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BUS2002 Strategic Business Analysis
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BUS2002 Strategic Business Analysis
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Course Code: BUS2002
University: London School Of Business And Management
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Country: United Kingdom
Question:
Understand the internal and external environments and ethical issues in business and management, with the view to solving particular business problems.
You are required to produce an Individual report based on the model chosen for your Group Presentation in Component
Your report must address the following elements:
Key lessons learnt about the model in component 1.
Examples of application of the model.
Relevant ethical issues.
Benefits and challenges of working as a team.
Answer:
Introduction
The aim of the report is to understand the internal and external environments along with the ethical issues in business and management with the help management model. The model that will be discussed in the report is Porter’s generic strategy which is an internal strategic model. The company that has been selected for this assignment is McDonald’s. It is an American well-known fast food company that came into existence in the year 1940s. The company perform their operations in the competitive environment due to which they face tough competition across the world. The porter’s generic strategies will help the company to resolve the issues which are faced by the company in the competitive market.
Overview of company
The company is considered the world’s largest restaurant chain in terms of the revenue because they serve their products across the world with numerous numbers of outlets (McDonald’s, 2018). The company initiated in 1954 with the small restaurant and now it is one of the world leading fast service brands with more than 36,000 restaurants in 100 countries or more (McDonald’s, 2018).
Porter’s Generic strategies
Porter’s generic strategies describe the ways through which the company pursues the competitive advantage across its chosen market scope. The strategies that are included in the model are Cost leadership, differentiation, cost focus and differentiation focus.
Cost leadership: – In this strategy, the company sets the strategy to become the low-cost producer within the industry. The low-cost producer must find and exploit all the necessary sources of cost advantage (Tanwar, 2013).
Differentiation strategy: – This strategy is used by most of the companies in the market as they want to become unique in this industry. Along with this, they follow the premium pricing strategy with differentiation.
Cost focus: – Cost focus strategy majorly focuses on cost advantage in its target segment (Teeratansirikool, et al 2013).
Differentiation focus: – In this focus strategy, the company focus on the different types of its target segments.
Business problems faced by McDonald’s
McDonald’s company faces numerous issues which impact their working within the market. Some of the issues are discussed below: –
Similar menu of McDonald’s: – The menu of the company is one of the biggest and major issues for the company. The research reflects that their menu remains the same with no major changes according to the country and their culture. Along with this, the menu of the company mainly includes burgers, wraps, fries, coke and ice-cream (McDonald’s, 2018). In addition, the menu includes some additional dishes but all these reflect that there is consistency in the menu of the company. This means that the company is not flexible with their menu. Though McDonald’s has put in efforts to bring the changes to their menu then also the company were not able to make the exact changes.
Limited target market: – Company mainly targets the young people and adult mainly who belongs to the working class. Moreover, this target segment of the company falls under the middle and higher income group. Considering the research it is found that the target market limited customers due to which they are not able to meet their objectives and goals that are to maximize the profit and to provide the customer satisfaction.
Price sensitive: – Company raise the price of their products without driving any customers. For example; this has been observed that there is a rise in the cost of beef and cheese offered by the company. This is one of the major issues which lead to customer dissatisfaction (The Star, 2014).
Rise in competition: – McDonald’s company found the rise in the competition in the current market from the companies like Burger King, KFC, Pizza Hut and many others.
Ethical issues faced by the company
McDonald’s company has been accused due to the negative impact on the environment because the company is continued to use paper and plastic. Research reflects that the company was in issues related to wage theft, poverty-level pat and mistreatment of pregnant workers (McDonald’s, 2018). This shows that the company is not able to follow the set guidelines and corporate governance. The company also find the issue related to CSR, one of the rising issues revolves around the CSR of house charity. The charity done by the company lost their reputation in the market because of child exploitation issues. The company is criticised in the market due to the ingredients in their products.
Application of model
McDonald’s should apply the internal analysis model that is Porter’s generic strategies to resolve the issues that are faced by the company in the market. The company should apply these strategies so that the issues can be eliminated. If the company apply this model then they need to ensure that every member of the company should work likes a team. The implementation is discussed below: –
Cost leadership: – This strategy will help the company to become the lower producer in the market. This resolves the issue of price sensitivity which is usually faced by customers. When the company will keep low prices for a product then it will meet the needs of customers because the other competitors offer the products at a high price. Along with this, if the company bring the slight rise in prices then also it hardly impacts the customers of the company.
Differentiation: – The applicability of this strategy supports the company to bring something different within the market (Flouris and Oswald, 2016). For example, the company took the decision to brought new dishes or recipes on the menu with combos that show the applicability of the differentiation strategy. The company should apply this differentiation strategy with the help of which they can understand the needs of customers and accordingly bring the changes in their product and service offerings. This will resolve the menu issues and company will also allow McDonald’s company to deal with the competitors.
Cost focus: – The implementation of this strategy will help the company in offering the cost advantage in its target segment. The target market will not get affected if the company will offer the products at the affordable price range. The products of company at the affordable price provide the advantage to the target segment. This strategy will reduce the issue related to the price and leads to customer satisfaction.
Differentiation focus: – The implementation of this strategy will help the company to focus on a different target segment instead of one particular segment (Flouris and Oswald, 2016). McDonald’s company can target the wide range of customer by offering attractive and differentiate products. This will resolve one the major issue of the company.
The solution for ethical issues
The company should increase the moral conscience level and should ensure that they should not harm the environment for their harms. McDonald’s food was wasted which shows the waste of products that directly affect the employee’s wage. The company should make use of the ICAEW framework that helps the company to resolve the ethical problems (ICAEW, 2018). The framework includes: –
Gather the facts and information for identifying the problems
Determining the affected parties
Considering the involvement of ethical issues
Determining which fundamental principles are affected
Refer to employing organisation’s internal procedures
Evaluating the alternative course of actions
Implementing and monitoring the actions
Challenges and benefits of working as a team
While working as the team it has been observed that there are different benefits and challenges.
Some of the benefits are: –
I took the ownership and guided the other team members
Improvement in the communication and teamwork skills
Increase in understanding
Easy distribution of work in teamwork
Some of the challenges are: –
The team has unequal participation
The limited creativity of the ideas and thoughts
I found it is difficult to analyse the needs of customers
Conclusion
In the end, it can be concluded that most of the companies in the current competitive world make use of this model so that they can solve the problems which are faced by business. McDonald’s company face numerous issues while operating the business in the dynamic environment. The model that has been implemented to resolve the issues is Porter’s generic strategies. The strategies will support the company to resolve the issues within the market. This will allow the company to deal with the business effectively.
References
Flouris, T.G. and Oswald, S.L., 2016. Designing and executing strategy in aviation management. New York: Routledge.
ICAEW (2018) Framework for resolving ethical problems [Online]. Available from: https://www.icaew.com/en/technical/ethics/framework-for-resolving-ethical-problems [Accessed on 10th July 2018]
McDonald’s (2018) About Us [Online]. Available from: https://www.mcdonalds.com/us/en-us/about-us.html [Accessed on 10th July 2018]
McDonald’s (2018) Ethics of McDonald’s [Online]. Available from: https://mcdonaldsethics.weebly.com/mcdonalds-ethical-issues.html [Accessed on 10th July 2018]
McDonald’s (2018) Our History [Online]. Available from: https://www.mcdonalds.com/us/en-us/about-us/our-history.html [Accessed on 10th July 2018]
Tanwar, R., 2013. Porter’s generic competitive strategies. Journal of business and management, 15(1), pp.11-17.
Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C., 2013. Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), pp.168-184.
The Star (2014) 5 problems facing McDonald’s [Online]. Available from: https://www.thestar.com/business/2014/10/22/5_problems_facing_mcdonalds.html [Accessed on 10th July 2018]
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