Introduction
Mcdonald's Corporation is an international chain of restaurants. The company’s headquarters is situated in America. Richard and Maurice McDonald founded the company in the year 1940 as a barbecue restaurant. According to Sameer (2012), McDonald's has in the modern day gone global, having approximately sixty-nine million clients on a daily basis, in more than a hundred nations. The organization's core mission is to be the best place for its consumers to eat and drink. The company works extensively to provide high-quality services to its clients globally. McDonald's basically employs a divisional organizational structure. Every division in the company is in charge of a certain operational area. The structure is highly beneficial since it supports sovereignty and the company’s suppleness. The organization’s structure is characterized by a universal hierarchy, performance-based divisions, as well as function-based groups ( Sameer, 2012 ). McDonald's specializes in a vast number of foodstuffs such as double cheeseburgers, sandwiches, premium salads, chicken McNuggets, and apple pies, among more. Furthermore, the company has a vast number of suppliers who provide various resources for the production of delicious foods. For instance, Keystone Foods provides chicken, and Kenny Longaker, fish, for McDonald's. It also has massive clients who consume the company’s food, despite their knowledge of the potential health effects of this junk food. The customers are basically of different ages, and the food is provided, depending on their preference. The company’s dramatic expansion and success can be attributed to its effective business and supply chain strategies.
Business Strategies and Supply Chain Strategies
McDonalds Selected and Product Lines
What makes McDonald a very competitive company is the presence of a range of food products to gratify the diverse feeding desires and wants of consumers. This is one of the supply chain strategies employed by McDonald. Product development is one of the main strategies used to increase the company’s competitiveness and maintain the acquisition of higher profits for business success. The company features a number of permanent products in its menu, which enables it to retain its brand. The basic hamburger, the Big Mac, and the cheeseburger are one of the permanent products in this menu ( Fristedt, Hansson, Huge-Brodin, Rehme, & Sandberg, 2012 ). Nonetheless, the company also provides temporary products such as the McRib, as well as the Big Ocean burger, which is produced seasonally. The temporary product strategy offers clients’ new foods and new experiences every single visit. Additionally, by doing so, the company is able to gauge which products satisfy the needs of the clients most, so that they can be retained. Furthermore, the introduction of new products attracts more customers and keeps them eager to taste more new things on the menu. As a result, the company is able to pose stiff competition to other such companies in the same industry, lining up its strategies with strategic alignment.
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Due to the contemporary health concerns, McDonald's has introduced new health foodstuffs in their menu, so that they can cater to the health needs of diverse consumers. Healthy foods such as salads, fruits, diet coke, and wraps have been added to the menu, to attract individuals who are cautious about their health. The introduction of these healthy foods is anticipated to make the company more competitive due to the increasing health concerns, and the prevalence of various lifestyle diseases ( Sameer, 2012). As a result, more customers would frequent McDonald's, increasing their levels of satisfaction and maximizing profits, which is one of the core goals of strategic alignment.
Purchasing Management
Purchasing management refers to the process of buying goods and services. McDonald's ensures that the procurement costs are not higher than the profits it receives in the event of selling the final product. The company’s goals are highly interrelated to the purchasing manager in order to augment the overall performance of the business. Purchasing management has a direct effect on the business’s productivity. The rapid expansion of McDonald's can be attributed to its great procurement management. The purchasing management team usually has immense knowledge of the items being purchased ( Fristedt, Hansson, Huge-Brodin, Rehme, & Sandberg, 2012 ). They have comprehensive knowledge on how the supplier’s prices relate to the minimal probable cost required in the production of goods.
Additionally, the team carries out research to foster an awareness of what other sellers are willing to sell the same required item for, likens prices, and then buys from the seller with the most convenient and cost-effective price. Furthermore, the procurement team can forecast and conclude the quantity of the item that needs to be supplied, the prevailing market trends, and the feeding habits of diverse buyers. The department then budgets, orders, and ensures that all information about procurement transactions is sent to the accounting and payment department. McDonald's purchasing management has done an impeccable job in ensuring that the company acquires cost-effective resources for maximum profit acquisition and that its procurement strategies align with the goals of the organization.
Supplier Relationships
Maintaining a good supplier relationship is one of the main supply chain strategies employed by McDonald's. The maintenance of sustainable relationships with its suppliers has been a good plan for achieving a continuous flow of goods, at a relatively cheap cost. For instance, Keystone Foods provides the company with four hundred million pounds of chicken and two hundred and sixty million pounds of beef annually. Additionally, Keystone Foods has been engaging in business with McDonald's since the 1960’s due to the good rapport it has with the company. The company is, therefore, able to get more favorable terms, as well as good partners with a comprehensive understanding of the company’s business. Under effective leadership, the company has been able to maintain the loyalty of its suppliers, and acquire goods at relatively lower costs, which enables the company to attain greater profits from its finished products. The loyal suppliers have been able to offer the company required resources, keeping it in business, and giving it a competitive advantage over other such firms, an effective strategic alignment approach.
Sourcing
Sourcing entails the process of recognizing and choosing suppliers. The process occurs before the procurement of goods and services is done. One of McDonald’s major strength is that it employs an effective sourcing procedure. The procedure enables the company to prevent the occurrence of wrong actions which may put in jeopardy, the company’s profitability. McDonald's first examines its procuring wants, develops sourcing strategies, and carries out market research to detect and assessing potential suppliers. After a proper analysis is made, the most suitable supplier is selected who can be able to supply the required commodities, at the most convenient price. As a result, the company is guaranteed cost-effective products, and high profits when the final products are sold, The company gives ample time to the sourcing department, to conduct its research and acquire useful information, which is critical for the section of the suppliers with the most favorable terms, for maximum production of food, profit acquisition, and the attainment of the company’s core goals. Sourcing is a good business strategy to line up the company’s goals with strategic alignment.
Demand Forecasting
McDonald's can produce goods depending on the information derived directly from customers. Furthermore, it employs an effective demand forecasting technique, which enables it to anticipate various threats and future uncertainties. The main approach employed in demand forecasting is data acquisition on the feeding habits of consumers, via the use of surveys. Accuracy in the obtained information enables the organization to schedule adequate servers, sufficient stock food, as well as conduct good schedules of food production; to promote the quality of services rendered ( Fristedt, Hansson, Huge-Brodin, Rehme, & Sandberg, 2012 ). Demand forecasting is a good supply chain strategy of attaining valuable information on the dynamic needs and food preferences of consumers, as well as the various changes that should be made within the organization, to promote the client's satisfaction levels. Effective forecasting has enabled the company to align its products with consumer needs, impacting frequent visits to McDonald’s restaurant by clients and profit maximization.
Resource Planning Systems
As a global company, it is critical for McDonald's to prioritize effective care for its operations in different markets across diverse regions. Therefore, the company employs ERP systems to foster productive control of its operations. The organization is also able to pose intense competition to its competitors such as Pizza Hut, and Dominos by using new advancements in technology to assist in the management of its processes ( Boje, Driver, & Cai, 2005 ). The company links these systems with its Business Intelligence Software. The system impacts strategic decision making. The data provided by business intelligence enables the company to make decisions about potential markets that should be invested in. The incorporation of ERP systems and business intelligence makes the operations more efficient. Furthermore, data on consumer favorites, as well as sales volumes, is incorporated into the ERP system, which is then utilized to make future growth decisions. This is a productive supply chain and business tactic to maintain competitiveness. McDonald's frequently uses the CRM module in its ERP systems to preserve significant information such as consumer food preferences, as well as potential markets.
Inventory Management at McDonald's
Inventory management is also another supply chain strategy used at McDonald's. Communication constantly flows from the supply planning supervisor in the main restaurant to other restaurants. The regional planners comprise of people who have worked for the company and stock control experts. Discussions are regularly held on any factors that affect the inventory level. Collaboration between regional planners and the Manugistics guarantees that the company has a satisfactory supply of raw materials. Additionally, ad-hoc factors are also involved in the evaluations of the forecast of inventory, with the aim of making reductions of predicted demands, based on previous performance and promotions for forthcoming sales.
Process Management-Lean and Six Sigma
Quality management is one of the key goals of McDonald's. The six sigma practice is employed for the purpose of making stipulations which depict the desires of the customer. The approach is very useful where process management is concerned. The company’s business procedures are able to be synced to consumer wants, eradicating waste, since priority is primarily given to tasks that create value ( Yuen & Cheng, 2015). The core benefactors of the six sigma procedures are the consumers, stakeholders, and the Staff at McDonald. The fact that the company can sell seventy-five burgers in a single second can be attributed to this. The use of the six sigma methodologies is an effective supply chain strategy since it leads to the maximum gratification of customer needs, while still enabling the company to be highly competitive in global markets.
Logistics
McDonald’s employs the company uses a central ordering system for the purpose of ordering resources from different producers. The products are then directly transported to each restaurant. The company also relies on various distribution centers, as well as the Baltimore office, to make distributions. The main supplier is accountable for warehousing, transport, and transfer. This business strategy ensures that goods are availed where they are required, at the most convenient time. The products are then utilized to satisfy consumer needs and profits made in the process, bringing about strategic alignment.
Customer Relationship Management
McDonald's maintains a good rapport with its consumers to keep the business running smoothly. Furthermore, it has fully managed to incorporated customer management relationships in its business model. Additionally, CRM programs and software’s are used to obtain more information on the consumers, their relations, as well as their propensities. As a result, the company has been able to develop new products and present them in its menu, to satisfy the dynamic needs of consumers ( Nollet, Ponce, & Campbell, 2005) . McDonald's employs a CRM method which fosters better-quality data acquisition, real-time reporting, and swift resolution of identified issues. Power Centre offers a data apprehension and database which is useful in the monitoring and assessment of client relationship. The program offers the company with both optimistic and negative customer reviews. As a result, it can recognize various customer relationship concerns and resolve them before matters escalate. Customer relationship management is the most productive supply chain strategy at McDonald's.
Global Strategies
The company makes use of some international market entry approaches for growth. Sole ventures, joint ventures, and franchising are some of these market entry strategies. Approximately fifteen percent of the company’s stores are functioning as sole ventures ( Yuen & Cheng, 2015) , while most operate as franchises. Additionally, franchising has enabled the company to reap the profits of local knowledge. The company’s brand and model have been useful in stimulating expansion and retaining significant control. Through Joint ventures, the organization acquires and utilizes knowledge of organizations in closely linked markets. These business strategies have been one of the major drivers of expansion for McDonald's.
Tactics to Improve Strategic Alignment
Selected Product Lines
McDonald's can enhance its strategic alignment by using more effective tactics to create awareness of the introduction of healthier foods in its menu. The use of advertisements can be useful in achieving this goal. Most importantly, the use of social media platforms is the most productive advertisement method since the message being conveyed is able to reach a great number of people. As a result, the needs of individuals who prefer a healthier diet would be met, augmenting satisfaction, boosting sales ( Yuen & Cheng, 2015), and most importantly, impacting the realization of the organizational goals. By doing this, McDonald would be able to enhance its strategic alignment.
2. Supplier Relationships
Suppliers are critical in any business since they provide a company with the required resources to produce a final product. It is therefore critical to enhancing trust for a sustainable relationship between suppliers and their buyers. The use of technology can increase transparency and foster the creation of a sustainable relationship between these two parties ( Nollet, Ponce, & Campbell, 2005) . Integrating a procure-to-pay system enables the procurement department to obtain effective data. The system not only saves valuable time, but also makes easier, basic tasks like making more orders and, contract renewals. Most importantly, technology alleviates the probability of errors and develops satisfactory transaction systems for suppliers and buyers. The use of technology can promote the development of trust; by averting the occurrence of faults which can jeopardize the good relationship between these two parties. Consequently, a stronger supplier relationship would be established, and strategic alignment achieved since a constant supply of resources would be guaranteed, enabling the company to achieve its goals.
3 . Customer Relationship Management
It is crucial for the CRM system to be enhanced, to promote a stronger customer relationship base. The main argument in this particular section is that it is not enough to just purchase the CRM software, adequate employee training is required to promote the most productive use of the software. Boje, Driver, & Cai (2005) argue that t raining ensures that workers have a positive attitude towards the system since they are well conversant with how it is used. The lack of training fosters a negative attitude, impacting the failure to update consumer-based information frequently. Training ensures that updates are frequently made, and the required data is obtained, for the timely resolution of problems and the maintenance of a good customer relationship. Consequently, the employees would be able to grow skill wise and have the opportunity to learn, while the organization obtains maximum profits, leading to goal realization.
4. Logistics
The use of logistics software’s can be essential in enabling McDonald's to make improvements in its logistics systems, to ensure that goods are supplied and distributed accordingly. The use of the WISE supply chain management software can be useful in achieving this goal. The software is highly flexible for use in the food industry. The software would ensure McDonald's closely monitors transportation systems, to ensure that goods are availed to the required places at the necessary time ( Rowley & McMurtrey, 2016). Additionally, the software has the ability to offer consumer services via emails, the internet, and over the phone. WISE would enable the company to track the activities of various restaurants globally. It would not only enhance operation systems, but promote consumer satisfaction levels, make business operations more effective and efficient, and impact the attainment of goals in the organization.
Competitors
McDonald can learn something significant from Domino’s which one of its leading competitors is. What makes Domino’s competitive is the availability of healthier food substitutes in their menu. Again, the customers are very familiar with these alternatives since the company has employed social media advertising to create awareness of those new developments ( Nollet, Ponce, & Campbell, 2005). Domino’s prioritizes the health of its consumers over everything else. It is crucial for McDonald's to introduce healthier foodstuffs into its menu, and make the welfare of its consumers a core priority, to cater for the health needs of the contemporary society.
Conclusions
The success of a company can be rooted in its business and supply chain strategies. McDonald's has depicted tremendous growth over the years. It has expanded and developed its stores in various nations globally. The company has also retained good supplier and customer relationships, which is critical for success. Its’ loyal suppliers ensure that the company has a constant source of raw materials and resources required for the production of quality foodstuffs. The consumers, on the other hand, ensure that McDonald's has a constant flow of money, which enables it to meet its sales targets. Most importantly, the company is headed by effective leaders in various departments such as the procurement, logistics management, sourcing, and operations departments, which is vital for successful business operations. Moreover, the company employs productive market expansion strategies such as franchising and joint ventures, to establish its presence in the global market. The success of the company can, therefore, be attributed to the selection of effective business strategies, supply chain strategies, and most importantly, strategic alignment.
References
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Rowley, B., & McMurtrey, M. E. (2016). McDonald’s and the Triple Bottom Line: A Case Study of Corporate Sustainability. Journal of Strategic Innovation and Sustainability , 11 (1), 33-37.
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