In this case study I will describe McDonald’s business strategy and how it differentiates itself from the competition and describe the roots that make the foundations of its competitive advantage. I will uncover how they have aligned their business, human resources and staffing strategies and been successful through a recession. Finally I will discuss some possible talent-related threats that could eat away at McDonald’s competitive advantage and answer the question about a high turnover rate in a tight labor market being a problem. I will offer a recommendation based on my research for McDonald’s to maintain their competitive edge in the marketplace for the next five years.
Integrating McDonald’s Business, Human Resource, and Staffing Strategies
How does a multinational company like McDonald’s actually become even stronger and increase sales through one of the worst recessions in history? McDonald’s is built on a foundation that gives it a competitive advantage and a business strategy that is consistent, flexible, and specialized. McDonald’s business strategy is the specialization strategy. According to Phillips & Gully (2009), “Businesses pursuing a specialization strategy focus on a narrow market segment or niche- a single product, a particular end use, or buyers with special needs-and pursue either a differentiation or cost-leadership strategy within that market segment. Successful businesses following a specialist strategy know their market segment very well, and often enjoy a high degree of customer loyalty” ( pg. 29, para 5.) McDonald’s niche market is people, how do people and their needs and wants become the roots of a company’s competitive advantage? Kiran Chetry at CNN had a discussion with the Vice president of strategy and menu at McDonald’s and this is what she said about what changed with McDonald’s “Well, there are two things that’s really attributed to McDonald’s success.
First and foremost, listening to our customers, its menu variety, its value and affordable prices at McDonald’s and the convenience that only McDonald’s can offer. The other piece is our system alignment around one plan. You know, under the arches we have a term called the three-legged stool. It’s our franchisees, our suppliers and our corporate staff working together. Those are the two things that have worked for McDonald’s and our success.” (Chetry, 2009, para 7.) The way they are able to fuse their business, human resource and staffing strategies is by tracking key indicators. Indicators that track product, service quality, speed, accuracy, turnover, productivity, customer satisfaction, sales and profitability are the keys to a successful strategy. An article written by Janet Adamy for The Wall Street Journal stated “McDonald’s has been on a roll since 2003, when, to get out of a slump, it halted rapid expansion and instead focused on improving the food. (Adamy, 2009, para 11.) she goes on to say “Behind the effort is an increased focus on examining reams of customer data measuring everything from whether customers are trading down to smaller value meals or dropping Cokes from their orders to exactly how much they’re willing to pay for a Big Mac.” (Adamy, 2009, para 13.)
McDonald’s has refocused its efforts and realized the importance of providing customers with quality food in a clean and organized environment with quick service at an affordable price. To bring all these things to their customers they need quality staff and they have built a strategy of hiring internally from referrals and marketing jobs in their restaurants. Now that the worst has seemed to pass with regards to the recession, the reality is that there could be some real talent-related threats to their labor pool. To keep a competitive advantage to offset possible turnover as more jobs open up and the labor market eventually tightens up the company has to find an incentive to keep the young and older potential applicants from going elsewhere and also retaining the quality of employees that they have. The best way for a brand like McDonalds to attract and keep quality individuals is to offer incentives for growth within the company through education and leadership training.
If they can open the window for ownership through a system of mentorship and promotion, the old stigma of getting a job “flipping burgers” becomes more like an apprenticeship in entrepreneurial opportunities that every employee will embrace. If an employee doesn’t want to eventually own a franchise but wants to lean on becoming and going into management within the company, a succession of internal promotions based on merit, longevity, production, and talent reviews would also be available for these types of employees. McDonalds is doing the right things when it comes to changing their menu and food and beverage selection to accommodate the needs of their customers. This has helped the company grow its net income from over 1 billion dollars in 2003 to over 4 billion dollars in 2008. (Adamy, 2009, para 15) The intricate parts and components of the people that McDonalds hires and the way they train them to keep the service and quality at the standards that they need to be at to be successful are the keys of success for this business and any business for that matter.
Adamy, Janet (2009). McDonald’s Seeks Way To Keep Sizzling. The WallStreet Journal.Digital Network, March 10, 2009. Retrieved from
Phillips, J. & Gully, S. (2009). Strategic staffing. New Jersey: Pearson Prentice Hall
Chetry, Kiran (2009). Food for thought: Why is McDonald’s thriving? CNN.COM, March 18, 2009. Retrieved from
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