Introduction
To begin with, it is necessary to emphasize that McDonald’s Corporation is the largest network of fast-food restaurants in the world. It is said that nearly 47 million customers are served every day in this network. The clients are mainly attracted by the simplicity of the choice, low prices, and high-level service (in comparison with the other fast-food restaurants and cafes). Lots of restaurants on this net have included a playground and special hall for children.
These are positioned as the best place for a birthday children’s party. The others are designed in a more natural style, and these restaurants are aimed to emphasize special comfort and an opportunity to relax: providing lounge areas and fireplaces, and refusing from hard plastic chairs and tables.
As for the financial position of this net, it should be mentioned that McDonald’s Corporation as it was stated in Dalton (2004) held a minority interest in Pret A Manger (a UK-based sandwich retailer) until 2008, and owned the Chipotle Mexican Grill until 2006 and the restaurant chain Boston Market until 2007. The company has also expanded the McDonald’s menu in recent decades to include alternative meal options, such as salads and snack wraps, to capitalize on growing consumer interest in health and wellness.
History
The business of fast-food restaurants started in 1940. These were two brothers Dick and Mac Macdonalds. They opened their first restaurant in San Bernadino, California, and this was the first restaurant with the introduced and properly incorporated “Speedee Service System”, which was initiated in 1948. This system further became the main principle of the modern fast-food industry.
From 1955 the company started working according to an absolutely innovative scheme, based on franchising. This scheme allowed McDonald’s to become the largest restaurant net in the world, as franchising is regarded as the most comfortable way of starting a business.
Constraints
The fact is that, in spite of the successful business performance, Mcdonald’s was involved in several lawsuits on various issues. Mushi-Brunt (2007) emphasizes that some of them entailed conflicts on the matter of the trademark. The company has threatened many food businesses with legal action unless they drop the Mc or Mac from their trading name. In one noteworthy case, McDonald’s sued a Scottish cafĂ© owner called McDonald, even though the business in question dated back over a century. The company was also involved in several cases on the matters of workers’ rights. The case was aimed to regard the conditions of the work and to regard the fact of breaking the law on the matter of child working conditions. It was the largest ever fine, imposed upon a company (ÂŁ12,400)
Still, the main accusation relates to the issues of health of the consumers. The fact is that the increased rates of obesity among children and adults are associated with the spread of fast food services and the accessibility of these foods for all groups of the population. This issue entails several factors which will be discussed in this paper, however, McDonald’s in particular and fast food, in general, cannot be responsible for individual’s obesity.
Analysis in the Context of Obesity Problem
PEST
Political / Legal
Political issues and political conditions, as well as legal, can not interrupt McDonald’s activity on a global scale. Originally, there is no single law against fast food accepted in the world, and free entrepreneurship is not forbidden. There are only indirect legislative projects that may create some obstacles. These legislations are related to the issues of obesity struggle, though, it will be required to prove that McDonald’s promotes the allover spread of obesity and harmful nutrition. Originally, this restaurant is positioned as a place with natural foods and ingredients, moreover, dietary foods and shakes are also included in the menu, and customers are free to make choices in accordance with their preferences, dietary schedule, or health requirements. Thus, the Corporation is not responsible for the increase of obesity rates, thus, the laws on the popularization of the healthy way of life cannot create legislative obstacles for McDonald’s performance.
Economic
The economic surrounding is regarded to be rather favorable for the business performance of the Corporation. Originally, the prices for the foods are comparatively low, that is why McDonald’s is often selected by businessmen and industry workers, adolescents, and adults as a place to have a bite. As for the issues of employment, it is necessary to emphasize that this company has almost 400% turnover (Healthy Eating and Tackling Obesity, 2006), nevertheless, it rarely lacks workers, as they can be offered stable salary which can be regulated.
Taking into account the issues of obesity dietary foods are slightly more expensive due to decreased containment of preservatives and carcinogens, however, this difference is not so essential in the allover situation of the increasing obesity rates.
Social / Cultural
Originally, this factor is the only which increases the obesity rates and may be influenced by the Company. The fact is that fast food is associated with real American food, and most of the movie characters prefer having a bite in the road cafes. They prefer hot dogs, hamburgers, fried potatoes, and coffee at least, but they never order healthy and dietary foods. The advertising campaigns of fast-food networks position fast-food restaurants as the best place for family rest or rest in the company of friends. These people are having fun and eating burgers, potatoes, hot dogs, etc. and any word is not said on the harm of these products. Thus, obesity should be regarded as a matter of social policy but not as the responsibility of fast-food networks.
Technological
This sphere may be regarded as one of the most favorable for this business. It is claimed that food technologies are developing rapidly, and the quality of the produced foods also increases. On the other hand, the amount of preservatives is not decreasing, so, these improvements will not affect the rates of obesity.
SWOT
Obesity
Originally, the issues of obesity are regarded as the essential obstacle for successful business performance not only for McDonald’s but also for other fast-food restaurants and networks. It is said that the issue of obesity is rather complex and it is the only which cannot be denied by society.
As Gard and Wright (2004) stated, obesity and fast food are the issues of health care and good communication. Health care organizations should promote balanced nutrition and a healthy lifestyle. This problem should be struggled since the very childhood, as children spend too much time near their computers and TV sets, while the previous generations preferred playing outdoors, burning out their energy and staying physically (and mentally) healthy”. In order to solve the problem of childhood obesity and diabetes, McDonald’s has donated $2 million to the Scripps Institute.
Ralph Alvarez, the president and chief operating officer, McDonald’s Corporation stated that the key aim of the corporation is to make a change in the lives of the children, help them to overcome this serious problem and enjoy their lives, which are not full-fledged with excess weight and deceases, linked with it. The cooperation with Scripps Research is regarded as the essential extension of McDonald’s long-standing dedication to the well-being of children all over the world.
Originally, it is the only, what McDonald’s can make for solving this problem. Moreover, it will be a powerful argument in the court, if McDonald’s will be obliged to respond on the issue of individual obesity. “More than 13 percent of children and adolescents in the United States are overweight and the number is growing at a critical rate” stated Richard A. Lerner, M.D., the president of The Scripps Research Institute. ” With obesity often comes debilitating, even fatal Type 2 diabetes. These are epidemics that America cannot ignore. The McDonald’s and Scripps Research alignment represents an advancement in the effort to change the landscape of these severe pediatric health issues.” (Stuttaford, 2004)
In order to increase the quality of their products and ensure the high quality of ingredients McDonald’s decided to tear off the contracts with all the meat suppliers who used antibiotics for growth increase. The chief management team is going to arrange the testing of their suppliers each year for ensuring compliance. This decision was taken after a precedent when two teenagers claimed in the court that the foods from McDonald’s have made them fat. The case was lost, and the reputation suffered essentially, as the investigation showed that the foods were rather harmful and the declared quality was higher than the real situation, and the foods were less healthy than the customers considered.
Nowadays, the deeper concentration on marketing is part of the anti-obesity struggle. The chief manager claims that McDonald’s cannot be accused of reasoning increased obesity, as McDonald’s serves 26 million people a day in the US out of 270 million people who eat 3 meals a day. He emphasized the following: “Every responsible person understands what is in products such as hamburgers and fries, as well as the consequence to one’s waistline, and potentially to one’s health, of excessively eating those foods over a prolonged time” (Wakefield, 2004)
Another case was listened to in August 2007. Parents of two girls accused McDonald’s corporation and two of its restaurants in the Bronx failed to disclose openly and clearly the ingredients and effects of its food, much of which are high in fats, salt, sugar and cholesterol. (Sugarmann and Sandman 2007). Thus, the plaintiffs claimed that McDonald’s should be responsible for the obesity of the girls, their heart deceases diabetes, high blood pressure, and elevated cholesterol. Sugarmann and Sandman (2007) note that the girls got used to having a meal at McDonald’s at least three times a week.
So, one of the girls weighs 270 pounds (5 feet 6 inches tall, 19 years old), and the other is 170 pounds (4 feet 10 inches, 14 years). The father of one of the girls stated that he had never seen any notion of the ingredients in these foods in the Bronx, and he believed that McDonald’s was the healthy food for his children. Samuel Hirsch, the lawyer who brought this case, called McDonald’s food “physically or psychologically addictive.”
He accused the company of intentionally withholding information and targeting children. The effects of its food on people’s health were “a very insipid, toxic kind of thing,” Hirsch said. Hirsch also was critical of McDonald’s billion-dollar advertising campaign. “Young individuals are not in a position to choose the onslaught of advertising and promotions,” Hirsch contended. (in Mushi-Brunt and Haire-Joshu 2007). The attorneys, who defended McDonald’s stated that the food could not be the only factor in their obesity. Originally, there are several factors, which are genetics, their medical condition, and sedentary lifestyle.
The fact is that these cases are numerous, and McDonald’s is not the only victim of these complaints. Thus, another citizen, native New Yorker fifty-six year Caesar Barber filed a suit against McDonald’s, Wendy’s, Kentucky Fried Chicken and Burger King. He claimed that the fast-food of these companies caused him to gain excess weight (now he weighs 272 pounds), and caused two heart attacks, as well as diabetes. However, the spokesman of the McDonald’s corporation told in his interview with CNN that these foods are quite healthy and can be fitted to a balanced diet, and he got persuaded by this fact himself.
Competitor Analysis
First of all, it is necessary to state that a typical McDonald’s restaurant serves an average of 109 customers each peak hour, with every customer producing an average of 56.7 grams of trash. Consequently, an estimated 6.35 kilograms of trash is generated from food sales alone each (peak) hour, so across the world, at least 196,821 kg of trash are being generated every hour. (Gard and Wright 2004) On the one hand, this information is absolutely useless for the competitive analysis, however, in the context of the global struggle with littering and contamination this information may be used by the competitors in their positioning as the organization which is aware of the ecological and environmental protection issues.
TGI Friday’s has already launched an advertising campaign in several European countries, stating that the issues of ecology are very important, so, it starts using recyclable materials and constantly decreases the use of plastic cups and spoons in coffees. Originally, it in no way impacts the quality of products, nevertheless, this company has become the first, who declared its awareness of the issues of ecology.
It is stated in Dalton (2004) that in 2006, McDonald’s corporation’s revenues totaled USD 21.5 billion, almost four times that of their competitive counterparts. To figure out what kind of trash is produced by a quarter trillion dollars, let’s calculate it by dividing the total by the price of a combo meal. On average, the nations with the greatest number of McDonald’s restaurants charge about $4.50 – including the rate of conversion.
As for the matrix, which is generally used for the evaluation of the competitive environment, it should be stated that the very idea of competition fails on the market of fast food, as it is rather difficult to struggle for a customer in this sphere. It is featured with the fact that the customer chooses the nearest café o restaurant, as the main aim is just to fill the stomach.
According to the offered matrix, the analysis will be the following:
The threat of potential entrants is minor. Every year small road cafes appear in the USA, and everything they can do is to distract less than 1 percent of the customers. It is impossible to compete with the global nets of the restaurants.
Suppliers are of great significance, and they are the basis of fast food. On the example of the regarded cases, it is possible to highlight the importance of the restaurants. The quality of the supplied ingredients directly impacts the quality of the cooked meals.
Substitutes. Everyone can cook a hamburger or a hot dog in the microwave oven, people are free to buy a semi-finished product. Everything depends on the location of the potential customer. At least 80% of the customers enter McDonald’s occasionally (Wakefield, 2004), and the others are constant or close to constant customers.
Buyers. As for the customers, which define the status of the corporation, it is necessary to mention that the consuming capacity of the consumers is quite enough for the constant development of the network. People are ready to leave their money for quickly prepared foods, high-quality service, and the opportunity to have a quick tasty and nourishing bite.
Conclusion
McDonald’s Corporation is the largest network of fast food. Originally, it is appreciated for the high comfort level, granted by the high-quality service and tasty foods. On the other hand, the increased obesity rates create serious obstacles for the successful functioning and development of the company. It has been emphasized that the fast-food industry cannot be responsible for individuals’ obesity, as several other factors influence the physical forms of people.
References
Dalton, S. (2004). Our Overweight Children: What Parents, Schools, and Communities Can Do to Control the Fatness Epidemic. Berkeley, CA: University of California Press.
Diabetes Risk to Young Men as Obesity Rates Spiral out of Control. (2008). The Mail on Sunday (London, England), p. 48.
Gard, M., & Wright, J. (2004). The Obesity Epidemic: Science, Morality, and Ideology. New York: Routledge.
Healthy Eating and Tackling Obesity. Sponsored by Fizzy Drinks, Chocolate and Creme Eggs. (2006). The Daily Mail (London, England), p. 33.
Mushi-Brunt, C., Haire-Joshu, D., Elliott, M., & Brownson, R. (2007). Fruit and Vegetable Intake and Obesity in Preadolescent Children: The Role of Neighborhood Poverty and Grocery Store Access. American Journal of Health Education, 38(5), 258
Stuttaford, A. (2004). The Fat Police. National Review, 56,.
Sugarmann, S. D., & Sandman, N. (2007). Fighting Childhood Obesity through Performance-Based Regulation of the Food Industry. Duke Law Journal, 56(6), 1403.
Wakefield, J. (2004). Fighting Obesity through the Built Environment. Environmental Health Perspectives, 112(11), 616.