McDonald's Corporation strategies during the global financial crisis

McDonald's Corporation

How recent economic trends are influencing the business

The recent global financial crisis that hit America the hardest affected almost all industries and sectors, including the fast food industry. However, looking at the financial performance of McDonald's the company only suffered slight decrease of revenue in 2007, but recovered the following year and has continued to show a positive growth. This means that strategies adopted by the company were successful. This section will examine these strategies and the role of the role human resource management plays in helping the company achieve its business goals.

McDonald's marketing strategy

As stated in the first part of this paper, McDonald's is the biggest fast-food restaurant, with over 30,000 restaurants in 119 countries. The company serves about 58 million customers daily. The success of the McDonald's can be attributed to its market strategies and human resource that have proved to be successful (McDonald's, 2012).

The general strategic plan of McDonald's is referred to as "Plan to Win." This strategic plan is focused on making McDonald's to be the best fast-food restaurant and not the biggest fast-food chain. Implementation of several strategic initiatives under this plan has resulted in superior McDonald's experiences entailed in the five aspects of remarkable customer experience, product, people, place, price and promotion (McDonald's, 2012) at the same time, McDonald's integrates geographical strategic plan. For example in the U.S.A. market, the company strategic plan has continued to emphasize breakfast, beverages as well as convenience. However, in European markets, the company applies a tiered menu strategy. The menu has premium selections, usual menu, and daily special offers. This is complemented with new food items and few promotions (McDonald's 2011 Annual Report). Within the Middle East, Asian and African markets, the company's strategic plan is centered on convenience, core menu value and breakfast. McDonald's general strategic plan in place and geographical plan has ensured its success in these markets.

Marketing mix strategy

The marketing mix strategy adopted by McDonald's to attain its marketing targets includes longer operating hours, maximizing efficiency of drive-thrus, and daily value meals. The company as well employs marketing promotions. For example, to improve its lows sales in 2007, the company used Shrek movie to promote its children's food items (McDonald's, 2012). In addition, the company is using is improving its brand image by transferring innovative ideas across its markets and using its slogan of "I'm lovin'it" to expand its relationship with its customers (McDonald's 2012).

The company has definitely been successful in its strategies that it has adopted and implemented.

Competitive base

McDonald's Corp. competes in a very competitive and challenging industry by offering need-satisfying products and services to its customers. Within this industry, ineffective competitors with unsuitable strategies normally fail (Kerin). To survive the competition, McDonald's applies an effective competitive approach to ensure that it remains successful. Though, the company competes on various bases such as cost, and nutrition, its strongest base is 'making customer happy' (financial report). A few years ago, the company made radical changes by the induction of "Made for you system (Chase).

Speed

As stated before McDonald's competes on various bases with the main of making its customer happy, thus, McDonald's vision, which aims at "providing fast, friendly and accurate service" (McDonald's, 2012) McDonald's understands that the certain targets are required to assess the performance in view of set targets. To attain efficient service time, McDonald's uses established, standardized training procedures for its workers as well as new drew-thru designs to cut service time. A part from speed, McDonald's as well uses low cost to gain competitive advantage.

Cost

McDonald's understands that, for a company to provide high quality products and services at low price, it has to have efficient processes all through its operations, and it has managed to do this. Once more, this is established in its vision that states that "we will be the most efficient provider so that we can be the best to the many people" (McDonald's, 2012). This is provided using different ways, including:

Value meal: this strategy gives a discount to a customer who purchases a sandwich, French flies and beverage together. McDonald's offers its customers up to twelve value meals on their breakfast and lunch menus (McDonald's 2012).

Dollar menu: McDonald's offers its customers a dollar menu where certain menu items are priced at just $1.00 each. This offer was particularly successful during recession, and it remains successful (McDonald's 2012).

Special menus: different McDonald's restaurants offer varying daily special items on their menu. For instance, "0.55hamburger Mondays" where the hamburger is offered at a low price, this form of promotion has proved to be very popular (McDonald's 2012).

Nutrition

The third competitive base of McDonald's is nutrition. McDonald's knows that customers are increasingly seeking healthy foods. Thus, McDonald's has lately focused on promoting its new nutritious food items. For example, it offers Go-Active meals in its USA restaurants and packed fresh fruits in UK (McDonald's, 2012).

Operational strategy changes

Made for you,

Initial, McDonald's used to prepare a certain number of sandwiches and place them in a warming container and wait for customers to come and buy. This meant that the management had to use precise prediction to get the number of sandwiches that would be required, because if the sandwiches remained unsold, then it means the company would suffer losses. On other hand, few sandwiches meant that customers will miss out, and thus will have to wait long to receive their sandwiches. However, Made for You System, a customer gives an order and this information is send directly to the kitchen were its prepared in less than five minutes and send to the food loading section, where other items like French fries are added and the order delivered to the customer.

Revitalization plan

In the past, McDonald's concreted on opening more outlets to increase its sales. However, since recession, the company now focuses on increasing sales volume through current restaurants. This strategy aims at reducing expenditure and increase revenues and share capital (McDonald's 2011 Annual Report). The main objectives of revitalization strategy are to persuade existing customers to buy more, attract new customers and create brand loyalty.

Speed

An important aspect of quality management is reducing the time customers' waits before getting their orders. The company has continued to embrace information technology to improve accuracy and efficiency. For example the company uses Total Time in Line (TTL) to measure the time a customer waits in line after he orders until when he receives his order. The target of the company is 90 seconds, which it has achieved (McDonald's 2011 Annual Report).

In summary, the company has taken various operational and organizational strategies that enabled it to retain and even increase its market share in the very competitive industry of fast food.

The role HRM plays in helping McDonald's achieve its business goals

Chase, et al., (2004) posits that organization implement varying approaches and strategies to manage their employees, basing on how an organization competes within the industry. Chase, et al., (2004) points out that there are three major strategies to gain competitive advantage, these are quality, innovation and cost. Thus, strategies that apply quality and innovation tend to be linked with committed employees, while organizations that use cost as a competitive advantage are linked with control. McDonald's seeks control more than commitment. Control at the company is not simply attained through machines, physical design of the restaurants, direct supervision, and rules and regulations but as well through employee recruitment.

According to Kerin, et al., (2003) all employees posses some form of power to interrupt the smooth running of operations by deciding to be uncooperative in the production processes, or just by terminating their services. Workers may abide to the power of the company, though they usually maintain a strong interest in their employment. Thus, employees and employers, to certain degree, are interdependent. As such, the company cannot depend only on coercion or conformity to get good performance form employees, the company as well require to gain cooperation and consent from the employees.

Chase, et al., (2004) asserts that the issues of subjectivity are related to analysis of actual work practices where interactive services are involved. This is because companies' actively control employees' identities. Chase, et al., (2004) stresses the anguish felt by employees when an organization exploits their feelings and personalities. Nonetheless, Kerin, et al., (2003) notes that some employees accept the standardization to be applied to them. Accordingly, many workers try to construct certain interpretations of their duties that do not destroy their individual personalities. Indeed, Kerin, et al., (2003) as well notes that in some circumstances, service routines offers employees and customers with benefits that assist in their regular acquiescence. Nonetheless, according to Chase, et al., (2004) routinization of service work as well as standardization of personality is not caring, and employees and customers may fail to gain from these processes. He argues that these manipulations are usually invasive, humiliating and irritating for employees an at times for customers.

McDonald's workers working as cashiers, for instance, even though merely offering fractional service interaction, are supposed to have internal control by being jovial, pleasing, courteous and smiling to customers, not withstanding that some customers may be rude or insulting. This is applicable to each employee at the company and they are expected to extent this to fellow employees and the management.

Therefore, the significance of emotional work in interactive service place, as that found at McDonald's ought not to be undervalued. To achieve its goals, McDonald's has standardized its service interaction, and this exerts a cultural impact that goes beyond the company. The organizational control approach has a profound influence in the lives of the employees, making them to adopt instrumental position towards their individual personalities, and those of other people. In its financial reports, McDonald's management has stated that the importance of effective communication as a way of motivating employees. Accordingly, Kerin, et al., (2003) encourages managers to use and focus on achievement, growth, employee recognition and responsibility as key motivators. This could be done as 'recognizing employee of the month' 'cash bonuses, awards, and promotions. All these motivators are present at McDonald's as a way of encouraging its employees increase their performance.

As noted by Chase, et al., (2004) endeavoring for career advancement locks the loyalty of the managers and other employees into the company, it could provide a genuine opportunity for promotion which could be difficulty for those employees with poor qualifications or less experience. Managers are persuaded to overlook the significance of hygiene factors that includes pay and working conditions. At McDonald's, managers do not control these aspects because they are controlled by the system. Training at McDonald's emphasizes the idea that pay and working conditions are not very important, what is more important is their 'positive' management style. Therefore, job satisfaction is explained as an experience established by the aspect of psychological ideas, and not by good pay and working conditions. Accordingly, effective managers will thus 'resolve' the problem of employee resistance by use of effective communication. Indeed, managers at McDonald's use three Cs (co-ordination, cooperation and communication) as the foundation of resoling all issues (McDonald's 2012).

Employee identification with the company and other employees is developed through the formation of a new understanding of collective. McDonald's encourages its employees to think of themselves as being part of the team, while the managers are encouraged to view themselves as coaches, who need to train the team. When the term "us and them" is used, the company wants its employees to re-think of the term to imply "us" as the company's team and "them" as the customers (McDonald's 2012). This outcome of this concept of teamwork appears to be applied by the company because people usually are reluctant to do what their colleagues ought to have done. However, with teamwork, even the most reluctant employees want to be part of the team. A common management style by McDonald's is the use of paternalistic terms for example, 'McDonald's family' that is used to describe the work conditions at each of the thousands McDonald's restaurants.

The strategies applied by human resource management of McDonald's have been successful in ensuring that the HRM helps the company to achieve its goals and objectives.

Conclusion

Throughout this company analysis of McDonald's we have established that McDonald's is a successful company that has continued to be the industry leader. The SWOT analysis showed that company has globally recognized brand name, high quality products and services, strong financial position and expansive distribution channel. The few threats such as government policies and challenge of trans-cultural markets were issues that company could address. When analysis its financial performance, it was established that the global recession did not adversely affect the company. McDonald's continued to post profits even when recession was baiting. Compared to its competitors such as Wendy's and Burger-King, McDonald's is far beyond them in terms of revenue and profitability. The success of McDonald's can be attributed to the effective organizational and operational strategies that the company has adopted and implemented. From this analysis, McDonald's is a good company in which to invest in, its financial base is solid and its marketing strategies are effective, the human resource management is well trained and offer critical competitive advantage; its future remains bright.