McDonalds Strategy

McDonalds Strategy

Business entities like the McDonalds use a mission statement to communicate the corporation’s purpose. In most cases, it remains unchangeable for a prolonged period of time, although the firm can periodically update the statement to meet the market demands (Dash, 2015). There is a direct link between the mission statement and the business’s line of operation and area of specialization. Business strategists craft it to clarify to communicate the organization’s future direction through identification of the target market and how to provide service. Both a mission statement and a vision must work together harmoniously, given that the former is a cause while the latter is the effect. Reputable corporations accomplish missions by aggressively pursuing visions.

According to Williams (2012), the mission statement should outline the organization’s overall goal and should guide its actions. In addition, it should provide a clear path for an informed decision-making. In essence, it must provide a context or framework within which the business entity’s strategies are formulated.  There are three main factors to consider when designing a mission statement. First, a strategist should identify the target customer or client. Second, he should clarify the type of service or product. Lastly, the business owner ought to design the product or service uniquely to attract a particular customer segment.

Private Businesses

Business choices bear long-term implications throughout the corporation’s life cycle. Undeniably, starting up a private limited company entails administrative and financial responsibilities due to a complex formation process. Nevertheless, there are several benefits that business owners gain when they take this option. For example, limited private firms are likely to pay less tax as compared to a public company or a sole trader. In the United States, private organizations are subject to 20% corporation tax, which will drastically drop to 16% by 2020 to attract foreign investment (Boyne, 2013). Furthermore, the organizational managers completely separate the business’s activities from the shareholder’s interests. Clearly, there is minimal interference of owners on the company’s operations. Moreover, the organizations protect the owner’s assets in case of poor performance or bankruptcy. There is no personal liability for the firm’s losses because the individuals that run the organization are self-employed professionals unlike in business partnerships or sole trade.

Furthermore, the cost of starting and running a private limited company is relatively low as compared to a public corporation. Still, accountants charge an additional amount to prepare or audit quarterly accounts for private business organizations. Irrespective of this, the advancing technology has automated most of the administrative tasks, hence lowering the operational costs.

Analyzing the External Business Environment

The organization’s environmental analysis is a strategic tool that identifies the external elements affecting the overall performance. It involves the assessment of the threat level or the available opportunities. Thereafter, the strategists and managers translate such evaluations into the decision-making process. In this way, the organizational leadership aligns the long-term strategies and mission to the business’s external environment (Aaker and Adler, 2014). Business markets change daily as new developments arise. Some of the factors that lead to a change in customer’s taste and preferences are beyond the business owner’s control. Therefore, such environmental changes influence the business conditions and performance. Through the analysis of the environment, the management can determine the daily circumstances that impact operations and profitability.

Particularly, PESTLE analysis is the most appropriate tool for analyzing the external environment because it provides a bird’s eye view of the corporation’s long-term performance. Not only does it help the managers to analyze the existing market but also the projection of business condition in the foreseeable future (Srdjevic et al., 2012). PESTLE analysis tool has several factors that influence the external business environment either indirectly or directly. The acronym letters signify environmental aspects, for instance political, economic, and social issues. Others are technological and legal environmental factors.

McDonalds as a Private Limited Company

McDonalds is a multinational business franchise classified as a private limited company (PLC). The firm is under the ownership of family members, hence can raise resources by offering shares in global stock markets. As a PLC, McDonalds enjoys numerous advantages that characterize its global success. For instance, it is easier for the corporation to control and monitor its global operations. Consequently, the leadership implements business strategies based on the existing market similarities. Given that McDonalds is unbound by public demands or government’s control, it can apply similar strategies in the lead markets of different countries. Moreover, the firm adopts creative strategies to improve product quality and customer service.

For decades, McDonalds Company has maintained the brand image by delivering its philosophy. Resultantly, the profit levels have grown tremendously. Private limited business entities are committed to motivating the workforce to improve performance. Besides, numerous promotional programs emphasize on employee improvement otherwise unattainable in public corporations. Private limited organizations compete fiercely to retain their market share. Therefore a continuous enhancement of McDonald’s strategic position is necessary to improve the customer’s perception. The corporation, its affiliates, and international franchisees run McDonald’s operations, hence the injection of fresh ideas to boost the annual performance.

The McDonalds’ Core Purpose

The core purpose of McDonalds is to take seriously the responsibilities of a market leader. The corporation does this by assisting the customers in building better communities and leveraging its size, resources, and scope to improve its annual performance. McDonalds is committed to sustainable business operations such that its long-term practices do not compromise the future generation’s ability to meet their daily needs. In addition, the franchise aims to be the best in quick service and restaurant experience (Kroc and Anderson, 2012). It provides hygienic quality service and value for customer satisfaction. McDonalds strives to be the best employer and to deliver operational excellence. In fact, the organization extends its strengths and improves the reputation through utilization of technology and innovation. Mainly, its focus is towards the internal and external customers.

McDonalds’ franchisees would not succeed globally if they did not prioritize their engagements. According to the leadership, the focus should not be on the sales quantity. Rather affordability of best services is fundamental in ensuring business continuity and sustainability. Over time, the organization has set its business model to accommodate the dynamic behavioral changes of its market segment and workforce.

McDonalds Organizational Structure

Table 1: McDonalds Organizational Structure

PESTEL Analysis

Factors	Areas of Concern
Political	·       Rising levels of international trade agreements offer an opportunity for the company to expand its operations. ·       Pending American and European tax reforms is an opportunity. Once the government implements the reforms, McDonalds remits additional taxes to match its unprecedented growth. ·       Evolving public health policies in the West threatens the business operations, especially regarding the sale of unhealthy fast foods. At the same time, it is a chance for the organization to improve the quality of products and services to meet the future market needs.
Economic	·       A slow but stable American growth is an opportunity due to predictability and America’s role as a global leader. ·       Risky but stable European economy threatens the business survival, especially in Greece and Eastern European states. ·       Slowing Chinese economy hinders McDonalds’ efforts to expand in Asia and to increase profitability.
Social	·       Widening wealth gap especially in the developing world allows the firm to reach out to a new market segment. ·       Increasing cultural diversity implies an increased demand for foreign food. ·       The trending healthy lifestyle is a threat to the business in the short run but as the firm re-engineers to meet the rising demands, profitability and sustainability are assured.
Technological	·       A moderate research and development in the sector offer a chance to innovate techniques to improve customer service provision (Vignali, 2011). ·       Increased business automation cuts the operation cost hence an increase in revenue. ·       Use of mobile devices leads to market penetration, increased sales, and profitability.
Legal	·       The latest minimum wage levels in the United States results in additional operation costs hence low profits. ·       The health regulations in schools and workplaces lower the demand for processed foods, hence minimizing the level of income. ·       The animal welfare regulation is in line with McDonalds’ sustainability policies, but at the same time, the organization must set aside funding for the program, thus an additional expenditure.
Ecological/Environmental	·       A Rising interest for the business environmental program gives McDonalds a chance to meet its sustainability goals. ·       An increased emphasis on sustainable strategies prepares the firm for future market stability. ·       Climate change threatens the survival of the business in the affected areas such as South East Asia and South America. Specifically, the destruction of organizational property through natural disasters results in financial losses.

Table 2: PESTEL Analysis

Good Practice Criteria

Each business organization must operate ethically and provide quality goods and services to meet the consumer’s demands. Unless the customer is satisfied, no organization can guarantee the customer’s loyalty to its brand. However, the survival of McDonalds in a tumultuous global market proves its implementation of continuous business re-engineering policies (Schroder and McEachern, 2015). The management understands the importance of addressing business challenges as they arise to maintain the business image. Already, McDonalds has adopted a Macca business model that links the needs of employees, suppliers, and the customers. Therefore, a harmonious balance of their needs guarantees the organizational prosperity and expansion to international business environment.

In an age of global warming, business entities ought to improve the environmental conditions through active participation in corporate social responsibilities. McDonalds is at the forefront in the minimization of environmental pollution and embracing green energy. As an experienced multinational, it constantly evolves its business practices through adoption of new innovation to improve efficiency and economic use of resources (Love and Miller, 2015). Additionally, the company has an ethical culture that promotes integrity, honesty, and fairness in business transactions. Each employee is accountable for his actions and the organization encourages collective responsibility. In all the organizational operations, the customer experience is at the core. Failure to recognize the customers as the main reason for existence has led to the downfall of most multinationals, but McDonalds is aware of this. Therefore, the corporation appreciates the consumers by providing superior commodities and high-quality service in a hygienic environment.

New Mission Statement

To provide opportunities for new talent while adopting new technology for innovation in product and service delivery. In addition, the organization has to strengthen the relationship between the employees, the management, and customers for success and sustainability.

Bibliography

Aaker, D.A. and Adler, D.A., 2014. Developing Business Strategies (Vol. 200, No. 1). New York: Wiley.

Boyne, G.A., 2013. Public and Private Management: What’s the Difference? Journal of Management Studies, 39(1), pp.97-122.

Dash, K., 2015. McDonalds in India. Thunderbird: the Garvin School of International Management, pp.p1-25.

Kroc, R. and Anderson, R., 2012. Grinding It Out: The Making of McDonald's. London: Macmillan.

Love, J.F. and Miller, A.W., 2015. McDonalds: Behind the Arches. London: Rutledge. Print.

Schröder, M.J. and McEachern, M.G., 2015. Fast Foods and Ethical Consumer Value: A Focus on McDonald's and KFC. British Food Journal,107(4), pp.212-224.

Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the Criteria Set for Multicriteria Decision Making based on SWOT/PESTLE Analysis: A Case Study of Reconstructing a Water Intake Structure. Water Resources Management, 26(12), pp.3379-3393.

Vignali, C., 2011. McDonalds’:“Think Global, Act Local”-The Marketing Mix. British Food Journal, 103(2), pp.97-111.

Williams, L.S., 2012. The Mission Statement a Corporate Reporting Tool with A Past, Present, And Future. Journal of Business Communication, 45(2), pp.94-119.