Managing Innovation in Business (Pass Criteria) - Desklib

This project summarises innovative practices which are undertaken by McDonald's for adding value to their products. It also enlightens varied aspects that are addressed by organisations for building their innovative capabilities. In addition, it delves into innovative practices performed by several organisations while operating in fast food restaurant industry.

Innovation in Business
(Pass Criteria)

EXECUTIVE SUMMARY
This project summarises innovative practices which are undertaken by McDonald's for adding
value to their products. This project report illustrates an understanding of creative and innovative
ideas that are taken by managers of McDonald's for attracting their customers on a globalised
level. It also enlightens varied aspects that are addressed by organisations for building their
innovative capabilities. This report also delves into innovative practices performed by several
organisations while operating in fast food restaurant industry.

Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION ..........................................................................................................................5
TASK 1............................................................................................................................................5
Analysing the future of industry in 2022 and beyond..................................................................5
TASK 2............................................................................................................................................5
Evaluation of requirement of innovation practices in organisations in 2022 and beyond ..........5
TASK 3............................................................................................................................................5
Ascertainment of future innovation capabilities for the organisation .........................................5
CONCLUSION ...............................................................................................................................6
REFRENCES ..................................................................................................................................6

INTRODUCTION
Entrepreneurial innovation can be understood as versatile procedure which is undertaken
by businesses who are willing to bring innovative practices as well as disruptive technologies to
marketplace (Bacinello, Tontini and Alberton, 2020). Innovation is considered as an aspect
which essentially enhances creativity as well as design thinking process of a specified brand.
Innovative practices are beneficial for organisations as it aid them in increasing their productivity
as well as profitability which further helps them in securing competitive edge. It also help them
in adding values to their processes in order to provide effective experience to their customers. In
order to better understand about innovation practices in business, McDonald's is taken into
consideration. McDonald's is an American based fast food corporation which operates its
business activities on a global level. It is considered as world's largest restaurant chain which was
established in 1980 and has its headquarters at Illinois, United States.
This project report depicts and analyse on how establishments plan, prepare and develop
their innovative practices. This report also critically discuss the capabilities of an organisation to
bring innovation practices. It also delves into an understanding regarding future of fast food
restaurant industry in coming years due to constant innovative changes.
TASK 1
Analysing the future of industry in 2022 and beyond
McDonald is becoming one of the largest food chain in terms of its revenue and stores.
People's attitude has started to change towards fast food restaurant industry as they are inclining
towards more health conscious food items. Even then, McDonald did not saw any drastic
decrease in its sales and continued to grow. Post pandemic consumer demands for convenience
and smooth digital experiences are on growth. Future preferences from fast food restaurant
industry are three things which are convenience, safety and digital. These accelerators positively
impacts each other and points towards a making fundamentally alterations in organisations
models (Nielsen, 2018). Enhancing economic situations and dismissal of restrictions are
supporting spending and demand of customers. The fast food restaurant industry is predicted to
perform good over next five years which are the reason of robust demand for delivery and

takeaways for fast food, this trend has been accelerated at time of pandemic. The comfort of
ordering from smart phones is likely to assist growth of industry. Moreover, the enlargement of
online sites for ordering and mobile application has facilitate customers to more compelling
compare menus of restaurants, allowing operators to compete effectively on costs (Industry
Research Report, 2021). The on going of this trend is expected to weigh on profit for McDonald.
The development of delivery options for fast food restaurants industry is pacing at fast
speed and will continue to drive in future too. Many restaurant and fast food joints are enrolling
for providing in-house delivery service option and some had also opted for third party delivery
services. McDonald's have existed for decades without giving delivery options but now
collaborating with third party services to allow consumers the option of delivery. Another growth
can be the accelerated use of artificial intelligence across the industry. As artificial intelligence is
congenital, it allows consumers to place order and get recommendations by a system which is
programmed in a way that facilitate personalised options (Sanasi and Et.Al., 2020). McDonald's
is started to giving people more choices with their orders using AI and personalisations as their
major strategies. UK was one of the first nation to launch and roll out self order kiosks which
turns out to be most popular way of ordering. This represents that more integration and time in
fast food restaurant industry will see more kiosks overtaking in person ordering.
Major technologies advancement have allowed McDonald to prioritize value,
convenience and efficiency to provide quick services. This helps in maximising efficiency and
alleviating more affirmative customer experiences and also helps in cutting costs. Acquiring self
ordering model by fast food restaurant industry has anticipated great rise in future as it allows
consumers to add item as per their choice. Within UK, increasing digital adoption at high pace
will drive growth of fast food restaurant industry. Thus will positively impact the sector in
several ways and provide business manager with numbers of strategic decisions (Breuer and
Lüdeke-Freund, 2017).
Innovations that are likely to take place in McDonald in 2022 and beyond are more adoption of
artificial intelligence and robots. In 2022, robots are the answer. The firm has came to know
about that hiring employees is difficult especially when they are asking for more salary than
what the bosses are making. McDonald will invest in robots to eliminate humans and strives to
save time with help of IT equipment, washing machines and dishwasher.

TASK 2
Evaluation of requirement of innovation practices in organisations in 2022 and beyond
McDonald's is considered as an innovative business house and has introduced several
innovative practices throughout their course of operations. In order to better understand about
requirements regarding innovative practices, managers of McDonald's have adopted pentathlon
framework model. This framework segregated innovative practices adopted by an organisation
into outputs such as business models, processes and methods (Clauss, 2017). It identifies
significant elements in order to obtain optimum performance. It is imperative for managers to

understand the concept of this framework which led them to develop innovations in highly
uncertain business environment. Various elements of pentathlon framework in relevance with
McDonald's are as follows:
Illustration 1: Pentathlon framework
Source: An analysis of innovation frameworks with a focus on Pentathlon Framework. 2021
Ideas can be considered as a thought which came in mind of individuals in order to turn
them into reality (de Vasconcelos Gomes and Et. Al., 2018). It is considered as a initial phase of
any innovative practice. Managers of McDonald's are keenly accelerating their transformational
journey in North India with adaption of tech-based innovations. This will help them to enhance
their customer engagement and retention. In order to perform better and maintain their
organisation at competitive edge have chosen to work on the principle of 3 D's which are digital,
drive thru and delivery. They have also developed self-service kiosks for enhancing their
technological sectors.
They are doing more modifications in their delivery services by improvising their mobile
application, self-order kiosks and personalisation technology. Managers of McDonald's are
planning to make investment in their drive-thru technology like dynamic menu boards and make
overall operational improvements. They are also planning for developing a program called
'Accelerating the Arches' whereby they will try to enhance customer experiences by integrating
digital ordering for fulling their diverse needs (Expósito and Sanchis-Llopis, 2019). They are

trying to integrate their core menu with personalised marketing through effective digital channels
in order to create strong relationships.
Strategy and prioritization is a next phase in innovation journey whereby organisational
managers assess varied ideas which are developed at the first stage (Foss and Saebi, 2018). It is
the stage where managers of McDonald's have to determine in which idea they need to invest
how much resources and determine their priorities. Due to global pandemic, business operations
of McDonald's have been suffered in a significant manner all over the globe. As it has impacted
adversely on spending patterns of people all around the world. They also get aware of their
hygiene and safety protocols which led them to move towards digital practices. It is imperative
for managers of McDonald's to invest their resources in adapting digital technology and make it
more effective.
They should implement self-service kiosks and made their mobile applications more
effective which led them to engage massive number of customers. Prioritization of activities are
also important for organisations as wrong choices can led to wastage of resources, time and cost
(Gupta, Mejia and Kajikawa, 2019). Managers of McDonald's have to set priorities for bringing
their innovative practices on the basis of market dynamics and their capabilities.
Implementation can be understood as a phase whereby real decisions are taken and
though or ideas are transformed into reality (Haaker and Et. Al., 2021). In order to adopt or
improvise new innovative practices, organisations has to bring changes in their cultural values.
In relevance with McDonald's, managers have implemented the changes in enhancing their
digital technology. For bringing changes, managers of McDonald's have evolved their team
members in understanding workplace dynamics. They have make it possible through listening to
their customers, business associates and team members.
They believe that their customers are using digital technology on a regular basis for
performing varied transactions (Möller and Halinen, 2017). They can also use this for making
their business practices more efficient. For implementing their ideas in a effective manner,
managers of McDonald's worked closely with IT teams and perform extensive research about
customer experience. This practices led them to invest in varied innovative exercises such as
digital menu boards, relevant product recommendations on mobile applications and empower
their customers by confirming their orders and make their experiences personalised.

TASK 3
Ascertainment of future innovation capabilities for the organisation
Innovation capabilities can be described as capabilities of an organisation whereby
managers identify new ideas and turn them into new or improvised products and processes which
benefits them in adding value to customer experience (Rangus and Slavec, 2017).These
innovative capabilities help businesses to develop their business operations. It is imperative for
establishments to bring innovative practices with through a shared vision and committed
leadership. It is considered as essential for managing varied ideas and innovative practices for
effective implementation of disruptive innovations. Management and leadership styles have a
significant impact on innovative practices of McDonald's. This business is hit hard due to global
pandemic and has suffered a lot. After the onboarding of new CEO, Chris Kempczinski,
company is again restarted their growth and development avenues. He has adopted democratic
leadership whereby he has focused on being a good listener for understanding feelings of their
employees and how they can get supported by organisation. Even in global pandemic
McDonald's supported their employees in financial and emotional aspects. For their drive-thru
process they have chosen 95% of their restaurants in USA and 65% on a global level. This
practice has made their processes faster as well as accessible in order to provide better
experiences to their customers.
Top management of McDonald's have planned to launch their loyalty program which is
known as My McDonald's Rewards in their US market and other countries shortly. During this
pandemic, they have learnt their simplified procedures like drive-thru and core menu are
effective ones for making their customer experience better (Santos and Et. Al., 2018).
In order to make their organisation adaptable to adopt varied changes, top officials of
McDonald's have chosen their own platform titled My McDonald's in order to get access of
information regarding their choices and preferences of their customers. It is desirable for
managers of McDonald's to market their innovative practices through the use of social media
sites extensively.
As it is important to inform their customers about innovative or improvised products or
processes in order to optimize their capabilities. For better understanding of innovation
capabilities of an organisation, it is imperative to gain insights regarding attractiveness as well as

competitiveness of industry (Van Looy, 2017). In order to gain understanding of attractiveness of
industry as well as scope of innovation capabilities, Porter five forces is taken into consideration.
Porter five forces is model which essentially provides information in relation to
competitiveness in industry which assist organisations in developing their corporate strategy
(Shakeel and Et. Al., 2020). Elements of Porter five forces in relation to McDonald's are
mentioned below:
Competitive rivalry- This element can be understood as number of competitors present in
a marketplace and how much they are capable in raising competition (Turulja and Bajgoric,
2018). It has been assessed that large number of competitors offering same commodities can be a
threat for companies and also lowers its power in marketplace.
At contradictory to this, organisation has high power in determining the prices of
commodities if there is no or little competition. In relevance with fast food restaurant industry,
competition is high and saturated. McDonald's faces a high competitive rivalry as there are vast
number of brands with similar goods. In order to curb their competitive rivalry, managers of
McDonald's have to capable for developing innovative practices.
Threat of new entrants- This element is concerned with entry of new market players in
industry as well as their capabilities to present competition to well-established companies
(Visser, 2017). In relevance with fast food restaurant industry, threat of new entrants is high due
to requirement of low capital and no obstructions to enter in industry. Managers of McDonald's
have to face high threat of new entrants as they can easily enter into market. However, it is not
easy for them to build their brand name as McDonald's and attract their customers as they are
loyal to them.
This threat of entrance of new market players is considered as considerable but it is not a
significant strategic issue (Briganti and Samson, 2019). In order to build their image for a longer
period of time, it is imperative for them to bring innovations on a constant basis.
Bargaining power of suppliers- This element of Porter five forces is concerned with
power upheld by service providers and how frequently they can drive cost of inputs (Zhu and Et.
Al., 2019). Power of suppliers is high if they are present in fewer number whereas their power is
decreased if they are large in number. It can be influenced with several factors such as number of
providers, rarity in their products and incurred switching cost of an organisation. Bargaining
power of suppliers is low as there are massive number of suppliers in fast food restaurant

industry. However, McDonald's has little effect of this force as their suppliers are fix from which
they had collaborated from very long. These suppliers provides them quality raw materials all
over the globe which enhances their competitive advantage as well as innovation capabilities.
Bargaining power of buyers- This can be understood as ability of buyers to drive prices
of a certain commodity. This element is largely based on economic principle of demand and
supply. It has been analysed that tremendous consumer base led companies to make
improvisation in their deals and increase profitability.
At the contradictory to this, having low customer base led organisations to change their
prices as well as increase their profit margins. In relation to fast food restaurant industry,
bargaining power of buyers are high and they can switch the brand in an easy and quick manner.
Managers of McDonald's face high bargaining power of buyers as consumers can easily switch
to other restaurants for changing their regular taste. It is imperative for managers of McDonald's
to achieve to bring constant innovations in their taste of their products in order to retain
customers for a long period of time (Amit and Zott, 2020).
Threat of substitutes- It is concerned with similar products or services present in a
market other than specified company (Zott and Amit, 2017). This can poses as a threat for
organisations as this practice can attract company's customers towards their commodities. It has
been analysed that if close substitutes of a product is present in market, customers can move
towards them which led to weakening of own position. In accordance with fast food restaurant
industry, organisations faces high threat of substitute goods as competitive rivalry is high as well
as there is low switching cost. McDonald's also face high threat of substitute commodities as
their offered products can be procured through other bakeries and restaurants. However, viability
and image of their brand name has led to significant impact on people's mind for purchasing their
products. These force led managers of McDonald's to bring innovations in their processes in
order to be more viable in eyes and mindset of public.
McDonald's have enough potential as well as capabilities to bring innovative practices in
their operations. In order to develop their innovative capabilities, they have to take care of their
culture and change management. It is imperative for them to enhance their change management
system in order to make their employees ready to embrace changes in an effective manner.
It is imperative for organisations to use cross functional collaboration for transferring knowledge
about innovative practices. Cross functional collaborations can be used in McDonald's as it can

improve their ability to solve varied issues and also aid in bringing innovation in business. It
provides them insights regarding working with differential teams in an organisation for securing
competitive edge. Bringing people across differential functions led to bring more opinions and
suggestions thus leading to more innovative practices. It is important to adopt diversity for
managing role of every person in a strategic manner.
Innovation road map in regards with Gantt Chart as follows:

CONCLUSION
From the above stated information, it has been concluded that innovation refers to bring
new ideas and turning them into viable products or services. Innovative practices are considered
as significant for organisations as it aid them to develop value for their products in order to
provide excellent experiences to their customers. It is imperative for organisations to develop
their innovative capabilities which led them to gain competitive advantage. Porter five forces can
be understood as a framework which is used by organisations for gaining insights into industry
competitiveness as well as attractiveness which further aid them to formulate corporate
strategies. Innovation capabilities is organisation's ability to determine new ideas and change
them into enhanced items, services which will provide advantages to firm. Evaluating
technological advancement, studying market trends and assessing changing preferences of
customers towards industry allows firms to assess the future aspect of their industry. Having a
perspective of future growth allows businesses to opt for advance technologies and measures
which are gaining popularity over time. It is essential for business managers to implement
constant creative measures to effectively deal with rivals strategies. It is expected from firms to
create practices which are innovative and creative in impelling manner which can further aid
them to gain competitive advantage in dynamic business environment. Innovations in business
operations will assist companies to decrease their cost which they can utilise to diversify
business practices. It is also crucial for enterprises to comprehend utilisation of digital
transformation to make companies operations and activities more efficient. These helps
businesses to improve their productivity level and maximise performances in market.
Innovations are important aspect of dynamic business world which needs to be implemented by
organisations on regular basis for proposing their brand as viable.
REFERENCES
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Online:
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