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McDonald's: Sales And Purchasing
What does McDonald's hope to accomplish with sales and purchasing?
As a food company, McDonald's is forced to operate on a tight budget, making its profits from high-volume sales at a razor-thin profit margin. Its sales and purchasing decisions must prioritize keeping costs low in terms of input costs for foods. However, it must also provide a diversity of product offerings to its customers, tailoring the menu to suit local needs and also responding to pressures to offer healthier options.
What are the sales and purchasing processes?
According to McDonald's, in terms of its sourcing "all of our chicken comes from our trusted USDA-inspected suppliers in the U.S., like Tyson Foods and Keystone Foods. Our beef and pork products also come from trusted USDA-inspected suppliers, such as Lopez Foods. In order to keep up with demand, a small percentage of our 100% pure beef is imported from USDA-inspected suppliers in Australia and New Zealand" (Meats, 2014, McDonalds). In terms of distributing its products, McDonald's primary method is through franchising, whereby the franchiser pays a service fee and rent to the main company (Acquiring a franchise, 2014, McDonald's). Because McDonald's products are so standardized, the franchiser must use the specific ingredients McDonald's has...
"McDonald's used to buy from over 100 regional ground-beef suppliers. But as McDonald's got bigger and bigger, they reduced that number to five. So this had the impact of creating bigger and bigger meatpacking companies to supply the fast-food chains. And in a very short period of time, we got a very concentrated meatpacking industry" (Schlosser 2014). It is alleged that McDonald's uses poor-quality beef with 'fillers' from a very limited range of producers which also means that any problems with the beef affect a wide range of all its customers.
The distribution process of using franchises also limits the degree to which franchisers can respond to local needs although this has changed somewhat given McDonald's globalization and its efforts to tailor its menu to local needs on a country-by-country basis. Still, McDonald's menus domestically do not have the variation of, for example, Starbucks, which has a core menu that can be altered, based upon the likely clientele of the store and the specific demands…
References
Acquiring a franchise. (2014). McDonald's. Retrieved from:
http://www.aboutmcdonalds.com/mcd/franchising/us_franchising/aquiring_a_franchise.html
Meats. (2014). McDonald's. Retrieved from:
http://www.mcdonalds.com/us/en/food/food_quality/see_what_we_are_made_of/your_questions_answered/meats.html
Retrieved from: http://www.forbes.com/sites/panosmourdoukoutas/2013/11/23/mcdonalds-three-strategies-to-re-ignite-sales-growth/
http://www.pbs.org/wgbh/pages/frontline/shows/meat/interviews/schlosser.html
http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questions/running-the-business/business-operations/what-is-the-structure-of-mcdonalds-and-how-each-department-in-the-organisation-interact.html
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