Innovations

Even though McDonald’s is an established and growing company it still continues to drive innovation in fast food daily. Innovations have played a big role in McDonald’s profitability over the years and continue to do so today. 

McDonald’s product offerings have evolved over the years alongside the tastes of their customers. A few examples of their products include: 

• McFlurry 
• Hot Apple Pie 
• Big Mac 
• Speciality Coffee 
• Filet-O-Fish 
• Egg McMuffin 
• Happy Meal 
• Dollar Menu 

These menu innovations have allowed McDonald’s to offer products at all times of the day, allowing for greater profitability. McDonald’s takes precaution of the customers experience when a new item is introduced. 

Through its innovations, McDonald’s manages to gain higher sales and greater profits from the fast food industry. The next time you stop in for a hamburger, ice cream, or a latte, think about how different the food would be without the continuing innovations introduced by McDonald’s.

McDonald's Leadership

McDonald’s provides their leaders with a range of opportunities and support to develop leadership skills needed for both long- and short-term business challenges. Their leadership is an overall basis, for all levels of the organization, not just management. All employees are expected to live by McDonald’s values and demonstrate excellent leadership qualities. I believe this is a great statement for McDonald's to have and stick to because it will allow their employees to cooperate and participate in a certain way while living up to McDonald’s exceptions as a leader.

One way for McDonald’s to create its leadership is through career development, which refers to all the activities that individuals undertake and as an organization that contribute to learning, growth, and movement from job to job. The career development process encompasses, career planning, individual development plans, succession planning, learning activities, and much more. The career development process has five

steps to it and they are to know yourself, know your options, create your plan, learn and develop, and lastly network with others. All of these process steps are great to create leaders and to retain to the company aw well. From what I have read, seems, to be working and having great feedback come from it. It is a process that allows individuals to find themselves while pursuing a career with McDonald’s. With this development they are to help create new leaders while also gaining knowledgeable and dedicated employees. McDonald’s believes that through their career development it will help employees perform at their very best, while experiencing personal career satisfaction.

McDonald's Organizational Structure

In 1967, McDonald’s first international expansion occurred when the company opened in Canada. The company’s international division was formed in 1969 and has continuously and successfully grown since.

McDonald’s international division of the corporation has become extremely important to the company’s overall success and accomplishments. In the past decade, almost 90% of McDonald's  expansion occurred in countries other than the United States. Having business be in foreign countries has been much more profitable for McDonald’s than operating in the U.S.

McDonald’s is a centralized, international division company composed of franchisees and joint venture partners. Being an international divisional company it allows them to have separate divisions of work while remaining under the same company. McDonald’s uses its knowledge and experience to enhance its business in all foreign markets, allowing them to be one of the best. They utilize many different resources in order to perform overseas successfully and to eventually grow into more markets.

McDonald’s has always had a great and strong relationship with everyone in the company and those relationships have increased ever since the start of their international division. I believe that is McDonald’s keeps doing as they are, they will continue to be successful in all markets. Their brand, logo, and reputation also go along with being an international company. McDonald's is a known company internationally and will continue to be known by millions because of their quality, service, and reliable reputation that they have provided over the years.  

Corporate Governance

McDonald’s Corporation’s Board of Directors is entrusted with, and responsible for, the oversight of the assets of the business in an honest, fair, and ethical manner. The Board of Directors believes that great corporate governance is needed in order to fulfill their obligations to shareholders. McDonald’s believe that a good corporate governance is a journey, not a destination. I find this statement to be completely accurate because you want to take your time with information not immediately end up with a decision. With it being a

The Board of Directors sharing a McDonald's meal!
Note how happy and carefree they are, that is
what McDonald's is striving for in its business. 

journey they are committed to reviewing the corporate governance principles at least once a year, with a view of continuous improvement. While researching their principles, the one thing that I kept finding is that the one thing that they will not change is their commitment to ensuring the integrity of the Company in all of its dealings with shareholders. McDonald’s continued focus on leadership on corporate governance is an internal part of fulfilling their dedication and commitment to the shareholders. 

McDonald’s success is built on a foundation of both personal and professional integrity. Millions of people around the world trust McDonald’s. They earn the trust everyday by serving safe food, respecting their customers and employees, and delivering quality, service, cleanliness, and value. They build on their trust by being ethical, truthful, and dependable. Since McDonald's practices great governance it has lead them to superior financial performance.

McDonald’s organizational culture is different on all levels in the company but the one thing that they strive for is friendliness and respect for all. It is a team of individuals with diverse backgrounds and experiences that are working in an environment that encourages engagement. Diversity and inclusion are a big part of their organizational culture and everyday McDonald’s strives in creating an environment for everyone to contribute their best. In order to retain their great employees, McDonald’s does offer incentives and bonuses to all employees, not just the higher level positions. The rewards are unique to the individual based on their needs and wants. This will help McDonald’s drive higher level of employee commitment. They believe that when they improve the happiness of their employees, it improves customer satisfaction and positively impacts the overall business results.

Global Market

 When thinking about McDonald's and there international strategy, being a global corporation comes to mind first.  It is currently the largest fast food restaurant, serving around 68 million customers daily in 119 countries. There are 34,000 restaurants worldwide including the USA, Canada, Australia, Japan, China, Germany, Ireland, Norway, Mexico, Poland, and many more which employ over 1.7 million people. In order for McDonald’s to keep succeeding in being the largest fast food corporation they need to understand the needs of the different cultures they are providing too and establish great communication with all of their global restaurants.

McDonald's in the USA

There are numerous reasons why McDonald’s has gone globally; and by far the best decision that they have made. First, it helped increase the size of potential markets for the firm’s products & services. Second, there is a greater trend for outsourcing their products. Third, they took advantage of arbitrage opportunities. They were buying their products for a cheap price but then selling them in different countries and selling them at a higher price based on needs.  Lastly, they optimized the physical location for their business. They are succeeding in this area because restaurants are being placed in the most developed and established countries and where they are able to meet the customer’s needs, while still making a profit. I am glad that McDonald’s made the decision to go globally because it allowed them to expand their products, knowledge, and experience with others everywhere across the globe.

McDonald's in China 

Having overcome the political, economic, and management risks involved with expanding to being global, McDonald's is one of the largest global fast food corporations today. McDonald’s strategy to go globally was not something that happened right away. It took lots of planning, communicating, patience, and most of all hard work from everyone involved in the process. The corporation had to establish where they wanted all of their restaurants to be located, what they would serve based on their customers wants, and mainly to succeed in the process. I am a proud customer to say that they do a great job in all countries, well at least in the USA and Australia. McDonald’s has worked hard to get where they are today globally and have overcome many different risks but they are just beginning on their journey of changing fast food globally. 

McDonald's Patents

McDonald’s is a company that respects its competitors and suppliers and considers them a valuable asset. They strive for competitive advantages through research, marketing, quality, and service; never through unethical business practices. McDonald’s does not engage in unfair of illegal practices.

McDonald’s currently has many different patents that help make their business a success and allow them to breathe easier knowing that other companies cannot steal their idea. First, they have design patents which “protect the ornamental design, configuration, improved decorative appearance, or shape of an invention. This patent is appropriate when the basic product already exists in the marketplace and is not being improved upon in function but only in style.” This would include the McDonald’s golden arches, their straws, silverware, and much more. All of these items and more are what makes McDonald’s unique and original.

Second, they have utility patents which “protect any new invention or functional improvements on existing inventions. This can be to a product, machine, a process, or even composition of matter.” In late 2012, McDonald’s unveiled its new packaging design for its carryout bags and cups. This is the latest step in the company’s ongoing commitment to provide their customers with information to help them make informed choices. This launch began in 2013 and will continue to be spread worldwide through 2013, having the text be translated in 18 different languages. This new design is an improvement to what they previously had on their carryout bags and cups, and is considered to be a utility patent.

2013, new carryout bag designs! 

2013, new cup designs! 

McDonald’s overall business life cycle is currently at its maturity stage. They have a solid reputation, many different products within their franchises, and they are still developing more. McDonald’s will always have rivals, such as Burger King and Wendy’s but none are doing as great of a job as they are. They all have their own way of differentiating themselves, and that makes that their main focus. They keep their customers satisfied, so they are turning to other substitutes. Also, McDonald’s major functional area of concern is its production, in which they serve their loyal customers. 

Intellectual & Human Capital

McDonald’s has great intellectual assets because without them they would not be as successful as they are today. They have a reputation that people know and trust and that in the end will allow them to stand out among all the other franchises because they are unique and the customers know what to expect from them. They also have excellent employee loyalty and commitment. Because McDonald’s is able to have excellent loyalty, they are able to retain their employees longer in the business and ultimately have the best knowledge possible from everyone. Since they are treated with loyalty, this allows the employees the stay and love their job rather than trying to find another job. And lastly, they have a brand name that everyone one knows and associates with McDonald’s; which benefits them because they know that great things come from them.

McDonald’s has a strong and dedicated Human Resource Management team who recruits, selects, trains, and retains their current employees. If McDonald’s had a poor Human Resource Management team, then they would not have very good human capital at all, but that is not the case. They have wonderful human capital with all of their employee’s knowledge, skills, capabilities, and experience McDonald's. With McDonald’s having great human capital from all of their employees, this allows them to have higher retention rates and not having to hire as many employees as some of the competing fast food businesses have to do because they lack in the human capital department.

Throughout the years that they have been in operation, they have received many different awards in everything that they excel in and make the best that they can be. Some of these awards include for…

     Brands: 2012 #4 Most Valuable Global Brands, 2012 #7 Best Global Brand

     Leadership: Ranked #2 among all companies for “People Management”, 2013 #3 Most Respected Company

     Sustainability: 2010 Greenest Companies in America, 2010 Top 100 Best Corporate Citizens
 

     Workplace: Black Enterprise Magazine “40 Best Companies for Diversity” 2011, Latina Style Magazine “Best Companies for Hourly Workers” 2011, and Diversity MBA “50 Out Front for Diversity Leadership: Best Places for Diverse Managers to work” 2011

     Other: 2013 #1 Best IR Companies-Restaurants

After reading through the list of only some of their awards that they have received, it’ s obvious that they have intellectual capital, human capital, and social capital that help them be the best fast food business around. McDonald’s takes great pride in their awards, honors, but also their dedicated and honorable employees, but mostly their customers who are being satisfied in the best ways possible.

Value Chain

By using Michael Porter’s “The Value Chain” we can see how McDonald’s performs to meet the customer’s wants and produce a product they are willing to pay for, from a company they trust. Below, I will evaluate a few of Porter’s primary and secondary activities.

Support activities add value by themselves or add value through important relationships with both primary activities and other support activities.
     Procurement- Helps bring in the biggest profit margin for McDonald’s. McDonald’s has maintained the same recipe for many years for some of it products, while changing some and adding more. They continue to satisfying the customers’ needs while also looking at the environment factors that are in play. McDonald’s has a development of collaborative “win-win” relationships with its suppliers; allowing them to trust them and have high buying power.
     Technology-The most important technological factor is in McDonald’s food preparation and serving. The soda machines are most efficient, in that you only have to press a button and it knows when to stop filling. This gives them an advantage to other companies because of the less amount of time it will take to get the soda prepared for the customer. Another bigger factor is their heating lamps, how they are able to create enough heat to keep everything warm without making them soggy, or ruining the contents and taste of the product.

Primary activities contribute to the physical creation of the product or service, its sale and transfer to the buyer, and its services after the sale.
     Service- McDonald’s most important asset of their business is service. They are able to customize orders for individuals and have mass producing. They have a quick response to the customer’s needs and wants. If McDonald’s was lacking in the service area, they would lose customers to Burger King and Wendy’s because of how they satisfying the customer’s needs. This is something that McDonald’s will not want to outsource because it is such a powerful and important factor to their company. It needs to be done by those who understand McDonald’s and who truly want to make a difference in individual’s lives.
     Operations-McDonald’s provides an efficient layout and workflow for everyone to be able to get the products made quickly but also effectively. Having a proper workflow area really helps McDonald’s so not all employees are in one area at once and no one is running into one another. This goes to show that McDonald’s companies have taken the time to establish the workflow area for employees to prepare the products quickly for the customers.
     Outbound Logistics-McDonald’s provides great outbound logistics because they have an effective shipping process which provides quick and easy delivery to its locations. They are able to get the food from the restaurant to its customers with a good system of work and have fast cooking time for all products ordered.
     Marketing and Sales-It seems McDonald’s is always trying to improve their brand image and name. Over the past few years, McDonald’s has stepped it up with improving their facilities, by creating a more family friendly environment while being able to enjoy delicious food. Because of the renovations and changes that they are making, they are kicking into gear by increasing their marketing in all areas, which then starts to increase their sales, making them a profitable and efficient company to enjoy any meal of the day with.

McDonald’s also has some tangible and intangible assets that help benefit the company tremendously. Its physical faculties and equipment is what makes up some of their tangible assets. Having both an environmental friendly facility and high speed equipment makes it hard for any other fast food restaurant to compete with them. McDonald’s also has some intangible assets including, their reputation, human capital, and their brand itself. Having the brand and reputation that McDonald’s has, has helped them succeed for many years now and will continue to do so in years to come.

External Environment

McDonald’s Corporation is currently the largest fast food restaurant, serving around 68 million customers daily in 119 countries. There are currently 34,000 restaurants worldwide and employs 1.7 million people. In order for McDonald's to keep succeeding in being the largest fast food restaurant they need to focus their attention on certain aspects to maintain their success and be the best.

McDonald's is a restaurant that attracts all ages. It has something for the kids, teens, and adults. The dollar menu is a big hit for McDonald's because it draws in those that are willing to spend only a dollar on a hamburger and be satisfied.

This country is starting to become obese; does McDonald's have anything to do with that? Probably yes. So McDonald's needs to start considering implementing healthier options on their menus and start taking away some of the unhealthier foods. I know that they have started adding in fruits, salads, and smoothies, but if this were done to a greater extent at all the locations McDonald’s could help lower the obesity rate of individuals everywhere.

If there was a way for McDonald's to eliminate how much grease is used to cook their food they would be creating much healthier options for us. And if there was an improvement to how much salt is placed on the French fries, that would help eliminate the amount going into the body but also lowering the rate of having high cholesterol.  

Also, if McDonald's started to make their cups, cup holders, wrappers, and napkins more biodegradable it would have a more lasting impression on the world. Helping the environment should be one of McDonald’s objectives when doing business because they do create so much garbage but if they were able to create new earth friendly materials it would help the environments in the long run. 

There will always be the possibility of having new entrants come into the fast food business but the way that McDonald's is operating and conducting itself they should not be worried. They do well in all 119 countries that they serve and will continue to grow.  Since McDonald's is a restaurant they do not have to worry about those purchasing anything off the internet. They are concerned will how well they are publicizing and performing at serving the customers. There is a high chance that substitute products may be produced by another entrant or rival. Because of the increased push on having better food and eating healthier, I believe that if McDonald's does not create healthier products for their line they may end up losing to another company that has a bigger and better product. And lastly, having Burger King and Wendy’s close on them for being the best fast food restaurant, McDonald's needs to keep what it is doing but also paying attention to concerns of their customers, or they may end up losing them. Keeping their dollar menu at a dollar will greatly keep them in good standing and having great customer service will be the number one reason why their customers will continue to stay with them.  Also, making sure that they are satisfying the needs of the certain countries that they are operating in will help them continue to be the best fast food restaurant.

These are just some of the issues that McDonald's could consider doing to make their business better and be more satisfying to the customers. McDonald's can improve on some things within the organization but as long as they continue what they are doing for now, they are golden; they just need to keep up with the new trends and wants of their customers.  

McDonald's! :)