Question:
Identify the current strategy that the organisation (or SBU) implements by examining its strategy statements and/or its value chain activities?
Vision
The vision of McDonald’s is to be the top fast service restaurant experience. Being the top means offering exceptional value, service, hygiene, and worth, so that it makes every consumer smile.
Mission
Mission of McDonald’s is to be the consumers’ much loved place. McDonald’s has a worldwide strategy which is the Plan to Win. We are committed to continuously improving our operations and enhancing our customers’ experience.
Values
McDonald’s believes that its consumers are the cause for its subsistence. McDonald’s shows its admiration by offering them with superior service and high quality food.
McDonald’s raises talent, builds up leaders and rewards accomplishments.
McDonald’s operates its business morally and holds its conduct to honesty, integrity and fairness, integrity.
McDonald’s helps its customers in constructing improved communities, and forcing its resources to help make the world a better place.
McDonald’s aims to foresee and react to altering customer, employee and system needs through continuous development and innovation (Christensen, 2007).
The Business level strategy of McDonald’s is one of the best in the fast food industry. McDonald’s retains a strategy of cost leadership while offering steady food with quality service. McDonald’s is an established industry that uses product propagation to meet many requirements in the fast food industry while daunting new entrants. McDonald’s maintains its business level strategy new by innovating both its products as well as markets.
The business level strategy of McDonald’s is sustained by its functional strategies which comprise McDonald’s capability to conquer and uphold superior effectiveness, value and novelty. McDonald’s maintains to innovate, which we can see with the introduction of Shamrock Shake and Mc Cafe. Other innovations of McDonald’s comprise breakfast on the go, , Snack Wraps and the Mc Griddle.
Brand differentiation and cost leadership are the business level strategies used by McDonald’s in its primary markets.
McDonald’s business-level strategy accomplishment comprises of some basic as well as exclusive concepts. Commencing with McDonald’s turnaround in 2002 there were many development and impending areas for future accomplishments. First of all McDonald’s acclimatized to the customer tastes by presenting healthier choices.
A strategic plan called “Plan to Win”, which was the preliminary point for the turnaround at the beginning of 2003, was build. This Plan consisted insistent objectives and actions for achievement based on the 5 P’s or the decisive drivers of customer experience .This plan focuses on present customers and by altering their image to endorse healthier menu items.
The business level strategy of McDonald’s controls the opponents and McDonald’s puts the bar and controls other fast food chains like Wendy’s and Burger King. McDonald’s business level strategy also counters to the aggressive dynamics of the industry by market diffusion, such as into the breakfast industry, innovating new products, such as the Snack Wrap, product propagation, such as burgers, and market development, such as the Mc Cafe with sphere coffees.
McDonald’s also upholds its business level strategy by whom and how they market to them. McDonald’s focuses on children. With children, McDonald’s makes use of a stable market connecting the whole family.
In the end, we can say that McDonald’s business level strategy is that of brand loyalty, low cost and differentiation. As long as McDonald’s will carry on to innovating new products, following social trends such as the removal of the super-size description in answer to an more and more health-conscious market, and accomplish into new markets, they will do well in the times to come.
Business Level (Competitive Strategies)
In order to attain competitive advantage McDonalds has adopted differentiation strategy; McDonalds can further differentiate its products. McDonalds should increase the professed additional value of its products in terms of better quality and more exclusive features than other of its opponents by indicting a premium for its professed additional value. This additional premium could be used to reduce the quality flaws in the food delivery which has increased disapproval among the public (Collin, 2010).
The fast food industry is becoming inundated, where the market is in front of increased adverse concerns on the consumption of fast foods and its health insinuations. Therefore, in order to expand the market risk McDonalds which is now wholly into the fast food business could depart from its present product line and could concentrate on other related and unrelated products and businesses too. The current diversified strategies of McDonalds cannot be used to minimize the market risk that McDonalds is facing currently; hence, it could ponder on the lateral diversification (Hill, Charles, & Jones, 2008).
McDonalds should diversify into a completely new business such as in hotels. This will profit the McDonalds as follows –
Since the fast food industry and the hotel business is run separately, the fall in one market will not control the other market.
Since the firm will not be dependent on a single market, it offers better risk control and expand the market risk that occur from industry slumps and competition.
Market Expansion
As a strategy of McDonalds, it can inflate its operations into other countries such as Latin America, Asia and Europe, with recently developed products, where they could put into practice their product adjustment strategy based on the religious and cultural value that are existing in those individual countries.
Currently, most of the McDonalds competitors are having their worldwide presence. In order to keep hold of the market leader position it is very important for McDonalds to inflate into more new markets.
McDonalds at present follows the hybrid strategy and now it can move into the differentiation strategy. McDonalds could augment its focal point on stirring to differentiation and delivering high professed value to while raising the prices. This could be brought in terms of creating more healthy foods with low calories and oil. This can be done in the course of spending highly on R& D to find the different ways of delivering better quality while keeping hold of the flavor and delectableness of its recipes (Han, 2008).
The increased value addition and R & D cost may need McDonalds to indict an additional premium price to their formula. This may not influence the sales, because the consumers are fewer prices receptive because of the strong brand image (Koen, Bertels, and Elsum, 2011).
– Conveying healthy foods with lesser calories will draw more consumers who are not into fast food eating due to health distress
– Amplified brand reputation and customer satisfaction
– Amplified profitability and sales
– Amplified shareholder value maximization
– Help from the local government and ensuing tax and other allowances
– The lower income or average income earners may toggle to other local food joints because of the augmented prices
– Increased lower profits & costs
– Opponents may emulate comparable differentiations
– Basis for differentiation turn out to be less significant to buyers
Above mentioned strategies would open up an entirely new market for McDonald’s through raising its market size. This will also increase the Mc brand image across the globe while intensification its brand acknowledgment and brand equity in the middle of its obtainable consumers. The strategy of diversification will help McDonald’s in expanding to other industries which will help it in reducing the threat that it faces from its competitors from the fast food market, also its strategy of expanding into other markets will help to a great extent in reducing the threat from the competitors who are already expanding themselves. McDonald’s can use its brand name at increase its prices a little bit , thus using its strength and get more opportunity in the market by using the added prices in overcoming the weaknesses that it faces in quality and slow delivery, also it can use these added prices to overcome its weakness of having high employee turnover. The strategy of introducing new and healthy products can also help in overcoming of its weakness that McDonald’s sells only fast food that is not good for health.
References
Christensen, C., (2007). Innovation: A Happy Meal For McDonald’s Retrieved from https://www.forbes.com/2007/08/31/christensen-innovation-mcdonalds-pf-guru_in_cc_0904christensen_inl.html
Collin, P., (2010). The Franchise Mall. McDonald’s. Retrieved from https://www.thefranchisemall.com/franchises/details/10357-0-McDonalds.htm
Han, J., (2008). International Journal of Business and Management. Retrieved from https://www.ccsenet.org/journal/index.php/ijbm/article/viewFile/905/878
Hill, T., Charles, J., & Jones, S. (2008). Strategic Management: An Integrated Approach, Houghton Mifflin Co.: Boston, 8th Ed. Pp. 1072. Hardcover.
Koen, P., Bertels, H., and Elsum, I., (2011). The three faces of business model innovation: challenges for established firms. Research-Technology Management, 54(3), 52-59.
McDonald’s Corporation (2013). Annual report, 2013. Oak Brook, IL: McDonald’s Corporation.
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