McDonald’s Corporation, Essay Example

Executive Summary

The ready-made aspect of the McDonald’s Corporation fast food franchise was chosen for this study in response to Industry reporting on investment. Selection of a fast food franchise as a small business is recommended, with industry profitability exceeding the market mean by 2.99%. Corporate support, supply chain and market channel management, and start-up costs, with in depth consideration to long-term overhead in employee compensation, insurance, and local real estate and tax factors. The Fast Food & Quick-Service Restaurant Industry is analyzed in reporting on industry performance from McDonald’s Corporation, the Industry Leader.

Company Story

In 1955 Ray Kroc “founded the McDonald’s Corporation, and 5 years later bought the exclusive rights to the McDonald’s name. By 1958, McDonald’s had sold its 100 millionth hamburger” (McDonalds). Early to the concept of integrated chain operations, Kroc promoted the vision of “In business for yourself, but not by yourself.” To this end, he developed a ‘total’ equity approach to partnership that includes both franchisees and suppliers “working not for McDonald’s, but for themselves, together with McDonald’s” (McDonald’s).

Social Responsibility

McDonalds Corporation, now in its 62^nd year of operations, the franchise restaurant chain is part of the global Social Responsibility corporate-consumer movement, and expands this vision through certain product niches toward “global progress on beef and coffee sustainability [in an] approach to life by addressing different components of sustainability through both global and local efforts” (McDonald’s). Linking ethical, environmental and economic platforms of sustainability, the McDonald’s has done a fairly rigorous job of convincing stakeholder’s of its discretionary competency at each level of operations. It’s “3 E’s: supply chain” motto guides company policy and procedure, and allows the company to create conduits for informational flows between its actual retail channels and its communications model. The Company’s Animal Welfare and Recycling programs serve as a vehicle for the green and sustainable community leadership position. Charitable outreach through support of professional basketball and contributions to nonprofit agencies for children from the Ronald McDonald House Foundation (RMHF) proffer voice for the corporation as an organization that cares about its largest segment – its future customers – in perpetuity.

Operations

According to McDonald’s Corporation, “the ingredients and materials that go into our products to be produced in ways that contribute positively to the development of sustainable agricultural and food manufacturing practices” (McDonalds). Interfacing the product lifecycle with the ecological cycle in an effort to maintain minimal impact on the environment, McDonald’s decision to go ‘green’ is based on an economic perspective, social responsibility belies the transfer of company’ values to capitalization on internal equity, product equity and the customer equity feedback loop. Consumer consciousness is now a commodity to be bought and sold, and how well companies are able to harness that intangible asset as a component of the product-cycle as it moves from supply to market is anyone’s game.

At McDonald’s the instantiation of equitable trading in commerce is cleverly worked into the fast food chain’s channel operations, and the company espouses authority in “delivering affordable food, engaging in equitable trade practices, limiting the spread of agricultural diseases, and positively impacting the communities that our suppliers operate in” (McDonald’s). Linking product quality with product delivery, McDonald’s ensures that “every step of the [Company’s] supply chain contributes positively to the safety, quality, and availability of [its] final products.” To this end, the Company’s vision articulates a ‘total’ chain approach to its concept, with “purchasing from suppliers that follow practices that ensure the health and safety of their employees and the welfare and humane treatment of animals” (McDonalds). Financials

Marketing Prospectus

The Company’s marketing mix belies its commitment to the “3 E’s” and includes social responsibility new media, internet, print, television and video distribution of the brand experience on its ‘Road to Sustainability.’ McDonald’s “takes its responsibility to the environment seriously” (McDonald’s, 2010). With the establishment of the Company’s Global Environmental Commitment in 1990, McDonald’s aligns itself with the international Kyoto Protocol, and claims constant sourcing for methods of incrementally improving its restaurant and supply chain environmental performance through: 1) energy efficiency; 2) sustainable packaging and waste management; and 3) green restaurant design.

Standard core competencies within current organizational change models and instruments of measurement such SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses employed in Six Sigma systems approaches, sustainable growth benchmarks are largely interpreted through an array of ‘green’ business concepts that have flooded the marketplace in the last decade as illustrated in Table 2.

Corporate decision is pressured to keep up with this phenomenon of convergence – where consumer ideologies meet regulatory mandates – and the future of social responsibility looks vast in that spiritual commitment of the brand, to the customer, and to the planet.

Financials

Description of Historical audit at McDonald’s Corporation is available at the Company’s website. According to McDonald’s agile and lean management strategies are responsible for the success of its business, and the efficiency of its global supply chain offers scope in assessment of its capacity to deliver ‘sustainable growth’ through responsive oversight. Priorities such as food safety, quality, and costs, as well as its brand identification as the Company committed to a ‘3 E’ platform of decision making, contributes to its overall performance. Integrated systems approaches to collective purchasing and supplier evaluation are the behind the scenes activities supporting the sustainable model. Lead by the Sustainable Supply Steering Committee (SSSC), formed in 2007, McDonald’s works toward its vision as a truly ‘global’ corporation, with a supply chain that consistently “yields high-quality, safe products without supply interruption while leveraging our leadership position to create a net benefit by improving ethical, environmental and economic outcomes,” and ultimately profitability (McDonald’s, 2010). Analysis of ten year stock performance by McDonald’s Corporation is illustrated in Table 3.

Bibliography

McDonald’s Corporation, 2010. Web.

McDonald’s Corportation, 2010. Hoovers. Web.

SWOT/PESTLE, 2010. RapidBi. Web.