In the success-oriented world, corporate strategy serves as one of the tools of the company’s realization. McDonald’s has proven to constantly change its marketing strategy for example, because public opinion of fast foods can radically shift thus affecting the acceptability or attractiveness of its product lines.
The paper investigated the impact of current issues and concerns raised against McDonald’s and other fast food chains as it affects the complex way public perception is created. There are five factors which the paper evaluated which may have profound impact on the long term operation of a fast food giant like McDonald’s. The paper developed a five factor complexity mapping of McDonald’s. These are policy, technology, business, corporate configuration and public opinion.
These factors are so intertwined that a change in one factor led to changes in another. The paper have also investigated and evaluated the marketing strategies which McDonald’s has used in order to target customers seeking to consume only ‘healthy’ products and those who do not mind consuming fat foods. The paper describes factors which affected consumer perceptions of ‘healthy’ and ‘unhealthy’ foods. The paper critically analyses the development of McDonald’s corporate strategy in relation to changes for example in public opinion and provides recommendations for further adjustments of the company’s strategy for possible future scenarios like high demand for all natural food and non-meat products.
II. Case Analysis
The subject of this study revolved around the possibility of having further strategies which increased the profitability and sustainability of the resources that McDonald’s Corporation has. The identification of the factors which play an important role in the sustenance of the market share that the company has will be reconsidered in his study whereas the modification could lead to the attainment of the same corporate goals.
III. Analysis of Current Strategies
Bright colours in its logo, the use of a mascot, Ronald McDonald, promotional toys and youthful attendants are all signs that McDonald’s has a particular interest in the children and youth as its major market segment. The Rikert scale graph of the responses as to the question whether McDonald’s strategy is aimed at children and teenagers shows. The graph is curved upward with one-third of the respondents strongly agreeing that advertisement and marketing has a particular slant towards this age groupings.
Table 1. Response to the statement that McDonald’s strategy is aimed at children and teenagers
Freq Percent 1 10 33.33 2 8 26.67 3 6 20.00 4 6 20.00 5 3 10.00 33 110.00 1=strongly agree, 2 = agree, 3 = neutral, 4 = disagree and 5 = strongly disagree
Source: McDonald’s Corporation
This is perhaps one of the plus factors in the success of McDonald’s over the years. As mentioned earlier, the distinct taste of McDonald’s and the experience with parents generally having a good time create a good memory that were invoked when the particular icons associated with the restaurant chain are seen either in television, print or bill boards which may subtly motivate the an adult with such an experience to relive that fine memory .
IV. Improvement of Strategies
The grand strategies to be taken in consideration for this study started with the analysis of the current organizational structure of McDonald’s Corporation which included the global operations and the marketing strategies used in its mainly multinational nature.
The strategy in this plan took place in the rethinking or updating of the necessary processes that involved a lot of options given the wide scope of operations. McDonald’s Corporation varied its strategies from country to country whereas each territory exhibits a different culture. Also, the company updated its product offerings form country to country in the same reason of varying culture, belief, and traditions.
V. Ansoff’s Matrix Analysis
A. Market Penetration
When we speak of market penetration in this case, it meant the further penetration into the market in order to gain a higher market share to cope up with the overall market growth. The fast-food service industry is in a high growth phase and is projected to continue growing in the future. What McDonald’s Corporation did to be able to cope up with this growth is to remarket its existing product offerings which brought in profits to the company using its existing market base. Under this scheme, the company did not necessarily focus in venturing into new markets and developed new products. Although it can still be possible, McDonald’s Corporation focused first in retaining its current market share to be able to expand and cope up with the high demands for growth in the industry .
This was done by using the marketing strategies that may have been used in the past. Strategies such as repackaging of the products such as Big Macs into paper-based cartons and the redesigning of the plastics and paper bags used in its restaurant franchises are among these. This strategy goes after the target market of the company which mainly focuses on the younger segment of the market.
B. Market Development
Market development went deeper into the marketing strategy employed by the company whereas the current product offerings of McDonald’s Corporation are marketed into new markets. The term market here is used to address either a new market overseas or a new market segment locally in the United States. For example, the company found it as an opportunity to open a new store in East Germany before and introduce the Big Mac or Happy Meal there. Eastern Germany was a new market and the market for McDonald’s Corporation there needs to be developed .
On the other hand, an example of market development wherein a new market segment is targeted is the marketing of the current beverage offerings of McDonald’s to the older segment of the market. In the current scenario, the fast-food company targets the younger segment of the market and the move to market its products to the older segments of the market is an example of market development .
C. Product Development
The concept of product development is summarized as developing new product offerings into the current market that McDonald’s caters to. This was seen as a move to capture a fresh market base loyalty for the company wherein McDonald’s could be positioned as a company which values the needs of the customers and adhered to most of their demands. A perfect example of this is the development of the McRice Burger in its Asian franchises wherein the demand to eat rice, which is a staple food in this part of the world, is recognized through the development of a product that caters to that specific need. A high cost was needed in the research and development of new products. However, McDonald’s Corporation has the capability to do so with the benefit compensating the costs in no time.
The concept of diversifying the market offering of McDonald’s Corporation was considered as a phase wherein there is a high risk as well as a high return is observed. Under this strategy, the company developed a new product line-up for a new market in which it would penetrate. This was considered then as a long-term investment for the company whereas the new market could grow bringing in new source of profits for the company.
The example of the Russian market franchise could suit well in this aspect. Under such situation, McDonald’s Corporation set-up a new branch in the country which is a new and unchartered in the 1980s while at the same time brought in new product offerings that suited the local taste of the new potential customers. Profitability under this situation will be made depending on the strategies that the company will take. Should McDonald’s Corporation fail on its assumptions, it could cost the market share for that market.
VI. Addressing Current Company Challenges
The radical change in the fast-food service industry today caused business people to think of innovative ways of catching up with the high-growth of the market. Although it requires the changing of the internal foundations of modern day business, the goal is still to keep up with the rapidly changing environment. To achieve this, the companies that undergo business ventures in the internet, called e-business, streamlined specific strategies in order to gain access to the world of fast business.
The main arguments that the plan addresses was the maintenance of the market share that McDonald’s Corporation has in its global operations. The large scope of operations are then divided into specific segments wherein various competitors which offer the same product offerings that the company has. A specific plan must be put in place in order to address such issues and be able to maintain its dominance among the other companies that serve as a threat.
McDonald’s Corporation operates in a centralized environment. Meaning, all decisions that are to be implemented in its global franchises all come from the mother office in the United States. Although controlling here is made easy, the efficiency of the decisions made by the central management especially if it involves culture and regional competition could go out of bounce. The management of McDonald’s Corporation would rely on smart assumptions. However, once the assumptions made by the central management fail, everything else could go wrong.
VII. Being Part of the American Culture
McDonald’s Corporation along with its restaurant chains was well expressed as an important export product in itself that the United States has. The culture of dining out in a fast service restaurant can be attributed to the company. However, the culture that McDonald’s has been successful in spreading the world over also needs to adapt to certain cultures in order to penetrate specific markets and gain market shares. Much can be said to the adaptation done in India wherein sensitivity to the culture is prioritized. India is a Hindu dominated nation which pays a lot of respect for Cattle which they consider as sacred.
McDonald’s uses beef in the majority of its burger product offerings and also uses beef essences in their fries. What McDonald’s did is to modify its product offerings for the country eliminating all of the products which may be deemed offensive to the local beliefs of Indians. As a result, McDonald’s retained its market share in the emerging Asian country. This is a perfect example of how a company adapted to the social structure of a place. McDonald’s Corporation has been doing this in all of its branches around the world and so far has been successful in doing so.
VIII. Marketing Strategies Employed
McDonald’s Corporation is known to adapt well under the situations of the countries and territories it operates in. However, this was proven not to be enough to sustain and surpass given the entry of new competitors which has the same concept as the company has. As a matter of fact, McDonald’s are the market leaders in all of the markets it ventures itself to but one. It only ranks number two in the Philippines wherein a local player, Jollibee Foods Corporation has the majority of the market, 3:1.
The reason behind McDonald’s marketing strategy is to somehow decentralize the planning and implementation of certain strategies that are inherent to a place or a territorial region. This provided an easy decision making for the company as well as in addressing specific needs that may be pertinent to a region but not on the other. Under such restructuring, McDonald’s operations were then divided into certain operational clusters where cultural and societal considerations including competition could well be addressed.
This move saved costs for McDonald’s Corporation since they will be able to implement specific plans to each regional cluster and made policies according to the needs and demands of the specific market. For example, South East Asian country operations will be unified into one to meet the cultural considerations of the region as well as offset the growth of competitors evident in this region.
After a thorough analysis of McDonald’s marketing strategies, the company aimed to decentralize the global operations of the company into territorial clusters. The rationale for the decision was brought about by the efficiency in the distribution channels of the company. Under such structure, the specific product offerings that McDonald’s offered were specific to the needs, demands, and considerations of the territorial cluster. By doing this, McDonald’s Corporation could address specific questions of competition and market share sustenance according to what ought to be prioritized. This created a value chain for the company which needs to cope up with the creative demands of the industry in order to survive.
The implementation plan for the clustering took place in one fiscal year. During this time, the framework of the clustering was laid according to the strategic premise of the management and according to the viability of the markets to be unified. It is in this manner that McDonald’s still did the plan without causing an internal managerial rift among its employees and so as not to shock them with the decision.
One factor of the industry is that it is impossible to control is the possible outcome of the future in this fast-paced industry, particularly the subject of the long-run. Considering the fast-food industry which involves a lot of creativity, the creative industry is a very volatile industry, the changes that may be predicted may occur in a matter of weeks; a shorter time span than any other markets or industries.
However, this would mean that McDonald’s Corporation sought development while at the same time, tried to adjust with the rapidly changing environment of the industry that they belong to. This appeared to be very hard on the company itself since looking for a possible trend should be decided upon immediately to avoid other fast-food service providers from setting the trends again and gaining the comparative advantage from the company.
A company obtained the advantage of the trend after they learned to adjust and then produced superior quality offerings along the line and after the company itself established the trend. The main drawback of this is that the company would only have to think of setting new trends in order for it to gain comparative advantage against other firms. The industry that it moves on tend to be very much dependent on setting new trends that’s why they have the weakness of having to set rather than develop.
IX. Marketing Contingency and Limitations
After the strategy was proven to be effective, the company would stick to a centralized global organizational structure and implement a new marketing scheme which in general would create significance in the global operations of McDonald’s. A high efficiency in terms of controlling concepts could be applied here as the decisions that the company would take would only come from one source.
On the question of sensitivity towards cultural considerations, the company will be able to tackle the decisions without bias whereas they would still be able to study the case to be addressed given their capacity to decide and make the goals of the company into reality. The question that lies here is up to what extent should the situation hold?
The strategic planning process for McDonald’s Corporation was designed for environments of known stability. The planning process this paper presents was made in such a way that it would respond to sudden changes in the environment; not simultaneous. The more unstable the environment would be, the more problems it would cause the planning process. It can even result to a failed plan once the plan proves to be of a nature that is not as adjustable as any other plan.
Another drawback is that sudden changes in the environment would not suit this process. The strategic planning process was made in such a way that the forecasted events and issues would either occur or not occur . The accuracy of the plan is affected by the accuracy at which events are forecasted; unplanned changes in the environment would fully disrupt the sequences involved in the plans designed.
Furthermore, the designed plans are also not made to come up with all the solutions to all possible events. It also does not include a contingency that would surpass any unforeseen obstacle in the path of success of the plan. For a fact, several other companies that formulated a strategic plan failed to foresee all the circumstances that can happen; leading to the breaking of the plan and the downfall of the project. In cases of volatile environments, the strategic planning process is not as practiced as much as the adjustment of the companies.
As for the hypothesis that there is a strong negative public opinion on McDonald’s product lines and corporate practice, there are items in the research which tends to support this contention such as the increased concern for good health but this does not necessarily translate to negative perception of McDonald’s . Public opinion tends to be more complex than simple likes and dislikes as there could be ambivalence or grey areas and more important and relevant to McDonald’s perception could change more so if the public see efforts on the part of McDonald’s to change in response to criticism. F
ortunately though, McDonald’s Corporation was successful in using marketing strategies in turning these weaknesses into strengths. Also, the company was successful in distinguishing itself as part of the local culture in every country it operates in.
One thing is sure given the documented responses of the McDonald’s. One, there was a clear move to promote greener and healthier image. This move given the corporate influence of the giant food chain affected the other players in the food industry especially the meat producers as evidenced by the call for the reduction of use of antibiotics in animal care and call for strict adherence to country rules and regulations. Second, more active public relations were done in the objective of clarifying the fast food issues.
Another conclusion we could make based on the findings is that public opinion despite global issues and concerns on health and environment is to a great extent relative to country and culture and such situation is plus factor in the global setting wherein McDonald’s plays . But nonetheless the worry is there that in a globalized setting and with the web and IT which make communication easier issues and concerns have a way of creeping into the popular psyche.
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