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Nowadays, the most important aspect of a business is its strategies. High profits and sales are the result of successful strategies adopted by a company. A good strategic management can lead to a well running business with high profits and sales and a great customer loyalty.
Businesses are trying to get as much profit as they can through hard work of management, advertisement and a good quality of service on what they are specialised to produce.
In this study, the subject discussed is the McDonald's food chain and the main issue is the company's entry strategy in becoming a successful multi-national company.
MC Donald's, is a chain that is more than well-known among almost every continent and one of the most famous trademarks all over the world.
In the 1940's, McDonald's started as a small business based in the United States. It began as a barbeque restaurant operated by Richard and Maurine McDonald. After 8 years they reorganised their business as a hamburger stand using production line principles.
In 1995, a businessman named Ray Kroc joined the company as a franchise agent. Mc Donald's original 'mascot' was a man with a chef's hat on top of a hamburger whose name was "speedee". Then "speedee" was replaced in 1967 with the now well known to us all mascot, Ronald McDonald.
Throughout the years, the expansion of Mc Donald's internationally, has become a symbol of globalisation and the spread of the American way of life. We may say that Mc Donald's own trademark design, the big 'M', is now the most famous trademark all around the world, reminding us from long distances each time of the company's goods, which is in fact mainly burgers and chips.
Year by year McDonalds improved its menu and increased the number of options and meals, hamburgers, cheeseburgers, french-fries, chicken sandwiches, salads, milkshakes, ice creams and deserts. Some of the most famous burgers are the Big Mac, the Filet-o-fish and of course the MC Chicken.
Some of the branches that are located approximately in every corner of countless countries around the world give you the chance to enjoy a breakfast with Egg Muffins or sausage Mc muffins at 6:00 o'clock in the morning before on your way to work. Some of the branches also are 24 hours a day open and some others even offer a 'drive-through' system giving you the option to buy your lunch without even getting out of your car. This started some years ago and it is among some of the best movements that they made, in order to help people order from their cars waiting less than 3-5 minutes for their food and leave immediately through a specially made car park which includes the ordering machines and tills, making McDonald's restaurants one of the pioneers that offer both counter service and drive-through service.
The most famous chain of fast food, McDonalds, operates over 34.000 restaurants worldwide, employing approximately 1.7 million people. These fast food restaurants can be found in 119 countries, which serve 58 million customers each day.
McDonald's customer target group are usually children and young people who are more likely to buy this kind of food. In the fiscal of 2003 the profits were about £17.1 billion. That was an increase of 11% from the profits of the company in 2002.
McDonalds, nowadays, has become the ultimate symbol of globalization, sometimes even referred to as the 'MC Donalization' of society. When the chain first began operating in Hong Kong in 1975, it was the first restaurant that was offering clean restrooms. In China, it took advantage of the country's growing use of personal vehicles by opening numerous drive-thru restaurants.
Furthermore, going deeper into the industry even in artistic and cultural sites, McDonalds opened a McDonald's restaurant and MC Café on the lower level of the French Fine Arts Museum, the Louvre.
McDonalds in 2006 introduced a brand named "Forever Young" in order to redesign all of its restaurants. The investment for the redesigning of the 14,000 restaurants was £1 billion. The aim was to make their restaurants transforming them more into coffee shops and creating a warmer environment for the costumer to relax while enjoying a meal. Many restaurants now also offer free a Wi-Fi service.
The company also expanded its product range by offering various combinations for all ages. Furthermore, McDonalds every now and then adds some products to their menu that are inspired by the traditions and the eating habits of each country. For example in India the consumption of beef is not allowed they serve other types of meat. Also in Indonesia they are trying to serve foods that Indonesians are more familiar with, with the sale of MC Rice, and similarly in Germany with the sale of beer.
McDonald's corporation's business model differs slightly from that of most fast food chains. McDonald's corporation earns revenue as a franchiser of restaurants. The company owns and operates directly approximately the 15%. The rest are operated through a variety of franchiser agreements and joint ventures. In most cases, the franchise does not own the location of its restaurants.
Moreover as a matter of policy, McDonalds does not make direct sales of food or materials to franchisees, but instead it organizes the supply of food and materials to restaurants through approved third party logistic operators.
As we can see from the book 'Fast Food Nation' written by Eric Schlosser (2001) MC Donald's is the largest purchaser of beef, pork, potatoes and apples.
As far as advertising is concerned, Mc Donald's company makes significant use of bill boards and signage, sponsors sporting events ranging from the Little League to the Olympic Games.
Through the decades Mc Donald's has used 23 different slogans in United States for advertising and at times it has run into troubles with its campaigns.
Mc Donald's has been able to use various strategies to uplift and sustain their competitive advantage in the market and it has increased its sales despite some issues that were raised against the company. A part of its business strategy is its plan to phase out its Super-size French fries and soft drinks as it tries to create a healthier image for itself. The company tries to make some changes in the menu in order to provide a range of choices that support a balanced lifestyle and diet and all these became part of its strategy.
The company has other strategies. The three wheeled vehicle that is used to collect the rubbish, used cups and burger wrappings all over the neighbourhood around the restaurant. They also encourage the staff to smile, to be optimistic and to treat its customers with respect.
Mc Donald's has developed three strategies for sustaining its competitive advantage. These are : customer convenience , customer value , and optimal operations. They improved the suite of its manufacturing systems like inventory control, production planning, financial control, and point of sale that supports the store. The fact that the company put Wi-Fi technology in their stores for instance has also become one of the attractive forces for customers. Mc Donald's is a highly flexible corporation and this has been evidenced by its vast product differentiation. This differentiation is one of their major strategies in order to enter foreign markets. They are able to change the variety of products that they sell to every country depending on the culture, their habits and their religion, when it has to do with food restrictions. For example, in Japan they created the 'teriyaki burgers', in Indonesia they created the 'Mc pork burgers' and 'MC tempeh'. In Philippines the 'MC spaghetti' and in Norway the 'Mc lox' which is made with salmon. McDonald's, in order to gain entry into the British market they had to change their menu in order to provide healthier menus for the British people, for example, chicken and salads.
In addition to product differentiation the pricing of goods is one of their top priorities.
Furthermore, McDonalds has focused on building an image of a fast -food restaurant that welcomes a family to come and have a lunch together, trying to build a family comfort zone. The general focus of their strategies was customers. As every business has its top priority its customers, so does McDonalds. Above everything else are the customers, their preferences on what they eat and their culture. That's why they have gained the respect of the people and they managed to make a chain of fast food restaurants addressing a daily way of life.
Despite the success of McDonalds some new chains of fast food restaurants will come up to compete them. McDonalds should then implement new strategies. It will have to update the latest market trends and identify new market segments. They can find out the changes in food preferences by consumer research.
Advertising and promotion is another strategy that they have to follow. This can be done through the implementation of the integrated marketing (IMC) approach. Through IMC , McDonald's, will be able to combine core strategies with other forms of communication to gain more marketing advantages and generate better business effects. Its aim should be to optimize the impact of persuasive communication on consume and non-consumers such as trade and professional audiences by coordinating such elements of the marketing mix as advertising, public relations, promotions, direct marketing, and package design. The IMC approach has benefitted many companies because it helps to identify the most useful methods of communication and to establish a good customer relation. Also good relationships with the employees, the investors, the suppliers interest groups and the public. The IMC approach has been applied by large and small companies and is well known among companies marketing consumer goods and services. By 1990s up to present the incorporated marketing communications has been one of the most important improvements in marketing.
Time by time there have been some changes on the internet that the companies create, design and appliance their business and marketing plans and also their programs for communication of the marketing. Companies, from large multinational enterprises to small companies develop web sites that they complete them with vital information that help them to develop their relations with the customers and attract potential consumers. Moreover, the internet can be used for promotion sales through coupons, sweepstakes and contests. Through the internet they can also make their public relations with the customers. It offers you the chance to see the products of the restaurant, explaining to you how the food is made and they provide you with pictures in order to know what you are reading for. By the IMC approach the coordination of different media channels can help them to establish better McDonald brand with result to higher market support market growth and sales.
The use of cost leadership and product differentiation strategy allows the company to enchance its products and to develop new ones based on the demands and needs of the consumers. They try to be competitive by generating ideas for new products which are going to be different and unique. So when the create something that is different and unique in the market place they increase the chance of gaining the interest of other potential consumers.
From what we can see from above and from the lectures McDonalds have used different strategies like International Strategy by selling global products and using similar marketing techniques all over the world. Also the transnational strategy by seeking location advantages and gaining economic efficiencies by operating worldwide. They use the Local responsiveness strategy that by responding to differences in the market in all the countries which they operate. As we can see it's a multinational company because it operates many franchises in more than 119 countries.
Licensing and Franchising have some advantages and disadvantages for the companies. Some of the advantages are that they contractually agree for the income through sale of production and marketing rights. They have limits to economic and financial exposure and also the licensing technology to local producers can cut the costs down. Whereas there are some disadvantages which is the difficulty of identifying appropriate partner and agreeing contractual terms. The loss of competitive advantage through imitation. Limits the benefits from the locational advantages of the host nation. And the last one are the exclusive rights of franchisee can result to lose the opportunities to gain more many from the products through potentially more profitable entry strategies.
To conclude McDonald's through its efficient strategies successfully operated within the food service industry. It created high standards of quality food service and customer loyalty and it gain the competitive advantage. It started from a small restaurant and now has gain entry in the most challenging markets all over the world with franchises.
The company managed to create a very strong and fast quality of service and customer satisfaction and also it managed to suit the taste and the preferences of each country to its menu with affordable prices.
Despite the successes, the company should take into consideration the competitiveness of the food industry and always to try to keep up the high level of its professionalism. A constant strategy is necessary to ensure their competitive advantage because of its similarity in some products with many other fast-food restaurants. Once the marketing strategy is in place various responsibilities are given to different individuals so that the plan can be implemented and work properly.
McDonalds have succeeded because of the big value that gives to its quality of food, service, the good knowledge of what consumers ask for and are willing and expect to buy and the daily high standard of its food. In my opinion McDonalds have achieved something that no one has never do. When people think about McDonalds they taste them the same time. From my personal experience and I think most of us when we think about McDonalds we feel the taste of our favourite burger in our mouth. This is the biggest achievement for decades and I think it will remain for ever if they keep up the good work and professionalism.