Sample Essay on McDonald Organization

McDonald Organization

McDonald organization is the leading fast-food industry globally. The firm enjoys an established brand name that is recognized locally and internationally. The organization management emphasizes on creating and keeping a long-standing relationship with its clients, suppliers, and shareholders, as a key success factor (Han 72). McDonald’s success is attributed to a strong brand name, health foods, quality customer services, and its play to win tactic. Despite McDonald’s success, it has received several criticisms, which have had a negative impact on its positive image due to bad management decisions and competition.

The purpose of this paper is to analyze critical problems that McDonald has came across in the recent past, especially those emanating from wrong decisions the organization made. Currently, the organization faces stiff competition from other organizations and competition complaint over franchise business across Europe. This paper will discuss the history, background, and SWOT analysis of the organization to understand the origin of the issues. Furthermore, the document will look at different wrong decisions made by the management, pestle analysis, and strategies of the organization in addressing the problems at hand.

 

 

Figure 1.McDonald Top Ten Menu Types

 

Figure 2. McDonalds revenue globally

 

McDonald organization is the worldwide front-runner in the food service industry. Currently, it has an estimated 32,000 local restaurants providing services to a total of 60 million people across 117 nations each day. The organization puts emphasis on offering excellent customer care services and establishing a strong and longstanding bond with its employees and suppliers. In terms of attaining consumer’s loyalty and confidence, the organization focuses on a play to win strategy that has been successful in revenue growth. McDonald market share product expansion has been realized due to its decision to provide health menu items, for instance, salads, milk, sandwiches, ice creams, and kid’s meals among others. In addition, more than half of the organization’s restaurants have put in place children play areas, a strategy that has won many children and parents. McDonald’s mission is ‘to be customers’ favorite place and way to eat and improve our operations and enhance customer experience.

History and Background

The organization history is traced back in 1930s when two brothers Richard and Maurice opened a carhop-drive restaurant in San Bernardino, California. In the 1950s, the organization expanded to self-service car shop that provided a simplified menu of cheeseburgers, French fries, milkshakes, and soft drinks among others and ran through an assembly line operation (Hill and Jones 147). Since then, the organization has continued to grow to its current state.

In the 21stcentury, the organization has continued to face criticisms both politically and publicly. In spite of all the challenges targeting the organization, McDonald has remained confident in providing quality services and has remained steadfast, thus leads the food industry. The organization has maintained its character through its positive environmental responsibility services, provision of quality and health foods, valuable customer care services, and supporting the community and the entire business world.

 

SWOT Analysis

The SWOT analysis entails a tactful planning procedure in evaluating strengths, weakness, opportunities, and threats of McDonald Corporation. This will provide a current brief overview of the organization.

Fig 1. McDonalds SWOT analysis

Strength. McDonald is a market leader in fast foods. It therefore enjoys a strong and commanding brand image. It has expanded to 125 nations serving a huge number of customers in its outlets. This makes the organization to have a higher competitive advantage over its competitors both locally and globally. Other strong attributes associated with McDonalds are qualified personnel, customer focus, new products, committed supplier base, and children friendly status.

Weaknesses. The organization brand image has some weaknesses, such as its focus on children in their market segmentation. McDonald has also been associated with unhealthy foods and conditions, such as obesity. Equally, McDonald faces stiff competition from other firms like Burger King and Wendy’s, and high employee turnover rates. All these have offered challenges to the organization. Furthermore, the organization prices are very high as compared to other related substitutes.

Opportunity. The organization can introduce healthy foods with low calories, an aspect that can be done through research and development. Furthermore, organizational leadership needs to come up with ways of reducing food wastage in controlling costs and increasing the product variety to fully command the market.

FINANCIAL PERFORMANCE

  McDonalds Burger King Yum!
Cash Flow-To-Revenue 25.3% 11.4% 16.8%
Cash ROA 20.4% 4.0 % 108.5%
Cash ROE 46.9% 20.1% 110.1%

Fig 3.McDonald’s Burger King and Yum! Financial performance FY 2014

Threats. The greatest threat the organization is facing is competition from its rivals across the world, such as Burger King and Yum (figure 2). The presence of McDonald organizations in low economic nations like India has made them vulnerable to the economic status. The organization image is also under threat, especially by associating its products with health issues. McDonalds has also faced criticism in other nations for being accused of being American in nature since that is where the organization was established. The organization has also experienced a number of critics regarding their employment practices and health issues associated with fast foods leading to a negative public image.

 

McDonald’s Management Decision Crisis Problems

The organization experienced a major crisis in the introduction of new products, and opening new stores. Initially, introduction of new products, such as vegetable burgers, pizza, and fried chicken did not meet consumers’ expectations. Most consumers associated the organization with hamburgers and French fries thus the products affected the sales value of the organization that were later on withdrawn. Opening of new stores caused many revolts among franchisees as will be discussed later.

PESTLE Analysis

 

Figure 2. McDonalds PESTLE analysis

These are the forces in the macro environment that affect the general performance of an organization. According to Allen, PESTLE entails key elements that have a direct influence over the organization. McDonald PESTLE elements are political, environmental, social-cultural, technological, legal, and environmental. They are forces that must be put in consideration whenever a decision is being made about the location of the business chain.

McDonald Competition Complaint over Franchise Business in Europe

The history of the franchise issue at McDonald Corporation begun during Fred Tuners tenure. At the time, the organization went through two major crisis, which were Franchisees and human rights. In the 1970s, a group of over 50 franchisees staged a revolt against McDonald wanting to establish their own companies. Those who took part in this rebellion were members of McDonald’s Operations Association (MOA). There were several reasons for these turn of events. First, the franchisees complained about being frustrated with strict operation requirements of the organization. Furthermore, they also complained about low sales because of opening more stores. These made the organization to establish a board of inquiry that gave its recommendations to the organization (Hill and Jones 154). The problem of McDonald and its franchisees is still there. Several franchisees in European nations have raised the issue again. They claim the organization is over controlling them and passing costs onto the operators as a means of coping up with the low sales. For instance, the franchisees are claiming the organization is charging them too much costs for items, such as rent, training, and other software thereby making them hard to make profits. This problem comes in a time when the organization is faced with increased competition and tough global economic conditions.

Solutions and Recommendations

Although McDonald organization is performing well in the global arena, there are several changes that it needs to put in place about marketing matrix of 4 Ps. These strategies should reflect the competitive nature of the market, for instance, offering their products and services at considerably cost effective prices. In addition, the organization needs to offer healthy foods, which do not have any health hazards.  Despite the organization providing healthy meals, their prices must be moderate because of the existence of other alternatives. It is also important that the organization create child-playing grounds to cater safely for the needs of children in the face of competition. Initially, there have been reported incidences where children were injured in the play areas due to lack of railings or carpets. The organization management should also ensure that their restaurants maintain cleanliness as this has been an issue with the firm. Hygiene is very crucial for all organizations, especially in the kitchen and cleaning areas. In order to keep up with competition, the organization needs to install WI-FI in all their chain stores in order to meet their customers’ demands with the current technology. Organizational managers need to look into the franchise issue in order to address all the concerned factors raised and solve them in an amicable way. This will reduce the negative publicity the organization faces in the continuous fight with the franchisees.

Conclusion

McDonald organization is the leading firm in food industry. Its birth was a major boost in the fast food market both locally and internationally. Despite the fierce competition and other unavoidable environmental factors, the organization still pursues its mission of maintaining good services and relationship with their stakeholders, mainly clients and suppliers in order to meet their needs and increase revenue. The organization concentrates on providing enjoyable experiences to clients in their restaurants, which has led to the success experienced by the organization. Despite several setbacks and negative publicity, the organization still enjoys customer confidence, consumer appraisals, and children admiration by providing good and healthy foods. The organization also puts more emphasis on giving back to the community, and enhancing environmental conservation.

Works Cited

Han, Jing. “The business strategy of McDonald’s.” International Journal of Business and Management 3.11 (2009): 72.

Hill, Charles W. L, and Gareth R. Jones. Strategic Management Theory: An Integrated Approach. Boston, MA: Houghton Mifflin, (2010). Print.