Strategies Being Pursued by McDonalds in 2010

Introduction

Ray Kroc initiated Mc Donald Corporation (in 1955) and by 1960, the man had acquired the (exclusive) rights to the company’s name. Ray Kroc’s aim was to establish a restaurant system that would pride itself in consistently high quality foods with a uniform mode of preparation (McDonald, 2010).

The company was committed to quality service delivery and its every single ingredient was tested and perfected to meet the restaurant’s high standards. Ray Kroc died in early 1984 but his passion for efficiency, quality and innovation continues to inspire many people in different fields of life to date and remain an integral part of McDonald’s policies (McDonald, 2010).

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Burger king firm was founded (in 1954) by McLamore and Edgerton. It is a chain of hamburger fast food restaurants that has evolved over the years from an initial menu that served only burgers, fries, sodas, and milk shakes to the inclusion of different variations of chicken, fish, and salads among other things.

The food and beverage sector is very competitive as new restaurants are being established almost on daily basis. These companies therefore have to plan strategically to increase their sales and maintain their customers.

The rival companies have to extensively advertise their products, improve the quality of their products and establish new markets in order to achieve and maintain high returns. McDonald’s, the world leading fast food chain operator has penetrated markets in most regions around the world and its close rivals among which is Burger king holdings, are adopting the same strategy to keep up with the competition.

Strategies Pursued by McDonalds in 2010.

McDonald has achieved remarkable success over the years due to its utilization of the franchise business model. 92% of McDonald’s stock value can be attributed to the contribution of franchised stores while the remainder comes from McDonald’s owned stores (Skytop1, 2010). The ultimate strategic plan of the McDonald is the plan to win by being the best fast food restaurant in the business. The company ensures that their entire system is made up of the best franchisees and employees in the industry.

This has seen the company achieve great success due to its improved customer service. McDonald’s annual report (2009) indicated that there were tremendous increases in revenue to a record of $23.5 billion and earnings per share rose to 15% enabling the company’s shareholders to earn $5.8 billion through share repurchases and dividends.

With more than 32000 fast food outlets world wide, McDonald further seeks to expand its market to as many regions of the world as possible. Baertlein (2010), in an article in Reuters, indicated that the company plans to have 2000 stores in China by the end of 2013.It has also penetrated into the Russian and the Indian market. However, its main aim is not just being bigger, but also being better than all its competitors.

To achieve the end the company concentrates on providing its customers with a wide range of food choices to choose from, improving its operations as well as providing a convenient and more inviting environment for the consumers (Annual report, 2009). The company also intends to adopt longer working hours to include breakfast and late night in the Western market in order to optimize efficiency and increase returns.

McDonalds intends to venture more into the growing market for specialty coffees, cappuccinos and espresso drinks. However, it is faced with the challenges of convincing reluctant franchises to jump on board.(Associated press, 2009). The company intends to transform the beverages sector from just being an accompaniment to a beverage destination.(Associated press, 2009)

The company also has a well established supply chain that enables them to obtain quality ingredients at competitive prices due. This gives them comparative advantage over the other companies in the industry and is one of the major reasons why McDonald continues to achieve leading profitability in the sector (Annual report, 2009). The company also utilizes strategic marketing plan that has considerably increased its consumer base.

One of its marketing campaigns used the Shrek movie to target kids where they gave them a choice between milk, fruit or vegetable to form part of their happy meal. Their brand name ‘I’m loving it’ has also deepened connections with existing customers. The brand image emphasizes on five factors of customer service which are people, products, place, price and promotion which ensure that there is quality service delivery in its restaurants.

The company also aims at catering to each consumer group needs. For example in the Indian restaurant, the hamburger is excluded from the menu since cows are considered as sacred animals. The company conducts an extensive research on the target population to establish their likes and dislikes. This has resulted in increased profits and the company intends to continue with the same trend through 2011-2013.

Conclusion

Since the food industry is saturated, the Companies aim at captivating more consumers as well as maintaining their regular customers. This is because in the absence of extensive marketing and promotions, consumers are likely to shift to other newly established restaurants.

The food and beverage companies should therefore invest on extensive advertising to promote their products in the market. Criticisms have been raised regarding the effects of McDonald’s food to human health. The company should therefore ensure menus promote healthy nutrition.

They should also promote consumer education to ensure that customers do not fall victim of negative information being spread by their competitors since this significantly reduces demand. The company should also prioritize quality service and deliverance and also ensure that the services are up to per with the contemporary consumer needs.

Reference List

Associated press.(2009). Coffee clash at McDonald’s. Morningstar Inc, 2009. Retrieved October 12, 2010 from: http://articles.moneycentral.msn.com/Investing/Extra/CoffeeClashAtMcDonalds.aspx

Baertlein, L. (2010). Yum sees china costs weighing on the fourth quarter margins. Retrieved October 12, 2010 from http://www.reuters.com/article/idUSN0625907120101006

Mc Donald’s website. (2010). our story, our history. McDonald’s. Retrieved October 12, 2010 from http://www.mcdonalds.com/us/en/our_story/our_history.html on 12th October 2010.

McDonald’s. (2009). McDonald’s annual report 2008. Retrieved October 12, 2010 from
http://www.mcdonalds.com

Skytop1. (2010). Mickey has the best menu, highest percentage of franchisees producing profits. (Long recommendations). Retrieved October 12, 2010 from http://clearstation.etrade.com/cgi-bin/bbs?Cmd=post&post_id=9420214&Refer

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