Research Korner: McDonald's

MANAGEMENT OF CHANGE: THE CAFÉ DE CORAL EXPERIENCE

MANAGEMENT OF CHANGE: THE CAFÉ DE CORAL EXPERIENCE Table of Contents   I.      Introduction.. 3 II.     Background of the Company.. 4 III.        Diagnosis.. 5 A.    External Change Drivers. 6 1.     Political Factors. 6 2.     Economic Factors. 6 3.     Socio-Cultural Factors. 7 4.     Technological Factors. 7 B.    Internal Change Drivers. 8 Figure 1. Ansoff’s product/market Matrix. 8 1.     Market Penetration. 9 2.     Market Development 9 3.     Product Development 9 4.     Diversification. 10 C.    Current State. 10 1.     Strategy. 10 2.     Structure. 11 3.     Systems. 11 4.     Shared Values. 12 5.     Skills. 12 6.     Style. 12 7.     Staff 13 D.    Source of Resistance. 13 1.     Endings. 14 2.     Neutral Zone. 14 3.     New Beginnings. 14 E.    Leadership in the Company. 14 IV.       Prognosis.. 15 A.    Status Quo Scenario.. 15 B.    Change Scenario.. 15 V.    Conclusion.. 16 VI.       References.. 16   I.      Introduction The realm of the fast food industry, the current trends brought about by western monoliths like McDonalds has been the prevailing formula. Specifically, serving dishes that are easy to prepare and serve such as sandwiches, deep fried foodstuff and other pasta-based products are those that fit the requisites needed in the formulaic process employed in such types of industries. However, one must also highlight that the advantage of these types of companies are not limited to their products and the dishes that they serve. These are only a fraction of what make them leaders of the industry. To be precise, it is this efficiency and quality that places these western companies in the top of their game. This primarily establishes the fact why their respective operations and processes are considered as the prevailing models in the fast food industry.    This problem brings forth a limited number of food genres that would fit the classification as a fast food company. In Hong Kong, a local company, Café de Coral, attempted to dispel the myth that such dishes that offer oriental cuisines will not complement the processes inherent in the fast food industry. This study will be taking a closer look in the existing conditions that Café de Coral is experiencing in their daily operations. The said name is under a corporation controlling various types of stores in the food industry. For the purposes of this paper, the focus of the study will be the Café de Coral based in Hong Kong. The arguments and observations held in this paper shall be reinforced by existing literature on organisational development and change management.    II.    Background of the Company Café de Coral is said to be the largest group of Chinese restaurants in Asia and the rest of the world. The company is listed under the Café de Coral Group in the Hong Kong Stock Exchange. The said company covers fast food, institutional catering, specialty restaurants, food manufacturing, and distribution among others. For the purposes of this study, the focus of the discussions will be the fast food operations of the company. The first store of the company commenced in 1968 on Causeway Bay. After several decades, the company controls over a hundred and twenty restaurants which serves drones of satisfied customers in a daily basis. Based on the company’s website, the current battle cry of the organisation is “A hundred points of excellence.” This is driven by the desire to provide imminent customer satisfaction by constant improvement in the quality of their products, the service that they provide, and the ambience in their restaurants. In doing so, the company makes their customers realise that the value of their money is given importance in the stores managed by the company.   The company has risen in the ranks of the food industry in Hong Kong because of the top products and services that they offer. In the area of products, the company flaunts of their signature products that are made with premium ingredients and prepared with the strictest quality control. The area of services is also one of the major factors why Café de Coral is at the top of its competition. With the motto mentioned above, continuous staff improvement through training is given the top priority of the company. It focuses on both individual and team skills of the company.   III.   Diagnosis In an article of Wong (2006), he coined the term “fast-foodization” as the process imposed by McDonalds in the modern food business. He also pointed out the phenomenon wherein exotic cuisines have become one of the major competitors of these big fast food companies in the West. Japanese, Indian, and Chinese restaurants which serve their respective local dishes directly take on the likes of Burger King and other major companies in the western world. This makes perfect sense as these exotic restaurants offer an alternative to the ubiquitous burger and fries offered by these established organisations in the fast-food industry. In order to establish the change needed in any company, an analysis of both the internal and external environment is required. In doing so, the specific areas on which companies like Café the Coral could pinpoint the specific parts of the operations that require improvements or reductions that will trigger change in the organisation. The following parts shall do exactly that, analyse both internal and external environments of Café de Coral to establish how it could initiate improvements in their operations. In doing the said discussions, the use of analytical tools such as the PEST Analysis, Growth stages, 7s framework, the company’s cultural web, transition curve, and the leadership theories and models implemented in the company. The findings in these discussions shall be the basis of the succeeding parts of the paper wherein two scenarios will be depicted.      A.   External Change Drivers To establish the existing conditions surrounding the external environment, the PEST Analysis will be employed. In doing the change drivers of the external environment shall be directly observed. 1.    Political Factors The government of the administrative region adheres to the encouragement of trade and business in Hong Kong. (Speath, 2004) This is shown in the liberties that it provides companies like Café de Coral and its foreign counterparts. Specifically, this is proven by the fact that the first McDonald’s in the region was established several decades earlier. (Watson 1997, 78) However, the business-friendly nature of the laws in Hong Kong does not make it weak. Companies have to similarly comply with the standards provided for by the laws of the land.     2.    Economic Factors Hong Kong is one of the imminent tourist destinations in Asia. People flock the administrative region wither for business, pleasure, or both. Studies have pointed out that travellers from the mainland have increased exponentially in the past couple of years. (Kam-Yee and Kim-Ming, 2006, 217) This means that aside from the tourists and locals of Hong Kong, companies like Café de Coral have to cater to a much larger crowd as massive numbers of mainlanders have added to the overall market of the Hong Kong food industry. 3.    Socio-Cultural Factors In the study of Chan et al, (1999, 12) they described the consumers in Hong Kong with low uncertainty avoidance. This basically means that the buyers’ decision in Hong Kong is primarily based on impulse. Buyers tend to do away with the possibility of planning to buy a particular product or brand before they actually make the purchase. This spells great for companies like Café de Coral since they already have a strong brand name and recall on the consumers. This makes them already a part of the short list of choices of the consumers when it comes to fast food cuisines. Moreover, it has also been noted that the consumers in Hong Kong possess long term orientation. (Chan et al, 1999, 12) This basically establishes the fact that Hong Kong consumers tend to be loyal to a particular brand or company once they have already tried it and are satisfied with the products or services. This reinforces the observation that companies like Café de Coral has strategically placed themselves in the core list of companies which the Hong Kong consumer will constantly visit. 4.    Technological Factors Companies involved in the food service industry have to contend with a complex system of inventory as they deal with stocks that are perishable and ultimately fragile. Fortunately, Hong Kong is one of the hubs of IT in the whole of Asia. (Koo, Lee, Ngan 2003) Most of its workforce is able to easily apply these processes in their operations. (Lee, Leung, Lim, Sia 2004) Infusion of inventory and logistics is highly workable for companies operating in this environment.      B.   Internal Change Drivers Though the standing of Cafe de Coral in Hong Kong appears stable, it is merely the tip of the iceberg. At some point, one must realise that there are several organisations that operate in the same industry that will readily take away the existing market share of the company. Thus, it is important to make sure that the company is aware of its strengths as to whether it would find a fit with the rest of the external environment. The drive towards market ascendancy of Cafe de Coral shall be presented with the help of Ansoff’s product/market matrix. In this manner, the company establishes the areas which could be considered as internal change drivers. (Adamson 2005, 358) The areas on which the company should consider is summarised in Figure 1 below.   Figure 1. Ansoff’s product/market Matrix     1.    Market Penetration The concept of market penetration basically establishes the possibilities on which an organisation could grow with the use of its existing market and products. (Stopper 2004, 21) In the case of Cafe de Coral, its market in Hong Kong shall continue to be stable provided that it holds true on its resolve of improving its signature products, ensure that premium ingredients are used, and the strictest quality control should be observed. 2.    Market Development As pointed out in the earlier part of this paper, Hong Kong is the centre of commerce in Asia. It has low uncertainty avoidance and long term orientation. This intimates that companies like Cafe de Coral should anticipate impulse spending and a more profound sense of brand loyalty. Hence, it is advisable for Cafe de Coral to find ways to seek new markets as they progress as a company to maximise this opportunity. 3.    Product Development With the area of product development, it appears that the company is lagging behind as they tend to display a single set of signature products. However, they maintained in their website that they never stop looking for ways to improve their products and services to ensure customer satisfaction. (Stopper 2004, 21) This shows promise on the part of the company as a prospective insight on the market appears to insinuate positive results. 4.    Diversification On the whole, the corporation on which Café de Coral is under have taken steps to come up with restaurants and other stores that will cater to those aside from the fast-food model in the food industry. There are several brand names controlled by the Café de Coral Corporation that focuses on catering and food production among others. This shows that the diversifications held be the company are still interconnected with every elements in the food industry. C.   Current State Another element that could determine the areas on which change could be induced is the current state of the company. In this paper, McKinsey’s 7s Framework shall present the distinct nuances of Café de Coral. This tool shall establish the possible implications of changes within the organisation. Hence, it will show the best way to tackle a particular strategy proposed to the company. The discussions in this part of the paper shall base its arguments on the website of Café de Coral. 1.    Strategy The company seeks to acquire “A hundred points of excellence.” In order to do this, the company has implemented a customer-centric approach in their operations. Customer satisfaction is held highly by the company. This is ensured by staff training at regular intervals which seeks to improve the individual and team skills of the organisation. However, it is observable that the company have not indicated a stable and veritable feedback system that would house the demands and criticisms of the customers. In doing so, the company may have difficulty in dealing with the demands of the customers as they are not actually aware of these specific elements.   2.    Structure Café de Coral is divided into independent operations of each store. Each store is considered as a team that has to maximise their profits and generate revenue for the corporation. It is responsible for its operational costs, hence, required to find ways to limit their expenses and find ways to attract clients to their respective stores. The store manager is the one that overseas the operations with the help of their staff which includes the administrative sector and those that deal with food preparation and customer assistance (waiters and servers). This thus manifest the decentralised nature of the decision making process in the organisation. Moreover, the organisational structure in every store is apparently flat hence giving the assumption that the communication lines are rather open between management and the other employees. 3.    Systems The company’s primary activities are basically composed of the acquisition of the raw materials that they would use as ingredients for their dishes. Normally these items of inventory are acquired from the main supplier of the corporation. Subsequent activities are manifested in serving and interaction with the customers. Moreover, the maintenance of the equipments used in the operations is also added into these set of activities.       4.    Shared Values The core value of the company, as intimated in the earlier parts of this paper, is the maintenance of a strong customer relationship management within the organisation. The customer is held highly and thus the operations revolve around what these individuals demand from Café de Coral. 5.    Skills The company basically requires both technical and soft skills. This means that each and every unit of the organisation has to take on skills like accounting and use of store equipment such as telephone and computers. In the area of soft skills, given that the main concern of the company is the consumers, involves elements like leadership, initiative, and communication skills. Looking at the reports provided by the organisation, there appears to be minimal gap in the overall workforce of the company. This is because they conduct regular trainings to keep their personnel sharp and deeply acquainted with the shared values within the organisation. 6.    Style The leadership style in every store varies from manager to manager. However, since there is a flat structure in every store, the leadership and management style tend to be highly participative. On the whole, the stores have a healthy competition with each other. Though they do not contend as to the actual market share, these teams contend to gain some “bragging rights” with the other members of the Café de Coral group. 7.    Staff The number staffs of every store of Café de Coral depend on the demands of the consumers and the required business activity in each store. On the whole, the training provided by the company shall place the required skills of new employees and ensure that the seasoned ones are kept informed of the knowledge required in their respective functions. D.   Source of Resistance To determine the sources of resistance in Café de Coral, the transition curve will be employed. The said model is summarised in the figure below. Figure 2. The Transition Curve 1.    Endings This phase of the transition curve, resistance is anticipated from the employees. This is especially true with regards to the seasoned personnel who are used to the traditionally applied processes. In the case of Café de Coral, it is anticipated that if ever there is some anxiety or denial of the change proposal, it would be rather minimal. 2.    Neutral Zone In this zone, the level of uncertainty is high among the personnel. This is especially true to those who hold positions that are contractual. More specifically, they will be in constant fear whether their contracts would be renewed or not. The managers of the respective stores would have to bear this responsibility to mitigate the implications of this state. The management has to keep control over the situation. 3.    New Beginnings In this state, the change is anticipated and accepted by the personnel. In the case of Café de Coral, the personnel may have realised the positive implications of the proposed change by the management. In this part, the proposed change is openly implemented as a part of the normal operations of the organisation. E.   Leadership in the Company As stated in the earlier parts of this paper, the leadership styles and management styles complement the flat organisational framework of the organisation. Basically, participative leadership is seen exercised in the operations of the respective stores. In this regard, the employees are empowered and the managers keep the human resource under his control.   IV.  Prognosis The following discussions will pinpoint the changes required of the operations of Café de Coral. To clearly establish the implications of these changes, two scenarios will me meted out in the process. Based on the discussions above, the company requires synchronisation in the operations of its numerous stores. However, as their independence has contributed much of their success, the management is in a dilemma what to do. Basically, the answer would be to install additional IT technologies that would put correspondence between the different stores and the respective suppliers in real time communication. A.   Status Quo Scenario In this scenario, nothing will change. The operations will be the same however the existence of a gap in between transactions could lead to delay that will essentially establish significant losses for the company.   B.   Change Scenario The implementation and installation of added IT technologies will provide the company added flexibility and opportunity to adjust their operations to actually minimise the losses of the company in instances where any unforeseen events come up. The apparent issue is the added costs in training the appropriate unit of each and every store in the use of the hardware and software applicable in the process. However, as pointed out in the earlier parts, the common Hong Kong worker is adept with the basics of information technology. Hence, this added instruction will not lead to any more wasted resources and time. V.   Conclusion The discussions above have intimated that the proper fit between the internal and external environments is essential to the achievement of the major goals of the organisation. Be it financially or not, it is left on the shoulders of the company to find a way to balance out the situations wherein they are able to remain flexible and keep things under their control.   VI.  References   Adamson, J. (2005) "Using Marketing Visuals for Product Talk in Business English Classes." Business Communication Quarterly. 68(3), 358 Chan, A., Chow, W., Fosh, P., Snape, E., Westwood, R. (1999) Hong Kong Management and Labour: Change and Continuity. Routledge. London. Kam-Yee, L., and Kim-Ming, L. (2006) "Citizenship, Economy and Social Exclusion of Mainland Chinese Immigrants in Hong Kong." Journal of Contemporary Asia. 36(2), 217. Koo, R., Lee, C., Ngan, M. (2003) “Voices and Implementation of Information Technology in an Elementary School Classroom : A Hong Kong Case Study.” Childhood Education. 79(5) 268 Lee, M., Leung, K., Lim, K., Sia, C. (2004) "Is eCommerce Boundary-Less? Effects of Individualism-Collectivism and Uncertainty Avoidance on Internet Shopping." Journal of International Business Studies. 35(6) 545 Speath, A (2004), “Hong Kong's defiance: China warns the city to forget democracy and get back to business. But many Hong Kongers aren't listening.” Time, Available at: http://www.time.com/time/asia/2004/hk_politics/story.html [Accessed 31 July, 2008] Stopper, W. (2004) "Establishing and Maintaining the Trust of Your Employees." Human Resource Planning. 27(2), 21. Watson, J. (1997) Golden Arches East: McDonald's in East Asia. Stanford California: Stanford University.

MANAGEMENT OF CHANGE: THE CAFÉ DE CORAL EXPERIENCE

MANAGEMENT OF CHANGE: THE CAFÉ DE CORAL EXPERIENCE Table of Contents I. Introduction .. 3 II. Background of...

PESTLE analysis of McDonalds

PESTLE analysis to explain company's international strategy for McDonald If you need a PESTLE Analysis, just send your instructions at ivythesis@gmail.com TABLE OF CONTENT                                                                                                           Page I.     INTRODUCTION                                                                                                                 3 II     BACKGROUND                                                                                                                   3 III    PESTLE ANALYSIS A.        POLITICAL FACTORS                                                                                                 4 B.        ECONOMIC FACTORS                                                                                               4 C.        SOCIAL-CULTURAL FACTORS                                                                                 5 D.        TECHNOLOGY FACTORS                                                                                          5 E.         LEGAL FACTORS                                                                                                         6 F.         ENVIRONMENTAL FACTORS                                                                                   6 IV   CONCLUSION                                                                                                                   7 V     RECOMMENDATION                                                                                                         8 VI   REFERENCE                                                                                                                         9 I.                  INTRODUCTION Globalization has made the globe considerably smaller.  States lines have turned into practically a divider separating certain regions of a massive unitary community.  Businesses are the one that are highly affected by this occurrence.  The virtual closeness of states has made trade and commerce an international event.  Together with these advances, the key standards of business are similarly taken into account.  The discussions in this paper shall involve an analysis of the international expansion strategy utilized by a multinational company.  In this case, the situation surrounding McDonald’s will be taken into consideration.  The following annotations and propositions employed in the following discussions are to be supported by claims on journals and academic pieces that address international expansion strategies and international marketing theories. II.               BACKGROUND The modest beginnings of McDonald’s in Illinois turned out to be among the main brand names in the international scene.  It has been synonymous to what is widely-accepted the fast-food concept. The company operates over thirty one thousand stores all over the world to date. It was one of the first to perfect the concept of fast service in the food industry in its early days of operations in 1955. Given that the products of the company are mainly western in character, its operations has also expanded to the Asian region. The first McDonald’s store operated in Hong Kong in 1975.  The first shop operated at Paterson Street in Causeway Bay.  Up to this data, the functions of McDonald’s in Hong Kong covers over two hundred restaurant chains spread in the whole of Hong Kong alone.  In the rest of the globe, it operates thousands of store franchises that functions autonomously. III.            PESTLE ANALYSIS Pestle is an analysis of the external macro environment in which a business operates. According to  (2008), pestle stands for political, economic, social, technology, and environmental factors. A.       Political Factors The international operations of McDonald’s are highly influenced by the individual state policies enforced by each government. (2001, 705) For instance, there are certain groups in Europe and the United States that clamor for state actions pertaining to the health implications of eating fast food. (2005) They have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products. On the other hand, the company is controlled by the individual policies and regulations of operations. Specific markets focus on different areas of concern such as that of health, worker protection, and environment. All these elements are seen in the government control of the licensing of the restaurants in the respective states. For instance, there is an impending legal dispute in the McDonald’s franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food. The existence of meat in their menus in India is apparently offensive to the Hindu religion in the said market. There are also other studies that points to the infringement of McDonald’s Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonald’s stores have to contend with the issues of employment procedures as well as their tax obligations so as to succeed in the foreign market.      B.       Economic Factors Organisations in the fast food industry are not excused from any disputes and troubles. Specifically, they do have their individual concerns involving economic factors.  Branches and franchises of fast food chains like McDonald’s has the tendency to experience hardship in instances where the economy of the respective states is hit by inflation and changes in the exchange rates.  The customers consequently are faced with a stalemate of going over their individual budgets whether or not they should use up more on these foreign fast food chains. (2004) Hence, these chains may have to put up with the issues of the effects of the economic environment.  Particularly, their problem depends on the response of the consumers on these fundamentals and how it could influence their general sales.  In regarding the operations of the company, food chains like McDonald’s tend to import much of their raw materials into a specific territory if there is a dearth of supply.  Exchange rate fluctuations will also play a significant role in the operations of the company. As stated in the paragraph above, McDonald stores have to take a great deal of consideration with reference to their microenvironment. The company’s international supply as well as the existing exchange rates is merely a part of the overall components needed to guarantee success for the foreign operations of McDonald’s. Moreover, it is imperative that the company be cognizant of the existing tax requirements needed by the individual governments on which they operate. This basically ensures the smooth operations of the McDonald’s franchises. In the same regard, the company will also have to consider the economic standing of the state on which they operate on. The rate at which the economy of that particular state grows determines the purchasing power of the consumers in that country. Hence, if a franchise operates in a particularly economically weak state, hence their products shall cost higher than the other existing products in the market, then these franchises must take on certain adjustments to maintain the economies of scale. C.       Socio-Cultural Factors Articles on the international strategies of McDonald’s seem to function on several fields to guarantee lucrative returns for the organisation.  To illustrate, the organisation improves on establishing a positive mind-set from their core consumers.  McDonald’s indulge a particular variety of consumers with definite types of personalities. ( 1994) It has also been noted that the company have given the markets such as the United Kingdom, an option with regards to their dining needs.  (2005) pointed out that McDonald’s has launched a sensibly valued set of food that tenders a reliable level of quality for the respective market where it operates.  Additionally, those who are aged just below the bracket of thirty-five are said to be the most frequent consumers of McDonald’s franchises. ( 2005)   The multifaceted character of business nowadays is reflected in the harsh significance of the information on the subject of the existing market.  This procedure is essentially identified in the field as market research. (1997)  Information with regards to the appeal and potential fields of the market would double as obstructions to the success of the company if this area of the operations is neglected.  In the case of McDonald’s they establish a good system in determining the needs of the market.  The company uses concepts of consumer behaviour product personality and purchasing decisions to its advantage. (  1998) It is said to have a major influence on the understanding of the prospective performance of the organisation in a particular market. (2000) D.    Technological Factors McDonald’s generates a demand for their own products. (2006) The company’s key tool for marketing is by means of television advertisements.  There are similarly some claims that McDonald’s are inclined to interest the younger populations more.  The existence of play spots as well as toys in meals offered by the company shows this actuality. ( 1995) Other demonstration of such a marketing strategy is apparent in the commercials of they use.  They employ animated depictions of their characters like Grimace and Hamburglar. Other advertising operations employ popular celebrities to promote their products.  The like  has become endorsers for McDonald’s worldwide “loving’ it” campaign.  Moreover, the operations of McDonald’s have significantly been infused with new technology.  Elements like the inventory system and the management of the value chain of the company allows for easy payments for their suppliers and other vendors which the individual stores in respective markets deal with. The integration of technology in the operations of McDonalds tend to add value to their products. Basically, this is manifested in the improvements on its value chain. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context. E.        Legal Factors There has been the recurrent bellowing in opposition to the fast food industry.  This has similarly made McDonald’s apply a more careful consideration on their corporate social responsibilities.  On the whole, this addressed the need of the company to form its corporate reputation to a more positive one and a more socially responsible company. ( 2005) The reputation of McDonald’s is apparently a huge matter.  Seen on the website of the company, it seems that they have acquired strides to take in hand the key social censures that they have been berating them in the past decades.  The company has provided their customers the relevant data that they need with reference to the nutritional substances of their products.  This is to attend to the arguments of obesity charged against the products of the company.  In the same way, the consumers provided freedom in choosing whether or not they want to purchase their meals. This is tied up with the socio-cultural attributes of the market on which they operate. For instance, operations in predominantly Muslim countries require their meat to conform to the Halal requirements of the law. In the same regard, those that operate in countries in the European Union should conform to the existing laws banning the use of genetically modified meat products in their food. Other legal concepts like tax obligations, employment standards, and quality requirements are only a few of important elements on which the company has to take into consideration. Otherwise, smooth operations shall be hard to achieve.   F.        Environment The social responsibilities of McDonald’s on the state are influential to the operations of the company.  These entail accusations of environmental damage.  Among the reasons why they are charged with such claims is the employ of non-biodegradable substances for their drinks glasses and Styrofoam coffers for the meals. (1997) Several civic groups in Hong Kong have made actions to make the McDonald’s franchises in Hong Kong aware of the rather copious use of Styrofoam containers and the resultant abuse of the environment.   (1997) further indicated that in 1995, McDonald’s Hong Kong went over the Styrofoam used by both Australia and the United States combined. IV.       CONCLUSION Debatably, the most significant contribution of this generation is the combination of globalization and internationalization in the businesses sector.  Developments in the international setting have an effect on the more particular factors in the operations in individual organisations. Alterations could take placer and require intense modifications to the operations such that it could have an adverse effect on the entire structure of the company.  However, as indicated in the arguments and comments in this paper, this could be acquired by setting a certain level of flexibility in the organisation.  This level of flexibility is basically acquired through the acquaintance of both the internal and external environment of the company. Even though McDonald’s may have been deemed as demigod in the fast food business in the international scene, what it preserves as revealed in its processes is the need for flexibility.  The slight changes that take place in the market have an effect on the operations of the business in any case.  This denotes that having the information on the effects of these alterations swiftly provides these fast food industry giants to take fine-tuning actions on their acts and still preserve their market position.  As implied in the introduction of this paper, the markets of nowadays manifest a cutthroat rivalry with the individual competitors, recognized brands or otherwise. Hence, any business in spite of the muscle of the brand name or the size of its reserves could not afford any failures in their individual markets.   V.        RECOMMENDATION The following recommendations shall be based on the conclusions and arguments above.    l          Political Factors   Since it is apparent that the company is expanding continuously, it is wise to deal directly with the proper authorities in the respective markets that they intend to operate in. This way, a good way of establishes good relationship with the government. It is advisable that the company rests on the good graces of the government on which they will be penetrating. To do this, all they have to do is accomplish all the prescribed acts and satisfy all the prerequisites for doing business. The company must also be acquainted with the law in order to know what their responsibilities and their possible liabilities.   l          Economic Factors   Before penetrating the market, the company must carry out a well conducted market research, especially in the movements in the economic environment. The frequency of the shifts in the inflation rate as well as the fluctuations in the exchange rate affects the operations of the company.   l          Socio-cultural Factors   Obtain the relevant information from the target market in addition to the individual customers of the organisation. It is imperative that before a franchise is granted to a particular market, a well drafted and comprehensive market research should be conducted initially so as to establish the acts that would conform to good customs, public policies, and morals of the said state. Similarly, the company should find out the shifts in areas like the consumer behaviour and purchasing patterns of the market. Fundamentally, this is the key condition for executing a suitable customer relationship management system.   l          Technological Factors   Use the internet to their advantage. The cost-effectiveness, interactivity and real-time effects of the communications are a good way to find suppliers. It is also a good way to correspond with the respective McDonald’s headquarters in every state. The company must also look into the use of IT to enhance their inventory operations. As the operations in its inbound and outbound logistics improve, the company will expect significant savings and reduction of costs in the operations.     l          Environmental Factors   Find out the environmental regime that governs the operations in every market. Monitor the waste disposal of the company. Minimize the use of Styrofoam materials and plastic cups. Constant updating of the social corporate responsibility is imperative. This should also entail that the headquarters should take in hand a manner of internal control of those that would infringe upon this company objective. Sanctions such as revoking of the franchise license or a particularly high fine should be installed to serve as a deterrent to infringement.      l          Legal Factors   Hire local counsels to deal with the legal conflicts in individual markets on which the company may encounter. This is shall ensure the company that the lawyers that will handle their legal affairs are more versed with the legal regime that would iron out certain creases on their operations.

PESTLE analysis of McDonalds

PESTLE analysis to explain company's international strategy for McDonald If you need a PESTLE Analysis, just send your instructions a...

A Business Report on McDonald's Marketing Management

MCDONALD’S MARKETING MANAGEMENT   by   [your name]     Presented to [your professor] [class/subject]   [name of university] [states] [date]   	 	 	 	Executive Summary McDonald’s is considered as one of the most popular and well-loved brands in the world and it can be reflected on the growing size and improving financial performance of the company. The said success can be attributed to the strong brand of the company, because of the different activities and strategic movements that have been done by the management for the past 69 years. It includes the long history of the company, which enables McDonald’s to be well experienced regarding the changing environment of the business which resulted to the company to innovate and strive for continuous development.             The strong brand of McDonald’s benefited the brand owner as well as the customers. For the brand owner, it had helped to maintain the position of the company in the market because of the growing number of loyal customers, which reflect on the financial aspect. Furthermore, because of strong brand, the company enables to become a global business, which helps to increase its size. On the other hand, it had helped the customers in the process of deciding about where to eat.   	 	 	Contents  TOC \o "1-3" \h \z \u Executive Summary. PAGEREF _Toc232423682 \h 2 Introduction.. PAGEREF _Toc232423683 \h 3 Background of the Company. PAGEREF _Toc232423684 \h 4 Strong brand and brand owners. PAGEREF _Toc232423685 \h 6 establish customer loyalty. PAGEREF _Toc232423686 \h 6 Financial Aspect and Profitability. PAGEREF _Toc232423687 \h 7 Attract quality internal customers (Employees) PAGEREF _Toc232423688 \h 8 strong brand and customer PAGEREF _Toc232423689 \h 8 How Mcdonald’s established strong brand. PAGEREF _Toc232423690 \h 9 Long History and experience. PAGEREF _Toc232423691 \h 10 Media Support and Advertisement PAGEREF _Toc232423692 \h 11 Differentiation and Innovation.. PAGEREF _Toc232423693 \h 12 Conclusions and recommendation.. PAGEREF _Toc232423694 \h 14 Bibliography. PAGEREF _Toc232423695 \h 14 Appendices. PAGEREF _Toc232423696 \h 16 Appendix A: Top 10 Most Powerful Brands. PAGEREF _Toc232423697 \h 16 Appendix B: How Strong Brands General Greater Profitability. PAGEREF _Toc232423698 \h 17   	 	 	 	Introduction As of now, the world of business is facing different challenges, particularly the increasing competition due to the changes in the lifestyles and demands of the customers. As a result, more and more business are becoming aware that applying effective marketing management will be very beneficial to the competitive advantage and position of a given product or service in the market. Brand is defined as the translation or conversion of the strategy of a business into the experience and practice of the consumers which suggests the specific behavior of the consumer (Van Gelder 2003, p. 15). It can also be considered as the promise that the level of quality people expect from a brand will turn to loyalty of the customers. Thus, the process of applying different marketing strategies to a given product, product line or brand is called brand management. In addition it can help to increase the perceived value of the product to the customers, which result to the increase in the franchise and equity of the brand (XPFLOW Software, Inc. n.d.). Therefore, it can be said that strong brand has positive impact on the performance of the company as well as the different entities or stakeholders that are directly and indirectly connected to the company.             This paper will focus on examining the different benefits of the strong brands to the business and the consumers by using the case of McDonald’s. Furthermore, it will also tackle issues that are related on the different processes that are involved in establishing strong brand.   	 	 	 	Background of the Company McDonald’s is the leading food service organization in the world. It generates more than $40 billion in terms of Systemwide sales. It operates in 31,000 restaurants in more than 120 countries over six continents in the world. The company claims that they have the benefits that are from the scale and strong financial position; the most recognized and respected brands; unparalleled global infrastructure and competencies in terms of restaurant operations, real state, retailing, marketing as well as franchising; leader in areas of social responsibility; sharing knowledge and expertise in terms of food safety; and committed in protecting the environment for future generations (Funding Universe 2003). The restaurant chain of McDonald’s of today began its humble beginnings in San Bernardino, California as a renovated barbecue car-shop restaurant by the McDonald brothers Richard and Maurice (Briggs n.d.). The business was later on developed by Ray Albert Kroc by convincing the McDonald brothers to open more restaurants under his management, which later on lead to the opening of Des Plaines, Illinois restaurant, the current McDonald’s museum. (Parris Kraus 2006). During 1960s to 1970s, the company experienced a phenomenal growth due to the dependency of Americans towards fast services (The Wall Street Journal 2003). Due to the different strategic movement, particularly with the aspect of marketing and R&D, McDonald’s had been able to maintain its position as one of the most popular and loved brands in the world, as well as in each nation where it operates. The study of BrandZ and Newsweek positioned McDonald’s as the 8th most powerful brands in the world, with the total brand value of US$49,499 million, increased by 49%, compare with the last year (see Appendix A) (BrandZ 2008).   	 	 	Strong brand and brand owners Strong brands have become a vital part of the asset value of a company. In the case of McDonald’s, its brand is one of the primary reason why it had survived on the different challenges that were encountered by the company regarding the changing lifestyles and demands of the customers, together with the different problems that are related with the economic aspect.   	 	 	establish customer loyalty             Due to the popularity of the McDonald’s, it can be said that its brand name is synonyms to fast-food, burgers, fries etc. Because of that, the company had been able to established more than 31,000 restaurants around the world, and enables to serve more than 47 million customers around the world (McDonald’s 2009). The said number can be considered as loyal customers who came from different geographic, age and economic status that became used to McDonald’s and considered the company as part of their fast-food consumption. Due to that, it can be said that one of the most important asset of the company is its brand name and image. A product or retail establishment has many aspects which combine in order to form its total impression. There are many studies which show that consumers form impressions of brands, and that these impressions later exert a major influence on the choice of products or brands, and the said impressions serve as major factors which influence on the buying behaviors of the customers (Porter & Claycomb 1997).  Furthermore, when the brand equity is high, customers are often more willing and prepared to pay a price premium for the product and more likely to engage in favorable word-of-mouth communication about the firm and its brand (Beverland 2005)                 The effort of McDonald’s in maintaining their position as one of the strongest brands in the world is considered as intensive because just like other companies, the company believe that the brand is considered as a vital aspect of the company.   	 	 	Financial Aspect and Profitability For many financial analyst, a key consideration when looking at companies with strong brands is that they present less risk. Strong brands generally remain strong, and this assumes the likelihood of a solid income steam. The said strong income stream reflects the interaction of different factors. With a strong market share, usually comes connected with higher price points, coupled with lower price elasticity compare with the competitors. As a result, it will help the company to have a better margins and a higher return on investment. Aside from that, well-known brands are much more likely to enjoy good distribution, which helps maintain high market share. These factors will result to greater profitability (see Appendix B) (Elliot & Percy 2007). In the case of McDonald’s, the fast-food industry, where it belong is experiencing problems that are connected to health issues which resulted for the said industry to lose market share against the fast casual dining restaurants (Eligon 2008). However, even though the industry is facing problem, the company still maintain its position as the most favorite fast-food chain the world. As a matter of fact, beside of the said factor, together with the ongoing problems about financial crisis, the company had been able to report 6.9% increase in sales during April 2009, and 5.1% in May of the same year (McDonald’s 2009).   	 	 	Attract quality internal customers (Employees)             According to McDonald’s one of the most important factors behind the success of the brand is the people who are working together in order to offer high quality services and products towards the customers. Organizations that have a strong brand can use its brand in order to attract and retain employees (Elliot & Percy 2007). Increasingly companies are allocating more money on the employee or employer brand, because strong employer brand can help to attracts better applicants (Slaughter & Zickar 2004). In the end, according to Ritson (2002) strong employer brand image can help to reduce the cost of employee acquisition, improve the relations between employees and employer, at the same time extend the average length of the employee retention and allow the companies to attract high-caliber staff at lower salaries than the competitors with weaker employer brands (cited in Elliot & Percy 2007).   	 	 	strong brand and customer Although strong brand primarily and immensely beneficial towards the brand owner or company, it also play a vital aspect towards the customers. Brands play a vital role in the process of the decision-making of the customers (Bendixen 2004).  Different research in psychology has shown that the name recognition alone can result in more positive feelings toward nearly everything, whether it is music, people, words and even brands.             In one study, the sample population was asked to taste each of the three samples of peanut butter. One of these samples contained an unnamed superior (preferred in blind tests 70% of the time) peanut butter. Another contained an inferior  (not preferred in taste test) peanut butter labeled with a brand name known to the respondents but neither purchased nor used by them before. The result showed that 73% of the respondents selected the brand name (inferior) as being the best-tasting peanut butter. The said result shows that the power of brand-name recognition. Mere name recognition will make people feel an inferior peanut butter tastes butter than the actually better-tasting peanut butter (Yang 2005). According to Davis (2000), the said consumer psychological reaction to brand names is called PATH or the acronym for promise, acceptance, trust and hope. A strong brand makes the intangible feelings of promise, acceptance, trust and hope tangible (cited in Yang 2005).   	 	 	How 	Mcdonald’s established strong brand             According to Aaker (1996) developing the strength of a brand is not deemed to be easy (cited in Schroeder & Salzer-Morling 2006). Different branding literature suggests that more advertising does not always create a strong brand, especially those brands that are badly positioned or connected with the inferior products or services (Schroeder & Salzer-Morling 2006). According to Aaker & Biel (1993), in order to establish a strong brand, it is important to consider the different factors which influence brand strength: Longevity, product category, quality, media support, personality and imagery, continuity, renewal and efficiency.   	 	 	Long 	History 	and 	experience             McDonald’s is already serving its customers and been in the industry for 69 years. Thus, the longevity of the brand can be considered as one of the most important aspect which enables the company to build a strong brand. It can be observe that majority of the firms that were included in the top most powerful brand have been in their respective industry for 25 – 50 years and even longer. Just like financial equity, brand equity is built up over time. Thus, those brands that have maintained a consistent presence over the years are better able to utilize the familiarity and understanding a customer has with their products in order to establish a momentum and power (Aaker & Biel, 1993).             In addition, brand loyalty cannot be built in a short period of time. It is important to connect the idea that the behavior of the customers can be affected by different factors including social factors from family, friends and society. Because, McDonald’s had been there for a long time, it had created a strong relationship with the customers, particularly with the families and group of friends, which enables them to be familiar and loyal to the brand. In addition, the company also enables to gain the trust of the customers because despite of the different challenges and hindrances towards the operations of the company, it had maintained its best performance.             The company is also focusing on the corporate social responsibility (CSR). The strength of the brand is not because of the strength of creating a difference in the perceptions of the customers but because of the meaning that brand creates (Kay 2005). Thus, brands can be powerful symbolic products, having considerable social impact and provoking considerable loyalty (Muniz & O’Guinn 2001 cited in Kay 2005).   	 	 	Media 	Support and Advertisement             The company also focuses on implementing different media and advertising activities by creating different messages that will strengthen and support brand to be connected with the customers, particularly families and young adults. In addition, the company also focuses on integrating the corporate social responsibility in marketing in order to build bonds of trust with the customers and the community where in the company performs its business. In 2003, the I’m Lovin’ it is considered as one of the most important marketing move and campaign of the company in order to target the changing behavior of the customer (Thompson & Strickland 2005, p. C-299). Visibility plays a vital role in establishing a strong brand, because it enables the customers to have a recall. Aside from advertising, McDonald’s gains visibility by strongly branded location. Furthermore, in order to come up with the current technological dependency of people, McDonald’s is one of the companies which established their presence over the Internet, and later on enables their customers to order online. The website serve as a communicating channel for the customers and stakeholders and the company by presenting news and archives about the company, at the same time, serve as a marketing tool that is used in order to entice customers (McDonald’s Are “Lovin’ It” 2005). In connection, the company had been able to show a strong message continuity by the evolution of its advertising slogans from one campaign to another, where in each theme is executed towards a range of customer targets around a single core message, where in the said message does not change radically from year to year (Aaker & Biel, 1993).             In connection, the company had been able to categorize their customers based on their demands. For instance, McDonald’s had been able to include products in the menu for those premium and price sensitive customers. Furthermore, the company also focuses on focusing on the demands of children, tweens as well as adults.   	 	 	 	Differentiation and Innovation              McDonald’s also focuses on their products by becoming responsive on the changing tastes, demands and preferences of the customers by focusing on the growing interests of the public towards wholesome food choices and other premium products in different part of the globe (Thompson & Strickland 2005, p. C-228). One of the major problems which are being faced by the company is the changing preferences of the people towards healthy diet. Because of the advocacy of different organizations towards health problems, particularly obesity, McDonald’s and its competitors are facing veto vote from mothers, tweens as well as kid. Because of that, the company focuses on food and menu innovation. One of the results is the Chicken McNugget which is made from pressed chicken that is equivalent of hamburger or different miscellaneous parts that were combined and pressed into an easily workable whole. Aside from that, the company also introduced the premium chicken nugget made with breast meat only and offers salad and replaces the shaken salad which is composed of shredded iceberg lettuce with a mixed salad that contains sixteen different lettuces. Furthermore, varieties of fruit and yogurt parfaits, new soup selections, McGriddles and other crispy-spicy options were added in the menu (Silverstein & Butman 2006, p. 177).             The said movement is important because it enables the customers to feel that the company is considering their demands and references in the process of deciding about the products and services to be offered. Aside from that, it also enables the company to change its image into healthy one, which will help to capture the hearts of those figure and health conscious people in the different parts of the globe. Thus, it helps to create a new meaning that the company will show to the current and possible customers.   	 	 	 	Conclusions 	and recommendation             Strong brand plays a very crucial role in maintaining competitive advantage of any company. In the case of McDonald’s, its strong brand had been one of its important assets, which enables the company to have a strong position in the market. The success of the brand can be attributed to the different factors including the process of marketing, R&D or innovation and human resource.             McDonald’s had been able to focus on the different factors which are influencing the behavior of their customers, and uses those information in order to offer new or improve products and services which will ensure satisfaction and loyalty from the customers. At the same time, the company also focuses on the different marketing strategies which will improve their visibility, particularly the aspect of real state, which enables the company to locate their restaurants in feasible places and the advertising activities, including online.             In order for the company to maintain the said position, it will be important to maintain the current strategic practices including the process of introducing products that will meet the needs and demands of different market segments such as premium and cheap products, and those for adults, tweens and children.             Above all, it is crucial for the company to maintain its connection with the society by the fully integrating the aspect of CSR in their entire system. This can help to maintain the brand meaning and image of McDonald’s which is considered as one of the most important marketing strategies today.   	 	 	Bibliography Aaker, D & Biel, A 1993, Brand Equity & Advertising: Advertising’s Role in Building Strong Brands, Lawrence Erlbaum Associates Bendixen, M, Bukasa, K A & Abratt, R 2004, ‘Brand Equity in the Business-to-Business Market’, Industrial Market Management, vol. 33, no. 5, p. 371 – 380 Beverland, M B 2005, ‘Creating Value for Channel Partners: The Cervena Case’, Journal of Business & Industrial Marketing, vol. 3, pp. 127 – 135 BrandZ 2008, The 100 Most Powerful Brands08, Millward Brown Optimar, viewed 10 June 2009, <http://www.millwardbrown.com/Sites/optimor/Media/Pdfs/en/BrandZ/BrandZ-2008-Report.pdf> Briggs, M, The History of the McDonald’s Restaurant Chain, Helium, viewed 10 June 2009, < http://www.helium.com/items/867501-the-history-of-the-mcdonalds-restaurant-chain> Eligon, J 2008, Where to Eat? A New Restaurant Genre Offers Manhattan More Choices, viewed 10 June 2009, < http://www.nytimes.com/2008/01/13/nyregion/13casual.html?_r=2&scp=1&sq=fast%20casual&st=cse> Elliot, R & Percy, L 2007, Strategic Brand Management, Oxford University Press Funding Universe, 2004, International Directory of Company Histories, vol. 63, St James Press, viewed 10 June 2009, < http://www.fundinguniverse.com/company-histories/McDonalds-Corporation-Company-History.html> Kay, M 2005, ‘Strong Brands and Corporate Brands’, European Journal of Marketing, vol. 40, no. 7/8, pp. 742 – 760 McDonald’s 2009, McDonald’s is Firing On All Cylinders, viewed 10 June 2009, < http://www.aboutmcdonalds.com/mcd/investors.html> McDonald’s Are “Lovin’ It” 2005, Strategic Direction, vol. 21, no. 6, pp. 21 – 23 Parris Krauss, C 2006, The History of McDonald’s, Associated Content (September 22), viewed 10 June 2009, < http://www.associatedcontent.com/article/61904/the_history_of_mcdonalds.html?cat=22> Porter, S & Claycomb, C 1997, ‘The Influence of Board Recognition on Retail Store Image’, Journal of Product & Brand Management, vol. 6, no, 6, pp. 373 – 387 Schroeder, J & Salzer-Morling, M 2006, Brand Culture, Taylor & Francis Silverstein, M & Butman, J 2006, Treasure Hunt: Inside the Mind of the New Global Consumer, Portfolio Slaughter, J E,  Zickar, M J, Highhouse, S, Mohr, D C 2004, ‘Personality Trait Inferences About Organizations: Development of a Measure and Assessment of Construct Validity’, Journal of Applied Psychology, vol. 89, pp. 85 – 102 The Wall Street Journal 2003, What was News 2003, viewed 10 June 2009, < http://online.wsj.com/documents/info-yemr03-frameset.html> Van Gelder, S 2003, Global Brand Strategy: Unlocking Brand Potential Across Countries, Cultures & Market, Kogan Page XPFLOW Software, Brand Management, viewed 10 June 2009 < http://www.xpflow.com/pdf/Articles/Brand%20Management_XPFLOW.pdf> Yang, K 2005, Design for Six Sigma for Service, McGraw-Hill Professional   	 	 	Appendices 	 	 	Appendix A: Top 10 Most Powerful Brands   	 		 		 		 		Position 		 		 		 		Brand 		 		 		 		Brand Value (US$m) 		 		 		 		Brand Value Change 	 	 		 		 		1 		 		 		Google 		 		 		86,057 		 		 		30% 	 	 		 		 		2 		 		 		GE (General 		Electric) 		 		 		71,379 		 		 		15% 	 	 		 		 		3 		 		 		Microsoft 		 		 		70,887 		 		 		29% 	 	 		 		 		4 		 		 		Coca-Cola (1) 		 		 		58,208 		 		 		17% 	 	 		 		 		5 		 		 		China Mobile 		 		 		57,225 		 		 		39% 	 	 		 		 		6 		 		 		IBM 		 		 		55,335 		 		 		65% 	 	 		 		 		7 		 		 		Apple 		 		 		55,206 		 		 		123% 	 	 		 		 		8 		 		 		McDonald’s 		 		 		49,499 		 		 		49% 	 	 		 		 		9 		 		 		Nokia 		 		 		43,975 		 		 		39% 	 	 		 		 		10 		 		 		Malboro 		 		 		37,324 		 		 		-5% 	 Source: (BrandZ 2008)   	 	 	Appendix B: How Strong Brands General Greater Profitability Source: (Elliot & Percy 2007)

A Business Report on McDonald's Marketing Management

MCDONALD’S MARKETING MANAGEMENT by [your name] Presented to [your professor] [class/subject] ...