For Business English II Students,
McDonald’s: Can It Regain Its Effectiveness?
The McDonald brothers’ first restaurant was founded in 1937 just east of Pasadena, California. It didn’t event serve hamburgers, had no playground, and no Happy Meals. The most popular menu item was the hot dog. Ray Kroc built McDonald’s into a mammoth business that still has 42 percent of the U.S. fast-food burger market. for Decades McDonald’s growth and profit margins were the envy of the world. McDonald’s was considered an effective business with tremendous potential for growth domestically and internationally.
Consumer tastes constantly change and adults began to get bored with the McDonald’s menu in 1960s. Responding to environmental pressure such as changes in consumer tastes, McDonald’s introduced a new sandwich called the Big Mac. As consumers grew weary of beef McDonald’s introduced bite-sized chunks of chicken in the early 1980s and within four years was the nation’s second-largest poultry seller.
McDonald’s changed as the environment demanded. It become the most recognized brand name and built thousands of golden acres stores. McDonald wanted to provide consumers what they wanted at a fair price and the best quality. However, in the 1990s McDonald’s had tried pizza, fajitas, pasta, fried chicken, and low-fat sandwiches and they have all been failures.
For a company that enjoyed significant growth for five decades based on its ability to read environmental trends, the failures have been shocking. McDonald’s has been unable to capitalize on its brand name or move beyond hamburgers and french fries. During a period when Americans are eating out more, McDonald’s has failed to capture a growing portion of the market.
the problems facing McDonald’s in the United Sates are spreading to its overseas markets. The easy markets such as London and Moscow have been entered. Now the firm is entering less bustling markets in Eastern Europe and Latin America. McDonald’s is as also faced with the quality-control problem of building more and more stores without carefully checking product quality. In a survey for Restaurants & Institutions magazine in which 2,800 consumers graded chains based on the taste of their food, McDonald’s ranked 87th out of 91. Consumers around the world want taste and quality when selecting a restaurant.
The organizational effectiveness of McDonalds is now a serious concern among franchisers, executives, and stockholders. How or whether McDonald’s can make the necessary changes to gain be the growth-oriented organization it once was is questionable. McDonald’s management has to identify the causes of the lost luster and then take specific steps to correct the problems.
As a business English student, you require to make a deep analysis and discuss the following questions:
- How can McDonald’s use its powerful brand name to help improve effectiveness?
- Is quality and taste important to you when selecting a restaurant? explain.
- What environment forces are the most different as we enter 21st century when compared to the 1950s and 1960s.
Post your answers in “leave a comment” menu in this page at the latest of 7th June 2011.
This case study is taken from:
Gibson, J.L., Ivancevich, J.M and Donelly Jr., J.H. 2000. Organizations: Behavior, Structure, Processes. 10th Edition, McGraw Hill. USA