Mc Donald`s Corporation Essay, Research Paper
McDonald’s Corporation is the world’s leading food service organization. The
corporation started out as a small drive-through in 1948 by two brothers, Dick
and Mac McDonald. Raymond Albert Kroc, a salesman, saw a great opportunity in
this market and advised Dick and Mac to expand their operation and open new
restaurants. In 1961 Kroc bought out the McDonald brothers. By 1967 McDonalds
expanded its operations to countries outside the U.S.A. This unyielding
expansion led the Corporation to open 23,000 McDonald’s restaurants in 110
countries in 1994, producing $3.4 bn in annual revenues. In addition, McDonald’s
opens a new restaurant every three hours. Also, McDonald’s has twice the market
share of its closest U.S. competitor, Burger King, representing 7% of total U.S.
eating-out sales. Similarly, McDonald’s serves about 1% of the world’s
population on any given day through its 23,000 restaurants internationally.
"Big Mac", the world’s most sold hamburger was developed by Jim
Delligutti in 1967 to feed construction workers. ‘Big Mac’ is the biggest
attraction and backbone of the corporation. Moreover, McDonald’s maintains its
competitive advantage by constantly creating new items to add onto its menu.
This shows us that McDonald’s practices an analyzer type of strategy,
introducing new items and defending its existing ones. McDONALD’S MISSION AND
VISION: "We serve people with good quality food, fast and at low
cost." McDonald’s vision is to dominate the global food-service industry.
Global dominance means setting the performance standard for customer
satisfaction and increases market share and profitability through successfully
implementing our convenience, value and execution strategies. THESIS STATEMENT:
To have a clear picture of McDonald’s corporation we need to look at its Task
Environment, which includes its: .Customers .Competitors .Strategic Allies
.Suppliers .Regulators We shall also explore McDonald’s Workforce Diversity and
its Total Quality Management. CUSTOMERS: Customers are those who pay money to
acquire an organization’s goods or services. For many years McDonald’s mostly
targeted the young people, however this has changed in this decade; McDonald’s
has turned towards a more general market. By doing this McDonald’s concentrates
on the family, targeting a diverse market which includes consumers ranging from
children to elderly people, using products such as the "happy Meal"
for children and "Egg McMuffin" for the elderly. McDonald’s also
realized the changing world we live in and the need for healthier food, since
there is an ever changing demographic group, who demand fast, top quality food
that is low in calories. McDonald’s responded to this opportunity and introduced
a new and innovative product. This new product was a regular hamburger that
tasted like the real thing but was made of plant material like Soya beans. This
same product also targets another demographic group, vegetarians. McDonald’s
mostly uses psychographic segmentation targeting the working and middle classes.
These are the people that are more susceptible to enter a fast food restaurant,
since these are the people that lead a fast moving life and thus require a fast
meal. In brief McDonald’s customers are of all classes, but largely working and
middle classes, and people of all ages. COMPETITORS: A competitor is an
organization that competes with other organizations for resources. In our
findings, McDonald’s has two types of competitors in the Lebanese market:
..Indirect ..Direct Indirect Competitors: Indirect refers to firms producing one
or two products that compete with McDonald’s products and therefore be a threat
to the company. We have identified four indirect competitors: Henry J. Beans,
T.G.I. Friday, K. F. C. and Popeye’s. Henry J. Beans offers hamburgers and fries
on its menu, therefore competing with McDonalds for customers of these products.
However, Henry J. Beans also known as Hank’s is a more of a bar restaurant and
therefore a hang out place, as a result charging more money for its products.
Hank’s targets middle to upper class customers, so where most of these customers
overlap are in the middle class. T.G.I Friday is another indirect competitor
reflecting the same characteristics as Henry J. Beans. Other indirect
competitors are K. F. C. and Popeye’s, both competing for the chicken nuggets
and fries customers. In brief, Hank’s and T.G.I. Friday’s competes with
McDonald’s by offering hamburgers and fries, whereas K. F. C. and Popeye’s
compete with McDonald’s by offering chicken nuggets and fries. Direct
Competitors: Direct competitors refers to firms producing the same products or
services as McDonald’s does. Here we found that McDonald’s has three direct
competitors: Burger King, Wendy’s and Hardee’s. McDonald’s closest rival is
Burger King, which operates a total of 9644 restaurants in 110 countries.
Wendy’s is McDonald’s second largest rival, which is also in the fast food
business, where Wendy’s operates 6776 restaurants in 32 countries. Hardee’s,
McDonald’s third largest rival is also in the fast food business and is the only
direct competitor apart from Juicy Burger in the Lebanese market. Hardee’s
operates 3080 restaurants in 20 countries. As we have illustrated McDonald’s
faces stiff competition from three major competitors, Burger King, Wendy’s and
Hardee’s. Suppliers: Suppliers is an organization that provides resources for
other organizations. McDonald’s has practiced a backward vertical integration,
by replacing most of its suppliers. It has done so for two reasons, 1) To reduce
costs, and 2) To ensure that its products are of top quality. These supplies
include beef and milk to be used in its products, which it gets from its farms.
Other suppliers include local grocery stores that supply McDonald’s with fresh
vegetables. Soft drinks are supplied exclusively by Coca-Cola, which is also its
ally. McDonald’s supplies also include raw material such as flour, sugar, yeast,
etc.,. Strategic Allies: A strategic ally is an organization working together
with one or more other organizations is a joint venture or a similar
arrangement. McDonald’s has formed a strategic alliance with: Walmart, Chevron,
Amoco, Disney and Coca-Cola. Walmart, which is a large shopping mall chain in
the U..S. and several neighboring countries, is allied with McDonald’s, which
offers great opportunities for both companies. McDonald’s has restaurants in
each Walmart, offering its customers conveniences and excellent fast food at a
low cost ease of accessibility. McDonald’s corporation describes it best in this
scenario: "Imagine a busy shopping day at your local Walmart and having the
ability to sit down with the kids and enjoy many of our McDonald’s favorites,
like ‘Big Mac’ sandwiches, world famous fries and kids favorite ‘Happy Meal’.
McDonald’s understands your busy lifestyles and the demands on your time. That’s
why we are making it easier for you to do more things in less time."
McDonald’s is engaged in an alliance with two petrol companies, Chevron and
Amoco. This alliance represents the ultimate in convenience. At these locations,
one finds a full-menu McDonald’s restaurant with dining room service. Nothing
can be more convenient, because one can fill up the car with gas and get a meal
all in one stop. Another important alliance that McDonald’s has is with Disney.
Here McDonald’s has the sole right to sell fast food in Disney’s theme parks
around the U..S. and other Disney operations in the world. Under the terms of
the agreement, McDonald’s will operate restaurants and Disney will promote its
films through McDonald’s. Regulators: Regulators are groups or governmental
agencies that can control and influence the organization’s policies and
practices. An example is Lebanon a few years ago when the U..S. government
banned all U..S. citizens and organizations to come or operate in Lebanon.
Another good example would be the embargo imposed on Iran where U..S.
organizations were banned to operate in this country. Another group of
regulators called interest groups can and have influenced McDonald’s to treat
its animals (cow and chickens) in a much more humane manner, which resulted in
the restructuring of McDonalds’ farms throughout its operations around the
world. The summary of the task environment which is by definition a specific
organizations or groups that affect the organization, which includes
competitors, suppliers, customers, strategic allies and regulators. Here we
described the task environment’s importance to McDonald’s, where McDonald’s
faces both opportunities and has threats in its environment. Workforce
Diversity: Diversity exists in a group or organization when its members differ
from one another along one or more important dimensions such as age, gender, and
ethnicity. Diversity is very important for McDonald’s. Here millions of teens
start out by working at McDonald’s. Here some of the teenagers move on to get
various jobs such as movie stars, skilled workers, famous athletes, management
positions and other educated positions in society. At McDonald’s two thirds of
middle and upper management started out as crewmembers in a McDonald’s
restaurant. There are opportunities for everybody in McDonald’s from teenagers
to elderly workers, and from people just entering or reentering the job market.
Moreover, McDonald’s offers special jobs for people who have disabilities, such
as people who are in wheel chairs and those who must use crutches permanently.
Furthermore, McDonald’s offers their workers flexible working hours. For
example, hours for people seeking just a few hours of work per week and those
who seek full time positions. The work force at McDonald’s also have some say in
their working hours, such as if they prefer the morning, mid-day, or evening
shifts in the restaurant. So, McDonald’s uses diversity to create a good
atmosphere in their work places among workers and management. Here they offer
work to all kinds of people without discrimination and the workers have flexible
hours that provides customer satisfaction. Top Quality Management: Quality is
the totality of features and characteristics of a product or service that bear
on its ability to satisfy stated or implied needs. For McDonald’s, total quality
management (TQM) involves that the employees are at work on time, are neatly
dressed, and are clean. The employees must make sure that the customers
constantly receive safe food, which implies that the employees must wash their
hands often to remain clean. Moreover, the employees must follow certain
Standard Operational Procedures, so the customers always receive exceptional
quality and service. This includes the employees using plastic gloves when they
prepare the food, that the meat and fries are properly fried, and that the
vegetables are thoroughly washed when used in the food. Another TQM is that the
employees rely on teamwork and high energy to get the job done, so that the
customers do not have to wait long for their food. Furthermore, McDonald’s
management emphasizes that their restaurants should be clean. This involves that
the restaurants are tidy, sparkling and spotlessly clean. As McDonald’s
illustrates the quality is that the employees delivers fast, accurate and
friendly service with a smile. CONCLUSION: In conclusion, we have explored a
large corporation such as McDonald’s and shown how its Task Environment,
Workforce Diversity and Total Quality Management can have a profound effect on
the organization. In order for such a corporation to remain a leader in its
field, it must stay growth oriented and constantly have contingency plans to
overcome turbulence. Another important factor is the type of strategy that it
follows. McDonald’s, Daimler Chrysler and Benz follow an analyzer type of
strategy, constantly introducing new products while defending their existing
products.