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Environmental factors influencing after McDonald's management

Executive summary

The main reason for this paper is to explore and discuss environmental factors impacting upon McDonald's management functions. And current strategies the company currently using to handle these environmental impact. This may be performed by exploring how McDonald's take on with all of the external and interior environmental factors.

There a wide range of environmental factors which were selected to describe the achievements of McDonald's company. They are:

  • Customers
  • Product or service
  • Competitor
  • Employees
  • Technology
  • Political factor
  • Economy
  • Environmental factors
  • Culture and religion
  • Globalization
  • Law
  • Share holders

Current Strategies that are being used by McDonalds tha we are going to critically analyse are:

  • SO Strategy Expand into china Acquire Krispy Kreme Corp
  • WO Strategy Menu development
  • ST Strategy Front integration with Disney and Sea park Market Penetration for Coffee brand in China
  • WT Strategy Development of New Menu Redesign the web site Increase sales

Introduction:

McDonald's the largest junk food restaurant in the term proven in 1955 in Illinois USA, more than 30, 000+ restaurants located in 120 countries worldwide, offering more than 54 million customers per day. In Dec 2005 Mcdonald's reached a record most of avenue greater than US$21 billion worl wide. With 390, 000+ employees, McDonald's now is the largest over-the-counter food service restaurant on earth. The corporation functions mostly by means of franchisees. McDonalds is one of the numerous corporations that have effectively used a blend of varied marketing strategies to be a internationally successful company.

Product Lines:

McDonalds performs in 3 major categories of food items/product lines:

  • Snack foods
  • Desserts
  • Beverages

The major product line is of the Snacks division while Sweets and beverages are relatively more supplementary in characteristics.

Desserts:

Desserts offered are Glaciers Products and Pies. Adjustable for division derive from Price and Consumer choice and flavour. Most good deal item is Smooth Serve Glaciers Cream cones. In medium price range various kinds of ice lotions and varieties of pies.

Beverages:

Three types of drinks are offered namely, Soft drinks, Espresso and tea. Variable for division derive from consumer inclination and tastes.

Environmental Factor Impacting McDonalds:

Discussion of environmentally friendly factors impacting McDonalds, inserting emphasis on the key drivers. Environmental effects got important impact on company's global and local business platform. As areas like interpersonal, political, environmental, economical, and culture are extremely very sensitive and critical that's why, those must be addressed properly for company's success. Alternatively strategy is really very important to company because from the direction and opportunity of company over the long time.

The environmental factors which are under macro and micro environment, immediately or indirectly impacting McDonalds. Presently McDonalds is using many strategies which received negative and positive results on company earnings. MacDonald's should keep carefully the successful and effective strategies and redesign or enhance the uneffective strategies. The money have many different values around the world, so that it also results the international currency exchange rate and correcting the right price because of their product. Many issues such as this have happened in a lot of those locations, and about 120 countries offered by McDonald's that count on the effective decision for their price range for the neighborhood currencies to efficiently make profit in that region.

As McDonalds is a global company and working businesses most of the countries in the world that's way, this company faces a lot of troubles and issues. There is a relationship between key drivers and environmental factors because the main element drivers for change are environmental factors who've got a high impact on the success or failing of strategy.

Customers:

Customers are a vital environmental factor for McDonalds. Every day practically 54 million customers served by McDonalds. Though McDonald's customers are mainly young generation. That is why, companies are always mindful about their choice. Because of this, customers demand, their choice, their preference, everything is impacting McDonalds.

Product or service:

McDonalds producing their won product and they're serving those directly to customers. That's way the factor of product and service is impacting McDonalds. Product quality, product variety, quick and friendly service, every things are important for company. Those acquired an important impact on McDonalds.

Competitor:

McDonald's main opponents are Wendy's, Burger ruler and Hardees. McDonalds always had a need to treat opponents carefully. That's way the factor related to competitor like competition product quality, service, price competition, market, sales, progress everything impacting McDonalds.

Employees:

More than 390, 000 employees employed in McDonalds. Employees are impacting McDonalds because company is recruiting, training personnel for company. And at the same time wages also related to this. It is not uncommon for McDonalds to be the employer of first vacation resort for teenagers just coming into the workforce, old workers desiring more income, or for those planning on transferring from one corporation to some other. So, employee is impacting McDonalds in this way.

Technology:

McDonalds is producing their main product which means burger, salads in their own kitchen, these are cooking all fries, nuggets and meats patties in their own barbeque grill. So, the utilization of equipment, special control devices, temperatures regulators, point-of-sales systems, inventory upkeep, financial information and marketing communications are all associated with different technologies. In this way technology is impacting McDonalds.

Political factor:

Different politics decision, guidelines, motives are impacting McDonalds. Different countries may have different politics view; they could take different decision about food Company. Specially regulations, because federal makes laws which law might be improved at the same time of federal government changing.

Economy:

Economy is important factor which is impacting McDonalds. Company always need to thing about success, growth, to increase of company. So, they need to consider countries demand, source, production, circulation, exchange rate, business cycles, and differential monetary growth rates across the world.

Environmental Factors:

McDonald's is growing day by day by increasing the amount of restaurant. The primary source of ingredient and packaging is characteristics. McDonald's has a Rainfall Forest Policy, which declares its dedication to beef purchasing practices that not contribute to exotic de-forestation. Everyday McDonalds using a huge amount of napkins, perform bag, tray lines, clamshells. Petrol and normal water is other major element using in McDonalds. The ongoing and enormous use of natural resources can disturb the balance in the ecosystem. In Europe, McDonald's for quite a while now has been recycling leftover vegetable grease/natural oils by recycling these to convert into petrol for his or her diesel trucks, everyone are mindful about environment. So, McDonalds needs to careful about environment that, what McDonalds are doing that's environmental friendly.

Culture and Religion:

McDonalds does business worldwide. So, different areas customers acquired different culture and faith. McDonalds need to take into account, cultural and religion rules and custom. For example, in the India, the non-vegetarian menu have the option of seafood and rooster items only. Meat is not on the menu in India because are considered sacred. Like this, in Muslim countries McDonald's introduced halal meat for burger.

Globalization:

As, McDonalds is an international and worldwide junk food company that is why, globalization is effecting McDonalds commercial strategy. McDonalds is wanting to increase its business in global market i. e like China. That's why before getting into global market McDonalds need to consider about the spot, culture and faith of customers. Moreover McDonalds need to think food behavior and decided to go with of customer of new parts. And once regions government guidelines, law, market, politics economy, everything is impacting McDonalds to generate their business.

Law:

Different country received own legislations which is impacting McDonald's. Health insurance and safety has a definite impact on the performing of chains in various countries. For example, all restaurants in the Muslim region are halal-approved, meaning food is ready and handled according to the tenets of Islamic laws.

Share holders:

Share holders impacting McDonalds because they make investments money on that. That's way, if MacDonald's do good business and when its potential customer is good, then price of show increase and there is a possibility of getting more dividend for shareholder. Alternatively if company needs more money for invest then McDonalds will concern more share in market.

Critical analysis of current strategies used:

SO strategies:

  • Expand into Chinese market (increase advertising and restaurant locations) Two decades back, McDonald's was typically unknown in Beijing. The first McDonald's was in Shenzhen in 1990. And now, by this time McDonald's widened into China quickly.

After market USA, China is the no 1 progress market for McDonalds. now, McDonalds got more than 960 restaurants and over 60, 000 employees in China. McDonald's is functioning in more than 100 places in China with ideas to open 500 stores in next five years. McDonald's is planning to start 125 restaurant this year, 150 in '09 2009 and 150 this year 2010 in China. The main reasons of growing business in China are increase advertising and restaurant location. Company is choosing bustling Commercial Road of the administrative centre city.

  • Acquire Krispy Kreme Company: McDonald's is wanting to obtain other food company to make it strong. Krispy Kreme is one of those, which operate whole sale doughnut syndication business. It imagine to be help McDonald's to expand more and do more profit but Krispy Kreme did not have enough reputation about profit and show value.

For the 1 / 4 ended Oct. 31, 2004 Krispy Kreme reported a net lack of $3 million, or 5 cents a share, versus a revenue of $14. 5 million, or 23 cents a share, in the year-ago 1 / 4. Income from ongoing operations before other charges and store final costs waare $2. 4 million, or 4 cents a talk about, substandard analyst anticipations of 13 cents a talk about, as reported by Thomson First Call. The business's share price declined 16 percent to $9. 64 on Nov. 22, 2004, So, its an issue of McDonald's to cope with Krispy Kreme. If McDonald's doesn't deal with Krispy Kreme carefully company couldn't be benefited.

WO Strategies:

  • Menu development(healthy lifestyle & Hispanic foods lines): McDonald's is promoting a healthy lifestyle to customers, that's way they are couching kids in cool athletics like bike driving, show boarding and playing baseball. From given case study, we recognize that, they put rating 2 for creating a "healthy lifestyle program to catch the attention of health conscious consumers, where weight is 15 and weighted report is 0. 30. McDonalds is also introducing more health-conscious menus like the fruit and walnut salad and the new option to change fries with fruit in Happy Meals menu. Lately Hispanic inhabitants has increased by 14% in U. S. That's way McDonalds always launching Hispanic selections like Fiesta menu, and lots of chicken menus. And these Hispanic foods are not only popular for Hispanic people also for general market.

ST Strategies:

  • Increase the number of restaurants found in theme parks Disney & ocean Playground: McDonalds not only open their restaurant generally in busy place it also increasing the amount of restaurant in theme parks Disney & ocean park. Initially McDonalds did struggle to open and do business in Walt Disney, Disneyland. Company exposed its ninth restaurant in Des Plaines, Illinois, in suburban Chicago, Illinois in 1955. And amazingly the first day earnings were $366. 12. kroc. From then on company is obviously trying to build restaurant in every famous and popular theme parks like Disney and Sea Park.
  • Increase advertising of coffee line in key market segments (China. North America): As, in China and THE UNITED STATES McDonalds got a large market. That's way McDonalds needed strategy of advertising of caffeine collection in those key market. But in China, there are lots of traditional small restaurant all over the country, which price is really cheap. Alternatively North America the "land of coffee". People of this area are habituated for taking nice and fresh coffee with cheap price. So, it's rather a obstacle for McDonalds to increase espresso sales in those key market segments.

WT Strategies:

  • Develop the menu to maintain with competition (Asian and Latin American) Customers got complain against McDonalds about the merchandise variety. From the given case study we found that McDonalds rating is 3 for product variety where weight is 0. 10, and weighted score is 0. 30. Where as two competition Wendy are rating and weighted score 4 and 0. 40 and Burger Kings are is 3 and 0. 30. So, McDonalds could do product develop by taking new food idea from Asia like lam burger, vegetarian burgers and food, hen tikka masala which is really popular for Indian people. As like as Teriyaki Macintosh from Japan, variations of Filet-O-Fish from China, ice cream with green beans or red coffee beans from Hong Kong. And from Latin America McDonalds could take idea of Roasted beef Burritos, taco formulas, fajitas etc.
  • Redesign the website to make it more user-friendly and compete better with conclusion: Customers always complain that McDonalds website is not user friendly so, McDonalds should redesign their website to make it friendlier. Otherwise they'll be failure to contend with other. McDonalds should put all restaurant location, food value nutritional content with their meals, price, new food, all promotional offers, and special selections of week in website.
  • Increase sales advertising and advertising expenses in key market segments: McDonald's has for quite some time now managed an explicit advertising campaign. As well as the normal mass media like internet, radio, television set, and newspaper, the company makes remarkable use of billboards and sign-age, sponsors activities events that starts off from local Little Group to the global Olympic Game titles, and uses coolers of orange drink using their logo designed for local events of most sorts of occasion. Moreover, television set advertising has always enjoyed a big role in the company's advertising Campaign. McDonald's Europe introduces Fairies and Dragons video game notion include with basic children's Happy Meals menu. For sales campaign and advert McDonald's spend huge profit their key marker. From the given case study, we know that McDonald's rate is 3 for advertising when weight is 0. 13and weighted credit score is 0. 39 but its true that McDonald's should choose right mass media to advertisement and right sales advertising on right product on right time.

From the aforementioned discuss we're able to easily say that, which strategies McDonalds is using, those got some downside, so McDonalds should alter those strategies and should use right place on right time.

Recommendations:

Due to this industry's competitive aspect and McDonald's degree of financial power and competitive rivalry, it might be suggested that McDonald's have a competitive strategic direction. Alternatives to consider include an acquisition, conglomerate merger, or turnaround. Both acquisitions and conglomerate mergers are feasible for McDonald's economically as they currently have both with Boston Market and Wal-Mart. However, Jim Cantalupo has recently implemented a promising home based business model which continues to be in the process of being fully integrated, thus ramifications of his turnaround strategy remain being realized and extra changes could negatively impact those already executed.

In keeping with the goals of Cantalupo's proper plan involving the second driver of exceptional customer experience, an acquisition of an inferior healthy operation could verify profitable and work to thrust McDonald's into the extreme quadrant. Among the companies to consider for an acquisition focus should be on breads specialty shops such as Atlantic Bakery Company or Panera, deli style outlets like Quiznos, or any other "fresh" kind of food. While it is important to acquiesce to customer wants and needs, McDonald's should adhere to their center competencies and maintain their image as the burger leader. Few health nuts will probably ever before visit McDonald's even with a healthier menu selection.

Conclusion:

In bottom line, McDonald's should mostly work at the successful implementation of Cantalupo's turnaround strategy. Acquiring a wholesome food chain helps this strategy while offering McDonald's the chance to continue to turn a profit in times of higher focus on nutrition without going through the millions in research and development to alter their own menu. Though, McDonald's continues to be the largest over the counter quick service food restaurant on earth. From then on McDonald's should think about the environmental factors which impacting company. Plus the strategies recognise the business is using now, those have negative and positive influence on business. The management of McDonald's have to continuously keep an eye on the umbrella activities of the organization, by assessing what works and what don't to build the organization strategies. In order to implement the strategies effectively and efficiently, the top level management should generate a protected climate for reassure, support, changes, and dedication of the organization. It really is then recommended that McDonald must ensure that all the strategies are well organized and put in place carefully beforehand, because these changes and strategies would be the deciding for the success or failing of any organization.

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