Strategy and Implementation

The scope of McDonald’s strategy mainly focuses on a certain demographic segment

of the population, namely, the adult consumer aged 18 – 35. This demographic is crucial to
McDonald’s success as consumers in this age group tend to frequent fast food restaurants
more than any other age group. As such, McDonald’s tailors its marketing strategy and its
menu line to befit this age group.

Distinctive Competencies:

 New product innovation and improvement.

 Superior product quality on the basis of “fresher, superior ingredients”.
 Innovation and partnerships.
 Location, Low price, Cleanliness, and High value of products.

These various distinctive competencies have enabled the McDonald’s enterprise to

sustain its current market position and its overall success. In terms of new product innovation
and improvement, McDonald’s consistently introduces new sandwiches at various economic
cycles based on ongoing research and development. Also, the “freshness” of all of its food
offerings has propelled the McDonald’s group into an aggressively competitive position as all
of its ingredients are ensured for safety and “freshness.” Finally, McDonald’s retail locations,
competitive pricing structure, and cleanliness are all factors that help retain the current
customer base as well as attract potentially new customers.

Competitive Advantage:

 High Quality is a key differentiation factor for McDonald’s. It positions McDonald’s

as a premium fast food restaurant with food made to order and fresh.
 Quick and inexpensive way to have a meal
 Elevate the customer experience by utilizing improved people quality

McDonald’s primary competitive advantage derives from the production of high

quality sandwiches, porridge and fried chicken that are both fresh and made to order. This is a
key differentiating factor that allows McDonald’s to maintain its current market share as the
most of the other competition does not necessarily adhere to this “freshness” policy. Also,
McDonald’s relative quick and inexpensive meals facilitate the retention and attraction of
customers. The “people” quality is a further attribute that McDonald’s strategy follows as
customer service takes a priority role.
The main conclusion to be drawn from the aforementioned is that McDonald’s
differentiates itself from competitors by focusing on superior quality and superior service. It
offers fresh salads, fresh burgers, fresh style chicken, and condiments. Combined with an
aggressive price structure, McDonald’s seems poised to command significant market share as
well as a significantly competitive position.

The Main Strategy

Based on McDonald’s vision and mission statements combined with a brief SWOT
analysis of their strengths and weaknesses, a strategy has been developed that will recapture
McDonald’s core essence of operations by creating and emphasizing providing quality
products. This means the day to day operations must place an emphasis on maintaining fresh
ingredients, reducing waste, increasing efficiency, and offering superior customer service.
There are numerous ways to accomplish these task but they must be ingrained from the top
and communicated down and laterally as well. Individual leadership through management
positions must place a significant amount of detail on ensuring proper and timely delivery of
supplies, hiring competent and resourceful workers, and an adequate amount of supervision
and training for employees so that day to day operations are conducted with precision,
confidence, and in a superior manner.
While there needs to be a keen and significant amount of emphasis placed on
operations and customer service as these two areas are seen as providing the backbone of
providing quality products and service, there also needs to be a heavy amount of attention
given to initiatives such as developing new products, offering greater diversity of products,
increasing presence overseas, and creating better management programs which will need to
come down through corporate policy.
The second point of emphasis for McDonald’s should be on increasing creates
innovative products and advertises through media to create brand awareness in Malaysia.
McDonald’s further needs to attempt to gain greater market share needs to develop new
products and offer more selection of products.
Lastly, McDonald’s about strengthening their learning and growth programs for
managers and employees. There are numerous ways McDonald’s could go about doing this
however, finding a successful way to do will be key as retention of good and competent
managers and employees will help ensure greater operational efficiency and thus greater
customer service and better quality food.

Marketing Strategy

Our strategy is based on serving our markets well. We will start remodelling current
outlet by providing a fun and energetic environment and open in strategy location.
Concentration will be on maintaining quality and establishing a strong identity in the local
market.
A combination of local media and local store marketing programs will be utilized at
each location. Local store marketing is most effective, followed by print ad. As soon as a
concentration of outlet is established in a market, then broader media will be explored.
Therefore, the execution of our concept is the most critical element of our plan.
We will actively build our brand, through the selling of supporting materials, such as
merchandise, promotional items and other marketing gimmicks similar to those of other fast
food franchises.

Pricing Strategy

Our pricing strategy is positioned as "generic", meaning that RM 5.99 is the average
consumer spending for a snack or light lunch in.

Brand Challenges

McDonald’s must establish a brand awareness to stand out from the other fast food
competitors.

 Our logo is distinct as fresh, energetic and playful with colour elements that are eye
catching.
 Product names are geared toward the target market (teens), with items which are fun
and easy to remember.
Marketing Programs

We will deploy three different marketing tactics to increase customer awareness of

McDonald’s. Our most important tactic will be "word-of-mouth" and in-store marketing. This
will be by far the cheapest and most effective of our marketing programs because of the high
traffic in targeted shopping locations.
The second tactic will be local store marketing. These will be low-budget plans that
will provide community support and awareness of our facility. The last marketing effort will
be utilizing local media. Although, this will be the most costly, this tactic will be used
sparingly as a supplement where necessary.
 In-Store Marketing
o In-store brochures containing our concept and philosophy.
o Wall posters.
o Design concept
o Standing signage inside malls’ lobby/aisle.
o Outdoor signage (if possible).
o Grand opening promotion.
o Party catering.
o Merchandising items.

 Local Store Marketing

o Brochures.
o Free occasional t-shirts at local stores events.

 Local Media
o Direct mail piece – containing brochures sent to surrounding addresses.
o Web page – containing company philosophy, history and news.
o Local magazines that target our core customers, such as Free! Magazine.
o Newspaper campaign – placing several large ads throughout the month to
explain our concept to the local area.

Positioning Statement

Our main focus in marketing will be to increase customer awareness in the

surrounding community. We will direct all of our tactics and programs toward the goal of
 explaining who we are and what we are all about. We will price our products fairly, keep
our standards high, and execute the concept so that “word-of-mouth” will be our main
marketing force.

Sales Strategy

The sales strategy is to build and open new locations in order to increase revenue.
As each individual location will continue to build its local customer base over the first
three years of operation, the goal of each outlet average sales is RM 350,000 monthly
basis, with the original flagship outlet expected to earn almost RM 4,200,000 per year.

8.0 The Strategy Map

After reviewing McDonald’s business practices and associated strengths and

weaknesses, the strategic objectives among the four perspectives of the balanced scorecard
and strategy map inclusive of financial, customer, internal (operations), and learning and
growth that McDonald’s needs to focus on to achieve its vision of growing stakeholder value
and profitability can be readily identified and more easily accomplished. The strategy map
(appendix 2) serves as a visual diagram and representation of the linkages among the four
perspectives while the balanced scorecard (appendix 3) will further help breakdown the
objectives, measures, and initiatives that will need to be undertaken to accomplish the above
discussed goals.

Financial Perspective

I. Lower Cost – As identified through the linkages associated with lowering cost, the
primary ways to lower cost are through reducing waste, improving consistency of
orders, and increasing operational efficiency. This will remain very critical
considering the economic times as consumers are looking for a low cost, quality
provider of food. Establishing monitory controls for reducing waste, saving
supplies, and ensuring ordering accuracy will allow for the reduction in
operational expenses and thus lower cost.

II. Increase Revenue – As seen through the linkages the best way to increase
revenue are the combination of raising prices and lower expense (cost). These are
 the two primary ways of increasing overall revenue. Additionally, revenue can be
increased by expanding market share and penetrating the global market. It should
be a point of focus for McDonald’s to expand into local developed and emerging
markets. In order to raise prices which is another way to increase revenue
McDonald’s would have to create greater value which could be done by offering
greater diversity of products, new products, and by providing high quality
products

III. Expanding on the outlets at strategy location – This goes hand in hand with
increasing revenue, through the building and expansion of more outlets at strategy
location and it also help create stronger brand identity but also will allow to
increase revenue Potentially could be the biggest point of impact for the company
in accomplishing their vision of increasing shareholder value as it would allow
increased revenue, greater market share, and stronger brand identity.

Customer Perspective

I. Lowest Total Price – McDonald’s will face very stiff competition in this category
by trying to provide the lowest total price. Given the industry is dominated by the
“big four” and particularly with KFC which has the largest market share, it will be
difficult to provide the lowest price. However, it is possible for McDonald’s to
provide the lowest total cost for price and value of service, which they effectively
have been doing since inception by offering comparable prices for products but
with superior service.

II. Availability/Convenient Locations – McDonald’s really needs to step up in this

area as they currently behind KFC in the total number of available locations.
McDonald’s has a lot of opportunity in this area as they can increase the number
of available locations by specifically focusing on urban and global markets to
increase their presence in areas with the highest concentration of consumers which
will allow them to accomplish other goals of increasing revenue as well as
creating stronger brand identity. Increasing the number of available stores will
remain key for McDonald’s to stay in the upper echelon among quick service
 providers in is of importance to consumers who tend to buy on quality, price, and
then third amongst factors availability.

III. High Quality – For providing high quality products, so although improvement can
be accomplished in this area, it at the same time is an area they already excel in
when compared to competition. However, McDonald’s needs to continue make
quality a staple of their business by tying it in with their branding and advertising
campaigns as providing quality products is of utmost importance to customers.
McDonald’s needs to continue to set high standards and deploy initiatives such as
always fresh ingredients campaigns to ensure to customers that providing quality
products is an area of emphasis.

Internal Perspective (Operations)

I. Increase Operational Efficiency – McDonald’s currently have some of the best

operational practices utilized in the fast food service industry. However, as new
technology is adopted, it will be critical to always stay at the forefront of
introducing and taking advantage of new technologies to increase operational
efficiencies. There needs to be a conscientious effort by managers expressed to
employees to strive for high levels of production with emphasis on reducing waste
and consistency for accuracy and timeliness of orders. In the fast food industry
time is of the essence hence increasing operational efficiency will give
McDonald’s a possible edge over other competitors if they can develop a sense of
timeliness and consistency for delivery orders. Properly trained employees and
modern up to date equipment will allow increases in operational efficiency.

II. Improve Consistency – Although the fast-food industry is dominated with

customer perceptions of providing utility through inexpensive offerings in a
timely manner, what remains relevant still is that they expect consistency along
the lines of quality and timeliness. McDonald’s needs to adopt measures and
targets for ensuring that each McDonald’s consistent product, which ultimately
will lead to greater operational efficiency, reduced cost, increased revenue, and
stronger brand loyalty.
III. Reduced Waste – From an operational perspective reduction of waste is a huge
concern and something McDonald’s will have to focus on severely as it has
visions of becoming the lowest total cost fast-food provider. Additionally,
reducing waste will allow more revenue to be generated as expenses are cut,
ultimately having an effect on shareholders’ value. Thus McDonald’s must
emphasis to managers and create measures to limit and reduce waste. Modern
technology and inventory control methods will be key as well in regards to
refrigeration and storing techniques for food and on the time delivery of supplies
to ensure that waste can be limited on a daily basis, all of which will increase
operational efficiency as well, lower expenses and increasing revenue.

Learning and Growth Perspective

I. Management Training Programs – As of now McDonald’s is trailing their

competition in the “big four” in regards providing quality management training
programs. McDonald’s currently has management programs on their books but
they are not at the level they should be to ensure the continual training and
development of managers and future organizational leaders. McDonald’s needs to
create greater incentives for managers to attract brighter and more qualified
candidates for management positions and to keep managers and hardworking
employees employed after training programs. Given that employees are one of the
greatest assets for any business, McDonald’s need to strive to try to retain
competent employees which will thus cut training cost and decrease overall cost.

II. Develop New Products – McDonald’s will need to focus on bringing out and
introducing creative new products that will help stimulate excitement for their
food offerings as well as take advantage of current trends towards healthier foods.
Moreover, McDonald’s right now is suffering from poor menu diversity and the
development and inception of new products will help this cause. As of now there
is an opportunity for McDonald’s to exploit the breakfast food offering side and
McDonald’s has plans and needs to aggressively pursue capitalizing on this
opportunity by developing new products for this segment of the market.
III. Employees’ Satisfaction & Loyalty – McDonald’s need to improve on employee
turnover in order to develop customer loyalty and there from customer retention,
organizations have to deploy employees who have developed loyalty towards the
organizations. Only such employees can give better service in their service to their
customers that would lead to a service level more than the expectations of
customers at all times.
Appendix 2 – Strategy Map
Appendix 3 – Balanced Scorecard

Objectives Measures Targets Initiatives

Increase Profitability Operating Income Profit Increase to 10% Inventory Management
Increment
Perspective
Financial

Increase Revenue Sales Increase to 7% Increase Brand Awareness

Market Share

Reduce Lower Cost Expenses Decrease material cost to 40% Innovative Product
Improve Customer Value Customer/Industry Surveys Visit at least twice a month Improve service and offers
Customer Perspective

(High Quality) deals

Find Strategy Location Number of Outlets Increase by 5% Explore New Market

(Availability to Customer)

Customer Growth Average Price 10% growth in Comparing Competitor

Lowest Selling Price Market Share Market Share Develop more product at reasonable
prices
Improve Consistency - on time service Average order time Max 1 minute service time More management oversight
Perspective
Internal

Increase Operational Efficiency ROI Increase to 5% Effective ongoing training

Reducing Waste Spoilage Loss Decrease by 3% Inventory Control Management

Develop New Product Number of managers passing Increase to 10% Global Expansion
Learning & Growth

test
Perspective

Management Training Progrm Certifications & Performance Operation course Training and development
Measurement

Employee's Satisfaction & Loyalty Employee turnover Decrease by 2% Employee Involvement