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Business & Marketing
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Mcdonalds Fast Food Chain (Coursework Sample)


The essay talks about Mcdonalds fast food chain and analyses factors such as inflation and interest rates that affect the organisation. It also talks of the organisational management of the McDonalds Fast food chain. It analyses critical factors that should be considered in the organisation inorder to make it more profitable.


Mcdonalds Fast Food Chain.
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1.There is a 1% change in the interest rate. This is staggering increasing your company’s cost of borrowing and it is inflationary meaning that dollars are relatively cheaper.
What impact does this have on your inflight strategies and tactics? Do you create new ones? How does this line up with your mission and objectives?
An increase in the interest rates will cause the business to face a higher interest rate risk in its risk-bearing assets including loans and bonds. Interest payments on credit cards and loans consequently become more expensive. The effect of this is that it will discourage the business from borrowing and saving. The business will therefore have to borrow less in order to expand its operations (Lawler III, Edward E. and Christopher G. W., 2006). Alternatively, it will have to charge the customers higher prices to service the loan requirements. Nevertheless, an increase in the cost of borrowing will cause reduced confidence of consumer to the company due to low investments and purchases brought about by increase in interest rates.
Increase in interest rates will decline the sales revenue since the number of customers who can afford money to cater for the increased cost of services will decline. Noticeably, the closing stock of the company is bound to go up due to the decreased demand for goods and services. Increased borrowing costs may also cause a longer term slowing of purchases. More costs means less buying.
Due to the inflation and increase in the borrowing costs, the business will have to create new strategies and tactics to cope up with the condition. Some of the techniques include:
Change of strategies.
In order not suffer shortages in demand, the company has to changes its pricing strategy aimed at timing an anticipated change in rates. Nevertheless, the company will have to revise its debtors pricing policy due to the increase in cost of carrying credit for the customers will arise brought about the increase in interest rates.
How does SMART change from these?
The acronym SMART stands for;
The company should be specific with the line of products it deals with and should mostly deal with those whose are not vulnerable to interest rate fluctuation.
This means that variables in the company should be in a position of being quantified. Interest rates, stock, costs, revenues as well as any other metric used in operation should be quantifiable.
This factor provides for the company that it should set achievable goals and targets which should remain live even at times of business swings such as increase in interest rates.
This implies that even with the worsen borrowing and investment options brought about by the increase in interest rates, the company should still remain relevant by producing products that best suit the market and the target group
T-time bounded.
This factor postulates that the company should consider time factor and be in a position of assessing business times and condition in order to take advantage of available opportunities.
Increase in the cost of borrowing prompts the business to rethink its objectives and strategies. One of the strategies needed to be changed is the marketing strategy. In case the company sees that the interest rates are on the rise, it should change its marketing plan. To do this, it should target customers who are most likely to be affected by this change. A"quick sale" approach would be feasible to others while to some, an easy credit approach would be okay (DuBrin, Andrew J., 2003).
Does this change how you fit within the industries?
Depending on the policies and the strategies to implement, the manner in which the company fits in the industry will matter a lot. In a perfectly competitive market, competition is stiff and incase the company offers high priced goods due to the increased interest rates, it will lose customers.
2. A new competitor has come into the market with a new product. Their company is leaner and produces quicker. How do you change your company’s structure to match these changes? Change the structure of the company to another. Assume that your operating model is wrong and change accordingly.
The fact that the company is leaner and is producing production more quickly implies that it has technological advances in production.
According to Wischenvsky, J. Daniel & Fariborz D. (2006), an important aspect of changing technology is determining who in the organization will be threatened by the change. To be successful, a technology change must be incorporated into the company's overall systems, and a management structure must be created to support it. The greatest that faces the company is to retain its old customers and attract new ones. However, it can achieve this by changing its organizational structure as well as production methods. However, the first thing to do is to examine the new firm. The company should ascertain what is causing the company to produce its commodities quickly and more efficiently thereby acquiring all the clients in the market.
To observe the effectiveness in production of the new company, examine the following:
Supply side EOS (economies of scale)
Economies of scale arise when firms produce larger volumes enjoy lower costs per unit because they spread fixed costs over more units, employ more efficient technology or command better terms from suppliers (Sims, Ronald, R., 2002). It could be that the firm is utilizing this techniques hence enjoying dominance in the market. Notably enough, economies deter entry into the market by barring new entrants.
Incumbent merits.
No matter the size of the learner firm, it could be that incumbents cost or quality advantages are stemming from sources such as proprietary technology, superior access of resources, geographical advantages (well positioned), or the company possess cumulative experience in the production of goods.
Upon establishing the above factors, the company may then re-examine itself and change its structure in order to counter the competition newly created. To do this, the company has to understand its current position. This will involve identifying the inherent problems that the company may have and undertake measures to solve the problems. After that, the company should envisage how it would look like after changing its structure. If it looks favorable enough, it should implement the change wisely. This is to say that, it should manage the transition effectively. This may be through drawing up a plan, allocating resources to the right personnel and departments’ etcetera.
In order to match with the changes, the following areas will be affected.
Organizational structure.
Usually, the change of organizational structure is brought about by introduction of a new product/service, new management or change in technology as well.
As a manager of the company, one should change the organization structure by downsizing operations, outsourcing other products or services from other corporations, acquiring or even merging with other companies. To do this, some workers have to be laid off especially if technology is put in place.
According to Champy, James, & Nitin N, (1996), the introduction of a new product in the market will have implications for changes in production, sales and customer service. The company may opt to also manufacture new products which are substitutes the products produced by the new firm in the market. This implies that the company should look for an alternative technology which will help in producing products to compete with those of the new firm. It can do this by outsourcing the technology or train employees of the organization on how to use the machineries acquired.
Cost changes.
To effect cost changes, the company should consider reducing costs of the products so as to improve efficiency of the company in relation to the new company. Major adjustments can be made to departments to cut costs, reduce budgets, lay off employees in redundant positions and eliminating non-essential services which escalate overhead.
Process changes
The company should undertake measures to improve efficiencies and its effectiveness in the market. It should change its production methods such as; there assembly, packaging, shipping etcetera. In a service org...
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