Mcdonalds Have Used Effective Global Expansion Strategies Commerce Essay

Mcdonalds Have Used Effective Global expansion Strategies Commerce EssayThe McDonalds is one of the just slightly thriving ball-shaped eatery chain around the world. McDonalds collect used effective global expansion strategies to enter tonic trades and gain a sh argon of the foreign nimble nutriment mart. This communicate presents McDonalds best practices in the global food manufacture, world(prenominal) provoketh trends and ch completelyenges. It bequeath similarly look at the McDonalds Corporation in relation to its major competitors and analyze how the company has responded to its surrounding environment. In closing, report result look at the prospects for McDonalds future and it give be gull that McDonalds volition be fitting to chief(prenominal)tain its dominant market position. It will elapse to be a model that serves as a bench mark for just about others in the persistence. Over any, the report renders an overlook of how McDonalds creates both gu est and brand loyalty for their intersections and inspection and repairs. This report focuses on McDonalds multi national success, challenges and strategies.Index1 Introduction -051.1. ambit of the report061.2. Aims and Objectives-061.3. Methodology062. Literature review and Analysis092.1. Environmental ciphers impactioning upon McDonalds092.2. Strategic analysis of McDonalds163. Conclusion -214. Recommendations225. advert231. IntroductionIn the world of globalisation the fast food business is the about dynamic and growth orientated business. And without any mistrust McDonald is the leader of all. McDonalds Strategy is continued growth, providing exceptional guest cargon, remaining an economical step producer, offering high value effectively marketing. Now McDonalds is a global scale brand. Since the start of the company in 1973, McDonalds Corporation began facing pages house servantally byout the unify States thus plungeing its brand recognition. Its sign sche me began by advertising directly to the middle and upper class citizens, as feces be seen in countries such as India and China. However, with its legion(predicate) spate shrouds on several of its food items, McDonalds began to furnish to several people belong to the depress class. The delineate strategic elements that make McDonalds so successful is adding 700-900 restaurants annually, increment unfermented menu items, pitiful price specials, extra value meals to make headway frequent guest visits, being highly s eliteive in granting franchises, choosing sites accessible to customers, focusing on particular product line consistent persona ,c beful attention to store efficiency extensive advertising use of Mc prefix, hiring courteous personnel paying an equitable wage providing good training.Originated in Ray Krocs founding precepts of Quality, Service, Cleanliness Value, McDonalds falsifyment has everlastingly conceptualised in being a leader in issues that af fect their customers. This belief is evident in McDonalds c resortness in mixed community projects regarding education, health c ar, medical search, and rehabilitation facilities. These activities pecuniary aid the corporation to extend their visualise beyond fun and entertainment into affectionate responsibility.Back scope of the reportThe background of this report is to evaluate environmental factor and key drivers impacting McDonalds success and schema. The McDonalds restaurants argon operated by MacDonalds Corp, franchisees, or affiliates under critical point venture agreements. At March 31, 2005 there were 18,306 franchised restaurants (generating 60% of 2004 system abundant gross revenue), 8,091 company operated restaurants (27%) and 4,111 affiliated restaurants (13%). In addition to the McDonalds restaurants operating under the comparable brand name, which is one of the 10 most popular brand names in the world, McDonalds Corp operates other restaurant chains under its match Brands which include Boston Market and Chipotle Mexican grillroom. The restaurants operating under these brands are approximately 1,000 andrepresent 3.22% of the stores operated or franchised by the company.(www. Mcdonalds.com)Aim and purpose of the themeAim and purpose of the report is to evaluate and analyse the key drivers that impact MacDonald success and scheme, its swot analysis and examine current strategies.Methodology axenic question is concerned with the expansion, examination proof and mendment of the question methods and techniques and implements that from the personate of research methodology. Examples of clean research include just beginning a sampling method which can be applied to a circumstantial situation developing a methodology to access the forcefulness of the procedures. commonly research in the social sciences is applied. In other words the experiments, methods, and research tools which is called the research methodology. look for method ology is useful to collect the information in the different aspects of an issue, problems and situations.Research will carry out mainly, using the qualitative method of research methodology, as the nature of research is based on primary data which will be collected by doing in-person interview questionnaires.Quantitative vs. QualitativeQuantitative research is based on the measurement of the quantity. It is applicable to phenomena that can be expressed in circumstance of quantity.The importance of the primary narrative and theoretical conjectureFigure 3.1 ancestry Remenyi, D et al (1998), Doing Research in Business ManagementAn presentment to Process Method pp-125, by Sage Publication. match to Saunders (2000) the research philosophical system depends on the way we think about the victimisation of knowledge and this view affects the way we do search. Whilst undertaking the research, a clear understanding of research philosophy is essential since it helps the researcher to r efine and specify the research methods to be used in a study, that is, to clarify the overall research scheme to be used (Easterby-Smith et al., 1997)2. Literature review and AnalysisThis chapter will provide a detailed literature review. The literature review helped frame the initial focus of this study, as hearty as focus the data analysis Swanson Holton, (1997). Literature reviews help researchers limit the scope of their inquiry as salubrious as act as a benchmark for comparison purposes. accord to Creswell (2003) literature reviews provide a framework for establishing the importance of the study.According to Swanson and Holton (1997), Research is a process of a specific type of out be. Outcomes of research are unexampled knowledge, obtained by an influencely, investigative process. Typically the research process begins with attempting to function a problem, which is done by asking a question and identifying a solution or, in essence, drawing a conclusion.2.1 Environmen tal factors impacting upon McDonaldsMcDonalds is one of most thriving companies in the world today. With its rapid globalization, the pie-eyed has been able to puff and maintain numerable growth as well as chronic to explore with its growth potential in the coming years. From the creation of the companys organic evolution in the United States, to its spread in England, Australia and more(prenominal) than newly India and China, the firm has been able to provide a variety of beefburgers and other foods to its consumers. From the Big Mac, to the Maharaja, the companys concomitant strategies, specifically with heavy research and development mother allowed it to fulfill the tastes of locals in either country it operates. Its leaders in all of its major departments defy established prices worldwide in all types of currencies, making its foods affordable for customers of all classes. The companys challenges of providing healthier foods to its patrons demand contri scarcelyed to its financial success, thus enabling loyal consumers. In certain countries, such as India and China, eating at a McDonalds has conk out a luxury, primarily among the middle class, who feel a sense of authorization that they too can afford to eat at quality restaurants. However, as the company continues to settle into its new environments, it will slowly cater to the lower class, as can be seen in the United States. The strategies develop by its experts, thus allows for the company to increase in revenues, quality, and bring about consumer satisfaction.McDonalds uprise analysisStrengthsMacDonalds has a good global presence with its nearest domestic competitor being only half its size, McDonalds is the market leader in both the domestic and international markets. MacDonalds benefit from cost reduction through economies of scale because of its enormous size and its huge global presence allows it to commute risk involved with the economic performance of specific countries. In int ernational markets, MacDonalds is well placed to expand and take advantage of long-term economic growth.WeaknessesThe food exertion is really change. As a result of this, MacDonalds has to deal with the prospect of looming market saturation, which could make it difficult to add new outlets. The market is forecast to grow by around 2% per year.OpportunitiesMacDonalds sold its Donatos pizzeria back to its founder in 2003 and discontinuedBoston market trading operations outside of the US. The company will instead focus on ChipotleGrill which is the companys most successful non MacDonalds branded chain of restaurants. Also to increase positiveness the company has slowed its expansion ofMcDonalds restaurants so as to refurbish and change the image of current restaurants and adding new features such as Internet access.ThreatsMcDonalds is exposed to changes in the global economy. The companys aggressive international expansion has left it extremely insecure to other countries economi c slowdown. Foreign currency fluctuation is in any case a nonher(prenominal) problem global companies like McDonalds. The Fast food constancy is comme il faut an increasingly private-enterprise(a) sector. MacDonalds keeps up with competitors through expensive promotional campaigns which leads to limited margins to gain market share. McDonalds is attempting to differentiate itself, with new formats and new menu items, besides other fast food constancy are doing the same too.McDonalds trick out analysis shows us that even though there are legion(predicate) threats against the fast-food industry, McDonalds occupies a relatively strong position in the global marketplace. According to the five forces model, the strongest competitive force is between rival sellers in the industry. This wonk analysis shows the much strength that Mc Donalds employs to keep itself at the direct of the fast-food industry. Although there are various weaknesses, these can all be dour around following the McDonalds Plan to Win, which was implement with the hiring of Jim Cantalupo. Obviously all fast-food chains are going to have to combat the new consumer health expectations, yet we feel that under Cantalupos leadership, McDonalds has a strong enough consumer base to grow in the upcoming years. The financial analysis shows certain flaws in McDonalds finances, but these are great(p)ly collectable to the expansionary policy in place in the company.SWOT Analysis and Grand StrategiesSourceP. Wright, C.D. Pringle, and M.J. Kroll,Strategic Management,2nd ed. (Boston Allyn and Bacon, 1994), hawkish ForcesThe quick- serving sandwich industry faces competitive pressures from a number of forces. The major competitive threats originate from competing sellers in the industry as well as firms in other industries that offer substitute products. McDonalds main competitors indoors the quick-service sandwich industry are continually deriving new strategies through offensive and en garde ta ctics in set out to gain customers and market share. In 1989, Wendys implemented the 99 cent value menu as an offensive strategy to gain customers looking for a quality product at a value price. In retort, McDonalds and Burger King took a defensive approach and in addition instituted a value menu in their respective stores so that they wouldnt lose market share and customers to Wendys. Firms in the quick-service sandwich industry are constantly jockeying for meliorate market position through offensive strategies and in response to these strategies, other firms will take a defensive approach to moderate against that offensive move made by the rival firm.Forces in the manufacturing AnalysisSource Based on M.E. Porter,Competitive Strategy Techniques for Analyzing Industries and Competitors intervene ProductsIn addition to competition from rival sellers in the industry, sandwich firms also face intense competitive pressure from firms in other industries interchange substitute pro ducts. The substitute products for the fast-food industry are probably some of the most diverse in the world. These substitute products may include products purchased from the local food product store, food from sit-down restaurants, or economisey foods such as pizza. The primary issue with these substitute products is that they are readily available to the customer and the customer tends to view them as being comparable or better in terms of the quality of fast-food products. other issue that faces the fast-food industry is the availability of products that cater to the health-conscious lifestyle. The majority of the public tends to view fast-food restaurants as primarily serving foods that are high in fat content and un intelligent and as a result they are likely to look elsewhere for a rosy alternative. In response to the product offerings, buyers also exercise a ample deal of bargaining ability through their purchasing antecedent. While fast-food products may not always b e associated with health and quality, fast-food restaurants to possess a major advantage over firms selling substitute products through the price of their products and the quick, well-to-do service.New EntrantsThe threat of potential new entrants and the bargaining power of suppliers is not a significant competitive force in the fast-food industry. Occasionally, new entrants will come along and compete with firms in the fast-food industry and offer substitute products. However, in order to compete on a large scale, it will require a great deal of capital to invest in real e declare and build physical restaurant locations. In addition, the market is already so arrant(a) that the new competitor might escort it difficult to establish a customer base and become profitable. Suppliers in the fast-food industry do not have substantial bargaining power due to the fact that firms in the fast-food business tend to purchase their materials from various outlets. one company might purchase t heir meat supplies from a friction match different meat manufacturers, then purchase their dairy ask from a number of different dairy companies, and also purchase their bakery products from a variety of sources. Since the fast-food firms divide their purchases among a diverse array of suppliers, the suppliers tend to have little or no bargaining power or supplement since there are multiple suppliers for the same products.Driving ForcesThere are a number of driving forces which have molded the current state of the fast-food industry. In the beginning, fast-food companies typically focused on being the low-cost supplier and sought to expand into as umteen markets as possible. As these national brands have grown, the markets they are competing in have become overly saturated with restaurant favorions. As a result, the fast-food industry has begun to focus on the needs of the customer. The buyer has a great deal of leveraging power due to the fact that if they are dissatisfied wit h one brand they can cushy switch or purchase from an alternate brand with little or no monetary repercussions. The fast-food firms have implemented strategies to improve the quality of customer service and the cleanliness of the restaurant locations in order to please their customers in hopes that they will become a repeat customer.Health FactorAll fast-food hamburger chains, McDonalds included, are forced to respond to the shift in customer preferences from high-calorie burger and hot up to healthier items such a deli sandwiches and baked potatoes. All the chains are expected to be struggling for several years to come to meet new consumer health expectations without compromising the original menu items.McDonalds customer service and opposing points As years have progress many issues have arisen for McDonalds but the greatest is probably its poor customer service. A customer service index done in 2003 found that McDonalds has the terminal the customer service ranking in the fas t food industry and is ranked even lower on customer service than the IRS. One reason for this is a high employee turnover rate. McDonalds has the highest employee turnover rate among its competitors. Another contributing aspect to the poor customer service is slow service at the drive-through windowpane. McDonalds currently ranks fifth in speed at the drive-through window and 19th in accuracy. If you compare its speed and accuracy to its competitors and keep in mind that McDonalds generates 60 per centum of its revenue from its drive-through and assume it is losing one percent of revenue for each six seconds that its behind, than McDonalds is loosing approximately 97,000 dollars annually.While McDonalds feels positive about its newly implemented changes the critics are quite an skeptical. It was stated that long-term they believe that it will be tough to sustain growth and margin expansion. precise concerns include McDonalds ability to maintain it current level of product rene wal and competitors ability to copy those ideas. The critics even went as far to question if McDonalds recent improvement was more of a reflection of the market and the dollar rather than its newly implemented strategy. In response, McDonalds officials stated that they will need to deliver on their stated goal of sustaining increases in sales and operating income. interest with the most significant question of weather or not the new changes will sufficiently provide McDonalds with core competencies necessary to build a sustainable competitive advantage in the global fast-food industry.2.2 Strategic analysis of McDonaldsMcDonalds Global strategyMcDonalds already holds a strong position in the global economy. It is recommendation that they decrease expansion in the almost saturated domestic markets, and continue their expansion in foreign countries, such as Asia, and the Pacific. Companies generally expand into foreign markets in an attempt to gain new customers and capitalize on cor e competencies. McDonalds core competency is that they are able to produce and sell quick and cheap food to a large number of customers. With this concept, they have been able to expand into other countries, and they currently are the largest global fast-food chain in the world. Since they already hold this lucrative position, they should continue expansion in an movement to drive out competition. One strong recommendation would be for McDonalds to expand into emerging markets. Since they focus on affordable food, it is likely that many could afford their products, and therefore, McDonalds could expand into a stronger company.Politically huffy StrategyOne of the companys major concerns was to develop ways to avoid policy-making confrontation with the Indian regime. The other major concern was to be metric of the religious sensitive in India. Almost 80% of Indians do not eat beef, and over 150 million Indian Muslims do not eat pork, therefore, instead of supplying the normal Bi g Mac, which consists of beef, the company developed the Maharaja Mac that is made of 2 lamb patties. Other foods were also added to the non-standardized menu including McAloo Tiki Burger, and other common Indian dishes.Emphasis on topical anaesthetic ManagementThroughout the world, McDonalds prides itself in hiring locals, specifically management in order to gain acceptance into the country by its citizens. The emphasis is based on the think global, act local theme of the company. For instance, the company decided to establish two joint ventures with two local entrepreneurs in New Delhi, who were selected to manage the fast food restaurant. This strategic move allowed the company to gain easy access to the bureaucracy associated with the countrys government.Employment OpportunityForeign enterprises are oftentimes reluctant to hire locals in their companies, specifically at the managerial positions, however, McDonalds research concluded that in order to survive the brutal Indian government, it would have to hire locals as cashiers, cooks, managers, etc., as well as provide jobs for the countrys coarse workforce. In fact, McDonalds outsources its products to several Indian companies throughout India. This provides evidence to the Indian government that McDonalds is not only customer friendly, but also employee friendly.Environmental comityIn order to achieve a positive re delegateation, as well as follow local and national policies of a country, McDonalds tries to establish serve that are environmentally friendly. India is an example where the company provides financial contributions and sponsors several community related activities in order to promote environmental protection. This is primarily seen within schools thus indicating that the company also supports local schools.Corporate CitizenshipIn order to better its reputation, this multinational firm gives back to the local citizens in all countries it operates. For example, the company provides severa l financial donations to local organizations. This is one way to elevate consumers to eat at its restaurants, as it is an incentive that is used to spread the name. diversificationOne strategy that McDonalds as well as many of the other fast-food chains have hugd is that of diversification. We feel that McDonalds should continue this trend. With the large health-craze hitting the United States, many restaurants have to change to healthier, higher quality menu items. The fast-food industry is no exception. Healthier burgers, low-fat salads are all popping up on menus across the country. We feel McDonalds should continue its diversification and incorporate more healthy foods, including low-carb burgers and fries. If McDonalds is able to stay ahead of the competition in this aspect, they will have a strong competitive advantage over such companies as Wendys and Burger King.Defend strategyThe purpose of this strategy is to make it harder for challengers to gain ground and for new firm s to enter. A fortify-and-defend strategy works well with firms that have already achieved industry dominance. Since McDonalds is already the industry leader in the fast-food market, they can opt for a number of tactics using this strategy to maintain their industry position. They can continue their expansion tactics by continuing to establish more stores around the world. This expansion would help defend against and help to admonish smaller companies from increasing their market share. In addition, they can also elect to invest capital in RD to aid in developing new technologies for their operations. These new technologies will help them remain cost-competitive and technologically progressive.Recommended strategy for McDonaldsThe main goal of the stay-on-the-offensive strategy is to be a proactive market leader. The principle of this strategy is to continually stay one step ahead of your competitors and force them to play catch up. McDonalds is already the industry leader in the fast-food industry with a market share of 33 percent compared with the number two chain in the industry, Burger King at 13 percent market share. They can stay out front by implementing technological improvements in their restaurants to enhance the production methods or to improve the ordering process of the customer. In addition, they can also discover new or better product offerings to satisfy the needs of their customers. The best approach that McDonalds can take through this strategy is to improve their customer service. McDonalds customer service ranking was the last-place in the fast-food industry and was even lower than the Internal Revenue Service. To improve upon this substandard attribute, McDonalds should revamp their training process for newly hired employees and introduce new educational modules for currently employed personnel.Training and learningMcDonalds should put more emphasis on training of its employees as part of their strategy of growth.Training and learning i s the main tools for HR to prepear management for any upcoming change in the organization. According to Beardwell and Claydon (2007) the role of formal training in organisation today appears to have declined significantly. Firstly, the speed with which skills requirements change in some sectors means the formal time consuming, to deliver efficiently as required. Secondly, the increase recognition of Human resource development as a tool to achieve competitive advantage has raised awareness of the need of the embrace learning as a central strategic concern and to be part of the culture of the organisation. Employees, employers, managers, leaders, government, European and international bodies, customers and Human resource development specialist consultants all of them needs more training for the future.Equal fortuneEqual opportunity, means changing workplace behaviour in the areas of discrimination, inner harassment and affirmative action to ensure that all employees have fair to m iddling access to fulfilling and productive working lives. Wright,N (2003)3. ConclusionIn analyzing McDonalds, the strengths, weaknesses, opportunities, and threats were inevitably explored to better understand the current situation. This SWOT analysis shows us that although there are numerous threats against the fast-food industry, McDonalds occupies a relatively strong position in the global marketplace. According to the five forces model, the strongest competitive force is between rival sellers in the industry. This SWOT analysis shows the much strength that Mc Donalds employs to keep itself at the top of the fast-food industry. Although there are various weaknesses, these can all be turned around following the McDonalds Plan to Win, which was implemented with the hiring of Jim Cantalupo.McDonalds has adopted many strategic changes during its business cycle.McDonalds business will continue to thrive as long as the core competencies are recognized and never forgotten. With every i ssue and challenge the corporation faces, it has the opportunity to improve itself and prove itself to the public, shareholders, and stakeholders. With every battle conquered, another one rises and with a secure mission and vision in mind, the corporation should never stray too far from the grow and success of the company. The recommended strategy will strengthen this plan because it is doing what McDonalds does best and more so. Despite the downturn the company has seen, the general impression we receive from McDonalds financial situation is that the company is slowly climbing out of a low period and making a turnaround. We must never forget the key success factors of the business which really makes the business for what it is today, including franchises that offer quick, efficient service in a clean friendly environment.4. Recommendations squad buildingTeam building is crucial for any individual McDonalds store for improvement of their sales figure and as a whole for the organiz ation. If the organizations have the proper police squad than they can face all sorts of challenges, they can achieve the competitive advantage, and organizations can maximize their profit.Sustainable growthManagers and employees of McDonalds need to put more effort about the sustainable growth. In this constant changing world of organisational dynamic only sustainable companies will survive. McDonalds should have concern more on their product and the way they produce it , and environmental issues.Total quality managementTotal quality management is the key of the success in the development path. If everything is done by as they planned, than they will the quality in every field of the organisation.The reason behind is, why researcher is accenting on these studies, because after covering these factors managers, employees and organisations will get the continuous development path.