The DataMontior Report, Term Paper Example

McDonalds showed positive current ratios for the last two years, although on the first year used in this study, it was down by 0.08 to burger king who produced a 0.88 current ratio. Gross profit margins for both McDonalds and Burger King are around the same, averaging at around 35% for both companies. Whereas net profit margins are looking better for McDonalds in the over-all years. According to the data gathered from Hoovers (n.d.), McDonalds ranks umong the top in the industry, breaking the industry median in all its positive financial aspects. Although, McDonalds, through the years from the data gathered, has been declining in sales. Rising from a revenue $22,786.6M in 2007 to $23,522.4M, although falling to $22,744.7M last 2009, which was significantly less than the base year. Despite this, McDonald’s is still doing better in revenue as compared to its competitor, Burger King.

McDonalds is considered one of the highest ranking franchises across the world, selling burgers and fries to over 100 countries (Hoovers, n.d.). One of the main strategies of McDonalds is to increase revenue by selectively designating locations where it is believed a franchise would benefit (“McDonald’s Corporation”, 2010). This is done by the company placing restaurants not only in neighborhoods, but also in malls and airports to expand its target market and gain revenue. McDonalds targets markets mainly families with children, suburban communities as well as teenagers. These reasons are- for families with children, automatically, Mcdonald’s will sell at least three meals per family dining, suburban communities, for greater brand recognition and comfort with the brand within a community and for teenagers, it gives them a place to “hang out”. The strong brand recognition of those golden arches gives McDonalds an advantage because of repeat customers. McDonald’s strong strategic orientation when it comes to marketing is assumed to be one of the main reasons why it is leading in the fast food industry. Economic issues McDonalds is facing concerns people trying to save money, because of the recent recession, people may not want to eat out as much as they used to, also with the recent increase in unemployment, McDonalds, being the fair employer it is as a successful company may have been receiving more applications for jobs. Political issues concerning the overweight and obesity issues across America have been affecting McDonalds as a brand, also issues on water management, which McDonalds proudly part-takes in is part of the company’s identity. Social issues such as the media, covering stories such as “SuperSize Me”, as well as the number of celebrities who frequent in McDonalds effects it socially. Technologically, advancements and developments such as the World-Wide-Web allows customers to purchase McDonalds from their home computers, also this advancement provides better and faster service which is more efficient. Its external competition still lies in cheaper options, which is the home cooked meal, as well as the booming hot and cold beverage industry.

McDonalds has suppliers who distribute other foods, these are things like condiments and even beverages. I believe that the largest suppliers of McDonalds is Coca Cola. Coca Cola supplies the company with all their soft drink choices. And, with every meal, a soft drink beverage is offered. McDonalds promotes this product by giving it a name like “value meal”, making people think that they are saving money. McDonalds does have power over the product because the product is still served in a McDonalds plastic cup, without the Coca Cola logo overtaking the design. Also, McDonalds, being the large brand that it is, can find a different supplier if anything negative happens with Coca Cola. McDonalds is providing Coca Cola business, and it is a very valuable customer for the brand. Another supplier for the company which I believe to be a major one is Heinz. It is a product which people get for free in packets, although it is used in regular burgers of McDonalds. It is needed for that authentic taste of McDonalds burgers and simply cannot be replaced by any other brand. Heinz is part of the McDonalds experience and identity.

Because of McDonald’s ambience, customers are prone to coming back. They provide with a comfortable feel and customers will always get what they expect from the brand – comfort, hygiene and a respect for customer values. McDonalds usually targets people from the suburban areas, to bring in their families. People in these areas are usually from the middle class, earning above the market equilibrium wage. The reason behind this is because the company would like repeat customers, and what better than families because when they purchase from the company, it would be an automatic sale for meals which the entire family will consume, three or four persons. Another target market for the brand is urban based individuals who are always on-the-go. These individuals are also repeat customers who want their food in a hurry, that is why McDonalds is committed to giving fast-food, service in 60 seconds. Lastly, McDonalds targets also teenagers who come in groups and want a place to hang-out. McDonalds provides them with the perfect environment, and benefits from teenagers with bottomless stomachs. There is no real generalization of the target market for McDonalds since the age range is so high. The Happy Meal suggests also that children are the main priority of the brand, offering them a toy with every meal.

McDonalds is in a good place when it comes to its competitors, according to Hoovers (n.d.) is the number one ranked fast food chain in the world. It generates high revenues every year, reaching over $22,000M. The numerous franchises as well as the great brand recognition accounts for such great marketing strategies by the brand. It places McDonalds well at the top of the fast-food industry. McDonalds climbed its way to the top with its wide-spread franchising as well as producing good products which are consistent (Hoovers, n.d.). According to the data gathered from Hoovers (n.d.), McDonalds is in a great place as compared to its main competitors. It breaks the industry median in revenues every year and remains at the top. Although revenues may have declined in the past year, McDonalds still leads the way in the fast-food industry covering more locations than any other fast-food chains, giving the company a higher advantage because of its strategic placements.

McDonalds is in the industry of fast-food. They offer not only food, but promise great customer service. So far, McDonalds has kept to its word and has consistently provided happy customers with both great food and great service throughout the years. A substitute for McDonalds as a fast-food industry. A substitute for this industry would be home cooking, or family dining. With people trying to save money these days, customers who may have regularly dined in McDonalds may opt to save money by just staying at home. Also, with the accelerated information about McDonalds’ health risks, people may also choose a healthier option. This may have been reasons why McDonalds’ revenue declined over the year.

A threat of new entrants for McDonalds is low. Although, with the booming of the coffee house industry, a company considered as a new entrant would be Starbucks. Starbucks does offer different goods and services as compared to McDonalds, and is totally a different experience. Starbucks is the number one specialty coffee retailer across the globe (Hoovers, n.d.). It does target the mostly the same market as McDonalds, although it not so much of a family company. Starbucks offers ambience, hygiene and customer values as well, and it also provides a different experience. It targets teenagers, in groups or alone studying, as well as those on-the-go urban customers who want great tasting coffee in a few minutes. Starbucks just started as a simple coffee house, yet there was a boom in demand for coffee house chains which gave Starbucks a lift. Now, it sits there on top with McDonalds.

McDonalds is doing better than average as compared to its competitors, although not as well as it used to in previous years. The company brags of its billion burgers sold world-wide, although with threats such as consumers opting to save money on every aspect of living, as well as epidemics such as A(H1N1), people are avoiding food which can harm them from their budget to their health. Although growth opportunities are still open for McDonalds, doors in the hot and cold beverage industry are still open for the brand.

Strategies which McDonalds is using to dominate the fast-food industry is mainly offering people consistent great service which respect their customer’s values. McDonalds does not only give quality food and service, they provide a place with an ambience which make people want to stay longer. A placement of a play area for children implies that McDonalds does want their customers to stay longer, even after they have finished eating. Party areas encourage large groups, and value meals encourage consumption of more than one of their products. Also, by selling to children a toy with every meal, additionally a toy to collect, it encourages repeat customers and a good customer-brand relationship. By targeting young children this way, McDonalds is conditioning children from the very beginning to fall inlove with the brand and be comfortable with it. This is so that when the children are older and have kids of their own, they will bring them to McDonalds, which is reminiscent of their childhood. McDonalds is excellent in terms of marketing, this has given them their well-known name.

Management and operations of McDonalds is very well organized and has kept McDonalds’ doors open for decades and decades to come. Management of McDonalds is mostly commended for its great customer service. It follows management policies, and has strict rules each branch follows, no matter where it is across the globe. The branches are well kept and well organized. It is supervised by head branches to ensure that quality is met every time. McDonalds also encourages customer feed-back, and requires its employees to greet customers with full respect. Also, McDonalds keeps its promise as a fast-food restaurant, continuing to serve its customers promptly and hassle free. The drive-through feature of most-branches adhere to this fast-food claim, and employees are well trained to be able to give customers full satisfaction in the delivery, presentation, quality of taste and consistency of their products offered.

The company’s production and operations have been running for decades and have stayed the same, giving customers good quality food and service. Food is still delivered promptly and has kept its general look. Even though McDonalds has come up with new products throughout the years, it still keeps the original food offered when it first opened. Production of new food usually follows a fad, or starts because of a certain season. Although, it still retains its name in selling burgers and fries, the products which gave McDonalds its humble beginning.

The organizational culture of McDonalds values its great customer orientation. The whole system of the company is very much customer-centered, which is why McDonalds has a number of regular customers. It is also under the strict management of a higher power, or a mother company. The branches of McDonalds gets regular supervision from these mother companies to ensure that service is on the spot and there are no issues concerning customer service, hygiene and the like. This keeps the quality of the company intact. McDonalds employees also focus on its quality of food. Ensuring that the food is consistent from the day before, or decades before, and they make sure it stays that way. Consistence lies in presentation as well as taste, this gives customers a feeling that they are well-connected with the products McDonalds offers and most of the time, these repeat customers have their “usuals”. McDonalds’ customer value is also backed up by good training for employees. A McDonalds’ employee is not just simply hired; he or she has to go through training to make sure he or she is equipped for the work place to give customers the McDonalds experience they come back for.

McDonalds does share its concerns for the community as well as the environment. The company part-takes in a number of charities, donating a percentage of each product sold to a designated charity. They also face environmental concerns, such as conserving water, and using recycled products. The quality of the food McDonalds serves promises its customers that it follows all health and legal implementations, and they do not violate any health codes. McDonalds does not only advertise for its products, most of the time you see commercials or signs advertising the charities you can contribute to by buying food from McDonalds. Although, there was a severe social issue on McDonalds in the aspect of health and obesity concerns. It was believed that McDonalds is a high contributor to the growing number of children who suffer from obesity. This has also lead to many lawsuits filed against McDonalds on the topic. However, I believe that McDonalds, when consumed not in excess would not cause too much health problems.

Strengths of McDonalds include that it is the number one ranked fast-food chain in the globe, it gains the highest of revenues in the industry and is a household name known to mostly everyone on the globe. Brand values and recognition draws customers in and keeps them coming back. The consistency of products and services as well as their quality is ensured and kept on track by operations managements. Weaknesses of McDonalds include some lawsuits which were filed due to health issues, this has somewhat damaged the name of McDonalds. Along with this, some product failures contribute to McDonalds failing in meeting their goals in revenues, coming out with products which do not sell as much. Even so, the brand is still a strong one, and the strengths of the company still outweigh its weaknesses. This is the reason why McDonalds is still running after decades of opening. Although revenues of McDonalds have decreased, it still has remained in the top, and will probably stay there in years to come.

References

Mcdonalds corporation. (2010). Company Profile, Retrieved from www.datamonitor.com

Hoovers . (n.d.). Retrieved from http://0-premium.hoovers.com.oasis.lib.tamuk.edu/