Mission Statement
Strategic planning in an organization is an important management function. It seeks to define the evolution of an organization in order to make its structure and management more suitable to the market needs which ultimately help it achieve its objectives (Hill and Jones, 2008). Mission statements play a key role in the success of such strategic plans as it helps to communicate the purpose of the organization to employees and other stakeholders. An organization’s purpose as defined in the mission statement consists of the target market and the contribution a product will make to the society. By communicating a well-defined purpose, the mission statement helps in avoiding any ambiguity that may cause confusion on the part of the stakeholders. It also a metric through which the attainment of an organization’s objectives can be measured and evaluated (David and David, 2015). As a result, the mission statement helps to align the focus and values of the employees and other stakeholders with those envisaged in the strategic plan of the organization which increases productivity and efficiency. A mission statement also acts as a means of motivating the employees through the by enabling them focus on a single goal which would ultimately benefit the organization and the employees themselves (David and David, 2015).
Rationale for a Private Limited Company
Private limited companies issue their stock to shareholders who have limited liability. The stocks are not publicly traded. The primary rationale for a private limited company is limited liability, that is, the business organization exists as a separate legal entity from the shareholders. It can therefore sue and be sued without directly affecting the legal status of the shareholders. The sale and transfer of shares is also restricted in a private limited company. A shareholder cannot transfer or sell his/her shares without the approval of the other shareholders. This is beneficial to the other shareholders since they get first priority in acquiring such shares as opposed to outsiders. Restricted share transfer/sale therefore also prevents against the risk of hostile takeover bids taking place. Given that such a company exists as a separate legal entity, its existence is perpetual regardless of the status of the shareholder (status is affected by death, transfer of shares or the shareholder leaving the company). In many jurisdictions, private limited companies enjoy favorable tax breaks when compared to other forms of business organizations. It is also easy to form a private limited company since only two shareholders are needed (Fenero tax and accounting, 2015).
Analyzing the External Environment
A business organization does not exist in exclusion. A situational analysis of its external environment is therefore necessary in order to ensure that such a business aligns its strategic planning with its immediate external environment (David & David, 2015). A number of tools can be employed to analyze the external environment. Such tools include a PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) analysis. PESTEL analysis enables a business to have an understanding of the macro environmental factors that it has to take into account if it is to successfully formulate and implement a strategic plan. A SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis enables a business analyze both its external and internal environment. Opportunities and Threats exist independent of the organization (Kotler and Keller, 2006). Porter’s five forces analysis is another tool that can be employed to evaluate a business’ external environment. It evaluates the extent of competition that exists within an industry and contextualizes the information in order to aid the development of a comprehensive strategic plan. It achieves by determining the bargaining power of both an organization’s suppliers and buyers who exist independent of the business. It also evaluates the threat posed by new entrants and substitutes.
McDonalds
McDonalds is a public limited company that is registered and domiciled in the U.S (McDonalds’, 2016). The company operates a franchise business model that is coupled with some company owned outlets. The company was listed on the stock exchange in 1966 hence completing its transition from a private limited company into a publicly listed company. There are a number of advantages for a company going public. The primary advantage for McDonald becoming a public company is that it enabled it to raise more funds at a relatively lower cost while at the same time spreading the risk of ownership to a higher number of shareholders. By selling its shares to the public, the company obtained additional funds that were used to finance its expansion across its primary market in the U.S and around the globe making it a multinational organization. The cost of such funds is often relatively lower when compared to other sources of funds since the reward for equity, dividends, is often lower than the cost of borrowed funds. By listing a company on the exchange, a sense of credibility is created. It means that the public and other stakeholders can have more trust on the business organization. In the process its brand equity rises as is the case with McDonalds.
McDonald’s Core Purpose
The primary purpose of McDonalds is to provide quality and affordable fast food products to its clients across the globe. However, the company sees its mandate as being more than merely preparing and serving fast foods (McDonalds, 2016). As a result, the company has broken down its primary purpose into three interrelated objectives that include promoting choices, creating opportunities, and encouraging a move towards a healthier society especially among the children (McDonalds, 2016). By promoting choices, the company seeks to create a wide array of menus that are not only healthy but also suitable to every demographic that the company seeks to reach. The company creates opportunities through the numerous employment opportunities it creates. The company has been billed as one of the largest private employers in the world. The opportunities it creates are extended in its affirmative action program that seeks to ensure that its workforce is as diverse as possible in order to give a reflection of the external environment that the company operates in across the globe. The company also champions healthy children through the various charity programs that it funds which are meant to encourage healthy living. It also sees itself as having a purpose towards the society by reducing its carbon footprint and being energy efficient.
McDonald’s Structure
Management→ Franchise head→ staff members
PESTEL analysis
Good Practice Criteria for McDonald’s Purpose and Values
A good mission statement should specifically and precisely mention the purpose and values of the organization. The purpose and values of McDonald Company as illustrated by its mission statement are clearly and specifically stated as being a favorite place to eat and drink. The values that the company stands for diversity and a sense of community are also stated. It also mentions aspects of its human resource management in relation to creating a strong overall community that would assist the company achieve its objectives. There is also a mention of what the company intends to do in the future in order to ensure that its goals and objectives as envisaged in its strategic plan are realized which is delivering quality, cleanliness, service, and value to its customers. It also makes a mention of creating a strong and positive community which is a pointer to the company’s involvement in the community as a form of social responsibility. A mission statement outlining an organization’s purpose and values should be simple (Hill and Jones, 2008). To this end, the company has surpassed this criterion. However, despite stating its ambition to become a trusted symbol across the world, its mission statement does not make a mention of the creativity and innovation that McDonald’s is renowned for across the globe. Despite touching on the various important attributes of an effective mission statement, McDonald’s mission statement is not memorable and as a result it may not effectively communicate the purpose and values of the company to its employees and other stakeholders in the long term.
McDonald’s New Mission Statement
Our mission is to provide a diverse and healthy range of our clients’ favorite meals. To create a lively community within our outlets by having a motivated staff with the aim of delivering quality and value in a timely and memorable manner through continuous innovation.
References
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Hill, C. and Jones, G., 2008. Strategic Management: An Integrated Approach. Mason, OH:
South-Western Educational Publishing.
Kotler, P. and Keller, K., 2006. Marketing and Management. New York: Pearson Prentice Hall
McDonalds, (2016). Our History and Timeline | McDonald's. [online] Mcdonalds.com.
Available at:
https://www.mcdonalds.com/us/en-us/about-us/our-history.html [Accessed 27 Jul. 2016].
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