The largest chain of fast food restaurants in the United Kingdom
McDonald Corporation is among the largest chain of fast food restaurants in the United Kingdom. It primarily sells French fires, chicken, hamburgers, soft drinks and breakfast. This paper draws on the view that McDonalds fast food continue to remain competitive in the fast food market niche by virtue of strategic management which sees it improving the taste of sandwiches as well as introducing a menu lost that is new for its customers. To understand the success of McDonald over the years, it is important to note the strategic management of the fast food corporation in the UK. Part of the strategic drive of McDonalds to increase its competitive edge has been to overhaul the system of food preparation and as evidenced in its recent food preparation system dubbed “Made For You", McDonald developed a mutual relationship with its customers since fresher as well as hotter food are delivered to customers; an aspect that leads to more consumption of McDonalds food (Stuart et al, 2007). The overall point in the strategic thinking and management of McDonalds rests on the enhanced flexibility on its customer service, business model, reaching and analyzing the strategic edge in light of competitive advantage and business level strategies. This paper seeks to analyze the wider environment in which McDonalds operates competition within the fast food industry, strategic focus, and how to address challenges that occur within the industry.
McDonalds Fast Food Company is among the largest food service retail corporation. Known for its hot and fresh fries, hamburgers, burgers and soft drinks, McDonalds operates about 30,000 restaurants in over 199 countries. In the UK, a majority of the McDonalds operates on the franchise basis. The strategic focus and organizational management has positioned McDonalds to compete effectively in an already competitive industry and thus edge a competitive base in the industrial environment and enjoy a market niche for its business. Customers visit its outlet on the daily basis because of the ability of McDonalds to create a company’s image that enhances people to get accustomed to the culture of fats food (McDonalds Corporation, 2010). As such, there is an apt customer base which McDonalds uses as a market entry strategy. Together with advertising companies that leaves the brand image in the consumer’s mind, McDonalds continue not only to penetrate the market but also expand their market size. As a result, there are a number of strategies that McDonald builds on to remain competitive in the industry and achieve t business and organizational objective.
McDonalds Company Overview
As one of the largest fast food corporation in the UK that concentrates on burgers, French fries, soft foods and breakfast, McDonalds has in the most recent introduced salads, snack wraps, fruits and carrot sticks. McDonald is a business that dates back in 1940. It was an idea that grew and became operational as the two brothers Mac McDonald and Dick opened a restaurant in the United States (Walsh, 2009) .The first McDonalds operated on the principle of modern fast food restaurant which later spread across Europe. The present McDonald is as a result of the successful expansion of the McDonald into a host of fast food markets. The company has become the symbol of globalization and it prominence in the UK is based on the concept of consumer responsibility as well as corporate ethics (McDonalds Corporation, 2010). Essentially, McDonald serves approximately one million customers every day.
Business Environment and Analysis of McDonalds
The environment in which McDonalds operates is very competitive that managers have been forced to adopt a strategic framework upon which they exercise their ability to identify, cultivate as well as exploit the core competencies that ensures that there is business and market growth. Thompson (2005) asserts that in order to arrive at this strategic threshold, McDonalds as a corporation has been the focus of the strategic policy formulation. In addition, Brown (2002) points out that there is no way in which the organization can exist in the vacuum. In this sense, McDonalds operate within a competitive environment and the foundation of its strategic management rests on its ability to analyze its competitor in the fast food industry. As a result, this not only enables McDonalds to realize its strengths and weakness but also help it to formulate a position on which it identifies the opportunities that are present for the organizations well as the threats it can face from its wider industrial environment. This strategic analysis best positions McDonalds in its market niche and is thus a strategy that reflects the best march for McDonalds strategic management.
The competencies exhibited by McDonalds form yet another aspect of its overall strategic management. Parsa (2002) contends that as one of the largest food chain companies in the UK, it defines its success from its strengths and opportunities. This is the distinctive competitive strategy that enhances the corporation’s competitive advantage in the market. A case in point is the financial opportunities, market leadership, image of the company to the market as well as the relationship between the company and its customer forms the strengths as well as opportunities than McDonald has achieved on its wider strategic management plan.
To achieve an enhanced and more profitable market niche, McDonalds creates a successful image in the customers’ minds and draws from it mission and vision statement to introduce to widespread customers a culture of fast food. This is evidenced by the fundamental concept that it serves over one million customers in UK per day and continues to add on its menu a new list of fast food items prepared. Furthermore, customer care relations, delivery speed as well as high hygienic conditions make the basic strengths on which McDonalds expands on. Cole (2003) articulates that McDonald has created a corporate symbol that is reinforced by the advertisement campaigns in the UK. Accordingly, it builds on this pedestal to foundationally establish a brand image that has remained in the minds of millions of people living in the UK. As such, the brand image positions McDonalds an edge higher than its major competitor in the food chain industries and its marketing strategies successfully addresses important business operations factors such as internal resources and the core competencies in relation to the external environment in which it operates (Kendrick, 2008).
Moreover, business analysts have maintained that the product value of McDonalds has contributed to the strategic focus of its operations. With regard to this, customers are aware of what to expect from the McDonalds restaurants whenever they visit the McDonalds. This gives emphasis on the fact that human resource draws their satisfaction from satisfying their customers and keeps the employees ready to adopt the innovative strategy of the company where they introduce newer products in the market in a bid to remain on edge with the newer tastes and trends of its customers and market size. The diversity of McDonalds into other related business forms the framework on which economists regard the McDonalds as the successful corporate group within the fast food industry (Enz, 2009).
Competitive Environment within the Operations of McDonalds
Every fast food restaurant operating whether as an organization or individual business is aimed at creating a new wave in the performance; all aimed towards implementing and sustaining the brand quality and the innovation of the business plan. Many fast food restaurants in the UK continue to analyze the external as well as internal business opportunities and therefore develop marketing plans that see them with a major market shares. These make food chain industry a very competitive industry in the UK. According to Hetrick et al (2006), McDonalds appreciates that competition for market place is stiff and has tasked its management to constantly communicate, compare their services with those of other fast food restaurants and finally improve on their service delivery and incorporate the developments of technology such as the internet to basically motivate their clients and improve on the overall center performance.
In addition, many fast food organizations undoubtedly enhance their food production which makes it futile to use the product quality alone as the marketing strategy. As this may create a scenario where you are rated average, McDonalds has gone a notch higher in edging its competitive advantage by modifying every marketing and business strategy to suit its vision statement. As such, Heath and Palacher (2008) argues that bearing in mind the already available resources is one point towards success but making use of all the primary competencies has enabled McDonalds to sustain its place in the competitive market. Accordingly, as the chief executive officer of McDonalds said, “the world has extensively changed and so have the customers. This calls for a dire need for any business organization to change in light with the customers change" (Walsh, 2009).
McDonalds Competitive Position within the Food Chain Industry
McDonalds has achieved the title of the leading and largest fast food restaurant in the UK from its overall strategic management concept of sustainable competitive market. With emphasis, this strategic policy has been behind the McDonalds ability to make it difficult for other food chain industries to penetrate its stronghold marketplace. Hill and Jones (2007) explain that McDonalds competitive position is attributed to its dynamic customer care relations, brand imaging, cost structure as well as its patent. With regard to this, the organizational as well as the managerial process has centered on sharing coordination and integration to formulate policies that drives the McDonalds on the pedestal of success. Believing in the customer and product value, McDonalds has created a situation where every employee strives to work for the common goal.
Similarly, McDonald, through its strategic management has demonstrated its strength in being able to learn and execute changes according to the needs of the markets. From this conceptualization, it has commanded a competitive position by being flexible to change within the milieu of technological developments and customer trends (Stuart et al, 2007). As such, Kendrick (2008) further postulates that a case in point for McDonalds success and market position falls on the paradigm of its long time organizational culture of concentrating on its advantage such as organizational behaviors as well as expertise to achieve success in every aspect of its objective. In the past, McDonald paid little attention on the concept of competitive advantage and thus even though it opened many outlets across Britain, its revenue did not change to the better.
The structural, technological and financial assets are the excellent market position of McDonalds. It therefore follows that McDonalds not only identifies but also implements these assets in the right direction in a bid to improve the services of the company in the market. Bordering the advantage on the vision which guides the company, McDonalds draws its strengths to achieve the competitive position by being committed to the sustainability of its vision. For example, bearing in mind that a brand or product revolves around the company’s vision, McDonalds works in lieu with this concept and thus attributes its competitive advantage on its faithfulness to the mission, vision and goals as well as objectives of the organization (Thompson, 2005).In light of this, McDonalds operates on the guideline of serving those people who have little or no time to cook an therefore provides a solution of a proper restaurant. In this case, the vision provides not only quality products but also quick service and desirable satisfaction among its customers.
The sustainable competitive advantage has undoubtedly meant well for the McDonalds and implementing these strategies is based on incorporating the best value strategies which make McDonalds unique and hard to be emulated by its competitors. It is evident that competitive advantages has helped and continue to help McDonalds to realize a great investment through an integrated, intelligent and dynamic human resources as well as strategic management (brown, 2003). As a result, McDonald caters for the situation where risk attitudes change and entirely vary the environmental uncertainty and volatility. This based on the product, price, promotion and place has provided a good starting point for the competitive position of McDonalds. Towards implementing the marketing function, the management of McDonalds constantly employs elements of marketing mix to appropriate plan on how to achieve the popularity in the market place (Enz, 2009).
McDonalds Marketing Strategy
McDonalds is known for its market entry on which it introduces people to the culture of fast food through the employment of emotive and highly persuasive advertisement campaigns. As Hetrick et al (2006) point out, McDonalds uses well structured advertisement campaigns to create a corporate system that penetrates the market as well as expands it. With regard to this, Parsa (2002) notes that McDonalds have put in place strategies that deal with the growing number of fast food customers in the UK. Towards achieving this, McDonalds emphasizes on customer care, speed in the delivery and high hygienic conditions around the McDonald premises. Connected with the concept of market entry strategy, McDonalds equally builds on its brand image; a factor that identifies it as an independent company. Accordingly, the company has taken into account business environment to achieve a competitive edge based on the service delivery, product and price.
In addition, McDonalds have used the diversity strategy in its operations. Hill and Jones (2007) contends that McDonalds uses this strategy to venture into other business; a factor that has helped the company to keep in touch with the market trends a mid the rising completion in the food chain industry. Towards this, McDonald’s emphasis on health food, introduction of new items such as salads on the menu, changed the overall appearance of the stores among adopting newer strategies. In light of this, McDonalds is able to achieve a competitive position in the marketing environment that is getting more competitive by day s a result of entry of new players in the industry.
Heath and Palacher (2008) further assert that a lot of innovations where McDonalds produces new products demonstrate another strategy in use for the McDonalds to catch up with the latest market development. As a result, it is able to respond to the ever changing tastes and concerns of customers. For instance, McDonalds continues to develop new recipes as part of it strategic formulation to cater for the health issues and concerns of the customers in UK.
McDonalds continue with the franchising model and employs over 60000 employees in approximately 1200 restaurants. The success behind all theses is typical of the effective marketing strategies that lead to the creation of high demand for fast food (Cole, 2003). The aim of successful marketing rests on making superfluous sales. Understanding the customer as well as the product that fits them has definitely formed the foundation of McDonalds marketing strategy. As opposed to other fast food restaurant whose entry in the market somehow takes the customer for granted and ends at providing quick service, McDonalds exploits the underlying concept of marketing which draws on the notion that customer satisfaction is the primary business priority.
Comparatively, many fast food restaurants in the UK are motivated in making profit and although they provide quality services, they miss out on putting their customers’ satisfaction on the fist priority. McDonalds has created business strategies that aim at fulfilling the creation of customer satisfaction. Fundamentally, McDonalds has invested in understanding the needs of a group or groups of customers in what is called market segmentation (Brown, 2002).As such, McDonalds defines these band of customers in terms of demography such as their age, region and gender such that each band of customers have a successfully and specifically tailored products as well as a marketing mix.
Future Developments in the Fast Industry
It is important to note that following the market trends of fats food industry, outsourcing of employees may not be effective. It is clear that everything in the present business community outsources but McDonalds should be ready to take care when outsourcing because in future, outsourcing is going to cease in its value following the whole sale idea of outsourcing competencies of the fast food chain store (Hetrick et al, 2006). Towards cushioning the effect of this, McDonald can outsource other business operations but not its core competencies. As such, it will keep abreast with the fact that the benefits of outsourcing which includes knowledge of market offshore, supplier relations and expansion of business operation. In so doing McDonalds will have put in place an order facility to cushion itself against competition, business failure and reduced profit margin.
In addition, the question of increased competition will be a future development due to the extensive entry in the fast food industry. As such, McDonalds will have to face an array of market risks as well as other business setbacks. However, what will make it strong and continue to enjoy the status of a leading fast food company is the constant formulation and implementation of strategic policies based on its knowledge of the customer needs. In other words, the taste, preferences and satisfactions of the customer should be their constant priority to face this challenging scenario (Parsa, 2002).With the future market function taking a consumer oriented approach, the marketing decisions are care going to be affected by the careful identification of the needs of the customers. As such McDonalds will need to devise marketing strategies that meet the customers needs as well as a business distribution system that bring the brands closer to the needs of the customer.
Recommendation for McDonalds Future Strategy
McDonalds should in future design a business plan that addresses the social changes spearheaded by the government and consumer groups which border encouraging a balanced diet and thus prepare types of foods that on the nutrition of the customer as well as their healthy lifestyles. Essentially, it can also develop a joint venture with other organizations such as the supermarkets in that some of its food is sold in the supermarkets. This comes with the marketing database which will help it to more accurately reach out to specific target groups of consumers. The customer identification could be on the basis of modeling and shoppers profiles; a factor which will enhance the prevention of band switching. In addition, McDonalds should focus on the corporate social responsibility and edge closer to those organizations with a value impact on the society (Enz, 2009).
Similarly, McDonalds should realize that promotion of its products is not merely an advertising function. It should come up with both advertising campaigns and promotional strategy that is defined by the nature of the market, the size of the market and the tastes as well as preferences of the customers. In so doing, McDonalds should design on the promotional mix that address the element of price, product and market in the way the customer will feel obliged to consume the product.
From the above discussion, it is evident that the strategic management plan of McDonalds has positioned it as the largest fast food corporation in the UK. This means that its business model is evidently different form other fast food chains. . Part of the strategic drive of McDonalds to increase its competitive edge has been to overhaul the system of food preparation and as evidenced in its recent food preparation system dubbed “Made For You" McDonalds developed a mutual relationship with its customers since fresher as well as hotter food was delivered to customers; an aspect that led to more consumption of McDonalds food. The overall point in the strategic thinking and management of McDonalds rests on the enhanced flexibility on its customer service, business model and analyzing the strategic edge in light of competitive advantage, business level strategies among others.
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