Free MacDonald’s Strategy Essay Sample
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Macdonald is a food supply company that has various supply chains around the world in 120 countries. Its headquarters are based in Oak Brook Illinois. The company has been able to hold its head high among other major companies during the trying moments caused by the recent recession. This research paper is going to look at the strategic options and opportunities for the company and then identify the best strategic option.
Like any other company, Macdonald has various companies in its area of business. In the U.K., it faces competition from Burger King; Taco Bell, Subway and Wendy's in the U.S.A. These competitors including KFC are traditional competitors of MacDonald's. The competition from traditional competitors has been seen to be very intense. However, there has been less competition from new entrants since conditions of entry into this market are not favorable. Since Macdonald is a brand, it has helped competition from substitutes to have less impact than expected.
There are several strategic options that MacDonald's may decide to use and some of the three strategies that the company can use include: consolidation, withdrawal and market penetration. Consolidation involves maintaining the strength of the company's position in the market using the current products that it has. The companies will therefore endeavor to maintain its market share and sales using its current products. Consolidation does not entirely mean maintaining the status quo. Changes do occur in the market and therefore consolidation implies keeping in pace with these changes like innovation and improvement of the current products (Harvard Business Review 1957).
The withdrawal strategy involves a decision of not continuing to trade with the products in the current market. This is used where there are signs that the company cannot competitive in the present or in the future effectively. Also withdrawal is necessary when the objectives or the expectations of the company changes. The withdrawal can be gradual but sometimes it is immediate and complete. Market penetration is also based on the products and market share that the company has. By use of this information, the company tries to increase its market share. This strategy is usually based on the strength ands weakness of the company. Market penetration becomes easy for new entrants or small organizations when the economy is growing compared to a static economy. Market penetration usually involves aggressive promotion and pricing for a short term period; this has no effect for large organization considering pricing involves losses which on short term basis does not largely affect big organizations (Harvard Business Review 1957).
Strategy analysis involves identifying the necessary strategy that will comply with organizations objectives. Some types of analysis include:
Gap analysis involves identifying the state of the company at the present and where it is supposed to be in the near future. An investment must have a systematic way of managing time and effort for a future that is both realistic and attractive. Therefore strategies have to be laid down to decide what is to be done today, tomorrow or any other day to realize such a future (Gunther, Grath, & Macmillan 2009). The difference between the present and the future is what is referred to us the Gap. MacDonald's needs therefore to judge its market share, profit or sales by use of market mixes such as the price, place, product, people, promotion and physical evidence.
This is used where organizations are focused on growth. The matrix involves market penetration, market development, product development and diversification. In market penetration, a new product is not sought but rather maintenance of the existing customers is taken into consideration by promotion or repositioning of the brand. Market development involves marketing the existing brands to new markets while product development involves marketing new products to existing customers. Diversification involves marketing a new product to new customers. This matrix is put into study to analyze the effective means of reaching out to customers and MacDonald's can put it into use (Harvard Business Review 1957).
It is used to analyze the position of a company in a competitive environment. Competitive advantage is considered in comparison to cost or differentiation advantage (Bowman, Faulkner, 1996).
MacDonald's should use the consolidation since they are a household brand name and do not need to employ very many and unnecessary strategies like those of new entrants. The consolidation strategy as analyzed by the Bowman's Strategy clock is as follows. The following eight options are taken into consideration: Increased price and low value product-works only in monopoly situations; low value and standard price leads to loss of market share; increased price and standard value causes higher margins and there is risk of loss of market share; focused differentiation which adds value to only a particular segment thus getting the required premium price; Differentiation which strives to add value either to get a premium price or not to get a premium price; low price and added value which is segment specific; low price which may lead to price wars; hybrid which involves identifying investing in low price and differentiation after identification of low cost base (Bowman, Faulkner, 1996).
With all these strategies in mind to increase the business base, other strategies of management should also follow. Issues like hiring, budgeting, leadership, people, firing, quality and change management should be taken into consideration. When managing employees, you should make them feel appreciated as Welch says "They didn't feel like rules when I was using them. They just felt like the right way to lead" (Welch 2005). A well managed organization will realize its full potentials.