Marketing entails offering quality products at reasonable prices. The research focuses on the marketing strategy of McDonald’s Company and its critics. The research includes the history of McDonald’s Company from its humble birth in California to its current worldwide acceptance as the best seller in the food and beverage market segment.
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Specifically, the research includes a SWOT analysis. The research ends with a recommendation as to what McDonald’s should venture into in the years to come. McDonald’s implements textbook-based marketing strategies to catapult it to its present stature in the restaurant, food, and beverage world.
Gilbert Sara (4) emphasized McDonald’s was founded by Ray Kroc. Dick and Mac McDonald’s had opened its McDonald’s Restaurant on 14th and E streets in San Bernardino state, California in 1940. The original store included a drive-in environment with a corresponding large menu and car hop services. In 1949, Dick and Mac had reduced their menu. The new menu item list included hamburger, cheeseburger, soft drinks, coffee, milk, potato chips, and pie. The most popular menu during this time period is the 15c hamburger.
In 1954, Ray Kroc accidentally enters the McDonald’s scene by selling a multimixer product to both Dick and Mac McDonald’s. Ray Kroc learns that both owners of McDonald’s were interested to set up franchises of their McDonald’s restaurant in many cities across the United States. Ray Kroc decides to enter the McDonald’s franchising business. Consequently, Ray Kroc opens his first McDonald’s store in Des Moines Plaines, Illinois on April 15, 1955.
Stanley Meston created the Golden Arches logo of McDonald’s. The company’s first day sale catapulted to $366. This was a large sum of money when comparing the value of $366 during that time period and today’s $366 value. The cost of food, clothing, shelter, and other necessities were cheaper back then compared to the prices of food, clothing, shelter, and other necessities of today, April 20, 2011. In 1965, the company was able to franchise 700 McDonald’s restaurants across the United States.
The new recipes included the “Big Mac” which was introduced to the public in 1968 and the replacement of potato chips with French fries. McDonald’s celebrates its 25 years of business operations. In addition, the company reached its 50th anniversary in 2005. In 2008, McDonald’s came up with a global design of the company’s products.
Anja Bohm (12) opined McDonald’s company has its strengths. First, the company has distinctive competencies. The competencies include its strategic advantages. Competencies include low prices, high quality goods, excellent service and.
Second, the company gains a competitive advantage, people will enthusiastically flock to a new McDonald’s branch because the McDonalds name is a name that can be trusted and admired. Third, the company has a strong marketing strategy. The company spends lots of money for advertising the different McDonalds products in the television, radio, and newspapers.
Fourth, the company has strength in research and development. The company continues to experiment with new ingredients and menu to pamper the current and future McDonalds clients. Fifth, the company has strengths in human resource management. The crew are well trained to serve each client the same high quality way; serving the same high quality products at low prices.
Sixth, the company has strengths in information system. Clients and log on to the online McDonald’s website and make an order for hamburgers, French fries and the like. Seventh, the company has strengths in infrastructure. The company sets up the standard McDonald’s restaurant format. The people from different countries have grown to love the same store fast food style infrastructure, especially the busy working person.
Anja Bohm (12) reiterated the McDonald’s Company has its strengths. The strengths represent the McDonald’s development and growth of the company over time which is identified as the company’s “competitive advantage” and “distinctive competency” that is responsible for the company’s growth to be one of the top restaurants, food, and beverage companies of the world.
The company has the most critical components of a company’s financial resources. The company’s high revenues allow the company to have ready cash on hand to pay for its maturing obligations as well as daily operating expenses.
There are other strengths not discussed above. First, the McDonald’s Company has distinctive competencies that include a strong worldwide presence. The company is recognized the leader in the fast food chain market segment around the world, especially within the United States.
Everyone within the United States and major cities around the world has come across the name McDonald’s. People from all walks of life have visited a McDonald’s store. Everyone will comfortable that they can easily munch the same McDonald’s quality and taste whether one is in Los Angeles, California, Upstate New York, Virginia, London, China, Saudi Arabia, Japan, Korea, Malaysia, India, and other countries.
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Second, the McDonald’s Company has under its worldwide fast food market segment more than 30,995 restaurants. The restaurants are strategically located in many places around the world. More importantly, more than 13,998 of the McDonald’s Company’s own stores are strategically located in many major cities within the local United States territory.
The establishment of the McDonald’s Company restaurants in different parts of the world indicates that there is strong demand for the McDonald’s Company’s products and services. The increase in the number of McDonald’s Company restaurants around the world proves that there is a strong demand for McDonald’s Company products and services.
Third, the McDonald’s Company introduces the important economies of scale principles in assigning costs and prices on its McDonald’s products. With the implementation of the economies of scale principle, the company continues to lessen its restaurant operating costs to more realizable levels.
Specifically, the implementation of the scale greatly lessens the expenses of its overall charting of new paths into uncharted fast food market segments around the world. The economies of scale theory states that some countries are composed of a majority of poor people.
The economies of scale theory states that some countries are composed of a majority of poor people. The economies of scale theory states that some countries are composed of a majority of very rich people. The economies of scale theory states that some countries are composed of a majority of average income people. McDonald’s offers it products at low prices. The company targets the general masses of the community.
Since there are poorer and average income people in the community compared to the community of rich and very rich persons, McDonald’s targets the average income and low income groups of people. The company is satisfied to generate a small income because there will be more clients visiting the McDonald’s stores compared to restaurants and food and beverages stores that offer its food and service products at very high prices.
Fourth, the McDonald’s Company maintains a string of children’s charities around many of its branches around the world. The name of the charity is The Ronald McDonald House. The McDonald’s Company spends lots of cash to feed the children entering its charity outlets. By engaging in children’s charities the image of the McDonald’s Company will improve in the eyes of the current and future customers. The amount allocated for the care of the children
Fifth, the McDonald’s Company focuses on the clients’ health and overall well-being. The company only uses ingredients that have passed its strict high standards. The McDonald’s Company complies with all the policies of the United States Department of Agriculture in terms of healthiness of the food ingredients and the food itself.
The company ensures that ingredients used in the production of goods and services are not spoiled or expired. The use of expired or spoiled food ingredients may cause the customers to suffer from food poisoning. Consequently, the customers can file a case in court for the food poisoning incidents. Such cases will cause a huge dent the image of the McDonald’s Company.
The company goes out of its way to protect its image. A damaged image will translate to a decline in the demand for the company’s products and services. A decline in the demand for the company’s products and services will cause a drop in the company’s revenues. A reduction in the company’s revenues will translate to a reduction in the company’s net profits.
Sixth, Anja Bohm (12) reiterated the McDonald’s Company invests in properties around the world and offers franchises. The establishment of McDonald’s Company restaurants around the world shows that many investors believe that the infusion of their hard-earned cash into the McDonald’s Company will be a profitable decision. The spread of McDonald’s Company restaurants indicate the investors are comfortable with their capital investment decision to have one or more franchises of the McDonald’s Company restaurant.
Seventh, the McDonald’s Company has a long list of real estate portfolios. The company is willing and able to purchase properties in different countries around the world. The purchase of such properties would be useful in terms of improving the company’s balance sheet presentation. The investors would be happy to see that the McDonald’s Company’s properties have increased through the years. An increase in the McDonald’s Company’s properties shows there is also an increase in the company’s stockholders’ equity accounts.
Eight, the McDonald’s Company has patents over very popular food items. The food items include Big Mc, Chicken McNuggets. Patents are defined as the government’s right given to an inventor or new product developer to craft the McDonald’s Company products. The copyright prevents the competitors and new entrants to the restaurant, food, and beverage competitors to produce the same products or even use the same product name such as “Big Mac”.
Ninth, the McDonald’s Company has one of the world’s most recognized logos. The Company’s logo is a huge “M” sign. Any person seeing the “M” logo can easily state that it means a McDonald’s restaurant is located nearby where the “M” sign can be easily seen from afar.
Tenth, the McDonald’s Company focuses its unwavering attention on its corporate social responsibility. The company implements community-caring programs. The programs are aimed at giving back to the community what the community has given to each McDonald’s restaurant located in major cities around the world in terms of food and beverage revenues.
Eleventh, the McDonald’s Company incorporates the local culture in all its branches in the United States, Europe, Asia, Africa, and other parts of the world. The McDonald’s Company hires the local residents to manage each McDonald’s restaurant. With the locally-hired McDonald’s employees, the company can be classified as a diversity-based company.
The Chinese employees bring a touch of the local Chinese culture to the McDonald’s China branches. Likewise, the Korean employees bring a touch of the local Korean culture to McDonald’s Korean branches. The United Kingdom employees bring a touch of the local United Kingdom culture to the McDonald’s United Kingdom branches.
Twelfth, the McDonald’s Company is strategically located in major airports, cities, highways, tourist attractions, and parks. Consequently, the large number of people passing through each McDonald’s branch easily accepts the sumptuous menu items displayed in each McDonald’s establishment.
Mike Meldrum (27) reiterated the McDonald’s Company has its weaknesses. First, the McDonald’s Company uses advertising strategies focused on inviting the children to visit the nearest McDonald’s restaurant.
Second, the McDonald’s Company implements a low pricing strategy to capture the competitors’ current clients. Clients would easily transfer their preference to McDonald’s products because the prices of their food items are low. Consequently, the competitors are forced to reduce their prices to levels matching or even nearing the McDonald’s food pricing levels.
Third, the McDonald’s Company lacks the penchant to innovate its products. The company continues to sell the same old McDonald’s products. The products include hamburgers, French fries, coffee, chocolate, beverage, Big Mac, and others. The people will generally prefer a change in the food menu to avoid boredom.
Mike Meldrum (27) theorized the company’s superior performance is the result of a successful fit between strategy and the environment. The community needs low priced food to fill their hunger fangs. In response, McDonalds creates high quality products to fill the community’s needs, wants, and caprices.
In addition, the company’s main technique is to analyze the competitors. The McDonalds Company does not fear the entry of new competitors because it is difficult to outmatch the McDonalds Company’s established high quality products sold at low prices. The suppliers are willing to supply McDonalds with highest quality ingredients and other company needs at reasonable prices.
The McDonalds Company does not fear product substitution because the substitutes are sold at higher prices; the clients will prefer lower priced goods and services. Realistically other traditional restaurant competitors offer their products higher prices than McDonalds.
Nadine Pahl (73) proposed The McDonald’s Company has its set of opportunities. First, the McDonald’s Company can effortlessly adapt to the food needs of the community where the company has established its strategically located branches. The company can introduce products that are very popular in the competitors’ restaurants. For example, the China branch of McDonald’s can introduce the popular food menus being sold to the competing Chinese restaurants or food outlets.
Second, Mike Meldrum (27) theorized the McDonald’s Company can introduce new marketing strategies to increase its revenues. The company can set up websites in each city, community, or state. With the McDonald’s website, the clients can easily order a hamburger or coffee with just the click of the mouse.
In addition, the company can distribute leaflets or promotional brochures to communities indicating the cell phone text numbers. The clients can easily order a McDonald’s Big Mac just by sending a cell phone text message to the local community’s McDonald’s branch.
In terms of threats, Mike Meldrum (27) insists the company can easily hurdle the encroaching new competitors because the new entrants cannot easily win the away the established client base of the McDonalds brand.
Further, the supplier threats can easily be resolved by contacting other suppliers to offer reasonably priced ingredients and other products. Likewise, the threat of substitute products can be easily answered by offering different product choices within the McDonald’s restaurant. For example, the Starbucks coffee is price three times higher than a cup of McDonald’s coffee.
Economics tells us the as prices go up, the demand for the products decreases. Thus, McDonald’s will always better alternative compared to Starbucks coffee because there are more middle income and low income people than rich people. The restaurant and food industry is composed of strategic groups. McDonald’s countless branches around the world are one strategic group that constantly wins most of the current and prospective client’s food preference.
The members of McDonald’s Company’s strategic group can easily resolve its immediate competitor situation. The company has been successful in implementing one universal marketing strategy to capture the new clients and communities food preferences. Currently, the company is at its maturity stage in the product life cycle environment.
The people from around the world have accepted McDonald’s as a mature company that serves their quality food needs at low prices for more than 50 years. Likewise, the macroeconomic environment, political environment, global environment, legal environment and social environment continues to be very favorable to the setting up of a new McDonald’s branch as well as the continued profitability of each currently established McDonald’s brand.
The McDonald’s Company has to contend with its threats. First, the McDonald’s Company has to overcome the current economic depression or recession. The recession covers much of the United States and Europe. The recession has reduced the current clients’ penchant to spend quality time gobbling a McDonald’s hamburger or sipping coffee while reading the newspaper’s headline stories.
Second, the McDonald’s Company has to resolve the currency exchange rate fluctuations. The McDonald’s Company will be happy if the currency exchange rate between the United States dollar and the Chinese currency, Yuan, will remain on the same level. A change in the currency exchange rate between the two currencies may spell an increase in revenues and profits or a decrease in revenues and profits.
Third, many of the competitors are coming up with new food items that can rival the taste, price, and quality of the McDonald’s products. Many local restaurants can easily implement new marketing strategies to please the ever-changing needs, wants, and caprices of its current and future food customers. On the other hand, the McDonald’s Company continues to steadfastly hold on to its popular brands throughout the years.
Fourth, the McDonald’s Company has to finally settle the health issues relating to the company’s food products. Everyone knows that eating too much hamburger is hazardous to a person’s health. Too much indulgence in the McDonald’s products may trigger hypertension, diabetes, and other ailments, especially for the “older” generation of restaurant clients.
Fourth, the McDonald’s Company focuses a major part of its capital investment on advertising. People often see McDonald’s advertisements in television shows. Likewise, McDonald’s advertisements are found in newspapers. In addition, McDonald’s advertisements are found in radio stories.
Fifth, many of the parents detest the McDonald’s Company’s marketing strategy. The strategy focuses on enticing the children to visit the nearest McDonald’s restaurant. The children are easy prey to the continuous advertising of the McDonald’s products and services. Consequently, the growing child will bring the McDonald’s food craze into their adulthood and elderly stages of life.
Sixth, the McDonald’s Company has been sued in courts for the effects of the unhealthy McDonald’s products on the health of its current and future restaurant customers. The lawsuits include charges that the food items are injected with addictive additives. The additives will create a craving among the current and future McDonald’s Company clients to return back to the nearest McDonald’s fast food restaurant to buy another set of McDonald’s addictive products to satisfying their addiction to the McDonald’s food items.
Seventh, major competitors are slowly, but surely, creeping into McDonald’s market segment and literally grabbing major markets. The popular Starbucks coffee is gaining a continuing increase in coffee lovers.
Likewise, Burger King has been able increase its food and beverage market share by chopping away and pirating many of the clients of McDonald’s. In addition, Wendy’s has successfully increased the number of its worldwide branches. The increase in Wendy’s branches translates a decline in the McDonald’s clients.
Eight, the McDonald’s Company’s setting up of new branches in other countries has been unfavorable in many instances. Some countries have slow economies which translate to slow sales. Slow sales statistical figures translate to slow profits. On the other hand, a fast economy translates to fast revenue generating activity. It is common knowledge that some countries have slow economies while other countries have fast economies.
Consequently, a fast economy will generate more revenues and profits compared to companies with slow economic inputs. Normally, communities or countries with few people having purchasing money will translate to lesser revenues and profits when compared to communities or countries having more people with higher purchasing power or having more money to spend for McDonald’s products.
The company’s control systems
Karl Moore (83) emphasized the company’s control systems focus is very realistic. The store officers and staff ensure that all the company’s ingredients are fresh and healthy. The store officers have implemented one strict production process in all the McDonald’s Company branches around the world. The company’s food preparation manual indicates the step by step process of preparing, cooking, and serving each McDonald’s around the world.
The food preparation process in the California McDonald’s Company branch is similar to the food preparation of the McDonald’s Company branch in Florida. Likewise, the food preparation process in the United Kingdom McDonald’s Company branch is similar to the food preparation of the McDonald’s Company branch in France. The food preparation process in the Saudi McDonald’s Company branch is similar to the food preparation of the McDonald’s Company branch in India.
The implementation of only one standard tried and tested ingredient choosing, and food cooking, and food preparation in all the McDonald’s Company branches around the world ensures that the outcome of each McDonald’s Company food and beverage activity complies with the company’s preset quality standards.
The company implements preset standards as a measure of quality performance. All branches must adhere to the standards for the sake of maintaining the company’s top spot in the world’s fast food market segment. The McDonald’s Company officers compare the employees’ actual job performance with established standards with the aim of improving any lackluster service performed by the company’s crew.
The McDonald’s Company officers do not waste any time in correcting or alleviation any customer complaints. The McDonald’s Company food crew is a human being, sometimes one commits unintentional errors. The new greenhorn employees are apt to commit mistakes fulfilling the needs, wants, and caprices of the clients.
The McDonald’s Company must be quick to remedy such errors to ensure the company will continue to patronize the company’s products and services. It is also customary to post the picture of the best employee of the month in each McDonald’s Company branch as a reward for enthusiastic and hardworking employees.
Based on the above discussion, it is highly recommended that the company continue its present course in terms of ingredient choosing, food cooking, food preparation, and pricing of the regularly sold McDonald’s Company products that include the “Big Mac”, Chicken McNuggets, the Frappes, and the standard hamburger, coffee, egg McMuffins, chicken, and other McDonald’s mainstay products being sold in its more than 50 years of existence.
The company should continue to expand its horizons by setting up more branches in other communities and countries to ensure that the world’s craving for the favorite McDonald’s Company products will be filled to overflowing status.
The Company does not have to retrench its employees because the company’s food and beverage market segment continues to generate huge revenues and profits. The company can use a combination of online (internet website) ordering, cell phone texting, and phone calls as a means for current and future clients to fill their need for the mouth-watering McDonald’s Company products.
In terms of the future, the horizon is crystal clear. Crystal clear means the company sees an increase in the number of McDonald’s Company branches sprouting like mushrooms in other cities that do not have a McDonald’s Company branch within the reach of the hamburger-loving, French fry-loving, and chicken McNuggets-craving residents.
Using trend analysis, since the current trend of setting up new McDonald’s Company branches in the past has spelled financial success, the company should continue in its unwavering stand to set up new branches in other parts of the world.
In terms of rationalizing, the company has been able to generate profits from each branch set up in major places where a huge volume of people congregate, the company should continue its present course to set up new McDonald’s Company branches, in malls, groceries, busy street corners, airports, train stations, and other busy intersections around the world.
Marketing includes offering quality products at reasonable prices. The history of McDonald’s Company from its humble birth in California to its current worldwide acceptance as the best seller in the food and beverage market segment shows the company deserves the accolades for striving to be the best in terms of product quality and quality service.
Specifically, the SWOT analysis scrutinizes the strengths, weaknesses, opportunities, and threats of McDonald’s. The recommendations show that McDonald’s continue its present course because the company will continue to generate more revenues and profits. Indeed, McDonald’s Company continues to successfully implement textbook-based marketing strategies to retain its catapulted stature as one of the best in the restaurant, food, and beverage world.
Bohm, Anja M. The SWOT Analysis. New York: Grin Press, 2009.
Gilbert, Sara P. The Story of McDonalds. New York: Creative Press, 2008.
Moore, Karl A. Marketing: The Basics. New York: Taylor & Francis Press, 2009.
Pahl, Nadine R. SWOT Anaysis, Methodology, and Practical Approach. New York: Grin Press, 2009.