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This is transformational time for the organization, where we have seen major changes which impact in every aspects of business. Global economical crisis lead us to new ear and emphasis us to think in a different way. The father of modern management Peter Drucker, conducted that We are in one of those great historical periods that occur very 200 or 300 when people don't understand the world anymore, and the past is not sufficient to explain the future. (Quoted in childress and Senn, 1995, p-3) .......REF
In this situation fast food industry facing the same although the economical impact varies company to company and all are struggling to overcome the situation is different way.
FEW LINE HOW MAC FACING ......
1.0 TITLE [P-1]......
In 1940, When the McDonald brothers, Dick and Mac opened their first Restaurant in San Bernardino, California, they could never have imagined the phenomenal growth that their company would enjoy. McDonald's is one of only a handful of brands that command instant recognition in virtually every country in the world. It has more than 30,000 restaurants in over 119 countries, serving approximately 50 million people every day. McDonald's global sales were over $41bn, making it by far the largest food service company in the world. In 1955, Today, over 70 percent of McDonald's restaurants are run on this basis. In the UK, the first franchised restaurant opened in 1986 - there are now over 1,200 restaurants, employing more than 70,000 people, of which 36 percent are operated by franchisee
1.2 McDonalds Mission Statement:
"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." [REF]
1.3. McDonald's vision :
McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.
Strategies of MacDonald for Olympic 2012
McDonald's sponsor the International Olympic Committee. "McDonald's has been a proud Olympic partner for nearly three decades. "As a global brand serving 47 million customers every day, As a TOP sponsor, McDonald's rights include: use of the Olympic rings in global marketing efforts; exclusive sponsorship opportunities with the 201 national Olympic teams around the world; and status as the Official Restaurant Partner of the Olympic Games through 2012. In addition to providing food service at the Olympic Games, McDonald's will conduct Olympic-themed promotions and activities to support the Olympic Games in its markets and countries worldwide.
2.1 The Stakeholder:
The direct or indirect individual or group who has interest on business success could be defining as a stake holder. Examples of a stakeholder are an owner, manager, shareholder, investor, employee, customer, partner and or supplier, among others.
[REF] The stakeholder defined by BusinessDictionary(2009) Person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies.
2.1.1. Suppliers :
as first food restaurant McDonald's having a god source of supplier for British Irish beef and at the same times, chicken which are not genetically modified and is free from antibiotic growth promoters. As food is the major product so they have sum oter related supplier swell
McDonald's, working together with the government and other members of the Olympic committee to improve the healthy food on the duration of Olympic which is one of the main legacies of hosting the Olympics will be improved health across the nation
In the UK, McDonald's Restaurants Ltd is the identity of McDonald's Corporation. The company does not offer its shares for general sale nor are its shares listed on the UK Stock Exchange. However, the company does register its accounts at Companies House
McDonald's also concuss about Globel environment they recognize the responsibility to protect and preserve the environment for future generations. They state that "Our goal is simple, to achieve continuous environmental improvement across all areas of our business". [REF]
Mcdonald's do continues training and develop of their employee and managers. They divided their Management Development in four key programmers:
Mcdonald's gives an experienced manager the opportunity to develop and learn new skills, to see a different side of the business and to experience how each department's strategies have a role in achieving the company's goals.
Macdonald have a large number of customer worldwide same as UK in every year. UK DATA .
As Macdonald have a large number of franchise in UK and for that they have significant number of employee mostly students are like to work there as part time basis. Roughly they have the following information [REF] DATA --
McDonald's Employment Levels 2001
3.0 Title [P-3]
Marketing Environmental Factors
Today's fast-food industry facing the continuous changing process and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. Environment analysis involves a systematic study of the broad within the economy and a comprehensive analysis of competitors and the company itself. The farm's environment consists of both the internal and external environment.(See appendix no.1)
\Internal Environment External Environment
PESTEL Analysis SWOT Analysis
3.1 McDonald's SWOT analysis
To determine the strength and weakness of the company SWOT analysis is a method which is wildly used and accepted to day's business world. (APANDIX-2)
* McDonalds has built up huge brand equity. It is the No. 1 fast-food company by sales, with more than 31,000 restaurants serving burgers and fries in almost 120 countries. Sales, 2007 (11,4009 million), 5.6% sales growth ? [ uk/world wide] Hoovers (2009, p.1),
* Good innovation and product development. It continually innovates to retain customers in the business.
* The McDonalds brand offers consumers choice, reasonable value and great service
* Large amounts of investment have gone into supporting its franchise network, 75% of stores are franchises. McDonalds (2008)
* Core product line out of line with the trend towards healthier lifestyles for adults and children. Product line heavily focused towards hot food and burgers.
* Quality issues across the franchise network.
* Social changes - Government, consumer groups encouraging balanced meals, 5 a day fruit and vegetables. And focus by consumers on nutrition and healthier lifestyles.
* Competitive pressures on the high street as new entrants offering value and greater product ranges and healthier lifestyles products. E.g. subway, supermarkets, M&S.
* Recession or down turn in economy may affect the retailer sales, as household budgets tighten reducing spend and number of visitors.
* Joint ventures with retailers (e.g. supermarkets).
* Consolidation of retailers likely, so better locations for franchisees.
* Respond to social changes - by innovation within healthier lifestyle foods. Its move into hot baguettes and healthier snacks (fruit) has supported its new positioning.
* Use of CRM, database marketing to more accurately market to its consumer target groups. It could identify likely customers (based on modelling and profiles of shoppers) and prevent brand switching
* Strengthen its value proposition and offering, to encourage customers who visit coffee shops into McDonalds.
* The new "formats", McCafe, having Wifi internet links should help in attracting segments. Also installing children's play-parks and its focus on educating consumers about health, fitness.
* Continued focus on corporate social responsibility, reducing the impact on the environment and community linkages.
* International expansion into emerging markets of China and India.
3.2 McDonald's PASTEL analysis [apendix]
Political, economic, legal and technological changes, social factors, the retail environment and many other elements affect McDonald's success in the market Political impact:
The international operations of McDonald's are highly influenced by the individual UK policies enforced by each government. For instance, there are certain groups in Europe and the United States that clamor for state actions pertaining to the health implications of eating fast food. They have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products. McDonald's stores have to contend with the issues of employment procedures as well as their tax obligations so as to succeed in the foreign market.
o The world's fuel price; which has been affected the company side to side.
o Cultural and Demographical change; due to international student immigration, joining of Eastern European countries to EU, ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
o Digital market; introduce different area in marketing and business to the companies such as online market and customer services. .......................................
Environmental & Ethical impact:
o In the past, most of the companies did not pay attention about factors such as Global warming or Air pollution...............................
o Claim rights; support customers to sue the company for any inadequate services or lack of safety and security. ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
Porter's five forces framework
By doing porter's analysis, we will find how much the industry and market is attractive to entry in terms of competitive forces (Jonson; Scholes & Whittington 2009:59). In fact we want to find out how factors such as the threat of Entry and Substitute, and also power of Buyers and Suppliers influence Fiat to compete in the market.
The threat of entry:
Fiat has gained a high ability of manufacturing small scale car. Being expertise will improve Fiat's situation in market in compare with the new comers.................................................
The threat of substitute:
In particular, two factors can help the company in this area. The Price and Performance. With reference to, Fiat's vision and mission, the company has targeted two dimensions in its future strategy; Innovation and Great value for stakeholders (See appendix no. 2-3).................................
The power of buyers:
This is assumed that Fiat should compete with companies such as Toyota and Asian manufacturer which produce vehicle in the area in which the labour cost is lower. ....................
The power of supplier:
However, all vehicle manufacturers try to find cheaper supplier in order to reduce the final cost of production, having a long presence in the market helps to compete with higher reliance from supplier. ...............................
Here is the part that Fiat has to improve itself in order to balance its situation in the market. Nevertheless, Fiat has not gain a good record in compare with the greatest competitors such as Audi, Renault, Vauxhall and Ford that produce small sized car, the market has reversed for all companies and it has made chance for Fiat to improve its competition..................................
Porter's generic strategy
After analysing Porters 5 Forces, PESTEL and SWOT it can be determined that FIAT according to Porters Generic would follow the differentiation and cost leadership strategy.
Differentiation Strategy: Fiat is a name of style, design and luxury. Now-a-days automotive market is captured by so many stylish and giant companies. .............................................
Cost Leading Strategy: Cost of Fiat car is not so low compare with some giant Asian and European car makers. ...................................
Focus or Niche Strategy: In the race of automotive market Fiat is trying hard to attract more consumes. Hence Fiat has taken many initiatives with massive investment for promotion, R&D and advertisement. So that Fiat should not focus on Niche market..
A 'marketing mix' is used to convert the positioning strategy into reality. It is made up of 4 elements: product, price, place & promotion.
A brand is a name, term, symbol, or design or a combination of these, intended
to identify the goods or services of one reseller or group of sellers to differentiate them those of a competitors. A successful brand is one that customers perceive as offering superior value...................................................................
McDonald's share the same core principles of teamwork, excellence and being the best that make the Olympic Games a model of excellence for the world."
McDonalds Business strategy is to be the best employer for their people in each community around the world, Deliver operational excellence to their customers in each of our restaurants; and Achieve enduring profitable growth by expanding the brand and leveraging the strengths of the McDonald's system through innovation and technology.
As it was previously stated, the great experience that Fiat as one of the pioneering automotive manufacturers has gain rescued the company during the years while it had been faced with almost unbearable difficulties. The company's creativity, innovative and diversification strategy are identical points in its futures succeed.
Even though, Fiat has excellently focused on the US market, it is crucial to make a plan for Asian, Middle East and Asia-Pacific marketplace as well. The company should see the gaps in the market and strongly focused on its capabilities (See appendix no. 5) in order to fill the market with its product, colourfully. Beside, it is also recommended that Fiat focus on new design such as Convertible and Multi functional automobile to bring those particular customers who are still unsatisfied with the market.
- Macro Environmental factors are in fact the last outer layer which wrapped up an organisation and significantly affected it towards unplanned direction. Therefore, PESTEL analysis is deniable when we are looking forward to a successful strategic planning. Moreover, by knowing the impact of each factor it is less likely to be faced with unplanned situation across an organisation strategy. This analysis makes a company able to highly compete within an industry or sector over the same product or services. PESTEL is abbreviation for Political, Economical, Social, Technological, Environmental and Legal parameter which define an organisational situation in relation with factors which could affect current or further organisation's strategy and or success or failure of particular strategy (Jonson; Scholes & Whittington 2009:55). That is why by using PESTEL analysis in Fiat case further approaches in strategic option and recommendation will be provided.
- SWOT analysis is one of the most important methods in today's strategic planning which is known as 'Strategic Message' (Jonson; Scholes & Whittington 2009:119). It is crucial to know where the organization exactly situated in the market. SWOT is basing on internal- weakness and strength- and external- threat and opportunity- causes which influence an organisation.
- Market Capability, is one of the most distinctive factors towards Fiat strategic marketing, definitely. Resources and Core-competency, both are the elements which help Fiat to implement its differentiation's strategy. On the other hand, the company's strength factors such as Scale and Experience and Innovation (Italian interior and exterior design) push it forward deep into the marketplace. Apart from that, the ability and experience that Fiat has gain during its long history, as a small scale car manufacturer, consider as the other competitive advantage for the company.
- Jonson, G; Scholes, K & Whittington, R. 2009 updated. Exploring corporate strategy; 8th edition. London. Pearson.
- Benko, C. 2009, Global Automaker Growth Strategies; [Online] Available at: http://www.pwc.com/auto/institute.Accessed date.......................
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- Montezemolo, L and Marchionne, S. 2008. Letter from the Chairman and Chief Executive Officer to shareholders.
- Fiat Group History.2009. [Online]Available at: http://www.fiatgroup.com/en-us/group/default/Pages/default.aspx.
- History of Fiat. 2009. [Online] Available at: http://www.fiat.com/cgi-bin/pbrand.dll/FIAT_COM/home.jsp
- Fiat S.p.A annual report; Consolidated and Statutory Financial Statements.2008. [Online] Available at: http://www.fiatgroup.com/en-us/shai/banns/budgets/Documents/Bilancio_2008/Bilancio%20Consolidato_ING_Bilancio_esercizio.pdf
- Fiat S.pA. New York Times report; updated June 15th. 2009. [Online] Available at: http://topics.nytimes.com/topics/news/business/companies/fiat_spa/index.
- UK car market: Stuck in reverse, 2009. [Online] Available at: http://www.independent.co.uk/news/business/analysis-and-features.