McDonald’s and Its Critics, 1973-2009

Summary of the case

MacDonald’s started from a traditional type restaurant to a global fast food chain. The corporation embarked into a journey of gradual expansion and became the 1^st fast food chain in the world. MacDonald’s used various strategies to achieve success in the domestic as well as the global market.The case is about the ups and downs that MacDonald’s faced after 21^st century.  This case gives the snapshot of the strategy, the corporation has undertaken to radically change and improve its image after a lull period of criticism and loss in business. The corporation adopted various strategies under different CEOs and these different strategies and each of the strategy is critically evaluated in this case.

McDonald faced a lot of criticism from the beginning of the 21 century and the corporation hadto change its brand image by instilling confidence and goodwill among the consumers. Furthermore the corporation also needed remain profitable. MacDonald’s improved the marketing of its healthier menu, refocused on its core product offering, modernizing the restaurant and introduced uniformity by developing QSC concept i.e.quality, service&cleanliness (QSC) in all of its outlets.Despite much criticism from groups like Greenpeace, dwindling profits and an increasingly health conscious public, the company has been able to use an improved and expanded product range to attract customers.

McDonald's has attempted to address critics of the fast food format by providing a healthier menu. In response, thecompany has implemented a strategy to enhance the publicity of its healthier menu, while at the sametime funding research into kids' obesity and forming the Moms' Panel to gain the opinion of mothers from around the world. McDonald's has gone back to basics in promoting its core food offering, burgers, creating a larger BigMac in defiance of critics on junk food.

Achievement of Fred Turner

Fred Turnerwas one of the earliest employees of McDonalds. He succeeded founder Ray Kroc as chief executive officer. He was a college drop-out and started working in the company at early age. During his tenure the company made highest achievement because of his strategic mindset. He took McDonald’s to new heights of profitability.He is credited with helping to massively expand McDonald's, introducing new meals and setting service standards for the company and its employees.

Turner changed the art of restaurant to science. He introduced the company’s 1st operation manual and developed time and motion study that defines operating techniques in detail. The manual specified cooking time for all food items, the precise temperature setting for each cooking equipment and standard portion of all products. In addition to this he also developed the quality control checklists and also developed guidelines into the optimal size of the crew needed for each shift of operations.He was the 1^st man to study time and motion strategy in the food chain industry. He was an architect of the company’s emphasis on quality, service and cleanliness, known as QSC.One of the biggest elements of McDonald's success has been its consistency that the customer knows what to expect in terms of food, service and speed.

Turneremphasized on uniformity in training for McDonald’s employees and establishedHamburgerUniversitywhich offered training program for managers, franchisees and employees. Hamburger University has been critical to establishing consistency in food preparation and service delivery across the vast network of McDonald’s.

Turner believed in the philosophy of Introduction, Expansion and Consolidation. He was the pioneer of management by regional organizational structure.He introduced the policy of close supervision of the franchisee to maintain uniformity.He appointed flying squads to monitor the different outlets to see if the uniformity and quality is being maintained at the franchisee network.

Turner is also credited with not allowing any union to form in the fast food chain. He didn’t givepriority tounionization and discouraged employees to form unions.  He was able to reduce the employee cost due to non-unionization. It wasan unprecedented achievement of turner that 14000 outlets of McDonald’s were operating and none of them were unionized during his tenure.

Jack Greenburg’s Mistakes

Jack Greenberg held the top post in McDonald during a difficult period for the company. He was made CEO of the corporation in 1998. Green berg was a very ambitious man and was hired from outside the corporation due to his past achievements in various companies.  He was looked upon as an agent of change and commanded so much goodwill that when he was appointed CEO, Wall Street jumped and stocks rose by 4%.  Despite being applauded from all sectors, Greenberg made some strategic mistakes which resulted in the corporation’s stock going down roughly by60% during his tenure.

MacDonald’s human resource strategy was based on hiring homegrown talents for the top executive posts but Greenberg decided to hire outside executives. This was one of the mistakes done by Greensburg because now people who did not have the insight into the MacDonald’s culture were drastically changing the business strategy in the corporation. Greenberg also moved away from the strategy of promoting uniformity across all outlets. He did not confer to the Kroc’s model of uniformity and made drastic changes to greater extent. In addition to this Green berg went aggressively with mergers and acquisitions which violated the rule of focusing on the McDonald’s brand only.

Greenberg's one of the biggest mistakes was spending rashly by procuring too many new storesGreen burg was focusing in creating monopolyin the industry by acquiring the other chains.He bought Aroma café, the 23 coffee and sandwich shop, 150 units Donatos Pizza and 850 outlets Boston Market to name a few. This added to the financial burden for the corporation and it was becoming hard for the company to manage the new outlets. Due to this the new outlets were having poor performance in terms of quality and service.The delivery time of the chain dropped to 46% and customers complained of harsh behavior and unfriendly staffs.

Greensburg is also credited with floating too many expensive innovations that didn't pay off. He developed “Made for you” system with an investment of $180M which he hoped will have significant improvements both in food quality and service speed but it turned out to be too labor intensive and it increased implementation cost and service delivery time.He promoted the food in the menu like “Salad”and but the changes he made didn’t come cheap and added to financial burden for the company. During his tenure the corporations stocks were trading at a seven year low and he resigned from the company in 2002 amid these financial difficulty.

Jim skinner’s leadership and MacDonald’s comeback

Jim Skinner restructured McDonald’s, redesigned the restaurants, and revolutionized the menu. Skinner also earns high marks for offering better value and improved marketing.His winning strategy, named ‘Plan to Win’, focused all team members’ attention on improving service, food, and ambience in the existing stores and not necessarily on opening new stores.His entire strategy was just the opposite of Greenberg.  He focused in remodeling the stores and improved the workflow in the restaurants. His plan was to make the outletsmore happening by installing new soft lights, repaint the walls and add internet facility. Some of the premium outlets of MacDonald’s were also placing stationarybicycles and video screens in the new play area within the restaurant.

He gave emphasis to customer satisfaction and developed high standard ofcustomer service as part of sustainability plan. He extended the store hours to attract new customers. Skinner also diversified the business to accommodate the premium coffee drinks. He installed coffee bars with baristas preparing espressos, cappuccinos and lattes within the restaurant.

Skinners response to the attack of the critics was also a import factor that sustained MacDonald’s.  He promoted fruit and milk as substitutes of French fries and soda drinks in kids menu. He added bottle of water and pedometer to adult meals. Sandwiches were offered with premium salads and apple slices.  Skinner launched balanced lifestyle and fitness program and refocused its marketing strategy on exercising.

Skinner also pioneered talent management and leadership development. High-potential employees were put through a leadership institute to nurture their talents. He was also a very down to earth person and also promoted consensus among managersbefore taking final decisions. He was also liked by peers and subordinates because he used to give time to employees and always motivated them.

How should Mc Donald respond to its competitors?

For MacDonald’s becoming and staying the market leader is a huge task, especially when competition is getting more intense. Keeping ahead involves continuous hard work to enhance the reputation of the brand, coupled with product innovation based on detailed market research that indicates how to please customers. McDonald's should focus on the vision shown by Fred Turner in providing a standardized delivery through quality, service and cleanliness across its vast chain.

McDonald’s should take the 'Customer focus' strategy by understanding what customers want and fulfilling their expectations with innovative products and quality services. They should differentiate themselves by focusing on a specific type of customer, in a specific type of location, with a limited product line, minimizing their costs, and competing on the bases of price and fast service.McDonald's should also adapt itself to changing consumer attitudes by offering healthier alternatives such as wraps and salads. McDonald's should revolutionize its menu, offering healthier options to woo health-conscious consumers.

McDonald's also has a great opportunity in the emerging markets. McDonald's still has not fully penetrated emerging economies. McDonald’s can stay ahead of the competition by opening new restaurants in the emerging markets like Indian sub-continent as well as Africa.