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Programmetitle Higher National Diploma in Business Management

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Unit(s) Unit 32: Business Strategy

Assignmenttitle Business Strategy Case Study Review

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StudentName/ID
UnitTitle Unit 32: Business Strategy
AssignmentNumber Assignment 01 Assessor
DateReceived1stsu
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bmission
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sion
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LO1 Analyse the impact and influence which the macro environment has on an organisation and
its business strategies
Pass, Merit & Distinction P1 M1 D1
Descripts

LO2Assess an organisation’s internal environment and capabilities

Pass, Merit & Distinction P2 M2 D1
Descripts

LO3Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given
market sector

Pass, Merit & Distinction P3 M3 D1

Descripts

LO4 Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions available to an organisation

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P4 M4 D1 Date:
Descripts
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* Please note that grade decisions are provisional. They are only confirmed once internal and external
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Pearson
Higher Nationals in
Business

Unit32: Business Strategy

Assignment 01

Assignment Brief
Student Name /ID Number

Unit Number and Title Unit 32–Business Strategy

Academic Year 2018/2019

Unit Tutor

Assignment Title Business Strategy Case Study Review

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Issue Date

Submission Date

IV Name & Date

Submission Format:

The submission is in the form of an individual written report. This should be written in a concise, formal
business style using single spacing and font size 12. You are required to make use of headings, paragraphs
and subsections as appropriate, and all work must be supported with research and referenced using the
Harvard referencing system.
The report - The recommended word count is 3,000–3,500 words for the report

Unit Learning Outcomes:

LO1Analyse the impact and influence which the macro environment has on an organisation and its business strateg

LO2Assess an organisation’s internal environment and capabilities

LO3Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given market sector

LO4Apply models, theories and concepts to assist with the understanding and interpretation of strategic directions a

Assignment Brief and Guidance:

Scenario:

Consider that you have been recruited by a well-known Sri Lankan based organisation as the Corporate Strategy M
tasked you to produce an environmental analysis and strategic growth management plan based on the use of recogn
……………………………………………………………………………………………………………………………
Section A: Learner needs to conduct an internal and external analysis as the basis of strategic planning. Ana
 PEST/LE and SWOT analysis of the organization
 Organizational Capabilities
 Analysis of the competitive environment using Porter’s Five Forces model

Section B: Learner should devise a strategic plan based on the environmental analysis and the finding includ

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 Evaluation of the different types of strategic directions available to the organisation

 Justify and recommend the most appropriate growth platform and strategies
 Produce a strategic management plan with strategies, objectives and tactics

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Grading Rubric

Grading Criteria Achieved Feedback

P1Applying appropriate frameworks analyse

the
impact and influence of the macro
environment on
a given organisation and its strategies.

P2Analyse the internal environment and

capabilities of a given organisation using
appropriate frameworks.

P3Applying Porter’s Five Forces model

evaluate the
competitive forces of a given market sector
for an
organisation.

P4 Applying a range of theories, concepts

and models, interpret and devise strategic
planning for a given organisation.

M1 Critically analyse the macro environment

to
determine and inform strategic management
decisions.

M2 Critically evaluate the internal

environment to
assess strengths and weaknesses of an
organisation’s internal capabilities, structure
and skill set.
M3 Devise appropriate strategies to improve
competitive edge and market position based
on the outcomes.

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M4 Produce a strategic management plan that

has tangible and tactical strategic priorities
and objectives.

D1Critique and interpret information and

data applying environmental and competitive
analysis
to produce a set of valid strategic directions,
objectives and tactical actions.

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Table of Contents
Executive Summary ..................................................................... Error! Bookmark not defined.
Introduction to the organization. ................................................. Error! Bookmark not defined.
Vision, mission and objectives.................................................... Error! Bookmark not defined.
EXTERNAL ENVIRONMENTAL ANALYSIS ....................... Error! Bookmark not defined.
Summary table of PESTLE analysis ........................................... Error! Bookmark not defined.
Internal Environmental Analysis. ............................................... Error! Bookmark not defined.
1. Resource Based View ...................................................... Error! Bookmark not defined.
2. VRIO framework ............................................................. Error! Bookmark not defined.
3. VRIN Framework. ........................................................... Error! Bookmark not defined.
How the available resources are utilized to improve the organizational capabilities.Error! Bookmark not
defined.
Identifying the strengths and weaknesses of Nestle Lanka PLC Error! Bookmark not defined.
1) Mc. Kinsey Model ........................................................... Error! Bookmark not defined.
2) BCG Matrix ..................................................................... Error! Bookmark not defined.
3) Value chain analysis ........................................................... Error! Bookmark not defined.
PRIMARY BUSINESS PROCESSES OF NESTLE.............. Error! Bookmark not defined.
SUPPORTING BUSINESS PROCESSES OF NESTLE ....... Error! Bookmark not defined.
4) Stake holder analysis .............................................................. Error! Bookmark not defined.
Part B........................................................................................... Error! Bookmark not defined.
I. Ansoff’s Matrix ................................................................ Error! Bookmark not defined.
Porter's Generic Competitive Strategies (methods for contending)Error! Bookmark not defined.
Bowman's Strategic Clock ...................................................... Error! Bookmark not defined.
Hybrid Strategy: ...................................................................... Error! Bookmark not defined.
A strategic management plan with strategies, objectives and tacticsError! Bookmark not defined.
•Evaluation of the different types of strategic directions available to the organizationError! Bookmark not
defined.
• Justify and recommend the most appropriate growth platform and strategiesError! Bookmark not
defined.
References ................................................................................... Error! Bookmark not defined.

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Executive Summary

This is a report about Company’s environmental analysis. The report contains about the PESTLE analysis
which identify and also discussed the various macro environmental factors that impact on the business,
highlighting the positive and negative impacts. And the SWOT factors of the Nestle Company to analysis
the organization and to identify their key strengths and weaknesses. It have been clearly mentioned the
PESTEL and SWOT analysis and how they interrelate with the internal and external parties. From the latter
part of the report McDonalds business and growth strategies has been described. How McDonalds has
placed their strategies in different geographical areas. How company has focused on those areas those points
have been discussed and as the final part relevant recommendations and conclusions has been provided.

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1.0 .Introduction

The world leading fast food retailers,. It operates more than 35,000 restaurants in nearly 120 countries
worldwide by serving more than70 million customers daily. 80% of McDonald’s restaurants are franchised.
McDonald’s revenues grew drastically $170 million since 2002

2.0. Company Overview

History

In 1917, 15-year-old Ray Kroc lied about his age to join the Red Cross as an ambulance driver, but the war
ended before he completed his training. He then worked as a piano player, a paper cup salesman and a
Multimixer salesman.
In 1954, he visited a restaurant in San Bernardino, California that had purchased several Multimixers. There
he found a small but successful restaurant run by Brothers Dick and Mac McDonald’s, and was stunned by
the effectiveness of their operation. They produced a limited menu, concentrating on just a few items – burgers,
fries and beverages – which allowed them to focus on quality and quick service.
They were looking for a new agent and Kroc saw an opportunity. In 1955, he founded McDonald’s System,
Inc., a predecessor of the McDonald’s Corporation, and six years later bought the exclusive rights to the
McDonald’s name. By 1958, McDonald’s had sold its 100 millionth hamburger.

. Products
 Burgers
 Chicken & Sandwiches
 Salads
 Snacks & Sides
 Desserts & Shakes
 Drinks

. CEO
Mr. Steve Easterbrook

. Vision
“To be the best quick service restaurant experience”

. Mission
“To be our customers' favorite place and way to eat and drink. Our worldwide operations are aligned around
a global strategy called the Plan to Win, which center on an exceptional customer experience – People,
Products, Place, Price and Promotion. We are committed to continuously improving our operations and
enhancing our customers' experience”

(mcdonalds, 2017)

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3.External environment analysis for McDonalds.

External Environment can be identified as the factors which is beyond the control of the company. The macro
surroundings impacts every commercial enterprise. It includes many elements that, if left unchecked, can
wreck a enterprise. Identify & take corrective decisions in macro environment is most important.

A macro environment includes impacts which have an effect on the complete economy of enterprise.
How plenty impact the macro environment has on a organization depends on how interlaced they may be.
Some elements, which include the economic system, will slowly have an effect on every and all commercial
enterprise. But organizations going through monetary downfall, and doubtlessly bankruptcy, are hurt more
drastically than groups in booming industries.

The economy also impacts clients. What they may be inclined to spend, on what, and the way often hinges at
the macro surroundings. If purchasers aren’t shopping for, or experience they're no longer in a position to shop
for particular products, sales suffer.

Through a correct macro environmental analysis an enterprise could verify what is the current position of
business as well as what are the positive as well as negative impacts from macro environment and how to face
the effectively. The tool which is using to analysis the macro environment is called PESTEL.

Factor Positive Impact Negative Impact

Political • Some governments
have been pressuring the fast
• Due to some trade, food industry, because fast
agreements McDonald’s is food has increasingly been
able spread their food seen as junk food, leading to
range in different obesity, cardiovascular
countries. difficulties and high
E.g. Partnership with UAE cholesterol
• The current tumult in
relations between the United
States and Russia may threaten
McDonald’s ability to
function and turn a profit in the
Russian Federation.

•
Economical • Creating more • Due to increasing tax
employment opportunities rates and inflation rates, needs
to decide that from where they
• The significant need to buy raw materials
number of outlets of from lower cost.

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McDonald’s in the
underdeveloped countries
is itself a sign of economic
momentum. McDonald’s
has positively affected the
economic scenario of the
states

Social • Due to busy life • Obesity among the

style increasing the kids has been increased
consumption of fast food significantly.

• Cultural believes
norms and different People
• E.g. generally hindu
people do not eat beef
Technological • Give best backup to • Advance technological
the management of the ways should be there to
company with advance produce the products with fine
software to manage overall quality and deliver to the
business models and to customers which incurred
promote the business massive expenses
through latest techniques
used by the customers to
approach them.
Environmental • Waste management • Taste of the people
Procedures may differ due to climatic
• Become weather and geographical
Environmental Friendly changes adopting to these
situations may difficult.
• Climatic changes may
affect products in the
international market.
Legal • Quality and safety • Different Rules and
production procedure regulation are applied on
according standards may different countries on food
increase the brand image production, Employment
and able to provide a fine laws, Health and Safety
quality product. Consumer laws and quality
management.
(weebly.com, 2015)
(Marketing Dawn, 2016)

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4.BCG Matrix for MacDonalds

According to BCG Matrix McDonald‟s is a celebrity. The reason for this is its excessive marketplace growth
and excessive marketplace percentage in the market. On the other hand KFC and Pizza Hut are the cash cows
due to their low boom price and excessive marketplace proportion. During past a few years KFC and Pizza
Hut have lost their market boom because of the reality that they misplaced their widespread struggle to their
competitor i.e. McDonald‟s. Another direct competitor of McDonald‟s is Subway. According to BCG Matrix
it's far a dog. Some of the motives which are responsible for its low marketplace share and low marketplace
increase are the much less expansion techniques being followed by the employer. Secondly they may be now
not focusing at all on all of the most important towns, as an alternative they're only centered at the goal
segments of Lahore and Karachi.

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4.1 BCG Matrix for the Products

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5.McDonalds McKinsey 7S Framework

McKinsey 7S framework illustrates the approaches wherein seven elements of corporations may be aligned
to growth effectiveness. According to the framework approach, shape and systems constitute tough factors,
whereas shared values, abilities, fashion and team of workers are soft elements. McKinsey 7S framework
stresses the presence of robust links between elements in a manner that a change in a single detail reasons
adjustments in others. As it's miles illustrated in discern beneath, shared values are positioned at the center of
McDonalds McKinsey 7S framework, due to the fact that shared values manual employee conduct with
implications in their overall performance.

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Companies grew up studying approximately 'the 4Ps' of the marketing mix: product, Price, place, Promotion.
And this model nevertheless works when the focal point is on product marketing. However maximum
developed economies have moved on, with an ever-growing consciousness on service corporations, and
therefore carrier advertising and marketing.To better constitute the demanding situations of provider
advertising, McKinsey advanced a brand new framework for reading and improving organizational
effectiveness, the 7S version:
The 3Ss across the top of the version are described as 'Hard Ss':
Strategy : The route and scope of the enterprise over the long time period.
Structure: The basic organization of the company, its departments, reporting lines, areas of expertise, and
responsibility (and how they inter-relate).
Systems: Formal & informal procedures that govern everyday activity, protecting the whole thing from
management information systems, through to the systems on the point of contact with the customer (retail
systems, call centre systems, on line structures ,and many others).
The 4Ss across the bottom of the version are much less tangible, more cultural in nature, and were termed
'Soft Ss' with the aid of McKinsey

Skills: The capabilities & abilities that exist inside the company. What it does first-class.

Shared values: The values and ideals of the organization. Ultimately they manual personnel toward 'valued'
behavior.
Staff: the Company’s people resources and the way they are developed, skilled, and inspired.
Style: The leadership technique of pinnacle management and the company's average running approach.

In aggregate they provide every other powerful framework for analyzing the agency & its sports. In a
advertising-led company they may be used to discover the volume to which the company is running coherently
toward a special & motivating place within the mind of client.

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6. Value Chain Analysis

The price chain includes all the sports from product idea to marketing and after sales service. Managing the
fee chain well allows to eliminate performance bottlenecks in addition to upload extra cost to the product
and manufacturing method. Mcdonalds has controlled its fee chain skillfully. Here is how:
Primary sports: This is an outline of the primary activities inside the value chain of McDonalds.
Inbound logistics: McDonalds has controlled a large deliver chain from which it sources uncooked
materials. Materials sourced from those providers are brilliant to the McDonalds distribution centers
international.
Operations: McDonalds is operational in around 120 countries. However, a very massive part of the
McDonalds system round 90% is run via franchisees.
Outbound logistics: McDonalds has authorized a big number of vendors which can be independently owned
and operated. Those distribution centers distribute products and resources to Mcdonalds restaurants globally.

Marketing & Sales:

“McDonald’s global logo is widely known. Marketing, promotional and public members of the family
activities are designed to sell McDonald’s logo and differentiate the Company from competition. Marketing
and promotional efforts attention on value, first-rate, meals flavor, menu preference, vitamins, comfort and
the patron experience”. (McDonalds Annual record 2017)
Support activities: This is an outline of the aid activities in McDonalds’ cost chain.
Technology: A smart fee chain isn't possible within the 21st century without making an investment in era.
HRM: In the twenty first century, financial boom is not feasible without making an investment in human
sources. By the yr quit 2017, the company had 2,35000 personnel in general which protected the employees
running in its workplaces in addition to inside the organization operated eating places.
Procurement: The company procures uncooked fabric from suppliers round the arena via its procurement
teams.
Firm Infrastructure: McDonalds has maintained a totally big firm infrastructure that includes its offices as
well as different crucial homes. It both owns and leases residences basically associated with the corporation
owned and operated restaurants.

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7.Stake holder Analysis

McDonald’s stakeholders affect the firm, specifically through manner of customer belief. The employer has
a ramification of corporate social responsibility (CSR) programs to cope with its stakeholders’ pursuits. In
principle, stakeholders affect commercial enterprise and are laid low with enterprise. This condition factors
to the importance of McDonald’s corporate social duty efforts as a way of optimizing the enterprise’s
position relative to its stakeholders. As the main firm inside the worldwide fast meals restaurant enterprise,
McDonald’s has evolved corporate social obligation techniques to minimize the poor outcomes of
stakeholders whilst pleasurable their pastimes. McDonald’s success is in part based on its company social
obligation efforts. (Marketing Dawn, 2016)
McDonald’s corporate social responsibility policy and programs address most stakeholders to ensure
prudent relationships with them. The company includes stakeholders’ interests in its CSR efforts, especially
in programs for investors and communities. (panmore.com)
McDonald’s Stakeholder Groups & CSR Initiatives
McDonald’s top stakeholders are its personnel and clients. However, the firm’s corporate social obligation
fame is likewise difficulty to the have an effect on of other stakeholders. The following are McDonald’s
fundamental stakeholder companies, arranged in keeping with importance:

 Employees
 Customers
 Investors
 Communities

McDonald’s CSR Performance in Addressing Stakeholders’ Interests

McDonald’s corporate social responsibility initiatives are full-size. They are effective in addressing the
interests of the stakeholder companies of investors and groups. However, McDonald’s handiest partially
satisfies the pursuits of personnel and clients as primary stakeholders within the commercial enterprise.
Thus, it'd be higher for the company to enhance its corporate social duty efforts. For instance, McDonald’s
can enhance its compensation method to fulfill employees’ worries about their wages. Product innovation
for extra healthy ingredients can also assist fulfill the concerns of McDonald’s customers.

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SWOT Analysis

•Strengths •Oppertunities

capitalize Invest

Shore up Identify

•Weakneses •Threats

Strengths

Brand image and fairness:

The most important strength of a worldwide emblem is its logo image and brand fairness. McDonald’s may
be very famous inside the worldwide market and in various corners of the arena. It is because the logo has
been capable of build very high degree of agree with among its customers. It is a widely known call in most
corners of the world and emblem photo is helpful in phrases of advertising and marketing as well as income
each. The stronger the emblem image of a brand, the better are its sales and profits. In case of McDonald’s
it's miles well called the leading rapid food emblem of the world.

Global presence:

Another critical strength of McDonald’s is its worldwide presence. The emblem sells across greater than 100
international locations through its franchised and organization owned restaurants. The quantity of overall
system wide eating places of Mcdonalds operational throughout 120 nations reached 37,241 in 2017. Of
those 34,108 have been franchised and 3133 were operated by the organization.

Innovative menu:

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Another crucial strength of the logo is its progressive menu. The brand serves a diverse menu that includes
hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, numerous hen
sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry cakes, sundaes,
smooth serve cones, pies, soft liquids, coffee, McCafé beverages and different beverages. In addition, the
restaurants promote a selection of different merchandise in the course of confined-time promotions. (Annual
file, 2017)

Customer service:

McDonald’s places heavy attention on customer support. It helps at attracting new in addition to retaining
vintage customers. Apart from courteous workforce, the logo also makes use of an expansion of technology
to serve and interact its customers.

Investment in virtual technology:

the emblem is making an investment heavily in new technologies to enhance its level of customer support in
addition to to have interaction its clients. It makes use of a ramification of virtual answers to serve its
customers consisting of factor of sale, and other in-shop systems or platforms.

Excellent deliver chain control:

Another critical strength of McDonald’s is its supply chain control. McDonald’s resources its uncooked
cloth from providers round the world. However, it does work to manipulate its satisfactory requirements and
enforces them with the assist of first-rate teams. It has nice centres around the sector that assist make sure
appropriate first-class raw substances being sourced from its deliver chain.

Weaknesses:
Franchisee issues: The McDonald’s system is 90% franchisee based that's certain to offer rise to franchisee
associated troubles. Due to one of these big gadget being heavily depending on franchisees exceptional
control sometimes turn out to be difficult. A large wide variety of McDonald’s eating places needed to be
closed in India best due to the fact the logo could not manipulate its franchisees there properly.

Food Quality related troubles:

Food fine related issues also erupt sometimes throughout the McDonald’s machine. In 2017, a large variety
of McDonald’s eating places in New Delhi India had been found to be serving low quality meals and needed
to be shut down.

Opportunities

Product innovation:

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The demographics of the worldwide populace have changed and this gives opportunities for menu
innovation. McDonald’s should layout its menu as per the taste of the millennial regeneration and serve
healthier merchandise. The millennial generation is fantastically fitness aware and wants healthier products.
Another key aspect is affordability. Including more low price items on the menu can also show worthwhile
for the brand and appeal to higher sales.

Market expansion in Asian markets:

The Asian markets are among the fastest developing inside the international and offer a few most important
possibilities of growing sales and profits. Both India and China are major markets which can be penetrated
deeper. But, the logo will have to consciousness on coping with its excellent there and higher management
of franchisees in those regions.

Customer engagement possibilities:

The millennial generation have to be engaged the use of cutting-edge technology and other diverse methods
for higher retention level. Millennial are a fantastically etch store generation who need cheap products and
excellent customer service. However, several brands are also inclusive of modern technology like AI and
different advertising strategies to attain out to the millennial and interact them. Apart shape social media,
there are other tools and techniques also to deliver the millennial purchasers nearer.

Threats:
Legal compliance:

Compliance troubles have grown larger within the 21st century that is due to the better degree of legal and
political regulation of international agencies. Non compliance results in hefty fines an can reason massive
financial losses. Moreover, there are so many legal guidelines related to food safety, fitness, high-quality
and labor that brands ought to control nearby compliance teams for every region they are running in. This
additionally results in better costs and problems.

Heavy opposition:

Competition in the QSR enterprise has stored growing and it has brought about higher advertising and
customer service fees for brands. The quick food enterprise is populated with numerous international and
neighborhood manufacturers. Every logo is pretty aggressive about opposition and uses so many strategies
like seasonal discounts and gives to entice clients far from the rival manufacturers. This has caused better
advertising and marketing and promotion prices in addition to studies and improvement fees for
international manufacturers like McDonalds.

Management shape:

Managing a massive and global enterprise like McDonalds isn't an clean challenge. It is mainly so whilst the
emblem is closely franchisee based. McDonalds’ 90% restaurants are operated with the aid of franchisees.

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The emblem plans to show it into 95% operated via franchisees. This has been main to management and
manage related problems for McDonalds.

Rising fitness focus and health associated grievance:

Globally, health focus is growing and those want more healthy meals. The Millennial era mainly is
surprisingly fitness aware and needs only less costly and good food. MCdoandls is known for its calorie
heavy menu and has additionally obtained grievance in the past for its unhealthy meals. Rising fitness
attention and meals quality associated complaint can harm the sales of speedy meals brands and it's miles
why they want to focus on meals pleasant and a more healthy menu.

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What is organizational capability..

An organizational capability is a enterprise's capacity to control resources, which includes employees,

efficaciously to benefit an advantage over competitors. The enterprise's organizational talents should
recognition at the business's capability to meet purchaser demand. In addition, organizational talents ought to
be particular to the company to prevent replication through competitors. Organizational capabilities are
whatever a business enterprise does nicely that improves business and differentiates the commercial enterprise
within the marketplace. Developing and cultivating organizational skills can assist small business owners gain
a bonus in a aggressive environment with the aid of focusing at the areas wherein they excel. (chron.com)

Strategic Analysis of McDonald’s Corporation

Brand photo and fairness: One fundamental aid of McDonalds this is above is its emblem picture and brand
equity. Brand image and fairness help with marketing of the emblem and assist to derive higher outcomes
from its advertising efforts. Believe is crucial in this era and McDonalds has were given a robust brand
photograph which suggests believe among its customers.

Global Presence: McDonalds is present in around 120 international locations. 90% of its restaurants are
operated via franchisees. Global presence is an important functionality which means a big consumer base and
higher income and income.

HR & Culture: The HR control and subculture of an organization are essential sources and each company
together wit h McDonalds has its own way of life. As of 2017, McDonalds hired around 235000 personnel.

Supply chain and technology: McDonalds has a properly managed deliver chain that's among one in every
of its major strengths. Apart from that the emblem has invested in era down its deliver chain as well as in other
processes consisting of inner and external conversation as well as customer service.

Innovative menu: McDonalds has were given an modern menu which is basically uniform with small
variations over the globe from marketplace to market and region to location. These small variations are made
on the way to match the flavor of the nearby customers.

Customer loyalty: McDonalds has a big customer base and enjoys very excessive level of purchaser loyalty.
Having a big and loyal patron base is an crucial strength which can result in better income and income.
Customer loyalty also can be predominant benefit in instances of monetary uncertainty.

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Resource/capability Valuable Rare Inimitable Exploited Implication

Brand Image Yes Yes Yes Yes Competitive
Advantage
Global Presence Yes No No Yes Temporary
Advantage
HR & Culture Yes Yes No Yes Temporary
Advantage
Supply Chain Yes Yes Yes Yes Competitive
Advantage
Customer Chain Yes No Yes Yes Temporary
Advantage

Analysis of the competitive environment using Porter’s Five Forces model

 Bargaining Power of suppliers

The bargaining strength of most of McDonalds suppliers is low that's because of their small length and being
scattered globally. McDonalds resources its raw material from all around the global. However, for maximum
of its raw it has numerous alternatives or several providers to supply from. There are only a few suppliers
that can't be replaced or may be changed with issue which offers them some bargaining energy. In case of
maximum their small size and monopoly role does not give them plenty bargaining strength.

 Bargaining power of customers:

The bargaining power of clients in the 21st century has grown very excessive. There are several motives at
the back of it apart from the accelerated competition. The twenty first century consumer is prepared with
statistics in addition to era and is also particularly health aware. Not just this there are such a lot of brands
inside the industry competing for marketplace percentage. Each logo is making an attempt to snatch
marketplace share away from its opponents. Fast food logo are investing lots in marketing as well as customer
support. Since every purchaser is precious and none of the manufacturers want to lose even a unmarried one
the point of interest has shifted closer to patron and brands are trying to be more and more patron oriented.
While this has intensified the race on the only hand, on the alternative it has given customers higher bargaining
energy.

 Threat of substitute Products

The chance of replacement products for McDonalds is moderate. There are several manufacturers which can
be presenting similar merchandise or have comparable menu items. The hazard isn't always simply from the

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global manufacturers but additionally from the local and smaller manufacturers. However, the threat receives
to be moderated by the brand image as well as big marketplace percentage of the McDonalds. The overall
hazard from substitute merchandise and types remains slight.

 Threat of new entrants

The chance from new entrants for McDonalds is likewise mild. Whilst there are not any great obstacles to
access, nonetheless to develop into fundamental brand is not easy due to the fact there is nevertheless a
massive investment in advertising as well as having professional human assets as nicely s having the
alternative infrastructure required for developing into a large and international brand. McDonalds is a big and
worldwide manufacturers with a string logo photo. It also holds the most important marketplace proportion n
the quick food industry. These factors mild the hazard from any new brand.

 Competitive rivalry among the existing brands

The degree of aggressive competition a few of the present manufacturers inside the rapid food enterprise may
be very high. The range of global manufacturers inside the fast meals industry has kept developing. This has
stored adding to the intensity of competition in the fast food industry. Moreover, from Dominos to Burger
King there are numerous big and influential manufacturers that are aggressively competing for market
percentage inside the speedy meals industry. There are different elements too main to higher opposition many
of the rival manufacturers. Overall the extent of rivalry a few of the existing manufacturers is very high.

Core competencies of McDonalds

 Brand image and loyalty

 Quality and the variety of meals
 Global Presence
 Attractive customer service
 Economies of scale

McDonalds’ brand image is one predominant competence that gives the emblem extra leverage in terms of
advertising and marketing as well as sales. It has a robust brand photograph in the marketplace that it has
built through the years and continues to bolster thru new campaigns and a clever method. It is considered one
of the fast food brands that serves the biggest range. However, nonetheless it serves a rather uniform menu
globally with minor nearby variations to healthy the nearby taste. Moreover, the brand is present in round a
hundred and twenty nations which also lets in the emblem get admission to a completely massive customer
base. Its worldwide parsec is most important competence that has led to increase in sales and income.
McDonalds is already recognized for customer support. However, to make such big scale operations viable as
profitably one ought to have economies of scale as inside the case of McDonalds. McDonalds has some
essential abilities such as a well managed supply chain and a pool of talented employees. All these abilities
have enabled it to develop its market percentage and client base. (rancord, 2019)

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McDonald’s VRIO/VRIN Analysis

McDonald’s Corporation uses its VRIO and VRIN resources and abilities to hold its fast food eating place
enterprise profitable. In this VRIN/VRIO evaluation of the organization, such organizational abilities and
sources are the strategic foundation for competitiveness. Considering Jay B. Barney’s version, McDonald’s
core abilities are the assets and talents that fulfill the VRIO measures: Value, Rarity, Inimitability (Imperfect
Imitability), and Organization. These measures construct at the VRIN analysis framework, which incorporates
the non-substitutable (N) criterion. This internal evaluation determines core capabilities within the useful
resource-primarily based view (RBV) of the short food organization. Using its middle abilities, McDonald’s
Corporation’s price chain imposes sustainable competitive blessings towards corporations like KFC, Subway,
Burger King, Wendy’s, Dunkin Donuts, and Starbucks. The food provider enterprise’s challenges require core
competencies for strategic positioning. In the VRIO/VRIN evaluation context, McDonald’s applies its center
abilities to enhance its price chain’s effectiveness to supply actual value to customers and make sure lengthy-
term aggressive blessings within the worldwide fast food market, in spite of robust strategic hurdles within
the U.S. Marketplace.

The following section discusses the VRIO and VRIN assessment of the organizational abilities and resources
that affect McDonald’s fee chain and strategic planning strategies. In the aid-primarily based view and the
following value chain evaluation outcomes, the corporation utilizes its resources and talents to compete
towards sturdy multinational food carrier firms and address market-particular issues. However, as this
VRIN/VRIO analysis indicates, McDonald’s needs to expand extra center competencies and sustainable
competitive advantages to improve the positioning and long-time period survival of its eating place chain
enterprise. (rancord, 2019)

McDonald's ORGANIZATIONAL RESOURCES & V R I O N

CAPABILITIES

Moderate uniqueness of food products based on McDonald’s- ✔

specific recipes

Partnership arrangements with third-party delivery service ✔

providers

New technologies for efficient order processing ✔

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Effective and efficient human resource development ✔ ✔

Efficient food production systems for cost efficiency and low ✔ ✔

prices

Expansive supply chain ✔ ✔

Size of international operations and restaurant franchise network ✔ ✔

Economies of scale ✔ ✔

McDonald’s Sustained Competitive Advantages/Core

Competencies:

Globally recognized iconic McDonald’s brand ✔ ✔ ✔ ✔ ✔

Portfolio of popular trademarks ✔ ✔ ✔ ✔ ✔

Non-core Competencies. McDonald’s Corporation has several sources and abilities which might be non-
middle skills indicated inside the VRIO/VRIN analysis desk. In the aid-based view, those capabilities support
the restaurant business enterprise’s value chain’s operational effectiveness but not lengthy-time period
competitive advantage. For instance, McDonald’s partnerships with 1/3-birthday party shipping service
providers are an organizational capability beneath the organization's strategic digital initiative. Delivery
service vendors like Uber Eats (a subsidiary of Uber Technologies Inc.) deliver fast food to clients’ doorsteps.
New order processing technology are organizational sources that are also part of the organization's virtual
initiative considered in this inner evaluation. For example, McDonald’s cell app integrates the Apple Pay
cellular price processing provider supplied by using Apple Inc. This strategic useful resource improves price
chain effectiveness and customers’ ease in purchasing. Such strategic competencies and sources, collectively
with McDonald’s meals product specialty, HR improvement, manufacturing systems, deliver chain and related
deliver chain control, franchise network, and economies of scale are non-center skills that don't fulfill all of
the VRIN and VRIO criteria, especially inimitability (VRIO analysis version), and non-substitutability (VRIN
analysis framework).

VRIO Core Competencies (Long-Term Competitive Advantages) of McDonald’s. Two core capabilities
are diagnosed on this VRIO analysis of McDonald’s Corporation. The organization’s brand is an

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organizational useful resource for profitability through emblem take into account (whilst clients think of
wherein to have their meal) and thru superb logo picture of merchandise. In the VRIO evaluation context,
McDonald’s emblem has excessive price and is rare within the industry. Competing eating place companies
can't imitate the logo nor simply create an similarly robust brand. Moreover, McDonald’s fee chain is prepared
across the most strategic utilization of the emblem as a center competency for sustainable competitive benefit
within the global meals provider enterprise. On the opposite hand, the emblems portfolio is an organizational
resource and core competency in McDonald’s speedy food price chain operations. In the VRIO evaluation
framework, this aid sustains the employer’s strategic ability to legally guard proprietary designs and
information. For instance, McDonald’s logos, consisting of meals and beverage names, are a energy that
creates an photo of distinctiveness, despite the fact that competitors’ merchandise may be similar. In the
resource-based totally view of this center competency aid, the emblems gain the commercial enterprise
through rapid food logo recall amongst customers. This useful resource satisfies the VRIO necessities for the
lengthy-term aggressive advantage of McDonald’s restaurant enterprise.

VRIN Resources and Capabilities of McDonald’s Corporation. In the resource-primarily based view, the
distinction among the VRIN and VRIO frameworks is inside the “O” or “enterprise” (VRIO evaluation) and
the “N” or “non-substitutable” (VRIN evaluation) standards. In this situation, McDonald’s Corporation’s
VRIO center skills are also the sources and capabilities that provide sustainable competitive benefit based
totally on the VRIN framework. For instance, the employer’s brand satisfies the V, R, and I criteria, as well
as the N criterion. The McDonald’s emblem is non-substitutable due to the fact no different company can
legally have the same logo. The resulting logo-based aggressive facet is specific to McDonald’s and its fee
chain. The portfolio of popular trademarks also presents sustainable competitive gain because it's far a non-
substitutable aid based totally at the VRIN evaluation version. These emblems are legally blanketed.
McDonald’s uses its trademarks to correctly promote merchandise and optimize its cost chain to supply these
products to saturated meals carrier markets global. Based at the VRIN check, this resource is a major source
of McDonald’s sustained competitive advantage.

Recommendations

Fortifying McDonald’s core capabilities can boom income revenues and develop the business enterprise’s
franchise community. This VRIO/VRIN analysis suggests that the business enterprise’s logo is a primary aid
for aggressive techniques in fast food markets. To make stronger the brand and the company photograph, and
to enhance the operational effectiveness of its price chain, McDonald’s ought to use progressive marketing
and client courting control. On the opposite hand, the agency’s trademark portfolio is also a middle
competency in this useful resource-based totally view and inner analysis of the restaurant business. Enhancing
the portfolio as an organizational aid could increase business resilience towards competition like KFC and
Wendy’s. McDonald’s should create new logos and make bigger its highbrow assets filings in extra markets
where the enterprise has a vulnerable but probably massive presence. These strategic goals mitigate the
restrained range of the agency’s center abilities proven in this VRIN/VRIO evaluation. Furthermore, growing
new core capabilities should bolster McDonald’s towards strategic challenges from competition and
regulation. For example, progressive meals provider system automation helps the operational price-
effectiveness of the value chain. McDonald’s has already taken steps in this strategic path via cashier-much
less restaurants, even though this form of automation isn't always yet carried out during the franchise network.

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Considering the aid-based view, developing new middle skills addresses the need for stronger competitive
benefits highlighted on this VRIO/VRIN evaluation of McDonald’s Corporation.

Evaluation of the different types of strategic directions available to the organisation

McDonald’s strategic plan is called ‘plan to win’. The concept of this plan is for McDonald’s to not be the
biggest fast food restaurant chain, but to be the best fast food restaurant chain. McDonald’s tries to achieve
this by applying the five P’s:.
1. People,
2. products,
3. place
4. price
5. promotion.
Along with this our firm also incorporate geographic strategic plans.

In the U.S., McDonald’s strategic plan keeps to cognizance on breakfast, hen, drinks and convenience. These
are the center areas in the United States. McDonald’s has released the Southern Style Chicken Biscuit for
breakfast and the Southern Style Chicken Sandwich for lunch and dinner. In the beverage enterprise,
McDonald’s beginning introducing new hot forte espresso offerings on a market-by-marketplace foundation.

Europe Market McDonald’s uses a tiered menu approach. This menu features: Premium choices, Classic
menu, and Everyday low cost services. They also complement these with new products and restricted-time
food promotions.

ASIA-PACIFIC, MIDDLE EAST AND AFRICA MARKETS McDonald’s strategic plan is focused around:
Convenience, Breakfast, Core menu extensions and Value.

McDonalds incorporates organizational strategic plans which consist of o Better restaurant operations, o
Placing the purchaser first, o Menu variety and o Beverage preference. With McDonald’s standard strategic
direction and its geographical strategic plans make McDonald’s international emblem gain a totally high
turnover price and greater tremendous monetary outcomes till date.

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Growth Strategies of McDonalds

In March of 2017, McDonalds introduced Velocity Growth Plan, named as such because McDonalds’re
moving fast – and in a clearly defined direction.

McDonalds know the most meaningful way to grow the business and create value for all of stakeholders is by
serving more customers more often. That’s why McDonalds’re focused on giving customers what they really
want: hot, delicious food served quickly – with an overall experience and value for their money that meets
their rising expectations.Velocity makes the most of competitive advantages, from our unmatched global scale
to our iconic brand to our tremendous presence in local markets around the world.
The key pillars of growth strategy are to:

Retain
Retaining the customers we have, fortifying and extending our areas of strength with focuses on breakfast and
family occasions.

Regain
Regaining the customers we had lost by improving the taste and quality of our food, enhancing convenience
and offering strong value.

Convert
Converting casual customers to more committed customers with coffee and snacks.

We also identified three accelerators, intended to drive growth on top of everything we’re doing:

Digital
Re-shaping our interactions with the customer – whether they eat in, take out, drive thru or order delivery.

Delivery
Bringing the McDonald’s experience to more customers – in their homes, their dorm rooms, their workplaces
and beyond.

Experience of the Future in the U.S.

Elevating the customer experience in the restaurants through technology and the restaurant teams who bring
it to life.

We’re proud of the progress we’ve made the last couple of years – and confident that guided by our Velocity
Growth Plan, we will continue becoming a better McDonald’s for customers. (corporate.mcdonalds.com)

McDonald’s established strategy determines its basic approach to developing its enterprise and competitive
gain. As the largest speedy food restaurant chain in the international, McDonald’s makes use of its
intensive growth techniques to support persisted enterprise improvement and enlargement. The associated
strategic goals dictate the enterprise’s operational activities, particularly in responding to economic

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adjustments and the movements of competing corporations. Variations in marketplace situations impose
strain at the commercial enterprise to adapt or reform its strategies. As such, McDonald’s customary
strategy and in depth growth techniques exchange over time to ensure lengthy-time period business
viability. McDonald’s generic strategy defines the firm’s overall business approach for competitiveness.
The intensive strategies determine McDonald’s approach to growing its business in the global fast food
restaurant industry. (Marketing Dawn, 2016)

McDonald’s Generic Strategy (Porter’s Model)

McDonald’s primary prevalent strategy is fee leadership. In Porter’s model, this common approach entails
minimizing fees to provide products at low expenses. As a low-value provider, McDonald’s gives merchandise
which are pretty inexpensive in comparison to competition like Arby’s. However, the company also makes
use of large differentiation as a secondary or helping typical approach. This secondary commonplace approach
involves developing the commercial enterprise and its products to lead them to distinct from competition. For
example, through McCafé merchandise, McDonald’s applies the vast differentiation universal strategy.
(mcdonalds, 2017)

Vertical integration is a strategic objective linked to McDonald’s price-management general method. For
example, McDonald’s owns centers that produce standardized combos of substances. Also, price minimization
is a economic strategic objective primarily based on the value leadership prevalent method. In addition,
product innovation is related to McDonald’s broad differentiation familiar method.

McDonald’s Intensive Strategies (Intensive Growth Strategies)

Market Penetration. McDonald’s uses market penetration as its primary intensive approach for boom. In
applying this intensive approach, McDonald’s grows by way of accomplishing greater clients in markets
wherein it already has operations. For example, McDonald’s opens new eating places in North America and
Europe by way of franchising, joint ventures or corporate ownership. A strategic goal linked to this intensive
increase strategy is worldwide growth through new locations. McDonald’s time-honored approach helps this
in depth boom approach because low charges and occasional costs empower the company to easily penetrate
markets.

Market Development. In its early years, McDonald’s used market improvement as its number one in depth
method for increase. However, market improvement is now a secondary in depth increase method due to the
fact McDonald’s already has restaurants in maximum regions around the sector, besides Mongolia, a few
elements of the Middle East and west Asia, and most people of African nations. A strategic goal for this
intensive boom method is to establish new places in new markets, which includes new McDonald’s eating
places in African or Middle Eastern international locations where the agency currently has no operations.
Based on its familiar strategy of price leadership, McDonald’s helps this in depth boom strategy by means of
using low prices to compete in new markets.

Product Development. McDonald’s uses product development as its tertiary or assisting extensive approach
for growth. In applying this in depth increase method, McDonald’s develops new merchandise through the
years, together with new McCafé merchandise. These new products may be versions of existing merchandise,

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or absolutely new products. The strategic goal for this in depth boom strategy is to capture greater customers
by way of attracting them to new merchandise. This in depth increase method has the same opinion with
McDonald’s vast differentiation frequent strategy in terms of latest products that make the company distinct.

McDonald’s real goal as a corporation is to make money for the stockholders. Their stated goal is Long term
sustainable growth for all stakeholders. McDonalds has realized that they are reaching a big maturation stage
in the business cycle, based on its profits slowing down more and more every year. It is going to be time to
reinvent or re-image this corporation to

Recommendations for McDonald’s

• More Healthy Choices

• McDonalds should develop menu choices that are healthy and socially acceptable. – It is possible to
develop a menu that people will enjoy and that also fits into the original “Speedy Service” model the
company introduced in the 1950’s.try to start the business cycle over again.

Use local food sources where possible. » Using local sources decreases the time to market, and also
decreases the use of fuel to transport goods.

Locally focused menu choices – McDonald’s in India has specific menu items – For the vegetarian market;

Increase presence in Asian countries

McDonald's has most certainly had a profound effect on China.

•When the first McDonalds opened in Beijing more than a dozen years ago, 40,000 people lined up to
observe a Big Mac and get their picture taken with the infamous Ronald McDonald.
•McDonald's is growing faster in China than in the United States.
•McDonalds owns & operates more than 600 stores across 105 cities in China.
•More than 100 more McDonald's stores will be added annually to Chinese cities within the coming years.

While offering the basic burger and

fries, McDonald’s in China also offers:
– Szechwan-style spicy chicken wings
– Seafood Soup
– Rice
– Oriental Sauces
– Taro and Red Bean Dessert

Strategic Analysis and Recommendation for McDonald’s

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McDonald’s generic strategy of cost leadership enables the company to sustain its market leadership. The
company’s broad differentiation strategy also helps. However, a possible strategic direction for McDonald’s
continued growth is to establish more locations in developing economies and in countries where the firm has
no market presence. The recommended strategic goal is to fuel business growth through a combination of the
market penetration and market development intensive strategies.

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References

Scribd. (2019). Mcdonald strategic mgmt project | Mc Donald's | Strategic Management. [online] Available
at: https://www.scribd.com/doc/29690896/Mcdonald-strategic-mgmt-project [Accessed 31 Mar. 2019].

Mcdonalds.com. (2019). McDonald's: Burgers, Fries & More. Quality Ingredients.. [online] Available at:
https://www.mcdonalds.com/us/en-us.html [Accessed 31 Mar. 2019].

Marketingdawn.com. (2019). [online] Available at: http://marketingdawn.com/pestle-analysis-of-Mcdonald's/

[Accessed 31 Mar. 2019].

Marketingdawn.com. (2019). [online] Available at: http://marketingdawn.com/pestle-analysis-of-Mcdonald's/

[Accessed 31 Mar. 2019].

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