to offer Happy Meal to keep the children. For example, Happy meal now including chicken selects, and no-sugar add crop drink (juice and low-fat drink) and also to produce McDonalds coffee which appeals to adult. Those products have been made to attract brisk customer and develop new customers.(www.McDonalds)Moreover, in addition to the innovational menu, McDonalds is also rebuilding and even relocating some of their restaurants to make the environment more attractive. At the same time, McDonalds is differentiating itself by creating 73Vol. 3, No. 11International Journal of Business and Managementmore relevant experiences such as allowing the customers to access the meshing with the wireless technology platform. This innovative way not only attracts the teenagers, but also perfectly able the modern professionals requirements. Social problem healthy issueWith the economic development, peoples living standards have increased dramatically these years. People are becoming more concerned about their health issues. It cannot be denied that McDonalds has attempted to make itself more convenience for the people. However, people also believe that such kinds of fast food are not good for their health. The world health organizations report presented that those food not only can cause the obesity of children, but also is part of the reason of causing cancer. Healthy issues became the biggest stumbling block to the d evelopment of McDonalds. Customers were switching to healthier offering, such as Subways sandwiches, or KFCs mashed potato instead of fried potato.McDonalds has responded to this healthy trend. In order to compete, McDonalds has added salads and other lighter options into their menu. If a mother comes in, she is not only buy the happy meal for her children, she will also be likely to buy herself a meal too .the lighter options also encourage existing customers to come back more often, because there is a greater variety of choices. Focus on ChildrenNo matter how different the tastes and the local needs are, McDonalds has paid considerable attention to the children in every country. They built happy land for them, offering fantastic happy meals with novelty toys to them. Furthermore, McDonalds has just launched computers with games that were designed to inspire the childrens imagination at the same time shape their personal characteristics. There are three main reasons for McDonalds to focus on the children(1) Children are one of the biggest consumers groups to McDonalds. And McDonalds has been regarded, as their popular place to go .The brand culture happiness is known by children. (2) McDonalds believe that counsel on children can build the stable business, and will provide the best engine to encourage the whole family to come to McDonalds. For example, one happy meal for a child only cost $ 5 but McDonalds can produce more new products in addition to happy meal to offer the whole family. (3) By Building a brand loyalty with the children, McDonalds more likely to be successfully today and in the future. In my opinion, McDonalds is not just selling the happy meal to children it is selling the American culture to the children the enjoyable individual life.Actually this strategy with focused children segment is fully worked for their future development purpose. Whatever how the environment changes this strategy can always develop future multiplication custom ers loyalty. And the happy children can also bring in the whole happy families. ConclusionTo sum up, there is a strong possibility that if the company fails to recognize the new competitions, shifting of consumer interests, and the social trends or innovative technologies, it will loose its market share.Previously, McDonalds emphasis on adding new restaurants for near 5 years, more than 50% of increase in new restaurants opened. Unfortunately, there was only 2% of increase in the sale of the food. So, in the year 2003 McDonalds decided to change its focus on increasing sales at existing restaurant and reduced capital spending which allows for a sizeable amount of cash be returned to shareholder. For achieving their objectives, the McDonalds strategy should be attract more new customers, encourage existing customers to visit McDonalds more often, build brand loyalty and, ultimately, create enduring profitable growth for the company.ReferencesEdstrm. A., & Galbraith, J.R. (1977). Tran sfer of managers as a coordination and control strategy in multinational organizations. Administrative Science Quarterly, 22, June, 248-263. Egelhoff, W.G. (1984). Patterns of control in U.S., U.K. and European multinational corporations. Journal of International Business Studies, Fall, 73-83Fatehi, K. (1996). International Management, New Jersey Prentice Hall. Geringer, J.M. & Hebert, L. (1989). Control and consummation of international joint ventures. 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