Organisation strategy

AN ASSESMENT OF AN ORGANISATIONS STRATEGY ON
PERFORMANCE:
A CASE STUDY OF MCDONALDS RESTAURANT
MONARCH BUSINESS SCHOOL SWITZERLAND
Dr Kennedy Amadi,PhD

Business profile
McDonald’s
Refer to appendix 1-4 for an image of McDonald’s main competitors, geographical locations, products and
market segmentation.
According to Sheikh, D., Bhutto, M., Memon, S., Ahraz, S., Murtaza, G., Farkhanda, M. (2016) McDonald’s
was established in 1955 in San Bernardino, California, united states. It all begun with the brothers Maurice
and Richard McDonald. McDonald’s is the world’s leading food service retailer and largest chain of
hamburger fast food restaurants, serving around 35,000 restaurants in more than 120 countries around
the world and almost 50 million customers daily.
Some of the main markets where they operate from are Germany, panama, Netherlands, japan, Australia,
Puerto Rico, France, Sweden, United Kingdom, Switzerland, Taiwanetc.
McDonald’s has a product range of beverages, burgers (more than 22 types), breakfast meals, chicken &
sandwiches, desserts & shakes, happy meals, Mc café bakery, salads, snacks and sides etc.
According to Downie, R. (2018) some of the competitors of McDonald’s are kfc, burger king, subway,
starbucks, pizza hut, dominos, Wendy’s etc.
According to Dudovskiy, J. (2016). Mcdonald’s classifies their consumer market to the conclusion that the
optimal consumer’s economic profile will be: lower, working and middle class. While the age
demographics will be: 8-45 years of age with the occupations of students, employees andprofessionals.

Question 1 25 Marks
Critically evaluate the strategic approach adopted by your chosen organisation and compare this
approach with an alternative.
You are required to make reference to recognised theory within your answer.
(875 words)
STRATEGIC APPROACHES
Strategy is diverse from a company’s mission, vision, objectives, targets and approaches. The definition of
strategy could be a long-term plan of activity planned to attain a specific objective or a set of targets. A core
administration work, strategy states how business ought to be conducted in each range of operations in
order to effectively fulfil the objectives and targets. A well-crafted business technique adjusts with the core
mission and vision, and acts as a road outline for supported benefit, competitiveness and development.
Strategy can moreover be characterized as the continuous process a company undertakes to get ready for
its future and knowing the precise steps it ought to take to actualize its arrange of activity to attain a
competitive advantage.
According to Gregory, L. (2017) the strategic approaches adopted by McDonald’s are: McDonald's generic
strategy which decides its essential way to deal with building up its business and competitive advantage. As
the greatest fast food chain on the planet, McDonald's uses its intensive growth strategies to help proceed
with business development and extension. The related strategic objectives direct the organization's
operational activities, particularly in reacting to financial changes and the activities of contending firms.
Varieties in economic situations force pressure on the business to adjust or change its systems. In that
capacity, McDonald's generic strategy and intensive growth strategies change after some time to guarantee
long-term business practicality. McDonald’s generic strategy defines the firm’s overall business approach for
competitiveness. The intensive strategies determine McDonald’s approach to growing its business in the
global fast food restaurant industry.
McDonald’s Generic Strategy (Porter’s Model)
McDonald's primary generic strategy is cost leadership. In Porter's model, this generic strategy includes
limiting expenses to offer products at low costs. As a minimal cost supplier, McDonald's offers products that
are moderately less expensive contrasted with competitors like Arby's. In any case, the organization likewise
utilizes expansive differentiation as an auxiliary or supporting generic strategic. This secondary generic
strategy includes building up the business and its products to make them particular from competitors. For
instance, through McCafé products, McDonald's applies the expansive differentiation generic strategy.
Vertical integration is a strategic objective connected to McDonald's cost-leadership generic technique. For
instance, McDonald's claims facilities that produce standardized blends of ingredients. Likewise, cost
minimization is a financial strategic objective dependent on the cost leadership generic strategy. Moreover,
item innovation is identified with McDonald's broad differentiation generic strategy.
McDonald’s Intensive Strategies (Intensive Growth Strategies)
Market Penetration: McDonald’s uses this strategy as its primary intensive strategy for growth. In
application, McDonald’s grows by reaching forward to more customers in markets where they already have
operations. E.g. McDonald’s had opened new restaurants in North America and Europe by franchising, joint
ventures and corporate ownership. A strategic objective connected to this intensive growth strategy is global
expansion through new locations. McDonald’s generic strategy supports this intensive growth strategy to
empower the firm to easily penetrate markets due to low costs and prices.

Market Development: In its initial years, McDonald’s used this strategy as its primary intensive strategy for
growth. Moreover, market development is now a secondary intensive growth strategy as McDonald’s has
restaurants in most regions around the world, some parts of the Middle East and west Asia, and partly
African countries. A strategic objective for this intensive growth strategy is to establish new locations in new
markets, such as new McDonald’s restaurants in African and Middle East countries where the brand as of
now has no operations. McDonald’s supports this intensive growth strategy based on its generic strategy of
cost leadership to compete in new markets by using low prices.
Product Development: McDonald’s uses this strategy as its tertiary or supporting intensive strategy for
growth. In application to this intensive growth strategy, McDonald’s has developed new products over time,
such as new McCafé products. The new products are variations of new or existing products. The strategic
objective for this intensive growth strategy is to capture more consumers by attracting them to new
products. This intensive growth strategy agrees with McDonald’s broad differentiation generic strategy in
terms of new products that make the company distinct.
McDonald's generic strategy of cost leadership empowers the brand to support its market leadership. The
brands broad differentiation strategy likewise makes a difference. In any case, a potential strategic direction
for McDonald's proceeded development is to set up more areas in creating economies and in nations where
the firm has no market presence. The recommended strategic objective is to fuel business growth through a
mix of the market infiltration and market development intensive techniques.

IMPACTS OF DEVELOPMENT ON STRATEGY
Below are some of the developments within McDonald’s and how they impact the brands strategy:
According to Pratap, A. (2020) the organization works and franchises restaurants that serve fast food and
refreshments across in over a 100 nations at a few price points. McDonald's framework is comprised of both
organization operated and franchised restaurants. There are several factors that affect optimal ownership
structure for a restaurant, trading area or a country. They incorporate pioneering experience of people,
monetary assets just as the legitimate and administrative condition locally in a few regions including property
possession and franchising. McDonald's drawn out objective is to run 95% of its framework through
franchisees (McDonald's Annual Report, 2017). For this reason and for ceaseless optimization, it consistently
surveys its mix of organization possessed and franchised restaurants. The connection between the
McDonald's image and its franchisees is of most extreme significance to the organization. The franchisees
are limited by understanding which expects them to hold fast to certain fundamental principles and
strategies.
These independent franchisees possess and work the McDonald's restaurants. These are some significant
points of interest of being a McDonald's franchisee. The organization and the brand go about as a core
support while the independent franchisees can be their own bosses and exercise significant authority over
work, advertising and pricing related issues. McDonald's is an eminent brand and its worldwide popularity is
profoundly helpful for the franchisees. The organization uses the ability it has picked up by working
organization possessed restaurants to help and improve franchisee activities and assist them with being
effective. Besides, it can test the developments made by franchisees and if conceivable actualize them across
significant cafés. The greatest bit of leeway for a franchisee is that he appreciates all the essential
opportunity to effectively work his business. Simultaneously, he has all the help he should be effective as far
as promoting, branding and operational expertise. In any case, McDonald's own activities likewise of
extraordinary criticalness since they assist it with being a dependable franchiser. The organization staff can
gain experience for restaurant operations at the organization worked restaurants.
As mentioned by Bailey, R. (2020) from the outset, the qualities of consistency and advancement appear to
negate each other. They've cooperated to allow McDonald's proceeded growth. Remaining reliable with the
centre segments of your business doesn't mean the items you sell, or even the manner in which you convey
them, need to remain the equivalent. With a strong establishment and set up forms, you can change your
item to more readily serve your clients without causing interruptions. Development originating from
responsiveness its clients and franchisees has assumed a major job in McDonald's fighting off stagnation
throughout the years. For instance, in 1975 a gathering of potential McDonald's clients had an issue: They
were soldiers and, around then, soldiers where they were located weren't allowed to escape their vehicles
while wearing their fatigues. In the wake of learning of this issue, McDonald's thought of an answer: include
a drive-through. The primary McDonald's drive-through was situated close to army installation Fort
Huachuca in Sierra Vista, Arizona to serve the soldiers there. Extra drive-through areas in Georgia and
Oklahoma City before long followed.
All the more as of late, McDonald's was experiencing probably the longest sales slacks ever. It was likewise
learning the exercise numerous heritage organizations have needed to learn: Customers have the high

ground in the present market, and it's ideal to tune in to what they need when they let you know—at that
point act accordingly.
The greatest case of McDonald's giving clients what they need is the appearance of all-day breakfast. For a
considerable length of time, McDonald's clients had filled message boards up requesting all-day breakfast.
Be that as it may, McDonald's was reluctant to roll out the improvement out of dread of hindering its kitchen
speed—a trademark in its endeavours for consistency. Be that sales kept on baffling financial specialists,
officials changed their tune. Starting on October 6, 2015, breakfast deals were reached out past the
conventional cut off time of 10:30am. The change roused a degree of generosity for the inexpensive food
establishment that hadn't been found in some time. With regards to staying aware of client tastes and needs
throughout the years, franchisees have been instrumental to McDonald's development. The following is only
an inspecting of items that were presented subsequent to being created by some attentive and inventive
McDonald's franchisees: McDonald's Happy Meal, Filet-O-Fish, big Mac, Hot Apple Pie, Egg McMuffin and
McFlurry.
These menu innovations (alongside items created in the corporate test kitchen) have taken into
consideration McDonald's to create product contributions for all mealtimes and the snack periods that fall
in the middle of, taking into account more prominent profitability. In any case, simultaneously, McDonald's
produces incredible consideration not to results the consistency of the buyer experience when another thing
is presented. As then-CEO James Skinner said in a 2010 meeting with CNBC, "McDonald's doesn't put
something on the menu until it very well be produced at the speed ofMcDonald's."
The success of McDonald's can be attributed to many more strategies but these are some that have
contributed heavily to it. The takeaways are: Developing strong, efficient processes, procedures and
remaining consistent on them allow for businesses to develop consumer confidence in the brand. Having the
foundation of consistent processes allows businesses the flexibility to innovate and adapt to consumers'
concerns, and improve the brand with minimal disruption. Problems and downtimes will happen in business.
Having an established rapport with consumers can help businesses be resilient when difficulties arise. Listen,
Customers know what they want. The main function of a business is to discover these wants and cater to
them. When customers are telling you what their desires are, it's an invitation for growth and deepening
bonds for the future.

A THEORETICAL STRATEGY FRAMEWORK
According to Kasi, K. (2017) the following is the detailed BCG matrix analysis of McDonald’s, which is the
world biggest fast food chain of restaurant and second biggest employer on the planet. Regardless, BCG
matrix was uniquely intended for those organizations, which have various segments, geographical, industrial
or product lines. This framework encourages the directors to plan the correct strategy for each section as
indicated by its need. McDonald has the highest market share of the overall fast food industry followed by,
its centre rival Yum Brands, which owns KFC, Pizza hut and taco bell. BCG matrix is four dimensional system
each dimension expresses the serious situation of the organization segments. McDonald's partitioned its
organization activity in four geographical segments, America, Europe, APMEA (Asia Pacific, Middle East,
Africa) etc.
Stars: As per BCG framework stars are those segments which compete and work in high sales growth industry
and have high market share. In the event that the McDonald chain of restaurants is assessed as far as
geographical segment its Europe segment that will come into the category of stars. In 2015 and 2016 Europe
segment has created the most income for the particular enterprise. Such segment requires market
development and market entrance strategy to develop the segment into cash cow for long run financial
sustainability.
Cash cow: These segments provide financial stability in the association. Such segments compete in low sales
growth industry and have high market share. McDonald America segment announced 31% share of revenue,
in enterprise annual sales. In any case, McDonald America segment can be remembered for the cash cow
strategy. Most definitely in America, rivalry is extreme, customers have many substitute restaurants to
supplant, one with other and the food business is solid because of rivalry and high recurrence of new
participants. McDonald ought to remember more products for its menu, target more segments and
distinguish their requirements of fine cuisine and fulfil them in like manner.
Question mark: APMEA segment of McDonald fall into the classification of Question mark. Such segment
contend in high growth industry and have low market share. In Asian pacific nations, industry sales
developing potential is extremely high yet tragically McDonald isn't making the most of this open door as;
its rival yum brands. Yum brands has been setting up new establishment every day on normal in referenced
locale be that as it may, McDonald has not been reacting to the contender procedure quite well. McDonald
APMEA segment ought to plan, advertise advancement and product improvement strategy. McDonald ought
to build up more franchises and acquainted new products concurring with the necessities of customers to
hand this section over to star. Yum brands have competitive advantage over McDonald in thissegment.
Dogs: Fortunately none of McDonald segment fall in to the category of dogs. Dogs are those segments of
company which are competing in low sales growth industry and have low market share. Such segments are
not good for the financial health of company/ corporations. Liquidation and retrenchment are the best suited
strategies for dog segments.
The main objective of this organisation is to provide better services without compromising the quality of the
service. The different matrix to measure the potential of this company. The competitive strategy of this

organisation is very strong to control the competitor in the market. McDonald required focusing on the
service differentiation strategy in the fast food industry and should provide superior services to the targeted
customers. This restaurant is the powerful brand name. This organisation faced many considerable issues
which are based on emerging conditions in the global market. This organisation has limited process flexibility,
and the product diversification is quite low. In this situation, this company may diversify on its product and
services. This organisation may have flexibility in responding to the market variations.

DECISION-MAKING TOOLS
Decision making refers to making choices among alternative courses of action, which may also include
inaction. Some of the decision making tools used by McDonald’s are below:
Leadership approach: McDonald’s is 24/7 business, through which they match demands of customers that
boost their sales revenue. Managers have a significant role for this brand. The emphasis on the norm is on
the control, division and coordination of tasks. At this particular function managers have to distribute
authorities to the job holders. The rigid structure helps them undermine the innovativeness amongst the
employees, and also an organisation culture towards empowerment and delegation which if developed
prevails to sustain in competitive environment. The leadership is effective in McDonald’s as they’ve used
various strategies to make the company as one of the best leaders in the market.
Balance scorecard: according to Chen, J., Qian, Y. (2019) is a strategic performance management tool that
managers use to follow the presentation of internal staff activities, screen the results of these activities, and
aid the management of intangible resources. As one of the biggest fast food chain organizations on the
planet, McDonald's has a moderately mature strategy for intangible resources the executives which
incorporates impalpable resource data indulgence, successful worker preparing and improvement of
corporate culture. This paper will examine its administration techniques and give a few recommendations to
the administration of intangible resources in contemporary ventures.
Gap analysis: A procedure utilized in Mcdonald’s to recognize the requirements that will empower an
organization to close the gap between its present level of execution using existing asset distributions and its
potential execution dependent on the optimum allocation and joining of assets. Gap analysis gives
McDonald’s to decide if wanted results are sensible dependent on schedule, cash and human resources
accessible to accomplish them. This highlights a corporate growth objective. Strategic development
alternatives are assessed, in view of forecasting and bench-marking, to determine how the organization will
meet these targets.
Value chain: Value chain analysis is an analytical framework that assists in characteristic business activities
that may produce price and competitive advantage to the business.
The most appropriate decision making tool to support business decision making for McDonald’s is Value
Chain Analysis. As mentioned by Dudovskiy, J. (2016) below is the detailed explanation as to why:
Primary Activities
Operations: McDonald’s operates Company, in hand and franchised restaurants. Regarding eightieth of
McDonald’s restaurants square measure in hand and operated by freelance franchisees. McDonald’s
franchise restaurants have one in all the subsequent formats: typical franchise, organic process license or
affiliate.
Conventional franchising: involves franchisees paying rent and royalties on the proportion of

sales alongside the payment of initial fees when opening a restaurant. During this variety of franchising,
McDonald’s Corporation owns the land and building or secures a long-run lease for the eating house
location and therefore the franchisee pays for instrumentation,signs, seating and interiordecoration.
Developmental license: involves licensees providing capital for the whole business, as well as the important
estate interest. In organic process license agreement no capital endowed by McDonald’s Corporation.
Royalty is paid by licence on the proportion of sales additionally to initial fees upon the gap of opening a
restaurant or grant of a replacement license. This structure of organic process license possession is
employed by McDonald’s in additional than seventy countries with a complete of five, 228 restaurants.
Affiliates: as another style of franchising refers to a restricted range of foreign attached markets. McDonald’s
receives royalties from affiliates on the plc. of sales. Japan accommodates the most important numbers of
affiliates with near to three, 100 restaurants.
Outbound logistics: McDonald's restaurants operate within the following formats: work stoppage
restaurants, drive-thru, counter-service shops in food courts and ski-thru. Method of getting meals in work
stoppage eating house format is typical process of feeding go in a eating house and it involves a waiter or
server taking order and delivering the food. McDonald’s counter-service shops, on the contrary, involve self-
service. McDonald’s is attributable with the invention of drive-thru and sky-thru formats of food delivery.
The latter format is offered solely in an exceedingly few locations like “a common Swedish holiday
resort of Lindvallen, 280 miles north of Stockholm.” McDonald’s doesn't supply home services
Marketing and sales: McDonald’s uses print and media advertising extensively so
delivery
hitherto.
as to
speak its selling message to the representatives of the target client section. Company’s advertising budget
within the US alone equalled to USD one.42 billion in 2014[8]. Alongside print and media advertising, this
quantity was spent on advertisements, events and experiences and promotion.
Service: High speed of the availability of client service is one in all the most competitive benefits of
McDonald’s. However, makes an attempt of the corporate to supply wonderful client services contradicts its
follow of paying minimum or slightly higher than minimum wages to its staff.

Reference list
1. Bailey, R. (2020), How Has McDonald's Been So Successful for So Long. [Online]. Availableat:
https://www.franchisedirect.com/information/markettrendsfactsaboutfranchising/thesuccessofmcdonalds/8
/1111/ (Accessed: 22nd May 2020).
2. Chen, J., Qian, Y. (2019), Analysis of Intangible Resources of McDonald's and Its Influence by
Balanced Scorecard Method. [Online]. Available at: https://www.atlantis-press.com/proceedings/iccesd-
19/125912934 (Accessed: 22nd May2020).
3. Downie, R. (2018), who are McDonald’s main competitors? [Online]. Available at:
https://www.investopedia.com/articles/markets/102815/who-are-mcdonalds-main-competitors.asp
(Accessed: 22nd May2020).
4. Dudovskiy, J. (2016), McDonald’s segmentation, targeting and positioning. [Online]. Available at:
https://research-methodology.net/mcdonalds-segmentation-targeting-and-positioning/ (Accessed:
22nd May2020).
5. Dudovskiy, J. (2016). McDonalds Value Chain Analysis. [Online]. Available at: https://research-
methodology.net/mcdonalds-value-chain-analysis/ (Accessed: 22nd May2020).
6. Gregory, L. (2017), McDonald’s Generic Strategy & Intensive Growth Strategies. [Online]. Available
at: http://panmore.com/mcdonalds-generic-strategy-intensive-growth-strategies (Accessed: 22nd May
2020).
7. Kasi, K. (2017), BCG matrix of McDonald’s. [Online]. Available at: https://bcgmatrixanalysis.com/bcg-
matrix-of-mcdonalds/ (Accessed: 22nd May2020).
8. Pratap, A. (2020), MCDONALD’S BUSINESS MODEL. [Online]. Availableat:
https://notesmatic.com/2019/01/mcdonalds-business-model/ (Accessed: 22nd May 2020).
9. Sheikh, D., Bhutto, M., Memon, S., Ahraz, S., Murtaza, G., Farkhanda, M. (2016), Strategic marketing
plan for McDonald’s 2016. [Online]. Available at:
https://www.researchgate.net/publication/301553341_Strategic_Marketing_Plan_for_McDonald's_
2016 (Accessed: 22nd May2020).

Appendix
Appendix 1: products of McDonald’s
Appendix 2: competitors of McDonald’s

Appendix 3: geographical locations ofMcDonald’s
Appendix 4: market segmentations of McDonald’s

Appendix 5: BCG Matrix of McDonald’s
Appendix 6: value chain analysis of McDonald’s

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