McDonald’s Company.
The continued success in McDonald’s chain of restaurants can be attributed to three components; corporate staff, supplier base, and franchisees of the restaurants. The management believes in these three tools in order to run the business both locally, and internationally. The company works under a vision for production of high quality and profitable yields, safe production, and consideration to employees benefit, communities, environment and biodiversity. To achieve this sustainable mission, the company integrates its business, corporate, and supply chain strategy (Han, 2008). This paper discusses the company’s business, supply chain strategy, and how it aligns these strategies to achieve its mission.
McDonald’s business strategy.
Despite the economic destruction that has affected the performance of the business in many regions, McDonald’s remains the best food supplier in most regions of the world. In recent years, the company has broadened operations in different regions around the world and has also expanded its variety from burgers to coffee, and healthy drinks (Adamy, 2009). The company’s growth can be attributed to its overall business strategy. The company aims at generating massive profits while producing quality products acceptable in its regions of operation. Most of the company’s revenues come from US and Europe. The most significant strategic approach used is ensuring that it maintains a leading position in these two countries and expanding operations to emerging markets (Stobbs, 2002).
The challenge is on differences in consumer behavior in different regions: Different consumers have different likes, tastes, and preferences (Enz, 2010). To achieve this, the company works under functional units. Each functional unit is required to submit wholly by producing, and marketing products as demanded in each region. The company works under this perspective, and provides what consumers demand. The company not only ensures local satisfaction but also pursues utmost local development.
The company’s management is extremely keen when it comes to its competitors. The company experiences most of its competition from Starbucks, Burger King, and Wendy’s (Adamy, 2009). However, it always overcomes this competition by offering a wide variety of products to attract additional customers, and segments. This has been achieved by chomping up offerings, and expanding its production to non-traditional menu options. This is done while the core base of burger and fries is still under operation. The company’s approach to deliver foods to customers has also contributed massively to remaining on top. Most of the competitors do not provide such services, and this is cited as one amongst its success. The company also values environmental safety, cleanliness and health. It has differentiated products for every class, status, and age of consumers (Enz, 2010).
Supply chain strategy.
In a fast food or perishable goods producing company, supply chain management is of lofting significance. Supply chain management helps in cutting down costs; improve on profits, and in maintaining the company’s standards. The McDonald’s supply chain can be described as a complex network of direct and indirect suppliers (Han, 2008). This complex system is managed by working closely with direct suppliers who share the company’s vision for sustainability, and values. The chain is held to clear standards for safety, quality, sustainability, and efficiency.
The McDonald’s supply chain comprises of a variety of local and regional supply chains, which are tied together globally by strategic policies and frameworks. In making this vision a reality, the VP of Worldwide Supply Chain, Frank Muschetto approved the formation of the Sustainable Supply Chain Working Group (SSCWG), in 2007. The SSCWG assists in developing strategies, and tools that the company requires for effective outsourcing. Amongst the goals of the committee, is to influence suppliers to improve on ethics, environment, and animal welfare. The committee ensures that raw materials are only purchased from suppliers who follow practices, which ensure uninterrupted supply, health and safety, and humane treatment of animals in the supply chain (Adamy, 2009). The company envisions in sourcing its materials, and ensures unique product designs, from the manufacturing process, distribution and marketing. This is enhanced by use of materials that minimize life-cycle impacts on the environment. The company also engages with suppliers who deliver affordable food, engage in equitable market practice, and positively impact on local communities.
While the supply chain in the company may seem straightforward at a first glance, its diverse constituents are multi-layered, and thereby critical. To enhance a successful chain, food ingredients are supplied under two categories; Tier-1 and Tier 2 (Li, 2007). The latter includes growers while the former comprises of processors. The products are then transported in refrigerated trucks to distribution centers. Single and multi temperature trucks then transport the products from distribution centers to the company’s outlets. This is enhanced by use of supply chain logistics, which ensure effective and fast deliveries, and at minimal loss (Enz, 2010).
Underlying the supply chain strategy is the use of three principles, which ensure smooth operation. This includes the principle of collaboration and trust between the owners, suppliers, and brand (Li, 2007). The company ensures that each principle is adhered unwaveringly so that a strong foundation is built among its suppliers. In addition, McDonald’s believes in culture of transparency, and partnership with the suppliers. The company shares most confidential plans with its suppliers. In return, the company expects all suppliers to be honest, transparent, and work in partnership with its plans.
Prioritization is also another strategy used in the company’s supply chain. The company gives priority to suppliers who ensure food safety, and minimize costs. As a secondary measure, the company depends on outsources expert opinions on deciding how to prioritize. Such include International Scientific Advisory Council, and Animal Welfare Council.
Alignment of business and supply chain strategy.
McDonald’s business and supply chain strategies are compatible as they work to reinforce trust in the company’s brand (Li, 2007). The company envisions in producing quality products at affordable costs. To enhance this vision, the company works with quality producing suppliers who provide goods at rational costs. The company also works with local suppliers in ensuring that demands, culture, and consumer behavior, at the local perspective are adhered. It ensures that every region is supplied with its preferences, designs, and quantities. The company believes that the supplier job does not end upon supplying rather when a consumer consumes the product. This ensures supplier’s accountability on quality of products (Ireland, Hoskisson and Hitt, 2008).
Leadership plays a crucial part in enhancing that the business, and supply chain strategies work in unison (Adamy, 2009). The company appoints expertise in management levels, accounting, marketing, distribution, and research departments. This ensures maintenance of business ethics, and discipline amongst the workers. It also ensures that suppliers maintain their ethics in the provision of uninterrupted suppliers. This ensures customer satisfaction as when, and where needed.
In conclusion, the growth of McDonald’s chain of restaurants can be linked to its focus on business strategy, corporate relationships, and supply chain management. All stakeholders are expected to work in unison to assist in strengthening the steady and the expansive platform, of the business. The success is, however, not faced with conflicts of goals: Sometimes the strategies conflict leading to a state of confusion in the running of the company. An example is when the company supported overfishing, in the short term, to ensure sustainability of fish-o-fillet supply in the long run. Even though, overfishing worked in support of the company’s goals, in the short term, in the long run it would have threatened the supply of fish-o-fillet. The management, however, views such hitches as their strengths to work together in accomplishing their vision.
Reference.
Adamy, J. (2009). McDonald’s seeks way to keep sizzling. The Wall Street Journal.
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Enz, C. A. (2010). Hospitality strategic management: Concepts and cases. Hoboken, N.J: John Wiley & Sons.
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Han, J. (2008). The business strategy of McDonald’s. International Journal of Business and Management, Vol 3(11).
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Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning. Bottom of Form
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Li, L. (2007). Supply chain management: Concepts, techniques, and practices enhancing the value through collaboration. Hackensack, NJ: World Scientific. Bottom of Form
Stobbs, G. A. (2002). Business method patents. New York: Aspen Law & Business.
