A Number Of Uncontrollable Elements Affect Mcdonalds Business Essay

Published: 2021-06-23 07:00:05
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McDonald’s is one of the best known brands worldwide.  McDonald's Corporation is the world's largest chain of fast food restaurants, it has more than 31,500 restaurants in 119 countries worldwide and serving nearly 47 million of customers each day. McDonald’s sells several fast food items and beverages including, burgers, fries salads, chicken and ice cream desserts. Many of the McDonald's restaurants have included a playground for children and advertising steer in the direction of children, and some of them have been redesigned in a more 'natural' style to emphasis on comfort to introducing fireplaces and lounge areas, and eliminating hard plastic tables and chairs. The corporations' revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. Each McDonald's restaurant is operated by an affiliate, a franchisee , or the corporation itself.
Branding only works when an organization behaves and presents itself in a consistent way. Marketing communication methods, such as advertising and promotions, are used to create the colors, designs and images which give the brand its recognizable face. At McDonald’s this is represented by its familiar logo – the Golden Arches. In all its markets, McDonald’s faces competition from other businesses. Additionally, economic, legal and technological changes, social factors, the retail environment and many other elements affect McDonald’s success in the market. Marketing involves identifying customer needs and requirements and meeting these needs in a better way than competitors. In this way a company creates loyal customers. The starting point is to find out who potential customers are – not everyone will want what McDonald’s has to offer. The people McDonald’s identifies as likely customers are known as key audiences.
McDonald's currently faces a dynamic time within the history of the fast food industry. Social beliefs and values regarding health and fast food have changed significantly and McDonald's must change with the times in order to continue its success. In order for Jack Greenberg to grow sales, profits, and market share, McDonald's must stick to its strengths, which include detailed market research, and product development in order to continually offer the most beneficial product mixes that stay in touch with changing customer tastes. They will continue to have an increasing amount of potential customers and may be able to capitalize on an increasing amount of health conscious consumers that still need a fast, friendly experience. McDonald's must continue to change and innovate as consumers and their values change. They must also be aware of the innovations and actions of their competition. McDonald's must take special care to cater to each of the segments within its market by staying in touch with each type of group within it market.
Questions 1: Identify the mission, objectives and social responsibilities of McDonald’s within its environment.
McDonalds, being a multinational corporation, sets objectives for themselves in hopes of achieving them through strategies and tactics. The objectives of McDonalds are to serve better food in a fun and friendly environment, to be a socially responsible company, to provide good return to its shareholders and to provide its customers with food of a quick service, high standard and value for money. There are tons of strategies implemented by McDonalds to reach these objectives, all focusing around the 5p’s (People, Products, Place, Price and Promotion) as mentioned in their mission statement. Such as advertising their product to make it seem more high quality than it really is, building playgrounds in restaurant areas, building hospitals for children etc. The tactics of McDonald’s include temporarily decreasing the price of their burgers, creating new forms of product, using celebrities to advertise their products, hosting birthday parties for the less fortunate children etc.
McDonald's brand mission statement is to "be our customers' favourite place and way to eat." This Multinational company have been aligned around a global strategy called the Plan to win cantering on the five basics of an exceptional customer experience - Products ,People, Place, Promotion and Price. They’re dedicated to improving their enhancing the customers' experience and operations. This mission includes to be the best employer for people in each native community independently in the location. To provide the outstanding service to all the customers and certainly achieve growth with profitable through strengths such as McDonald’s technology and system innovation. The foresight of McDonald’s is to be the best quick service restaurant in the whole world. It refers to cleanliness, outstanding quality, high value food and high quality service in order to make every customer happy and smile.
McDonald’s company states that their values in actuality are the corporate responsibility of the company. They show values in everyday activities, when they are achieving some goals and most importantly open lines of communication is the main value between customer and other stakeholders. They work together with independent franchisees and suppliers to achieve a maintainable future for the communities in which they operate as well. Their strong values helped them to become who they are, what they do and how they operate in these times.
McDonald’s values it’s customer satisfaction. It said that the reason for McDonald’s existence are due to customers. They are trying to prove the appreciation by serving a superior service and high quality food. They also try very hard to create a welcoming environment. And McDonald’s also value to be committed to it’s employee. They believe that working in a well-trained team with backgrounds and intercultural experiences are way toward of success.
Ethic in business is also one of the values. They are trying to conduct their business with fairness, honesty and integrity. They state that: "We are individually accountable and collectively responsible".
McDonald’s obliged to grow business profitably as long as it is publicly traded company. This requires not only focus on gaining more money but also on customers and the health of the whole system. The changing environment, customer, employee and systems need lead to the McDonald’s evolution and innovation as well.
McDonald’s objectives involve identifying the customer’s needs and responding to them in a way that’s better than its competitors. To go further into detail, this paper focuses on 3 objectives:
To establish in the minds of its customers that McDonald’s is a healthy and
environment-friendly brand. McDonald’s in France has changed its logo from red-yellow to green-yellow as a first step towards responding to the continuously increasing health trends all over the world.
To increase customer satisfaction by increasing employee productivity by at least 20%. Trainings and skills are to be provided to the employees, for it is believed that although it is the product that gets the customer to try, it is the relationships built that keeps the customer loyal.
To increase customer satisfaction by constantly improving and updating the
operating systems and marketing databases. Another objective is to improve the restaurant system by having 24 hours 7 days stores and delivery service all days and nights long. McDonald’s already has it in many countries, customers are able to enjoy and benefit it at anytime they want, which will also increase the profits.
Social Responsibility
It is obvious that business organizations have certain responsibilities to their employees and customers. Indeed, such responsibilities are usually set out in law such as consumer and employment law. However, in modern times many organizations take a much broader and more inclusive view. This is the concept of corporate social responsibility (CSR) or corporate citizenship. CSR means that the business recognizes legal, ethical and social responsibilities to a diverse range of stakeholders.
Each year, McDonald’s purchases over Euro 80million worth of 100% Irish beef for use in its restaurants here in Ireland, but also for export to other McDonald’s markets across Europe. One out of every five hamburgers sold across Europe in McDonald’s is made from Irish beef. McDonald’s uses over twenty different local suppliers to provide over Euro12.5 million worth of food products every year. Each individual supplier must commit to the company’s standards of quality assurance, business ethics and social responsibility. There is a strict verification process that is conducted by external auditors who may inspect a site, examine documents or interview employees. McDonald’s won a Chambers Ireland 2010 CSR award for its work with suppliers under the ‘Flagship Farms’ programme which recognizes farmers who supply the McDonald’s system.
The Rainforest Alliance is a non-profit organization that works to transform the use of land in order to develop sustainable farming practices and protect biodiversity and the environment. When these things happen, the supply chain and farming incomes are protected into the future. In 2007 McDonald’s switched to coffee supplies that are certified by the Rainforest Alliance in support of these principles.
Given the massive amount of solid waste that McDonald’s disposes each year, an opportunity for continual improvement exists. The model which they created to combat their solid waste output was designed to be comprehensive, incremental, and ongoing. It is comprehensive because it spans the expansive network of McDonald’s 600+ suppliers. It is incremental because realistically these changes take time to become effective on all fronts. It is ongoing because the problem itself will never cease to exist. Recent initiatives such as the introduction of reusable shipping containers, packaging changes to include more recycled content, and the use of unbleached paper products are just a few of the efforts being made to reduce their impact on the environment. In a most exciting project, waste cooking oil will be converted to biodiesel for use in the company’s fleet of vehicles.
Moreover, McDonald’s result of specific employment policies, that promote fair and progressive employment practices. McDonald’s staff come from all age groups and include parents, teenagers, university students, people with disabilities and senior citizens. Jobs can be long term contracts or part-time jobs with flexible hours.
Question 2. Investigate the external environment factors in which this organization is operating. (eg. using PESTLED tools to analyse the external environment.)
The macro-environment consists of forces such Political, Economic, Social, Cultural, Technological, Legal and Environmental. The micro-environment includes other environmental constraints, such as the structure of the suppliers, the market, customers, trends of the market, the public and competition. Equally important is the internal environment incorporating the examination of the company’s marketing mix (product, price, place, promotion) and service mix people, process management, physical evidence). 
Every company, after considering both its internal strengths and weaknesses and the external environmental influences that affect it (opportunities and threats) is in a position to develop an effective marketing plan. Failure to understand the external and internal environment capabilities may lead to sub- improvement of efficiency of the organization’s strategy and resources invested. Company which operates branches or subsidiary companies in several countries (Multinational companies) must highly consider environmental auditing and the development of the SWOT (strengths, weaknesses, opportunities and threats) analysis. This is crucial if they want to capitalize on organizational strengths, minimize any weaknesses, take advantage of market opportunities as they arise and avoid, as far as possible, any threats.
It should be noted that the external environment is very important as it ruling principle by the behavior of any marketing orientated organization. Consequently, for the purpose of this case, considerations of the analysis external environment are highlighted for McDonald’s.
McDonald’s and its external environment
Political and legal factors
Political factors include laws, agencies and groups that influence and limit organizations and individuals in a given society. The assessment being evaluated includes the government attitude to the stability, foreign markets and financial policies of a country and government bureaucracy. Political and legal forces are highly important as they cover many aspects of company policy. Government policy affects industry as a whole through the Department of the Environment and the Department of Trade and Industry. These departments develop policies on the trading,
restrictions and standards within their particular field. The policies created can affect businesses in different ways, in how their products are produced, promoted and sold. Multinational companies should understand that the political background is different across the regions of the world. Many former centrally planned economies, for example, are still heavily protected by the government. In such a climate, it is more likely that proposals for a joint venture will be accepted. It is argued that the legal consequence of marketing a product internationally are very complicated. Each country has their own legal system and when a company internationalizes then it must keep within these legal systems.
When it comes to developing marketing mix components in foreign markets, the company’s approach may have to be adapted. The legal environment must be assessed to determine whether it would affect the launch of a product into a new country. In many countries, government and regulations have a direct influence on product design. Law often required minimum or special product standards, which may necessitate the shape, kind, components or even the brand name of a product used. Government regulations and restrictions control the content of promotion. The law restricts the advertiser’s freedom, particularly with regard to the advertising message and visual presentation. Promotional activities also may have to be changed, depending on the country involved and the legal systems that take place. Price regulations may be another factor that a company needs to look at when launching into internationalization. As some countries governments may control the price that is set for products.
Economic factors
Economic factors include factors that affect consumer purchasing power and spending patterns. Economic trends are again, to a large extent, bound up in government policy and area crucial issue to businesses and marketers because of the way they affect consumer spending power. In periods of relative prosperity, a consumer’s disposable income will be relatively high and, therefore, there is a willingness to spend more money. Price becomes a less sensitive issue and this affects marketing strategy itself. During a market down turn, however, spending power decreases making price more relevant. The differences that exist between countries in different stages of economic and industrial development have a profound influence on price setting. Differences in income levels may suggest the desirability of systematic price variations. It is, therefore, important for McDonald’s to understand that, in countries with a lower stage of economic development, it is necessary to set a lower price. The limited purchasing power in developing countries, often combined with low levels of education, poses special problems for marketers on promotion. Although theoretically a company has a wider choice of promotional tools, in practice the choice of effective tools is somewhat limited. For example, in foreign markets with low economic development, McDonald’s should try to use cost effective methods of promotion, otherwise the final price would be beyond the reach of most customers.
Technological factors
Lifestyles and attitude changes cause changes in product demand and how products can be sold to customers. It is based on considerations as to whether the local market has sufficiently developed technologies to take full advantage of the product. It should be noted that high technologies are required to make full use of the variety of  promotional methods using alternative advertising media such as television or websites. Technological developments have made international travel and communication more accessible to consumers and led to a situation in which social habits and fashions change much quicker. Technological factors include forces that create new technologies, creating new product and market opportunities.  McDonald’s successful internationalization can be partly attributed to the way the company has overcome technological problems. The systematic substitution of equipment for people and the carefully planned use and positioning of technology have helped each franchise to be of the same high standard.
Socio-cultural factors
McDonald’s special emphasis on children and teenagers as advertising targets was successful largely because the strategy capitalized on these existing social trends. Another important factor was that the value that US society placed on time preferred the consumption of meals with minimum time effort. Saving time, in fact, created the desire for meals purchased outside the home on an unplanned or impulse basis. The result was a developed quickly demand for low-priced food that was available any time and that could be purchased with minimum shopping effort. Therefore, to understand markets abroad, the company must have an appreciation of buyer behavior. Culture could be defined as institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors. Culture includes the entire heritage of a society transmitted by word, literature or any other form. It includes traditions, habits, religion, art, education, language, family and reference groups. While satellite television and the international media are shrinking the world and homogenizing consumer tastes, culture continues to pull in the opposite direction. Traditions and religious beliefs run deep and could often conflict with international media messages. When McDonald’s entered India, the chain decided not to launch its Big Mac burger as a result of deferring to the Hindu prohibition against beef consumption. And McDonald’s has been forced to change its food preparation methods as well; inSingapore and Malaysia, for example, the beef that goes into burgers must be slaughtered according to Muslim law.
Environmental factors
The climate and physical terrain of a country are important environmental conditions which have a significant effect on the demand and the type of product made available. Prior to entry into a new market, it is very important for McDonald’s to consider the physical terrain and climate in the appraisal. Temperatures, altitude, and humidity are some of the climatic conditions that can affect products in foreign markets. Being environmentally friendly is another important issue to consider. Environmental groups forced McDonald’s to reduce its use of plastic and styrofoam packing. While McDonald’s internal market research shows that environmental issues will have neither a positive nor negative impact on sales, they have agreed to work with the Environmental Defence Fund, an environmental pressure group, to reduce unnecessary and harmful waste.
McDonalds has seen many changes, good and bad during its creation and duration of the business. As long as the core competencies are recognized and never forgotten, then this business will continue to thrive. With every issue and challenge the corporation faces, it has the opportunity to improve itself and prove itself to the public, shareholders, and stakeholders. With every battle conquered, another one rises and with a secure mission and vision in mind, the corporation should never stray too far from the roots and success of the company. The recommended strategy will strengthen this plan because it is doing what McDonalds does best and more so. Despite the downturn the company has seen, the general impression we receive from McDonald’s financial situation is that the company is slowly climbing out of a low period and making a turnaround. We must never forget the key success factors of the business which really makes the business for what it is today, including franchises that offer quick, efficient service in a clean friendly environment.
A number of uncontrollable elements affect McDonald’s international marketing strategy and tactical implementation. These groups of elements include the PESTLE (political, economic, social, technological, legal and environmental), structure of the market and competition being faced as well as analysis of its stakeholders, customers and product adaptation within its internationalization strategy. All of these aspects are crucial to a company’s strategic decision making. The level of understanding that exists in these relationships will determine the success of a company. McDonald’s is not making a one-time standardized global choice but it is striking to find a balance. The goals of reducing costs and complexity lead McDonald’s to consider standardization, while customer orientation sways it towards adaptation. It is evident through the analysis that McDonald’s is adapting its marketing mix elements in order to go in line with the external environment.

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