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McDonald’s Company Analysis

Updated April 19, 2022
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McDonald’s Company Analysis essay

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Company Background

McDonald’s, in full McDonald’s Corporation, American fast-food chain that is one of the largest in the world, known for its hamburgers. Its headquarters are in Oak Brook, Illinois. The first McDonald’s restaurant was started in 1948 by brothers Maurice (“Mac”) and Richard McDonald in San Bernardino, California. They bought appliances for their small hamburger restaurant from salesman Ray Kroc, who was intrigued by their need for eight malt and shake mixers. When Kroc visited the brothers in 1954 to see how a small shop could sell so many milk shakes, he discovered a simple, efficient format that permitted the brothers to produce huge quantities of food at low prices. A basic hamburger cost 15 cents, about half the price charged by competing restaurants. The self-service counter eliminated the need for waiters and waitresses; customers received their food quickly because hamburgers were cooked ahead of time, wrapped, and warmed under heat lamps.

Seeing great promise in their restaurant concept, Kroc offered to begin a franchise program for the McDonald brothers. On April 15, 1955, he opened the first McDonald’s franchise in Des Plaines, Illinois, and in the same year launched the McDonald’s Corporation, eventually buying out the McDonald brothers in 1961. The number of McDonald’s outlets would top 1,000 before the end of the decade. Boosted by steady growth, the company’s stock began trading publicly in 1965.The public face of McDonald’s was created in 1963 with the introduction of a clown named Ronald McDonald, while the double-arch “m” symbol became McDonald’s most enduring logo in 1962, lasting far longer than the tall yellow arches that had once dominated the earlier restaurant rooftops. Other products and symbols would define the McDonald’s brand, including the Big Mac (1968), the Egg McGuffins (1973), Happy Meals (1979), and Chicken McNuggets,(1983).

The chain continued to expand domestically and internationally, extending to Canada in 1967, reaching a total of 10,000 restaurants by 1988, and operating more than 35,000 outlets in more than 100 countries in the early 21st century. Growth was so swift in the 1990s that it was said a new McDonald’s opened somewhere in the world every five hours. It effectively became the most popular family restaurant, emphasizing affordable food, fun, and flavours that appealed to children and adults alike. In addition, as one of the world’s largest private employers, McDonald’s faced numerous calls to increase wages. The term McJob was added to the Merriam-Webster dictionary to mean “low-paying job.”

In the late 20th century, McDonald’s moved beyond the hamburger business by acquiring Chipotle Mexican Grill (1998), Donatos Pizza (1999), and Boston Market (2000) in the United States, and in the United Kingdom McDonald’s purchased Aroma Cafe (1999) and an interest in Pret A Manger (2001), a sandwich restaurant chain. However, by late 2008 McDonald’s no longer owned or had a stake in any of those companies, instead concentrating on its own brand.

McDonald’s corporate mission is “to be our customers’ favorite place and way to eat and drink.” This mission statement highlights the significance of customers as the business focus, while maintaining the company as a major influence on their food and beverage purchase decisions. McDonald’s corporate vision is “to move with velocity to drive profitable growth and become an even better McDonald’s serving more customers delicious food each day around the world.” This statement is included in the growth plan that the company introduced in 2017. The company’s previous vision statement was “Our overall vision is for McDonald’s to become a modern, progressive burger company delivering a contemporary customer experience.”

McDonald’s has been recognized as a great place to work in more than 30 of the markets in which we do business. Awards that been given to Mcdonald’s Corporation are,

  • Ranked #3 among all companies for “Management Quality”
  • Ranked #7 among all companies for “Global Competitiveness”
  • Ranked #4 among all companies for “Financial Soundness”
  • McDonald’s also ranked #2 in the Food Services category
  • 2013 #8 Best Company for Leadership
  • 2014 #42 Most Respected Company
  • 2014 #22 World’s Most Admired Company

Sustainability : McDonald’s was a member of the Dow Jones Sustainability Index from 2005 to 2013

In a nutshell, it can be clearly proved that McDonald’s Corporation is definitely a very successful company. McDonald’s Corporation ,emerged as one of the best fast food restaurant company and will continuously try harder in being the best company at the international platform.

Organizational Culture

Organizational culture is well-defined as the underlying beliefs, assumptions, values and ways of interacting that contribute to the organization’s unique social and psychological environment such as environment and atmosphere, compensation, standard and policies, people, leadership and organization. A strong culture can create predictability, orderliness and consistency without the need for written documentation. So, the stronger an organization’s culture, the less managers need to be concerned with developing formal rules and regulations. Every company which have strong organizational culture usually has doctrine and laws that the law relating to matters which originate straight from the life-cycle of a corporation. It includes the formation, funding, governance, and death of a corporation. In other words, doctrine and laws is referring to the organization and control, management system and procedures and the command and control structure for the deployment of resources. McDonald’s, as the largest player in the global fast food restaurant market, uses its organizational culture to attract customers and qualified employees.

McDonald’s organizational culture encourages learning in order to ensure business efficiency in production and service. The organization’s continuation reflects the company’s effectiveness in applying its corporate culture to achieve the desired level of human resource capabilities, a condition that highlights the importance of organizational culture as a success factor for McDonald’s global business. McDonald’s organizational culture emphasizes human resource development and efficiency to support business growth and achievement in the global fast food restaurant market. This organizational culture has some characteristics which are people-centricity, individual learning, organizational learning, Diversity and inclusion, arranged according to McDonald’s priorities.

Firstly, McDonald’s apply people-centricity by prioritizes employees’ need and development. The organization fundamental beliefs and principles of business direct feature the significance of supporting individuals. As a service business, McDonald’s encourages employees to engage management to help develop processes and procedures in order to ensure support for people. Secondly, McDonald’s also take individual learning as an important organizational culture. They feature the significance of long lasting learning and conviction that singular learning advances efficiency, quality, and business adequacy. To encourage singular inclining, the organization gives preparing and advancement openings through Hamburger University, entry level positions, worldwide versatility, and administration improvement programs so as to keep up an authoritative culture that persuades representatives to continue learning. Besides, McDonald’s authoritative culture additionally bolsters hierarchical realizing which is utilizing singular figuring out how to create hierarchical learning to push the business forward higher than ever of execution. Through policies, programs and meetings that encourage employee feedback and knowledge sharing, McDonald’s are able to apply this feature of its organizational culture. Furthermore, McDonald’s states that decent variety and consideration are key factors in the company’s hierarchical culture.tp McDonald’s perceives the significance of assorted variety and incorporation in improving human asset capacities to react to progressively enhanced markets. To guarantee support for assorted variety and incorporation, McDonald’s hierarchical culture energizes representatives, providers, franchisees and clients to give criticism and take part in significant discussions to enhance the business. McDonald’s hierarchical culture has the benefit of empowering organizations to enhance administration quality through individuals focused, singular learning and authoritative learning. However, excellence and high quality are factors that are not effectively covered in the corporate culture. Although McDonald’s emphasizes learning and supporting people in organizational culture, it does not emphasize the excellence of individual performance. Therefore, McDonald’s may emphasize excellence and high quality output in its organizational culture.

The Power of Change

Over the years, McDonald has a major changes to turn the business around and improves its public images. McDonald started to focus more on accepting the customer feedbacks and trying to accept customer’s changing tastes. This is because McDonald’s company has changed their CEO, Steve Easterbrook. The new CEO did not follow the previous footsteps of the former CEO. Also, McDonald change their menu on the drive through menu boards by not showing a full menu. With this, the customer can speed up the queue by not having congestion during drive through. McDonald only display their top selling item on the drive through menu

After years of begging for McDonald all day breakfast, finally in 2015 Oct 6, they have their breakfast menu all day. They had McMuffin, pancakes, sandwiches and etc to serve the customers. The breakfast menu will change once it is 10:30am. McDonald also begin their delivery service, where the customer can call for their hotline to order food instead of driving to the restaurant. McDonald has their own postmates to deliver the food which they offer 24 hours daily. Customers and order anything they want except for ice-cream cone.

KFC has their best seller of fried chicken. McDonald wanted to bet them with the same selling item which is fried chicken, but McDonald did not beat them successfully because McDonald fried chicken is not as good as KFC’s. As we all know that McDonald serves the best burger but not fried chicken. But in 2018, they introduced their new “better chicken” which it was crispy and juicy. They change their old recipe and the quality of chicken. Now their fried chicken is also one of their best sellers. McDonald made a huge change of their burgers. They removed the artificial flavors, colors and preservatives from its burger which includes all the burger on the menu. All the burgers have no artificial preservatives except for the pickles.

McDonald also have made some changes with their burger. McDonald tend to use the crispy fried chicken to put in with their burger, which its now called Crispy McChicken Deluxe. This has become one of a new item for McDonald to beat KFC. Customer will not only go to KFC when they want to eat fried chicken, they can also choose McDonald when they want. Also, McDonald always provide promotions to the customer through their apps, compared to KFC, KFC seldom have offers or promotions. McDonald know how to control their price range for not letting their customer to have expensive meals.

5.0 The Power of Change

McDonald’s uses the fourth principle of Sun Tzu’s The Art of War and its application in managing their business strategies to overcome dire situations to get the best result over its competitors. Speed strategies also have their advantages. McDonald’s became the leader in the fast food industry with their strong focus on customer service, response to competition, and use of marketing techniques early on in their development, while the other competition did not even think to implement such ideas in their business. McDonald’s Operations Competitive Strategy focuses on cost, speed, and nutrition. They prioritize making the customer “happy.”

So during their time in becoming the leading fast food industry this is how McDonald’s used speed strategy to overcome other fast food industries. So how did they implement speed strategy and maintained leadership among other fast food industries?

Historian Love writes that the McDonald’s brothers ‘defined a totally new food service concept (Their hamburger stand was) the birthplace of a new generation of restaurants’. The McDonald brothers applied a Factory-line assembly design to a commercial kitchen, to make a faster and precise product. They cut the serving time down from 20 minutes to 30 seconds, which at the time was mind-blowing for customers which lead increase in their business.

McDonald’s focus quite a lot on other fast food industries, so they know what is very popular at the moment. So they utilize Culinary Head Chefs that innovate and create new menu items to be relevant and provide high-quality taste. Like in 1993 they started McCafe to compete with Starbucks, Tim Hortons, and other coffee shops, offering premium coffees.

There was a shift in society in the 2000’s where people wanted fresh and healthy food, which continues today. There were concerns about obesity and heart disease. As a result, McDonald’s started creating healthier menu options (added more chicken and salads).In 2006 McDonald’s chefs noticed a trend of people grazing and eating 5 small meals, so they created “snack wraps.”

In 2014 McDonald’s spent approximately $3 Billion on restaurant renovations. A Major shift and renovation of the restaurant’s set-up which created a more family-friendly environment and comfortable spots for people to stay longer and socialize. Ways they did this was introducing free Wi-Fi, comfortable seating, and focusing on children play areas.

Ultimately McDonald’s sustains Their Competitive Advantage with Innovation and deciding what is the best time to introduce these innovations to the market often catching the other food industries by surprise and gaining more profit for their business and gaining momentum to do more. They definitely changed how the whole fast food industry works. This is how McDonalds used speed strategy.

Direct and Indirect Forces

In the battle, Sun Zi talked about using the direct forces to match the enemy and use the indirect force to win the enemy. Besides, Sun Zi also mentioned that the combinations and efficiently applied of direct forces and indirect forces are infinite and its interactions can produce wonderful results. Another says, in all fighting, the direct method may be used for joining battle, but indirect methods will be needed in order to secure victory. Direct forces in war would be similar to the quality or price of a company’s services or products in business while the indirect forces in war would be similar to the service level or intangibles like branding in business. Indirect forces can be proved by the quality and price can be easily imitated but it is the intangibles that are hard to replicate and it gives a business a sustainable competitive edge over his opponent and it also allows differentiation between products and services easily.

Indirect forces can affect the market and affect the market’s profits and prices. One of the indirect forces of McDonald’s is the threats of indirect competition. The competition between the companies which produce slightly different products but target the same customers is called indirect competition. The indirect competitor of McDonald’s is also aim to satisfy customers’ same needs. McDonald’s indirect competitor is other fast-food restaurant such as Domino’s Pizza and Pizza Hut. This can be proved by the sales of in the United Kingdom grew by 1.7% in the quarter one of 2017 while the sales of Domino’s has increased 10.2% in the quarter one of 2017. The supplier pressure will be also one of the indirect forces for McDonald’s. As the demand of raw materials or input is high, the supplier will raise the prices of the raw materials in order to earn more profit. Hence, when the prices of raw materials is high, McDonald’s needs to focus on their finance department to manage the flow of money.

In order to win the “war”, the McDonald’s playground was introduced in 1963 in the USA. McDonald’s playground is a build-in games for children ages 3-9 and are located inside most McDonald’s restaurants around the world where children can have fun. The parents will be at ease to let their children to enjoy food and games at the same time since the playground is safety enough. This concepts loved by kids and parents and they willing to drive the rest of family to go McDonald’s. Moreover, McDonald’s also provided the facilities such as toilet, car parks especially for those who are disable. Besides, McDonald’s has introduced the “Happy Meal” since 1979. A Happy Meal is a kids’ meal which the food is included with a small toy. Both of them are contained in a re box with a yellow smiley face. The Happy Meal is themed to promote a current family-oriented movie. The first promotion which was the Star Trek Meal. This is aimed to promote the Star Trek Meal: The Motion Picture in December 1979. The Happy Meal set which include Pokémon toys has debut in Malaysia is on 15 November 2018 until 12 December 2018. There are two different Pokémon toys will be distributed every week. Since Pokémon is a well-known Japanese anime, the fans of Pokémon has queued a long line outside the McDonald’s branches before 15 November 2018 in order to buy the Happy Meal set. All the Happy Meal sets is successfully sold out within a few hours in every branches of Malaysia right after the campaign started. This is no doubt to say that Pokémon toys are cute and are a good collection for kids and adult alike. The menu and decoration of each of the McDonald’s branches all around the world will be different. In order to suit the taste and the cultural of their customers, McDonald’s has launched different menu based on the country. For instance, the menu of McDonald’s in Malaysia is halal which means no pork, but the branches in Thailand offer hamburger with pork.

McDonald’s has received the advantages by using the theory as their customer was satisfied with the services provided by McDonald’s and the people will have higher tendency to choose McDonald’s compare to other fast food restaurant. This is because the brand of McDonald’s is unique and highly positioned in the people’s mind. On the other hand, there will be disadvantage of applying the theory. For instance, the promotion given to their customer and the facilities provided may be cost highly. Hence, McDonald’s is recommended to invest in other new markets and merge or cooperate with other companies to increase their profits.

Conclusion

Sun Zi was a smart and wise military leader whom cared about his people more than himself. He wrote The Art of War after years of participating in many battles as a way to pass down his knowledge, and it has had a lasting inheritance. The Art of War has become one of the most famous military strategy books. Since he completed writing the book, the principles as well as theories he has stated in the book have been practiced and experimented. Eventually, it was used as both war strategies and business strategies.

In a nutshell, through the completion of this assignment, Sun Zi’s Art of War and Business Strategies have clearly taught us that even successful companies, for instance, McDonald’s Corporation, has either directly, or indirectly implemented a few of Sun Zi’s theories that we have learnt in our lecture classes in order for them to emerged as one of the most well-known, profit earning and successful company around the world.

These theories are not only practiced and applied in politics or business, but can also be implemented in our personal lives. The theories that we have discussed in this assignment can be practiced in educations as well as any other organized activities that we may take part in. This clearly proves that although Sun Zi’s theories were widely practiced in the ancient days, there are still individuals and organizations that still hold onto these practices even until today.

It can also be clearly seen that the background of McDonald’s and the strategies applied by McDonald’s has aided McDonald’s to be one of the most famous fast food company throughout Malaysia, and several other countries around the globe. Although there are obstacles for this company such external competition as well as internal complications, it still has been able to get through all of it through the application of all these strategies we have discussed in our papers.

We can be able to see that philosophers from the ancient days, as well as their theories are definitely very helpful to us and play a huge role when it comes to improving a firm’s prospect. It is even known worldwide as a successful fast food company due to its ability to make profit from its products.

Through this assignment, we believe that McDonald’s practices the theories that we have discussed, be it directly or indirectly. The implementation of these theories have definitely played a huge part in helping the company bee as successful as it is now.

McDonald’s Company Analysis essay

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