McDonald’s introducing flexibility downs with the complexity
Background of the Case
http://www.xtimeline.com/timeline/McDonald-s
I. Statement of the Problem
What are the effective strategies that McDonald’s must consider to manage the changing business environment?
II. Objectives
1. Develop a business model as framework for strategic and tactical planning
2. Identify and implement growth strategies
– Globalization of franchises
– Increasing price competition
– Reduced brand loyalty
– Market Saturation
– Personnel reduction
– Integrated value chain
3. To formulate new strategies that will capitalize on new opportunities that the
industry is facing
3. Manage and monitor implementation of strategies
III. Areas of Consideration/ Major Assumptions
A. Financially Capable to pursue on globalization of franchises.
– McDonald’s remains at the top three to five fast-food chains since the management had reached its maturity level in the business until today.
– Overseas markets are increasingly playing a larger role in McDonald’s profitability.
– McDonald’s has implemented a company-wide recycling program. One of the programs that have been initiated is the Mc-Recycle Program that is devoted to $100 million annually to the promotion of recycled products in the construction and equipping of restaurants.
– McDonald’s stock was selling at 39 times the year’s likely earnings, was not perceived as a bargain. Investors viewed McDonald’s as a solid company and a good long-term buy.
B. Volatile Business Environment
– The competition among fast-food chain industry has heated up, considering this as an opportunity for McDonald’s to change its strategy to focus on increased market share rather than on individual store sales and profitability.
– Opportunities that the technology brings for the improvement of McDonald’s service, focused on speed and efficiency.
– A need for technological innovations
The frameworks that can be used for this case are the following:
– Steps of the strategy management process
– The organization, the levels of its environment and the components of these levels.
– SWOT Analysis- strategic development tool that matches internal organizational strengths and weaknesses with external opportunities and threats.
– GE Multiifactor Portfolio Matrix
– Porter’s Model, determinants of substitution threat
– Reducing resistance to change concept
– Factors to consider when changing an organization
IV. Alternative Courses of Action
a. Pursue the existing direction in investing for technological innovations, but develop new growth strategies
Pros:
– Provide increased company growth
– Improve the profitability and the flexibility of the company
– Integration of new resources and capabilities
– Adaptation to the technology that will satisfy and entice customers
– For the long-term benefit of the management
Cons:
– Requires the most careful investigation
– High cost-of-entry and high risks
– Requires long period of time
b. Focus on core competence: to sustain its leadership in the food industry.
Pros:
– Core competence yields a long term advantage to the company
– Any core competence provides a viable basis for your corporation to create or strengthen a new strategic business unit
– Improving core process execution
Cons:
– Cannot offset the low periods. Many businesses have seasonality of highs and lows; if you can acquire a business that has a high-yielding when your business has a low, you can offset the low periods.
– The company will be bureaucratic.
V. Recommendation
Pursue the existing direction in investing for technological innovations, but develop new growth strategies
Also:
– Boost profits and market share
– Increase brand loyalty
– Increase Market saturation
– Use technology to reduce employee costs
VI. Action Plan
McDonald’s must strategize intensively for its continued success. The company can continue on its traditional path of consistency (being very successful) and quality through standardization, and alter strategies by continuing to provide a variety of offerings and service by means of technological changes.
Presenting business directives by means of web page is one of a good technological investment for the company. Most of the people in the world rely on the Internet and it would be easier for the customers to simply make their orders with just a power of one click. This will be very useful for customers working with their computer and don’t need to call the establishment. This will serve the customer in the shortest possible amount of time. Hence, customers can give their comments or feedback about McDonald’s service immediately and this will benefit the management to improve more of their service.
McDonald’s should conduct trainees or seminar to educate employees of the technologies that will be implemented: like the use of smartcards and improved producing of superior food products like technocratic (improve the preparation and service of the French fries). In adapting to technological changes, everyone in the company, leaders and employees, must be willing for the changes and this will lead to the success of the company.
Irreplaceable ♔ 