Businesses exist in a very competitive environment and competition happens whenever two or more parties make every effort for a goal which cannot be shared. For example, supermarkets are in competition with each other to offer the best possible value for money goods, and to offer the most appropriate variety of products for their customers. Businesses battle in many ways.
One of the most noticeable ways is over price. Within a market businesses are faced by direct competitors. These are firms that produce the same or very alike goods. However, most products are set apart in some way. For example, although soap powders may look highly similar each will offer some form of special ingredient that sets them apart.
A direct competitor is a business that produces or sells a product or service that is the same or highly comparable to another in the same market. Indirect competition happens when firms compete for the same amount of spending, although they might be in different sectors of the same market or in different markets. Every growing or a successful organization has some competitors. If we take an example of McDonald's and Burger King:
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In making an analysis of McDonald's, the first issue we will examine is their company goals. McDonald's has a goal of one hundred percent total customer satisfaction. They do understand that this goal is not always achievable. If for any reason they do not meet that goal, they will do whatever it takes to correct their mistake.
McDonald's has a second company goal that sets them apart from most of their competitors. One of there goals is the principle of giving back to the community and that remains one of their major goals today. If we take a look at McDonald's Guarantee states, food will be hot and your service will be fast and friendly. The customer service of McDonald's focuses on one customer at a time. They are much more concerned with the quality of the service rather than the speed. Employees usually take one order at a time and then prepare that order while the customers wait. After the current customer is satisfied, they move on to the next customer. This process allows great accuracy and quality but lacks speed. Employees in McDonalds work at a quick speed but it seemed like they had no time for customers. They acted as if it was a burden for them to stop and answer a simple question or refill a drink
Where as Burger King Wants to individualize each customer's order and provide the fastest service possible. Burger King's policy is to give the customer many choices and to accurately and quickly provide whatever the customer chooses. This policy is reflected in their slogan which is YOUR WAY, RIGHT WAY.
Operating under this rule makes it very easy to achieve their goals. Through the various choices they give it is easy to customize each order. Burger King's procedures are also consistent with their goals. In order to individualize each order they provide customers with many options when ordering. Some options include fries or onion rings, cheese, bacon, mustard, ketchup, mayonnaise, lettuce, tomato, pickles, and onion. The customer can pick any mixture of these options that they wish. Burger King takes customer orders on a continual basis. One employee takes the customer's order, the customer then moves down the line where another employee is preparing the order. Meanwhile, the original employee is taking another customer's order. Customers also get their own drinks while they are waiting for their meal. This makes service much faster because employees do not have to prepare drinks. They also provided relaxing music for customers to listen to while dining. Burger King has got more than sufficient communication and leadership. Employees give the customers feedback on their orders. Each customer receives a receipt, which enabled them to double-check their order. The employees also read the order back to the customer before handing them the order. In terms of leadership, there is a manager to sort out things.
Organizational Goals Both McDonald's and Burger King share the same basic organizational goals of profitability, sales volume, fast and courteous service, and cleanliness. There are slight differences to these goals by both companies.
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Organizational Structure When observing McDonald's and Burger king, the organizational structures of the two restaurants are very alike. There appeared to be a crew leader who was a non-managerial employee and, there was a manager who was present behind the counter. The managers of the restaurants seemed to be in command of every aspect of the whole food service procedure.
Technology Both McDonald's and Burger King are on the cutting edge of technology. They both employ state of the art cash registers and both have electric timers built into their cooking machines. Although the cooking styles differ between Burger King and McDonald's, the method of production is the same. Large amount of food is cooked at once then placed under heat lamps or put in the microwave when an order is placed. Both stores have the same drive through technology with a speaker and a well-lit menu to relay the message to the cooks.
Employee Motivation The motivation of both stores for employees to perform well is hard to ascertain from just observing, but it appears somewhat obvious. The people working in these establishments appear to have a lower social economic status, and the fact that a paycheck is coming at the end of the week may be the only motivation they have.
Environment The environment at McDonald's and Burger King seems to be a simple, yet unstable one. It is apparent that the majority of people, who work there, are not choosing their employment as a career option. Therefore, the workforce is constantly changing and adapting to new employees and new situations.
Leadership Style There was similar leadership style employed by the management at both stores. Task orientation was essential to meeting the goal of fast food. Each person had to be focused on the task at hand, because during certain hours of the day, both stores were very busy. There seemed to be little flexibility from management if it meant compromising their goals.
McDonalds and Burger king have been competing with each other for several years now and there's no sign that it's going to stop any time soon. As we all know that the economy is entering into a correction these two super-chains have to fight more and more to win business and defeat all there competitors. Burger King recently announced plans to drop the price of its double cheese burger from $1.99 to just 99 cents even though Burger King's double cheeseburger is 30% larger than the version offered at McDonalds. This means that they are not making much profit on it. But they have to attract more customers towards them and defeat there competitor.
On the other hand McDonalds is ready to drop the double cheeseburger from its dollar menu all together. Many franchisees are upset because the double cheeseburger is not a profitable item for the stores at a $1.00 price point. Complaints have been made that consumers will come in, order two double cheeseburgers and a glass of water and that means the store will lose money from that customer.
The main fast food chains often offer special sandwiches and discounted prices on certain items as a way to draw customers back into their stores and keep them loyal to the company so they keep coming back. The method is very successful to draw in business, and as the economy continues to remain on unstable ground, we will likely see the fast food chains come up with better deals and more original food items to effort to draw customers in.
They're continuously keeping an eye on each other and the competition, and making sure in McDonald's case, making sure Burger King didn't break in on its market share, and in Burger King's case, finding ways to take away McDonald's market share. If we look at McDonald's versus Burger king 16 years ago, even with some of the challenges they've had over that time horizon, McDonald's average U.S. sales per unit is up over 20 percent, while Burger King over that same time frame is down 8 to 9 percent. French fries have been a sore point for Burger King Operators for years. The company has tried new formulas in the last couple years, but Burger King's fries are still considered by many in the industry to not measure up with McDonald's.
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The relationships between profits and product differentiation expose that both McDonald's and Burger King are better off avoiding close competition if the market area is huge enough. However in small market areas, McDonald's would be located together with Burger King. In contrast, Burger King's profits always increase with greater differentiation. The balance depends on the market's size. In small markets McDonald's locates near the center of the market, and Burger King locates to the side of the market. In larger markets McDonald's and Burger King choose locations on opposite sides of the market although McDonald's locates closer to the best possible central location than Burger King.
One of the reasons why Burger King is so successful includes many factors but one of them was location. One of the best ways to explain it is Burger King has always found outlets where there is a large attention of people but that wasn't there only strategy because they also had the great idea of going head-to-head with McDonald across the street. By setting outlets in front or near a McDonald outlet they were guaranteeing visibility of their franchise.