Strategic Management Plan 3
Introduction
The McDonald’s Company is mostly known for offering its regulars great fast-food choices as well as making excellent hamburgers. As a company that operates within a very competitive environment, it implements effective strategies to ensure that it maintains a competitive edge in the market. This report discusses some of the important elements that encapsulate the strategic management plan of the McDonald’s.
Strategy Implementation
The McDonalds as a business firm is very keen on the strategies that it uses to achieve its goals and objectives. This company has laid down specific long-term goals and objectives that need to be implemented. The goals and objectives of this company are:
Focusing on the above strategy implementations has helped the corporation to achieve the outlined goals and objectives; that assists it to get a competitive edge over other players besides ensuring high performance.
Discuss International Strategy
Discuss Strategic Implementation
McDonald’s has implemented various strategic activities to facilitate the achievement of its goals and objectives, including the following. Firstly it has engaged in the creation of a strong brand in the market, where it has come up with a well-established image across the globe. In this regard, it has created a high perceived value for its consumers by offering high-quality goods at affordable prices (Harorimana, 2010). Through the strategy, it has been able to provide a high-value chain compared to its competitors. What is more, the firm has incessantly been launching new products in its chains across the world. It also offers its consumers local delicacies depending on the region in line with its globalization strategies (Kotler, Keller, Koshy, & Jha, 2012).
Explain the influence of Governance and Ethics
McDonald's has an efficient system of governance, and it strictly observes the set ethical guidelines. Consequently, conducting its business in an ethical fashion has constructively impacted its performance in the fast-food sector. Additionally, its well-established governance structure has facilitated effective management and the monitoring of business activities across all the various retail outlets. The system enables the company to smoothen its operations on the retail front. In this regard, it strictly adheres to the set business ethics, which enables it to do what is morally upright when it comes to catering to its regulars.
Discuss the Company Social Value
The foremost social values of McDonald's include the promotion of the well-being of its stakeholders and the protection of the environment (Kotler et al., 2012). The organization is sensitive to serving the needs of its internal and external stakeholders. It ensures that its employees are satisfied at work, and the clients are satisfied and get value for their money. The shareholders are also given dividends at fair rates. Environmental protection is also another social value of the company. In this regard, it protects the environment through the go green policy where it packages its products using 100% recyclable materials; the move helps in the reduction the waste material released into the surroundings (May et al., 2000).
Discuss Innovation and Diversification
The success of McDonald's depends hugely on its innovation strategies and its highly diversified product portfolio. To appeal to its consumers, it utilizes an innovative tactic referred to as glocalization, whereby it combines the global and local tastes of food to develop an appealing taste to consumers from different parts of the world. Thanks to technology, the firm can prepare foodstuffs in a standardized way in terms of quantity and ingredients. It also offers several fast-food products, including salads, desserts, coffee, chicken, turkey, and hamburger among others.
Discuss Legal limitations
There are legal restrictions within which the business and its partners operate. For the franchisees, they must obtain a legal license to authorize them to supply McDonald's branded products (May et al., 2000). To operate in any region, the company is required to obtain a business, environmental, and occupational permits or licenses from the relevant authorities. The requirements are aimed at ensuring the safety and effectiveness of the firm’s operations throughout its retail outlets. It is also limited by the environmental regulations prevailing in the different regions in which it operates as it is required to observe the set environmental conservation and sustainability standards.
Evaluation and Control
Like other corporations with numerous subsidiaries, McDonald’s controls most of the business activities. It also evaluates the effectiveness of the strategies used by each of its multiple outlets as well as the performance of their employees to determine their output and efficiency. For purposes of evaluation, the McDonald’s has put in place several guidelines to verify how effective its strategies are (Atkinson, Waterhouse, & Wells, 1997). It analyses the returns gained on total assets to determine whether it is gaining or losing. It also endeavors to present its patrons with quality merchandise at reduced rates and as fast as possible (Atkinson, Waterhouse, & Wells, 1997). In this regard, it monitors the individual performance of employees, the manager, and other stakeholders to realize a maximum output.
Explain Strategic Metrics
The major strategic metrics utilized by McDonald's are changes over time and benchmarking. The first strategic metric is used to determine the progress of the company in terms of financial performance through the years; for example, the revenues generated in 2015 are compared to those of 2016. Conversely, benchmarking is used to set the goals and objectives to be achieved by the company in comparison with other successful players in the industry.
Discuss Key Financial Ratios
As per its results in the year 2015, the gross margin of McDonald's stood at 38.5, which is a 0.4% increase from the previous year (Morningstar, n.d.). Despite that, the net income reduced from $4758 million to $4529 million in the same year, while the earnings per share also declined from $4.82 to $4.8. However, the payout ratio has been rising incessantly over the past five years while at the same time the operating margin has been unstable over the same period. For example, the operating margin decreased from 29% in 2014 to 28.1% in the following year.
References
Harorimana, D. (2010). Cultural implications of knowledge sharing, management and transfer: Identifying competitive advantage. Hershey, PA: Information Science.
Kotler P., Keller K. L., Koshy A., & Jha M. (2012). Marketing management. A South Asian perspective. New Delhi: Pearson.
May, R. C., Stewart, W. H., & Sweo, R. (2000). Environmental scanning behavior in a transitional economy: Evidence from Russia. Academy of Management Journal, 43(3), 403-427.
Morningstar (n.d.). McDonalds Corp: Financials. Retrieved from http://financials.morningstar.com/ratios/r.html?t=MCD
