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Strategy without an implementation plan is as good as having no strategy at all. This dynamic program ensures you'll know where and how to compete and gives you all the tools you'll need to get you thinking in the right strategic direction. The purpose of this study is to conduct an exploratory investigation of the relationship between strategic planning, implementation and business performance of McDonald.
1. Executive Summery
The main goal of a strategic planning process is to determine where a company or organization is going, and the steps needed to get there. Strategic planning also allows planners to think of "what if" scenarios, and then plan contingencies. Along these lines, the five steps are reflection, validation, collaboration, action and implementation.
Reflection gets people together to determine where the company is now, and where it needs to be. Validation goes a little more into the meat and bones of how a company is run, and determines how and if plans, goals and objectives will fit the strategic alignment of the company.
Collaboration is when stakeholders, employees, customers and everyone else involved with the company put their two cents in toward getting a plan together and ensuring that everyone is on board with the vision.
Action is taking all of that great information and putting in together in a workable plan, and implementation / action is when the plan and its goals and objectives are put into play.
Along these lines, a strategic plan can move toward positioning products for the best competitive advantage. If we take the case of Mc Donald's, for example, which is rolling out a new type of package for its food, the strategic planning question likely asked was how they could change the packaging to reflect the idea that people are trying to take better care of themselves. From there, no doubt, there was feedback from everyone, the consumer surveys to the focus groups and customers, and new packaging was born.
With this example in mind, the roles people play (and the decisions they go through) in a purchase definitely should influence strategic plans when it comes to any kind of marketing communication.
2. COMPANY BACKGROUND
It is very amazing story of the beginning of the McDonalds. Mac and Dick McDonalds were two brothers who first opened a restaurant in 1940 in San Bernardino California USA. No one had thought about it that this restaurant was going to make a history. In start they used to sell very nice food cheaply and quickly. As far as foodservice retailers of the world are concerned, McDonalds is considered as a market leading food provider in the world. It has more than 31000 restaurants in the world. It would be hard to find that person in the world who wouldn't know about McDonalds. People of all ages know what McDonald is. McDonalds serve more than 58 million people in a day in more than 118 countries. If we go in deep analysis, it comes to know that about 75% of the McDonald's restaurants are operated and owned by local persons. McDonald's sale in 2006 was more than $57 billion in all over the world which is a record. In 1955, Ray Kroc applied the formula of success by expanding McDonalds in all over the world. He achieved this goal by offering franchises. This key of success really worked, even though, now more than 70% of the McDonald's restaurants are run on this rule and principle. In UK, McDonalds opened first restaurant in 1974 and first franchised restaurant in UK was opened in 1986. It was due to successful achievement that McDonalds is operating about 1190 restaurants in UK. They have a big series of employees too. About 70000 people are working in McDonalds. In all restaurants of McDonalds, 51% restaurants are working as franchises. McDonald's has twice the market share of its closest U.S. competitor, Burger King, representing 7% of total U.S. According to the current survey, McDonalds opens one restaurant after every three hours which proves the popularity of the McDonalds in all over the world. As it is already mentioned, most of the restaurants of the McDonalds are operated by the franchises. Fees, royalties, and rent are paid by the franchises for the corporation revenue. From 2005 to 2007, total revenue of McDonalds was exceeded by 27%. McDonald's important products are, cheeseburger, hamburger, french-fries, chicken products, desserts, milkshakes and soft drinks. Due to the criticism in western countries on the healthiness of the foods, McDonalds modified their products by bringing some healthy and nice stuff like salad, wrap and fruits etc. in marketing point of view, McDonalds has got good marketing strategy in their policies and systems. They are offering good customers services which every customer like. They normally have good, qualified and well trained staffs which gives them an extra edge on other organizations. Their burgers are always taken as examples by the people. They only believe in quality of the products.
With the increase in the quantity of restaurants, McDonalds is now becoming unbeatable food Organization in the world which is a big challenge for all the food companies of the world.
- To be the best and leading fast food provider around the globe
McDonald's brand mission is to be the customers' favorite place and way to eat, and improve McDonald's operations to provide the most delicious fast food that meet their customers' expectations.
McDonald's values summarized in "Q.S.C. & V.". Provide good quality, services to customer. Have a cleanliness environment when customer enjoys their meal. The value of food product makes every customer is smiling.
(Q= Quality, S= Service, V= Value, C= Customers)
The objectives are the areas of emphasis within the Association. Rather than specific statements with a specific goal, objectives state that the Association plans to continue to do quality work in the following areas. These objectives or areas of emphasis need to be attained by discussion and review of the organization's current activities as well as activities in which it would like to participate. At McDonald's the main objectives are
- To serve good food in a friendly and fun environment
- To be a socially responsible company
- To provide good returns to its shareholders
- To provide its customers with food of a high standard, quick service and value for money
These need to be both long-term and short-term goals; six months, one-year, three years, and ten-year goals need to be set so that the strategy for reaching these goals can be outlined in the plan. Management at McDonald's recommends setting the long-term goals first and then setting short-term goals: those goals which can be reached as steps to attaining the long-term goal.
2.6 Action Plan
The Action Plan should be designed after the main goals and objectives have been set in order to attain the mission in a straightforward and measurable way. With an Action Plan, the goals themselves can be obtained. Without the Action Plan, and the measures it entails, it would be impossible to implement the plan and measure its success. Being able to measure success would certainly be important both for maintaining our tax status as a not-for-profit organization as well as to explain the use of it to the membership-at-large.
2.6.1 Short Term Plans
Their plan is to deepen their connection with the customer by providing great service ad experience "in every restaurant, every time." Their usage of different activities allows McDonald's and the Customers to have a relation between them.
1.6.2 Long-term Plans
Use a Systems-based approach to understand how our supply chain impacts and is affected by the natural and social world and to help us find solutions.
Maintain a long-term view when supply planning.
2.7 Management Summery
The company's management philosophy is based on responsibility and mutual respect. Concrete Fabricators maintains an environment and structure that encourages productivity and respect for customers and fellow employees.
Management at McDonald are committed to:
- Providing a safe work environment to protect employees, the employees of customers and subcontractors, and the public
- Supplying safe products for customers
- Continuously improving the company's safety program to reduce the risk of accidents and occupational illness in a changing work environment
- Encouraging employees to participate in accident prevention programs, and take personal responsibility for their, and their co-workers', health and safety
- Employing properly trained personnel, equipment, and procedures necessary to enable regulatory compliance, and contribute to the high safety standards for our industry
- Monitoring workplaces, enforcing safe work practices, and communicating the company's safety performance to employees and other stakeholders
- Making safety a value-added service that the company provides to its customers
2.8 Aims & Objectives of McDonald's
Why are Aims & Objectives important in a business? In a business when a number of brains are working together, there are always different views on a certain aspect, therefore aims and objectives are used to help them focus on one view on the aspect which either seems right or is right. Aims and Objectives help an organization grow; it is used as a guideline, a plan and a goal. What the organization is heading for and how it is heading there and where it is heading? All the answers for these questions are answered by Aims & Objectives.
The Main Objectives of a Business are: -
Sales - Sales revenue is the total amount of money a company has earned by providing their service or selling their stock.
Growth - An increase in the Business capacity to produce more stock or provide better or greater service.
Profit - Residual value gained from business operations after cutting out expenses such as stock cost etc.
Customer Satisfaction - Providing service to customers to their satisfaction level such as hygienically clean place or high quality food.
It's what I eat and what I do...I'm lovin' it
With millions of customers around the world, McDonald's recognizes the importance of conserving natural resources and the benefits they provide for current and future generations. McDonald's also recognize that their long-term business goals will be better served if they help to protect the natural and community resources that support and are affected by McDonald's activities.
McDonald's have a long-standing record of industry leadership in environmental conservation. McDonald's achievements have been recognized by such organizations as the Audubon Society, Conservation International, Keep America Beautiful, the National Recycling Coalition, and the U.S. Environmental Protection Agency.
McDonald's approach focuses strategically on their major environmental impacts and is guided by world-recognized independent experts.
2.10 McDonald's Supply Chain
Taking our environmental commitment to the next level, we are incorporating socially responsible practices into our supply chain.
Working with Conservation International, McDonald's have launched an initiative to integrate a broad range of socially responsible practices into their worldwide food supply chain. This is a significant strategic advance in their establishedresponsible purchasingprograms. The guidelines that provide the framework for the initiative address key natural resources and impacts, such as water, air, soil, and biodiversity.
McDonald's have opened the world's first HFC/HCFC/CFC-free restaurant, in Denmark, to test the feasibility of using various types of equipment that use no refrigerants associated with global warming.
3.0 Analysis of Strategic Environment that have Impact on McDonald's Profit over the Last Few Years
The word strategy has become one of the most common and badly used words in business writings. Everywhere we look we see terms such as business strategy, cooperate strategy, marketing strategy, marketing strategy, strategic marketing, product strategy, pricing strategy, advertising strategy and even discount strategy.
As far as strategic environment of McDonalds is concerned, they have retained good strategic policies for their betterment. This is because of their strategic environment system; they have been number one in the field of food services. For the control of their internal and external environment, they have made a solid and high quality planning.
3.1 PESTEL ANALYSIS
In analysing and examining the strategic environment, it is important to find those factors which change the demand and supply level of the organizations. If we analyse some issues, it comes to know that there are many factors which bring the change in the organizations in different aspects. To analyse them is one of the main and important task. There are many scales to measure and find them. PESTEL analysis is one of those analyses or framework which could categorize major environmental influences on organizations. PESTEL is a combination of six words.
The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans.
3.1.1 Political factors:
Political factor is an important factor of any business strategy environment. There are some of the political factors are government stability, Environmental protection laws, foreign trade regulation, Employment laws, social welfare policies and Monopolies legislation.
They all have a great role in the organization. McDonalds has been performing very good under all political circumstances. They have a good reputation in all the countries that's why all the government policies don't affect on McDonalds. They pay taxes to all countries, so, no one has any such complaint about this. The main quality of McDonald is that they easily adjust in any political factors. Sometimes, government decisions can be a major factor of downfall of the company. Most of the businesses cannot survive and they go out of the business field. Governments of all the countries respect McDonalds, that's why McDonalds have no complaints over government policies. Political de-stability also affects the businesses. Many organizations are ruined in those areas where there is always a political problem. McDonalds have made a very effective strategy to handle these issues; they open their branches in those places where they can predict that there would be no problem there.
Their management make those policies which help the organization in all fields. They take care of the Employment laws of those areas where they work. So, political factors don't affect the McDonalds by providing them good services and facilities.
3.1.2 Economical factors:
Economical factors play main part in the organization. Economic conditions affect how easy or how difficult it is to be successful and profitable at any time because they affect both capital availability and cost, and demand. Economic factors consist of money supply, inflation, unemployment, interest rates, GNP trends, Energy availability and cost, business cycle and disposable income.
McDonalds has been a successful organization under all circumstances of economical factors. Economy normally effects the organizations but this is because of the strategy of the McDonalds, they are going high and up. They have helped the society of the specific areas where they work by giving them job and employing them in their organization. Workers not only come here, they are also trained by the trainers of the McDonalds.
3.1.3 Social factors:
This is also one important topic of PESTEL analysis. Social environment is actually based on the taste, life style changes, education and culture of the typical place. It is obvious that people of different countries have different taste, culture, and choices. McDonalds has taken care of people of all the countries and they make their products according to the need and culture of the particular areas.
Main examples are Muslim countries. Muslims don't eat pork or ham. McDonalds is very popular in hamburger. They know the needs of the Muslim countries. They don't make hamburger in those countries. Even in UK, in a lot of majority of Muslim areas, McDonalds have opened halal shops and restaurant in order to fulfil the needs of the Muslim people.
3.1.4 Technological condition:
Technology is very important aspect of the organization. In the success of the organization, a good technology system plays a major part.
McDonalds being a worldwide organization is aware of its importance. They have launched a well equipped and modern technological system to compete with the competitors. They have a good machinery system to make their products. They know their challenges very well. They have good and organized system of taking the products to the doors of the customers. For this purpose, they have very nice and speedy system of motor cycles and cars. They don't want to lose their customers at any cost. Technology wise, McDonalds have no competition in this world in the food provider companies, when new innovation come in the market, McDonalds try to be on the first buyer of that new innovated machinery to facilitate the customers in the right and best way. It is always hard to use the new innovation but the management has those people in their staff who educate the rest of the worker to get the know how of that technology.
3.1.5 Environmental Factors:
Environmental factors normally consist of environmental legislation, energy consumption, environmental protection law etc.
McDonalds are doing their best to organize these things in their organizations. They work in those places and areas where they find the facilities of these important things.
3.1.6 Legal Factors:
These factors depend on those processes which have the characteristics i.e. Health and safety, Employment law, competitive legislation and labour legislation etc. McDonalds are taking part well to handle all of these challenges very well and effective to keep alive in the competition. There are some very popular restaurants around them i.e. KFC etc. but they are doing very well.
3.2 PORTERS FIVE FORCE MODEL
Michael Porter's theory is known as 'five forces model'. By using this theory or model any firm can get a strong grip over the rival company and firm. It is very useful to explore the environment of the area where the company operates.
McDonald is a chosen company which is now explained with the help of the Porters force Model.
- Threat of New Entry:
- Power of Suppliers:
- Power of Buyers:
- Availability of substitute:
- Competitive Rivalry:
It is easier for the company to come in the market but very difficult to compete with the big companies like McDonalds.
Like other big multinational companies McDonalds have also been suffering with this problem, but this is just because of the clean and wise strategies of the McDonalds, they are still a market leader. There are many other food companies who have almost similar taste and products. KFC, Wendy's, Taco Bell and Subway are the major competitors of McDonalds which have had some impact on McDonald's profit. A lot of new companies are introducing in the market to compete the McDonalds but this is because of the commitment of the McDonalds with the people, those companies do not survive. A lot of temptations are always given by the new businesses to the customers by offering cheap products but customers don't compromise on the quality of the product. For McDonalds, quality is everything
Sometimes organizations have to face a big difficulty to get a reliable supplier. This problem is seen in those companies where there is no substitution. Those companies who don't have their own supplier are always blackmailed by the supplier. With the grace of God, McDonalds don't have such a problem. They have their own materials. Suppliers feel happy to deal with the McDonalds as they know that McDonalds have various choices.
This is how much pressure customers can place on the business. This always happens in those businesses that have a small number of buyers or in those places where there are few customers of that product. McDonalds don't have these problems. They have developed such a business strategy which helps them in this department. First, they do not have limited customers. Every one feels proud to be a customer of McDonalds. About 58 million customers are served daily by the McDonalds. Second, they have opened their restaurant in those places where there is a big population seen.
Sometimes, it is seen that substitute of the product is found in the market. For example, if some one eats mutton and beef suddenly prices get higher, so, he finds a chicken as a substitute of the product. This is one of the areas where McDonalds are facing tough time by cheap restaurants like chicken cottage or DIXY etc. but still plenty of people don't compromise on quality. They know that McDonalds means 'a place of quality food products'. Media and education have made people wise and intelligent. They don't compromise on health weather they have to pay a lot for this.
Sometimes rivals work aggressively. They don't care about their own profits and benefits which cause a big problem to their competitors. Those companies only try to work to make their name in the market. McDonalds have also very power rivals like KFC, Wendy's, Taco Bell and Subway. They sometimes organise policies to compete McDonalds. A lot of people have got used to the taste of McDonalds. Those people pay McDonalds more but don't do in other places.
3.3 KEY FACTOR OF SUCCESS
Success is an achievement and mission of an organization. Companies are successful when they get good profits in the market. McDonalds is no doubt a successful organization of the world who has been earning profits in billions. There are always some factors which help the organizations to be successful and profitable organizations.
- Customer's satisfaction:
- Product or service development:
This is one of the most important aspects of the success of the business. If an organization wants to be a successful organization, it should have enough money involved in making the shape of good businesses. Sometimes, arrival of competitor becomes headache for the company. Sudden planning helps them to tackle the situation. The most important way is to low the prizes to attract the customers.
Money for McDonalds is no problem for them. They can take sudden steps easily. Most of the people consider McDonalds a bank of money and profits. Even though, they can afford to serve customers free of charge.
Customer benefits are at the roof of marketing and selling, because, in order to satisfy their needs, customers are not so much looking for particular products and services, they are looking for the benefits that these may be able to provide. If two or three identical products have the same kind of benefits but prices are different, customers, obviously, tries to take the product which is the cheapest of all. This shows that prices are also the way which can solve the problem of the customers.
McDonalds are adopting the same policies. The most important thing of the success of McDonalds is that their customers are loyal. They don't go anywhere because they have maintained a very good standard over their customers. So, customers of the McDonalds are very satisfied with them.
It has been mentioned many times in this assignment that quality should be the main part of an organization for their long lasting success. Most of the customers don't compromise on quality. This is also a very important part of marketing mix.
McDonalds have no doubt a very good quality standard. They always serve the customers high standard products. This is one of the important areas of the success of McDonalds.
It is very necessary to keep the products and services up to date with the time going. If organizations don't bring innovation in their fields, they get ruined, so, products and services should be developed with the time change.
McDonalds of 1990s and now are completely different. They used to serve some specific products before but now they have become a complete giant in the field of food. People of all levels like them, as; they have variety and well developed food and services.
4.1 Summarize the findings of analysis, the researcher recommend a future corporate strategy that would be suitable, feasible and acceptable to the company.
After big discussion about the McDonalds about the various part of its success, it is very difficult to express the strategies in a short paragraph, however, some of the approaches of the strategies are discussed below and after those strategies the most appropriate approach of strategy is given at the end of these explanations.
- The classical approach:
- The evolutionary approach:
- The processual approach:
The classical approach to strategic environment formulation is probably the oldest strategy approach. The profit maximization is the major key of an organization and the job of the strategies is then to position the organization into those markets where most profits can be made. The underlying belief is that strategy is best created through a rational and intellectual analysis, often carried out in the isolation from the normal ups and downs of any market place. Most of the scholars strongly believe that high quality planning is what is needed to take control over both internal and external environment. Strategy, based on objective analysis and "rational economic man" will make the difference between success and failure in the long term.
The organization cannot control the environment in which it operates- markets are more power full than the company. Since large organizations tend to be slow to react or respond to change, the power of an all-embracing strategy may be overrated. They even argue that investing in a long term strategy could be counterproductive for the organization. Since best result always be achieved by matching the needs of the environment now, the organization investing in the long term can always be undercut by the organization focusing on short term cost reduction processes.
An effective and practical corporate strategy will only from close involvement in every day operations of the organization. The environment is too strong for it to be overcome through intellectual analysis alone, but on the other hand seem to be less sure that the marketplace is sufficient enough to ensure profit maximizing results. Every organization is a coalition of individuals with their own personal objectives and ambitions, and, cooperate goals are therefore the result of a bargaining process driven by profit and non-profit motivated values.
Planning which is not followed by implementation is an exercise in futility, what is the point then, strategy is a craft rather then a science and business strategy is best created by a series of small steps that slowly emerge into a pattern. Without the right competences in place in an organization many strategic plans cannot be implemented anyway. Therefore the whole process should be one of slow development, construction and consolidation. This corporate strategy is most appropriate, acceptable, feasible and suitable for the company for the future I recommend because no one can predict about what happens in next day, so corporate strategy should consist of the daily work task, it could help the organization a lot.
5. References & Bibliography:
- Abell, D. and Hammond, J. (1979), Strategic Market Planning, Prentice Hall.Abell, D.F., and Hammond, J.S., (1979), Strategic market planning, Englewood Cliffs, N.J.: Prentice-Hall, P.10.
- Dunfee, T., Smith, N. and Ross, W. (1999), 'Social Contracts and Marketing Ethics', Journal of Marketing, 63 (3), pp. 14-32
- Fred David, (no date). Strategic Management concepts and cases 12 edition