Introduction
McDonald’s is one of the most successful corporations worldwide. This fast food restaurants chain includes more than 30,000 restaurants which serve to around 70 million people in all parts of the globe (2012 annual report, 2013). The corporation’s revenues are more than $27 billion and the growth is steady as the revenues increase each year (2012 annual report, 2013).
It is also necessary to note that the company was once a family owned business operating in one US state. At present, this is a publicly traded corporation which is operating in 118 countries (Williams, 2010). This success suggests that the company has implemented effective strategies at different levels, which enables it to be the leader of the market even though its major competitors have also achieved a lot.
Business-level strategy
Business-level strategies focus on the company’s relationship with its customers (and potential customers) and its competitors. When it comes to a corporation, business-level strategies are used to address the needs of customers in specific markets, countries, areas (Hitt, Ireland & Hoskisson, 2012). One of the major strategies at the business level is development of proper relationships with customers.
Hitt, Ireland and Hoskisson (2012) note that it can be effective for a business to employ the strategy at three different levels, i.e. reach, richness and affiliation dimensions. This approach helps develop proper relationships with existing and potential customers. Hence, the reach dimension is concerned with developing strategies to access and connect to customers.
At this dimension, the company can focus on introducing new services to customers. Clearly, the company should continuously monitor the needs of its existing and especially its potential customers. It is essential to understand who these customers are and what they are seeking for.
It is also important to understand how to let them hear the message. Introduction of new services will attract new customers. Admittedly, each market and each area needs a unique approach and numerous characteristic features of people living in this or that region should be taken into account.
The richness dimension dwells upon the degree to which connection between the company and the customer can develop. In other words, this is about the information flow between the customer and the company. This dimension also involves monitoring and research.
The company should make sure that customers’ ideas can be heard and brought to reality. The use of social networking can be a good tool to make it possible as customers can share their ideas and address the company at any time.
The affiliation dimension is concerned with developing customers’ loyalty. Thus, it is crucial to make sure that customers’ aspirations are met. The two dimensions mentioned above focus on acquiring information and developing strategies to meet customers’ needs, whereas the third dimension is about control over implementation of the strategies utilized.
The use of this three-dimension strategy will ensure long-term success of the company as loyalty of existing customers and attraction of new customers will enable the corporation to remain competitive.
Corporate-level strategy
At this level, the company should focus on numerous issues related to the development of the company as a whole unit. Thus, it should focus on the level of diversification, allocation of resources, possible cooperation with other companies (Hill & Jones, 2012).
These issues require special attention as they define the way the corporation will develop. It is also important to note that the corporation has to take into account its shareholders’ views at this level. Any corporation gives certain rights to its shareholders and the latter can affect the way the company develops.
It is possible to work out an effective corporate-level strategy for McDonald’s. As far as diversification is concerned, the company should focus on regional features to win customers’ loyalty. Admittedly, the company has been associated with the American way of life. The company has attempted to change this image though it still persists.
However, in the contemporary globalized world, this image can negatively affect the company’s development. Therefore, the corporation should work on development of a new image of a global fast food restaurant chain which meets requirements of the contemporary customer.
The message to articulate worldwide is that the company enables people to eat fast, healthy and cheap food. Obviously, it is essential to pay special attention to regional peculiarities as each country has its own vision of healthy and fast eating.
Allocation of funds is also of paramount importance for McDonald’s. Acquisition of real estate, development of new products, marketing and research require sufficient funding. Some companies try to reduce their expenditures limiting their research.
This is counterproductive as profound research helps companies understand recent trends and work out appropriate strategies to address issues they face. These strategies will help the corporation maintain its leading position in the market as they will ensure the corporation’s development.
Competitive environment
The most significant competitor of McDonald’s is Burger King, which is a global corporation, operating in 79 countries. The food served in the restaurants of both corporations is quite similar as McDonald’s and Burger King specialize on hamburgers and serving fast food. It is necessary to note that the strategies employed are quite similar at all levels, though Burger King is less successful due to a number of mistakes.
Clearly, effective corporate-level strategies are crucial for any corporation. McDonald’s has managed to develop consistent franchising policies which enable its franchisees to run their business successfully.
More so, McDonald’s operates about 15% of its restaurants in the USA, and this rate increases when it comes to units in other countries (Williams, 2010). Therefore, it is possible to note that the control over management is quite significant. In other words, the corporation makes sure that restaurants follow the necessary regulations accepted in this or that area.
At the same time, Burger King has failed to build proper relations with its franchisees. The corporations’ policies concerning franchisees are not consistent and franchisees often deviate from certain norms.
Some aspects of cooperation between franchisees and the company are not properly highlighted in agreements, which also led to several legal issues (Williams, 2010). However, relations with franchisees are not the only flaw in the corporate-level strategies utilized by Burger King.
Burger King’s expansion policies are also less effective than those employed by McDonald’s. Thus, McDonald’s is seen as a symbol of globalization (Williams, 2010). Burger King lags behind. The corporation is often accused of paying little attention to regional peculiarities even though the corporation is open to novelties. For instance, in Germany they sell beer and in the Middle East they offer kosher food (Smith & Kraig, 2013).
Nevertheless, people often claim that Burger King is still seen as an alien chain with no specific message or set of values (Williams, 2010). Though McDonald’s is still regarded as a restaurant symbolizing American ways of life, it is now more associated with globalization and modernity. Thus, McDonald’s has proved to be a more successful company in this area.
Admittedly, the flaws of corporate-level strategies also lead to inefficient business-level strategies. Inconsistent corporate-level strategies are also associated with inconsistent business-level strategies as franchisees can be run poorly due to lack of knowledge and proper management.
Franchisees can often fail to follow certain standards and this leads to poor quality of service and, as a result, customers choose other fast food chains. Furthermore, inability to understand the needs of customers living in this or that area also results in customer’s lack of loyalty.
It is necessary to note that McDonald’s has more chances to be out of its competitors’ reach in the long run as the corporation employs efficient strategies which help the company develop and meet needs of the contemporary markets and its customers.
Burger King may lose more points in the long run as their policies are often ineffective. There is lack of control and lack of development. Hence, McDonald’s is likely to be more successful in the long run.
Slow-cycle and fast-cycle markets
Noteworthy, evaluation of the two corporations’ success can differ in slow-circle and fast-circle markets. In a slow-circle market, where change occurs quite rarely, Burger King could be quite successful. The corporation has had a constant growth for decades.
It was successful in the middle of the twentieth century. Of course, it is hard to say whether McDonald’s would be less or more successful than Burger King. The chances of the two corporations could be equal for a slow-circle market as they offer similar products and services.
However, when it comes to a fast-circle market, McDonald’s is a leader exploiting successful strategies. The fast-circle market is characterized by changeability. At that, such markets change quite fast.
For instance, the contemporary hospitality market can be seen as a highly competitive and changeable market as technological advances bring a lot of changes. Thus, new services are offered, new types of advertising is being used. Clearly, hospitality market is not as changeable as the market of mobile phones, but companies should try to keep up.
McDonald’s successfully implements numerous changes, while Burger King is less successful in this respect. Thus, McDonald’s is often the first one to introduce new services while Burger King only responds to these novelties introducing similar products, services or strategies (Williams, 2010).
Therefore, Burger King could not successfully compete with McDonald’s. At present, it is apparent that Burger King is losing points while McDonald’s is still a leader in this market.
Conclusion
To sum up, it is possible to note that McDonald’s is a successful corporation that utilizes effective strategies at corporate and business level. Successful implementation of these strategies has enabled the company to become the leader in the sphere.
The company’s most significant competitor, Burger King, has inconsistent strategies and fails to implement changes in time. This contributes to the success of McDonald’s. It is necessary to note that the corporation has become a symbol of change, success and modernity, which contributes to its success worldwide.
Reference List
2012 annual report. (2013). Web.
Hill, C., & Jones, G. (2012). Strategic management theory: An integrated approach. Mason, OH: Cengage Learning.
Hitt, M., Ireland, R.D., & Hoskisson, R. (2012). Strategic management: Concepts and cases. Mason, OH: Cengage Learning.
Smith, A., & Kraig, B. (2013). The Oxford encyclopedia of food and drink in America. New York, NY: Oxford University Press.
Williams, C. (2010). Management. Mason, OH: Cengage Learning.