Stephanie Lynch-Moreno

BPS 4305-007
Professor Dan Bochsler




McDonalds


McDonalds has brought smiles to many faces throughout the years and
continues to play a major role in our everyday lives. We know the slogan, Im
loving it, by heart and we recognize the bright yellow arch that resembles the
company. This iconic company, which has been around for several successful
decades had hit a rough patch in the fast food industry. The worlds largest
restaurant chain faced considerable challenges in 2013 stemming from a declining
economy and other external forces (Strategic).


External Forces:


McDonalds vision needed to change because of the external factors taking
place all around them. McDonalds had not improved their technique, marketing, or
update the menu in several years. It had become very apparent that lack of strategic
planning was affecting the overall running of the company. Consumers were looking
for healthier, more exotic food choices and were turning to the competitors. The
competitors included Wendys, Burger King, and Chick-fil-A. The attitude of
consumers needs had changed due to the overwhelming influence of the media,
politics, and health experts. The rise of obesity in the U.S. alarmed many and the
negative documentary Super Size Me made by Morgan Spurlock displayed the
enormous amounts of health risks associated with the products offered by
McDonalds. The films content brought many lawsuits and created a huge uproar for
the company (Strategic).


The general environment had changed and McDonalds was not up to par.
The sociocultural forces influenced the values, beliefs, and lifestyles of the society,
which proved to be damaging. There was a greater concern for healthy diets and
physical fitness. This influence depressed the sales of McDonalds because the menu
still reflected the old mentality of the fast food industry (Strategic). Competitors
had to know the customer demand and change the menus to include better quality
meat, salads, and even including other options for sides, maintaining the
competitive advantage over McDonalds.


The quality of the end product was not the same from the previous years.
Once well known for its cleanliness, speed and service, was now falling behind
because of having to tighten their labor market. McDonalds began to cut back on
training as it struggled to find new recruits, leading to a dramatic falloff in the skills
of employees. This hindered the executing of new food because they were poorly
done making it easy for consumers to go with competitors.


Internal Forces:

Many mistakes took place that brought the giant chain down. Some included,
trying so many different things and executing them poorly. The lack of knowledge
on how to expand created a serious problem. This action was also reflected with the
service and quality, allowing the company to fall so far behind from its rivals.
Noticing these failures and not making changes helped with the fast decline.


McDonalds had various changes starting with the top executives returning to
the company to help it get back on track. The overexpansion had caused the chain to
lose focus and James R. Cantalupo came to the rescue. His plan was to increase sales
at existing locations by improving the menu, refurbishing the outlets, and extending
hours. He understood that its franchisees and employees alike needed to be
inspired as well as retrained on their role in putting the smile back into the
McDonalds experience. He had a new plan and he stressed getting back to the
basics of service and quality right and kick out the underperforming franchisees
(Strategic).


The internal changes took place starting with the much-needed update done
to the menu, ingredients used, and variety of choices. The revamped line of fancier
salads, enhanced breakfast sandwiches, and alternatives to side options opened up a
larger range better than before. This was only the beginning of countless changes.
When Jim Skinner took over in 2004 he dealt with the overwhelming concerns
about the unhealthy image McDonalds was displayed as. He removed the
supersizing options on items; he started to provide nutrition information on
packaging, and began to remove the artery-clogging trans fatty acids from the oil
(Strategic). These changes would reduce the sodium content in all products by 15%
moving towards a healthier menu.


This was the smartest move for McDonalds both bringing back Cantalupo
and Skinner. They knew the importance of changing the current situation and what
changes needed to be made to get a final result. Execution of a plan is some
situations the most challenging part but these two were able to follow through
successfully. They did not overwhelm themselves nor the company with a large
amount of changes, they focused on things one-step at a time which proved to be a
great strategy.


McDonalds has remained committed to pushing forward with their new
strategy.


Competition:


McDonalds has tough competition including Burger King, Wendys, Subway,
Chipotle, and Taco Bell. The closest rivals have remodeled their menus to the new
health conscious crowd. As where Subway, Chipotle, and Taco Bell offer a more
customized menu which appeal to a wider range of people with fresh food items
available each day.


McDonalds upgraded their promotional advertisement level to keep up with
the changing times. McDonalds has teamed up with Spotify to run a competition
called The Flavourhood. Users submit their favourite tracks for a different fast-food
themed playlist each week, spurred on by the chance to win gig tickets as well as
free tracks from Amazon. The most popular tracks and playlists are published back
to Spotify to drive continued interest. The ever so popular Facebook is also
included; the McDonalds Facebook page is where fans can interact with all types of
games and challenges the company has to offer. This helps includes the consumers
on a different level and allows them to feel more connected. Involving those that are
the interested in the company will allow it to grow. This partnership, advertising,
social media and online PR creates multiple entry points. McDonalds has been
taking advantage of this most useful piece of technology; it is more useful than any
ad campaign. This new campaign method has been a success and has put
McDonalds back on the map (McDonalds New Media).


In the fast food industry there are several components that allow success. A
few consist of product positioning, competition, and location. Its very important
deciding how to position a product, marketing managers need to understand how
product differentiation affects competition. The close relationship between product
differentiation, prices, and profits is key in the fast food industry. Analyzing the
information and putting together a product position strategy is also very important
for a profitable execution (Product Positioning).


The importance of product positioning is critical. The optimal product
positioning reveals that McDonalds should pursue different locations from its
competitors such as Burger King or Wendys. The ideal place would be to be as far
as possible regarding location to allow McDonalds to own its unique niche its
customers. To make the most profit separation is a must. The closer McDonalds is
to a competitor the lower the prices will be. Not only will prices vary the closer
together competitors are but the weaker firm will not be able to attract many
consumers and will eventually go under faster.


With the return of Jim Cantalupo as chief executive of McDonalds
Corporation, focusing on new changes has resulted in the companys turnaround.
Since his return in 2002, he has included a new tagline for advertising campaigns
and menu changes for the health-conscious consumers, improved the recipes and
the overall improved taste of the food. These changes have enhanced sales
tremendously. Finally, McDonalds has something to bring to the table and being
able to compete once again (McDonalds Makeover).


Growth Management:


The business environment is constantly evolving we must have strong
leaders to stay on top of these changes to make successful decisions. As challenges
arise the leaders who can inspire and guide a team will go far. McDonalds requires
leadership skills at all levels in the organization; every employee must demonstrate
leadership. To make sure this is met and the right people are working for
McDonalds, executives have formed a career development process. This process
includes:
Know yourself
Know your options
Create your plan
Learn and develop
Network with others

Know yourself.

The importance of knowing who you are and what you are made of is important
trait in a leader. A leader that is strong knows what they stand for, they are
confident in the decisions they make, have values, are able to lead by example,
and are usually great positive role models.

Know your options.

Open communication with a clear message will allow every employee to know
the focus of the company. Allowing each employee to know what steps to take
leaves little room for mistakes.

Create your plan.

A strategic plan that has a realistic focus is the ultimate key to success.



Learn and develop.

Having the ability to learn a skill makes it easy to adapt to McDonalds standards.
The environment is always changing and those that are easy to adapt will allow
fast development for the company.

Network with others.

Being able to connect with others allows you to draw people in. This is so
important especially in todays age where Facebook, Twitter, and other social
media play such a large part of McDonalds marketing.


The career development process allows McDonalds to get the best
employees for their company with the standards they would like met. McDonalds
philosophy; Career Development at McDonalds combines a focus on personal
growth and development with talent management objectives in order to help
employees to perform at their very best- while experiencing personal career
satisfaction (McDonalds Leadership Development).


Members of the senior management team reiterated the companys strategic
plan. Its growth priorities is optimizing the menu, modernizing the customer
experience, and broadening accessibility to the McDonalds brand (McDonalds
Continues).


McDonalds long-term goal for future growth includes, the sales growth to
increase from 3% to 5%, the operating income growth to increase from 6% to 7%,
and the return of incremental invested capital in the high teens (McDonalds
Continues).


The average annual constant growth targets are realistic and achievable.
These goals keep the company focused on making decisions for the long haul.
Evolving to meet the consumers wants, investing to build demand, and maintaining
a focus on execution and operation will lead to success. Don Thompson explains,
Our goal is to ensure that we are adapting to keep pace with the changing
marketplace. We are intent on strengthening our brand by running even better
restaurants and delivering the best food and beverage offerings. Today executives
are valuing their people more, investing in their brand, restaurants, and using
technology to capitalize on long-term opportunities that will make McDonalds
bigger and better.



With McDonalds new motivation and straightforward plan the company will
go further than it has before. The change in the hiring process will allow the best
qualified people that are eager to follow the guidelines McDonalds prefers to be
hired. Allowing the company to have the best to represent them from the bottom up.
Having a solid team throughout the company will prove its importance, as sales will
increase. The lack of service, commitment, pride, and responsibility should
diminish. McDonalds new train of thought of where the company should be in the
future has changed their mindset of what is wanted for the whole team. Focusing
from within will allow the company to flourish externally. Having such a strong
store manager and staff will help with the new presentation and standards
McDonalds is trying to reach. This performance helps the overall customer
experience and give them a fresh new view of what McDonalds is trying to be. The
consumers are at the store making their purchases, the first and last person they see
should make a lasting impression so they have the desire to return.


Bringing back the previous executives to help rebuild the name and value of
the company was the smartest move yet. The need for more employees and future
executive prospects is crucial so the growth continues in the future. Planning ahead
is a fundamental role for any company and needs to be present at all times to stay
on the path to success. Now that there is a clear, concise goal and direction
McDonalds can be more innovated. The next steps would be to continue with the
growth and improve the quality of the food. Staying on top of what consumers want
and need will allow new and old clients to return to the most recognizable company
around the world.


Being competitive with prices is also a great way to stay in the game with
rivals. Offering games to have the interaction of customers increase bringing in
more attention to McDonalds. The new advertising and marketing techniques is
reaching new customers rather than the traditional way. This proves that
McDonalds is determined to keep up with the changing times and are committed to
learning a new process that was once foreign to the giant firm.


Conclusion:


McDonalds has been around for what seems like a lifetime, just like many
things in life they have gone through their ups and downs. Hitting the rough
patches has allowed the company as a whole to determine what is really needed to
stay in business with great competitors. The drive and determination was there
when they were no longer making the same amount of revenues and their once loyal
consumers were turning their backs to go somewhere else.



After many failed attempts the company realized what and whom they
needed to bring their team back. Bringing previous executives to rebuild and form a
better, more stable McDonalds was the best movement in the right direction. They
new how the company worked and had the McDonalds values instilled in them
allowing growth to develop.


Jim Cantalupo knew the importance of each individual employee and set the
standards higher for each that applied to work for the company. Having a set
standard from the bottom of the company onward helps with the execution of his
plans to improve the quality of the new McDonalds. The overall plan to modify the
physical appearance draws in the curious crowds, allowing new and old consumers
to visit the new stores.


In conclusion, this McDonalds case study has open my eyes regarding the
importance of doing the proper research, knowing your customers needs and wants,
making room for new changes in technology, knowing the environment and being
well-knowledged regarding competitors in the business I would try to pursue.


Setting a concrete goal that is not too overwhelming and that is achievable
will allow my future company to go further than trying to pursue too many projects
at once. Finding my own personal niche will set me aside from others and will draw
the attention away from possible rivals. Trying to offer something unique or
upgraded from whatever is in the market is the ideal way to go.


The success of a business is developed over a period of time consisting of
brainstorming, research and development, proper planning and marketing, a strong
execution, and following through with new creative ideas to make sure our business
stays competitive.








References:


Jargon, J. (2014, April 21). McDonald's Faces Sharper Competition in Breakfast
Battleground. Wall Street Journal (Online). p. 1.



McDonald's campaign is the perfect combination. (2010). New Media Age, 14-15.



Leung, S. (2004, January 28). McDonald's Makeover. Wall Street Journal -
Eastern Edition. pp. B1-B10.


Thomadsen, R. (2007). Product Positioning and Competition: The Role of
Location in the Fast Food Industry. Marketing Science, 26(6), 792-804.

Oak Brook (2013, Nov 14). McDonalds Continues To Invest For Future Growth.

McDonalds Leadership Development website

Dess, Gregory, Lumpkin, G.T. , Eisner, Alan, & McNamara, Gerry (2012).
Strategic Management Seventh Edition. New York. McGraw Hill Education.