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McDonald’s Corporation is an American based world’s leading company in the fast food industry. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice. McDonald in 1948 they reorganized their business as a hamburger stand using production line principles. Ray Kroc joined the company in 1955 as a franchise. A McDonald’s restaurant is operated by either a franchisee, an affiliate or the corporation itself. McDonald’s Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. In 2012, McDonald’s Corporation had annual revenues of $27.5 billion, and profits of $5.5 billion. Products:
Macdonald’s primarily sells hamburgers, cheeseburgers, chicken burgers, French fries, breakfast items, soft drinks, milkshakes and deserts including ice-creams. Currently restaurant also expanded its menu to include salads, fish, wraps, smoothies and fruits in order to change the taste of the consumers. Company also serve soup in the Asian countries. The menu of the company differs according to the serving countries like prawn burger in Singapore. In Germany and western European countries MacDonald’s serve beer also. Operating countries:
Macdonald’s corporation is one of the largest fast food selling company. It have 31,800 flagship restaurants serving nearly 68 million people in each day among the 119 countries worldwide. Mainly, company operated by franchisee, an affiliate or the corporation itself. Basically company is operated largely in America, Canada and European countries like U.K., Competitors:
There are many fast food restaurant running currently in the market. However, Macdonald’s is one of the largest company operating internationally. Though, MacDonald’s itself is a brand but also it have some of the competitors in the market. There are many small fast food restaurant like as chicken and chips shops which serve the most of the items served by MacDonald’s in context to U.K. Besides these small fast food operating restaurant some of other big company are also running internationally. Such as Burger King, KFC fast food, Sam, Subway, etc. All of these are the main competitors of the MacDonald’s.
The international operations of McDonald’s are highly influenced by the individual state policies enforced by each government. (2001) For instance, there are certain groups in Europe and the United States that clamour for state actions pertaining to the health implications of eating fast food. (2005) they have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products.
On the other hand, the company is controlled by the individual policies and regulations of operations. Specific markets focus on different areas of concern such as that of health, worker protection, and environment. All these elements are seen in the government control of the licensing of the restaurants in the respective states. For instance, there is an impending legal dispute in the McDonald’s franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food. The existence of meat in their menus in India is apparently offensive to the Hindu religion in the said market. In terms of the Asian countries there are many people who do not consume beef burger and it hurts their religion as well. This kind of act arise the dispute and violence and it affects the business of the company. Like also in Middle East countries, they have their political law that meat provided in the country should be Halal. The company should focus on the religion, ethnic and the political status of the operating countries for the sustainable business. There are also other studies that points to the infringement of McDonald’s Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonald’s stores have to contend with the issues of employment procedures as well as their tax obligations so as to succeed in the foreign market. Political system:
1. Liberal democracy (less than half 191 UN members)
A liberal democracy is a form of representative democracy in which elected representatives who hold power are limited by a constitution that emphasizes protecting individual liberties, equality and the rights of minority groups. Among the many liberties that might be protected are freedom of speech and assembly, freedom of religion, the right to private property and privacy as well as equality before the law and due process under the rule of law. Such constitutional rights, also called liberal rights, are guaranteed through various controlled institutions and statutory laws. Additionally, the constitutions of most contemporary liberal democracies prohibits majorities, which is rule by the will of majority, when it harms those in the minority.
2. Authoritarian or absolutist (Burma, Saudi Arabia)
A political theory holding that all power should be vested in one ruler or other authority. b. A form of government in which all power is vested in a single ruler or other authority. 2. An absolute doctrine, principle, or standard.
3. Communist (china, Cuba, North Korea)
Communist reg the term “Communist state” is generally applied to a state with a republican form of government characterized by single-party or dominant-party rule by a Communist party which sets as its ultimate aim the construction of communism. Technically, “communist state” is a contradiction in termini as a communist society is in principle stateless; hence such states do not refer to themselves with this term, but rather as socialist states or workers’ states. It should therefore be understood that “Communist”, in this sense, refers to the Communist organization governing the state rather than the state structure itself (imes)
4. Theocratic (Iran, Vatican)
Theocracy is a society governed by priests, or one whose government is heavily influenced by religious leaders. Originally, theocracy meant a system where divine law was the basis of all humanly enacted law, and in which religious and political hierarchies were merged. Today, the term theocracy is applied to refer to the dominance of religion over state. Technological Factor:
McDonald’s generates a demand for their own products. The Company’s key tool for marketing is by means of television advertisements. There are similarly some claims that McDonald’s are inclined to interest the younger populations more. The existence of play spots as well as toys in meals offered by the company shows this actuality. Other demonstration of such a marketing strategy is apparent in the commercials of they use. They employ animated depictions of their characters like Grimace and Ham burglar. Other advertising operations employ popular celebrities to promote their products. Company also have its marketing strategy like as Facebook, Google Ads, etc. The like has become endorsers for McDonald’s worldwide “loving’ it” campaign. Moreover, the operations of McDonald’s have significantly been infused with new technology. Elements like the inventory system and the management of the value chain of the company allows for easy payments for their suppliers and other vendors which the individual stores in respective markets deal with.
The integration of technology in the operations of McDonalds tend to add value to their products. Basically, this is manifested in the improvements on its value chain. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context. According to (computing.co.uk) MacDonald’s are inventing the new ideas of technology. The company is also introducing wireless networking, PlayStation 2 video games consoles, internet terminals, flat screen televisions and music videos into its revamped stores. They are also providing free WiFi in the context to U.K. market. According to (marketingmagazine Jan 2011) MacDonald’s have started using contactless card payment service in U.K. This services helps in faster service for the consumer and saves the time period. Macdonald’s also have invented their new machinery equipment for the better service. They use new process for oil refining and latest machines which help in less pollution. They also use their cooked oil as bio diesel for their own delivery trucks.
SOCIO- CULTURAL FACTOR
Articles on the international strategies of McDonald’s seem to function on several fields to guarantee lucrative returns for the organisation. To illustrate, the organisation improves on establishing a positive mind-set from their core consumers. McDonald’s indulge a particular variety of consumers with definite types of personalities. It has also been noted that the company have given the markets such as the United Kingdom, an option with regards to their dining needs. (2005) pointed out that McDonald’s has launched a sensibly valued set of food that tenders a reliable level of quality for the respective market where it operates. Additionally, those who are aged just below the bracket of thirty-five are said to be the most frequent consumers of McDonald’s franchises. As socio – cultural includes the attitudes of people, religion, their culture, taste, family, etc all this factor may affects the MacDonald’s company. As matter of fact, MacDonald’s opened in India have to be concern in selling the meat products like beef, mutton, and pork. The religion where these products are as offensive will not be consumed.
Another example is selling meat products in Muslim based countries also. All the meat products should be Halal otherwise the consumer will not use the products. Other meat is pork which is not allowed to sell in the countries of Middle East like U.A.E, Dubai, Qatar etc. MacDonald’s should focus on the culture of the operating countries. The culture and tradition of the country also impact on MacDonald’s. Many people have tradition of not using the market cooked foods or they don’t have culture of eating outside, this also may affect the business of the company. Education and awareness is another factor. People may have the bad image of the food they consume if the quality of the food is not well. As a result they spread the negativity which may arise the fall in the sell. Another is age groups of people. So, company should emphasis on the socio-cultural aspect of the operating countries in order to provide the best service and obtain well business. Currently in UK MacDonald’s faced social problem. As from report from BBC, it was found about the sexual poem in the Kid Meal which was complained by the parents of the country and later the company apologised.
In the external environment legal factor also have its impact in the different organisation and companies. In context to the fast food companies it arises the different problems. The legal issues regarding the quality of foods, employees, environment and many more are some of them. There was a current roar against the fast food industry. It has forced McDonald’s to apply more close examination on their corporate social responsibility. As a whole it has addressed to requirement of the company to generate its corporate reputation to more positive and the more socially responsible company. The reputation of McDonald’s is obviously a huge question. Noticed on company’s web site, seems, that they have got steps to take in hand the key social condemnation that they abused them in the last decades. The company gave to their clients the corresponding data in which they need the relation of food essence of their products. This is to attend to the arguments of obesity charged against the products of the company. In the same way consumers have provided freedom in a choice, whether they want to buy the meal.
It is connected with socio-cultural market signs which they influence. For example, operations in predominantly Muslim countries demand, that their meat corresponded to Halal requirements of the law. In the same regard, those that operate in countries in the European Union should correspond to the existing laws forbidding usage of genetically modified meat products in their meal. Other legal concepts as tax obligations, employment standards, and requirements to a degree of quality are only a few of important elements on which the company should consider. Otherwise, smooth operations should be difficult to reach. Some issues may be: company sells fatty foods it may be changed in the operating countries. Other, MacDonald’s opens 24 hour in some places which also may be changed by the law and gets affected.
PORTER’S FIVE FORCES
1. The threat of entry of new competitor McDonalds, has make an entry barriers that others competitor cannot enter the fast food industry easily because, McDonalds have good product and services that customer has learned to expect from fast food industry. · As we can see, people more choose McDonalds compare to others fast food like KFC, Burger King or A&W because MacDonald’s has cheaper price a lots of menu that suitable with Malaysian taste and good service like MC Delivery compare to others fast food restaurant. ·The greatest strength was creating an image in the minds of the people and introducing them to the fast food culture. Delivery speed, customer care and cleanliness are the core strengths on which these stores expanded. They created a corporate symbol and their advertisement campaigns were highly successful in establishing the brand image and logo in the minds of the millions. Two main competitors generally identified with McDonald are the Burger King and the KFC. McDonald marketing strategy is concerned with the internal resources. ·A large amount of product differentiation exists in the industry. The McDonald brand ranks as 8th in Business Weeks Scoreboard over global brands. Furthermore the brands KFC and Pizza Hut are also represented (with place nr. 61 and 63 on the scoreboard). This signifies a large consumer preference to the global brands, and would create somewhat of a barrier for new entrants.
2. The bargaining power of supplier
Different suppliers have different bargain powers in the fast food industry. There is the soft drink industry where mayor supplier brand names supplies products and brand value to the fast food industry. Then there is the large amount of smaller suppliers that delivers other products to the fast food industry. For example, Coca Cola and Pepsi. The market for soft drinks is dominated by a few companies. Mainly Coca Cola and Pepsi. These soft drinks suppliers are the only ones who have the capacity to match the needs of the global fast food chains. The domination of a few suppliers in an industry with more customers sets a high bargaining power for the suppliers. · The fast food industry is interested in having the soft drink producers being a part of their own branding. The Pepsi and Coca Cola brand have a global brand ranking of respectively 23 and 1. · With the smaller fast food places the soft drink suppliers are holding all the bargaining power, since the individual fast food companies does not form a significant part of the supplier clientele, and their business could be partially dependent of the suppliers willingness to provide necessary equipment for the company.
3. The bargaining power of customers (buyers)
Since the industry is flooded with many different kinds of fast foods and many different suppliers of fast food, then the buyer are in a situation where many suppliers are offering products that have a certain similarity. Since the global fast food chains have been trying to match each other’s successful products and product packages, then the buyers can actually buy similar products from multiple suppliers, and that is a situation the empowers the buyer.Furthermore, if the fast food industry does not match the demands of the buyers and the general consumer trends, then the buyers can choose not to buy their product and convince others to do the same. · A good example of this is the movie ‘Super Size Me’ in America. It is a movie showing an ordinary consumer trying living of McDonald’s fast food, and the purpose of the movie was to see what the traditional fast food from MC Donald could do to your health if you were to eat their products for every meal. This movie shows what the buyers possible reactions could be if not satisfied or not being pleased. The reactions from the whole market were a large change in consumer preferences and brand preferences.
4. The threat of substitute products or services
The generic products of fast food are mainly considered as convenience. Convenience and availability are the main drivers for choosing fast food. However, this is backed up by focus on value. Since the market as a whole consists of many differentiated fast food companies, then the customers are used to having the option of choosing the best value products. · The value of the substitute products in general matches the fast food products and the consumer preferences of the consumers. The substitute product offers both cheap value meals and quality products for both ends of the quality scale that the fast food industry normally targets. Furthermore, it offers healthy alternatives to match the consumer needs and wishes. · The differences between McDonald and their others competitive are services of delivery that is Mc Delivery that give a good service, faster and make customer easy to buy from any kind of set of menu at McDonald’s.
5. The rivalry among existing firms in the industry
McDonald however is far larger than most in the industry with 31,000 outlets compared to its nearest hamburger competitor Burger King, with 11,500 (Reuters, 2008). KFC (owned by 2nd largest competitor Yum! Brands (Yahoo7finance, 2008), Burger King and countless others sell similar product to McDonald. · McDonald traditional competitors include many of the other fast food outlets across the country has been shown that the presence of a Burger King, for example, will increase the likelihood that McDonald will open nearby. Thus, it can be seen that the threat of competition from traditional rivals is intense and should never be over looked. In general, McDonald and its main competitors (Burger King Corporation, Wendy’s International, Inc., Hardee’s, and Jack in the Box) are active in making fresh moves to improve their market standing and business performance by introducing their product innovation and launching many outlets franchise. A good example of this would be the price competition between multiple fast food chains’ value meals. Price dumping is normally a good way to attract new customers, or stealing customers from competing companies, and since it have been a growing consumer trend to go after these value meals, then it is a product category that have been adapted from most of the global fast food companies.
The high level of competition forces the individual competitors to copy of each others are products and ideas quickly since the competitors are always keeping an eye out for new ideas for themselves, and so far there have been no way of protecting a burger or sandwich recipe. In Malaysia, every Chinese New Year, there will be a prosperity burger. Thereby they have found a way to differentiate, which gives them a bit more space to move in, and thereby a little less fierce competition. · The main competition goes through the branding. In addition, the competition to create the strongest brand is fierce. Firstly, normal advertising through TV, posters radio-commercials are regular. However, the biggest brands like McDonald’s and Burger King have been branding their own brand through piggy backing on other brands power.
Ecological Factors affecting International Business
Environment or ecological factor is one of the aspect of external environment. Ecological factor is any factor, biotic (living) or abiotic (non-living) that influences living organism. All the environmental factor brings marked distributional, structural and functional changes in the living creatures which directly affects the business internationally. International business is highly influenced by the different ecological factors. Manufacturing industries, different organisations, food selling companies, etc faced the several problem through many environmental factors. For the sustainable growth and development of any business all the aspect should be well matched. In absence or excess of any factor, which is necessary in the business may arise the depletion in the business. As a matter of fact, ecological factor should be considered vitally for the growth of international business. Below we will discuss some of the ecological factor that affects the business.
1. Climate, weather and climate change
Any business can only be success in the favourable climate and weather of the place. Climate and weather is very important in order to have a growth of business. It affects the business in the unfavourable conditions. Especially climate, weather and climate change affect the industries such as tourism, farming, insurance etc. The adverse effect of climate change causes many problem in the industries. However, businesses that are dependent on long-term investment are likely to have larger impacts, because the consequences of climate change increase over time. So the industries of construction, real estate, transport and infrastructure are likely to be the most effected by climate change impacts. As for the example, tourism sector will be directly affected by the climate change and the weather condition of the place. People couldn’t broad to their destination due to the inconvenience.
Climate change may occur high temperature, low temperature, high rainfall etc. in the improper time period which result problem for the tourist. Currently, in USA there was a high snowfall in the history which is due to the climate change. As a result the industries and companies are not able to run their business accordingly. Climate change will affect almost all forms of infrastructure: electricity, gas, and water in the utilities as well as transport access and telecommunications. This in turn will affect people.
2. Natural calamities
Natural calamities or disasters are another factor of ecology which affect dynamically on the business. These disaster came unknowingly and create the adverse effect not only on the business but also affect people. Natural disaster affect all small and large types of business. Natural disaster includes flood, landslides, earthquake, volcano, tsunami, storm, hurricane, and others. If one of these occurs than it brings the wide problem in all companies and industries. Additionally, natural disasters have larger repercussions for small businesses because they often operate from a single location. As small businesses also gets the majority of their business from customers in the surrounding area, any of these disaster may bring the adverse effect. As for example last year storm in New York causes several problems. Business are closed for many days due to unviability of electricity, water, telecommunication, transportation etc. Due to this factor business cannot take off and there was a huge loss in all sector of businesses. Another example is flood in Pakistan, Tsunami in Philippines, volcano in Indonesia, earthquake in japan etc. As of the report Japan nearly need a year to recreate it business in all of the sector. Not only the host countries businesses get affected but also they affects worldwide. There will be shortage of supply and recession may arise.
3. Pollution and wastes
Another ecological factor affecting the business internationally is pollution. It is one of the most important factor which is to be consider in the change in businesses. Mainly there are air, water, noise and land pollution. All of these four pollution creates the adverse effect in current business sector worldwide. All type of businesses are influenced from pollution. Manufacturing industries are highly affected through this factor. Due to high pollution businesses cannot produce high number of product due to which it generate loss in the industries. Chemical industries are main source of water pollution, they are advised to deactivate their chemicals and proper managements for their waste and build separate place to dispose it. Due to which companies need to spend big amount of money for the waste management. In china government encourage to use the public transport instead of private due to extreme air pollution. This directly affects the motor industries sector as their sales get decrease.
According to the report from BBC, due to the extreme air pollution in Hong Kong it is very difficult for the people. Tourism industries is influenced as people cannot see the proper scenery due to the air pollution. As from report air quality in Hong Kong is three times worse than London and New York. Wastes management also affect the business sector. Proper waste management gives the healthy environment. Mainly food factories and restaurants are affected due to waste pollution.
4. Global warming and depletion of resources
Global warming is the average increase in the temperature of the earth in air level and oceans. Industries including agriculture, tourism, health, real – state etc. are main sector of business which are affected. Due to the pollution and global warming the depletion of Ozone layers is highly occurring as a result the UV rays of sun will directly fall in the earth surface and increases its temperature. This affects the wildlife, agriculture and others sector dynamically. The business in this sector gets affected and it creates the vital problem. Another is depletion of natural resources. Raw materials are one of the important ingredients to run any type of business. All the manufacturing industries required raw material to run their business. Due to the global warming and improper use of resources it difficult for the companies to find raw materials which may result closing of the businesses. Scarcity of raw materials typically slow down the long term strategies and responses by the business, thereby missing on opportunities to make early moves and position themselves competitively.
Ecological Factor affecting MacDonald’s
MacDonald’s corporation is one of the largest fast food selling company globally. It have its companies in more than 119 countries serving 68 millions of people each day. McDonald’s is growing day by day by increasing the number of restaurant. The main source of ingredient and packaging is nature. McDonald’s has a Rain Forest Policy, which declares its commitment to beef purchasing practices that do not contribute to tropical de-forestation. Everyday McDonalds using a huge amount of napkins, carryout bag, tray lines, clamshells. Oil and water is other major ingredient using in MacDonald’s. Environment is the most important in context to the business of MacDonald’s. As most of the ingredients came from the environment and they need depend on it. However, due to different ecological factors there is imbalance in the ecosystem and environments gets affected. As a result various impacts affects the business of MacDonald’s. Some of the ecological factors which affects MacDonald’s corporation are discussed below: 1. Global Warming and climate/weather change
The process of changing the temperature of the earth surface gradually and occurring the unfavourable climate is known to be global warming. In a common way, having the imbalance climate and weather in earth surface which is not acceptable for the living creatures indicates as global warming. MacDonald’s is the fast food selling company which is highly affected due to the impact of climate change and global warming. Most of the materials used by the company are fully available from nature. First of all let we discuss the resources used by the MacDonald’s to run its business. They use different animals such as beef, chicken, pork, etc. Vegetables and salad are also most important for their productions. Organic coffee beans which comes from tropical rain forest is another raw materials which are used. Other several resources are used to run the business. Climate change and global warming creates impact in the whole environment not only in the numbers of product.
MacDonald’s use the coffee beans from African tropical forest, due to the climate change their will not be the favourable environment to produce the organic coffee, as a result company need to use for cost to recreate its business. On the other hand, customers may not be fully satisfied because of non-organic and in concern to the health. Also tropical deforestation is becoming one of the vital problem which generates the low production of resources. This result the fall in the business. Different animals are used in the burger of MacDonald’s, due to global warming the UV rays of the sun are reflect back into the earth and its temperature rises gradually which makes difficult for the creature to survive. Global warming brings the unpredictable weather conditions. This will bring the bad impact in the business like MacDonald’s.
As of the current example, heavy snowfall in New York City which is due to the global warming. Many places were affected due to that unpredictable snowfall. As a result all the companies including MacDonald were also closed for several days. Overall, global warming and climate change is one of the hot topic of concern in current situation. Food sectors and many more are adversely affected through unpredictable change in the environment. All the business sectors are fully responsible to do a research and generate awareness in controlling the environment.
2. Natural Disaster, pollution and resources depletion.
Natural disasters are those calamities which have not any time period to happen. They happens automatically and unknowingly. It includes flood, landslides, earthquake, volcano, etc. Food selling companies like MacDonald’s are directly affected due to this type of disasters. Normally, people are affected in the places of occurrence. So, the business of that places influenced badly. In terms of MacDonald’s in U.K, beef are provided from Scotland. If disaster like landslides or earthquake happens than there will be difficulties in the transportation facilities. Other like communication, electricity, water facilities, etc are also affected. Due to which there will not be supply of goods. As a result it slow down the business of MacDonald’s and customer are will not be satisfied. As for the example, tsunami in Japan, Flood in Pakistan, storm in USA, etc directly affects the business.
Due to this factor MacDonald’s are closed for long period of time. Pollution is also one of the ecological factor which created disturbances in the business of food selling companies. As MacDonald’s corporation use most of the natural resources for it food production, pollution mainly affects the environment. Harmful gases are released by the different manufacturing industries which creates air pollution. Due to this pollution there is more probability of acid rain which dynamically affects the living creatures and plants. MacDonald’s use coffee bean seeds from tropical rain forest, but due to acid rain it will generate several problems and will not be more organic. Different kinds of diseases will emerge in the animals like beef, chicken and pork. As MacDonald’s is popular for Hamburger, the diseases like swine flu will directly affect in the pork, another bird flu in chicken and others. Government may apply the new rules regarding water, noise and land pollution which may also affects the opening of new branches worldwide. Depletion of natural resource is another major factor.
Deforestation, water resource depletion, wildlife degradation are some of them. All this will adversely affect the ecosystem which creates scarcity of resources. MacDonald’s may face the scarcity of the raw materials required for its production due to deforestation in the tropical forest. Due to lack of water resources it generate the negativity in the productions of drinks and other products. Hence, natural disaster, pollution and resources depletion affect the business of MacDonald’s in a major way. MacDonald’s need to focus on these factors to create its business successfully in worldwide. Preservation and long term usage of production should be in action. Long term strategies and external sources should be implemented in order to get the sustainable business and growth of the company.
MacDonald’s responding to the ecological factors.
a) Other areas of improvement include coffee beans and milk. McDonald’s now only uses those beans certiﬁed by the Rainforest Alliance; and uses organic milk for milkshakes and hot beverages. It has Rainforest policy where it is completely against tropical deforestation supporting the balance in eco-system. b) Recycling and reusing of the products (to decrease the pollution) c) Separate agriculture and farming facilities to produce for its own use. (eg, beef, pork, chicken, vegetables) d) Use of vacuum urinating facilities(preserve water resources) e) Using paper bags instead of plastic, easy to dispose
f) Use its grease oil for its own delivery trucks
g) it have its separate waste management site which helps to make community clean h) McDonald’s worked with Conservation International to develop an environmental scorecard. It drives greater awareness of resource use (energy, water, air emissions and waste) with the ultimate goal of reducing our environmental impacts i) To provide customer with both good food and good value, MacDonald consider priorities for food safety, quality and cost–as well as sustainability–when making sourcing decisions. Their vision for a sustainable supply chain links responsibility for ethical, environmental and economic outcomes. j) McDonald’s has developed a next generation “low oil volume” (LOV) fryer that uses about 40% less cooking oil and 4% less energy maintaining the SAME Great taste. Hence these are available in restaurants around the world.
As a result of this, environmental action plans have been developed to address these issues. For example, McDonald’s has a policy of sourcing its food as close to home as possible, with approximately 70 percent of the company’s food coming from the UK and Ireland k) In a ﬁrst for the quick-service restaurant industry, McDonald’s opened the world’s ﬁrst hydroﬂurocarbon (HFC)-free restaurant in 2003 in Denmark. The result is that the restaurant does not use Freon in its refrigerants, thereby helping cut down on harmful climate changing emissions. As further proof of its commitment, McDonald’s’ efforts at efficient packaging and recycling have been recognized by the Environmental Protection Agency (EPA). Also, the Campus Ofﬁce Building received the LEED-EB Platinum award in2009, in recognition for its ‘green’ initiatives.
Future developments work
MacDonald’s can use the electrical heating instead of gas to save the resources Also can use the latest machinery equipment which produce less emission of harmful gases Using less fridge and freezer which emits harmful gas such CFC. Use new technology to open the new restaurant which have less effect on environment featuring the Rainforest Alliance Certified
MacDonald’s celebrate their work with the Rainforest Alliance and want to inform customers that they should feel good about purchasing their espresso beverages that are brewed with 100% Espresso from Rainforest Alliance Certified farms. Environment awareness campaign
Patents protect what makes things work – like what makes a wheel turn or the chemical formula of your favourite fizzy drink Copyright
Copyright is an automatic right which applies when the work is fixed, that is written or recorded in some way Trade mark
Trademarks are signs (like words and logos) that distinguish goods and services in the marketplace Design
Designs protect the appearance of a product/logo, from the shape of an aeroplane to a fashion item Types of Market:
Monopolistic competition is a market structure where many companies sell similar products, but are not identical. Firms in this market structure are a monopolist for their brand. There is freedom of entry and exist into the industry as there are no barriers such as strategic raw material, very high start –up cost and lack of information. Mc Donald’s maintains its competitive advantage with ‘Big Mac’ as its biggest attraction and backbone of the corporation.(ukessay)
So how McDonald has managed to compete with other monopolies? McDonald’s have their own profitable specialty coffee in the form of McCafes, a concept taken from Starbucks. Recently, McDonald’s has remodelled the design of some of their restaurants, replacing their fiberglass tables and industrial steel chairs with wooden tables, comfortable faux leather chairs, and have painted their interiors of muted colours of orange, yellow, and green. McDonald’s not only have borrowed Starbucks’ concept of coffee, but have also begun borrowing the same design and feel. McDonald’s has gone under this remodelling with their restaurants to bring down other top competitors such as Burger King and Wendy’s since they are not as successful and cannot afford such upgrades to their own restaurants.
Non-price competition is a way of how firms attract consumers with factors other than price, such as style, service, or location. So how McDonald has used non-price competition to convince customers to come to them instead of other burger places. Macdonald’s has not only been trying to beat other top competitors in the burger industry. It has also been competing with restaurants that are not even fast food chains. One of the examples of non fast food chains that McDonald’s has been trying to draw customers away from is Panera Bread. McDonald’s has also been trying to bring customers away from Chipotle, a Mexican chain that was originally owned by McDonald’s until October 2006. McDonald’s has also competed with Starbucks Coffee with the selling of their McCafes.
4. Perfect competition
Globalisation, its indicator and main driver.
Hetal (1999) defines globalisation as, ‘ the widening, deepening and speeding up of all worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, financial to the spiritual. It helps in following: increased international trade
a company operating in more than one country
greater dependence on the global economy
freer movement of capital, goods, and services
Recognition of companies such as McDonalds and Starbucks in less economically developed countries.
INDICATORS OF GLOBALISATION:
1. International trade
2. Financial flows
DRIVERS OF GLOBALISATION:
1. Economic ( benefits of economies of scale, cheap labour) 2. Technology (communication and transportation)
BARRIERS TO GLOBAISATION:
1. Government regulation( tarrifs and subsidies, border and immigration control, public procurement, control on capital flows) 2. Cultural and geographic distance (taste, culture, language, religion, corruption, work culture)
CSR and MacDonald’s
Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders. Key CSR issues: environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labour standards and working conditions, employee and community relations, social equity, gender balance, human rights, good governance, and anti-corruption measures.
Being a responsible corporate citizen, McDonald’s firmly believes in giving back to the communities it operates in. they love to provide support and encouragement to the people who need it the most. All our restaurants contribute to their local community and every year we help set up and support numerous educational, sporting and charity programs designed to help a wide range of people. McDonald’s has a proactive approach to charities and sponsorships. We believe these help inspire and support the people of Pakistan, especially the underprivileged ones, to live a better life. We are dedicated to delivering great experiences through our ongoing community support programs. Some of the program done by MacDonald’s:
1. In Pakistan, litter patrol set up in the neighbour to pick up litter and aware the people, cleaning campaigns, walk for cruelty of killing animals, support woman, support the thalassemia society in Pakistan. 2. In UK, clean the surrounding near the restaurant, fix litter patrol, keep Britain clean campaign, feeding program in London Olympics, charities and support to the different clubs, support education sectors. 3. Support various community based programs such as sponsoring education for the poor people in India and Asian countries. 4. Support in sports and encourage children to physically fit. MacDonald’s use low energy LED light bulbs, energy saving equipment and waterless urinals, and recycle used cooking oil into biodiesel to fuel more than half of our delivery trucks. They also recycle the cardboard boxes used in more than 89% of our restaurants, and more than 85% of our packaging is made from renewable resources. They are the Community Partner Community Partner of the four nations’ Football Associations.
This means it work with local football clubs, schools, youth teams and junior leagues around the UK. MacDonald’s programme gives people the chance to volunteer and qualify as a football coach so they can give free, high-quality coaching to young people across the country. They also organise daily litter patrols and work with environmental charities Keep Britain Tidy , Keep Wales Tidy , Keep Scotland Beautiful and Tidy Northern Ireland. Most of our charity work is focused on supporting Ronald McDonald House Charities, an independent charity which McDonald’s has supported for over 20 years. Ronald McDonald House Charities provides a ‘home away from home’ for families with children undergoing treatment in hospital. The Charity relies on voluntary donations, and you can find collection boxes in every single one of our restaurants. MacDonald’s also invest over £360 million a year in the UK agricultural industry. The majority of our ingredients come from Britain and Ireland, with more than 17,500 British and Irish farmers providing us with ingredients such as beef, Freedom Food pork, free-range eggs, organic milk and potatoes. E Business:
McDonald’s is one of the most recognisable brands in the world, yet also has to battle a fair amount of negative publicity The McDonald’s UK page has more than 30m fans, and its local market pages have all attracted several hundred thousand ‘likes’. Data collected by Internet Access – Households and Individuals, 2013
In 2013, 36 million adults (73%) in Great Britain accessed the Internet every day, 20 million more than in 2006, when directly comparable records began. Access to the Internet using a mobile phone more than doubled between 2010 and 2013, from 24% to 53%. In 2013, 72% of all adults bought goods or services online, up from 53% in 2008. In Great Britain, 21 million households (83%) had Internet access in 2013. Broadband Internet connections using fibre optic or cable were used by 42% of households, up from 30% in 2012.
Globalisation strategy of McDonald:
McDonald’s has developed their unique globalisation strategy. McDonald include their fore main characters to make perfect business strategy. Are shown as below 1 Think globally but act locally
3 Advertising strategies
4 Social responsibility
1. Think Globally but Act Locally:
The main aim of the McDonald’s Corporation is to focus locally with the global strategy. It always performs and supply all the operation, systems as per the requirement of the local factors. It always try to be fit in local traditions, cultures, society and political. McDonald’s Corporation always keep special factors in mind while making their business strategy. It always performs as per the requirements of the different markets. Macdonald expenses lots of resources to develop and create its products as pre the local demands and traditions. However, once McDonald’s corporation failed to do this, while establishment in Germany and Netherlands, consumers did not accept their local menu in the year 1970 because they wanted American food rather than their local menu.
After this experience company realised that every restaurant’s local menu should incorporate some local tests as well but at a minimal level.At the time of establishing in India, McDonald has considered that Hindu community does not eat beef as per their Hindu belief. Therefore, they specially introduced new vegetarian series of the product in their menu. Also taking Muslim community in focus that Muslims did nit consume poke. Therefore, they only sell chicken and lamb. It had done separate preparation for Vegetarian and non-vegetarian.
The other most important feature is their price differentiates than their competitor. This pricing strategy of McDonald’s corporation is very reliable and unique. While fixing the price McDonald’s takes some factors in consideration like local life style, income of the family, location etc. The time of fixing price for the products, they also focus on the primary target group of the company, lower and power level. McDonald’s enters in most of metropolitan city of the country in which it enters.Sometime during period of lean time company offers discounted price to boost their sell in short McDonald’s corporation believes that to stay longer life in the market we should have unique pricing policy.
3. Advertising/Promotional strategies:
Advertising is the other platform to the company by the help of which company introduce their product, boost to the customers etc. every organization have their unique and own promotional strategies. Here McDonald’s arranges their promotional strategy as a part of advertisement. The worldwide promotional activities of the McDonald’s corporation is organised by “DDB Needhamand Leo Burnettas” well their local collaborates in different countries. It sometimes organised by the local advertising company also. Other than advertisement, McDonald’s corporation uses more promotional tools to promote their product. Company offers their product at law price; it gives toys to the children etc. most successful promotional strategies became very popular now days .McDonald’s has for decades maintained an extensive advertising campaign.
In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games and makes coolers of The Orange with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company’s advertising strategy. In January and February 2008 there was an offer of buy one get one free by McDonald’s UK particular for the Big Mac. Company introduced press coupons and those coupons can be exchanged at the McDonald’s restaurant to get benefit of the product. To date, McDonald’s has used 23 different slogans in United States advertising as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns