The Story Of McDonald’s: History, Products, Vision, And Strategy

History of McDonald’s

McDonald’s is an international brand who serves foods and drinks to the consumers including burger, fries and milkshakes. The journey of McDonald’s all begins in the USA in 1954 with the contractual agreements of Ray, an American businessman and McDonalds’ brothers. By 1960, Ray in the USA opens 200 restaurants and also bought McDonald brothers share for $3 million in 1961 (Dunlap, 2018). Later in 1965, McDonalds’s Corporation had been established when it went public.

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The expansion of McDonald’s takes up at a very fast pace as it becomes the world’s largest fast-food chain with a presence over more than 100 countries with the customer base of 69 million.

The vision statement of the McDonald states that they want to become modern and progressive burger company by bringing outstanding customer service and experience. This can be done by providing the customer with high-quality food and global experiences that make feel them valued (Specter, 2015).

The mission statement of the McDonald is serving as a strategic tool to reach the vision set by the top executives at the beginning. This states that they want to give the customers their favourite place to drink and eat. In addition, in respect for the employees, the approach is to set a great place for the people to work. The mission statement of the McDonald also consists of their CSR activities, which is for the whole community.

The corporate strategy of the McDonald is to work in the best possible manner for providing the value to the customers, community and employees of the company. The culture of McDonald is also strong enough and in the favour of the global youth employment.

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The major products of McDonald, which are unique to the New Zealand menu, are –

  • Georgie Pie– Made to the original recipe using quality New Zealand beef with classic Steak Mince ‘N’ Cheese pies freshly baked in the McDonald stores every day.
  • McMuffins– Special product not available on All Day Breakfast menu. It is sourced from the farmers in the major regions like Taranaki and Waikato.
  • The Boss– Includes two juicy quarter pound, beef patties, double cheese, lettuce, onion, tama to and mustard all over.
  • Kiwi Burger and Big breakfast– It includes two sausages, has brown scrambled eggs and a toasted muffin.
  • Breakfast bagels– It comes in two flavours: BLT or NYC.
  • Happy Meals – The Companyteamed up with Hotel Transylvania 3 to bring you a little bit of fun in every box with the presence of toys.
  • Kiwi Pavlova– Only available in summer and spring months.

With these delicious foods, the McDonald’s value proposition will also include convenient locations, efficient service, in-store facilities, distinct products like a big mac and a broad range of food choices (Leavy, 2010). This value proposition will give consumers a reason to be a part of the brand.

McDonald had a competitive advantage, which is obtained by its core competencies, efficient deployment of physical assets, technological and managerial resources. The major core competencies of McDonald are its secret recipe, product line enhancements, cost leadership strategies and economies of large-scale, unique brand identity and strong value chain (Siegel & McWilliams, 2011).

In addition, over the last few years in New Zealand, McDonald has evolved with their menu items with their customers, and shown leadership as a responsible corporate citizen. They are persistently reformulating their product so that to reduce the saturated sugar, fat and sodium without affecting taste and quality. They also extend the range of beverages and foods so that to add value to the customer meals. In 2016, they move to 100% fresh eggs being as a free range. McDonald New Zealand also came up with the first digital marketing solution to prevent children seeing McDonald’s advertising online. In Greenlane, the concept of Burger bar was also introduced including vegetarian + gluten free options.

Vision and Mission Statements

In the environment scanning, the first analysis needed to be done via PESTEL, which includes –

  • Political factors– The Company is influenced by many factors in the world as each nation and state as its own policies. For example, McDonald is facing certain issues in the franchising for the violation of religious laws relating to the food contents. In New Zealand, the 2 principles legislations i.e. Commerce Act 1986 (encourages competition in the New Zealand market) and Fair Trading Act, 1986 (For consumer protection against unfair trade practices). Other important legislation important to McDonald is because they employee people i.e. – Human Right Act 1993, The Equal Act 1972 and Employment relation Act 2000.
  • Economic factors – Some economic factors like inflation and exchange rate can affect McDonald in facing hardship (Macdonald & Muellbauer, 2014). These are those factors which are present in every. Sometimes customers also face this problem due to the budget as to whether they have to use their money for fast food chain or not. The income aspect is also important for the McDonald as they know that the average annual salary in New Zealand is $41,200 and considering this, the company have to change their pricing strategies. In most of the countries’ economies, the unemployment rate also affects the business like in New Zealand, the rate of unemployment is 4.5%.
  • Socio-Cultural Factors– Over the globe, there are different types of consumers present in the market which are served by the McDonald and that also includes families, children’s, students and business peoples. McDonald strategy is different for different country and others factors too. For example, the company give free Wi-Fi to the students who come to McDonald for eating (Gurtoo, 2011). In New Zealand, there is a drinking culture also which makes the company offer drinks with their food but the legal age for buying alcohol is 18.
  • Technological Factors – In McDonald, technology is something which is changing with time and development. It includes changes in the value chain and logistics of the management, inventory system, and payment system with customers and suppliers. In New Zealand, McDonald also has a new system of order where the specific menu item is not given on time, the customer can pick it up for free.
  • Environmental Factors – In the past, McDonald had to face many environmental issues relating to the burgers packaging, and cups made of Styrofoam, which cause harm to the environment (Hrangkhawi, 2017). Later on, they stop giving food in polystyrene packaging as their brand value is diminishing in many articles and the internet. They also started to use non-hydrogenated cooking oil in all their stores. The list of items in their menu also changed a lot with organic milk and sustainably grown coffee. They started using cardboard made up of 70% recycled brown paper bags.
  • Legal Factors – Some of the legal requirements need to be followed by McDonald which is imposed on its macro-environment. In New Zealand, the basic legal requirements are – minimum wages level, regulations regarding local health in schools and workplaces and Animal welfare regulation (Boeri, 2012). These are also a threat possess to McDonald in their business.

Now, for a more deep understanding of the environmental factors, it is also necessary to identify its competitive environment, social responsibility and ethics in business –

  • Competitive Environment– In every industry, there are numbers of competitors who affects the business in terms of profitability. In New Zealand, the biggest competitor of McDonald is KFC and Burger King. The competition is high in a fast food restaurant because of the market saturation (Terry & Forrest, 2007). The other factors are the high numbers of firms and low switching cost. In addition, the customer in McDonald feels low switching cost and this make them easily transferrable to another chain of a restaurant like Wendy’s. For example, In the battle of burgers, McDonald comes ahead and becomes the winner ahead of Burger King in New Zealand and as per the financial statements, McDonald restaurant New Zealand, sales were increased to 6.5 per cent in the year 2016, compared to the Burger Kings New Zealand as it sales were increased by 4.2 percent.
  • Social Responsibility and ethics in the business – According to McDonald perspective, they believe that Social responsibilities are not any type of program, which begins, and ends rather they are a part of the company (Mare?, 2008). The major issues faced by McDonald in-terms of social responsibility are related to animal welfare and the environment. Generally, the corporate social environment is a part of business ethics which is expanding in the world. It basically an economic and social advantage where the business has to run in an appropriate way which fulfils all ethical and legal standards. For this, the management needs to satisfy the community needs.

One of the most recognisable brands in the world, McDonald is no stranger of the digital media and other emerging technologies effect on the business and customers. McDonald accepts various digital platforms like digital payment and digital ordering in the various market of the countries which help them in the Customer Relationship Management and cost saving. The most efficient and brilliant digital marketing campaigns launched by McDonald are –

  • With the concern regarding the public health issues relating with the quality of the food, McDonald New Zealand started a campaign on YouTube which offers the customer to ask any type of question relating to the food and the company will answer. More than 20,000 questions were asked on the YouTube channel and where each of the questions was answered.
  • McDonald monopoly goes digital when the company latest product allowed customers to use the stickers for winning prizes with the help of mobile devices in entering a unique code.
  • Some of the products like smoothies and ice creams depend on the weathers but McDonald want to connect with the consumers and that why they launch Iced Fruit Smoothie App where many interactive games are there to help consumers to win free smoothie redeemed in their stores (Baig, 2012).
  • McDonald also uses various social website which helps them in spreading necessary information and also serve as an electronic advertisement. These social websites are Facebook, Twitter and Google + (Shalin, 2016). The McDonald New Zealand Facebook page has around 79 million likes. The company believed to have frequent updates in order to maintain people attention and thus post an average of fife updates in a month.
  • In response to the digital strategy, the company already had introduced the strategy which enables the customers to make customize orders according to their needs. The company also enables promotion via mobile applications such as push notification on day offers.
  • Geographic factors– It includes dividing the market into many geographical areas. The presence of McDonald is all over the world and anyone can find its outlet anywhere. When considering the metro size and city size, it varied from under 5000, 20000-50000 and 50000+. It is in the climate of Northern and Southern and any individual can find it in rural areas as well. In New Zealand there are several benefits and drawbacks to do business like considering the advantages, any business can find New Zealand a developed market due to its well-maintained economy and they can also get tax relief in many forms. The economy policy of New Zealand is also well framed for every business and all these will remove various barriers to enter into the market. Although there are several disadvantages too like the disparity in culture, tight law in property registration, etc. but these can be replaced if the organization frame correct business model.
  • Demographic factors – In considering these factors, the company need to study the population, which can be scattered and divided based on gender, age, income, and lifecycle of family (Utami, 2016). In general, McDonald served products for all gender, age and family size population. The company also consider people with all types of income whether a businessman or a student. In terms of religious factors, the company respect all types of cultures like in India, the eating of beef is treated as a sin and in Mexico the company offers the burger with more chilli sauce as in every country, their outlet is present in every state and locality and this shows that the company caters to all races and nationality.
  • Psychographic factors – In these factors, the company divided the consumers on several bases like social class, personality or lifestyle (McDonald, 2012). From the perspective of McDonald, the company cater to all types of classes like considering the budget, they serve expensive meals for the people who did like to purchase the product of ‘M’ range category.
  • Behavioural factors – These factors are based on certain variable differ from customer to customer like patterns of eating, usage rate, price sensitivity, loyalty towards a brand, and benefit against the feature (Gunter & Furnham, 2014). McDonald is readily available for all types of occasion but many believe and perceive the birthday parties of the kids. The company also has a long list of loyal customers who will only purchase meals from them. Considering people attitudes, it seems to be positive relating to the product they received.

Now, two-target profile within the segmentation will be –

Geographic

Happy Meals

Kiwi Pavlova

Country, region and Continent

Happy meals are a part of the McDonald menu items, which can be found in any country, but the difference can be in terms of food choice and the toys included in the meal.

It is only available and sold in the spring and summer months.

Density, City and Metro Size

Not relevant

Not relevant

Demographic

Gender, Age, Family Size, Religion, Race, Nationality

Not relevant

Not relevant

Income

Psychographic

Personality, Social Class and Lifestyle

Not relevant

Not relevant

Behaviour

Occasions

Not relevant

Not relevant

User Status, Benefits, Loyalty Status, Attitude

This factor needs to be important as the products served by McDonald needs to be of high quality and only then the customer will be satisfied. Loyalty can come with this method only and attitude is also important as this will make keep coming them to their stores.

The benefits should be more than the customer satisfaction and the products served by McDonald need to be of high quality and only then the customer will be satisfied. Loyalty can come with this method only and attitude is also important as this will make keep coming them to their stores.

Conclusion

McDonald had faced several difficult challenges in its business life cycle. The future success of the company is only possible when the company maintain its core strengths and capability with the enrichment of quality on a timely basis.

The company competitive environment is very tight due to the presence of many competitors in the market like KFC, Burger King and Star Bucks. There is a need for carefully understanding the market so that their weakness can be overshadowed by their strengths. In addition, the company can make their strategy aligning with the markets and economy of New Zealand. New Zealand is known to be a high-income economy and ranked as the 13th most developed country in the Human Development Index in 2017. McDonald can also get various traffic exemptions on the specific goods. The policy and economy of New Zealand also tightly regulates the all the number of business, the volume of products and thus McDonald or any other company can be assured that they are not entering in overcrowded markets. Also, new Zealand can be seen as a prime location for many foreign offices and that is why it also becomes the prime location of exporting. 

On the contradictory side, some businesses may find it difficult to do business in New Zealand as due to the problem of registration of property, getting electricity connection (as it requires 50 days to complete), difficulty in getting credit and protecting investors, culture differences, etc. However, these advantages can be undercover if the company makes correct prior plan and procedure to establish a business successfully. This can include getting a lawyer to learn all the rules relating to the country business, sourcing of market information, checking local authority rules, etc. This all will help them to perfect structuring in their business model. 

The company is also using the medium of digital technology but it is not enough, as they should focus on the implementation of disruptive technologies in all aspects of their store like improving the efficiency of processing, technological advancement, increase customer experience and saving costs.

References

Baig, F. N. (2012). McDonald’s breakfast launch dilemma. Emerald Emerging Markets Case Studies, 2(8), 1-13.

Boeri, T. (2012). Setting the minimum wage. Labour Economics, 19(3), 281-290.

Dunlap, T. (2018). 11 Surprising Facts About the Real History of McDonald’s. Retrieved from https://people.com/food/11-surprising-facts-about-the-history-of-mcdonalds/

Gurtoo, H. C. (2011). McDonald’s to woo customers with free Wi-Fi. Retrieved from https://www.hindustantimes.com/business/mcdonald-s-to-woo-customers-with-free-wi-fi/story-UpR276GVQ2hqg6ytMmZVnI.html

Hrangkhawi, V. (2017). MCDONALD’S – HEALTH AND ENVIRONMENT. Retrieved from https://www.gaiashomes.com/mcdonalds-health-environment-2/

Leavy, B. (2010). Design thinking–a new mental model of value innovation. Strategy & leadership, 38(3), 5-14.

Macdonald, R., & Muellbauer, J. (2014). Exchange rate pass-through in developing and emerging markets: A survey of conceptual, methodological and policy issues, and selected empirical findings. Journal of Development Studies, 50(1), 101-143.

Mare?, R. (2008). The Dynamics of Corporate Social Responsibilities. Netherlands: Martinus Nijhoff Publishers.

Shalin, H. J. (2016). Social Media Data Extraction and Content Analysis. USA: IGI Global.

Siegel, D. S., & McWilliams, A. (2011). Creating and capturing value: Strategic corporate social responsibility, resource-based theory, and sustainable competitive advantage. Journal of Management, 37(5), 1480-1495.

Specter, M. (2015). Freedom from Fries. Retrieved from https://www.newyorker.com/magazine/2015/11/02/freedom-from-fries

Terry, A., & Forrest, H. (2007). Where’s the beef-Why Burger King is Hungry Jack’s in Australia and other complications in building a global franchise brand. Nw. J. Int’l L. & Bus, 28, 171.