Operations Management

Topics: Marketing, Strategic management, McDonald's Pages: 7 (2308 words) Published: May 1, 2013

by Student's ID: 1011728

Module: Operations Management

Topic: McDonalds

Tutor: Mildred Brown-Houston

How the competitiveness that McDonald faces has changed since it was found (in current form) in the 1950s. McDonald’s has experienced unprecedented growth in the last six decades. The growth has been attributed to their innovation and uniqueness in terms of preparation of food and delivery; this has made the company to expand from Illinois in the United States to over a hundred countries serving over sixty million customers daily across different societies and cultures (Haig 2007, p.87). This has propelled it to the world largest fast food restaurant with double digits profits and billions of dollars turnovers. However, competition for its market share has intensified for the last fifty years. In 2012, McDonald’s profits slumped with pundits and its executives blamed a myriad of recent events including competition, carbon copying of their ideas, and economic downturn, especially in Europe where Euro crises aggravated the economic outlook. However, fierce competition remains McDonald’s Achilles heel. This has been contributed by various factors, which are discussed below. McDonald’s inception was based on principle that gave it an edge such as line production, good location, offering clean restrooms, glass partition that gave customers view of their food being prepared, standardisation of their products, customization of foods according to different cultures, and cheaper prices, which made it competitive in quality and pricing. Unfortunately, competition has emerged challenging the same core values that have made its brand a global phenomenon. Firstly, other chains like Burge king, KFC, Wendy’s, and Mexican Grill entered the market. This meant that they now had to share their market share with these restaurants. These restaurants have copied the MacDonald’s model in many aspects such as locations and services. They offer first food deliveries, standardised products, and very competitive prices. With the new competition that is implementing the chains ideas, it changes the dynamics of the business because they no longer have an edge, which they enjoyed in the past (Baker & Baker 2004, p.62). In recent times, restaurants like Burge King and Wendy’s have revamped their business. They have invested heavily in the expansion and at the same time have been doing vigorous advertisement including celebrity endorsements, which has been MacDonald’s strategy for some time. In fact, the competitors have consolidated their market base and at the same time have piled pressure on the McDonald’s market. This means that although McDonald’s has a well-known brand, they have to spend more to advertise and at the same time maintain their low prices traditions. These restaurants have also borrowed from the McDonald’s the way of doing business, hence cutting down on the edge the company enjoyed at the beginning. Some of McDonald’s traditions, which they have implemented, include standardisation of their food, competitive prices, good locations, and at the same time improving other areas such as accessibility and expanding the menu (Barbara 2001, p.88). Other competition has come in directly from the consumers’ perspectives. Consumers have become more aware and generally conscious about their health. They are shunning some foods like French fries and burgers, which have been blamed for obesity across United States and Europe. This means they are willing to spend more money in order to get quality in terms of health. This has brought fierce competition from Mexican Grill, which is more expensive, but has healthier food. Other restaurants have a generally more inclusive menu, which has a range of varieties, hence attracting different types of customers. This has forced McDonald’s to change its strategy in order to keep their customers. Some of the changes include changing the menu to...
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