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The capital requirements together with reserve policies were overhauled with the entry of new leadership and avenues of the company. Moreover, the company had to align compensation with long-term returns. The strategies, which were laid by the company after its revival was to settle the dividends of the purchasers, and pay debts, which had been accrued in payments (Stonehouse, 2004).
Porter's Five Force
The Porter's Five Forces have a great influence of the way McDonald's Company has been operating in the market. Literally, the company has embraced all the five figures making up the Porter's Five Forces. These are the forces, which influence the market as it happened to McDonald's Company. The company faced the threat of new entrants into the market. When the company was introduced, it dealt with different products, most of which were also being produced by some other companies. As such, the company had to shift from one product to another with consideration of the competition it was receiving. Switching costs resulted in the downturn the company faced after the 1960 and 1970 great performances. The company has faced or fallen victim of threats of substitutes. At one time, the company had to leave out some product, which was performing well in the market in order to pursue some others (hamburgers). This also contributed to the downfall of the company. The company succumbed to influences and threats of the buyer power.
Because of its innate problems and issues in the United States of America, the company had to lose some buyers who had become common and imperative to the performance of the company. The decline in the level of brands together with little mistakes committed by the company discouraged the clients that the company had initially attracted. The degree of rivalry is also influential in the way McDonald's company has been in existence. At one time, the company had faced a diversity of rivals who had to overtake it. Moreover, the company faced threats from the supplier power. The company could not manage to replicate to needs for forward integration. The purchases registered by the company reduced and thus the company had to resume to its lowest standards of performance (Gilbert, 2009).
The revival of the company's fortunes began in October 2002. The major concern was thrown to the revival of the stores and production avenues in the United States of America. This started with the introduction of low-cost Dollar menu. This was done specifically in the United States of America in order to reduce on the sale prices and hence attract more sales. This was followed by a huge failure in the amounts of profits accrued. As a result, Greenberger decided to resign at the end of the year 2002. The retired Cantalupo had to resume work and became the company's chairperson and CEO as at 2003.
Cantalupo started this reign by the announcement of major restructuring, which was geared at reaching all the departments of the company. This was to begin with the 2002 loss. During this restructuring process, a number of stores were also closed. These stores included those in the United States of America and Japan. Workers close to 600 were eliminated from their jobs. The charges, which were used to settle these employees, went as far as eight hundred and fifty three million dollars. These charges led to the losses experienced in the following quarter, a loss that was described as the worst in a period of 38 years (Stonehouse, 2004). The new management and CEO of the company had to stop the strategy of establishing additional stores in order to increase on sales. Otherwise, the company had to adapt to efforts of increasing the present amount of sales using the available tools and materials.
At this point of performance in the market, the company had to sit back and review on other possibilities of making it again in the market. The company was almost qualifying for the AARP membership. The company had to start again by looking for ways and means of revitalizing its presence in the market without affecting on the existing stores and core values, which made it rise to that level. For it to do this, the company began the introduction of different and several other menus. These included entree salads, McGriddles breakfast sandwiches, together with white meat. Other options, which were introduced into the market by the company, included test marketing vegetables and fruits. The company realized that if it focused on customer needs and preferences, it was likely to survive and revive itself again in the global and local market. Customer experience became important in reviving the fortunes of the company (Roy, 2009).
The company had to establish and adopt a new campaign strategy in the connotation of "Rolling Energy." This idea was launched in 2003 resulting in the use of youth images, culture celebrities, music genres as pop, and other mechanisms of social media. The company had to summon Cantalupo to be the leader of the company. The company was then aiming at reclaiming its golden luster. The plans, which were laid down by Cantalupo, were very simple. They talked of focusing on the customer experience. A new strategy to sweep the company's restaurants was launched and successfully implemented. This became the major happening which touched on the heart if the company and people.
The company was at the process of becoming influential and regaining its luster in the local and global market. The leader of the company, Mr. Cantalupo, had to declare no ubiquity in the running of the company. He personally declared that the company was back in the market and making huge strides towards its success as it was before (Ahlstrom & Bruton, 2010). He favored the idea of 'forever young" which was instilled into the company's protocols of management and operation. During this time, most of the company stations and stores had been closed down. What followed was a massive reopening, which almost took a lesser part of a day. Cantalupo managed to run what was termed as the first and successful McDonald's campaign in the lifetime. The company began successful campaigns in more than 100 countries. During the magnificent campaigning period, which had begun and taken shape across the globe, the company began to register equitable and increased levels of sales. Services had changed and thus resulted in more deliveries and increased accruals.
Nonetheless, the leader of the company, Mr. Cantalupo was not able to test the fruits of his management and revival of the company. He succumbed to death in 2004 just when his mechanistic and glittering vision of McDonald's company was taking shape. However, it is said that this leader has set plans for the company and thus his death could not bring any negative influence over the performance of the company. For instance, December 2003 marked a 7.3% increase in the level of sales. The same stores registered an increase of 2.4% for the following year. This was because of falling down 2.1%.
More openings were registered in 2004 within the existing structures. Moreover, the company was even able to establish new more structures in different countries. The $1.5 million, which had been budgeted capital expenditures, was started and used to remodel and establish existing structures. The company managed to pay debts in down payments to its workers, an amount which had risen to around $400 million to $700 million. Much of the returns from the company went to dividends and share purchases, an amount that took $1 billion form the company. The company was also able to set long-term goals and objectives. Part of the long-term, goals included sustenance of the annual system wide sales together with growth of revenue at rates of between three and five. The company also vowed to make a menu, which contained no fattening tissues. By the end of the year, 2004, the company planned to introduce a super size French fries, which was to be accompanied by soft drinks. Thus, the company was again back in the race for glory. All these achievements were established because of the company's abilities to manage and run various sectors and branches in different countries.
Global and local comparison in management of McDonald Company
The various strategies incorporated by the company in management have led to the big success the company has registered so far. The main concern and strategy that the company adopted in running the management sectors was through the introduction of various sectors and branches in the U.S., Canada, Japan, and China. All these countries and other 116 countries in which the company had made sales have leadership trends, which incorporate and reflect on the local and international objectives of the company. A number of presidents who represented stations outside their home countries spearheaded the branches to profitability. Moreover, these leaders are always shifted from one branch to another in order to enhance uniformity of performance and eradicate cases of complacency. For instance, Jim…[continue]
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Still, what has to be mentioned at this state is that the productivity is increased at the level of repetitive team tasks. In other words, when the tasks of the team are less repetitive, when they are new and involve creativity, the productivity of the team decreases. This is explained by the fact that the members in a homogenous team are alike and tend to have the same reaction
Strategic Management at McDonald's McDonald's Strategic Management Strategic Management at McDonald's Strategic Management at McDonald's McDonald's: Introduction Organizational Structure and Corporate Governance Industry Sector Analysis Michael Porter's Five Forces Model Key conditions in the External Operating Environment of McDonald's and its Industry The Value Proposition on McDonald's Products Financial Performance SWOT Analysis for McDonald's TOWS Matrix for Alternative Strategies BCG Growth Share Matrix for McDonald's Marketing, Financial, and Research & Development Strategies McDonald's Leadership Joint Ventures, Strategic Alliances, and Partnerships Performance Measurement Methods and Benchmarks Recommendations References Table of Contents Sr.
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