Comprehensive Analysis of McDonald's Business Strategy and Operations

This report provides a comprehensive analysis of McDonald's business strategy. It begins by examining the company's vision, mission, and objectives, highlighting its global presence and commitment to customer satisfaction. The report then delves into the corporate and business-level strategies, including the fast-food concept, standardization through franchising, and supply chain management. It explores McDonald's leadership style, organizational culture, and key features like people-centricity and individual learning. The analysis further discusses the company's generic strategy of cost leadership and its intensive growth strategies, such as market penetration, market development, and product development, including glocalization. The report concludes with recommendations for incorporating more innovative products to maintain a competitive edge in the dynamic hospitality industry. Overall, the report offers a detailed overview of McDonald's strategic approach to achieving its goals and maintaining its position as a global leader.

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Tourism and hospitality business strategy
[Type the document subtitle]
8/25/2019
Student name

Tourism and hospitality business strategy 1
Executive summary
The purpose of the report is to analyses business strategy, which reflects and depends on the
organizational culture, leadership, vision, mission and goals, which will also be analyzed in the
report critically. McDonald's was founded in 1940 based in America and is considered to be one
of the largest fast food chain serving globally. The vision of the company is to move company
with the velocity to become a better fast food outlet and drive the company towards a profitable
vision, McDonald is serving customers with more tasty and delicious food and beverages every
day across the globe. The core principles considering the business strategy include Franchising,
Fast food concept, and Supply chain management. Through the traits and management style, it
can be difficult that the leadership style applied by Steve is a transformational leadership style.
The key features of the organizational culture of McDonald's include Individual learning, people
centricity, organizational learning. However, one of the cons identified through the
organizational culture is that high quality and excellence its consideration that has not been
found integrated into the corporate culture of McDonald’s. It is recommended to the company to
include more innovative products in order to become one-step ahead of the competitor and gain
competitive advantage. The primary intensive strategy includes market penetration. Market
development strategy of the company, which is responsible for working towards the vision, that
is to expand the market across the globe. The product development strategy was one of the most
important strategies as the company tries to look out for new product development.

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Contents
Executive summary.........................................................................................................................1
Vision, mission, objectives..............................................................................................................3
Corporate level strategy...................................................................................................................4
Business level strategy.....................................................................................................................4
Leadership style...............................................................................................................................9
Devil is in the detail.....................................................................................................................9
Search for stability.....................................................................................................................10
Be nimble...................................................................................................................................10
Organizational culture...................................................................................................................11
People centricity....................................................................................................................12
Individual learning.................................................................................................................12
Organizational learning.........................................................................................................12
Critique......................................................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Vision, mission, objectives
McDonald's was founded in 1940 based in America and is considered to be one of the largest fast
food chain serving globally. The restaurant has a high global presence and the products offered
by the company include burgers as most popular food variety in most of the nation, puff, ice-
creams and similar product range (corporate.mcdonalds, 2019).
The vision of the company is to move company with the velocity to become a better fast food
outlet and drive the company towards a profitable vision, McDonald is serving customers with
more tasty and delicious food and beverages every day across the globe. The statement reflects
the growth plan of McDonald’s, which has made the company work to world global services.
The mission statement of the company is to make a place that is considered to be the favorite
place of the customers and change the way to drink and eat. Moreover, the mission includes the
global strategy of the company that is known as planned to win, which includes the worldwide
operations that are integrated with this strategy, which is being focused on exceptional customer
experience through place, products, people, promotion and price. The company has found itself
committed towards by repeatedly enhancing the customer experience and operations of
McDonald’s across the globe (corporate.mcdonalds, 2019).
The goals of the company include reputation management goal that includes reinforcement of
image of McDonald’s that will focus on words healthier alternatives and it can be done through
new communication focus. Relationship management goals include promoting new potential
customers with new initiatives. The task management goes off McDonald’s include increasing
public support for McDonald’s that’s cool also considered as the position that the company is
willing to be across the globe (forbes, 2019).
The objective is that the company has considered in order to accomplish these goals are
awareness objective, that will include creating an increasing the awareness of McDonald’s offers
among the public with the aim to position it towards healthier alternatives the target audience for
this will be families that consist of 15 years old or younger kids. Action objective includes
behavior action and opinion action, which includes changing the existing customer's behavior in
order to incline their purchasing pattern towards new options, attracting new customers. The key

Tourism and hospitality business strategy 4
objectives that will include the creation of easy transition when the company is trying to enhance
positive attitude considering the new alternatives that are healthier options for the customer
(Carton, 2014).
Corporate level strategy
The corporate level strategy is the beast for other strategies in the organization as this will
provide directions to the organization. McDonald’s has considered a focused strategy on
cornerstones of quality, restaurant operation, cleanliness, service and value for which the
company is positioning two words better not just bigger. This includes a strategy that is customer
centric. The strategy is inclusive approach to the future, including a new effective role for
company in more aligned policies, resources, and practices in a creative manner to realize that
vision (Baker & Bowen, 2015).
The policies of the company include the recognition of words its responsibility considering
future generation’s use of resources and environment that is to be preserved. The policy directs
the restaurant operations towards considering the prices of the restaurant that includes improving
energy efficiency, production of solid waste amount, minimizing the effect of noise, odorous,
emission and effluent to the atmosphere. It also includes maintaining restaurants across the litter
free environment by the conduct of schedule litter patrols. Moreover, it includes increasing the
recorded value of the waste prior to the disposal of that solid waste (Betton, 2017).
The corporate governance of McDonald’s is dealing with different ways through which the
company can get the return on their investment from operation management, which include
suppliers of finance to other corporate activities. It has been identified that the success of
McDonald’s was developed on the foundation of professional and personal integrity. Through
the corporate strategy, the belief of the board reflects that good governance is not destination it is
just a journey (Bruns, 2013).
Business level strategy
The business level strategy of McDonald’s was responsible for the implementation of the vision
of the company and was responsible for the success of the company where the core principles
considering the business strategy include

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1. Fast food concept
The speedy service system was a unique idea introduced in 1948 fast food is a concept that the
restaurant operation has implemented. It has included ready to eat food products, mass
production, and accommodation for a large number of customers, improve operational efficiency
and effectiveness, and increase sales volume and promotion of convenience by deducting time
for wait for food order. The fast food strategy the main centrally focused considering the daily
operations of the branch that were still based on speedy service system (Chari & Feng, 2018).
2. Standardization
Standardization is one of the central business-level strategies that have found to be the most
important success factor for McDonald’s journey. The key vision of the company included to
expanding the business across the globe, the business model that was part of the strategy of the
company was franchising the fast food stores across the globe (mcdonalds, 2019). The key
reason to opt for franchising as a mode of entry into other countries was a standard quality that is
maintaining the same quality as of initial store, increase in revenue from royalties, franchisee fee
and rent; however, this may limit the company to directly earn from the operators from the place.
However, it has helped the company to expand the business into developing and developed
nations like Germany (profolus, 2019). From figure below, the study has shown the
standardization strategy of the company for five nations.

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Figure 1: (Source: https://www.semanticscholar.org/paper/Product-standardization-and-adaptation-in-Marketing-
Membe-Loukakou/8b9916af0164521f8e4563fb15e50e3c7ba05faa )
3. Supply chain management.
One of the key operational activities in the business is supply chain management, which was
another important element of McDonald’s business strategy. The company was not only
responsible to sell fast food products but the strategy also included to reduce the cost of the
production in order to become a cost leadership company, which included uses of resources in
daily activities that include dining provision, kitchen equipment and raw material for physical
stores. In order to manage the supply chain and keep the quality of the food product at the
standard or benchmark, includes McDonald’s strict standards for its suppliers through
performance management in order to ensure high-quality around all the branches of the fast food
store across the world. The performance management strategy of the company was to make sure
that all the branches are able to serve the customer needs and requirements as per the
benchmarked quality. Moreover, considering the procurement of raw material the company
secured the farm owners' contract as well as different producers of food and be available across

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the globe to make the supply chain agile and reduce the negotiating power of suppliers (Davis et
al., 2016).
One of the major aspects of business level strategy is to decide the generic strategy of the
company. McDonald’s general strategy reflects that the company has used a competitive
advantage in order to develop the business. McDonald’s was world’s biggest fast food chain that
has used its intensive growth strategy in order to ensure business development and business
expansion. Previously it has been discussed the strategic objectives including the operational
activities, idea generation, supply chain management. The generic strategy and growth strategy
of the company has been changing with the diversity in environment in order to ensure that the
business is viable for long time. Considering the porter's generic strategy model, the primary
generic strategy of McDonald’s is cost leadership (corporate.mcdonalds, 2019). The company
implements the strategy in order to target broad market by keeping the cost at the minimum level
and offering the products to the customer at the lowest price possible. Other than the cost
leadership strategy, the company has also focused on product differentiation that is to make the
product unique and distinct from that of the competitor companies. However this has become
more important in today’s scenario as the competition in the hospitality industry has been
increased to large level, for example, other global brands like burger king, coffee chains, KFC
are some of the major competitors that have considered similar strategy and offering similar
products as they have been trying to imitate the strategy of McDonald’s. Therefore, it is
recommended to the company to include more innovative products in order to become one-step
ahead of the competitor and gain competitive advantage (panmore, 2019).
The intensive growth strategy that has been implemented by McDonald’s, which are found to be
the success factor for the company includes integration of three growth strategies that is market
development, market penetration and product development. The primary intensive strategy
includes market penetration. It has been identified that the taste and preference for the customers
in the market depend on the location at which they are residing, as within the global brand the
company needs to consider the needs and requirements of the customer in particular nation. The
major factors that were responsible for this include culture, religion, technological factors that
have affected the company’s globalized strategy (Jaworski, 2018). Therefore, through this
strategy the company opens new restaurants using joint ventures, franchising as the mode of

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entry into the international business, which reduces the threat of political factors affecting the
business.
Figure 2: (Source: https://www.semanticscholar.org/paper/Product-standardization-and-adaptation-in-Marketing-
Membe-Loukakou/8b9916af0164521f8e4563fb15e50e3c7ba05faa/figure/7)
From the above figure, the study reflected close analysis of the menu in various nations,
reflecting another strategy, the company has also considered the glocalization strategy that is to
include the local based on preference and change the menu for each nation while keeping the
quality standards and services as per the global strategy of the company. This has supported
McDonald’s by reducing the cost and empowering the enterprise to penetrate markets
(corporate.mcdonalds, 2019). Market development strategy of the company, which is responsible
for working towards the vision, that is to expand the market across the globe. The company looks
out for the opportunities where it has not been targeted yet, searching for the locations that will
be suitable for McDonald’s restaurant. For example, the company expanded into Asian countries
that are developing nations so as to introduce a culture and trend of fast food restaurants and
become the first-mover advantage in some of the nations. In addition, since cost leadership
strategy of the company was suitable to be targeted in developing nations, this strategy found out
to be the success factor for the company. The product development strategy was one of the most
important strategies as the company tries to look out for new product development like cost
leadership strategy of the company was suitable to be targeted in developing nations, this
strategy found out to be the success factor for the company. The product development strategy
was one of the most important strategies as the company tries to look out for new product

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development like McCafe products. This also included increasing the menu range as per the local
taste and preference that is to change the ingredients, food preparation method considering the
nation in which the company is performing (research-methodology, 2019).
Through the business level strategy analysis, the key recommendation for the company includes
integrating product differentiation strategy along with the cost leadership strategy in order to
increase the opportunities for the company (Doole & Lowe, 2008).
Leadership style
The man behind a strong quarter of McDonald’s is Steve Easterbrook who is CEO of
McDonald’s since 2015. It has been identified that the smart management style of this leader has
reflected through the success of McDonald’s. He was found to be one of the strong leaders and
has reflected an effective leadership in McDonald’s while facing the changing industry. Through
the traits and management style, it can be difficult that the leadership style applied by Steve is a
transformational leadership style. He was appointed as CEO in 2015. While working with the
company, in two years Steve has exhibited a strong management style, which helps the company
to compete in the industry as the competition increases in fast food industry within this time
(corporate.mcdonalds, 2019). The key traits of Steve analyzed through implement of
management style in a changing industry while reflecting effective leadership includes
Devil is in the detail
The deals introduced and implemented like build your own burger and one dollar soda deals. He
was found to be contributed to boosting the strong third-quarter of McDonald’s where customers
were attracted towards deals offered by the company. Moreover the signature crafted sandwich
was another attractive menu item introduced by Steve. Therefore it can be said that the
contribution of Steve while implementing these deals that we're attracting new customers while
not changing the nature of the company fundamentally. It was definitely responsible for premium
menu items and increased its offering however these were the details that led to point a change of
McDonald’s. This store sales growth identified for McDonald’s was 4.1% in us and 6% globally.
The detail oriented turnaround plan by Steve what is the solution to the broader customer
segment that dude customers to expect more from McDonald’s. Through this, McDonald’s is
now offering make your own option that has engaged customers and have them personalized

Tourism and hospitality business strategy 10
service and make their own best burger as per their liking, combination and preferences
(thestreet, 2019).
Search for stability
Another contribution by Steve included searching for stability. McDonald’s in third-quarter
refrain Chinese Hong Kong and Chinese businesses that led to reaching a goal that was 4000
restaurants were to re-franchise within one year. Through this strategy the company offers more
stability in income and revenue, over this the return on investment was increased. The cost of
operations at the stores was reduced and royalty payments and rent were more predictable. Steve
takes those moves considering shareholders in mind. Another key trait that has led to the
leadership style of McDonald’s effective was transparency and clear intentions by Steve. The
goals were clear in his mind and that includes searching for stability as well. Steve achieved the
stability, as this evidence suggests he was successful in achieving the stability, the reason being
he was known to the business out an inside while understanding the needs and wants of investors
(Anderson, 2010).
Be nimble
Steve was employed in McDonald’s from 1993; however, he took a break as he opted for being
CEO of pizza express in UK china and return to McDonald’s with a plan to implement agility
and speed of smaller enterprise that he has the lead. As he considers the responsibility, it was
known that the McDonald’s changing industry is not an easy task as it is enormous and large
enterprise than most of the competition in the market. Through this, Steve plan on implementing
improvements and turnaround ideas that will change the customer experience and he found me to
implement quickly even if the corporation size was too large. As per the evidence from reports,
one of the best ideas of Steve that has led to success factors for McDonald’s was all day
breakfast (Birasnav, 2014).
From the analysis of McDonald’s structured and culture, it has been identified that the autocratic
leadership would be the most suitable leadership in McDonald’s restaurant, the reason being the
team managers or team leaders are liable to make unilateral decisions. However, this may exert a
lot of pressure on members of the team. It was identified that the crewmembers did not complain
and enjoy the work environment in which they were working even after ordered or directed by
the team leaders. Therefore, it can be said that the performance motivation at McDonald’s was

Tourism and hospitality business strategy 11
not because of the leadership style adopted, however this maybe because of the team member's
willingness to perform as individuals. It was identified that the span of control of each manager
at McDonald’s was small which reflects that the number of the subordinate under one leader was
around five. This may reflect certain advantages like tight control over subordinates and easy to
supervise daily operations, better coordination among the team members, reduced delegation and
ability for the leaders to do more work in team. However, the flat organization is suitable to have
wide span of control. It was identified that the McDonald’s corps organizational structure was
centralized; however, it may be different for the retail outlets (Bottani & Galli, 2017).
Organizational culture
The organizational culture of McDonald’s has identified to support the industry that is to position
the company as per its goals. McDonald’s is one of the biggest players in fast food market with a
global presence. The company is using its culture in order to attract qualified employees and new
customers. The gist of the organizational culture will reflect habits, traditions, and values that are
influencing the behavior of workers in the organization. In order to make sure that the company’s
production efficiency and service are high the company is increasing learning organizational
culture for its employees and all the stakeholders. The way through which the company is
repeatedly evolving reflects the efficiency of the firm in applying the corporate structure and
corporate culture in order to attain the desired result levels considering the capabilities of the
human resource of McDonald's have in order to gain competitive advantage in industry.
Therefore, the efficiency of the firm in applying the corporate structure and corporate culture in
order to attain the desired result levels considering the capabilities of the human resource of
McDonald’s in order to gain competitive advantage in industry. Therefore, the evidence reflects
that organizational culture of McDonald’s is one of the success factors in the international
business of McDonald’s. This supports organizational culture of McDonald’s including in
maximization of operational efficiency and productivity (Petersen, 2015). The enhancement of
service quality is also one of the impacts of corporate culture of McDonald’s. The key features of
organizational culture of McDonald's include