Strategies for McDonalds Fast Food - Case Study Example

Strategic Planning Student’s Name: Lecture’s Name Date: Background and Mission analysis This report presents McDonalds fast food joint strategic plan for the next ten to fifteen years. A strategic plan is a business tool that helps the company stick to its goals and objectives at all times. The company has been able to establish itself in Australia and many other countries. This has led to a lot of competition from other major food stores. This made the company to change some of its initial strategies so as to cope with the cut throat competition. The main challenge has been that the local people are very much loyal to the local companies; therefore, the company has not been able to establish itself fully in the Australian market. The report also involves the analysis of the fast food sector so as to identify the major competitors in the industry. This is also to enable for better planning in terms of strategies. The strategic plan will work to help the company have a large share in the fast food market so as to cut off the competition. The report will also help will help bring out the challenges facing the food joint and how they can be solved to benefit the company. This will help give the best services in the industry. McDonald fast food The company was founded to offer the best services in the fast food industry. The company has expanded to over 40 countries around the world. The company provides a line of most preferred fast food in many of its outlets. The company is always open meaning it operates for 24 hours in a day because their employees work in shifts to ensure all their customers are given the services when they need them. The company has a lot of staff because they work in shifts of six hours there one outlet have over a hundred employees. The organizational structure of the company is led by a manager and every department is led by a department manager who are charged with the task of overseeing those staff under them person their duties in the best interest of the company and the interest of the customers. Mission and Vision of the company The aims at satisfying the fast food customers in the areas where they operate by providing what they want. This means that the company provides products and services as per the needs of the customers and according to the set standards in the industry. This is to ensure that they get as many customers as possible to keep the business operational in Australia. To provide the best services in the fast food industry so as to win the largest market share. The company operation in many countries means that it faces diverse cultures and eating habits. Therefore, the company is working to ensure they provide products and services that in line with such cultures and eating habits but not to change the status quo. This will ensure acceptability in most of the areas it sets up its operations. The company’s providing of a wide range of products to people of diverse culture means that even those who travel a lot still get the food they prefer in the countries where McDonald operate because there is international variety. There are staff who have expertise in different international languages to ensure that the international customers are given the services just like the local customers in case they do not understand the local languages. The company Values Integrity One of the core values is integrity among all the stakeholders. This means that the company gives the best services and products as per the set standards. The company calls for integrity in all its operations. Abide by the law The company aims at abiding by the law of each and every country it has operations. This means that the company adheres to the rules set by the local government of the countries they are operating. Honesty The company ensures it gives the customers what they want in the best quality and quantity possible. This is to gain trust among the customers. Stakeholders Owners The owners of McDonald are the people who finance its operation and are the key decision makers in the company. Their aim is to earn profits in return of their services and investment. Management These are the people who ensure that every operation of the business is running smoothly and they are the link to the ownership of the business and the other staff. Staff These are the people who literally run the business because they provide services and products to the customers. They are the company’s eyes in terms of what the customers need and how they need it. Customers They are the reason behind any investment because their purchases ensure the business is running and that it is not gaining losses. They are the real financiers of the business. The customers include both local and the international who are the tourists and the business people who travel a lot. The Government The government provides security and a favorable investment environment. This makes it possible for the company to have a smooth way of investment. External and Internal Analysis General Environmental Trends (PESTLE Analysis) Political environment Political factors are the changes that arise as a result of government influence. These include policies passed by the regional organizations and the government itself. The government has a non-discriminatory treatment to all the investors. The government has a policy of increasing international investors in the country. The economic factors Economic factors are factors that directly affect investment and the company’s profits. They include interest rates, which is the cost of borrowing money. McDonald considers low interest and low wages as a driving force in Australia. The demand for fast foods is very high in Australia and this will is a good economic factor for any fast food business. The social factors These relate to behavior, lifestyles and tastes of consumers. The company producing a wide variety of products is due to putting into consideration the diverse cultures of people of the world. The population structure has also been considered in reaching the investment structure. According to the current statistics there are a lot of young people who like fast foods. Technological factors Technological factors are the changes that arise from advances in communication. This is use of the most current technology in providing their products and services. These include computers and the most current production equipment. McDonald’s should be aware of technology used in the fast food industry. The legal factors These are the laid down rules and policies that companies should follow. The legal frameworks include consumer protection, environmental legislations, health and safety and employment law. Environmental factors Efforts to reduce environmental degradation through use of paper and releasing of gases into the environment should be the company’s most important goals. Energy use should be reduced so as to safe Mother Nature. Specific Environment Trends Nature of the customer The main customers are the local people who live in the areas around the business. There is also another group of customers these are the international customers comprising tourists and the business people. The culture and interest of all the categories of the customers have to be considered in providing the company’s products. Suppliers The company has a lot of suppliers who supply them with raw material and other products that ease the company’s production. These include computers and other equipment that contribute to the smooth delivery of company services and products. Employees Management They are mainly promoted from the company’s junior staff and they can be posted in any countries. They are those employees with management skills and can help the company to grow and provide the services in the best way possible. Junior staff These are the staff who deal directly with the customers and ensure production of the products. They are mostly from the areas around the business because the company aims at promoting employment of local people. They are also trained in various skills as required by various departments in the company. Competitors The company attracts a lot of competition from the biggest fast food dealers in the country because of its big international reputation. The main competitors of the company will be tropical lunch Haus, Kais Bar and Lings Freezer. The three companies take the largest share of the fast food outlets in the country. Porter’s five forces analysis Industry Rivalry Comment on the extent of competition between competitors Rating Industry growth rates There is a lot of competition Very high High fixed costs Wages for both the management and other staff is very high and cut the company profits. High Intermittent over capacity There is a lot of capacity in the industry High Product differences Because of competition every company try to differentiate its products High Switching costs The company can switch cost of labor with machinery Medium Informational complexity Differences in culture High Concentration & balance McDonald is the only company dealing with international tastes Low Diversity of competitors There is diversity High Corporate stakes High Exit barriers There are no exit barriers High Industry rivalry rating High The bargaining power of customers (buyers) The degree of customer power Rating Differentiation of outputs There is high output differentiation high Switching costs High Presence of substitutes The customers can opt to cook or buy from supermarkets High Industry concentration relative to buyer concentration high Importance of volume to buyers high Cost relative to total buyer purchases high Impact of outputs on the cost of differentiation High Buyer information about supplier products High Buyer profitability The main aim of the business profit making High Decision makers incentives high Threat of backward integration Low Bargaining power of customers (buyers) Rating Low The bargaining power of suppliers The degree of supplier power. Differentiation of inputs High Switching costs Low Presence of substitute products Low Supplier concentration relative to industry concentration Low Importance of volume to suppliers High Cost relative to total purchases in the industry high Impact of inputs on cost or differentiation high Information about suppliers products High Supplier profitability Medium Decision makers incentives High Threat of forward integration High Bargaining power of suppliers rating High The threat of new entrants The ease of entry to the market. Economies of scale High Proprietary product differences high Brand identity High Switching costs medium Capital requirements High Access to distribution High Absolute cost advantage Low Government policy Mid Expected retaliation High Threat of new entrants rating Low Threat of substitute products or services The extent that different industries offer substitute products Rating Relative price performance of substitutes Low Switching costs Low Buyer propensity to substitute Low Substitutes rating Low Internal Analysis: Resource based model evaluation Tangible resource Capital from owners Human resource Organizational structure Machinery Intangible resources Company’s reputation Experience in fast food industry use of technology Company capabilities The company can provide high quality and quantity in the fast food sector. This will help bring in the competition required in the industry so as the other players can give the best results. The company can also be able to provide a wide range of products to cater for different culture and taste. Competencies It is the only company producing international products to cater for diverse cultures Highly qualified personnel Good customer care services Value Chain Analysis Primary Activities Support Activities Secondary Activity Assessment Procurement There is shortage of some raw material this calls for import of some products this makes the process very expensive. Human Resource Management There is a fair process in recruiting and the staff is well trained. There is promotion on merit. Technology Development Most of the company’s services are computerized Infrastructure Increase in infrastructure cost means reduction in profits SWOT analysis Opportunities Threats Increased number of tourists Rising numbers of people who prefer buying food than cooking Increased competition Global financial crisis Shortage of raw materials Strengths Weaknesses Production of diverse cultural foods Highly trained staff Good customer care Production of international foods Reduced profits Failure to fully penetrate the market Recommendations The company should aim at owning the sources of raw materials through integration. The company should also endeavor to reduce the costs incurred. This will increase the profits and will help penetrate the market. The company should also engage in other forms of advertisement apart from the social media. The Strategic Plan The strategic plan will work to eliminate the already identified weakness and threats. It will also work to capitalize on strengths and opportunities which are there. one of the problems to be solved is the shortage of raw material The company will work to own the sources of raw material through integration with the suppliers to ensure they do not have a shortage. The company should also diversify its services to even include the most preferred beverages. This will mean the company will increase its products and will have a large market share because it will be preferred by many customers. The company should work to improve the already better customer service This will help maintain their customers and even get others from their competitors. Increase training on all members of staff The staffs are the most variable asset a company can have this will ensure that they deliver quality services to their customers. objectives Key performance indicators Target Initiative Increased advertisement Training to staff Increased number of customers Customer satisfaction Increase number of customers Offer best service in the industry Provide training on best customer care Wide variety of products Increase profit Balance sheet No losses Increased customers and sales Introduce new products Customer satisfaction Maintain current customers Selling a beverage Increasing employees skills Employee promotion and satisfaction Excellency in their work Training of staff Implementation of the strategic plan The company should implement one objective at a time and have time to measure the outcome. This will help the company in the annual reviews to ensure that the strategic plan is being followed and it is helping the company achieve its goals and objectives. Conclusion The company should ensure the strategic plan has been followed to the letter so as to evaluate each and every objective of the plan. The company should work to ensure it owns the sources of raw material because this will help have a share in the market and increase the profits. McDonald’s fast food company requires a lot of research to be successful in the international market. It requires implementing ownership as the best market entry strategy because, it outweighs all the rest. It should also consider an analysis of social, legal, economic, political and technological factors that might affect its operation in the international market. References Bartlett, C. and Ghoshal,S. 2008. Transnational Management. Boston: McGraw Hill. David, L. Kurtz, 2008. Contemporary marketing. Cengage, Learning Fraser, L., Merrilees, B., and Wright, O., 2007. Power and Control in the Strategic Planning. Journal of Strategic Management 23(9-10), pp.1037-1054. Hill, A. and Hill, T., 2011. Essential Operations Management. London: Palgrave Macmillan. Jeannet, J. P. and Hennessey, H. D., 2004. Management Strategies. 6th ed. New York: Houghton Mifflin. Lee, K. and Carter, S., 2010. Global Management. 2nd ed. New York: Oxford University Press. Malcolm, Mc. Donald, 1999. Marketing plans. Butterworth-Heinnemann Thomas, D. C., 2008. Cross- cultural management: essential concepts. 2nd ed. United States: Sage Publishers. West, D., Ford, J., and Ibrahim, E., 2010. Strategic marketing: creating competitive advantage. 2nd ed. New York: Oxford University Press. Read More