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Mcdonalds diversification strategy
Operational strategy of mcdonalds
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Investigating McDonald's
The purpose of this report is to show my understanding of why
McDonald's adopted franchising.
In the report I am going to explain franchise and explain its legal
framework. Also the amount of control McDonalds actually has over the
McDonald's outlets and where the outlets should be located. I will
also evaluate if original decision to franchise was the correct one.
My report will include:
v where my information comes from and why;
v an introduction that will give a brief history of McDonalds and some
of the characteristics of the company i.e. aims and objectives;
v I will explain what a franchise is and their advantages and
disadvantages as well as how they operate;
v the agreement of franchise and what problems the franchiser might
have with the franchisee with things like freedom and control, and
v a conclusion of if I think McDonalds choice was successful and if I
think it could be improved.
Research and Sources of Information.
When gathering my information for this report I will research in
different areas. I will by looking in books, on the Internet at the
McDonald's site, asking my teacher and from their student handbook. I
will need to go to the McDonalds web page because I need to find out
about their history, their aims and objectives, how they control and
manage their franchises and general information about the running and
franchising of McDonalds Restaurants Ltd. The information I am
gathering is needed to base my report on.
The advantages of using the McDonald's web pages is that they have
extensive information about the franchising of McDonald's but the
disadva...
... middle of paper ...
...enviable locations including 341 oxford street
In 1974, McDonald's opened its first restaurant in the UK. Today, more
than 2.5 million people in this country place their trust in
McDonald's every day - trusting the Company to provide them with food
of a high standard, quick service and value for money.
Conclusion.
The size of McDonalds has increased rapidly since it first became a
franchise. Where ever you go theres bound to be a McDonalds outlet
round the corner. McDonalds has no spread around the world and can
found anywhere busy. The number of outlets in the number of outlets in
the country was growing but is now slowing down and a lot of McDonalds
restaurants in the big cities are being closed down. Most of the
McDonalds outlets are franchises now. In the world there are 28,707
McDonalds outlets excluding
In the essay, “Working at McDonald’s,” Amitai Etzioni shares his strong belief that working, especially at McDonald’s type restaurants, is bad for teenagers. I would agree that working is not a good thing for teenagers under some circumstances but at other times it is good. First, jobs affect school involvement and attendance in bad ways. Second, jobs often provide “on the job experience,” but much of the time the experience taught is useless. Third, fast food jobs may provide a disadvantaged status. Fast food jobs can also provide an advantaged status. Finally, workers can learn to manage their money by making mistakes with money before they get into the Real World.
The McDonalds Company has come to the limelight as one of the fast foods outlet causing health problems to the young people. The youngsters have taken the matter to the judiciary to contest for justice. They have also engaged the media which has publicized the company in that respect. Nonetheless, it is not McDonalds Company alone. The writer confesses that he once dealt in that venture and is remorseful about the woes bedeviling McDonalds.
This essay focuses on the topic of globalization, taking along several other factors with it. Increasingly in the world, it becomes obvious that the globalization is affecting almost all the businesses of the world. Every market in some way or the other is following the principles of globalization. For example, McDonalds is a chain of restaurants working in collaboration to deliver their customers with the best product and to achieve this McDonalds follows the concepts of globalization. This essay will discuss anc ethnographic study at McDonalds examining whether it confirms or denies the claims made about globalization.
Also in 1961, Kroc opened Hamburger University in the basement of a McDonald’s restaurant, in Elk Grove Village, Illinois. By 1963, McDonald’s was selling a million hamburgers a day. The company went public in 1965. In 1967 the opened their first international restaurant in Canada. In 1971, McDonald’s restaurants opened in Europe and Australia.
As a company, McDonald’s was first introduced in Des Plaines, Illinois in 1955. This was the very first McDonald’s restaurant, which all started in San Bernardino, California in 1954 when Ray Kroc approached the McDonald brothers with a business proposition to start a new company. In 1965 McDonald’s went public and was later, in 1985 added to the Dow Jones Industrial Average. (www.mcdonalds.com) The company has gone through quite a few changes with its changing CEO’s over the years, but the company seems to be on track with CEO Jim Skinner, named in 2004. Skinner was named the new CEO just in time to clean up after McDonald’s first ever quarterly loss. He succeeded by showing that McDonald’s revenue had climbed 11% during 2006 and net profits had climbed 36%. (Dess, Case 40 Pg. 1)
According to Royle (1999) McDonald’s is a very large multinational enterprise (MNE) and the largest food service operation in the world. Currently the company has 1.5 million workers with 23,500 stores in over 110 countries with the United Kingdom and Germany amongst the corporation’s six biggest markets, and over 12,000 restaurants in the United States. In 1974 the United Kingdom corporation was established and in 1971 the Germany corporation was established, currently the combined corporation has over 900 restaurants and close to 50,000 employees in each of these countries (Royle, 1999).
Compare the globalization approaches of Starbucks & McDonalds The parameters to be used for this comparison are:
A franchisee, an affiliate, or the corporation operates a McDonald’s restaurant. Thus, McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees or sales in company-operated restaurants. According to Yahoo Finance report, McDonald's Corporation had annual revenues of $27.5 billion, and profits of $5.5 billion (McDonald’s 2014). McDonald’s primarily sells hamburgers, cheeseburgers, chicken snacks, french fries, breakfast items, soft drinks, milkshakes, and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies, and fruit. Their food caters to all age groups, and they have a special menu known as “happy meal” that is targeting children.
Have you ever wondered how the business empire of McDonalds was started? With over ninety nine billion served, it was started in 1940 in San Bernardino, California. It was started off as just a Bar-B-Q that served just twenty items. Its first mascot was named “Speedee” They eventually realized that by setting up their kitchen like an assembly line that they could be much more productive and get their food done faster, with every employee doing a specified job; the restaurants production rate became much higher. A milkshake machine vendor came into their small restaurant one day, his name was Ray Kroc.
At the start of 2015 McDonald’s stated they wanted to increase their net profit between 5% - 7% over 2016 calendar year. The Gross Profit ratio from 2014 - 15 did not fluctuate from 66%, following this was the small increase in net profit by 1%. McDonald 's had fallen far from their overall goal of a 5% -7% increase. Yum Brands is now achieving higher net margin at its company stores than McDonald’s with their revenue skyrocketing in from 41,546,000,000 in 2014 and 42,692,000,000 in 2015 well ahead of McDonald’s.
McDonald’s USA has been feeding the American society since 1940. Recently, the company has had various issues with people posting on social media as well as questioning the restaurant’s food. Millennials created controversy about what McDonald’s was serving its customers and this showed itself in ongoing negativity between social media, blogs, and news sites. This caused an extreme decrease in the restaurants sales. The tactic proposed was to become more transparent with the public, but the focused audience was “curious skeptic” millennials.
Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand without having to pay such a large initial cost to open a new store since the franchise purchaser pays a cost to open the business. As well, the company can regulate many of the business activities so that there is a sense of consistency throughout all of the locations. The purchaser is allowed to use the trademarks and goods of the franchise which already have a large market presence. As well, they are provided with training and work standards by the company to help their business run smoothly (Kalnins & Lafontaine, 2004, p.761). Looking at the business model of the world’s largest food retailer, McDonald’s, provides great insight into franchising and business growth in general as well a better understanding of a global business that utilizes the franchising technique.
McDonald’s is such an iconic fast food restaurant that almost every American and a good part of world relates the golden arch with McDonald’s. In its journey to be the most recognized brand, McDonald’s had its humble beginning and many turbulent fights of survival. McDonald’s marketing journey is a noteworthy one for anyone studying the marketing.
This video provides an overview of product diversification. It explains that there are two types of diversification, which are related diversification and unrelated diversification. In addition, the video informs that diversification often involves merger and acquisition activities. Furthermore, it stresses the importance of keeping diversifications balanced, as in some instances, companies that do not take advantage of diversification, can miss out on some benefits, and/or could experience negative effects. However, on the other hand, the opposite could also occur, because some companies that over-diversify, extend themselves too far and can experience detrimental and disadvantageous effects as well. The key is staying
In relation to intangible McDonald’s prides itself as having excellent customer service. McDonald’s trains their employees to be able to handle complaints efficiently. Research has shown that only 5% of people who have a complaint bring it to the attention of the customer service department. 45% of complaints are made on the spot to the employee they are dealing with. 50% of customers who encounter a problem in McDonald’s never make any sort of complaint. As employees are usually the first point of contact for customers, McDonald’s recognises that it is important to fully train their employees in good customer service. McDonald’s creates a customer friendly