How can McDonald’s Improve its Business: A Business Research Report

This report examines the challenges faced by McDonald's while operating in the global business environment and provides suggestions and ideas to improve its business operations. The report includes a literature review, analysis of market segmentation strategy, implementation of crowdsourcing, quality management policies, and external environmental factors affecting the company's business. However, further research is needed to fill the knowledge gap and provide a comprehensive understanding of McDonald's business.

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business research report
How can McDonald’s Improve its Business

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Table of Contents
Introduction................................................................................................................................2
Project objective.........................................................................................................................2
Project scope..............................................................................................................................3
Literature review........................................................................................................................3
Knowledge gap...........................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................11

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Introduction
Taking businesses to global and successful platform, buying and selling of products and
services involves various activities in international marketplace that poses many challenges.
Through years, it has been witnessed that many multinational companies make hefty errors
while attempting to perform business operations in global environment (Meyer, 2009). The
errors can be explained by identifying the deficiency in understanding the concept of
standardisation and adaptation in international market as well as issues in business standards
while operating in foreign countries (Ritson, 2011). Similarly, McDonalds, a chain of fast
food restaurant company has envisaged many challenges including adaptation to local
environment, which is also an ongoing barrier for the company and might continue to grow
while opening more restaurants worldwide. Among many, the biggest challenge faced by
McDonalds was in 2001 when the company hit the lowest point, specifying the new trend of
healthy eating among people. Although this affect was majorly seen in its home country i.e.
USA, this trend continues to evolve in other nations also (Chib, 2012).
Project objective
This research report has been prepared after examining issues and challenges faced by
McDonalds while operating in global business environment. This report will make
suggestions and guide the company to improve its business by undertaking effective and
efficient business strategies as mentioned in literature. This forms the objective behind
preparing this report in which research as well as present literature will find out ways through
which McDonald’s business can get improved in fast food industry.

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Project scope
In regards to objectives behind preparing this report, the scope of this research report also
constitutes in finding out ways through which business in McDonalds can get improved. This
report will present ideas and suggestions after analysing present literature regarding how
companies can get improved through application of improved business strategies and
policies.
Literature review
McDonald’s Corporation is one of the leading brands dealing in chain of restaurants and fast
food business serving more than 47 million customers every day through more than 33,000
restaurants spread in 119 countries globally. The company sells food products like fast food,
soft drinks, salads, ice-creams, and ready to eat products. McDonalds restaurants are
managed and operated on franchise systems or by the corporations itself. The revenues
gained from corporations comes from rent, fees collected from franchise owners and
royalties. The company itself runs many self-operated restaurants. McDonalds restaurant
business was formed in the year 1940 by Dick and Mac McDonald brothers in California.
They were successful to introduce the “Speed-Service System” concept in 1948 by
establishing principles of contemporary fast food restaurant. The present business dates its
founding by opening of a restaurant by Ray Kroc in 1955 at Illinois (Gadsden, 2014). Kroc
later purchased McDonald’s brothers’ equities and led the company expand worldwide until
it became public listed in stock market in 1965. With expansion, McDonalds became symbol
of globalisation and spreading American food and lifestyle. However, the prominence of the
company also falls under debates and questions regarding obesity, consumer responsibility
and corporate ethics. Nevertheless, with the vision to become leading and best fast food

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provider internationally as well as locally, McDonalds has been able manage its business
operations in providing delicious food that meet consumers expectations (Mujtaba, 2007).
How market segmentation strategy of McDonald’s proved adverse for its business?
Like every multinational company, McDonalds also have to face many challenges and issues.
McDonalds primary challenge lies in its menu where Greenburg even tried to minimise this
problem by introducing whole new menu in US and UK kitchens to make food fierier and
fresher. Nevertheless, the response made by customer for these initiations did not get
improved and additionally the store sales reduced due to customers drift away from the stores
of the company. McDonalds introduced segmentation of market to mange its diversified
customers needs through identification of homogeneous market segment. According to
Martin (2011), “The rationale behind marketing segmentation is to allow businesses to focus
on their consumers’ behaviours and purchasing patterns”. Market segmentation, if done
appropriately, allows companies to understand and improve consumers by tailoring market
demands in proper manner. However, in McDonald’s case, the company failed to attempt this
strategy effectively due to which the decline in its growth became attributable in shifting
public opinion against eating fast food. Another reason for the decline in company’s product
sales can be related to the reasons behind improper store management regarding store
cleanliness, food quality and enhanced. It can be said that due to these reasons also
McDonalds competitors like Subway and Dominoes were able to gain competitive edge and
rule fast food industry over McDonalds (Mujtaba, 2007). As mentioned earlier in this report
regarding the year 2001 case, McDonalds was recorded poorest performing enterprise dealing
in fast food business were approximately 11% of its customers reported company products
dissatisfying due to slow service, rude employees and dirty stores. This may be due to the
CEO of the company did not considered Franchise rulebook and gave more power to its
franchise owners for adopting their local menus (Kim, 2015).

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According to Gichuru & Limiri (2017), there are many ways through which
marketplace can be effectively segmented. Organisations need to utilise correct strategy that
proves best for its service or products and best strategies often arises after using diversified
strategies. This study was further supported by Dolnicar, et al. (2005) where the authors state
that the perception of cultural difference present in global business environment can be the
key for multinational organisations success. As a result, organisations can shape their
business needs and operations according to the buying habits and market demands. After
analysing McDonalds case, hiring and developing quality staff can be suggested who can
prioritise customer value along with bringing harmony within organisation (Gadsden, 2014).
Companies who does not determine and misses fundamental changes requires fresh and
talented workforce to listen and maintain customers loyally ( Gichuru & Limiri, 2017).
McDonalds must also work on gathering strategic information’s regarding its customers
while keep on discovering their everchanging demands, thus creating loyalty and satisfied
service programs. Along with it, adding value added service can also attract those customers
even who are less loyal or restrains themselves from eating fast food. For McDonald’s,
customer loyalty can prove a powerful tool that can be enhanced through making appropriate
market segmentation strategy that can be followed by the company to build customer
relationship. According to Meyer (2009), for fostering customer loyalty, organisation’s
leaders should comprehend that satisfying customers only will not differentiate company
from other competitors. Therefore, leaders or managers of McDonalds shall commit to
deliver quality food along with enhanced customer services that exceeds expectations along
with inspiring them to remain engage with its restaurants.
How can crowdsourcing prove beneficial to McDonald’s?
Another issue that needs to be tackled by McDonalds is regarding its menu especially in US
market. As mentioned before, the company has faced severe drops many times due to failure

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in maintaining appropriate menu according to customers demands. This might be due to the
reason that McDonalds must have failed in doing appropriate market research before entering
new and fresh markets (Tanahashi, 2008). For this, the company needs to make a thorough
research of customers they are going to serve along with understanding what are the reasons
why old customers remains no longer interested in McDonald’s food and beverage. This issue
can be undertaken by doing market survey, interviewing its loyal customers and focussing
groups who are displeased with McDonalds products or service. In fact, McDonalds can use
customer-oriented strategies to deepen customers involvement and expand its business
simultaneously. Crowdsourcing is a technique that can possibly engage customers in effective
manner that can even boost businesses (Li, 2016). Whitla (2009) defines crowdsourcing as
“‘the act of a company or institution taking a function once performed by employees and
outsourcing it to an undefined (and generally large) network of people in the form of an open
call”. Crowdsourcing helps in gathering and collecting online communities through
solicitation of ideas and solutions. It has the potentiality in unlocking capabilities of mases.
McDonalds can benefit from such tactics since it will be able to generate new and enhanced
products ideas while creating emotional and directive connections with customers as well as
franchise partners. It can even regulate its business operations by gaining market success
rapidly and economically through verification of market trend, priorities and opportunities.
According to Li (2016), when customers gets involved in business processes, it can lead to
supplementary favourable response. Therefore, once products are developed due to
crowdsourcing, McDonalds can examine them in few of its outlets and develop the same in
others afterwards, if the results are positive. This can undoubtably prove advantageous for
McDonalds in improving its business standards along with developing research tools that are
required to be present in contemporary organisations. In addition to it, as customers will
participate in crowdsourcing activities of McDonalds, it can help the company target desired

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customers which has also been one of the biggest challenges for the company presently
(Whitla, 2009).
What trends and quality management can be implemented internally in McDonalds company
to improve its business?
Another issue recognised in McDonalds is its strategic management policies and procedures
that hampers its business operations. The company needs to develop set of new guidelines
that can be implemented in the organisation internally. Cleanliness, quality and service are
the few factors that had made McDonalds fall under suspicion of unhealthy management
within organisation (Loukakou, 2012). The unhappiness among customers as well as
franchise partners is an important aspect that needs to be studied as well as improved. Indeed,
according to Harris & Chernatony (2001), customers perceptions and expectations are crucial
that means if bad perception remains a general trend, then the customers will start shopping
somewhere else. The author further adds that in an era where corporate branding is moving
ahead of line branding, there is a great necessity to appreciate management approach that can
enhance corporate branding. This requires managing contrarily from line branding, focussing
more upon organisational environment (Groenendijk, 2003). Even the trend and composition
of brand management are changing that requires coordination of business activities
( Carpenter, et al., 2012). One of the consequences realised here is that business marketing
not only necessitates planning perspectives addressing external opportunities along with core
competencies, but considers integration of internal organisational activities also to ensure
consistency in work delivery ( Harris & Chernatony, 2001). In McDonald’s case, the
company must be firmer towards its franchise partner stores regarding services, cleanliness
and food quality. McDonalds can even introduce guidelines and new regulations along with
making regular inspections to monitor its franchise stores. In fact, these must be based on
surprise visits so that correct information regarding everyday activity can be collected. If

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franchise partners do not comply with company rules, a penalty or even shutting it down must
be applied that can help McDonalds gain reputation in the market (Vitasek, 2014). This will
also bring notion among public that McDonalds under no circumstances will allow bad
quality products as it cares for its customers health and priorities.
How does external environment affect McDonalds business?
One of the key issues identified in fast food business is increased competition and
McDonalds also faces the same. Burger King is presently the second largest hamburger fast
food company globally and also the strongest competitor of McDonalds. Wendy, third largest
fasts food chain also gives tough competition to McDonalds along with Hardee’s and Jack in
Box. These quick service sandwich companies have been constant pressure for McDonald’s
among many other industry forces (Tanahashi, 2008). For example, Wendy implemented 99
cent value meals to gain customers looking for value priced quality meals. Again, Burger
King took a self-protective approach by instituting value-added meals in all its stores that
helped the company in retaining its loyal customers. Addition to it, the intense competition
from rivalry companies in similar industry has become key issue due to entrance of variety of
substitutes that are readily available to consumers (Han, 2008). Customers tend to look
forward any new product launched both in terms of value as well as quality (Soliman, 2011).
Growing concern regarding health consciousness have also impacted sales in McDonalds as
majority of consumers have started viewing fast food as unhealthy and fat content food.
Although McDonalds changed its strategies many times by introducing healthier meals, its
new menu also failed to please its existing customers who expected better from the company
(Rathi, 2013). Since McDonalds is already into fast food business with a share of 33% as
compared to other two leading companies, McDonalds can remain ahead of the business by
implementing technology and innovative improvements in its business operations.
Additionally, the company can introduce better or even fresh food to satisfy its customer

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needs who are more health conscious and against fast food consumption (Brusseau, 2012). To
improve standardisation and product quality, McDonalds must revamp its training process for
new as well as old employees by introducing training programs along with adaptation of
healthy work environment (Team, 2017).
Knowledge gap
The above report has been prepared after identifying major issues in McDonald’s business
and identifying current business trends present in literature. Although this report has
presented various ideas and suggestions that can minimise issues within the company,
making further analysis of company like internal and external analysis along with other
strategies used by the company, can help in formulating business strategies that can improve
McDonald’s business more effectively. Along with it, the gap identified can also be seen in
areas like identification of outsourcing strategies of McDonalds as the company faces lot of
issues in its franchise stores.
Conclusion
The above report has been prepared after identifying major issues in McDonald’s business
policies that needs to be improved so that the company remains sustainable in future years.
The expansion strategy made by the company without making enhanced market research and
improper planning of market segmentation has reduced its sales significantly in-home
country as well as in international market. Concerning its menu, McDonalds have tried
making lot of changes but have remained unsuccessful. It can be noted here there that
McDonalds must pay more attention to market research, as mentioned earlier along with
following crowdsourcing techniques. This will help the company in understanding market

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trend and opportunities that can lead to more favourable customer response. In regards to
competition faced by McDonald’s, the company can develop new set of guidelines that can
control cleanliness, quality and service in McDonald’s franchises to remain ahead of the
game. In conclusion it can be said that McDonalds faces many business-related issues that
have impacted the company sales in past few years severely. The strategies and improved
business policies have been mentioned in the above report after identifying and evaluating
present literature related to contemporary business management. The ideas and suggestions
discussed in the report can not only improve McDonald’s business, but also help the
company remain ahead of its competitors along with forming a strong base for future growth
in sustainable manner.
References

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