Central Decisions and Issues: MacDonald’s (Essay Sample)

Case Study Assignment: MacDonald’s
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Central Decisions and Issues
There are various decisions and issues that the new CEO must be aware of as he aims to take the McDonald to the next level. Menu is one of the issues because the previous CEO had initiated a plan to alter the existing menu and incorporate the local menus to meet the local needs. The menu must be given more weight because the customer’s needs are changing, and the business must also be flexible to meet such varying conditions. Quality service is one of the critical issue that the new CEO must address. Previous approaches to improve quality include selling dairy products free from growth hormones. Therefore, the new leadership should decide on whether to continue with that strategy or introduce another strategy. Labor is another issue that the company must address. Currently, McDonald's is ranked poorly in terms of friendliness, making it difficult for the company to attract a talented workforce. Therefore, the new leadership must decide on appropriate ways to ensure employee satisfaction, including the call of increasing pay to $15 per hour. Service expectation are another critical issue that the company must look into. Customers want services that will give them the best experience making them think about the business next time. Different customers have different expectations; for instance, millennials' expectations are different from the booming generation. Therefore, the new CEO must decide on the best strategy that must be implemented to meet customers’ expectations. Competition is increasing and therefore, the new CEO must make decision on the best strategies that the company must employ to counter competitors. Further, the CEO must make decision on how the business will address the issue of healthy lifestyle due to increased concern on obesity rate. All these issues must be addressed because they can affect the company’s performance and act as barriers towards the strategies developed by the new CEO to revamp the business. The outgoing CEO had already issued most decisions. Since he was not removed based on poor performance, the new CEO should review and consider supporting such strategies because they aimed to promote the business's growth and competitiveness.
Situation Analysis
An organization can be affected by both internal and external factors. Therefore, it is crucial to identify all the internal and external factors that might affect the organization to ensure that they do not affect the set strategies and decisions. Analysis of internal and external factors that may impact McDonald's strategic choices was analyzed using SWOT and PESTLE analysis.
Internal Factors that Impact the Strategies
Various strategies have been initiated to ensure the organization's success and competitiveness; however, internal factors can impact the implementation of such strategies. Internal factors involve those factors that are under the organization’s control. The following are internal factors related to McDonald’s firm.
Leadership
Leadership is critical to any business's success because leaders are the ones who influences the implementation of strategies and give others direction. Leadership at McDonald’s has gone through various changes and successions since 2003. For instance, in 2003 to 2004, the sudden death of the then CEO led to the appointment of Jim Skinner as a CEO who introduced “Plan to Win” to the company. The company had another CEO in 2012, Don Thompson, who initiated strategies such as optimization of the menu and improving customers’ experience. After the retirement of Thompson in 2015, Steve Easterbrook became the CEO who focused more on attracting the millennial and rebuilding it.
From this brief history of leadership at McDonald's, it is evident that each CEO initiated their strategies; however, it is not known whether the successors tried to accomplish what their predecessors had started. Therefore, the type of leadership that the new CEO will demonstrate shall determine how the developed strategies will be implemented. The new leadership should strive to motivate workers because the current trend or low workers' satisfaction can hinder the growth strategies that are in place.
Human Resource
Human resource is a critical internal factor in any business that must be taken seriously failure in which it can affect business strategies. Human resource department manages the recruitment of employees as well as addressing issues affecting the employees. From the company’s findings, it is evident that McDonald's is having a massive challenge in its human resource management because it has staffing issues. According to a national survey, most staff working for McDonald's do not demonstrate a high level of professionalism, leading to customer’s complaints. This is a serious issue, especially in the food industry, and the company is risking losing customers to its competitors. The business is also facing a challenge of understaffing, making it ranked the second last in terms of friendliness. Understaffing can affect both workers and customers because workers are overworked while customers may be forced to wait long before they are served. Overworking the staff also demotivates them, making it harder for them to provide quality services. McDonald’s has also increased its menu to more than 120 items; however, the company has not increased the staff, yet the additional items require more specialized equipment and more time. The addition of more menu items is a good strategy; however, workers are becoming exhausted. Therefore, the company is risking losing talented workers, making it harder for the company to realize its strategy because workers are the ones to implement such plans.
Product Quality
Product quality is a critical factor and a challenge to McDonald's. Other competitors in the market, such as Wendy and Fast Casual, are focusing on strategies to improve their products' quality. McDonald's must also focus on the continuous improvement of its products to increase its competitive advantage in the market. McDonald's' size and long-term existence have attracted multiple critics and negative coverage concerning the quality of its products. Employee’s dissatisfaction and understaffing have also contributed to low-quality products and services. Product quality is a significant concern to McDonald’s because, in 2019, McDonald’s was ranked lowest in the Customer’s Satisfaction Index. High-quality services and products can improve customer satisfaction; hence, they should be given more weight. Improving quality was one of the outgoing CEO's priorities, and the new CEO must consider promoting this strategy.
External Factors
External factors involve factors that are out of the company's control. These factors must also be identified because they can hinder the strategies that the company has developed. Based on the SWOT analysis model, external factors of an organization comprises the opportunities and threats. However, this report focuses on the risks because they are the ones that can affect the organization negatively when not addressed.
Competition
Competition is a significant threat to McDonald's, which can hinder the company from achieving its plans. McDonald's competitors include Burger King, which merged with the Canadian restaurant chain in 2014, becoming the third-largest quick-service restaurant chain. This company generates an annual sale of $30 billion per year. Since it is operating globally and offering the same service as McDonald's, it can utilize McDonald's weaknesses to dominate the market. Wendy's is another competitor, mostly in the U.S. market, because it is the third-largest chain in the U.S. This company also focuses on quality. Customers in the market value quality, making Wendy one of the significant threats as McDonald is trying to improve its quality. Teco Bell is also a competitor in the U.S. market, having more than 6,000 restaurants and is still opening 6 to 8 restaurants every year. Other competitors include Chick-fil-A with 2,200 locations across the 47 states in the U.S. and Fast casual that provides high-quality food without table service. All these competitors are competing for the same customers and market-making this industry very competitive. With increased competition, each company is introducing a unique strategy to attract customers, and therefore, McDonald must assess the strategies used by its competitors before implementing its own.
Political Factors
Government policies are one of the significant factors that can be a barrier to McDonald's' success. For instance, government policy requiring businesses to avoid antibiotics in dairy products is a considerable challenge for McDonald's. The company is now forced to sell dairy products free from growth hormones, which may not be adequate, considering its market size. Another challenge facing McDonald's concerns the marketing of the products to young individuals due to obesity. The study shows that 17 percent of the young population is obese in the United States, making it a challenge to the company because youths are among the leading target customers for McDonald's. Although the company has already initiated strategies to address obesity and to guarantee customers healthy food such as reducing sugar level, the business may lose customers due to the issue of obesity.
Kempczinsky's Main Decision Alternatives
From the above analysis, it is evident that McDonald's faces multiple challenges, both internal and external. There are various alternatives that the new CEO ca...