Business Case Study: Mcdonald's Top Tips

McDonald's has successfully created a brand/name for itself as the leading fast food retailer in the world. It is somewhat of impossibility for one to not come across a McDonald's with over 30,000 local restaurants in over 100 countries (McDonald's, 2011). Those restaurants are owned either by a franchise owner or a corporation; a percentage of all the earnings from a franchise owner, including a percentage from their annual revenue go to McDonald's.

McDonald’s has been in business since 1955. Through many years of great strategic and financial planning, it has become one of the most successful food chains in the world. In order to continue its great success, McDonald’s must continue to adapt to change. In this paper we will discuss the strategic and financial planning that would be necessary to keep McDonald’s on top of the food chain.

With the enlargement of company across countries, McDonald’s has started to raise the franchise fee which has created a lot of hustle bustle among the franchisees. If this forced fee demand continues, many of

McDonalds’ is one of the best and largest fast food restaurant chains in all over world. They have 30,000 restaurants in over 100 countries. Their main object is to be best in fast food market rather than to be biggest restaurant chain in world. They served over one billion people in 2007 moreover their income was down in 2007 but they made a revenue record of $ 23 billion. As they have great brand image in market so to keep that brand image and that standard they always keep focusing on their strategies. Like in U.S. they are focusing on breakfast and chicken so, they launched new product for promotion which is southern style biscuit for breakfast and southern style chicken for lunch it attracts people a lot and in Europe their menu features premium selection and classic menu which offers a cheap or affordable meals and they also provide limited time food promotion moreover in Asia-pacific, middle east and in Africa their plan is to focus on convenience, breakfast and value.

REFERENCES•www.mcdonalds.com, accessed on 18 July, 2008•www.mcdonldsindia.net, accessed on 18 July, 2008•en.wikipedia.org/wiki/McDonald's, accessed on 19 July, 2008•http://www.associatedcontent.com/article/263943/mcdonalds_strategic_marketing_mix.html?cat=4, accessed on 19 July, 2008•www.kfc.com, accessed on 25 August, 2008

There are changing societal trends in the areas where McDonald’s operate. There are changes in consumer preferences and also in some communities they culture different as compared to other areas in the market. To remain relevant in the market, they have to deal with these issues by conducting market research that will help them be knowledgeable of the needs of the market. They also need to adjust their menu to suit the needs of the consumers.

McDonald is a fast food franchise based in the United States and has various food outlets in other countries like India, United Kingdom, China, Japan, Canada and Australia. McDonald has been termed as the ‘World`s Local Restaurant’ because of its affordable take-out and sit down meals. The economic recession in the US in 2010 greatly affected businesses especially fast food restaurants whereby most small restaurants had to temporarily close their businesses. However, McDonalds remained afloat amidst tough economic times in the American market because of specific strategies which will be discussed.

In the article “The Franchisees Are Not Lovin’ It,” the authors, Gruley and Patton, discuss the difficulties of the McDonalds franchise, the struggles of the franchisees, and the inability to solve these problems. The article goes on to talk about how McDonalds needs to get back to basics, just as they say themselves. Yet, they continue to make the menu more complex by the constant introduction of new foods. They are getting away from their identity as a burger joint. As a result they are closing restaurants and are continuing to experience declining revenue. McDonalds isn’t what they used to be and something needs to be done to improve the well-being of the company, the franchisees, the employees, and most importantly the customers.

McDonaldization is an epidemic infecting the United States as well as consumers all over the country. George Ritzer’s term McDonaldization means “The process by which the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as the rest of the world” (Ritzer, 1993:1). McDonaldization is moving stealthily into every facet of our daily lives and affecting us more negatively than positively. Before one understands Ritzer’s coined term “McDonalidization”, one must know what McDonalds is first. McDonalds is a multi-million dollar corporation of fast-food restaurants serving consumers all around the world.

McDonalds has been around since 1940, when it was created by Nick and Mac McDonald in Bernardino, California. Since then McDonalds has only grown around the world in popularity and business. There are currently more than 33 thousand restaurants around the world in 119 countries. The chain has remarkably gone form offering just a few items on its menu to a wide range of over a 145 diverse items on its menu. Needless to say McDonalds has embedded itself within the world’s society. The way McDonalds runs its business has many different components. These different items include geography of a location, Weber’s model, development, and mass consumption.

From drive-through restaurants, to Chicken Mc-nuggets to a hamburger joint, McDonald?s has come a long way. It?s the leading chain of fast food restaurants in the world that serves more than 55 million clients on the daily basis. In 1940, the corporation was established by two brothers from California, Maurice and Richard McDonald. However, directed by Ray Kroc, the current McDonald?s business times its establishment to the inaugural of a licensed restaurant on 1955, in Illinois. Later, the McDonalds expanded globally after Kroc bought the brothers? capital in the company. Today, McDonald?s runs about 32,000 restaurants globally, in about 115 countries (Eric, 2001). The restaurant provides its clients with great tasting and cheap food; dealers with a mutual obligation to deliver the highest quality products and ingredients; and franchisee and staff with opportunities for growth. Through its growth into numerous worldwide markets, the company has become a figure of globalization and a great supporter of how Americans live. It has become a common public debate topic about consumer responsibility, company ethics, and obesity, due to its fame (Eric, 2001).

Back in the 1960s and 1970s, company and corporations tried to branch out using the franchising scheme, since it’s the safest way for both the franchisor and franchisee. Compared to others, McDonald was way ahead of their competition again when it comes to franchising. Unlike other fast food chains, McDonalds’ executives were interested in expanding their franchises by offering lower franchising fee instead of demanding a large fee up front, sold off the rights to entire territories, and earned money by selling supplies directly to their franchises. Together with their well-known brand recognition, McDonalds continues to expand more and more, just like what Ray Kroc wanted from the beginning. This kind of explained why there are so many McDonalds restaurants compared to others, such as Carl’s Jr and Burgers King. While this might seems like a good business decision for the company, it’s a 2 way knife for franchisee. Instead of demanding large royalties or selling supplies, McDonald became the landlord for most of their franchises. These franchisee have to pay up to 40% markup and that one single contract breach could lead to franchisee’s eviction. Over the years, this eventually turned into a good business for company and as one of McDonalds’ executive put it’’ We are in the real estate business and the only reasons that we were able to sell fifteen cent hamburgers is because it is the only way that help our tenants to us our rent.’’ In other words, to open up a franchise

down the expansion plan. What went wrong with McDonald’s and what can other international franchises

Since McDonald’s is the most well know fast food chain in the world with a market cap of 69.35 billion, brand recognition is their biggest strength. The secret of McDonald’s success is its willingness to innovate and maintain consistency in the operation of its many outlets. In recent years McDonald’s has introduced Premium Salads, Snack Wraps, fresh Apple Dippers in the United States, and Corn Cups in China. Also, McDonald 's products are priced so low that economic conditions are almost insignificant.

According to Michael Porter, there are three generic strategies that a company can use to achieve competitive advantage: Overall Cost Leadership, Differentiation, and Focus (Dess, McNamara, & Eisner, 2016). Applying this concept to the McDonald’s case, it is possible to infer that the primary generic strategy adopted by the company is cost leadership (Gregory, 2017).