Mcdonalds

I have been instructed to produce a detailed manual based on Customer service within a company of my choice. I have chosen McDonalds Restaurant as it has very good customer service which the majority of large recognized companies lack. During this manual I will be engaged in observation by doing research via interviews with staff and managers, internet websites, books or handouts based on McDonalds, and annual reports and fact packs available. Through out my investigation, I will be looking at the level of customer service provided within McDonalds and looking in detail at specific elements.

I will be identifying such elements including different types of customers and their needs, skills required in order to provide effective customer service, how consumer protection is incorporated into its policy, strategic objectives, how the organisation uses customer service to meet its customer needs and objectives, customer service techniques, procedures and quality standards, and improvement. Customer service is essentially the service a company provides that meets or exceeds customer needs and expectation.

In detail it is the service quality as perceived by a user that depends on the size and direction of the gap between the expected service and perceived service, which in turn depends on the nature of the gaps on the service providers side, associated with the marketing, design and delivery of services. In other words, there is generally a gap between the service provided by a company and the service the customer expects. Customer service nowadays is taken very seriously as there is a high amount of competition.

If good customer service is provided, customer needs are fulfilled and all parties are pleased. Customers will return if treated with well, if customers have received good service from the organisation they will recommend it to their family and friends (positive/negative word of mouth), good practice will exist in every aspect of the organisations activities, and if customers are happy with the service and the employees do not have to deal with a constant stream of dissatisfied customers which will have a positive effect on employee morale.

Many organisations consider themselves to be fully well aware of the needs and wants of their customers. Organisations consider customers to be of vital importance since this is the key to business success. In my personal view if an organisation manages to keep the customer in mind at all times, then inevitably it will increase its market share, provide better services than those of the competitors, it will maintain its current customers and attract new ones.

I have chosen McDonalds for this assignment mainly due to its highly rated customer service. I am a regular and know many people who work at McDonalds and have noticed the significant amount of approachable staff that help when asked for information. This company is a highly rated one and in my view has dominated the fast-food industry since being recognized in the 80’s. Due to the high amount of fast food organisations, customer service has to be taken far more seriously as competition is a major existence.

In my view fast food organisations have the most competition as there are a number of them who are all doing or perhaps exceeding the customer needs. McDonalds is a Company that continues to strive to offer greater convenience to customers while responding sympathetically to local circumstances as new restaurants are built. When the earliest McDonald’s restaurants were opened in the UK in the 1970s, customers travelled miles to visit them.

Today, customers demand greater convenience and want to visit a McDonald’s wherever they are, and will visit a restaurant anytime of day and expect quality no matter what the circumstances are. In my view McDonalds has used customer convenience and research as the driving force behind new restaurant locations, which has led to new McDonald’s in sites as varied as cross-channel ferries, a bowling alley and London’s former County Hall. The Company is committed to responsible growth, and works closely with local planning officers and community groups when developing a new restaurant

McDonald’s is one of only a handful of brands that command instant recognition in virtually every country of the world. McDonald’s began with one restaurant in the US in 1955 and today there are more than 26,500 restaurants in over 119 countries, serving around 39 million people every day making McDonald’s by far the largest food service company in the world. McDonalds currently employs around 50,000 people throughout the world. There are over a 1000 restaurants based in the United Kingdom which employs approximately 14000 people.

Socio-cultural factors that could affect fast foods is the aversion to eating beef in countries such as India and different taste preferences of different cultures such as the preference for spicy foods in Korea. Wendy’s has to become sensitive to different culinary cultures and accommodate these in its innovative menu and service culture. Technological factors that affect fast foods are the popularity of online ordering and innovative kitchen equipment. Wendy’s has to consider these factors in developing its customer-driven strategy.

Legal factors affecting fast food companies include employee obligations under labor laws, consumer obligations under consumer protection and contract laws, and investor obligations under corporation law. By understanding and complying with all its legal obligations, Wendy’s can prevent costly litigation. Environmental factors, considered as a broad term, affecting the fast food industry include waste management, environmental protection, and community welfare.

Wendy’s has to continuously improve on its corporate social responsibility and community programs to enhance the value of its brands. V. Internal Audit: The internal audit identifies the factors within the company that affects its performance and requires consideration in strategy development.

1. Strengths and Weaknesses

Wendy’s has a number of strengths that supports its competitive position. One is a strong brand name encompassing healthy fast food as the distinguishing factor.

By embedding its mission statement in its brand communication, Wendy’s is able to consolidate its marketing activities and outcomes. Another is the ability to provide fresh and high quality food at low prices, which distinguishes the company from its competitors. However, Wendy’s also has weaknesses. One is its slightly higher cost structure relative to its competitors (Hoovers), particularly McDonalds, by focusing on healthy and fresh food ingredients and preparation practices that could affect price flexibility.

Another is the easy replication of its differentiation strategy, which means it has to continue augmenting its health fast food mission to ensure distinction.

2. Resources

Wendy’s has various assets for carrying out its activities. Its physical resources comprise store buildings placed in key locations, equipment for food storage and preparation, and its website at www. wendys. com as part of its technological resource. These physical resources support the current level of operations of Wendy’s. Expansion through the establishment of new stores would mean acquisition of physical resources.  Also Describe sources of internal and external finance for a selected business

The website is the encompassing resource because it covers all the stores by providing information on menu, nutritional value of food, store locations and contact numbers, and other information valuable to consumers. However, Wendy’s is yet to develop the transactional use of its website as an order site coordinated with its different stores. This comprises an area requiring development similar to McDonalds and Burger King. The human resources of Wendy’s make-up a valuable resource in supporting its service oriented strategy. Read about 

McDonalds Ansoff Matrix

The dynamic pace in the workplace provides employees with flexibility in schedule and opportunities for career development as motivation for performance. (Wendy’s International Inc.)

Wendy’s has to continue improving the work environment to shorten turnover rates compared to McDonalds and Burger King. The organizational resources of Wendy’s including its structure, strategic values, patents and trademarks support its brand equity. Wendy’s has to further augment brand equity through differentiation since McDonalds and Burger King as equally strong and popu

McDonald’s always select their workforce very carefully. Many people have had their first Job working at a McDonald’s restaurant. Cooking equipment and procedures are evolving and it takes a person who can multitask and think more analytically. McDonalds has incorporated exams during the interview process to find people with the right mindset and skills for the job. McDonald’s started a campaign launch to help recruit qualified employees to keep their high standards going in the restaurants.

The labor conditions for McDonalds is you must be at least 14 years of age to be onsidered for employment and can only work 12 hours a week If under 16 years of age.

Diversity

Along with being one of the leading employers in the fast food industry, diversity plays a very important role in the operations of McDonald’s. Diversity is one of the most important ways of doing business. Diversity is part of McDonald’s business plan is part of the business planning process. Diversity is the corporations most valued initiative and is always tied into the daily way of life at McDonalds.

McDonald’s has diversity business planning guidelines that are rolled out to all levels of leadership In he corporation. It is also tied Into the strategic planning process.

Benchmarking data and similar processes

McDonald’s always kept freshness in their stores. The concept is called “Made for you” by the corporation but marketed to the public as “Just for you”. It is a benchmarking process where the food is no longer prepared to put into stock that is used to meet demand. This method is to prepare food that is driven by customer demand.

This approach eliminates the sitting time of the product, which Is non-value added and Increases customer satisfaction across the board.

Factors of production

McDonald’s uses JIT manufacturing in their stores. JIT stands for “Just in Time”. This is a manufacturing system where the product is “pulled” on by the customer, rather than “driven” by the company. In a traditional system, the company may sit by and say that they plan to sell 100 units of food during the day. They would trend this data around demand times and produce accordingly.

What happens Is that some of the food will either not get sold, or will be In storage for some period of time. The benefits to this method are that the company pays less money in inventory and storage, and pays less money for inventory on hand. On the same hand, there can be outages by single-source suppliers, causing temporary inventory outages.

Sources of raw materials

For raw materials McDonalds basically has specific companies from which they take their materials. And McDonald’s Is taking materials from those companies for long years.

For example, their coffee Is produced by “Gavlna gormet” coffee company. This company has been producing coffee for McDonalds for the last 25 years. Overall, the company supplies McDonalds with over 400 million cups of coffee per year. This is no small bill for any supplier, so they have learned to respond to McDonald’s demand. This company gets its coffee beans from Central America, South America, and Southern California.

Key products & services

Provided 100 countries and offers a standardized menu with some geographic variations.

Their key products include hamburgers and cheeseburgers, chicken sandwiches, French fries, wraps, chicken nuggets, salads, desserts, sundaes, soft serve cones, pies and cookies. They also offer beverages such as milk shakes, soft drinks, coffee and flavored tea. In many markets, McDonald’s also offers a variety of breakfast items such as hot cakes, muffins, biscuits, and bagel sandwiches. Some of McDonald’s key brand names for their products include Big Mac, Big N’ Tasty, Filet-O-Fish, McNuggets, McFlurry, McMuffin, and McGriddles.

Organizational structure

McDonald’s operates its stores in two ways: company owned stores and franchised stores. According to McDonald’s Data monitor, McDonald’s has 32,478 restaurants. 6,200 are company owned restaurants where McDonald’s gets revenue from restaurant sales. The remaining restaurants are franchises where McDonald’s gets revenue from either rent and/or royalties based on a percentage of sales.

Locations for production/distribution

McDonald’s operates in over 100 countries with its primary markets in Europe, Asia Pacific and Northern America.

The company headquarters is located in Oak Brook, Illinois and employees 385,000 people. McDonald’s has stand alone restaurants as well as locations inside airports, toll stops, colleges and malls.

Policies & strategies on pricing

One of McDonald’s main pricing strategies is its dollar menu. The dollar menu made its debut in the U. S and was so successful it now appears in restaurants across the world. The dollar menu is very successful at appealing to college students or low income families.

Consumer perceptions

McDonald’s Data monitor lists one of its strengths as “strong brand value draws customers to McDonald’s restaurants”. This well established brand name is one of their key positive consumer perceptions. McDonald’s has a strong brand which can lead to consumers to choosing them over a competitor. This strong brand also makes it easier for McDonald’s to enter new regions and markets. Since they have such an established brand name, it makes consumers in new markets more likely to try their restaurant once it is opened.

Consistency

“Quality, Service, Cleanliness and Value” is the main formula of McDonalds.

It doesn’t matter if you’re visiting a McDonald’s in California or Connecticut, America or Australia – you’re going to have a similar experience wherever you are. This highlights Ray Kroc’s vision for McDonald’s from the beginning.

Innovation

Innovation is really important for a company’s growth. And McDonald’s adopted it very well. At first, the characteristics of consistency and innovation seem to contradict one another. But in fact, they work together to allow for McDonald’s continued growth. Innovation stemming from responsiveness to customers and franchisees has layed a big role in McDonald’s fending off stagnation over the years.

In addition, McDonald’s product offerings have evolved over the years alongside the tastes of their customers thanks in part to some observant and innovative franchisees. A few examples of products that were introduced after being developed by McDonald’s franchisees or owner/operators are: Filet-O-Fish, Big Mac, hot Apple Pie, Egg McMuffin and McFlurry. Franchisee selection business integrity. And it should have strong business background, with special emphasis on interpersonal skills, team leadership and financial management, or ompatible experience.

It’s a well-known fact that technology is the future. The use of robots in the food industry will be a common trend in future and McDonald’s global organization is mainly controlled by IT systems. Their IT systems development is colossal and the technology serves as a fuel for the company to accelerate the progress.The social responsibility of McDonald’s on a region is influenced by the operations f the company in that specific region. McDonald’s is a major sponsor for numerous sport competitions/activities, development of schools and supports many charity organizations. Environmental concerns over waste management have forced McDonald’s to switch to biodegradable packaging and to reduce the company’s greenhouse-gas emissions. 6 LEGAL FACTORS: like enforced taxes and levy, quality requirements, employment standards, are only a few among the other equally important legal factors on which the company has to take into consideration in order o respect all the laws and regulations, worldwide with reference at political-socio- economic and environmental circumstances.

McDonald’s is the world’s largest fast food company that is measured under the franchising organization. Everyone can take the franchise from the organization through a standard agreement and contract with the McDonald’s. They give the opportunity to the local business person to use the product idea and brand name to the company, they get commissions and don’t take any risk from the local market. The purpose of the franchising is to minimize the risk and cost of being global.

Burger King Versus McDonald’s Fast Food Franchises have raised many questions or debates that have arisen because of obesity issues and health concerns in our society to this day. This has led me to compare Burger King and McDonald’s. Comparison of these two companies to see exactly what they have to offer and the fact that people seem to look at all fast food the same. It is all bad for you and causing health issues. Burger King and McDonald’s are the top two fast-food chains and are known for serving unhealthy foods, but there are healthy choices available, as salads.

As I have done my research to see if there are healthy options when we eat at these places. Truly comes down to whether it is us or the franchises making the wrong choices or whose fault it really is. Fast food franchises being all of the same or having differences amongst food options and services offered. Similarities Main thing appears to be a burger, fries, and a soft drink is what they are known for. Both of the franchises basically offer the same types of foods, combo meals, children meals, dollar menus, supersizes available, playlands and a drive-thru for that fast service.

Usually, you can bet the food will taste the same each time you go, giving us the feeling of reliability. Whether you want to sit down as a family or eat on the go. Both of the companies keep the cost down to make it an affordable meal and giving us a variety to choose from. They both serve breakfast, lunch, and supper options. This is partially what makes it hard for us to say no. The convenience and time-saving options really hit home to our busy schedules. Differences: Now even though they both seem to be basically the same, there are differences within these two franchises.

One way that they are different is in the way they prepare and process their foods. At Burger King, they use a process where there is no human intervention while cooking their burgers. No one has to stand there and flip the burgers. This is saving time and providing employees to be available to keep moving and making meals more quickly. They also use a broiler, giving us that broiler taste. Where McDonald’s uses a basic grill style and someone has to be there constantly to turn and flip the burgers. Burger King has bigger and thicker burgers, providing more for your buck.

They also have the option of onion rings instead of fries, and they are lower in calories than fries. When concerning their fries, they even have the option of no salt on them. This is an amazing option for those of us watching our sodium intake. The one thing that I was surprised with is that they provide Kraft macaroni and cheese and apple fries in the children’s meals, along with milk. The fries are still included, but for those parents who do not want them to have the fries, there is your other option. McDonald’s gives you a wider range of choices in desserts and salads.

They offer 10 different types of salads, where Burger King only offers you 3 types of salads. Their happy meal is including a choice of low-fat chocolate and white milk, fries along with apple slices. If you do not want your child to have fries, there’s the option of two packages of apple slices. They are attempting to offer a healthier choice for your children. Healthier choices If you want just the basic burger, fries, and a beverage, it really does not matter where you go; they both offer these and come down to the consumer’s taste buds.

Basically either place you go, they both have begun to offer many healthy food options. It still is not the best choice, but you can choose something that will not cause so much weight gain. It is coming down to our choices on what we eat if we must go to a fast-food restaurant. Some of the choices you can make: Have a salad with the dressing on the side, Burger King’s fries with no salt, have the condiments on the side or none, choose a burger with no bacon or cheese, have their oatmeal option with fruit on top, a veggie burger instead of meat, grilled instead of fried and have juice instead of soda.

There are many things that we can choose to eat that will make our visit to these two places healthier. Both places provide brochures on the nutritional value of their meals, take time to check them out and see what you are eating. Burger King and McDonald’s are very similar in many ways but do have differences. Just depending on what your taste buds are, if you want it made your way, or if you want a bigger burger. These will assist in determining which company fits best with your desires. The salad option, McDonald’s is the way to go.

They have the best options in this category but remember to go for the grilled instead of fried and have that dressing on the side. Just remember it is our choice of what we are putting in our bodies.

References

1. Associated Press. “McDonald’s profit climbs 27 percent. ” MSNBC. October 19, 2007. Retrieved November 26th 2011.
2. Written by Associated Press on November 15, 2011 4:35 pm. http://newsone. com/author/associatedpress3/ Brandau, Mark (28 March 2011).
3. “BK’s Chidsey to resign in April”. Nation’s Restaurant news. Burger King Corporation. 2007, www. k. com, Retrieved November 26th 2011. Cordal, Ina Paiva; Walker, Elaine (28 October 2010).
4. “Burger King Ousts top staff”. Miami Herald. 2010 10-K SEC Filing, Burger King Corporation, 30 June 2010, pp. 38-40. Hogan, David (1997).
5. Selling ’em by the Sack: White Castle and the Creation of American Food. New York: New York University Press. Jakle, John A. ; Sculle, Keith A. ; Pappas (1999).
6. Fast Food: Roadside Restaurants in the Automobile Age (1st ed. ). JHU Press. pp. 116–117. ISBN 080186920X. “Mathew Burns of Long Beach, California, and Kieth g.
7. Kramer, Burn’s stepson and owner of a Daytona Beach, Florida drive in, founded Insta-Burger King, Burger King’s predecessor. ” Kroc, Ray and Anderson, Robert (1977).
8. Grinding It Out: The Making of McDonald’s. Chicago: Contemporary Books. Levinstein, Harvey (2003).
9. Paradox of Plenty: a Social History of Eating in Modern America. Berkeley: University of California P, 2003. 228-229. Luxenberg, Stan (1985).
10. Roadside Empires: How the Chains Franchised America. New York: Viking, 1985. Mcginley, Lou Ellen with Stephanie Spurr (2004).
11. Honk for Service: A Man, A Tray and the Glory Days of the Drive-In Restaurant”. Tray Days Publishing. Schlosser, Eric (2005).
12. “Fast Food Nation: The Dark Side of the All American Meal” HarperCollins Publishers. www. chapters. indigo. ca/books/Fast-Food-Nation. Retrieved November 25th, 2011. Thottam, Jyoti (June 6, 2005).
13. “Fast Food Face-Off. ” Time Online Magazine. Read more at Suite101: Which Fast Food is Better: McDonalds or Burger King? | Suite101. com http://tasha-kelley. suite101. com/which-fast-food-is-better–McDonald’s-or-burger-king

Thomas Edison once said that “Opportunity is missed by most people because it is dressed in overalls and looks like work. ” The words of Thomas Edison aptly describe McDonald’s Corporation’s formula for success. McDonald’s is living proof that success is not achieved overnight. Success can only be achieved through dedication and commitment to excellence and hard work. Back in early 2000, McDonald’s suffered a corporate slump. Externally, sales suffered because of issues relating to mad cow disease and the search for healthier and greener alternatives to fast food.

Internally, sales also suffered because McDonald’s was starting to saturate its market, losing to the increased competition and failing to meet the changing needs of its customers. As a result, stock prices were at a low and corporate targets were not being achieved. This is evident as the price of its stock hit the all-time low in March 2003 at 13. 85 per share. Below is the graph showing McDonald’s historical share prices from 2000 until 2009. It shows that McDonald’s share prices and investor confidence started to decline from 2001 until 2004.

It managed to slowly recover in 2005. At present, McDonald’s has fully recovered from its corporate slump. Before it was able to fully recover, McDonald’s identified its problems that affected its corporate performance. Among these problems is the failure to manage its growing number of franchises.

Franchisees have complained of McDonald’s management that there were certain problems with stores operated by franchisees which management have failed or refused to address (Kathy Bergen, 1997); aggressive expansion strategy created a cannibalization effect among existing stores. Before McDonald’s dramatic recovery, its business strategy was focused on aggressive expansion. McDonald’s was able to open new stores but the appearance of growth was merely superficial. The unintended result was that each McDonald’s store catered to the same customers.

A McDonald’s franchisee even remarked that he loses more in sales every time a new McDonald’s store opens near his location compared when a Burger King or Wendy’s store opens. For McDonald’s to recover it needed to come up with ways to manage its existing stores. It must be stressed that its problem boils down to store management. Jim Cantalupo and his team came up with the Plan to Win in an attempt to fix the company’s management problems. One of its first acts is to accept that there was a problem within the organization.

The second act is to shift its strategy from aggressive business expansion to focus on better management of its existing stores and better customer satisfaction. The strategic focus was on “being better, not just bigger. ” Thus, instead of McDonald’s wanting to open new stores, it decided to improve its services by coming up with better products and better services to its customers. It changed its goal from opening thousands of stores to retaining its existing customers and attracting more new customers to McDonald’s.

Consequently, the Plan to Win was born. Plan to Win has the following basic elements: Service, Menu, Value and Restaurant Ambience. McDonald’s adopted a different perspective in its Human Resources by making employee training a priority. The crew members were given better training on customer service. The top executives who supported this initiative even brought in customer surveys so that they can get inputs from its customers. The menu was likewise improved and salads and fruits were added to cater to customers who are health and weight conscious.

The change in strategy was immediately felt in McDonald’s store as it started to attract new customers. McDonald’s dominated not only the lunch and dinner but it even started to conquer the breakfast market which is estimated at $25 billion (“McDonald’s 24/7”, 2007). Just a few years ago, McDonald’s directly competed with Starbucks and started serving coffee in all its stores to attract breakfast-eaters to its store. Recent Consumer Reports say that McDonald’s coffee has overtaken Starbucks in terms of taste and price. At present, McDonald’s continues to dominate the coffee market.

McDonalds Company began it operation in 1937 when two brothers Dick and Maurice McDonalds opened a small drive-in restaurant in California. There first two menus were hotdogs and shakes. By 1948 the business was very successful and they had been able to create a bigger drive-in restaurant but they realized that about 80% of their revenue comprised of Hamburg sales so they had to close and restructure their business. The new model comprised of dining for family and implementation of speedy service system with nine item menu.

Following success of the business it first franchise was opened in 1952 and sold to Neil fox in phoenix, Arizona. Due to extensive growth and need for more fund to expand the business went public in 1965 and it shares started to be traded on Wall Street. In 1967 it opened a restaurant in Canada which was it first outlet outside the United States and marked it beginning as a global company. The global expansion led the company to open stores and franchise around the world and currently it operate in over 120 countries with over 30,000 stores (Morgan & Leavitt, 2008).

Though the company has enjoyed an extensive growth it also encountered problems and challenges during it expansion which include poor management, competition, poor response to changing needs of customers and franchises and bad marketing. The company’s brand mission is to “be our customer’s favorite place and way 2 to eat. ” they have also aligned their world wide operations around a global strategy known as plan to win. This plan focuses attention on exceptional customer experience and consists of the 5Ps i. e. People, product, place, price and promotion.

Through the use of porter five forces the company will be able to identify areas of improvement or changes required in order for the business to remain competitive in the fast food industry. Analysis of McDonalds using the porter 5 forces The main purpose of this analysis is to assess the competitive position that McDonalds occupies within its industry. The five forces to be analyzed include rivalry within the industry, threat of substitute product, threat of new entrant, bargaining power of the buyer and bargaining power of suppliers.

Threat of New Entrant

The threat of entrant is high in the industry due to high profitability and growth the industry have been experiencing in the last 10 years. This attract various players in the industry and considering that the capital requirement to start such a business is small then many firm are now joining the fast food industry and increasing the intensity of competition. One of the barriers to entry that McDonalds have been using is the economies of scale. Since the company has been operating on a large scale it has been able to lower it operating cost as compared to new entrant.

For instance its various restaurant located in different countries are recycling used cooking oil for re-use as bio-diesel which is environmental friendly. In UK and Australia the fuel have been used in delivery trucks and taking into consideration the increase in global fuel cost then the program have enabled the company to save much in term of transport cost. Further more 3 the company has been able to introduce bulk oil program which involves delivery of cooking oil to various restaurant via a portal located on the exterior of the restaurant which connect to a tank in the store.

This have enabled the company to save on packaging cost that would have been incurred if the delivery was through small plastic jugs inn corrugated boxes (gilad, 2003). One of the other area where McDonalds has been able to cope with threat of new entrant in the market is it brand identity. through effective marketing strategies McDonalds have been able to sell it ideas to the household and the brand name have become so familiar in the market just as other famous brand in the market such as coca-cola, Pepsi and it main competitor star buck.

One of the way through which it has been able to create it brand identity is through several social responsibility program such as student sponsorship and charities. One of the charities run by the company is Ronald McDonald house charities (RMHC). This has led to employees, owners and suppliers supporting the initiative since they believe that supporting families, children and community is a right thing to do. This has been critical in building trust between customer and the brand.

The company is using cost leadership as it strategy to compete with new and also old rivals. McDonalds enjoy cost advantage compared to other players in the industry and this will in addition act as a barrier to new entrant. Technological advancement have enabled the company to introduce labour saving equipment while at the same time stream line many processes which include having the US restaurant change from standard 4 beverage machine to automated ones. The threat of new entrant is high and poses a major threat to business survival.

Threat of substitute product When it come to substitute the threat is real as there are a number of them, except that McDonalds can hold their own ground since the satisfaction each one of them avail is different. Consumers are becoming increasingly conscious about their healthy and with the US and other market recording a high number of people with obesity and other related health problem most people are avoid sugary and food with high fat content i. e. junk food. This means the variety and taste of products that the company develops could give it a competitive edge.

Low switching cost has increased the threat of substitute as buyers can switch to substitute without incurring any cost. Furthermore there is a high buyers inclination to substitute due to the health issue mentioned earlier. The price performance of substitute does not seem to increase the threat as the products are not close substitute (Finlay, 2000). In dealing with threat from competitors the company has introduced a new program called McDonalds moms quality correspondent program which aim to improve on quality and meet customers health expectation and taste.

Most people equates fast food with words like low quality and cheap therefore the main concern of the organization was to share the truth with million of their customers and that is how they came up with a simple strategy of one mom at a time. Since moms make family decision concerning meals, that is why mom’s quality correspondents (MQC) is important in 5 changing negative perception about safety, quality and nutrition of the product they love and serve. The program also involves moms who are freelance writers with their own blog which allows them to share McDonalds experience with others.

They given a chance to ask question and witness how the company product are made. They usually meet with the firm nutritionist and menu development staff and also take several trips to sources of food. Documentation through the MQC website of all this field trips is done where photos, videos and journal entries are made. The program has enabled the firm to create brand ambassadors where McDonalds have not only managed to change their perception about food quality but also in reaching millions of customers through sharing the experience.

Therefore technology can be said to have played a major role as it has allowed sharing of messages with many customers. The main strategy that the firm has been using to deal with threat of substitute is focus on a specific target market and providing quality product which meets customers need. Substitute can be said to have a low threat to the firm’s survival.  Rivalry within the industry The competitive rivalry within the industry is high due to the large number of firms in the industry.

In addition the low switching cost allows customers to switch from one product to the other and this has increased competition within the industry as firms are struggling to capture customers. Further more there are low level of product differentiation and consumers can hardly tell the difference in product sold by competitors and this has also increased intensity of competition within the industry. Since most of the products are perishable firms try to sell their merchandise as soon as possible which has also played a 6 major role in increasing rivalry as firms try to unload their products at the same time.

McDonalds has adopted product differentiation as it main strategy in dealing with rival. One of the initiatives adopted by the firm is a new packaging that is content with the world. The new packaging offers a unique opportunity for the firm to connect with more than 58 million people around the world every day. The new packaging extends the firm story while at the same time remind customers about food quality and freshness through one of the most visible medium. As matt biespiel the global brand strategy director of the company says “packaging is the ideal place to tell stories.

” In current market customers receive hundreds of advert every day which bombard their mind therefore the company has focused on building trust, honesty and consistency. As biespiel put it this sensitivity “carries consistent brand messaging around quality and build trust by encouraging people to learn more about the food they love. ” improvement in technology has enabled the packaging to use striking and visual style in communicating food quality and passion. In support of the new packaging the vice president of the firm said that “language can make a brand as familiar as your best friend.

” Furthermore in competing with star buck which is a major player in the has introduced WI-FI hotspots in its restaurant which covers more than 200 sites in US and successful implementation of the technology will lead to introduction of the same service in the global market. Other ways through which the firm has dealt with rivalry within the industry is through the creative use of distribution channel while ensuring that their stores and franchise are located in strategic position and exploiting relationship with supplies.

Rivalry within the industry therefore has a high threat to the firm’s performance. Bargaining power of suppliers. Supplies play a major role in the industry since most of the product used are supplied from outside. What increase the bargaining power of suppliers is that these inputs have a major impact on cost and differentiation of product. In addition there are no substitute inputs which give supplies more power while bargaining with the business. One of the major areas where the firm has been able to deal with supplies power is through the quantity of good supplied.

Since the firm place a large order then it is able to bargain effectively with supplies who are interested with large volumes. To improve efficiency and productivity then McDonalds has been working closely with supplies in identifying potential production and sourcing efficiency. Improvement of technology has enabled the company to introduce self-order kiosks. Therefore supplies can be said to have low threat to the business.

Bargaining power of buyers Consumers have high bargaining powers due to availability of substitute and low switching cost. The large number of firms in the industry also gives the consumer a variety to choose from and this further increases their power. In fast food industry consumers have full information of availability of product and their prices and considering that they are price sensitive then this further increases their power. In dealing with this threat McDonalds has focused on three main areas which include product differentiation, brand identity and quality improvement (temporal, 2000). The company has employed product differentiation and focus as it strategies in dealing with consumer bargaining powers.

In distinguishing itself the company has developed a 8 range of health products. In US health focus entailed new meals for adult and include bottled water, salad, a pedometer and some advice to walk more. In differentiating their brand values McDonald has been emphasizing on health related issues through sponsoring physical education program which appears in US public elementary schools. In order to burn off burgers and shakes the company has started to sell bikes and skateboards and this also aims to differentiate it from other operators in the fast food industry.

Furthermore the new packaging which has been made possible thanks to the new technology has created such a brand image which competitors have not yet been able to imitate. Through charities and other sponsorship undertaken by the company many consumers have switched to the brand to support the initiative. Therefore the bargaining power of consumers can be rated as moderate threat (Cavgugil & knight, 2000). Conclusion McDonalds have preformed favorably in the fast food industry compared to it key rival and has reclaimed it market share in the industry.

In dealing with threat in the industry the company has been using two main strategies which include product differentiation and focus. Through the analysis porter five forces the company has positioned itself to deal with various threat in the industry and it is apparent that their strategy match what their publicly available information says.

References

1. Cavgugil, Tamer. and Knight, Gary. International Business: Strategy, Management, and the New Realities. Pearson Education, 2000.
2. Finlay, Paul. Strategic Management: An Introduction to Business and Corporate Strategy. Financial Times/ Prentice Hall, 2000.
3. Gilad, B. Early warning: using competitive intelligence to anticipate market shifts, control risk, and create powerful strategies. New York, NY: American Management Association, 2003.
4. Morgan, Mark and Leavitt, Raymond. Executing Your Strategy: How to Break It Down and Get It Done. Harvard Business School Press, 2008.
5. Temporal. Strategic positioning: creating growth, generating profits, and achieving high performance. New York, Oxford University Press, 2006.