It has been suggested by The Guardian that Mc Donalds- one of the worlds most prominent fast food franchises- should inculcate a new firm culture that is more innovative, participative and more market oriented. The global economy has hit everyone hard- consumers included- and now even the occasional diners are spending less money on food in their favourite fast food joints. So for The Guardian to suggest this now will certainly prove helpful but at a time when there is no money in the global economy, the question to be asked will be "How helpful will it be to Mc Donald's performance as of late?"
Now according to Debra Thorsen "culture is an energy force that becomes woven through the thinking, behaviour and identity of those within the group." Investopedia (n.d)[Online] then defines firm culture as "the characteristics and behavioural attributes that decide how a company's staff and management interact and control business transactions with customers and other outside individuals." Aside from the product itself, the firm culture is generally what gives outsiders (customers) an image and an idea of what the firm is all about. Every company has a firm culture. A company's culture can be reflected in its employee benefits, turnover, dress code, business hours, office setup, hiring decisions, and treatment of clients, client satisfaction and every other aspect of operations. In the case of Mc Donald's however, their firm culture has been called into question and requires a change not just to survive the effect of the weakening global economy but to improve performance in the market.
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Now according to Investopedia (n.d)[Online], market orientation can be defined as "a company philosophy focused on discovering and meeting the needs and desires of its customers through its product mix". Unlike the previous marketing strategies which focused on creating a unique selling point for its products, the market orientation functions the other way round, because the market orientation focuses on tailoring products to meet customer requirements. In summary, the market orientation is an interconnected marketing campaign between an organization and its buyers.
A company like Mc Donald's should be carrying out market orientation, yet The Guardian suggests a programme of change that makes the firm's culture more "market oriented". As mentioned earlier, a change in the firm's culture would prove helpful but how helpful? Especially with a programme that is more market oriented. The next paragraph would examine the benefits a market oriented firm culture can bring to Mc Donald's.
BENEFITS & FEATURES OF UTILIZING A MARKET ORIENTATIVE PROGRAMME
Customer-Centric - Customer centric is the act of creating a positive experience for the customer before, during and after the sale. An advantage of the marketing orientation is that the business in question is built on addressing the needs of the customers. If customers require specific characteristics in a product, a company can quickly learn and react if it has an influential stance in the marketplace- like that of McDonalds -and if it is customer-centric. Now Mc Donald's is a company with a huge reputation. Getting a more customer centric nature into the market orientated programme will add value to the company by enabling it to distinguish itself from competition. Not only will it add value, the organization will operate more productively, there will be increased revenues; often double-digit improvements; increased customer satisfaction and loyalty; less turnover of clientele; the customer acquisition costs; sales; marketing and operational costs will all decrease, and the loyalty of customers bring in referral customers because word about the positive- customer centric -experience for the customers will spread around.
Competitive Advantage- Placing customers at the top of the priority list can prove to be a huge advantage in any market like that of the fast-food market. When a company puts so much time and effort into product engineering and development, it is less prepared to create solutions that appease the demands of the dynamic customer markets. Knowing what customers want not only helps develop the products to suit them, it aids to market them persuasively so as to grow the company's customer base and sales levels.
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Adaptability- A critical advantage of the marketing orientation is that a business is more likely to be in contact with the latest market trends thus providing these businesses the ability to accumulate faster responses from customers in terms of customer requirements. This assists in the quick improvement of service rendered and also makes product or service adjustments- more often than not -sought after by the customers.
Responsiveness- Business strategist Martin Roll states that "customer focus is one of the three pillars of a market orientation." Companies which employ this orientation are generally considered to be more responsive in terms of changes in market trends. This provides numerous advantages to companies that are able to develop products that not only meet customer requirements but do so in a short period of time. The only down-side is that it is more strenuous. If Mc Donald's can work this responsiveness in its favour when the economic meltdown ends, then the company can find itself ahead of its competitors in the fast-food market.
Consistent Improvement- In the Journal of Marketing's January 2011 write-up by Rajkumar Venkatesan and Robert P. Leone, both claim "a market orientation helps drive constant improvement in company processes and systems because it promotes a 'culture of experimentation' ". Most market-oriented organizations always explore opportunities to build on their product and service offerings to meet the requirements.
Just like every other economic meltdown/recession, this one will end in a matter of time. What must be done before then is to prepare for the next period of the business cycle which is the recovery period. In the recovery period of the business cycle, stocks recover because of the fall in prices and incomes, and there is increase in productivity, customer confidence and aggregate demand. When this period arrives Mc Donald's must be ready to get off the mark in terms of attracting new customers and retaining new ones in order to see encouraging annual revenues and profits. That is why The Guardian suggested Mc Donald's changes its firm culture to a more market oriented one. So Mc Donald's can equip itself for the recovery period to come. Changing the firm culture to a more market oriented one will improve Mc Donald's performances but not now. It will do so in the long run when the recovery period of the business cycle kick-starts. But until then, its performance must be managed through "participative management".
According to businessdictionary (n.d)[Online] participative management is a "type of management in which employees of all rankings are have the opportunity and freedom to come up with ideas and strategies towards distinguishing, setting and accomplishing the company's goals, objectives and other official decisions that can impact the employees directly". In a formal organization like Mc Donald's that have a lot of branches/joints around the globe; it is only proper that some sort of management must be employed. It is agreeable that procedures must be followed and a chain of command must be present, but at this time when both prices and output are very low only to be compounded with high interests rates (recession), it is only logical that Mc Donald's should have all-hands-on-deck. As mentioned earlier, one thing Mc Donald's must do is to ensure its performance is not worse than it already is. The participative management can do just that. The concept of this management style is not just to make use of physical capital but to fully utilize the emotional and intellectual human capital. The participative management style involves employees in some of the decision making processes of the organization so as to ensure that the psychological needs of the employees are met. Not only will the participative management act as a catalyst to motivate employees to achieve organizational set objectives, but the job satisfaction and the quality of their work life will increase(Maslow's Hierarchy of needs). It also values diversity and stimulates effective leadership amongst employees.
Motivated employees are actually the biggest assets to an organization and the participative management system is an effective method to retain the best talents in the industry. Participative management instils a sense of pride into the employees and motivates them to increase productivity in order to reach the targets assigned to them because a sense of company ownership has been created within the employees. This sense of pride and motivation will enable employees to feel like they are in a group/team with the same objective (Elton Mayo's Hawthorne Studies). This will maximize productivity and output without even having to mention the word "money" to them. So this "participative management"- if executed -goes against what Frederick W. Taylor claimed in his Science Management that individuals- employees -are only motivated by money and also that people respond as individuals and not groups. But the most powerful asset the participative management has is the variety of innovative ideas it produces for the good of a company.
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Innovation in business is all about formulating and applying new ideas in an organisation successfully. Innovation could either come as a major breakthrough- creating and bringing a new product or service to market -or a series of smaller innovations such as finding better or more efficient ways of working and becoming more profitable. Innovation is a process and should be considered as such because these ideas need an investment of time, energy and money in order to deliver and live up to its potential. Inculcating the culture of innovation can be crucial to a business' long-term profitableness, potential sales and success in general. Innovation is a concept that can only function when given enough freedom to the "innovators" to formulate new ideas- something that can work effectively under the participative management. In most organizations, there is normally a department or a group in charge of formulating new ideas but that is not the case in an organization with a participative management. In a participative management organization, the group in charge of innovation is everybody. The saying that "Two heads are better than one" applies here because both employees and managers are likely to have ideas and potential solutions to existing problems which they (the employees) face on a regular basis. What a lot of individual businesses are unaware of is that the employees are- more often than not - a business' most valuable asset when looking to innovate because they (the employees) relate to the customers directly relate to the customers. Mc Donald's is an organization with approximately 32,478 restaurants and over 1.5 million employees worldwide. It would be wise to encourage innovation in an organization as large as this because new ideas will keep flowing from the employees because they have direct contact with the customers. Innovative ideas in business usually end with organizations having to pay for research and advertising and the recession period is certainly not a period where there is enough money for miscellaneous spending. Generation of innovative ideas should be encouraged and acknowledged in Mc Donald's but none should be executed yet since there would not be enough funds available because of the recession period. Although a research or review- within the company's financial capacity -can be carried out to examine the existing processes in the business and see if there is any area that needs improvement. The market can also be studied to spot existing trends and target areas that have not been exploited.
POSITIVE OUTCOMES OF INTRODUCING THIS PROGRAMME
If introduced, McDonalds will experience:
Increased profit as a result of increased sales
Improved working conditions for the employees
Improved understanding between employees and customers
Variety of production methods due to increase in innovative sources
Improved decision making processes
Once these are experienced in the company, the problem of low output will be solved and McDonalds will be restored to a profitable position.
As promising as the introduction of this programme may seem, the issue of whether or not this programme actually answers the right questions is one to be considered with adept scrutiny.
With the ever-growing issue of the high population of obese people in the western countries- the United States to be specific -one might feel that the truth is "people just want to adopt a healthier lifestyle".
Aside from this, markets that have companies which carry out market orientation are usually dynamic and swift, and the programme would need time to be fully effectuated. Therefore McDonald's is not likely to have enough time to fully implement this change in firm culture.
In addition, the impact of a stronger dollar; increase in commodity prices and increase in competition are all factors that are out of McDonald's control thus affecting its sales and profit directly or indirectly.
In conclusion, to introduce a programme of change to make the firm's culture 'more innovative, more participative and more market orientated' immediately would improve Mc Donald's overall performance in the fast-food market and solve its problem of reduced sales and profit. Although the results may not produce instant results and progress, the program will certainly stabilize the company's performance while the economy is still in recession before it will start presenting results. The three features suggested by The Guardian (innovative, participative, and market-oriented) must be exercised simultaneously for the program to function effectively. Just like how a market mix would work, not one of these features of the program should be ignored. The employees must generate innovative ideas to keep selling the product. The employees should be given the freedom to generate these innovative ideas under a participative management system. And finally these innovative ideas that have been generated under the participative management system should be produced and sold as a market-oriented product. Scribd (n.d)[Online] "With every battle conquered, another one rises and with a secure mission and vision in mind, the corporation should never stray too far from the roots and success of the company".