A Report On Sustainable Competitive Advantage Of Mcdonald For The Subject of Strategic Human Resource Management Submitted to Prof.

Miss Chhaya Chavada Submitted by CHAUHAN SUNIL ENROLLMENT NO:-117020592028 M.B.A. SEMESTER IV ANAND INSTITUTE OF MANAGEMENT (Affiliated to Gujarat Technological University)

Introduction
All companies seek competitive advantage. It is the force that holds their company above others in their industry and gives them power to stay in business for a while. It includes brand recognition and thrives on being the first choice of consumers. An example of a company with competitive advantage is

McDonalds. They have been in the fast food business longer than the vast majority of their competitors and their brand is known globally. They are a front running company because they have great advertising and they are consistent. They are innovators in their industry by creating revolutionary ideas such as the $1 menu and introducing healthier lines of food such as salads and wraps to appeal to the changing tastes of consumers. They recently came out with a new premium coffee line that is taking business from Starbucks because it is much cheaper. McDonalds is a powerful company that consumers have come to know and trust and they have the power to change as tastes change. This keeps their competitive advantage alive. Marketing Environment: It is a well-established fact, in the modern day world for an organization to maintain growth in terms of profitability and market share must have well defined strategic edge oppose to rival companies. The competitive strategies of a company often formulate in relation to the industry in which it competes. A company's strategy is measured in terms of products and service it delivers ( Poter, 1985). The business must take into account various external factors when making decision .The ability to anticipate such external factors, plays a large part in the ability of the business to survive. The strategy of an organization can be analyzed by:

ORGANISATIONAL ANALYSIS: PESTL ANALYSIS:

A) Political Analysis: According to Porter, political environment affects decision making of

organization. It consists of laws, government agencies and pressure groups that limits, various companies in the society. McDonald has been asked by the US Government to ensure health of its customers. The company acknowledged that some of their suppliers were heavily using growth stimulating antibiotics on chicken, beef and pork. These chemicals were proven to be injurious to human health. The company is also working with people for ethical treatment of animals to improve the ways in which animals are raised and slaughtered. (Greider 200) McDonald in future should make changes in laws about packing and be much more conscious about food hygiene. And they should be more conscious about dietary health because now people become more and more conscious about fat free diet with the same taste.

B) Economical Environment According to Kotter (Poter) by changing consumers spending pattern as customers at different income levels have different spending patterns, change in major economic variable such as income interest rates, savings and borrowing pattern, cost of living have a large impact on market place.

-McDonald started a new store outside the US in 1969 and found that it will not be successful in suburbs area. But there was no commercial development in suburbs of Europe and the main market is in central cities.(Derbes 2005) In future McDonald's need to identify whether the number of target customer is growing or shrinking and whether their buying habit change in future.

C) Social environment Through marketing McDonald establishes a prominent position in the minds of customers that is known as branding. For customer it is important to understand how they feel during purchasing and what images does the product give. -McDonald was oriented towards family market and focused on attracting small children to have a treat and fun, teenagers by offering saver menu which is affordable and facility to access internet in the restaurant and a business customer as they visit during the day as service is quick the food tastes great and can be eaten in the can without affecting a busy work. Customers also enjoys noise, casual atmosphere and bright colours of McDonalds restaurant. -In future McDonald should facilitate changes in patterns of eating out ( times 100).McDonald should launch food with low calorie with maintaining same taste because its major customer are young people and they likely to purchase food which is oil free and maintain health of customer and McDonald maintain their loyalty customer

D) Technological environment -According to Porter to withstand in market and getting opportunities, companies should keep up with technological changes otherwise their product will find outdated. -McDonald increased it focus on the customer and invited new ideas from people. These ideas were turned into new products and process and the company began to act a new mantra think big, start small and scale quickly. McDonald has set up a ware house with a number of model kitchen in it. The experts test the new product and process and try the innovation at few partner restaurants. This helps them to test the menu before launching a new product in t he market. -In future McDonald's has to develop new food production techniques that will be much faster asafer and easily access by the customer. Low fat and sugar free menu should br incorporated so even colorie conscious people can utilize this branding. SWOT ANALYSIS:

Strength

Weaknesses

Opportunities

Threats

Strength:

Good quality- McDonald has build up huge brand equity. It is the number one fast food company by sales with more than 3100 restaurants serving burgers and fries in almost 120 countries sales (11,4009 million) 5.6% sales growth.

Good innovation and product development: It continuously innovates to retain customers in the business

Strong management team and loyal trained staff Large amount of investment have gone into supporting its franchise network, 75% of store are franchises.

McDonalds brand offers customers choice, great service and reasonable value.

Weaknesses:

Seasonal Across the franchise network there is a quality issue Core product line out of line with the trend towards healthier lifestyles for adults and children. Product line heavily focused towards hot food and burgers.

Opportunities:

Has great joint venture with retailers ( example supermarket) McDonald respond to social changes by innovation within healthier life style foods Its more into hot baguettes and healthier snacks (fruits) has supported its new positioning

McDonald has great opportunity to growing dinning out market for young generations and middle age group.

Consolidation of retailers, so better location for franchisees

Use of CRM, database marketing to more accurately market to its customer target group. It could identify customers and prevent brand switching off.

Threats

The main threats of McDonalds are: Burger king corporation Wendy's International Subway Jack in the box Taw Bell

Competitive Advantage: According to Philip Kottler Competitive advantage is an advantage over competitors obtained by providing customers great value then competitors provide for the nearly same product According to Michael Porter, a competitive strategy takes offensive / defensive action to create a defendable position in a company to be successful with competitive forces and generate a superior return on investment and main base of this performance is sustainable competitive advantage (SCA). Two basic type of competitive advantage

Cost leadership: A firm sets out to become a low cost producer in the industry.

Differentiation: A firm has a unique product in its industry and its is widely appreciated by customer.

Focus: A firm has sets out to be best in a group of segments.

It has two variants

cost focus cost differenciation.

McDonald's competitive advantage: - The organizational and managerial process should have a enough coordination. Presently McDonald is focused on organizational behaviour and expert managerial staff. Previously McDonald mainly focused into expansion of its outlets over the globe than strengthening its core advantage. Because of this policy it didn't get good revenue and suffer a massive loss and this leads to require a change. - Structural, financial assets of company and technology are excellent market position to establish sustainable competitive advantage. And McDonald is abundant with all such aspects. By 200, McDonald has started to concentrate on its greatest advantage - Any company starts with some specific vision and to sustain in this vision is the greatest advantage. McDonald's vision to start is to help out people who had very little time to cook and to provide quick service, quality satisfaction and cheap products, to customer. It is fact that, implementing the best value based strategy using all advantages that are unique to the company and which cannot be copied or replicated by other competitors. McDonald's has to face lot of risks, competition and setbacks but is still number one brand in fast food industries is I think because of its core competence and sustainable competitive advantages both external and internal.

Here at McDonalds, we have a very specific set of competitive advantages we try to achieve. We strive to be cost leaders and offer our food at

prices that cannot be matched by our competitors. In order to do this, your store must be efficient and keep everyday operations costs as low as possible. Doing so, will allow for our stores to be superior to other fast food restaurants because we can serve our food at lower prices than any other fast food company. Another important competitive advantage we have here at McDonalds is the speedy delivery of our food. In order to maintain this advantage over other fast food chains, you must make the processes of cooking food simple for all your employees. It must be easy to learn and easy to execute with a low failure rate to ensure the quick production and delivery of your food. These two competitive advantages comply directly with the vision of the company which is as follows: McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile. Just like any other firm, McDonalds competitive advantages are what makes it stand out when compared to other companies. These aspects of McDonalds are what helped it become the number one fast food distributor in the world.