The Impact of Innovation on McDonald's Profitability: A Study

This research proposal investigates the impact of innovation on McDonald's profitability. It begins with an introduction highlighting the increasing competition in the fast-food industry and the importance of innovation for gaining a competitive advantage. The problem statement focuses on the need to analyze how innovation in McDonald's products affects its profit volume. The research aims to study this impact, analyze McDonald's product menu, and evaluate the effects of new product additions. The proposal outlines the justification for the research, emphasizing the benefits of innovation for McDonald's, such as improved customer satisfaction and competitive advantage. It also discusses the potential outputs, including the benefits and risks of innovation. The conceptual framework covers the definition and types of innovation, including evolutionary and revolutionary innovations, as well as the different categories of innovation such as profit model, structure, network, product performance, process, product system, service, channel, brand, and customer engagement. It also highlights the benefits and risks associated with innovation. The methodology, organization, budget, and schedule are also included in the proposal, providing a comprehensive plan for the research project.

RESEARCH PROPOSAL PROJECT
The Impact of Innovation on Profitability of McDonald`s
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Contents
Introduction...........................................................................................................................................3
Problem Statement...............................................................................................................................4
Research aim, objectives and research questions.................................................................................5
Justification and potential output of the research project....................................................................6
Conceptual framework..........................................................................................................................7
Methodology.......................................................................................................................................13
Organization of the study, project budget, and schedule....................................................................14
References...........................................................................................................................................16
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Introduction
This research proposal intends to analyze the impact of innovation on McDonald`s
profitability. McDonald’s is a famous food chain around the world. However, the competition
for McDonald`s is increasing day by day, as there are several food chains such as- KFC,
Dominos, and Subway, which are giving a tough competition to McDonald’s. In order to
entice the customers, it is important to provide such product or services which are different
from the competitor brand. Innovation is one of the ways that can help in providing different
product to the customers and gain competitive advantage.
The research proposal includes the problem statement which provides detail about the
problem which insists to perform the research; aims and objectives of the research,
conceptual framework, methodology for research, the budget for the research and
organization of research.
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Problem Statement
Competition among the business organizations is increasing day by day. In order to entice the
consumers and to enhance the sales and profitability, organizations are adopting innovative
strategies and practices (Shukla, 2017). Through innovation, an organization can make
changes in the business operations, modifications in products and strategies etc. Innovative
products which have different attributes, such as- new taste (food product), new packaging,
new design etc. The better innovative product is generally appraised by the customers.
The main problem that insists to carry put the research is to study the impact of innovation on
McDonald`s profitability. It is important to analyze the impact of the innovation in the
product of McDonald`s, to assess whether the innovation will enhance the profit volume or
not. Hence to solve this problem, the research will be carried out.
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Research aim, objectives and research questions
Aim of the Research- “This research proposal`s aim is to study the impact of innovation on
the profitability of the McDonald`s”
The objective of Research- The objective of the research is related to the research aim.
When the objectives of the research will be accomplished, then it will support in reaching the
aim of the research ( Bougie & Sekaran, 2016). The main objective of the research is as
follows-
 Study the McDonald`s product menu.
 Analysing the impact of innovation on McDonald`s profitability.
 Evaluating the impact of adding a new product in the menu list of McDonald`s.
Research Questions- The research will intent to find the answer to the primary question i.e. -
What is the importance of innovation in regards to the enhancement of profitability for
McDonald’s?
The other important questions which are required to be answered through the research are-
 Will product innovation be helpful for the McDonald`s?
 Is there any requirement of product innovation
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Justification and potential output of the research project
Justification of research for McDonald`s
Technology along with innovation has come up with extreme results for business
organisation in terms of their business operation management. In order to manage business
activities or operations, there are various innovative ideas or innovative technology has been
adopted by business organisations. Therefore innovation in business organisation has become
topic of interest for many researchers.
The research is important to be carried out as there are a number of benefits of applying
innovation in the business. Innovation in perspective to the business organizations can be
related to the adoption of the new technology system, strategic innovation, manufacturing
innovation etc. This research has an objective to analyze the appliance of innovation and its
benefit for McDonald's in terms of enhancing the profitability (Cuellar, 2015). Through this
research, McDonald`s will be able to assess the importance of adopting innovation in the
product list. Through the research, it can be evaluated that which type of product shall be
manufactured by McDonald`s for its customers. As innovation in the product by considering
the customer`s taste and preferences, will provide profit to the McDonalds. As effective
innovation will help in enhancing the sales and enhancement of sales will lead to profit
maximization. The research will also be beneficial for the McDonalds as through the research
result, the areas related to the risk for business can also be identified (Kaufmann & Ruediger,
2014). Subsequently, strategies could be developed by McDonald's to mitigate those risks
which can become a hurdle in adopting the innovation. In addition to this, the other benefits
which can be availed through the McDonalds after completion of this research are- improved
customer satisfaction, gaining competitive advantage, support and encourage diversity.
Potential output of research
The expected output of the research is as follows:
1. The benefits of innovation for McDonald`s
2. Risks associated with innovation, that may cause issues for business
3. Preferences of customers, as what innovation they want in the product
4. Overall impact of innovation on McDonald’s business
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Conceptual framework
Innovation means adoption of new ideas, strategies for the better mental and for increasing
output. It is a very complicated procedure which requires time and effective manpower.
Innovation is mainly applied to increase the productivity of the company's product and also to
increase the profit graph of the concerned. Under this importance is given to improve the
quality of the product, goods used in manufacturing, effective use of management, achieving
the set goals, customer satisfaction etc. Innovation is a time con process but it immensely
helps in expansion of consumers in the market. It is an important aspect for the growth and
production (Cuellar, 2015). Under this process, new technologies are undertaken to increase
profit and also to satisfy the consumer.
Innovation not only helps in the betterment of consumer's live with innovative ideas and
effective management. Management's mainly focuses on the consumer. They use to take
feedback regarding their products. By this, they come to know whether the existing product
needs any change or quality improvement etc. Effective management plays an important role
in quality improving the product. Management's main aim to make effective strategies for
product modification (LOPEZ, 2015).
In context to social aspects, innovation supports in forming new methods for joint venturing
alliance creation, flexible work hours, joint venturing, and creation purchasing power of
buyers'.
The two broad classifications of innovation are- Evolutionary innovations is also regarded as
dynamic or continuous or evolutionary innovation, which brings about through various
upsurge advances in processes or technology. On the other hand, revolutionary innovations
which are also known as discontinuous innovations; these are frequently disruptive and new
(Wiech , 2013).
The types of innovation can be differentiated on the basis of 10 categories, which are:
Profit model – How the price of the service or product is set by the company in an
innovative manner to gain profit. For instance, innovation done by Gillette with razor
and blades model.
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Structure –Innovation in the structure of the company. For instance, innovation is
done in organization`s structure, such as improvement in the formal structure of the
organization to make it flexible ( Bougie & Sekaran, 2016).
Network – Innovation can be done by the organization in regards to external
relationships and partnerships. For instance, a collaboration of Toshiba with UPS for
repairmen of Toshiba laptops.
Product performance – Developing a new product that comprehends new features. For
instance, transparent vacuum cleaner launched by Dyson without any bag.
Process – Innovation in the process to carry out things in a different manner. For
instance, the process of car hire was completely changed by Zip car (Baer, 2017).
Product system – Innovation in the product system is one of the methods of
innovation. It is related with how the product of an organization connects. For
instance, a group of independent developers was being used by Mozilla to create its
plug-ins and Firefox.
Service – Innovation related with services, such as value added services or additional
support to the clients or customers. For instance, free delivery of products to the
customers.
Channel – This type of innovation is related to the way an organization grasps the
market. For instance, Amazon provides a service to users for ordering and
downloading Kindle book in less than two minutes.
Brand – Innovation in context to the brand is related to the promise made by the
company. For instance, many companies make a promise that their customers will not
be disappointed with the product or services (Beard, 2014).
Customer Engagement – Another innovation is related to the engagement of
customers. For instance, the experience of clients is used to be valued and the
emphasis is given on providing a pleasant experience to the clients with innovative
manner.
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It is confirmed that an organization can pursue innovation in every single structural function
– for e.g. in HR, Marketing, Sales, and Operations. As a result, each and every department
might have distinct innovation metrics and objectives. In short, everything can be innovated;
however, it needs a creative idea and some resources.
Conceivably it is more supportive to state that innovation is of two type – successful and
unsuccessful. Innovations related to successfulness facilitates in improvising value for the
business in addition to the customers. Unsuccessful innovation does not provide value to the
customers and to the business. Successful or unsuccessful innovation differs by industry, on
the other hand, in general, the launch of new products majorly fails to come across their
objectives.
Innovation is almost placing an approach or idea into action. Innovation can be generally
described as ' effective exploitation of ideas in a commercially way'. Positive innovation
mainly concerns about forming or adding value. Innovation can be done through: improvising
existing products, services or processes or (process innovation), or by producing new
products, developing services or processes of value, which has not been in existence earlier
(product innovation).
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Innovation can originate through many practices:
Refining or changing business processes in order to upturn competence and efficiency, or to
empower the business to prolong the range of existing products or services. Manufacturing a
new product or developing a service may facilitate the business in meeting the requirements
or demands of the consumers. Beside this, it may also facilitate in creating value to for
existing services or products. Innovation also helps the business organization to compete with
the competitors; as by offering an innovative product or services organization may gain
competitive advantage (LOPEZ, 2015).
In whatever manner innovation is carried out, it intends to a creative process. The concepts or
idea for innovation can come from several ways, such as-
o Inside the business – for e.g. from sales staff, in-house designers, employees etc.
o Outside the business- for e.g. media reports, customers, market research insights,
suppliers, or from contacts at research organizations
The successful idea for innovation derives from purifying those several ideas, classifying
those ideas in such a manner that the business will lay emphasis on and smearing funds and
assets to exploit them.
Benefits of innovation- Innovation offers a large number of benefits for the business
organizations, such as:
 Increase in profit margin
 Product differentiation
 Satisfying needs of consumer
 Markets development
 Personalized services
 Product expansion
 Retaining or upturn in market quota
 Securing a market strategic position
 New business prospects
 Rise in competitive advantage
 Use of economies of scale.
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Risks in innovation
Besides the benefits, innovation also brings risk for the business, such as-
 Product may not be accepted by the market;
 Innovation requires high investments, which may be not paid back for the duration of
the product lifecycle (Cuellar, 2015).
 While innovating a product or service, it requires excessive deliberation of resources.
In case, attention is not paid to the resources then while the innovation process, then
wastage of resources may occur; which is a risk for the business.
 When the innovation is carried out in a partnership, then there is the possibility of
transfer of risk to a certain partner.
 Company becomes dependent particularly on the new product
Innovation is not at all times what is required by the world. Many innovations are not being
valued by the customers, and this resulted as insolvency of business organizations. The
organizations which failed due to innovation are not recognized by the individuals, however,
the successful innovations bring positive impact on business (Kaufmann & Ruediger, 2014).
The scarcity of innovative ideas in the business organizations is not there. As employees
working in an organization have new ideas that may bring success in a particular or whole
area of business. However, it is up to the management, whether to accept the innovative idea
or not. Stick on an old concept in perspective to the business is not always good. As
consumers need some change in the product or services, and this need of consumer can be
fulfilled by offering them a new product or service (Beard, 2014). Employee`s ideas or
concepts shall be considered as a suggestion, as it may help the business organization to gain
success. Management shall determine a collaborative approach to make decisions regarding
innovation and to move ahead from one phase to the next phase of the innovation process.
This could be done by involving employees from different departments of the organization,
as well as concerning the consumers. Involvement of employees are important as an
innovation can also impact on the employee’s performance and other aspects (Baer, 2017).
Therefore, in order to persist, business organizations must develop, and must innovate its
processes. The role of management in context to supporting innovation should be:
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1. Providing suggestions to employees regarding innovations and helping them to assess the
areas which require innovation.
2. Hiring applicants who are creative and have potential to actually innovate (LOPEZ, 2015).
3. Displaying flexibility in context to the allocation of resources for innovation.
4. Showering reward to employees, who have given a best innovative idea.
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