MacDonald's is a fast food restaurant, which has 36535 restaurant branches in more than 119 countries throughout the world. It has maintained a lead in the hamburger fast food industry over the years. Its headquarters are at Oak Brook in Illinois, U.S.A. The company has established a website http://www.mcdonalds.com/us/en/home.html through which it advertises its newest offers, and through which customers can access it and get to learn more about it.
Background and History
Maurice and Richard Macdonald's established MacDonald's. It was initially a barbecue restaurant, but as it grew, the owners emphasized more on hamburgers. Ray Kroc later joined the company in 1955 as a franchise agent. It is through him that the restaurant expanded its borders outside the U.S.A into 119 countries around the world. The company is operated by either an affiliate, franchise or the Macdonald's corporation.
Macdonald's Canada is a Canadian franchise of the Macdonald's fast-food corporation. The American Macdonald's corporation owns it. It was established by George Cohon in Richmond, Canada from where it has expanded throughout the country. The Chief executive officer for this franchise is John Betts. It currently has 1,400 branches in Canada and is amongst the leading fast food chains in the country. According to reports by the Marketing Magazine, 2.5 million people visit this restaurant every day.
In 2012, Macdonald's Canada was faced with a wave of accusations from its customers. These accusations were to a larger extent based on myths and misconceptions concerning its quality of food, packaging and product launches. Customers were questioning the quality of foods from the restaurant and were not convinced they were getting value for their money. As a result, the company came up with "Our food, your questions campaign, a move which enabled the company to answer the customer's questions over social media ("Case Study: How McDonald's Canada built trust and reputation with the help of social media « Best Marketing," 2016). Social media was the best forum to use since the accusations were rotating around social media such as Twitter and Facebook. Through the campaign, the restaurant chain managed to address the fears and concerns of its customers and to reassure them that the myths going on in the media were not based on facts.
Analysis via Porter's Five Forces Model
The threat of new entrants
Macdonald's Canada is threatened by the rise of new restaurants, which offer similar products at the same or a lower price (Ritzer, 2006). This is made easier by the low startup capital and the easy access market.
The bargaining power of buyers
The buyers at MacDonald's do not have a bargaining power. MacDonald's is, therefore, getting to set their prices, which they perceive as fair and impose them on their customers. They ensure to have prices, which are similar to those of other restaurants in the industry.
The bargaining power of suppliers
This refers to the ability of the suppliers to influence the prices of their supplies to the Macdonald's restaurants. MacDonald's is the leading supply chain restaurant in the world. The suppliers of Macdonald's have a lower bargaining power since the restaurant chain can choose from the large numbers of suppliers available in the market. Most suppliers owe their existence to the restaurant.
The threat of substitute products and services
This threat is minimal in the restaurant business since most restaurants have similar menus. It can, however, crop up when Macdonald's comes up with a special recipe, which can then be copied by other restaurants and especially in the incidence where many people love that particular recipe.
Competition in the industry
The fast food industry in Canada is highly competitive. Restaurants such as Burger King, Wendy's, KFC Canada, MacAfee, and Harvey's pose a major competition against the restaurant. The location of their outlets together with their advertising capabilities give MacDonald's Canada a run for their customers and profits (50MINUTES.COM. Minutes, 2015)
Strategy Used In Attaining a Competitive Advantage
Cost leadership strategy
This is whereby a firm chooses to become a low-cost producer of the services and products in the industry. MacDonald's Canada strives to be the cost leaders in the restaurant industry ("McDonalds Corporation Strategic Management Analysis", 2016). They aim at offering quality foods at a lower price than the rest to attract more customers into the company.
Focus Strategy
The Macdonald's restaurant has been in the fast food industry longer than other industries in the market. The restaurant has focused on fats foods and is particularly known for its hamburgers. To increase its buying power, the fast food restaurant has narrowed its options and stuck to producing quality foods for its customers. The restaurant aims at achieving a lower cost for its narrowed products. The low costs of foods at this restaurant has increased its customers, and it has maintained the lead in the fast food industry.
Differentiation Strategy
According to the porter, a differentiation strategy involves the production of a product, which is unique and is perceived by the customers to be better than other products in the market. Macdonald's strives to come up with unique recipes to satisfy their customers need for newer and better foods. It makes use of its top chefs and their innovative capacities to strive for differentiation in the restaurant industry. This has put the company ahead of its competitors throughout the years.
Specific Strategy
Ensuring Coherence in Strategic Direction
This strategy is important in increasing market premium and shareholder value. It refers to the ability of a particular business to connect their products and services to their differentiation capability to create value for their customers. The MacDonald's company prides itself in its capacity to produce unique hamburgers. It uses its brand to franchise more branches, which is cheaper than establishing another restaurant altogether
Value Chain Analysis
A value chain emphasizes on lower costs for the customers, as well as better differentiation from other products in the market. Macdonald's sets itself apart from other restaurants in the market by availing its products lower prices than other restaurants.
Recommendations
The Macdonald's company should be more transparent concerning the procedures they use in making their foods. This will minimize the myths and misconceptions, which their competitors use against them.
Steps
The company can release you tube videos which explain the processes behind their foods
The company can involve the media in giving a clearer and more detailed description of the company foods. This can be incorporated into their adverts.
The company should constantly use their public relations to create a positive image of the company's products
Opinion
This case study relates to the level of transparency in industries. To avoid cases of myths concerning a company's products, a company should be courageous enough to address the processes involved in the preparation of its foods. The transparency of any company diminishes the possibilities of any rumors, which may keep the consumers away. The step taken by Macdonald's to address the consumer questions was courageous and worth the risk. The more transparent a firm is to its consumers, the more trust it will gain from its consumers.
References
50MINUTES.COM. Minutes, 5. Cadiat, A., & Probert, C. (2015). Porter's Five Forces. Primento Digital.
Ritzer, G. (2006). McDonaldization. Thousand Oaks, Calif.: Pine Forge Press.
McDonalds Corporation Strategic Management Analysis. (2016). Slideshare.net. Retrieved 19 May 2016, from http://www.slideshare.net/TahminaSharmin/mc-donalds-strategic-management-analysis
