The Final Strategic Direction For The Company Mcdonalds Marketing Essay

The Final Strategic Direction For The Company Mcdonalds Marketing Essay The concept of strategic positioning was considered to be a part of marketing terminology which is capable to explain the other marketing tools configuration such as price, product, place and promotion. It is generally exploited to explain the position of the organization in the market in a particular segment. This will help to improve the shares in the market, dominance, improve the profits by efficient use of factors such as cost, location, service in order to increase the ROI. Many organizations may gain particular position in any one of the 4 Ps and gaining in all is very complex and difficult as is generally aimed to attract the consumers. The strategic position is a complicated concept which require more complex commerce functioning which may generally increase the overheads to a company. For the effective planning of a strategic positioning in an organization more efficient and sophisticated tools and techniques and information are required. This concept is practiced when the organization tend to spread in to various other segments of the souk from the existing segment.(Middleton, J. (2003). The strategic positioning can be based on the insight of consumers which will determine the nature and requirement of the clients. This will assist the management for a better decision making in the form of marketing planning, strategic marketing and development of novel products. An in-depth analysis is required for a better interaction of the brand with the consumers. This will help to estimate the perceptions, attitudes, values, beliefs and trends of the current market. Jim Downey October 2007, the strategic positioning of an organization is carried to plan for the future of the organization that may include various steps such as: Concept of future obligation of the organization Collection of the information which is a multifold task such as internal and external data of the company along with the estimation and assessment of the rivals company and its indifferent services and products. Critical analysis of various factors of the organization Strategy determination either by continuing the originally practiced strategy or by altering as per the study and requirement. Finally implementation of the strategy in order to accomplish the objectives and mission of the organization. Concept and definition of Strategic Positioning: Thomas A. McLaughlin has explained the concept of strategic positioning as the position aspired by the organization. The concept is achieved by entertaining certain step by step procedure such as crafting the mission of the organization or reiterate the previous mission the organizational and souk examination screening of the internal optimistic conditions making over the position of the company in next few years the premeditated arrangements of the organization has to be amalgamated achievement plan has to be exercised accordingly The author describes that the concept of strategic planning has eventually transformed into the concept of strategic positioning. The following is considered to be various factors which are involved to achieve a Strategic Positioning of any organization. Figure no. 1: Factors of Strategic Positioning in the organization Ref: Thomas A. McLaughlin, Strategic Positioning Mind Your Strengths, Focus on the Future From the above figure, it is evident that the implementation of the concept of strategic positioning in any organization is possible through proper amalgamation of the factors such as: Vision Mission Resources Strategic planning Structure of the organization The vision, mission, objectives and values are characterized by every organization to improve its efficiency. This is shown in order in the following figure: Figure no. 2: Vision, Mission, statement of organizations Ref: Ref: http://www.foursightconsulting.com/ideas/tools/Quick%20Refernce%20-%20Creating%20Vision,%20Mission%20and%20Value%20Statements.pdf Vision: the basic aspect of Vision is to grant an outlook image of the organization in advance. This is carried on a visualization otherwise a delusion. These may include the following factors like: Enlarge the probable fore look It is ashored in actual circumstances necessitates audacity derived from resonant principles and morals Mission: every business live with a reason. The term Mission sums up to a declaration by recognizing the basis on which an organization exists along with its purpose or upcoming goals. These declarations recognize the companys community and deal with its situation about philosophy, morals, and values of application. Strategic Planning: Strategic planning helps to determine the fact that where the company at present and what are its targets and is considered as a bit higher than marketing. All the aspects like H.R, economics, I.T, procedures, appointing, back-up tactics, framework, user interface, work place outline and the variables which influence the venture along with its efficiency, can be persuaded through this. It helps the authorities get a clear vision of where the development is, what can be its long-term goals and be responsible for its future resolutions. Worrell, L. (1998) Tools and techniques of strategic analysis: 4.1) Strategic Analysis: (Juce- Vicius, 1998) The concept of strategic analysis is defined as a method for carrying analysis on the ecology of the business under which various functions of the organization are conducted and plan for the strategies. The strategic analysis of an organization is accomplished to concentrate on various functions of the organization such as: Studying the requirement of the clients To thoroughly study the market To study the threats and competitors products and strategies Various tools and techniques are involved to determine the environment of the company through the following tools and techniques such as: 4.2) SWOT analysis: according to Craig Fleisher and Babette Bensoussan (Prentice Hall, 2002) the term SWOT stands for Strengths, Weaknesses, Opportunities and Threats. This is considered as the basic tool in the strategy planning which help to scan the environment, to identify the external factors of the organization which can be overcome by proper planning. It helps to recognize the weak points and strengths i.e., internal factors of the organization. All these are planned strategically to achieve its future goals. This can be carried out as an element of strategic planning or as an independent aspect in the organization. This can be explained through the following figure: Figure No. : SWOT Analysis Ref: http://munazza1905.files.wordpress.com/2009/04/figure-4-question-which-i-can-ask-my-self-for-doing-swot-analysis-for-doing-my-own-personal-development-plan.jpg 4.3) PEST analysis: according to Jim Downey October 2007, the PEST analysis is similar to the SWOT analysis. This generally comprises issue of Political; Economical, Social and Technological aspects which are comprise all the external factors. Clear study is carried out to identify these factors and strategic plans are made. The following figure will explain the PEST analysis for an organization: Figure no. : PEST Analysis Ref: http://www.learnmarketing.net/pestmarketing.jpg Goal grids: this type of tool helps to recognize its future goals and act upon it accordingly in a strategic approach. 4.5) Supply chain analysis: according to P. Mohan Chandra, the general supply chain management includes various aspects like stock managing, logistics management and acquisition and supplying or circulation. The following are considered to be other form of tools that also may help in studying the environment of the company: Porters five forces analysis: Michel E. Porter has developed this technique in the year 1979 which is a very aggressive method for estimating and appraising the viable strengths and the current position of the company in the market. This evaluation and estimation is possible for any company by assessing the 5 forces that explains the present situation and amount of antagonism of the commerce in the market. This concept will help to determine the power situating points in the organization. Hence this is a two fold estimation of current position of the company and helps in the strategical planning for the position to reach in the future. As it helps to assess the strength points of the company and souk, this may facilitate to overcome the weak points and drawbacks. Power of the dealer: this force will help to assess the features of various dealers and their strengths and weaknesses such as the quantity of dealers for every input, estimation of the service or product of dealers exceptionality, strong points and size of the dealer, the relative change in the price for changing from the current dealer to the other. Power of the Buyer: this force is employed to estimate the cost reduction for the buyers by employing the following factors such as the current market situation with figure of consumers, estimating the significance of the individual consumers of the company, the change in price for changing from one buyer to the other. Aggressive competition: this force is generally employed to estimate the aptitude and number of the opponents of the current souk along with analyzing the services and products of these competitors. Threat due to replacement products: the products which are a near replacement of an existing product may involve excessive risk and clients may prefer the product with lesser cost which may reduce the competitiveness of the company and power of the company in the souk. Threat due to fresh contestant: this force will be able to study the new entrants in to the souk who may in turn reduce the profitability of the preexisting company. This can be represented through the following figure: Figure no. : Porters Five Force Model Ref: http://itstrategyblog.com/wp-content/uploads/2008/01/porters-five-forces.JPG 4.6) Value Chain Analysis: (Sigitas VaitkeviÄ ius, Gediminas Merkys, Asta SavaneviÄ ienÄ-, 2006) the concept of value chain analysis has been devised in the organizations to estimate the value produced by the organization to the consumers. For estimation and analysis of value chain, the internal aptitude of the company is assessed by parting various activities of the firm in to different clusters or groups. Examining and improving each cluster may raise the value which may assist to enhance the antagonism of the company through each raised value in the market. This analysis is carried out in 3 steps as follows: The first step may result in dividing the functions of the company in to two different sections such as principal activities that are directly involved in producing the product along with promotion, distributing the same to the clients and provide after sale sustainability. The remaining is considered to be secondary activities which may assist to perform the principle activities. The second step is to allocate price for each of these activities. This information will help to understand the interior potential for the management of the company that is treated to be an expensive insight. The last step is to determine the activities that are able to generate and improve the value by enhancing the fortification of the consumer and success in the souk. For this three main factors are considered to assess the function of each action of the value chain such as mission of the company and its functional undertakings of the operations, type of the organization and the system for the enhancement of value adopted by the company by studying the value inclusion by he downstream and upstream affiliates of the firm in dispersing the products to consumers. 4.7) Four Corners Analysis: Jim Downey October 2007 the concept of Four Corner Analysis has been fabricated by Michael Porter, which assists to study the rivals which may in turn acts as an aid for developing strategies for future of the company. The concept will useful for developing and altering the necessary changes in the strategic plans that may be devised by the rivals and triumphant steps followed by them, estimation of variable replies by each rival to react to that strategy. The changes in the environment and shifts of companies may also be studied through this technique. Generally in the organization this concept is overviewed and SWOT analysis is employed to determine and estimate the rivals strengths and weaknesses. But this may give a thorough analysis of the reaction that may follow by the rivals by studying the major functions such as motivations, actions, assumption of the management and the capabilities of the organization. This can be analyzed by the factors in the following figure which represents the Porters Four corner analysis: Figure no. : Porters Four Corner Analysis Ref: Jim Downey October 2007 Strategic Analysis Tools Topic Gateway Series No. 34 à ¢Ã¢â€š ¬Ã‚ ¢ Early Warning System: (Sigitas VaitkeviÄ ius, Gediminas Merkys, Asta SavaneviÄ ienÄ-, 2006) as the name implies this concept is employed to detect the warnings to the organization in advance and may also predict a suitable event which is very crucial for the company. These are considered to be the sources for the preliminary scenes to react for the opponents strategies. This comprises of the following 7 important factors such as: Defining the market: this will explain the scope of the organization such as geographical position, souk and brand etc. Open system: this will help to analyze the content about the rival in a broader way. Sorting out: based on the significance of the available data about the rivals may be screened and sorted based on the crucial necessities and act accordingly. Analytical aptitude: this will help to determine the way to be followed by the rival by building probable scenario and observe the signs for the preferred selection of any one of them out of the list. Interactive capability: this require well apposite group for attaining the signals to drive forward. Strategic planning: this will in turn explain the alterations in the current strategies followed by the organization according to the moves of the rival. Recurring methodology: this may considered as a cyclic method that may be repeated to stay up to date. Strategic Positioning of Mc Donalds: Company profile: Mc Donalds is considered to be the leading food chain company world wide and is prevailing brand globally at a rank of No. 8 in the world. It has a period of destruction which is considered to be due to unstrategical analysis followed in the company. But at present the analysis is satisfactory as the company again raise its share value and earnings. The following are few strategic approaches followed by the company which can be shown in the following figure: Figure no. : Strategic approach of Mc Donalds Ref: http://www.eszes.net/EloadasokPDF/ESSCA/MarkStrategy.pdf Phase No. 1: Vision/ Mission: the vision and mission of the Mc Donalds as part of the strategic positioning was established once the older one is accomplished for an effective positioning in the market. The vision at present is to be worlds best quick service of restaurant services by mixing various factors such as cost, quality, and products etc. development of new strategic planning for efficient expansion and attract the clients. The mission of the Mc Donalds company is to create a roadmap for the future of the company by increasing the share value of the company. Objective: the strategic objective is monitored in the Mc Donalds to pave enduring commerce positioning in its field of market and aggressiveness. Principles of strategic positioning: The following are considered to be various principles involved in the strategic positioning: Tactical formulation or conceptuation: strategical planning and strategical implementation as per strategy are assessed in this. Planning with future insight: the vision and mission for the next few years is planned in this segment. Variety in the style of thinking: aggressive thinking, risk taking capability, change management, thinking aptitude etc are commenced in to this. Power based techniques: this will include the requirement, geographical positioning, funds, asset values and strategic leadership etc. Ideas implemented in Mc Donald have to achieve strategic Positioning: Ries and Trout: it is considered to be resourceful work out performed by exploiting preexisting product of the company. Focusing on various factors such as brand expansion and interaction strategies are also considered to be a part of this. This will help to : existing place of the company is reinforced in the clients view untenanted place can be grabbed by commencing this technique This will decide the re-position and de-position of the company. This technique is very well executed in Mc Donalds which helped for strategic positioning of the company world wide. Treacy and Wiersema: it is a notion of discipline that shall be followed by the company. This is based on the different approach for providing unique services to the clients and also can introduce innovative product through strategic analysis and discipline that will improve the: Leadership in terms of product Excellence in terms of functioning Intimation with the consumers of the company. The strategic positioning of the Mc Donalds is as follows: Figure no. : positioning of various companies Ref: http://www.eszes.net/EloadasokPDF/ESSCA/MarkStrategy.pdf The positioning is achieved by the Mc Donalds due to its excellent insight for the consumers which has improved the superior decision taking ability by analyzing the trends, values, beliefs, attitudes and perception which helped to devise superior market panning, strategic marketing and introduction of novel food products in the market. Various concepts are being reviewed at every time such as: Segmentation of the customers Improving the satisfaction level of the customers Changing the menu as per the current demand Appraisal and evaluation. Continuous development of novel products and study various aspects such as acceptance from them, optimal features of the product, decision for embracing and falling from the product line etc. Mc Donalds strategically plans and implements timely introduction of novel products and services and takes various steps to improve the interaction with the clients. Hence the following can be considered as the main treasons for the effective strategic positioning of Mc Donalds: Cost leadership Innovation Thinking and acting differently by creating 24/7 availability of food items Effective expansion Providing eminent products with better service, value and cleanliness. Enhanced interaction Swift delivery with taste Availability of mobile restaurants 24/7. Consistent activity throughout value chain Periodical implementation of various tools and techniques such as SWOT, screening environment and souk, analysis of forecasting and scenario description Strategic group analysis, and value chain analysis is also considered to be a part of mc Donalds strategic positioning based on screening. The following figure may be helpful to explain the strategic positioning: Figure no. 3: Strategic position tools and techniques Ref: http://www.consumerpsychologist.com/images/cb/STP2.png Phase No. 2: Strategic Analysis Tools and Techniques in Mc Donalds: Mc Donald makes a rigorous exploitation of the strategic analysis tools and techniques periodically to estimate the environment, its changes, to estimate the companys strategic position as well as opponents strengths and weaknesses. The following are some of the tools and techniques exploited by the Mc Donalds. SWOT analysis: this is carried to determine the internal environment of the company that include aspects such as strengths, weaknesses, opportunities and threats which can be as follows: Strengths: the strengths of Mc Donalds is a global brand, global and domestic leader in the market, cost reduction and control of prices, economic growth on long term basis, superior real estate collections world wide, high accessibility, high recognition of brand, higher opportunities, able to attract all the ages of consumers, healthy environment, better generosity, strong promotion tactics, superior client service, high quality of product, interacting capability etc are considered to be it major strengths. Weaknesses: As every company has weaknesses, Mc Donald also holds weak points such as lack of clarity in the strategic direction, higher debts and feeble balance sheets, considered to have high overall costs, lack of core competencies, problems in internal functioning, poor R D, constricted line of products, deficiency of skills in promoting are few weaknesses. Opportunities: availing first 24/7 mobile restaurants and introduction of healthy hamburger is a great opportunity for the food chain expansion, ability to expand globally, increase the line of products, skill conversion in to the novel goods, taking over opponents, impeding affiliations, exploitation of innovative technologies and brand expansion. Threats: the potential threats of Mc Donalds are from fresh rival entry in the market, high priced regulations, vulnerability of the commerce operations, changes in the demography, reduced sales figure, higher no. of competitors, lower rate of growth etc are few threats faced by the company. PEST analysis: this will be able to explain the external environment of the company which also includes the factors such as political, economical, social and technological concerns of the company. Political: Mc Donalds have a considerable knowledge about the political situations of various nations where they function. The company is well organized to face any political concern Economical: it is considered to be economically stable both internally as well as the nation where they expand. Greater target of market, less cost with high earnings, concerns due to inflation is also economical factors faced by the company. Social: Mc Donald has a very aggressive reputation for its product and quality which is accepted in many social groups. As it is very tasty and natural ingredients are employed it has not many social concerns in the countries where it operate. Increased employability and working with various social groups can be observed in Mc Donalds. Technological: as Mc Donalds is known for the exploitation of innovative technology in the company. As the technical advancements takes place the Mc Donald will be able to procure and adapt to the changes of technologies to produce the products (Royle, T Towers. B, 2002). Porters five forces Plan: this is a crucial tool in strategic analysis which will explain the current position of the company in the market. Competition: Mc Donald is facing much competition from its rivals and thriving to with stand this competition to become no. 1. The new entrants now face hectic competence from Mc Donalds. It is able to surpass many food chains. Ease of entry: as the Mc Donalds is a global brand and well settled and recognized in various countries, the new entrants will face difficulty to enter and succeed. Substitutes: The companies face issues with the various substitutes offered by many companies. And with in the company varied range of products are being provided for a huge pick up for the consumers. Strength of the dealer: it is observed to have lesser strength of dealers in food and beverage industry. Strength of buyer: the buyers are also considerably having lesser strength in food industry. The other tool which tends to reposition Mc Donalds in a strategical approach is through effective value chain and inventory analysis. In Mc Donalds the analysis is made through effective inbound logistics where resources and inventory are assessed at every level of production and allocation, functioning activities which involve conversion of resources to final product, outbound logistics where the goods are distributed, sales and promoting to generate sales and client related services etc. Effectiveness of Tools and Techniques; the following are various tools and techniques exploited by Mc Donalds. The effectiveness of these tools and techniques can be observed in its financial record till date. It has been ranked worlds no. 8 position for global brand. Along with the following records: The net sales figure of Mc Donald is raised to 6.9% and the count of guests raised by 3.1% which was observed to be 6.8% and 3.8% in the previous year. The sales in the system has up surged by 11% Margins and other earnings received by the company are around 17.6% and margins due to franchisees are raised by 82.3% The share value is $3.76 which is considered to be raised by about 16% Cost allotted for operations is about $5.9 billion and expenditure of the capital is about $2.1 billion. Repurchasing of shares is implemented as part of commerce extension by $5.8 billion and enhanced dividend by $0.50 per share by 4th quarter. The current annual dividend rate is $2.00 per share. ROIIC of one year is 38.9% which was considered to be 37.5% the previous year. Strategic directions: the term strategic direction is defined as the course of action that is implemented by the company in order to achieve it goals and objectives. Any company will formulate vision and mission along with objectives as part of Strategic direction for the next few years. This can be a form of strategic planning for the development of the business. As discussed earlier Mc Donalds is keen to formulate vision and mission as per the strategic plan and attain it in a strategic approach. The inventory and resources are maintained and converted in to production along with distribution with controlled inventory process and value addition analysis. By effective exploitation of various technical advancements along with periodical exploitation of the strategic tools for estimation, the company is bale to achieve its vision and objectives. The following may few strategic directions for the company: Exploitation of technological advancement Innovative products introduction Better interactions with clients High quality and tasty products Good environmental experience Logistic analysis. Hence the future directions shall be in the form of healthy aspect of the food items produced by the company as it has observed drastical deduction in the year 2002 due to improper strategic plans and directions. The future plans shall be effective to stop repeating such thing again. Better decision making tactics and administration shall be implemented. Safety of the food Better analysis of risks such as assessment of issues Improved interactions and communicate about the chemical content and naturality to lighten the protest Improve significance Improve ethical values The issue concerned with the implementation of the above mentioned strategic direction may be arised due to the growing complexity of the company and hence collaboration shall be planned with in the individual franchisee or outlet level. Better risk management is difficult may be due to collaboration constraints, analysis shall be done to reduce the wastage which is considered to be criticism on the Mc D company for waste production inspite of recycling and overhead prices to the company. The sales can be improved by increasing the promotional value along with food safety logo along with better planning and better implementation part. http://www.echeat.com/essay.php?t=28470 Hence from the above it can be understood that with the growing complexity the strategic issues may be arised in the complex organization such as Mc Donalds hence, it should plan and execute the strategic planning separately for each outlet which will increase the scope for estimation of weak points and enhance them in to positives at each level to increase the value of the company. Presentation of the findings Hence from the above study it can be understood that strategic positioning is a concept earlier included as a part of marketing but from the past few decades it is treated separately and as a crucial concept in the organization. This concept involves a broad study about the target market, study about the clients and concept of service and enhances the strategies based on the findings to reposition or deposition the organization in the current market in a particular function. This will improve the service vision of the company. This concept involves a brief study about the capacity, inventory and demand, pricing, promotioning, control of utilization of resources etc can be estimated through this. This will help to estimate the position of the organization in the near future and system of realization can thus be assessed in divisional level of the firm. The study is made by connecting the concept in Mc Donalds to study the strategic position through various strategic analysis tools and techniques such as SWOT, PEST, Porters Five Force Analysis and Value Chain Analysis etc. As the strategies implemented by the Mc Donalds is very effective and under control, it has gained a global leader position on the factor of customer satisfaction. Conclusion: it can be concluded that, strategic position is a beneficial concept which when applied from various divisional level of the organization will increase productivity and profits to the organization which is observed in case of Mac Donalds.