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Facts, Circumstances, and Central Issues of Organizational Study
The fast food industry has been experiencing increasing competition because of the current technological use and increasing diversification among the companies operating in the industry. McDonalds Corporation is a leader in the industry and has remained committed to improving its market and appeal to more customers in the 119 countries it operates about 33,000 restaurants. It is worth noting that the threat of the health effects brought about by fast food consumption appeared to be a significant threat to McDonalds market expansion and profitability in the industry, but the company was resilient enough to bounce back and promote its products with emphasis on quality. This precautionary circumstance can be observed in the way consumers have started considering nutritional matters especially with the rising cases of obesity in the US and other parts of the globe. Currently, the company focuses on maintaining leadership in the market by spreading its focus on a larger population rather than a limited group or individuals. Therefore, the major foods on MacDonalds menu include hamburgers, Big Mac, cheeseburgers, Filet-O-Fish, Chicken McNuggets, French fries, snack wraps, and Quarter Pounder with Cheese. The central issue at the organization is trying to identify the best strategies to reach the market and promote these products for increased profitability and market leadership. McDonalds Corporation has been successful in tackling this issue by improving the marketing and communication strategies about the companys focus on providing healthy foods for its dedicated customers.
Current Information Available
Currently, McDonalds market is diversified, as the company does not focus on a small group of individuals. The target market is every segment of the society covering genders, age, nationality, income, race, and family status. This is in tandem with the urge to ensure larger profits and industry leadership are maintained. The company has also tried to embrace the current marketing strategies such as the use of social media with the understanding that most consumers are currently utilizing social media across the globe. A recent announcement by the company is that there will be an addition of 150 new stores in Russia and 300 stores in China to improve the market base. The Euromonitor International data is one of the most important sources that can provide information about the organization and its diverse elements including market, competition, opportunities, target market, technology, consumer realities, and industry. For instance, Hu & Xie (2013) assert that the Euromonitor International data indicates that McDonalds Systemwide 2011 business accounted for about 8% of restaurant sales and 0.5% of its outlets were among the most competitive from about 7 million researched outlets.
Historical and Current Situations of the Company and Its Industry
Hu & Xie (2013) affirm that MacDonalds Corporation began from a humble in 1955 with only three restaurants in the United States. The company grew gradually and by 1958, it had 34 restaurants before the opening of 68 more restaurants in 1959 to bring the total number to 102. In 1960, the campaign dubbed as Look for the Golden Arches was effectively used by the company to market its products. The Big Mac hamburger came in place in 1968 hence boosting the overall companys progress. With this in place, the company started to expand to other parts of the globe by opening more restaurants to satisfy its ever-increasing consumers. The history of the entire fast food industry dates back to the need for readily prepared meals among individuals. This meant that there was an increasing demand for fast food consumption as many individuals in the population looked forward for effective service.
Currently, McDonalds Corporation remains the leading provider of fast food services. This leading position is indicated by its largest number of restaurants totaling to about 33000 in different parts of the globe with a large number of employees. Skinner & Thompson (2011) assert that in 2011, the company announced that its largest restaurant would be built on the 2012 London Olympic site. This restaurant was envisaged to have over 1500 seats and employ over 470 employees. More so, the overall fast food industry is currently competitive with all companies such as Burger King, McDonalds, Hardees and Wendys trying to take over the market. However, they are also trying to emphasize the provision of healthy products to consumers because of the raising concern over the nutrition status of fast food.
Target Market, Competition
The company is not selective in the individuals it targets. McDonalds aims at producing products that appeal to individuals of all ages, sexes, and races hence explaining the reason for its spread around different parts of the globe. The company aims at offering a friendly and fun environment that will ensure everyone enjoys. Therefore, McDonalds seeks to appeal to all people ranging from families that love our Happy Meal to the working members of society who are always in need of ready meals and anyone wanting to enjoy services such as Wi-Fi.
According to Skinner & Thompson (2011 ), key competition emanates from different companies both in the hamburger segment and the non-hamburger segment. Key competitors in the hamburger segment include the Burger King Corporation that has been struggling to improve its sales and market share over the years. Additionally, there is the Wendys/Arbys Group that is deemed to have the strongest same-store-sales and has been expanding its hamburger restaurants over the years. In the non-hamburger segment, there is Starbucks Coffee, and Pizza Hut that dominates in the pizza segment.
The consumer of McDonalds is any individual ready to enjoy the products offered, as the company is not selective in its production. The wide range focus on the wider demographic of consumers is the right target for the organization. This will always ensure that the restaurants are flooded with consumers, hence improving sales and profitability at all instances. The wider demographic focus also necessitates the expansion of restaurants in countries such as Russia and China.
Resources and Constraints
The large financial resources generated from the operations of McDonalds in different countries is one of the most important resources available at the organization. For instance, Hu & Xie (2013) affirm that the sales in 2011 increased by about 5.6% despite the negative publicity it received concerning the lack of attention on the provision of nutritious products. The sales have continued rising over the years up to now hence, generating enormous levels of finances that help push the company ahead. This has enabled it expand into more countries and increase the number of restaurants in countries such as Russia and China because of the escalating demand for its products.
Additionally, there is a dedicated management and a team of committed employees in all the restaurants set up in different countries around the globe. The focused team of management composed of individuals such as Jim Skinner who is the Vice-Chairman and CEO, and Don Thompson who is the President and COO. Additionally, there is a large team of employees with wide experience in the provision of quality fast food, hence attracting more employees.
The only constraint faced by the company is the negative publicity that it faces at times because of the assertion that it provides non-healthy products that have played an instrumental role in promoting obesity in the US. The enormous negative publicity that the company received from different quarters tended to threaten its sales among consumers who were becoming a bit cautious about their health status. The health effects caused by the fast food tend to affect the purchases by most consumers. The need to check on health has played a contributory role to discouraging purchases among some consumers.
The major obstacle to the growth of McDonalds Corporation is the enormous lawsuits concerning the unhealthy products used by the company. Skinner & Thompson (2011) reiterate that in 2011 the company faced a lawsuit accusing it of selling non-halal items advised as halal. This case dragged over a long period denying the company the opportunity to make the tremendous steps in terms of growth. In this case, the company was forced to settle the litigation with an amount of about $700,000, which is indicative of a major loss to the company. Again, health organizations have also been keen to sue the organization over the production of non-healthy foods hence retarding its progress.
Next Steps for Strategic Planning and Implementation
One of the most important steps for strategic planning and implementation at McDonalds Corporation should be to embrace technologies and use of items that will ensure the production of healthy foods to consumers. It is worth noting that there have been increased complains about the companys provision of unhealthy foods that contribute to high levels of obesity. It will be important for McDonalds to embrace the use of technologies and methods that will ensure the health standards of consumers are produced. Therefore, it will be important to consider the health standards of individuals.
Additionally, the corporation should look forward to expanding into more countries around the globe. It is important for McDonalds to consider expanding to other parts of the world especially in Africa where there is a potential for more consumers in developing economies. More funds need to be dedicated to the expansion of the company to ensure that it reaches more consumers hence generating a high level of profitability. More restaurants need to be opened in many countries hence spreading the diversity of the company. This will help the company take an advantage over companies such as Burger King, which are also yearning to get a larger market for their products.
Current Environmental Factors and Possible Future
Technology has played an instrumental role in the advancement of McDonalds Corporation. Consumers are able to enjoy Wi-Fi at once they visit the restaurant. This is an additional advantage of the company that makes more customers want to come to the restaurant for more benefits. Technology has continued promoting the transformation of McDonalds Corporation to date and there has been enormous innovativeness through technology. For instance, the preparation of foods using the current available technology has improved the delivery of products within the required time and with the highest quality possible.
However, competitors such as Starbucks and Burger King have also remained strong in the industry hence posing an immense challenge to McDonalds Corporation. The level of competition has gone a notch higher as each company aspires to get to the best position in the fast food industry. For example, Burger King has been an instrumental competitor as it continues to open more restaurants across the US and expanding into other parts of the globe in the recent years.
However, the future remains bright for McDonalds because of the belief that it has acquired the loyalty of customers over the years of operation. Consumers have remained committed to the products offered by McDonalds that has built a strong brand name. Consumers have not been swayed by the assertions that the products at McDonalds are unhealthy, as they have continued to buy them at all times. This indicates that the future is bright even if more technologies continue to be brought to the company for the improvement of service delivery.
Decisions that Need to be Made
Decisions relating to massive advertising by the company will be vital. Advertising is an important element in marketing as it ensures that the level of competitiveness is increased and the company is able to remain in a strategic position within the fast food industry. Advertising should be done through social media as most consumers have an access to social media and will be able to get information about the products and services available at McDonalds within the required time. Skinner & Thompson (2011) opine that increased advertising will help improve the sales at the company and will play a key role in attracting more consumers at the company as they yearn to have new experience. Advertising should be conducted with the goal of ensuring more consumers are brought on board hence improving sales and profitability at the company. This will boost its position in the market with a high level of competitiveness.
Decisions relating to the production of healthy foods should be made as well. The developing notion that McDonalds Corporation provides only unhealthy junk foods should fade off as the management puts in place the decision to provide healthier foods to consumers. This will lead to more positivity among members of the public and there will be enormous purchases from McDonalds Corporation. The consequence of this is also improved sales and its objective is promoting health standards among members of the public who are the ultimate consumers of the products offered by McDonalds Corporation.
Strategy for Moving Ahead
In order to ensure progress at the company, marketing messages must be designed in the manner that they appeal to customers. Messages must be developed in the sense that they reflect the products offered at the company hence promoting consumer awareness. For instance, the promotional messages should be made in an understandable manner that attracts customers effectively hence ensuring they come in large numbers into the company. The best marketing venues to put these messages should be social media, such as Facebook that has a high number of users. Social media provides the best avenue for marketing the company as it will assure that a large number of people get information about McDonalds Corporation. Additionally, the information could also be availed on print media such as newspapers and business magazines that are widely read by consumers.
More so, it will be prudent for McDonalds Corporation to embrace the manufacturing of healthy products that will ensure most consumers come into the company to enjoy healthy products. The distribution of these products should be simplified by ensuring that door-to-door deliveries are guaranteed at some points. This will motivate more consumers to stick to McDonalds and this will lead to the transformation of current marketing experience.
Concerning matters of competition, it will be important for McDonalds to continue with its pace-setting strategy. Skinner & Thompson (2011) agree that it should continue opening more restaurants and improving the quality of its products to stay ahead of the competition in the industry. Diversification of the products offered will also ensure the company stays ahead of the rest in the competition. It should continue taking the technological advantages by installing Wi-Fi in more restaurants opened. Additionally, technology should be utilized in the preparation of foods for effectiveness and maintenance of the highest quality.
Current economic conditions of consumers should be considered by ensuring that prices are kept at the affordable level. This will ensure that more consumers come into the company for a bite or a drink as they deem fit. The internal leadership should be kept strong for superb decision-making in the organization. Overall, it will be vital to ensure the organization progresses with the required desires. The improvements will entail matters such as opening more restaurants and ensuring a high level of technology is promoted in all the restaurants.