McDonald’s Corporate Leadership Issues
An external consultant hired by McDonald’s corporate leadership should consider the fact that the corporation remains one of the most prominent fast-food chains globally. Nonetheless, it is vital to acknowledge that problems exist even in highly profitable and competitive corporations. Namely, the firm’s strategic issue is the inability to fulfill the dynamic consumer demand. Specifically, trends change concerning how customers choose fast food places to go to.
While McDonald’s is known for affordable prices, the products are not highly customizable, healthy options are minimal, and the overall service is lower than in other restaurants. The strategic issue ultimately affects sales and, as a result, is a limitation that requires addressing. Consumers are less motivated to invest in McDonald’s products, so they are more likely to generate revenue for competitors.
The fact that the barrier above is, indeed, a strategic issue is supported by relevant evidence. For example, the total revenue in 2016 was $ 24,622 million, while in 2018, it decreased to $21,025 million (Dess et al., 2021). This implies that the decisions implemented on the corporate level, or lack thereof, negatively impact profitability.
The strategic issues, however, have occurred long before, reported in a 2003 survey in which the participants highlighted the low service quality at McDonald’s (Dess et al., 2021). As a result, it is evident that the strategic issue of focusing on price decreases rather than establishing higher standards for product quality and similar elements has partly led to the generation of problems for the fast-food chain.
McDonald’s Corporate Leadership Recommendations
A recommendation correlating with the strategic issue is investing in better-quality products. As mentioned, McDonald’s has always been associated with lower prices. However, at the same time, the main association with the restaurant was the lower quality of both service and food. Instead of joining the generally exemplified trend of prioritizing freshness and healthy goods as highlighted in the strategies of other restaurants, McDonald’s has remained somewhat neutral. Cooking with free-range eggs, replacing margarine with butter, and avoiding certain ingredients such as high fructose corn syrup are excellent changes (Dess et al., 2021).
Nonetheless, they are not widely advertised or visible, and consumers have stopped associating McDonald’s with unhealthy food rather than more balanced food. Thus, a recommendation would be to focus on fresh ingredients and diversify the range of healthier alternatives, such as offering whole-grain buns for burgers or reduced-sugar milkshakes. This would generate interest in consumers who would otherwise opt for other fast-food chains that are more widely recognized as offering balanced options.
The recommendation does, indeed, correlate with potential success in solving the strategic issue. Namely, it is highlighted that consumer demand has shifted. Specifically, restaurants such as Burger King and Wendy’s, which are in the same segment as McDonald’s’, are likely to be preferred by potential consumers (Dess et al., 2021). Moreover, Five Guys and Shake Shack are favored for the quality of their burgers, while Chipotle Mexican Grill and Panera Bread are famous for their options for customizing orders and fresh ingredients.
The fact that consumers prefer the establishment above directly shows that focusing on better-quality ingredients would attract customers back. As a result, McDonald’s would improve its competitiveness despite the strengths of its rivals. Moreover, as it already has the competitive advantage of lower prices, improving ingredients will majorly elevate McDonald’s in the eyes of the target demographic.
References
Dess, G. G., McNamara, G., Eisner, A. B., Lee, S.-H., & Sauerwald, S. (2021). Strategic Management: Text & Cases (10th ed.). McGraw-Hill Education.