BA 454 Management Cases
April 19, 2011
McDonald’s and Its Critics
McDonalds started in San Bernardino, California simply as a drive-in and a car hop service with a large menu in the 1940s and the first McDonalds restaurant was opened in Des Plaines, Illinois in April 1955. Over the years, McDonald has established itself as one of America’s most popular fast food chains. From its early beginnings to its current state, McDonalds has undergone several changes in business procedures to include changes in their menus, the way it compete, and in its management and training of its staff. Though McDonalds started as an American household name, today it is well recognized in the international markets. McDonalds operates 32,737 restaurants in 117 countries, and of that amount, the McDonalds Corporation owns 6,399 restaurants. The other 26,339 are franchised owned through conventional and other means (McDonald’s 2010 Annual Report, 2011). Problems or Challenges
McDonalds has posted record profits over the years, some years are better than others. However, despite the current turbulence of the world market, in 2010 McDonalds cash from operations totaled $6.3 billion compared to $5.8 billion in 2008. McDonalds currently faces different problems, however , for many years, McDonalds have faced challenges from many competitors to include Burger King, Kentucky Fried Chicken (KFC), Subway, Wendy’s, Sonic, Jack in the Box and Hardees, but they were always able to put up a strong fight with their competitors and continue to lived up to their mission statement (McDonald's FAQ). McDonald's brand mission is to "be our customers' favorite place and way to eat.” Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience – People, Products, Place, Price, and Promotion. We are committed to improving our operations and enhancing our customers' experience. As a recognized brand, McDonald’s have faced strong criticism from different organizations and special interest groups that accuses McDonalds of targeting their products to children. Additionally, they are accused of their products being linked to obesity in both children and adults and they face strong criticism both locally and internationally for not doing enough to make their products healthier. As a result, McDonald’s faces lawsuits from customers, special interest groups and from government agencies. McDonald’s also has a high employee turnover rate because most of their employees are not looking for McDonalds to be a career, but as a starting job for earning extra cash. Currently approximately 33 percent of McDonald’s employees are teenagers. As a result, McDonalds spend a large amount of cash annually to train new employees. Additionally, because McDonald’s is in many countries, their sales revenues are affected by the economic conditions that each region faces. While this is a potential problem, it could also be one of the strengths. In its commitment to provide quality service and meals to their customers, McDonald has joined forces with local farmers in the country that they operate to provide all the meat, vegetables and other supplies that they need for daily operations. As a result, they spend a lot annually to keep their restaurants operational and to keep their supplies fresh. Analysis
As McDonald continues to face these challenges, management must make every effort to counter these problems effectively through product differentiation, strategic management, and innovation. If this is not done, then the restaurant chain will not continue to dominate the fast food arena as they have successfully done in the past. To make this transition into the future the managers must examine the strengths, weaknesses, opportunities, and threats of their corporation and use it as...