McDonald Corporations Essay

Evaluation

The background has high-end a lot of areas and issues that are affecting McDonald Corporations. However, three key points will be clearly evaluated based on the three problems mentioned, which include an emphasis on expanding the chain leading to loss of focus, lack of a professionally designed competitive advantage strategy, and low business strategies. Schimd (2018) states that the success of international expansion is not always guaranteed despite whether a brand is as big as Mcdonald’s. This is because growth does not mean that the brand is doing well; it only expands its market share. This means that a brand may have a large market share but be in a position of making losses. How? McDonald’s main goal shifted from its focus from the customers’ needs and directed all its energy on being global. Though the entity was offering quality foods, depending on its location, quality is relative.

Ineffective marketing, poor product launch, and slowness to change are some of the issues that should be addressed when a new outlet it opened. Another aspect that should be considered is the culture and the type of food that a country appreciates. McDonald’s is an American entity and only focused on promoting American recipes. This turn may have turned out so well for the restaurant in the United States and may have, in one way, led to the business developer to only customize the menu fit for American foods. However, the franchise in Vietnam proved that more was to be done if the franchise was to expand in the country. When the franchise first opened its first outlet in Vietnam, it was received with a lot of anticipation. Still, later the consumers’ expectations took a negative turn due to the fast foods that were being offered. Unfortunately, three and half years later, the McDonald had to rethink its strategy.

The expansion may have successfully taken off well in America and was initially working for the American people, who significantly led to the franchise pushing forth with the expansion plans driven by Ray Kroc’s vision. With the success of the expansion, it is possible that its success led to the management shifting its focus from business development to business expansion. The over-expansion failed to work for countries such as India and Vietnam as the franchise lost focus and determination to deliver fast foods in accordance with the country’s cuisines. Had the franchise been more articulated and strategic in its business development strategy, it would have been able to open stores in an articulated and custom-made manner to each and every store opened for such countries. The entity also expanded based on the success it had experienced in other continents, especially in America; this did not work at all.

The second piece of focus is how the franchise applied a competitive advantage that worked against itself. In the pursuit of wanting to please its customers, McDonald’s used cost leadership and product differentiation but not in such a strategic manner. Like the first issue, in pursuing market share, the entity lost focus on its business and placed its emphasis on market share. Bonnelyche (2020) states that McDonald’s offers its products at minimized prices as compared to the likes of Arby’s. This has always been the primary generic strategy for the entity. However, this should not have happened at the expense of the company. Cost leadership advocated for a smaller profit margin, but fixed, and variable costs should be well considered so as to build a sustainable business. The benefit of Cost leadership is that it allows an entity to sell more for less.

In the application of the porter’s model, McDonald’s also applied product differentiation to penetrate its market. Product differentiation brings about the inclusion of various preferences and considerations that customers prefer. However, McDonald’s menu moved from having eighty something items on the menu to having over one hundred items on the menu. There is no single person who will have time to look at the over one hundred items on the menu. The product differentiation caused the entity to have a very lengthy menu and long processes to make s ready. As a result of this, s took long to be prepared, not to mention all the groceries that had to be pushed to endure that nothing is undelivered due to lack of ingredients. Ideally, this means that it is possible that the stores were filled up with so much inventory to match up with the menu only for it to be thrown away either due to very little s being made for a particular item or too much purchase of the inventory.

Both product differentiation and cost leadership may have worked or maybe still working for the franchises but at the expense of the franchise. Product differentiation should be applied to a level where the company is not putting itself in jeopardy. Should this happen, then an entity should opt-out with a solution that safeguards the business of a company. This should also have been the case for McDonald’s as well. McDonalds being one of the largest global fast food’s restaurants did not just happen overnight. This success is proof enough that the Porter models did and is working for the entity; however, the limits of its efficient fail when business is lost through the dire desire to please its customers at the expense of the franchise.

The third and final issue facing McDonald’s is poor business strategies that fail to put customers’ needs first. The long turnaround plan by Easterbrook was long-awaited in 2015, and everyone hoped the process put in place would favor the customers. This is according to a YouTube video posted by CNN Business soon after the turnaround plan was announced. The reporter is quick to summarize the twenty-minute announcement in sixty seconds, with nothing positive to disclose to the customers. According to the reported, most consumers hoped that there would be premium menus or offers in the announcement, the announcement of store revamps of mention of healthier items on the menu. Far from it, all strategies mentioned only spoke about the business aspect of the franchise. The strategies mentioned included unlocking growth, optimizing today, and shaping tomorrow, system alignment, and focused talent on customers. All these termed remained phrases as they did not match up to what customers wanted to hear. The issues or concerns of the customers had not been addressed.

Looking back from the beginning, this may have had been a management issue as the 3-legged stool strategy only focuses on suppliers, employees, and franchises. Though the values mention putting customers first, the value loses its purposes as it exclusively focuses on serving the customers without having an idea of what precisely they want to be served. It would have been more elaborate had the value-focused on meeting the needs of the customers. This means that right from the formation of the values and models of work; customer concentration was not highly valued or, if it was, not through emphasis was made on it. To prove on these points is the fact that McDonald only introduced healthier foods way later after it realized a decrease in its market niche. There was not any form of communication in terms of what customers wanted, what they did not like, nor feedback.

The business strategy put in place were more theoretical than practical as the company was more concerned with the policies and theories of business and their practicality. Therefore it also took the company a very long period to turn around and go beyond the fries and burger menu. It is said that most customers in America only love McDonald Burger above averting else that the franchise has to offer. Besides, the strategy of working collaboratively and expansion of the franchise to increase its market share. Most of the strategies put in place may not have resulted in successful outcomes the entity as a franchise has broadly worked for the entity would and maybe the most substantial aspect that keeps it running.

The value chain of McDonald is made up of primary activities and support activities. The primary activities include inbound logistics where the franchise its own pre-defined suppliers where they purchase their raw vegetables. In addition, they also apply backward vertical integration that lowers the cost of the raw vegetables and also ensures that the purchases are of good quality. This ensures that they foods and drinks are made from freshly produced ingredients. Operations also falls under primary activities where McDonalds, in the effort to speed up its s has come up with a speedy kitchen made up a large grill, fryer and a dressing station. In terms of services, the entity offers free Wi-Fi, gift cards and play places for kids to ensure that its customers are well entertained. However, despite all these eateries such as Burger King are still at an advantage over McDonald’s making the value chain to have less competitive advantage as would have been desired.

Through VRIO, McDonald’s in terms of value did take long enough to exploit new opportunities that came their way. This is because of insisting so much on keeping up with it American menu which had had great success in America. In terms of rarity, McDonald’s is so resourceful as it is a franchise and would have been easily able to enter new markets easily. It was also a huge brand and had worked on working out the problems mentioned above then this would have worked for their advantage. In terms of instability, the franchise would have easily adopted to it environment had it from the start chosen to carry out a market research. In terms of organization, based on the inbound logistics the franchise is well organized and well able to deliver, however it has lost focus on the business which had led it to the place it is by the time of the research. McDonald’s is quite resourceful but however fails in the aspect of value this making other franchises gain a competitive advantage

Schmid, S., & Gombert, A. (2018). McDonald’s: Is the Fast Food Icon Reaching the Limits of Growth? In Internationalization of Business (pp. 155-171). Springer, Cham.

Bönnelyche, S., & Schönborg, I. (2020). How Can CSR Give a Competitive Advantage in Accordance with the CSR Stage Model? A comparison between the Swedish company MAX and the American company McDonald’s CSR strategies.