Paper type: Essay Pages: 7 (1570 words)
Make a recommendation regarding the future strategic direction if the company. According to the SWOT analysis, MD is regarded as a star taking the BCG matrix. Therefore MD should hold its position within the market.
In order to do this, we have recommended a few strategies for MD to maintain its position. To maintain its star position, MD needs to be proactive and be constantly aware of its environment. Currently there is an opportunity in the Chinese market. MD has plans to penetrate this market.
In order to be successful, MD needs to thoroughly analyse this market and tailor its products to the target market. Due to the growing industry and increasing competition, MD needs to also integrate a differentiation strategy.
According to the weaknesses, MD is currently having problems with delivering excellent customer service. Whilst MD has invested in employee training and values customer service within the organisation, this may be an area MD needs to strengthen on. This will help differentiate itself from competitors such as Wendy’s and Burger King and hence continue to hold its position within the market.
DEVELOPMENT and RECOMMENDATIONS FOR IMPLEMENTATION OF STRATEGIC OPTIONS Strategic options:
Reduction of employee training spending (lowering employee turnover); Taking advantage of organic food industry popularity (develop new products for new segments); Advantage of human health problems (improvement of products).
1 Reduction of employee training spending (lowering employee turnover). In order to reduce of employee training spending and to lower turnover, we would like to suggest: To give the job just for highly motivated people. It means, that they are going to be loyal and not to leave job so fast; To train new employees using ’’Big Brother’’ principle. New employees would be trained by employees, who are working longer. In this way, company reduces training spending, new employees are trained by the people, who are working inside the company and do the same things every day. To motivate employees and always take care about their expectations. It can be money premiums for good working in the end of the month (or year), some employees parties, ’’Employee of the week (month)’’ competition and etc.; also employer should take a look of what employee is expected from employer and try to solve that, ex.
Maybe employee is not expected to get premium every month, but for good and loyal working he would like that the company would pay his child studies fee after 5 years. 2. Taking advantage of organic food industry popularity (develop new products for new segments); McDonald’s is not that company, who suggest the most organic food, so they can try: To make a line of organic food in their menu and take a look what is more popular and healthy for their customers. If it is going more popular than usual menu food, it is more worth to make all food in organic way, even it is more expensive. First of all, people like what is natural, and then they are interested in the price. To be in a partnership with scientists and doctors in order to take care of their customers heath.
Everybody knows that organic food makes people feel better and healthier; also it affects nature in a good way. McDonald’s declares that ’’everything is for customer’’, so it must take an advantage of organic food popularity and ’’make’’ their customers to live healthier and in more natural way. To make big advertisement companies declaring organic food pluses and make it more popular in such way. Many people loves McDonald’s food, so it has an authority and can show good example of necessity of organic food in people life and compare how organic and usual McDonald’s food effect customers’ health and all the nature about them.
3. Advantage of human health problems (improvement of products) McDonald’s is big food supplying company, and all of us know, how food affects our health. It is one of the main factors, what built our body and strength our brains. Knowing that, McDonald’s should: Suggest just high quality, improved products, which is full of vitamins and minerals. So, it means that the company must improve their products, all the food must be certificated and fit for all healthy food standards. Be in a contact with suppliers, who supply products for McDonald’s food and always check if the products is natural, high standard and healthy for all of age customers. Contact with doctors, scientist and improve their products to fit for all of age customers, even they have some problems with their stomach. It means to make measures and find what the best is for all possible customers.
Strategists have a tremendous amount of both latitude and responsibility in developing and balancing the strategic options of an organization. The countless decisions required of these managers can be overwhelming considering the potential consequences of incorrect decisions. One way to deal with this complexity is through categorization; one categorization scheme is to classify corporate-level strategy decisions into three different types or grand strategies (Porter, 1985). These grand strategies involve efforts to expand business operations (growth strategies), decrease the scope of business operations (retrenchment strategies) or maintain the status quo (stability strategies). More specifically, growth strategies are designed to expand an organization’s performance, usually as measured by sales, profits, product mix, market coverage, market share or other accounting and market-based variables.
Typical growth strategies involve one or more of the following: _ with a concentration strategy the firm attempts to achieve greater market penetration by becoming highly efficient at servicing its market with a limited product line (E.g. McDonalds in fast foods) by using a vertical integration strategy, the firm attempts to expand the scope of its current operations by undertaking business activities formerly performed by one of its suppliers (backward integration) or by undertaking business activities performed by a business in its channel of distribution (forward integration) _ a diversification strategy entails moving into different markets or adding different products to its mix. If the products or markets are related to existing product or service offerings, the strategy is called concentric diversification. If expansion is into Products or services unrelated to the firm’s existing business, the diversification is called conglomerate diversification. In order for MCD to enhance its competitive advantage and market share in the fast food industry, the organization must consider the following recommendations. 1. Implement Online Ordering Globally
There has been a growing trend of food delivery in the China and Middle Eastern Markets. In order to capitalize on this demand and meet customer preferences, MCD has implemented an online ordering system in selected regions such Asia, Middle East and Africa (Jargon, 2011). However, MCD should consider expanding this growth strategy throughout all its stores. It is expected that if MCD proceeded with this strategy, the organization will be able to attract build its target market, especially tech savvy teenagers. This will in turn improve its market share and competitive advantage in the fast food industry (Donnelly, 2013).
Moreover, by employing online ordering, MCD will experience an increased efficiency as the ordering process will be timely and reduces the chance of error as opposed to ordering via a call center (Jargon, 2011). Additionally, there will be a reduction in operating costs, especially in MCD call centers as ordering will be steered to an online platform (Jargon, 2011) Counteracting this benefit of online ordering, MCD needs ensure that its product quality is not undermined. Specifically, high quality equipment with insulators should be used in order to retain the warmth of food, without it getting soggy (Jargon, 2011). Currently, MCD has a flat rate for orders in China, however charges a fee ranging between fifteen to twenty percent on the order price in other countries (Jargon, 2011). However, MCD’s rival, KFC currently charges a flat rate on its delivery orders. Therefore, it is recommended that MCD implements a flat rate on delivery orders in all its fast food outlets in order to maintain consistency and remain competitive in the market (Jargon, 2011). 2. Increase the number of healthy options in MCD’s menu
As raised in 1.0 of this report, changing customer tastes and preferences towards healthy eating has posed a threat for MCD. Since, MCD is an influential brand in society; the organization has faced scrutiny by several health groups over its menu lacking healthy options (Strom, 2013). In order to rectify this issue, MCD is currently developing initiatives in order to improve to menu to suit with the changing culture in society. Specifically, the organization is proposing make significant changes to its menu, particularly developing food that is low in salt and sugar by 2020 in regions that account for over eighty five percent of sales (Strom, 2013). Furthermore, MCD is proposing to place less emphasis on its menu items that are deemed to be unhealthy to children in its marketing campaigns (Strom, 2013).
Currently, MCD has placed premium pricing on its healthy options and this has downgraded its competitive advantage. This is due to rival, Subway being successful in its ability to sell healthy and fresh fast food at affordable prices (Strom, 2013). Therefore, in order to match this, MCD should consider incorporating more fresh produce into its menu selection that is also reasonably priced. Additionally, rival Burger King recently announced its new turkey burger to its menu (Strom, 2013). As a result, introducing more lean meat options into its menu is recommended to MCD in order to appeal to health conscious individuals.
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