Mc Donald`s Corporation Essay, Research Paper

McDonald’s Corporation is the world’s leading food service organization. The

corporation started out as a small drive-through in 1948 by two brothers, Dick

and Mac McDonald. Raymond Albert Kroc, a salesman, saw a great opportunity in

this market and advised Dick and Mac to expand their operation and open new

restaurants. In 1961 Kroc bought out the McDonald brothers. By 1967 McDonalds

expanded its operations to countries outside the U.S.A. This unyielding

expansion led the Corporation to open 23,000 McDonald’s restaurants in 110

countries in 1994, producing $3.4 bn in annual revenues. In addition, McDonald’s

opens a new restaurant every three hours. Also, McDonald’s has twice the market

share of its closest U.S. competitor, Burger King, representing 7% of total U.S.

eating-out sales. Similarly, McDonald’s serves about 1% of the world’s

population on any given day through its 23,000 restaurants internationally.

"Big Mac", the world’s most sold hamburger was developed by Jim

Delligutti in 1967 to feed construction workers. ‘Big Mac’ is the biggest

attraction and backbone of the corporation. Moreover, McDonald’s maintains its

competitive advantage by constantly creating new items to add onto its menu.

This shows us that McDonald’s practices an analyzer type of strategy,

introducing new items and defending its existing ones. McDONALD’S MISSION AND

VISION: "We serve people with good quality food, fast and at low

cost." McDonald’s vision is to dominate the global food-service industry.

Global dominance means setting the performance standard for customer

satisfaction and increases market share and profitability through successfully

implementing our convenience, value and execution strategies. THESIS STATEMENT:

To have a clear picture of McDonald’s corporation we need to look at its Task

Environment, which includes its: .Customers .Competitors .Strategic Allies

.Suppliers .Regulators We shall also explore McDonald’s Workforce Diversity and

its Total Quality Management. CUSTOMERS: Customers are those who pay money to

acquire an organization’s goods or services. For many years McDonald’s mostly

targeted the young people, however this has changed in this decade; McDonald’s

has turned towards a more general market. By doing this McDonald’s concentrates

on the family, targeting a diverse market which includes consumers ranging from

children to elderly people, using products such as the "happy Meal"

for children and "Egg McMuffin" for the elderly. McDonald’s also

realized the changing world we live in and the need for healthier food, since

there is an ever changing demographic group, who demand fast, top quality food

that is low in calories. McDonald’s responded to this opportunity and introduced

a new and innovative product. This new product was a regular hamburger that

tasted like the real thing but was made of plant material like Soya beans. This

same product also targets another demographic group, vegetarians. McDonald’s

mostly uses psychographic segmentation targeting the working and middle classes.

These are the people that are more susceptible to enter a fast food restaurant,

since these are the people that lead a fast moving life and thus require a fast

meal. In brief McDonald’s customers are of all classes, but largely working and

middle classes, and people of all ages. COMPETITORS: A competitor is an

organization that competes with other organizations for resources. In our

findings, McDonald’s has two types of competitors in the Lebanese market:

..Indirect ..Direct Indirect Competitors: Indirect refers to firms producing one

or two products that compete with McDonald’s products and therefore be a threat

to the company. We have identified four indirect competitors: Henry J. Beans,

T.G.I. Friday, K. F. C. and Popeye’s. Henry J. Beans offers hamburgers and fries

on its menu, therefore competing with McDonalds for customers of these products.

However, Henry J. Beans also known as Hank’s is a more of a bar restaurant and

therefore a hang out place, as a result charging more money for its products.

Hank’s targets middle to upper class customers, so where most of these customers

overlap are in the middle class. T.G.I Friday is another indirect competitor

reflecting the same characteristics as Henry J. Beans. Other indirect

competitors are K. F. C. and Popeye’s, both competing for the chicken nuggets

and fries customers. In brief, Hank’s and T.G.I. Friday’s competes with

McDonald’s by offering hamburgers and fries, whereas K. F. C. and Popeye’s

compete with McDonald’s by offering chicken nuggets and fries. Direct

Competitors: Direct competitors refers to firms producing the same products or

services as McDonald’s does. Here we found that McDonald’s has three direct

competitors: Burger King, Wendy’s and Hardee’s. McDonald’s closest rival is

Burger King, which operates a total of 9644 restaurants in 110 countries.

Wendy’s is McDonald’s second largest rival, which is also in the fast food

business, where Wendy’s operates 6776 restaurants in 32 countries. Hardee’s,

McDonald’s third largest rival is also in the fast food business and is the only

direct competitor apart from Juicy Burger in the Lebanese market. Hardee’s

operates 3080 restaurants in 20 countries. As we have illustrated McDonald’s

faces stiff competition from three major competitors, Burger King, Wendy’s and

Hardee’s. Suppliers: Suppliers is an organization that provides resources for

other organizations. McDonald’s has practiced a backward vertical integration,

by replacing most of its suppliers. It has done so for two reasons, 1) To reduce

costs, and 2) To ensure that its products are of top quality. These supplies

include beef and milk to be used in its products, which it gets from its farms.

Other suppliers include local grocery stores that supply McDonald’s with fresh

vegetables. Soft drinks are supplied exclusively by Coca-Cola, which is also its

ally. McDonald’s supplies also include raw material such as flour, sugar, yeast,

etc.,. Strategic Allies: A strategic ally is an organization working together

with one or more other organizations is a joint venture or a similar

arrangement. McDonald’s has formed a strategic alliance with: Walmart, Chevron,

Amoco, Disney and Coca-Cola. Walmart, which is a large shopping mall chain in

the U..S. and several neighboring countries, is allied with McDonald’s, which

offers great opportunities for both companies. McDonald’s has restaurants in

each Walmart, offering its customers conveniences and excellent fast food at a

low cost ease of accessibility. McDonald’s corporation describes it best in this

scenario: "Imagine a busy shopping day at your local Walmart and having the

ability to sit down with the kids and enjoy many of our McDonald’s favorites,

like ‘Big Mac’ sandwiches, world famous fries and kids favorite ‘Happy Meal’.

McDonald’s understands your busy lifestyles and the demands on your time. That’s

why we are making it easier for you to do more things in less time."

McDonald’s is engaged in an alliance with two petrol companies, Chevron and

Amoco. This alliance represents the ultimate in convenience. At these locations,

one finds a full-menu McDonald’s restaurant with dining room service. Nothing

can be more convenient, because one can fill up the car with gas and get a meal

all in one stop. Another important alliance that McDonald’s has is with Disney.

Here McDonald’s has the sole right to sell fast food in Disney’s theme parks

around the U..S. and other Disney operations in the world. Under the terms of

the agreement, McDonald’s will operate restaurants and Disney will promote its

films through McDonald’s. Regulators: Regulators are groups or governmental

agencies that can control and influence the organization’s policies and

practices. An example is Lebanon a few years ago when the U..S. government

banned all U..S. citizens and organizations to come or operate in Lebanon.

Another good example would be the embargo imposed on Iran where U..S.

organizations were banned to operate in this country. Another group of

regulators called interest groups can and have influenced McDonald’s to treat

its animals (cow and chickens) in a much more humane manner, which resulted in

the restructuring of McDonalds’ farms throughout its operations around the

world. The summary of the task environment which is by definition a specific

organizations or groups that affect the organization, which includes

competitors, suppliers, customers, strategic allies and regulators. Here we

described the task environment’s importance to McDonald’s, where McDonald’s

faces both opportunities and has threats in its environment. Workforce

Diversity: Diversity exists in a group or organization when its members differ

from one another along one or more important dimensions such as age, gender, and

ethnicity. Diversity is very important for McDonald’s. Here millions of teens

start out by working at McDonald’s. Here some of the teenagers move on to get

various jobs such as movie stars, skilled workers, famous athletes, management

positions and other educated positions in society. At McDonald’s two thirds of

middle and upper management started out as crewmembers in a McDonald’s

restaurant. There are opportunities for everybody in McDonald’s from teenagers

to elderly workers, and from people just entering or reentering the job market.

Moreover, McDonald’s offers special jobs for people who have disabilities, such

as people who are in wheel chairs and those who must use crutches permanently.

Furthermore, McDonald’s offers their workers flexible working hours. For

example, hours for people seeking just a few hours of work per week and those

who seek full time positions. The work force at McDonald’s also have some say in

their working hours, such as if they prefer the morning, mid-day, or evening

shifts in the restaurant. So, McDonald’s uses diversity to create a good

atmosphere in their work places among workers and management. Here they offer

work to all kinds of people without discrimination and the workers have flexible

hours that provides customer satisfaction. Top Quality Management: Quality is

the totality of features and characteristics of a product or service that bear

on its ability to satisfy stated or implied needs. For McDonald’s, total quality

management (TQM) involves that the employees are at work on time, are neatly

dressed, and are clean. The employees must make sure that the customers

constantly receive safe food, which implies that the employees must wash their

hands often to remain clean. Moreover, the employees must follow certain

Standard Operational Procedures, so the customers always receive exceptional

quality and service. This includes the employees using plastic gloves when they

prepare the food, that the meat and fries are properly fried, and that the

vegetables are thoroughly washed when used in the food. Another TQM is that the

employees rely on teamwork and high energy to get the job done, so that the

customers do not have to wait long for their food. Furthermore, McDonald’s

management emphasizes that their restaurants should be clean. This involves that

the restaurants are tidy, sparkling and spotlessly clean. As McDonald’s

illustrates the quality is that the employees delivers fast, accurate and

friendly service with a smile. CONCLUSION: In conclusion, we have explored a

large corporation such as McDonald’s and shown how its Task Environment,

Workforce Diversity and Total Quality Management can have a profound effect on

the organization. In order for such a corporation to remain a leader in its

field, it must stay growth oriented and constantly have contingency plans to

overcome turbulence. Another important factor is the type of strategy that it

follows. McDonald’s, Daimler Chrysler and Benz follow an analyzer type of

strategy, constantly introducing new products while defending their existing

products.