Week 3 Assignment 1
Introduction
For an organization to be successful and achieve its optimal potential for growth, it must incorporate a function of management that is thorough. This function should be able to efficiently organize its resources and direct them towards commonly achieving the set businesses objectives and goals. The function should also strike a balance between its resources and business needs and adapt respectively to changes in its immediate environment as well as to alterations in technology and the needs of its stakeholders, among other trends. This study focuses on McDonald’s, which stands as one among America’s prominent fast food companies. It gives an in-depth analysis of the company’s managerial function and shows how the company is influenced by such factors as globalization and technology in its operations.
McDonald’s is an American fast food company. It was initially started by the McDonald brothers as a restaurant in 1940 but was later rechristened as a hamburger stand. It was then purchased by the businessman Ray Kroc, who made changes to it and developed the brand into a franchise. Since then, McDonald’s has immensely grown to be branded as the world’s largest restaurant chain regarding revenue collected. The company serves an average of over 69 million customers and is spread to over 100 countries. The paper will show how the company has since been impacted by globalization and technology and will apply the resource and industrial-based model to show how the company could be able to earn more return.
Globalization
Globalization can be interpreted as the process whereby an organization develops an international influence, or rather, extends its outreach to a global scale . Globalization involves an active interaction between different companies, people, and governments worldwide. It is a process that is driven by investment in international trade and greatly relies on information technology and the ability of the company to adapt to changes in its environment (Hitt, Hoskisson, & Ireland, 2013). Being one of the world’s largest restaurant chains, McDonald’s could only achieve this by globalizing itself. Since the corporation’s establishment in 1955, McDonald’s has been able to build up more than 31000 restaurants, operating in up to 117 countries worldwide. It has managed this by focusing its attention on adapting to the cultural and traditional needs of the different countries it spreads its reach. An example of this is where the company offers chicken and vegetarian versions of its burgers in India, a country whose inhabitants do not especially partake in red meat. They also offer kosher burgers in Israel and ‘Halal’ menus which comply with Islamic means of food preparation prominent in Arab countries. The company’s main competitors include other fast food restaurants such as Burger King, KFC, and Subway. It, however, banks on using its brand, which is especially focused on making burgers with fresh beef in them as opposed to the other firms which generalize their products.
Technology
Technology can be understood as the branch of knowledge dealing with scientific creation and its practical application in human life. Efficient incorporation of technology would allow for enhanced communication as well as increased efficiency of operation, security, business culture, and the research capacity of an organization. It is for this reason that technology has been a growing necessity that most businesses are growing fond of every year. McDonald’s is one such company. Throughout the years, the company has advanced its computer technology in such a way that is has achieved automation of most of its processes. A good example of this is its installation of computerized points of sale as opposed to the traditional cash registers. The company has also installed Wi-Fi hotspots in their restaurants, a tactic that has attracted more young people to the restaurant. It has also input a robotics-infused system that facilitates shorter food processing time, a Nintendo Ds system as a tool for e-learning and facilitating training for their recruit staff. Others include biodiesel technology to reduce its carbon emissions and online platforms such as an active website and social media whereby customers can acquire information on the menu, the products offered, the store locations and facts on nutritional value as well as other components relating to advertising. Another technology-related innovation of McDonald’s was the installation of touch-activated screens in their drive-through sections which made the ordering process easier for customers in cars.
Industrial-Based Model
An industry-based model can be explained as a set of tools, methods or processes that universally apply to most corporations within a particular industry. These may include the core dimensions, methodologies, and materials used by those companies and their business practices. These models can also include certain factors within the firm’s external environment such as regulations, the competition, and its conduct, as well as legal economic and financial aspects. These apply to mainly all sectors. Therefore, their understanding can monumentally increase the ease with which a company does its operations. In the case of McDonald’s, it has respectively corresponded to these common tools. The most prominent external force affecting it is competition. This is mainly because the fast food industry is saturated and has customers with low switching costs. This means that they easily transfer to the competing restaurants. McDonald’s has, therefore, had to be actively involved in aggressive marketing tactics as deployed by its competitors. The firm has also had to create reasonable pricing for their products as well as differentiate them to acquire customer loyalty. It has managed this by buying in bulk from its suppliers, thus acquiring economies of scale.
Resource-Based Model
The resource-based model suggests that the firm can use its unique capabilities and resources to provide the basis of a strategy for attaining competitive advantage. The approach that has been chosen should emphasize the firm is exploiting its core competencies, as opposed to focusing on opportunities laying in its external environment (Peteraf, 1993). One such way that McDonald’s has incorporated this model is by acting on a staunchly set routine. The firm has operating manuals that are the same in all their branches which dictate precise directions on how each of their activities would be done. This continuous repetition of processes has allowed the firm to maintain the standard and uniformity of their products worldwide. This, in turn, has allowed for customer loyalty. McDonald’s also emphasizes quality leadership at all management levels and teamwork as a requirement for their employees. They train and improve the skills of their workforce where it lacks. By so doing the company has been able to maintain a consistent and conducive culture between its employees and managers thus maintaining its core competencies and gaining a competitive advantage over other companies with offering substitute products.
Vision
The vision statement is a worded description that is meant to serve as an aspiration for a company’s staff. It states what the company intends to achieve in its mid or long-term future and is used as a guide by the company’s leadership for choosing its current as well as the future course of action. According to Meyer (2017), The vision statement of McDonald’s is “to become a modern, progressive burger company delivering a contemporary customer experience. Modern is about getting the brand to where we need to be today, and progressive is about doing what it takes to be the McDonald’s our customers will expect tomorrow. To realize this commitment, we are focused on delivering great tasting, high-quality food to our customers and providing a world-class experience that makes them feel welcome and valued”. The statement has components showing that, besides having a business approach, the company is also open to embracing technology in improving its customer experience. It has been able to reflect this in its operations through various innovations that have allowed for more efficient service and product delivery.
Mission
The mission statement of McDonald’s is as stated: “Our mission is to be our customers’ favorite place and way to eat & drink. We’re dedicated to being a great place for our people to work; to being a strong, positive presence in your community; and to delivering the quality, service, cleanliness, and value our customers have come to expect from the Golden Arches—a symbol that’s trusted around the world” (Meyer, 2017). The statements show details of the company’s market position. It also highlights its accommodation to its human resource functionality as well as its awareness of the social responsibility it has. The statement, in turn, has managed to develop the company’s global brand and has strengthened its ability to attract investors, customers, as well as a skilled and enthusiastic workforce. The company also has a financial objective that aims at minimizing cost and subsequently optimizing the value of its products.
Stakeholders
The stakeholders are the entities which affect business and are affected by the business. In this scenario, they include the customers, suppliers, creditors, unions, and employees of McDonald’s. The McDonald’s employees are especially held with utmost priority. The company includes fair compensation and career development opportunities for them to maintain their productivity and encourage them. They, in turn, provide quality services. Customers are also held in high regard. McDonald’s accommodates them by offering affordable and healthy choices of food. They, in turn, are loyal to the firm and allow for a steady rise in profit and market relevance. Other stakeholders that McDonald’s prioritizes are its investors. The demands of these individuals are mostly profitability and an increase in revenues. McDonald’s assures this by introducing new products and enacting social responsibility.
Conclusion
The theorist Henri Fayol majored on five elements of administration which he termed as ‘the five elements of administration.’ These included planning, organizing, command, coordination, and control (Fayol, 2013). Henri suggested that by engaging in these traits, managers would be able to achieve the goals of the business in the most efficient way possible.
The study has given an overview on how the management of McDonald’s has been able to incorporate some if not all of these elements to its function and in turn has managed to attain financial success and market dominance. By planning for and adapting to trends in technology and globalization, the company has been able to spread across multiple countries and penetrated the markets there despite the various external forces that are present in the foreign lands. By using its capabilities and unique strengths, it has managed to achieve a competitive advantage over others in the rather congested fast food market. It has continued growing and maintained its relevance. Other firms can use the findings of this study as a benchmark. By implementing the strategies of McDonald’s, they’d stand a high chance of achieving business success.
References
Fayol, H. (2013). General and industrial management. Mansfield Centre, CT: Martino Publishing.
Hitt, M. A., Hoskisson, R. E., & Ireland, R. D. (2013). Strategic management: Competitiveness & globalization: Cases. Mason, OH: South-Western, Cengage Learning.
Meyer, P. (2017, February 5). McDonald’s vision statement & mission statement analysis – Panmore Institute.
Peteraf, M. A. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14(3), 179-191. doi:10.1002/smj.4250140303
