McDonald’s corporation is the world’s largest hamburger producers with a command of a customer base of 68million spread in 118 countries globally. It boasts of 34000 restaurants worldwide with a workforce of 1.8 million customers globally, where 80% of its restaurants are franchised. It main Headquarters is in United States. Its main delicacies include french-fries, chicken, hamburger, soft drinks, cheeseburgers and desserts (McDonalds, 2010). Recently, the company’s innovation management has introduced new products like salads, fish and smoothies to stay ahead of its rivals. (The New York Times)
Company’s value and Mission
The company’s mission is to be the customers’ restaurant to eat and drink at an unprecedented level of service. Its values which sustain the company’s reputation are: placing the customers satisfaction at the center of all decisions, listening to the customers complains and compliments, Commitment to the company’s model, corporate social responsibility, and commitment to expand and innovate new products I order to maximize profits. (The New York Times)
The company operated wholly on its primary restaurants and branches. Later it decided to introduce franchise method to reduce the ease of operation in new environments and reduce the cost of expansion .The company provides incentives to interested parties for instance equipments to operate, brand name and little start-up capital the .franchise is limited to operate only the company’s products. Their services range from inside services to outside catering services.
The company style of management has given them a competitive bonus over their competitors through frequent review of their products and introducing new ones in the market. In addition, the strategy of franchising has shielded them from extraneous operation costs cost and reduced its risk. This has enabled them to traverse in many countries within a short while and increased revenue.
The company’s main competitor has been Subways but McDonalds has remained ahead in terms of sales despite being surpassed in the number of fast-food chains by Subways. Its consistent introduction of new varieties like smoothies has kept them ahead of rivals. Recently they adopted a system called “Ethnic consumer trend” This trend has been applied to woo middle-class Caucasians to buy smoothies and snack wraps.
This strategy has enabled the company realize the composition of America’s population and developed varieties related to their tastes. For instance, African –Americans, Hispanic and Asians were treated to products of their taste. “The ethnic consumer trend helps set the trend on how we enter the market” says Neil Golden, McDonalds US chief marketing officer (Bloomberg BusinessWeek Magazine)
Continuous improvement of its varieties has retained its customers. For instance, smoothies have been combined with fruits to improve tastes. Introduction of coffee drinks with brand names like Mochas, associated with black has improved the market response of coffee”, says Golden. (Bloomberg BusinessWeek Magazine)
The company’s stays ahead of rivals by offering lower prices especially to the developing countries. Besides Heavy investment in advertising through all channels, including discounted promotion strategies has won the confidence of many customers. (Bloomberg BusinessWeek Magazine).
The company maintains its brand recognition worldwide through franchising. Besides granting franchise rights to business enterprises, it ensures that its logo and all its products are retained and no rival product is to be sold alongside. Moreover, the franchise agents are restricted from engaging in activities of rival products. The company franchises well-established enterprises to hasten its recognition in the new market.
The company’s structure of governance makes it convenient for the suppliers to interact with the company’s managers. The procurement department is mandate with the responsibility to source for credible suppliers, negotiate the terms of contract and oversee the delivery of raw materials.
For instance, when McDonald ventured in Russia majority of the raw materials were unavailable in Russia. Currently independent Russian supplies supply most of the ingredients. They ventured into growing the raw materials locally and introducing varieties related to the local ingredients available. This has reduced logistical costs and at the same time won the taste of Russians .Russians has even changed, they eat. For instance production of potatoes wedges and cherry pie. (Business Today)
Their strategy to get the lowest price in raw materials, they maintain constant supply relationship with their suppliers who in turn sell to them at lower price. In new environments, they engage farmers supporting them with initial capita to grow raw materials and in turn buy them at a cheaper price. Other competitor who produce similar products like Subways share the same market for raw materials.
Unlike other competitors McDonalds has no history of exploiting suppliers at the expense of its rivals. They ensure they retain cordial relationship with them for the continuity of the business (Wall Street Journal)
Helm, B. (2010, July 8). Ethnic Marketing: McDonald's Is Loving' It. Bloomberg Business Week.
McDonald: The Leading Global Food Service Retailer: AboutMcDonalds.com. (2012, April 10). Retrieved October 27, 2013, from http://www.aboutmcdonalds.com/mcd/our_company.html
Sakuma, P. (2012, May 6). How McDonald came back bigger and better. The New York Times [New York].
Jargon, J. (2011). Subway Runs past McDonald's Chain. Wall street journal.