Introduction
All businesses, irrespective of their industry, require strategies in order to be successful. High competition resulting from globalization and technological advancement has necessitated clear-cut strategies in order to survive. Strategic management has never been as important as it is today.
Through strategic management, organizations are able to identify and implement the best practices to gain competitive advantage, increase profit margin and grow (Hubbard, Rice, and Beamish 2008). Fast food industry is one of rapidly growing and competitive industry.
A company in this industry has to develop and implement successful business strategies in order to gain competitive advantage. In this report, a case study for McDonald’s is provided. The report reviews the strategies that McDonald’s has adopted in order to maintain its global position in fast food industry.
Organization Overview
The McDonald’s has been in operation in food industry since 1954. The US based company operates a chain of fast food restaurants in more than 119 countries. Though initially established by McDonald’s brothers, McDonald’s success is attributed to its later owner: Ray Kroc. Over years McDonald’s has emerged to be a strong brand in the fast food industry. Most of its restaurants across the globe are operated as franchises.
McDonald’s chain of restaurants is renowned for its uniform and standardized menu. McDonald’s menu across its chain mainly consists of burgers, milk shakes, French fries, sandwiches, Ice cream sundaes, vegetable salads and desserts (McDonald’s Corporation 2010). The menu however changes slightly from country to country depending on culture and customer taste.
The company is renowned for its innovative products. Some of its successful products include Big Mac, Chicken McNuggets, Quarter Pounder with Cheese and the Filet-O-Fish (McDonald’s Corporation 2010). McDonald’s main target for its products over years has been children and mothers. The company has therefore adapted its products and restaurants to its main target. Besides its ‘Happy Meals’, some of McDonald’s restaurants serve breakfast offering that include coffee, Egg Sandwiches, Sausage McMuffin, biscuit and hotcake.
Though McDonald’s is generally successful, it has encountered various challenges along the way. High competition in fast food industry has been one of the main challenges in its global strategy. Apart from high competition, the company has been involved in controversies over its contribution to obesity. Increased health concerns especially in the US and UK has been a major concern to McDonald’s management.
Strategies
McDonald’s has adopted various strategies in order to be successful in global fast food industry. Although McDonald’s is one of the most experienced companies in the fast food industry, established and upcoming companies have been a threat to its market share. Wendy’s is just one of the fast food companies that have been a threat to McDonald’s.
Through adopting certain strategies, McDonalds have been able to withstand competition and increase its number of restaurants across the globe. Strategic management should define an organization’s position, its desired position in the future and actions to be taken in order to achieve the desired goal.
Through its ‘plan to win’ global strategy, McDonald’s has been able to remain highly competitive despite of negative publicity over health concerns.
Increased health concerns and negative publicity resulting from health related controversies have been a major challenge to McDonald’s (Wilsher 2010). To address this, McDonald’s has adapted various business strategies. To create a healthy image for itself, McDonald’s plan to do away with soft drinks and Super French fries.
Besides, the company plans to make changes to its menu in order to reflect increases health concern. For instance cinnamon roll with a sausage burrito is considered to be the major breakfast offering in United Kingdom.
McDonald’s has been able to establish a strong brand over years. With negative publicity resulting from health concerns, the company has increased its effort to protect its brand. “Be our customers’ favourite place and way to eat” is the company brand mission (Ganapathy 2009). To ensure the mission is achieved, the company has taken firm actions from improving products, customer service to promotion.
The company has implemented a new cooking system aiming at improving quality of products served in its menu (Howard 1999). Restaurant décor to brand icon has been improved across the globe in order to ensure consistent image to its customers. In addition, McDonald’s has consistently increased its promotion effort through conventional channels as well as new technology such as the internet.
Customer service is core to success in hotel and hospitality industry (Prakash and Olsen 2003; Tse and Jogaratnam 2008). McDonald’s has taken strategic actions to ensure high customer feel. Part of the strategies includes recruitment and training of right staff.
McDonald’s staff is trained to treat customers with respect and maintain a smiling face while serving. High standard of hygiene is maintained including restaurants’ bathrooms. To show its concern for environment, McDonald’s collects dropped burger wrappings and cups using its three-wheeled vehicle (Livesey 1999).
Strategic Recommendations
The principle objective of strategic management is to boost an organization’s competitive advantage. It enables the management to establish plans to address current and future needs of an organization (Thompson, Strickland and Gamble 2007; Carpenter, Sanders, Rice and Martin 2010). Fast food industry has attracted many players that try to address various customer needs.
Most of these competitors exploit customers’ needs and concerns not well served in McDonald’s. McDonald’s therefore needs to put more effort to maintain its market share in the industry. Some of strategic actions that McDonald’s should take include:
- Enhance promotion and advertisement in order to overcome negative publicity
- Progressively expand its menu in order to accommodate increased customer needs and tastes, including health concerns
- Invest more on product development in order to come up with competitive products for different cultures
Conclusion
Strategic management approach is a necessity in all industries in the global economy. Hotel and hospitality industry is one of the industries that most require strategic management. Companies in this industry must align their products and services to rapidly changing customer needs and taste. McDonald’s success in fast food industry can be attributed to its adherence to strategic management principles.
The company is able to overcome its challenges by following clear-cut plans. Though clouded by controversy over health concerns, the company seems to maintain customer loyalty and still has high competitive advantage over other players in the industry.
Reference List
Carpenter M. A., Sanders W., Rice J. and Martin N., 2010, Strategic Management: A Dynamic Perspective, Concepts and Cases, Pearson Australia, Frenchs Forest.
Ganapathy, S., 2009, McDonald’s International Strategy: Squander Brand Equity? Web.
Howard, T., 1999, The Over-Arching Strategy-McDonald’s Global Brand Strategy Task Force. Web.
Hubbard, G., Rice, J. and Beamish, P., 2008, Strategic Management Thinking Analysis, Action, Pearson, Sydney.
Livesey, S., 1999, McDonald’s and the Environmental Defence Fund: A Case Study of a Green Alliance, The Journal of Business Communication, Vol. 36
McDonald’s Corporation 2010, Travel through Time with Us. Web.
Prakash, K. and Olsen, M., 2003, Strategic alliances: a hospitality industry perspective, International Journal of Hospitality Management Vol. 22, pp 419-434.
Thompson, A., Strickland, A., and Gamble, J., 2007, Crafting and Executing Strategy, McGraw-Hill, New York.
Tse, E. and Jogaratnam, G., 2008, From the top down: strategic management in the Hospitality Industry, SAGE Handbook of Hospitality Management, SAGE London, pp165 – 191.
Wilsher, S., 2010, McDonald’s in Hot Water over Marketing Tactics. Web.