Strategy managment Essay

Published: 2020-04-22 15:24:05
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Category: Strategy

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The McDonalds Corporation is the largest hamburger fast food chain in the world. It serves around 68 million customers daily in 119 countries. The companys headquarters is in USA. The company has expanded its business across the globe through franchisee and affiliations and company owned outlets. McDonalds revenue is not just from sales of the fast food but also royalties and rents i. e the company has many sources of other incomes as well.

The company very well understands the changing customers need and accordingly alters its menu. To enter the Indian market McDonalds completely changed its menu to suit the Indian taste buds and has been very successful. The company follows a low cost leadership strategy and thus is able to deliver a low cost happy meal. The company provides good quality fast food at very low prices that competitors find it very difficult to match.

The company is able to deliver its products at low prices because firstly they have vertical integration for few of its raw materials plus they buy other ingredients in bulk which lets them take the advantage of economies of scale , secondly they employee people with just basic educational qualification as mostly everything is machine operated the art of cooking is not needed. Thus the employees cost is also low. McDonalds also has its own institute called the Hamburger institute where it trains employees.

Since the employees are trained especially for the company operations they become more efficient and the advantage of learning curve also comes into the picture. The company also follows an ethnocentric mentality where it sources all its raw material from the country where its outlet is operating which also reduces the cost. The company is able to achieve these low cost by having an appropriate control system. This control system has to be followed by all the outlets. The company follows a control measure called strategic thrusts.

Here they calculate all the costs and compare it with the projected costs and find reasons for the increased cost. Constant check on the cost is very important for the company otherwise the company will not be able to deliver the low cost meals. Maintaining a low cost is not just a onetime affair it needs to be evaluated and controlled on timely basis. The company also follows a control measure called the special alert control for example in India few years back the onion prices suddenly become very high.

Onion being an important ingredient for McDonalds posed a problem for the company. This is when the special alert control came into picture and a timely identification of the cause and a team to work on it enabled McDonalds to deliver its low cost meals. Another strategy that company has used to grow is though franchising. The company is spread all over the globe and thus needs a sound control system to deliver the same product at low prices all over.

Thus for this the company follows bureaucratic control (top to bottom method of control) as the major method to have an effective and efficient management. In this method the management controls the employees by punishments or rewards. In the company the employees at the lower level just make the food and deliver it to the customers. All the major decisions like what kind of new product should come out is done by the top management. The lower level employees just have to follow instructions.

This tells us that the company has a bureaucratic control. This model is used across all the outlets and thus helps to maintain uniformity. It is Challenge for the company to control the thousands of franchises in the system. Rules approach and cultural approach are used by the management to ensure that the international outlets make maximum profits and it works in favor of the entire corporate plan. The rule approach is evident from the requirements stated for obtaining a franchisee.

The management follows a strategic surveillance approach where it asks for continuous report and paperwork submission. The companies operation and training manual is considered as a Bible which has exact instructions as to how each activity is to be carried out. Strengths of the Control systems adopted by the Company: 1. Having provisions for strategic trust helps to reach to the changing external and internal environment immediately. 2. Bureaucratic control increases the possibility of tracking accountability and indirectly affects

the performance of the employees 3. Having standard control systems enables the company to deliver the same level of service across the globe. 4. Strategic surveillance helps the company to keep a close watch on all the outlets and make sure that no outlet is tarnishing the image of the company. Weakness of the control system adopted by the Company: 1. Bureaucratic control can be demoralizing as the lower level employees have no say in the company. Thus employee satisfaction may go down and this can affect the performance of the company. 2.

The franchisee does not have much control over the operations of the outlet. He has to mechanically follow the guidelines of the company authorities. In cases where customization is needed he cannot cater t 3. Strategic surveillance from the point of few of the franchisee is not much beneficially because monthly reporting also adds up to his work. The independence of working is also lost. Conclusion: McDonalds has been very successful in implementing its strategy. The success of its strategy is also because of its sound control mechanisms.

It is because of the smooth control mechanism that they are able to replicate it all over the world and deliver the low cost good quality happy meal Citations 1. Implementing a Successful Business Strategy for McDonalds. Implementing a Successful Business Strategy for McDonalds. N. p. , n. d. Web. 18 Aug. 2014. 2. Functional Tactics & Implementation. OnStrategy. N. p. , n. d. Web. 18 Aug. 2014. http://onstrategyhq. com/resources/functional-tactics-implementation/ 3. McDonalds Control System. King of Fast Food. N. p. , n. d. Web. 18 Aug. 2014.

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