A leader has the mandate to develop a vision that is compelling as well as a strategy for achieving the vision. To achieve a vision, a leader must organize both the material and human resources. Excellent performance of a given organization does not result as an accident but rather as a product of visionary leadership of that particular organization. When a vision has been drafted, the leadership work to ensure it is achieved within the stipulated time. For that justification, it is prudent for an institution to have strategic leadership for the achievement of its strategic vision. Apart from setting an organizational vision, the leaders must also find ways of solving the challenges facing their organizations. Businesses face challenges in their everyday operations. For instance, MacDonald’s has been battling with several challenges from financial to cultural. This paper is set to examine the challenges facing the Mac Donald’s, its financial status, and how these financial challenges affect its profitability, growth, as well as sustainability. Additionally, it describes a strategy for alleviating these challenges.
The firm has been facing one of its worst challenges in the world market since its inception. This is due to its inability to cope with the constantly changing restaurant environment. Mac Donald’s has several branches worldwide in the restaurant industry. Its rivals have taken advantage of Mac Donald’s slump in the market. It has been hit by scandals from its various branches worldwide (Hartman & Werhane, 2013). For instance, the expose’ on its partnership with a company that was suspected to have relabeled expired meet in its China branch. These scandals have dented the reputation of the firm adding to its problems. All these problems have led to a reduction in the revenue of the firm. This has plunged it into a financial crisis that needs to be resolved by the leadership of the organization. The firm must also deal with the dented reputation before it can get back to its position in the restaurant market.
The firm has been struggling with finances since the scandals erupted and its inability to change its strategies with the change in consumer tastes and preferences. In 2015, the firm released a report indicating that their profits had gone down. The world’s number one burger chain realized a reduction in their quarter one profits by 400 million U.S dollars. This was one of the biggest profit slumps in the history of the Mac Donald’s. This has greatly affected the firm that was once one of the biggest in the fast food industry (Warren, Reeve, & Duchac, 2013). This even led to the closing down of several branches that were believed to be doing poorly regarding sales. Most of these branches were in Japan, China, and the United States. In late 2015, the company announced a decrease of 11% in its revenue and thirty percent drop in profits. The firm has started detailing a strategy that would enable them to turn around its dwindling financial fortunes.
These financial problems have hindered the growth of the firm since its revenue has gone down, and profits are too low. The company had a strategy of reinvesting the profits gained in one branch into another in a different market. Due to the fall in fortunes of the firm, its growth has been restricted. The company has shrunk in size instead of growing. This indicates how the financial challenges have affected its growth (Boyes & Melvin, 2012). The closing down of branches due to financial difficulties has also affected the company’s profits. In previous years, Mac Donald’s was one of the companies that posted very high profits. Reduction of profitability, financial challenges, as well as closing down of branches has led analysts into believing that the Mac Donald’s has reached the final stretch of its life in the restaurant market.
Despite all these problems, there is still hope for reviving the company financially. For the company to solve its financial crisis, it needs to differentiate its workforce (Boyes & Melvin, 2012). When resources are concentrated on developing a workforce that is productive, it can reduce the number of its unproductive workforce. By doing this, the finances used in maintaining as well as training the unproductive group can be invested in other areas. This is referred to as strategic workforce differentiation. Apart from strategic differentiation, the firm can also reform its culture. The inability of the Mac Donald’s to change with the changing culture has been its main undoing. In most of its branches, especially in China, Japan, and India, it was unable to integrate its culture into the cultural practices of the region. This is believed to be one of the main reasons for its struggles in the regions. To ensure its growth in other cultures, the firm has to consider its internal cultural reforms (Smith, 2012)
The Mac Donald’s should also have an aggressive marketing strategy. This would enable it to announce itself once more to the world business environment. The rebranding of the products as well as reducing the line extensions of the products would reduce the confusion on the products value among the customers (Boyes & Melvin, 2012). Line extensions are a good way of marketing a product, but when the extensions are too many, they lead to confusion. A Proper marketing strategy that focuses on the product and not the company has the potential to improve the customer base. Mac Donald’s reputation has been dented by financial problems and scandals. The best marketing strategy for such a company is one that focuses on the products rather than the company.
All organizations face many challenges in their daily operations. These challenges affect the firms in very many ways. It is essential that the leadership of a given organization develops strategic visions. With these visions, the organizations can wade through the crisis with minimal interference of their operations. Strategic marketing as well differentiation of the workforce are some of the strategies that should be employed by companies to solve their challenges.
References
Boyes, W., & Melvin, M. (2012). Fundamentals of economics. New York: Cengage Learning.
Hartman, L. P., & Werhane, P. H. (2013). The Global Corporation: Sustainable, Effective and Ethical Practices, A Case Book. London: Routledge.
Smith, T. (2012). Strategic Workforce Planning: Guidance & Back-Up Plans. Numerical Insights LLC.
Warren, C., Reeve, J., & Duchac, J. (2013). Financial & managerial accounting. New York: Cengage Learning.
