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McDonalds

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McDonalds

This is an exciting and interesting essay to write for a number of
reasons. For one it's an honour to make a research on one of the most
profitable societies of the world, for second because the kindness of
McDonald's employees and the precision of McDonald's Web site, are
perfect sources for all kind of information that can help analyse
through Porter's value chain, all the aspects of its value creation.

In the late 1940s, Dick and Mac McDonalds were searching for a way to
improve their little drive-in restaurant in San Bernardino, California,
U.S.A.; they invented an entirely new concept based upon speed service,
low prices, and big volumes. Word of its success spread quickly, in
1952 they had more than 300 franchising inquires a month from all over
the country. McDonald's is now the largest and best-known foodservice
retailer and one of the two best-known and powerful brands in the
market. With more than 24,500 restaurants in 115 countries, some of
those operated by the company, some by franchisees or by affiliates
operating under joint-venture agreements. The global market potential
is still huge: yet on any day, even as the market leader, McDonald's
serves less than one percent of the world's population. The restaurant
chain plans to expand their leadership position through convenience,
superior value and excellent operations. The effort to increase market
share, profita! bility and customer satisfaction has produced high
returns to shareholders: a compound annual total earning of 21% over
the past 10 years. McDonald's vision is to dominate the world-wide
foodservice industry. Universal dominance means setting the
performance standard for customer satisfaction and increasing market
share and profitability through successful fulfilling McDonald's
convenience, value and execution strategies. A precise way of
considering McDonald's' role of operations is through Porter's value
chain analysis. The Value chain breaks down the firm into its
strategically relevant activities, in order to understand the behaviour
of costs and the existing or potential sources of differentiation. A
firm gains competitive advantage by performing these strategically
important activities more cheaply or better than its rivals. For a
company which feeds some 38 millions clients every day, finding a
reliable quality supplies is a major factor for success. McDonald's has
solved the problem by making food supplies part of their success.

McDonald's distributors are strategically to be accessible to the each
restaurant and carry practically everything, from meat and potatoes to
lightbulbs. Coca-Cola, the right well-known drink, has been with
McDonald's from the beginning supplying beverages. McDonald's is
increasingly using its leverage to capitalise upon global purchasing
practices. New restaurants throughout Europe feature tabletops from
Belgium; chairs, floors and tiles from Italy; doors from Austria etc.

all using low-cost, quality suppliers. McDonald's 'new 'Made for you'
preparation food system will allow it to serve hotter, fresher food.

When a burger is being created the bottom bun and the meat is heated up
together in the microwave, than the cheese, ketchup, mustard and
pickles are being put on and covered up with the other half of the bun.

The whole finished burger is then wrapped up into special paper and
market with the time. New cookers are being added which grill the
burger meat faster. Everything is then put in special storage cupboard,
which additionally holds the food warm for no more than 10 minutes,
after that the burger is eliminated. When the customer orders his/her
food is straightaway served. The quest for variety to satisfy the
growing number of customers was attracting ultimately led to new items
being added to the Classical menu (hamburger, cheeseburger, milkshake
and coffee, soft drinks and fries). Now there is a wide range of
products that have been introduced throughout the years: Quarter
Pounder (1972), Chicken McNuggets (1983), Egg McMuffin (1973), Big Mac
(1963), etc. In addition many new products are always under development
in McDonald's test Kitchens for evaluation in selected markets. The
menu is often enchanted with promotional products to add variety on
limited time bases. The group constantly examines their menus around
the world in light of changing customer's taste, as well as local
customs. In addiction to traditional favourites, customers will find
special menu offerings in some countries outside the U.S. Examples
include the popular Teriyaki Burger in Japan and vegetable Nuggets in
India. Also in a large Muslim populations, such as Malaysia a! nd many
Middle East countries, their menu is Halal, prepared in keeping with
Muslim guidelines. Research indicates that customers feel a unique
emotional bond with the chain, the idea of a visit to them triggers a
feeling of anticipation and excitement unlike in any other restaurant.

Customers come to McDonald's for signature products they can't find
anywhere else. In addition many families visit the restaurants because
of their unique ability to put smiles on their children's faces. Happy
meal combine wholesome food whit a toy; Ronald McDonald is a special
friend; play places provide safe and fun recreation and the alliance
with Walt Disney Company let the children's shout even more.

McDonald's is recognised as one of the best marketers of the world,
investing some hundreds of millions of dollars every year for
advertising and promotion of its image. In 1967 the franchisees created
the Operators National Advertising (OPNAD). Fund by pledging to
contribute 1 % of their individual restaurants sales to a national
co-operative advertising program in addition to the 2 or 3 % they were
contributing to their local advertising-co-operatives. McDonald's has
always shown bits of real life in their commercials that seems to have
became a standard for them. Their marketing efforts go far beyond
advertising, including special food promotions, games, videos,
cassettes, tapes, videos, CDs that we couldn't get anywhere else for
the value. Because of the diversity of customers that go to McDonald's,
they developed segmented marketing programs as various key audience.

McDonald's is the sponsor of such important worldwide sporting events
as the Olympics and the World Cup s! occer, car racing (NASCAR),
Basketball (NBA) and many more. Men are also drawn to McDonald's
because of their unflagging support of our neighbours around the world.

This begins with franchisee involvement in their communities and
extends to Ronald McDonald House Charities. The brand is also
sponsoring the Dinoland exhibit at Disney's Animal Kingdom in Florida
and has various showcase restaurants in each Disney attraction resort.

This means a well organised psychological bombing aimed at all kind of
people, from every race and social class where the golden arches result
to be the overall winner. McDonald's Corporation is dedicated to the
selling of hamburgers, a common job especially in the U.S. To survive
in the communal market McDonald's delivers Quality, Service,
Cleanliness and Value (QSC&V). This chain is also well known because of
its consistency in delivering a customer experience that has value far
beyond good food at a great price. But probably the most attractive
side of McDonald's' activity is the training that stands as background
in every single employee. McDonald's corporation started his fortune
training people on how to be kind, fast, precise and effective: it has
been an absolute pioneer in this field. This year is the Hamburger
University's 37th Anniversary. Hamburger University is McDonald's
worldwide management training centre located in Oak Brook, Illinois.

Designed exclusively to instruct personnel employed by McDonald's
Corporation or employed by McDonald's Independent Franchisees in the
various aspects of the business. All training programs be! gin with
one essential ingredient: The Basics of McDonald's Operations. Because
of McDonald's international scope, translators and electronic equipment
enable professors to teach and communicate in 22 languages at one time.

McDonald's also manages ten international training centres, including
Hamburger Universities in England, Japan, Germany and Australia. Today,
more than 50,000 managers in McDonald's restaurants have graduated from
Hamburger University, located in a 130,000 square foot, with a faculty
of 30 resident professors. McDonald's believes that his quick-service
format would be lost if service at the order desk was not courteous and
efficient, to avoid this problem some detailed video tapes have been
created to train every single worker who had to have direct contact
with the customers. The tapes cover every aspect of dealing with the
customers during his 15 seconds at the counter. Crewmen are instructed
to initiate each order with a polite question: 'May I have your!
order, please?' The success of these service methods cannot be
questioned. Competitors soon realised the benefit of classroom
instruction too. Now all major fast-food chains have training schools.

Yet, non-has come close to matching the resources McDonald's continues
to devote to formal instruction. The Hamburger University even
includes a 154-room lodge where students live during training. Given
its commitment to uniform standards, the McDonald's System hardly seems
to provide room for individual initiative. In fact, one of the least
understood characteristic of the system is that its fascination with
uniformity exists side by side with its lesser known-but equally
strong-respect for creativity and judgement of its franchisees. Without
the freedom of franchisees and suppliers to exercise their
businessperson instincts, to test their own ideas on new products and
procedures, and even to challenge the corporation head-on, McDonald's
might still have attained its celebrated uniformity, but a terrible
price. It would lose the creativity those divers franchisees and
suppliers provide. It would, in short, lose touch with the marketplace.

Approximately 80% of McDonald's restaurant businesses world-wide are
owned and operated by franchisees. Each McDonald's restaurant runs on
! the standard basis given by the big McDonald's headquarters:
approximately 2,800 employees provide a wide variety of support
functions to the 24,500 McDonald's restaurants through a network of
divisional, regional and local-country offices. The chief way to
control his restaurant is done in many ways. I think that the most
effective way, is the MBWA (The technique of managing by wandering
around) to make personal inspection on Q.S.C.& V..This effective
technique, done by regular visits is the one most used by McDonald's
chiefs to control directly their manager and the other employee's
work.

Bibliography

McDonald'Òs Annual Report 1998

McDonald'Òs Web-site: http://www.mcdonalds.com

John F. Love, McDonald'Òs Behind the Arches

Cliff Bowman, The essence of strategic Management,

Laurie j. Mullis, Management and organisational behaviour

Tim Hannagan, Management Concept and practices

Thompson Strickland, Strategic Management

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