McDonald's: Managing Innovation in the Fast Food Business Sector

This report provides an executive summary and in-depth analysis of McDonald's innovation strategies in the fast-food industry. It explores the importance of innovation for business growth, focusing on McDonald's as a case study. The report examines the company's product-specific innovations, customer satisfaction initiatives, and adaptation to changing consumer preferences. It outlines McDonald's future plans, including health-conscious food options, digital transactions, and online servicing. The report also details the company's innovation capabilities, strategic roadmap, and the importance of corporate leadership in driving innovation. It highlights the industry's future trends, market analysis, and the role of technology in enhancing the customer experience. Overall, the report assesses the challenges and opportunities for McDonald's to maintain customer interest, enhance profitability, and ensure long-term sustainability through effective innovation management.

MANAGING INNOVATION
IN BUSINESS

EXECUTIVE SUMMARY
Innovation is an essential element for continuous development and growth of business,
organisation and innovation. Management and operation of innovation in business context stands
for effective formation and execution of goods and services form manufactures to end customers.
The concept of managing innovation is illustrated in McDonald's perspective to explore its fast
food industry in more comprehensive way across the world and is one of the fastest growing fast
food chain in the world. McDonald is mostly known for its innovative ideas for specific product
and services. Product specific innovations and development experimentation establish a separate
existence of organisation in market.
This is expected that organisation is seeking for mass expansion till 2020 in fast food
industries with latest technology, inventions and innovative ideas. Form past years, organisation
is mainly focused upon analysing positive attitude and response for products and services.
Innovations and developments were centralised around customer satisfaction and loyalty. With
the dramatic change in preferences of customers related to fast foods and street foods created
challenging in front of managers. Subject to considering this major challenge, the management
of innovation created in this report. For sustainable growth and development of McDonald's
management, committee adopted the environment and health friendly innovation aspect to attain
more customer interest and enhance profitability of organisation.
The report explores about understanding of management and assessment of innovation
subject to organisational growth and development. Apart form it, McDonald's key objectives is
to sustain customer interest and the product developments that are also illustrated in this context.
Innovation subject to retain the future sustainability is considered in this report. Planning,
staffing and collaboration subject to implement innovation plans are summarised with effective
leadership. With cross functional co-operation, evaluation of capabilities and blockages is also
done in this context.
The innovations methods essential to build up the capacity of organisation to enhance the
profitability and sustainability explained through this report. Management committee is
centralised around assessing the risk and maximising the profitability with retaining the customer
loyalty and support. Internal structure of McDonald's reading delving the services and products
to end customers are also considered in this report. The overall structure is formed to analyse
future innovation requirement by considering the interest of customer and clients. Under this

assignment, Various type of methods to attract consumers with organisation also considered in
strategic planning process. Future profitability and cost comprising are the main elements
included in innovation plans and strategies.
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION ..........................................................................................................................1
Future of Industry in 2020 and beyond..................................................................................1
Future of McDonald in 2020 and beyond...............................................................................3
Building the Future Innovation Capabilities for McDonald...................................................4
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
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INTRODUCTION
Innovation can be defined as process of a introducing something new which satisfies
demand and desires of people. Organizations use this concept for improving efficiency of
business operations and offer more innovative products at marketplace. It will help in attracting
more customers and enhancing sales volume. This would also aid them to gain high position at
marketplace and win competency as well. Therefore, being innovative is foremost approach of
every business which engage them in developing a better relationship with customers.
The present report entails the process by which a company can manage innovation
process in business (Biemans, 2018). McDonald is taken in this project which deals in fast food
sector. It serve products like burger, French fries, beverages and more in worldwide. This
company aims to bring innovation in business for modernizing customer experience. An
innovation road map is outlined in report which entails stages of creating innovation in business.
It includes future of industry in food sector and requirements of innovation in organization by
2020. Moreover, this road map also highlight how to build the future innovation capabilities for
McDonald and other companies in same sector.
Future of Industry in 2020 and beyond
In UK and other countries, it has seen that nine out of 10 manufactures are expected to
get high revenues and increase at least 5% growth in business every year. For this purpose, they
are making more investment in latest technology, equipment and system. In context with food
industries as food is considered as integral part of life so it indicates a high scope for their
business in future. From the last century, it has evaluated that food culture spreads over entire
globe. Therefore, as much as other products, food items has shaped the global economy and
provide employment to 12 million people. So, with rapid expansion in business of these
industries, it has evaluated that they will provide more jobs to people which helps in reducing
unemployment related issue (Brown, 2013). Along with this, government of UK also support
these industries for opening business in food market so that financial condition of nation can be
improved.
Overall, global food industries is found in better shape as compared to last past
performances. Today, people are more attracted to those fast food products which maintain
nutrition level and will not affect their health. As in fast developing world, people gets less time
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to prepare own food that shows dependency of them towards such industries which satisfy
consumer demand. Shifting culture of people from rural to urban life will increase high demand
for food products which are ready for them to eat (Christensen and et. al., 2016). As running with
competition will shows their dependency on fast food. Today, more than 60% of population are
highly dependent on food industries for satisfying their needs.
Illustration 1: Sales Performance of Food Industries
(Source: Sales Performance of Food Industries, 2018)
Illustrated figures present that growth of business in food industry sector is rapidly
increasing. In 2020 and beyond, companies under this sector will generate high revenues. As due
to busy life of people, they used to prefer packed food rather than to cook at home. So, it will
give advantage to organisations dealing in food sector to serve them products as per their
preferences. Moreover, this graph also depicts that from current net income level of UK£5.19B
which will increase to UK£56.58B in upcoming years (What Are Analysts Saying About
McDonald’s Corporation’s (NYSE:MCD) Future?, 2018).
Therefore, it can be said that there is much scope for industries in conducting business
operations in food sector. For this purpose, organizations are required to concern on quality of
food products. People in developed countries, demand high quality of products which are safe
and healthy for them. But preservation of processes and raw foods is much critical for any firm
(Clegg, Kornberger and Pitsis, 2015). It is most difficult task for keeping global food supply in
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safe manner to customers. Therefore, companies are required to adopt such technologies by
which quality and richness of food items can be maintained. It includes Ultraviolet irradiation
(UV-C), active packaging and volatile, active packaging and more. These kind of technologies
also aid food industries to keep eatables fresh and healthy for long hours. This would help in
enhancing profitability of business and achieve high growth in upcoming years.
Future of McDonald in 2020 and beyond
In this computerised world, each and every organisation wants to implement advance
technology that assist to create innovation that is not only an organisation but also in overall
industry. However, McDonald believes in grabbing each or every opportunity which is existing
at marketplace and their Vision 2020 is “A Golden Arch to Happiness, Choice is yours”. It
means, they are offering products as per their preferences in order to maximize their market
shared by 2% in every coming year. McDonald is a well known organisation in fast food
industry which implement changes at a effective level. In the year of 2020 and beyond, the firm
will be considering quality of changes on the basis of future requirement as -
 Health friendly food - In this new era, customers pay their maximum attention towards
the healthy and fat free food items. Therefore, McDonald needs to implement healthy
ingredients in their fast foods. It is expecting from McDonald to set up its menu with the
implementation of more healthy stuffing in the next few years. The major considerable
items in this category can be summarised as olive oil, low cholesterol oil, sugar free
products as well as organic ingredients that assist to create customer's faith toward the
organisation easily.
 Digital transactions – From the last few years, customers and business organisations are
fully aware about benefits of digital tools due to which they are preferring modern
transactions process while exchanging goods or services. In this advanced world, these
kind of techniques assist to save time by transmitting services digitally. Digital
transaction has been already implemented in McDonald services but there are lots of
customers who are still more likely in money transactions (McDonald, Clair and
McPherson, 2018). Hence, in the next few years, McDonald is planning to implement
these services for everyone so that they can use safe transaction as well as keeps aware
customers about its uses too.
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 Online servicing – In this digitalized world, several organisations provides their services
through online mode. McDonald is also one of them who is delivering their products to
customer's through online methods but in a few countries. Therefore, it is the strategy of
McDonald to carrying out their business through online tools and techniques. Till the
years of 2020, McDonald will continue to expand its mobile order and pay platform
services for each and every customer. The staff of McDonald is focused on customer's
order, how they want servicing, how they wants to pay and what are they looking for as
well. These can be the future planning of the management of McDonald.
 Variety – McDonald has paid their maximum attention toward the diversification
strategy that assist them to announce new and creative ideas in market (Scherer, Palazzo
and Seidl, 2013). Main reason behind the implementation of diversification is to compete
in the growing competition in fast food industry switching to more health friendly
products. For this, management is analysing the present markets and introducing
diversified services and products in present and further years (Singh, 2013).
All these are McDonald's 2020 strategy that helps them to create a unique and individual
image in target market. Through this, firm can stand with major competition by setting out a
clear benchmark for others in fast food industry.
Building the Future Innovation Capabilities for McDonald
Innovation is a procedure of converting invention and idea into products and services
which develop value for which the consumers pay. Through using innovation, company can
develop some thing new, unique and more creative than existing within market (Cucciniello and
Nasi, 2014). Innovation is viewed as application of better solution which can meet with new
needs, exiting market and unarticulated requirements. Innovation is helpful in making services
and products more attractive as comparison to other companies.
McDonald restaurant deals in a fast food restaurant and it offers fast food items of
different categories to people. It is behemoth fast food sector but the reputation of this company
has endured bettering in last decade. It has established over 37,000 locations over 60 million of
consumer traffic daily and also sell more than 75 hamburgers in every second (Guenette, 2013).
An innovation strategy key core of each company and it focuses on making future better. For
innovation evaluation and proper success, roadmap is an effective tool that McDonald can
employ in regard of building future innovations and capabilities of organizations. This can be
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termed as visual presentation of strategic aim. Its main purpose is to create an effective approach
that wins support of managers, staff members and executives within firm which are having
difficulties in many business units. McDonald business firm makes innovation in its food items
by making them attractive and tastier (Dover and Lawrence, 2012). This organization makes
changes in its menu on continuous basis so that consumers will be attracted towards it and also
will be loyal. The roadmap helps in develop corporate innovations and some steps in innovation
roadmap mention below:
Build corporate leadership principles which are already in place- Each company have
set of guiding principles in place and they also should be incorporated in innovation roadmap
because it can not separate leadership as well as innovation efforts.
For an example- Leader of McDonald can motivate its team members to think new ideas
and make innovation in its existing menu.
Helpful in creating key objectives for efforts- By considering the leadership principles,
business organization should determine the key objectives such as bring innovative services and
products, transform business, became more competitive, develop modern HR function and many
others.
Determine necessary key areas which are effective- There are several key areas for team
to work on them and also requirement to get an effective overview (Drucker, 2014). The
necessary innovation areas are firm, infrastructure, services or products etc.
For an example- For innovation, McDonald can identify new areas such as menu,
technology etc.
Develop pool of the resources in order to get job done- Firms make mistake by creating
pool of the projects. Under this, it is necessary to determine, develop and train the people in short
and long term perspective.
Develop capabilities- In this, there is requirement of developing capabilities of
innovation among employees so that they can contribute in developing products, process and
services more unique as comparison to other firms.
With the help of innovation, company can do its innovation in systematic manner. Under
this, innovation roadmap is structured on the basis of given elements:
Trends- It is general direction under which something is changing or developing. At
marketplace, changes keep taking place in any products and services on continuous basis as per
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demands and needs of consumers. So, focus of every business firm to adopt the current market
trends to attract consumers.
Example- The taste and preferences of consumers are changing with in short period of
time so before producing new food items an make changes in menu, firm should know about
their wants and preferences.
Markets- It is a place where consumers and sellers meet. It is collecting of people for
sales and buy of provisions, commodities etc. At marketplace, there are many organization which
mainly focus on satisfying demands or needs of consumers by making their products attractive.
With the help of innovation, firm is able to attract consumers and enhance productivity.
Technologies- It refers to devices and machineries which develop from the scientific
knowledge. Technology helps in conduct business in easier manner and communicate with large
number of consumers (Du, Leten and Vanhaverbeke, 2014). Through using technology, firm can
make improvement in quality of its services and products.
For an example- McDonald can use the digital payment method by ordering its food
items through mobile application.
In fast food sector, McDonald is a marketing leader that has strong market position. The
main attractive parts of this industry are quick services and better quality. Employees and
managers of this fast food restaurant come up with innovative ideas so that they can make some
changes in its menu items. For future development and to remain in market as market leader,
McDonald's has to come up with creative ideas and innovative plans which are unique from
other organisation that can enable better productivity in marketplace. Here are discussed some of
core areas where organisation is planning improvements in innovation roadmap:
1) Menu
It efforts toward the design of new menus to satisfy changing demands and needs of
consumers of McDonald's. In this modern era, people are more health conscious. Generally the
food food items are not good and healthy for health of people, so it will take initiative to give
healthy menu options by add some nutrition. It is aiming to include enhanced personalization and
remove the unhealthy choices. In future, McDonald has planned to launch class Big burgers in
three different size adding some new food items in its domestic stores on continuous basis. It will
also launch the upscale burgers, Signature Sandwiches" and chicken sandwiches. The main focus
of McDonald company is to serve Sprite Tropic Berry drink in different nations. This firm will
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make changes in its pricing strategy on continuous basis and it will provide the healthy margins
to consumers.
2) Self- service ordering and table services
This fast food restaurant is committed to became progressive and modern burger firm and
also will be adding the self- service ordering and table services at stores. Then staff members
will spend their more time in restaurant by directly delivering food to table and also providing
the traditional dining hospitality. Average spend in visit of per consumer at McDonald’s
restaurant will enhance estimate from$ 3.35 in 2016 to $ 3.42.
3) Online ordering
McDonald provide its food items online through other mobile application. It does not
have its own mobile application. So, through using own mobile services, this firm will able to
take order online and for this consumers will pay with credit, debit cards and cash ( Epstein,
2018). In coming year, McDonald will launch digital ordering platform and will upgrade its
restaurant with “experience of the future”. McDonald restaurant will assure that it prepare to
serve large volume of orders with the help of using digital platforms without any hurdles.
4) Technology
Technology will help company in better future implementation in which training of
employees will also key area. This company use the automation technology but in future it will
adopt the artificial intelligence to help in performing business activities better and enhance
productivity of company (Hisrich and Kearney, 2013). McDonald's has started to apply these
technological advancement from 2018 and also can make improvement comparable sales
through nearly 100 basis points. In two years, McDonald will connect dots among the online and
offline behaviour of consumers. McDonald will committed $2.4bn to this mission with target of
the remodelling of 100 stores per-quarter. Average annual consumers has declined from 730,000
to 609,000 among 2012 and 2017. If the technology initiatives will permit it to enhance over
forecast period and then it will reach around 650,000 in 2023 year. Technology will help this fast
food restaurant to serve fresh food items, provide training to employees, connecting with large
number of people and many others.
5) Marketing techniques
McDonald's announces that it will partner with the suppliers and franchisees to minimize
emissions of greenhouse gas concerned to McDonald's restaurants by 36% through 2030.
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‘Signature Collection’ will be tailored in almost 28 restaurants in East of England and London by
McDonald's. This will be a method of branding the organisation through delivering premium
products to certain consumers. For enhancing the sales, it is necessary for McDonald to use the
innovative marketing techniques. McDonald restaurant is aiming to innovative marketing by
using the sales promotion technique. It conducts its promotional activities on large scale and for
any changes, it aware consumers about the existing or new food items (Kouvelis and Lus, 2013).
In this present time period, large number of population are connected with social media so it is
easy for company to promote its products on that. In order to increase its promotion, McDonald
will promote its food items by organising a social media campaign for promotion and branding
such as Instagram, famous channels, Facebook instantly. It is an easiest way to connect with
large number of people. In future, this fast food restaurant will do advertisement of its products
and services by celebrities from this people will more attracted towards it. It is an effective way
of gain attention of consumers towards company and it will enhance its sales in a significant
manner (Kristensen, McDonald and Sutton, 2013).
These all are the future innovation of McDonald which help in making building the future
innovation capabilities for McDonald fast food restaurant.
CONCLUSION
From this report it has concluded that today innovation become fundamental for every
company in order to win competency. This process helps organization in adding more features in
products and make them more beneficial. Therefore, to introduce innovation, enterprise adopt
latest technologies and equipments. Continuous innovation in services assist an organisation in
carrying out products satiating to consumer needs and demands. For this, this is requisite for
companies to formulate strategies and policies that thrive and properly maintain such
innovational activities. These strategies is considered as the basis of success of every business. In
this regard, an innovation road map has given in present report which entails stages to manage
innovation in business. As per depending on purpose, road map of innovation include trends,
markets, measurement of marketing techniques and more. Thus, concerning on these phases, a
company can not only bring innovation in business but also can manage the same as well.
Under this, mentioned report studied about the future innovations which McDonald will
do in future such as change in menu, technology, marketing techniques and many others.
Moreover, requirement of innovation in business also discussed by which a firm can attain its
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future growth. It includes introduction of high technology in business so that quality of products
can be maintained. Along with this, the major purpose of making present report is to build the
future innovation capabilities for organisation to help them in running business smoothly and
gain opportunity to expand operational activities in future. Therefore, it is necessary for every
firm to create innovation in products so that customers can satisfy their needs in better manner.
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REFERENCES
Books & Journals
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Christensen, C.M. And et. al., 2016. Disruptive innovation: intellectual history and future paths.
Harvard Business School.
Clegg, S.R., Kornberger, M. and Pitsis, T., 2015. Managing and organizations: An introduction
to theory and practice. Sage.
Cucciniello, M. and Nasi, G., 2014. Evaluation of the impacts of innovation in the health care
sector: A comparative analysis. Public Management Review. 16(1). pp.90-116.
Dover, G. and Lawrence, T.B., 2012. The role of power in nonprofit innovation. Nonprofit and
Voluntary Sector Quarterly. 41(6). pp.991-1013.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Du, J., Leten, B. and Vanhaverbeke, W., 2014. Managing open innovation projects with science-
based and market-based partners. Research Policy. 43(5). pp.828-840.
Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Hisrich, R.D. and Kearney, C., 2013. Managing innovation and entrepreneurship. Sage
Publications.
Kouvelis, P. and Lus, B., 2013. Managing Innovation processes and new product development
projects: operations and marketing research perspectives. In Innovation and Growth:
What Do We Know? (pp. 57-86).
Kristensen, S.R., McDonald, R. and Sutton, M., 2013. Should pay-for-performance schemes be
locally designed? Evidence from the commissioning for quality and innovation
(CQUIN) framework. Journal of health services research & policy. 18(2_suppl). pp.38-
49.
Lawrence, T.B., Dover, G. and Gallagher, B., 2014. Managing social innovation. The oxford
handbook of innovation management. pp.316-334.
McDonald, S.M., Claire, R.C. and McPherson, A.H., 2018. Should Attitudinal Views toward
Innovation Development Play a Role in Policy in Peripheral EU Regions?: New
Evidence from Vouchers Program in Northern Ireland. Journal of Innovation
Management. 6(2). pp.121-137.
Scherer, A.G., Palazzo, G. and Seidl, D., 2013. Managing legitimacy in complex and
heterogeneous environments: Sustainable development in a globalized world. Journal of
Management Studies. 50(2). pp.259-284.
Singh, A., 2013. Managing emotion in design innovation. Crc Press.
Online
What Are Analysts Saying About McDonald’s Corporation’s (NYSE:MCD) Future?. 2018.
[Online] Available Through <https://simplywall.st/stocks/us/consumer-services/nyse-
mcd/mcdonalds/news/what-are-analysts-saying-about-mcdonalds-corporations-
nysemcd-future/>.
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Guenette, 2013. Five things you didn't know about McDonald's. [Online]. Available through:
<https://www.usatoday.com/story/money/markets/2013/11/19/five-things-about-
mcdonalds/3643557/>.
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