Assessment 1: Novel Value Proposition of Organic Cafes in McDonald's

This report presents a novel value proposition for McDonald's: the introduction of organic cafes within its existing restaurants to cater to the growing demand for healthier food options. The executive summary highlights the potential for McDonald's to attract health-conscious consumers, particularly millennials, by offering products such as whole-grain burgers, zero-sugar beverages, organic chicken, and raw juice. The report analyzes the current market, identifies target consumers, and proposes a competitive advantage through McDonald's existing strengths in convenience and cost leadership. It then delves into McDonald's value chain, examining inbound and outbound logistics, operations, marketing, and support activities. Porter's Five Forces are applied to assess the competitive landscape, followed by a SWOT analysis. The analysis highlights the strengths of McDonald's global network and brand awareness, while also acknowledging weaknesses such as reliance on franchises. The report identifies opportunities in menu engineering and addresses the threat of substitutes. The report suggests a need for McDonald's to adapt its menu to satisfy changing consumer needs and market trends. The report concludes with recommendations for the implementation of the organic cafe concept within McDonald's.

Running head: ORGANIC FOOD 1
Student’s Name
Institution affiliation
Date

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Executive summary
The advent of a millennial generation that craves for organic food due to health concerns
has revolutionized the menus offered by restaurants. However, most fast-food restaurants such as
McDonald’s are still using conventional foods making them lose a significant share of organic
customers who prefer other alternatives. This report presents a novel idea of establishing organic
cafés within McDonald’s to serve organic consumers with products such as whole-grained
burgers, zero sugar beverages, organic chicken and raw juice. The use of innovative tools and
techniques has been employed extensively

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Organic food
Introduction
Conventional food has been reported as the leading factor of deteriorating public health
among the aged and children not forgetting diseases such as obesity, diabetes, and heart-related
maladies. Conversely, organic foods particularly raw vegetables, whole grains, and grass-fed
meat are said to be safer and more sustainable compared to genetically engineered and processed
junk foods that constitute the bulk of the diet in the U.S. (Chait, 2019).This is the reason why
establishing an organic café for McDonald’s could cater for the health-conscious consumers who
are skeptical when it comes to consuming conventional food. The organic consumers will be
served with whole grain burgers, zero-sugar beverages, raw juice, and organic meat.
Target consumers
According to research conducted 2009,it identified three organic customer demographics that
McDonald’s can serve and increase their sales(Chait, 2019) . The periphery consumers and this
group constitute 14% of the total organic consumers. It is comprised of people who are starting
to depend on organics, though they make no important behavioral transformations and this
means they purchase little to no organic products (Cummins, 2014). Mid-level organic customers
constitute the bulk of organic buyers that is around 65%. The consumers not only change their
attitudes but also their norms and purchase organic foods (Pestek, Agic & Cinjarevic, 2018) . The
last classification is that of primary organic consumers and this is made of a small niche, which
is 21% of individuals who are obsessed with organics. They demonstrate their passion for

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organics through attitude and behavior. The consumers converse only about organics and only
buy organic foods.
Novel value proposition
The change in consumers' needs revolutionizes the manner of operation for businesses.
The millennial are concerned with eating habits particularly now that many diseases are arising
due to unhealthy eating lifestyles. Thus, many consumers are shifting their eating patterns
towards organic foods as a way of ensuring they eat healthily. McDonald’s could use such a shift
towards organic food products by introducing organic cafés in their already existing restaurants
to serve organic consumers. This would mean offering specialized products such as natural
juices, zero sugar beverages, and organic burgers.
Competitive advantage
One of McDonald’s main competencies is its ability to offer convenience when
customers demand and need to eat at competitive rates while getting the ultimate value for their
cash. The restaurant's competitive edge enables it to concentrate on being consistent through its
food production and utilizing raw materials across the globe. The global recognition associated
with McDonald’s as a brand provides another competitive edge
Cost leadership enables McDonald’s to offer food rates that competitors cannot compete
with. To achieve this, McDonald’s stores are efficient and maintain daily operations costs at a
minimum. It is through this that enables McDonald’s outlets to be superior compared to those of
rival fast-food joints since it can offer its products at lower rates. The other important core is
McDonald’s speedy preparation and delivery of food.

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value chain analysis by McDonald’s
Inbound logistics
It has been the custom of McDonald’s to order raw vegetables and other inputs from its
historic vendors thus by having both capital and labor increased, production increases
proportionately. The restaurant also adopts backward vertical integration where it replaces many
of its vendors. It does that for two purposes that are to minimize costs and two to facilitate that
its goods are of superior quality. Such supplies entail milk to be utilized in preparing of selected
beverages. However, others are suppliers that entail domestic grocery outlets that nourish
McDonald’s with fresh vegetables. Coca-Cola is contracted to supply soft drinks and is one of
McDonald’s allies.
Operations
Before McDonald’s brothers creating the framework of their fast-food operation, various
joints did prepare food fast enough. Such joints used short-order cooks who specialized in
preparing food that required less time for preparation. A short-order cook required skill and
training, as excellent cooks were in demand. Such a speedy framework was entirely different.
Rather than employing the services of a professional cook to prepare food quickly, McDonald’s
employed the services of many unskilled employees.
The process
The process of mass production dictates the chain of restaurants to have a distribution
web to transport the food to each restaurant. The warehouses are tasked with carrying huge
amounts of all things that a restaurant needs. This entails food items and paper products used in
packaging food. The warehouses then transport the supplies to each restaurant via trucks. Similar
to the chain of management, both warehousing and distribution are centralized as opposed to

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each restaurant handling the process. In some outlets, the managers are tasked with tracking the
inventories of food, cups, and materials used in wrapping. Thus, they order all items needed by
the restaurant from a distribution center where such items are shipped from.
Outbound logistics
McDonald’s is dedicated to offering food of superior quality and excellent customer
service at an ultimate value in a serene environment that is welcoming(Lopez, 2019) . This is the
sole reason why McDonald’s cooperates closely with its staff, franchisees, and suppliers to offer
a balanced variety of food choices while offering the nutrition information required to enable
customers to make viable decisions. At the restaurant phase, McDonald’s concentrates on
sustainable energy, packaging and the management of waste. McDonald’s is committed to
innovation and improving its operations necessary in establishing and building a profitable
venture that is not only sustainable but also environmentally friendly.
Marketing and sales
McDonald’s restaurants are situated in more than 119 states across the world serving
around 58 million customers daily. The company has roughly 31000 restaurants with a
workforce of 1.5 million. The company also runs other restaurant brands for instance Piles café.
Advertising
For many years, McDonald’s has always engaged in massive advertising campaigns.
Also, apart from the media such as television, radio and print media, McDonald’s employs
billboards, sponsors major sporting tournaments such as Olympic Games(Lopez, 2019) .
McDonald’s also makes coolers of beverages such as orange drinks with its logo readily
available for domestic events. Nevertheless, television plays a vital role in McDonald’s
advertising technique.

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Support activities
Company infrastructure
The infrastructure at McDonald’s is complex as it uses advanced IT while maintaining
green operations(Lopez, 2019) . McDonald’s offers eco-friendly workstations and restaurants that
portray the company’s sustainability objectives and portray McDonald’s environmental
stewardship in its places of work.
Human resource management
McDonald’s work offers have positive elements though employees often prefer working
at McDonald’s based on various other attractive choices. Irrespective of how people define work,
McDonald’s provides many advantages for workers who would be comfortable with flexible
hours and are involved in other responsibilities. McDonald’s provides chances for those workers
who would be marginalized in the labor market due to fewer chances of securing a job
elsewhere.
Technology development
Despite stagnation in consumers’ confidence in Europe and the U.S., McDonald’s
concentrates on modernizing its restaurants, adapting its menu and engineering the value
proposition of its food.
Porter’s five forces
Strength of competitors is strong
Currently, McDonald’s is one of the most competitive enterprises. The advent of many
global companies, as well as local fast food outlets that have similar menus, have made
intensified rivalry where each player in the industry aims at establishing their share in the
market. It is also evident that there is a certain degree of saturation (Asad, 2012) .The competitors

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of McDonald’s are fast-food joints for instance Burger King and Wendy’s and in other nations,
there are local fats food joints.. In such an industry, all players aggressively spend on advertising,
engineering ideas to improve their menus and launching new franchises to attract new
customers. The large number of rivals translates to McDonald’s competitive rivalry being robust.
The threat of new entrants
Internationally, the threat of new entrants is a feeble force due to many entry barriers.
Thus, to successfully compete with McDonald’s, the new joint has to establish many outlets
across the world and this would demand huge capital investment and time, the fast establishment
of economies of scale to enjoy profits, have access to suppliers of raw products such as meat and
conduct extensive marketing to raise awareness among consumers(Asad, 2012) . Thus, generally,
McDonald’s faces a moderate threat.
Suppliers' Bargaining power
The raw materials such as milk and chicken sourced locally used by McDonald’s are
readily supplied by a large pool of suppliers. McDonald’s orders are huge on a regular basis.
Thus, most suppliers would be willing to serve by McDonald’s. Hence, suppliers lack the
power to bargain with McDonald’s making it difficult to raise their prices(Asad, 2012) . Also,
McDonald’s can easily change suppliers with no switching costs. Thus, the suppliers' bargaining
power is weak for McDonald’s.
Buyers’ bargaining power
The fast food buyers have many alternatives in the market. Such buyers can switch from
one joint to another without incurring any switching cost following them being unsatisfied. The
customers loyalty to restaurants seems to be decreasing with the number of rivals. Thus,
customers can easily protest any price increments by McDonald’s and switch to other rival

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restaurants (Gregory, 2018). This positions buyers as having a robust position of bargaining to
move McDonald’s to maintain its rates if it wishes to have repeat buying by consumers. Thus,
McDonald’s buyers have strong bargaining power.
Threat of substitutes
Some of the substitutes for McDonald’s meals entail meals from other restaurants, for
instance, KFC and pizza and meals prepared at home. Moreover, bakery products are substitutes
for McDonald’s. Hence, such substitutes are competitive based on consumer satisfaction and
quality(Asad, 2012) . There are no switching costs associated with switching to such substitutes.
There have been concerns regarding McDonald’s products leading to consumers switching to
other healthier products. Thus, McDonald’s substitutes offer a strong force.
SWOT analysis
Strengths
Global network
One of the main strengths of McDonald’s business model is its global presence(Garipova,
2019) . McDonald’s has sustained a robust presence in more than 100 nations. Its international
business entails McDonald’s itself and licensed premises operating under its name. It is reported
that in 2018, the number of restaurants under McDonald’s framework increased to more than
37,000.McDonald’s is ranked as the second-largest restaurant in the world based on the number
of outlets while Subways is ranked first. The U.S is ranked as the leading market for McDonald’s
though sales from the global markets are impressive.
Brand awareness
McDonald’s takes pride as a fast-food brand and seems to enjoy a high degree of
brand awareness across the world. McDonald’s international presence is a vital element in

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promoting its brand awareness(Garipova, 2019) . However, shifting its focus on marketing and
customer services has led to McDonald’s brand recognition shift to another level. McDonald’s
employs a mix of digital activities to increase its brand awareness in the leading markets. The
restaurant’s logo gets recognized easily in all its markets. Hence, customers can recognize
McDonald’s restaurants in strategic positions via the logo.
Weaknesses
Overreliance on franchise
McDonald’s model relies on franchises that handle more than 90% of its enterprises.
Despite stability in McDonald’s operations, various franchisee issues arise. McDonald's plans to
have 95% of its business operations under franchisees. Currently, McDonald’s franchisee
operates 93% of its activities. However, the major challenge with operating an enterprise close to
wholly via a franchisee operation is that a firm's reliance on franchisee cooperation increases.
Opportunities
Engineering of menu
The change in consumer needs and market trends are a major concern in the current
years. The advent of a millennial generation that is health-conscious dictates foods that are
organic with low calories. Though McDonald’s offers a balanced menu with competitively
priced products, there is room for more innovations in its menu. This can assist McDonald’s in
increasing the size of its customers with regards to the millennial and health-conscious
customers.
Threats
Robust competition

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The fast-food industry has witnessed intense rivalry with other players mounting pressure
on McDonald’s. Thus, competition is not only from major players such as Subway and Burger
King but also from local restaurants in different markets that are growing. This has promoted
McDonald’s incur higher costs of operations and investment in marketing and also in providing
superior quality for its products.
Reflection on development of personal innovation capabilities
Creativity and critical thinking
Though the characteristics of personality and consistency in work methods are explained
by Amabile and Pilemer(2012), the focus of this reflection is on the primary element of creative
and critical thinking capabilities. The reflection borrows from previous research by shifting focus
on personal-level innovation that is the role of an individual in generating their ideas and being
part of implementing the ideas. The cognitive style for solving problems entails divergent and
convergent thinking capacities. With divergent thinking, an individual can generate many
alternative solutions as opposed to one remedy. However, with convergent thinking analytical
and judgmental capabilities are employed in evaluating the value of an idea or diagnosing the
causes of hurdles. The capabilities in both contexts are crucial in generating novel ideas. Scot et
al., 2004 demonstrated that personal creative thinking skills are malleable as they get improved
via training based on creative problem-solving. Such creativity-relevant capabilities should be
more influential in the stage of idea generation compared to the implementation stage. Though
such new ideas can be produced through the cognitive processes as highlighted, idealizing such
ideas into reality demands different capabilities like communication skills.
Strengths
Impeccable analytical skills

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My ability to analyze different situations and draw insights and conclusions is one of my
valuable tools as an analyst.
Problems solver
Ability to identify a problem and provide the needed solutions is another strength I possess.
Weakness
Fear to delegate
Fear of delegating projects to others to avoid errors and blame makes me not assign tasks to
others which limit the growth of others.
Lack of good communication skills
I am shy when it comes to public speaking and this makes it difficult to explain a concept or idea
to a large group of people.
Room for improvement
Attending a seminar on improving communication skills would do me more good by
boosting my confidence to address large groups of people. I will also start believing in others’
capabilities to deliver good work this way I will delegate tasks to others.
Conclusion
McDonald’s has positioned itself in the market as a fast-food restaurant. With core
competencies such as cost leadership and quick serving of food, it can price its product at low
prices. The market for organic food provides an ample opportunity that McDonald’s can exploit.
With large economies of scale, the company can take advantage of advertisement and promotion
campaigns. Thus, serving organic customers, McDonald’s will serve an untapped market that has
potential. This will be achieved by establishing organic food cafes within its premises.
.

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References
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Creative Behavior, 46, 3-15.
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Chait, J. (2019). 8 Different Reasons People Buy Organic (and How to Market to Them). Retrieved from
https://www.thebalancesmb.com/who-buys-organic-food-different-types-of-consumers-2538042
Cummins, R. (2014). 10 Reasons Consumers Buy Organic. Retrieved from
https://www.google.com/amp/s/www.ecowatch.com/amp/10-reasons-consumers-buy-organic-
1881899943
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Institute. Retrieved from http://panmore.com/mcdonalds-five-forces-analysis-porters-model
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