Report Example on McDonald's Discourse and Quick-service Restaurant Industry

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Carnegie Mellon University
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Question 1: McDonald's deliberate and emergent discourse

Since its inception in 1940, Mcdonald's has encountered various market and industrial dynamics that have helped shape the company to the corporation it is today (Charities 2013). Started by the McDonald brothers in 1940 the company had become a global power by 2012 with a presence in one hundred and twenty countries and territories around the world, thirty-six thousand eight hundred and ninety-nine restaurants and over sixty-eight million customers every day. Its operations, tax compliance, environmental obligations, profit rates and many other operational issues had remained on a steady rise since it started operating up to the year 2012 when the company began experiencing a significant reduction in its performance. Before then, it had been placed as the number one performing stock in the Dow Thirty with a total shareholder return of more than thirty-four percent (Charities 2013). The troubles in the company started becoming clear in 2012 when it dropped to thirtieth in the Dow thirty with a significantly reduced total shareholder return of up to negative ten point seven five. The companys sales growth dropped by one point eight percent while its annual system-wide sales growth barely reached the companys minimum target of three percent. The company also experienced issues with its operating income growth which was at one percent compared to its goal of six to seven percent. The tragedies continued to arise in McDonalds with the company experiencing a drop of fifteen percent in its net income for the year 2014 (Charities 2013). The companys shares had dropped by fifty percent in early 2015 compared to the overall global market. By this time, the company had gained a global age which many economists referred to as McDonaldinization where its presence was felt at a global level. Its influence on society was felt all around the world because of its presence in over one hundred countries. Despite the gradual global growth that was experienced by the company before 2012, the effect that was being experienced by the main branch trickled to its overseas subsidiaries. The global subsidies would generate up to seventy percent of the revenues the company recorded but the weak global economy experienced from 2012 especially the significantly reduced effect of the dollar meant that the trademark products in its overseas branches were at an all-time high. The company was at an increased risk of losing many customers not only due to the increasing prices but also due to the scandal of selling expired meat which was attached to McDonalds Chinese meat suppliers. Political issues in various European countries did not spare the company (Charities 2013). The United States had presented a sanction to Russia for its invasion of Ukraine, and as a retaliatory procedure Russia shut down several McDonald outlets because of failed inspection. Internal managerial changes did not do any justice for the company including the appointment of various management individuals like Deborah Wahl who took the chief marketing officer position. Customers continued to face a form of confusion due to the complex menu items, the companys labor policies which seemed exploitative, the increased length of time it took to get served and the developed distrust in the quality of ingredients used by the company. Therefore, the steady rise of McDonalds faced a sudden downfall which the company required significant evaluation in its business strategy to overcome (Charities 2013).

Question 2: McDonald's strategic discourse

As it started in 1940, the restaurants strategic discourse mainly focused on the provision of various food products. In applying the Bowmans Strategy Clock, the company was at the hybrid position where the products were similar to those provided by competitors. The similarities existed in both the variety of products which included drinks, fries, and burgers (Rothaermel & Arthaud-Day 2015). These products were also availed in the market by the McDonald competitors. These were the initial development levels of the company, and the McDonald brothers would manage to keep the products at what the competitors had in the market. Therefore, the aim of the brothers at this point was an emphasis on quality and streamlining their operations. Quality and streamlining worked well for the company as its popularity grew and the brothers managed to expand to nearby towns. Through the years its strategy was based on vast expansion as the owner Ray Kroc aimed at expanding the companys presence as far as it could reach. By the 1970s the company had managed to open up to seven hundred outlets across the United States. The focus had now shifted from only expanding the number of restaurants to increasing the products offered by the company (Rothaermel & Arthaud-Day 2015). Some of these products included the Egg McMuffin and the Big Mac. Kroc builds his company along four major principles which included value, cleanliness, quality, and service. The companys high volume of business demanded the incorporation other suppliers who Kroc sort for and recruited as long as they would adhere to his high standards. The company progressed to international presence through opening their first branches in Canada and Puerto Rico. These outlets were later on followed by other international McDonald restaurants which continued to develop up to this day. The company is now present in North America, Europe, the Middle East, Africa and the Pacific (Rothaermel & Arthaud-Day 2015). It is evident that the aim was to have a global influence and it is present in all continents of the world. The company started with burgers, fries, and burgers with a variety like the Big Mac and the Egg McMuffin. It eventually introduced other products including various types of soft drinks, breakfast items, desserts, chicken, French fries and chicken sandwiches. It has introduced various types of services including take-out, eat-in and drive-throughs (Rothaermel & Arthaud-Day 2015). The United States menu is now streamlined to include up to two hundred items. It also offers healthier options like salads and removed artificial preservatives from its chicken McNuggets. Competition has been tough for the company since its inception including restaurants like Burger King and Wendys in the 1980s, but the company has managed to keep its edge over the several competitors through international expansion and the continued innovations in its products. McDonalds Ansoff Matrix indicates its market penetration through the various existing products like the desserts, fruits, wraps, milkshakes, hamburgers, chicken products, soft drinks, breakfast items, French fries, and cheeseburgers (Rothaermel & Arthaud-Day 2015). Its product development leans on the continued innovation in all products and the introduction of new brands. Its market development is visible through the various new markets like Yemen, Venezuela, and Uruguay. Diversification is evident through the companys acquisition of other restaurant chains like the Chipotle Mexican Grill and Pret A Manger. The company continually applies the Ansoff matrix to improve existing products and create new ones, and to grow its presence in new and existing markets (Rothaermel & Arthaud-Day 2015).

Question3: Attractiveness of the quick-service restaurant industry in the United States and globally

The forecast for the quick service restaurant industry is a growth of up to twenty-two percent by the end of 2017 which is equivalent to a value of two hundred and twenty-four billion dollars. Economically the quick-service restaurant industry continues to provide more employment opportunities for civilians in the United States and across the globe (Rothaermel & Arthaud-Day 2015). It is evident through the unemployment rates which decreased by more than half from the recession period at ten percent to five-point-one percent in 2015. The expansion Of McDonalds and other quick-service restaurants to date means that its employment potential has improved from what it was in 2015. However, there exists good and bad news for the quick-service restaurant industry where the age and economic disparities in customers determine its attractiveness (Rothaermel & Arthaud-Day 2015). One is that many people are currently employed and therefore have the ability to eat out. However, customers with high amounts of disposable income are likely to opt for higher priced and higher quality food products. The attractiveness of the industry continues to improve especially in the United States with Americans spending more on dining out than on the purchase of groceries (Rothaermel & Arthaud-Day 2015). However, a further look at the statistics reveals that older consumers especially those between fifty-one and sixty-nine years will opt for buying groceries than they do on dining in restaurants. The millennials who make up a majority of the world population will prefer dining out than the traditional high-end form of dining. Nearly all the quick-service restaurants around the world depend on hamburgers as their main product and in many instances beef will make up the highest proportion of what is served in these restaurants. Beef remains as the highest proportion of meat consumed in the US at fifty-eight percent. It raises a health concern because many of the obesity cases are because of a high consumption of meat. McDonald's has been sued on many occasions for making its customers fat, but these lawsuits are never successful. However, obesity brings about a cost of two trillion dollars across the globe which is equal to the gross domestic product of Russia (Rothaermel & Arthaud-Day 2015). Up to two point one billion which is an equivalent of a third of the global population have obesity. It is, therefore, evident that the condition is the leading human-caused economic burden across the world. The US spends up to six hundred and sixty-three billion dollars annually health care expenses related to obesity. Many of the quick-service restaurants sell products full of antibiotics which may lead to the development of antibiotic-resistant bacteria as the body gets used to many of the antibiotics through food intake and thus fail to work when necessary (Rothaermel & Arthaud-Day 2015). Therefore, the attractiveness of the quick-service restaurant industry has both the positive and negative aspects which work for or against the industry.

Question 4: The resources and capabilities of McDonalds

The companys success is built around its various resources and capabilities. The resources include the physical resources which include the various outlets, the daily service capacity and the variety of products. The company is present in one hundred and twenty countries across the world with approximately thirty-six thousand outlets within the countries. Its service capacity is up to sixty-eight million customers daily at the global level. It has numerous items on its menu with the United States menu comprising of up to two hundred food items (Rothaermel & Arthaud-Day 2015). They include salads, soft drinks, cheeseburgers, hamburgers, French fries, a variety of chicken products, wraps, desserts, fruits, smoothies and much more. The human resource also makes up another important aspect of the company. It is made up of several managerial positions with a board of directors made up thirteen individuals. The current CEO Steve Easterbrook took control on the first of March in 2015 after Don Thompson stepped down on the 28th 0f January the same year (Rothaermel & Arthaud-Day 2015). The company offers employment to numerous members of staff who serve in its various outlets in the united states and acro...

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