Question

McDonald’s Corporation

When most firms were struggling in 2008, McDonald’s increased its revenues from $22.7 billion in 2007 to $23.5 billion in 2008. Headquartered in Oak Brook, Illinois McDonald’s net income nearly doubled during that time from $2.4 billion to $4.3 billion—quite impressive. Fortune magazine in 2009 rated McDonald’s as their 16th “Most Admired Company in the World” in terms of their management and performance.

McDonald’s added 650 new outlets in 2009 when many restaurants struggled to keep their doors open. McDonald’s low prices and expanded menu items have attracted millions of new customers away from sit-down chains and independent eateries. Jim Skinner, CEO of McDonald’s, says, “We do so well because our strategies have been so well planned out.” McDonald’s served about 60 million customers every day in 2009, 2 million more than in 2008. Nearly 80 percent of McDonald’s are run by franchisees (or affiliates).

McDonald’s in 2009 spent $2.1 billion to remodel many of its 32,000 restaurants and build new ones at a more rapid pace than in recent years. This is in stark contrast to most restaurant chains that are struggling to survive, laying off employees, closing restaurants, and reducing expansion plans. McDonald's restaurants are in 120 countries. Going out to eat is one of the first activities that customers cut in tough times. A rising U.S. dollar is another external factor that hurts McDonald’s. An internal weakness of McDonald’s is that the firm now offers upscale coffee drinks like lattes and cappuccinos in over 7,000 locations just as budget conscious consumers are cutting back on such extravagances.

About half of McDonald’s 31,000 locations are outside the United States. But McDonald’s top management team says everything the firm does is for the long term. McDonald’s for several years referred to their strategic plan as “Plan to Win.” This strategy has been to increase sales at existing locations by improving the menu, remodeling dining rooms, extending hours, and adding snacks. The company has avoided deep price cuts on its menu items. McDonald’s was only one of three large U.S. firms that saw its stock price rise in 2008.

The other two firms were Wal-Mart and Family Dollar Stores.

Other strategies being pursued currently by McDonald’s include replacing gasoline-powered cars with energy-efficient cars, lowering advertising rates, halting building new outlets on street corners where nearby development shows signs of weakness, boosting the firm’s coffee business, and improving the drive-through windows to increase sales and efficiency.

McDonald’s receives nearly two thirds of its revenues from outside the United States. The company has 14,000 U.S. outlets and 18,000 outlets outside the United States. McDonald’s feeds 58 million customers every day. The company operates Hamburger University in suburban Chicago. McDonald's reported that first quarter 2009 profits rose 4 percent and same-store sales rose 4.3 percent across the globe. Same-store sales in the second quarter of 2009 were up another 4.8 percent.

Questions:

1.      Which theory of organizational adaptation is applied at McDonald's (Theories to choose from: Institution Theory, Strategic choice perspective, and Organizational Learning Theory) ? Discuss.

2.      Conduct the environmental scanning of McDonald's through SWOT analysis.

3.      Discuss any 2 strategies used at McDonald's ( Strategies to choose from : Corporate strategy, Business Strategy, and Functional Strategy) . Elaborate.

4.      Under which strategic type (according to Miles and Snow) can McDonald’s be classified? Elaborate.

Answer 1

Answer 1:

McDonald's Corporation has a divisional authoritative structure. Theoretically, in this structure type, the business association is partitioned into segments that are given obligations dependent on operational necessities. Every division handles a particular operational territory or set of key destinations. One of the points of this corporate structure is to help self-rule and hierarchical adaptability in fulfilling business needs in various authoritative perspectives and markets.

Answer 2:

McDonald's Strengths :

McDonald's qualities make it a main contender in the drive-through eatery showcase. This part of the SWOT examination shows the inner key factors that add to hierarchical practicality. McDonald's fundamental qualities are as per the following:

• Solid brand picture
• Moderate market broadening
• Standardized processes

McDonald's has a brand picture that makes the business seriously solid. Another significant quality is advertise enhancement dependent on the company's essence in many locales around the globe. This factor diminishes showcase based dangers. What's more, McDonald's has an extensive arrangement of normalized forms, which is a quality that adds to business productivity and item consistency. This part of McDonald's SWOT investigation shows that the organization has the ability to keep up powerful tasks.

McDonald's Weaknesses :

McDonald's shortcomings are connected to the organization's market center, items and procedures. This part of the SWOT investigation demonstrates the interior key factors that cutoff firm execution. McDonald's primary shortcomings are as per the following:

• Restricted process adaptability
• Low product enhancement
• Helplessness to Western market decay

McDonald's normalization guarantees consistency yet in addition lessens the organization's adaptability in reacting to showcase varieties. Low item expansion relates to the association's emphasis on nourishment and refreshment items, which is a shortcoming that makes the business exceptionally defenseless against log jams in the eatery business. Furthermore, lion's share of McDonald's incomes are from the U.S. what's more, other Western economies. This is a shortcoming since it makes the firm effectively defenseless against monetary decrease in the Western world. This part of McDonald's SWOT examination shows that the organization needs to all inclusive grow, improve adaptability, and augment its item blend.

Opportunities for McDonald’s:

McDonald's chances are connected to its item blend and worldwide development. This part of the SWOT examination focuses to the outside key factors that help business development. McDonald's principle openings are as per the following:

• Extension in creating nations
• Market improvement in the Middle East
• Item broadening

Thinking about its reliance on Western markets, McDonald's has the chance to develop and grow in creating nations, for example, Asian economies. The organization can likewise utilize a market improvement methodology to set up tasks in Middle Eastern nations that it has not yet entered. What's more, to address showcase based dangers, McDonald's has the chance to grow new items or enter new ventures. This part of McDonald's SWOT examination shows that the business has noteworthy open doors for worldwide development and extension.

McDonald's keeps up its situation as the top player in the worldwide drive-through eatery industry through methodologies that address the inner and outer factors in this SWOT examination. The SWOT examination structure distinguishes the most pertinent inner and outer business factors that decide the association's prosperity. McDonald's uses an assortment of techniques to manage these elements. Be that as it may, the organization faces significant issues dependent on rising conditions in the worldwide market. This SWOT examination brings up the most squeezing worries that McDonald's must deliver to keep its initiative in the business.

Threats Facing McDonald’s:

The dangers to McDonald's depend on serious contention and sociocultural patterns. This part of the SWOT investigation manages the outer vital components that limit business advancement. The fundamental dangers to McDonald's business are as per the following:

• Forceful rivalry
• Healthy ways of life pattern
• GMO pattern and guidelines

The eatery business is exceptionally serious. Forceful contenders undermine McDonald's status as the market chief. Additionally, the solid ways of life pattern is a danger since it disheartens buyers from eating at McDonald's, which is frequently condemned for unhealthful items. Likewise, GMO guidelines are a danger since they can possibly restrict McDonald's items. The firm at present doesn't have an exhaustive approach on GMO fixings. This part of the SWOT examination demonstrates that McDonald's needs to grow new arrangements with respect to GMO fixings, just as new items to draw in wellbeing cognizant purchasers.

Answer 3:

McDonald's authoritative structure has the accompanying attributes, orchestrated by criticalness in influencing nourishment administration business tasks:

• Worldwide hierarchy
• Execution based divisions
• Capacity based gatherings

Worldwide Hierarchy: McDonald's Corporation has a worldwide chain of importance to cover every one of its activities around the world. This element of the authoritative structure accentuates corporate control with regards to administrative control and course. For instance, McDonald's CEO coordinates the exercises of all business territories through this basic trademark. Orders and mandates are passed starting from the ceo to center chiefs, and to the eatery directors and work force in organization claimed tasks and among franchisees. This element of McDonald's corporate structure is run of the mill of most worldwide business associations.

Execution Based Divisions. Execution based divisions are the most particular component of McDonald's corporate structure. Preceding its revamping on July 1, 2015, McDonald's had the accompanying geographic divisions in its authoritative structure: (a) U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East and Africa, and (e) Other Countries and Corporate (OCC) including Canada, Latin America and Corporate. After the redesign, the organization utilized execution as reason for the new divisions in its authoritative structure: (a) U.S., (b) International Lead Markets, (c) High Growth Markets, and (d) Foundational Markets and Corporate. The United States division gives the greatest local deals incomes to McDonald's. The mix of worldwide lead advertises likewise speak to a significant lump of the organization's incomes. The high-development markets represent a little minority of McDonald's incomes, despite the fact that these business sectors present significant potential for business development dependent on quick monetary turn of events.

Capacity Based Groups. McDonald's keeps up work based gatherings in its corporate structure. For instance, in corporate tasks, the organization has a People bunch for human asset the board, and a Supply Chain and Sustainability bunch for inventory network the board and maintainability tries. Each gathering is under the administration of a corporate official or ranking director. This hierarchical structure trademark empowers McDonald's Corporation to address the essential capacities in its business. Gatherings might be included or changed as the organization develops and its objective markets change.

Answer 4:

Analyzer Strategy:

Associations with an Analyzer Strategy are huge enterprises, often market leaders that build on others innovations and develop new products.

For the most part, the organizations that are genuine analyzers won't really be the first to make something, yet they may rather enhance the production of another firm. Along these lines, they are pioneers to a certain extent, yet not in the most genuine feeling of the word. This kind of firm will for the most part sit back, watch the market and its requests, and afterward try to fill those requests as effectively as could reasonably be expected. Because of their ordinarily enormous size, this sort of organization can be late to the market with a particular item and still be effective at long last.

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