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MC DONALDS

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Introduction

DEPARTMENT OF HOSPITALITY MANAGEMENT AN ESSAY ON Establishing a suitable Environmental Scanning System for McDonald's UNIVERSITY OF WESTMINISTRY LONDON, UK INTRODUCTION Today's business environment is turbulent and subject to unprecedented challenges due to rapid changes in the forces of external environment. Strategic management equips the organisations to take decisions that influence long-term activities of the organisation that facilitates attuning to the external changes. Environmental scan is a process that enables to plan the development strategies for a business plan. CHOSEN FIRM & DOMAIN Fast Food sector, one of the complex and unpredictable industries, is now playing a dominant role in the service economy. The fast food giant McDonald's has been chosen for applying an environmental scan. McDonald's, largest retailing chain has 31,377 restaurants across 118 countries including 1200 outlets in UK, employed 1.6million recorded $ 23 billion revenue. McDonald's developed many successful products such as hamburgers, chicken sandwiches, French fries, Happy Meal, Big Mac, Egg McMuffin and innovative products like McSalads, chicken McNuggets & McLean Deluxe Sandwich etc and follows value strategy for keeping the prices relatively low (McDonald's Annual report-2007) . ...read more.

Middle

Michael Porter's five forces model. Threat of new entrants into food retailing sector causes concern, the entry is easy as the investment is low and getting legal permissions is also easier. McDonalds encountered challenges from Burger King, KFC, Taco Bell, "Yum!" and Wendy; however the threat of new entrant of the scale of Mc Donald's is less and McDonald's also uses cost leadership strategy against new entrants. Threat of Substitutes is due to the introduction of cheap substitute products into the market resulting in the decrease of industry's attractiveness and profitability. McDonald's main competitors offered quality products at affordable rates. McDonald's effectively countered it by introducing 'pound Saver Menu" in UK. McDonald's vigorous advertising campaign attracted the customers from moving away towards alternatives. If the suppliers have a high bargaining over the management the industry's profitability reduces. McDonald's adopted Backward Vertical Integration to the suppliers for reduced price and high quality and also developed a good supplier chain system, while nominating some of the suppliers to the board of directors. McDonald's had trained suppliers in social accountability and also developed partnerships with Coca Cola. ...read more.

Conclusion

The participants are asked to rank each of the observations of SWOT analysis and top five priorities under each category will be listed for action. Step-7 Here the participants will be further asked to suggest on how to capitalize the strengths, how to over come the threats, what shall be done to overcome weaknesses and how to take advantage of the opportunities. The suggestions are then aligned into an action plan. Step-8 Monitoring and Evaluation is a continuous process that includes the identification of the indicators to be monitored, comparison of results and incorporating necessary changes. McDonalds positioned a system for M&E while constantly training their staff. Advantages & Disadvantages Environmental scanning enables McDonald's to identify and understand the events and trends in the external environment. Assessment of their relationships and possible implications leads McDonalds to take appropriate decisions for designing and developing a strategic plan. The ES has certain limitations. The quantification of the results of ES and further assessment of their impact on the firm is difficult. McDonald's also found that strategies are emergent rather than explicit. The reliability of the scan depends on the wholesomeness and relevance of the data collected and the knowledge, skill, expertise and experience of the participants. ...read more.

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