BUS499 Business Administration Capstone Business & Marketing Essay
Attached is the Required Template for Assignment 2
***PLEASE USE THE TEMPLATE ATTACHED***
Using the corporation you chose from Assignment 1, examine its industry. Research the company on its own Website, the public filings on the Securities and Exchange Commission EDGAR database (http://www(dot)sec(dot)gov/edgar.shtml), in the University's online databases, and any other sources you can find. The annual report will often provide insights that can help address some of these questions.
Write an eight to ten (8-10) page paper in which you:
Choose the two (2) segments of the general environment that would rank highest in their influence on the corporation you chose. Assess how these segments affect the corporation you chose and the industry in which it operates.
Considering the five (5) forces of competition, choose the two (2) that you estimate are the most significant for the corporation you chose. Evaluate how well the company has addressed these two (2) forces in the recent past.
With the same two (2) forces in mind, predict what the company might do to improve its ability to address these forces in the near future.
Assess the external threats affecting this corporation and the opportunities available to the corporation. Give your opinions on how the corporation should deal with the most serious threat and the greatest opportunity. Justify your answer.
Give your opinion on the corporation's greatest strengths and most significant weaknesses. Choose the strategy or tactic the corporation should select to take maximum advantage of its strengths, and the strategy or tactic the corporation should select to fix its most significant weakness. Justify your choices.
Determine the company's resources, capabilities, and core competencies.
Analyze the company's value chain to determine where they can create value using the resources, capabilities, and core competencies discussed above.
Use at least three (3) quality references. Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
Citations and references must follow APA or school-specific format.
Check with your professor for any additional instructions.
The specific course learning outcomes associated with this assignment are:
Identify how the six segments of the general environment affect an industry and its firms.
Identify the five forces of competition.
Analyze the external environment for opportunities and threats that impact the firm.
Analyze the internal environment of a company for strengths and weaknesses that impact the firm's competitiveness.
Use technology and information resources to research issues in business administration.
Write clearly and concisely about business administration using proper writing mechanics.
Week 6 Assignment 2
Strayer University
BUS499 Business Administration Capstone
Week 6 Assignment 2
Organizations operating in today’s turbulent business environment have to address significant challenges in order to succeed. McDonald’s is a popular fast-food company that has 35,000 outlets spread across 100 countries. With such globally distributed operations, the challenges it faces from its environment are intensified. The company through its franchisees also employs around 4 million people who help it serve around 70 million people daily. The company has to ensure that it satisfied the needs of these customers otherwise it risks losing market to competition. This paper examines the issues in its external and internal environment and how it responds to them. The paper identifies technological and socio-cultural segments as they influence McDonald is the most. The forces that are most significant for the firm are buyers` bargaining power and rivalry among existing companies. The paper also addresses future improvements, external threats, strengths and weaknesses, and the value chain of the firm.
General Environment
The external environment of a firm can be described as all the external influences that affect how business decisions are made and the firm ’s financial performance (Grant, 2016). The source of these influences includes the political, economic, social, technological, ecological and legal environment. McDonald, is one of the leading companies in the Foodservice industry in the U.S., is influenced largely by the technological and social-cultural environment.
The technological environment provides marketing opportunities and business automation for McDonald’s. The company can market its products through the use of social media. For instance, they usually send any news notification regarding promotion and products to their customers through Twitter and Facebook (McDonald's, n.d.), thus reaching millions of people through digital marketing. According to Hitt, Ireland, and Hoskisson (2017), firms analyze the capabilities offered by technology, which enables them to create more value for their customers. For instance, McDonald's is utilizing technology to ensure that all users, including those with disabilities, can access and use their mobile applications and website for efficient and timely services (McDonald's, n.d.). Further, customers are also able to locate the nearest McDonald’s restaurant within their vicinity by visiting the company’s website.
The socio-cultural environment of McDonald`s is characterized by changes in healthy lifestyles and increased cultural diversity among its customers. Mcdonalds has a diverse customer base as it serves in over 100 countries. These customers have different values and attitudes, which affect the way McDonald's makes its decisions, especially regarding products. For instance, as noted in the McDonald's Corporation annual report (2017), restaurants have a regular menu, but changes have been made to accommodate customers from different geographical backgrounds, who have different tastes and preferences. Further, the rising trend in healthy lifestyles among consumers has put pressure on the company, which is currently offering nutritional products based on their customers' health needs. For instance, the company recently introduced Happy Meal on their menu, which is meant to encourage a healthier generation (McDonald's, 2018). Such changes are necessitated by the social-cultural environment where more people are adopting a healthier lifestyle
Five Forces of Competition
The five forces model by Michael Porter can be used to examine the competitiveness of an industry. According to Hill and Jones (2009), the five forces that shape competition in the industry include the risk of entry by potential competitors, the intensity of rivalry among established firms, suppliers’ bargaining power, buyers’ bargaining power, and the closeness of substitutes to the products in an industry. The stronger these forces are, the more limited the ability of firms in the industry to raise prices and make better profits (Hill & Jones, 2009).
The two forces that are significant to the operations of McDonald’s are buyers’ bargaining power and intensity of rivalry among the established firms. As informed by Hill and Jones (2009), when the switching costs are low, it is easy for buyers to play off firms in the industry and the process force down prices. In the fast food industry, customers can easily switch from one restaurant to another. With there being a large number of other restaurants, buyers have a strong power that can affect the operations of McDonald's. There is also a strong intensity of rivalry among firms that are already established in the industry. The company faces stiff competition from companies such as Starbucks, KFC, and Subway. With the saturation and low switching costs, the competitive rivalry emerges as a strong force that can affect the operations of the firm.
Evaluation
McDonald’s has employed some measures to address the challenges from the two forces. The company has in place strategies that are meant to increase customer loyalty and thereby reduce buyers’ power. Through cost leadership, the products of the firm are offered to customers at competitive prices. This strategy also helps it fight competition since the price is a factor that affects the purchase decisions of buyers. The company also differentiates itself through the quality and safety of its food. The company strives to provide its customers with delicacies that cannot be matched by competitors. With the company engaging in social responsibility, it positions itself as admirable to the customer. McDonald’s also has a customer-centric growth strategy as outlined in its annual report. The strategy aims to retain existing customers, regain lost customers, and convert casual customers to committed customers (Sec.gov, 2017). Such measures help it maintain the leading position in the industry.
Future Improvements
While the company has in place measures to address the buyers’ bargaining power and rivalry among established firms, there are some strategies it can employ for future improvements. First, the company can invest in research and development. Through such investment, the company can come up with innovative ways to improve its business process and products’ quality. According to Bigliardi and Galati (2013), research and development in the industry can help a firm come up with foods that have more nutritional value. Research and development can also help the company reduce costs, which will boost its cost advantage against competitors. Second, McDonald’s can add healthier choices to its menu to address the needs of customers who are health conscious. As noted in its annual report, if the company does not evolve in addressing customer preferences, there is a high likelihood that its business will suffer. Therefore, future improvements in the company may focus on creating healthier menus to cater to the needs of customers who are health conscious.
External Threats and Opportunities
Analyzing the external environment allows firms to be proactive in identifying and responding to threats and opportunities based on changes in the external environment (Hitt, Ireland, & Hoskisson, 2017). McDonald's main external threats relate to the socio-cultural factors and industry competition. Consumers are becoming more health-conscious, demanding food that is nutritious with low calories. This is the main threat to McDonald’s seeing that it deals with fast foods, which are deemed less healthy than slow foods. In the McDonald's Corporation annual report (2017), the company noted that their consumers’ preferences are evolving at a high rate and failure to anticipate and respond to such changes poses a threat to the company. Consumer preferences have changed specifically when it comes to the company’s food offering which needs to change to include healthier offerings.
Further, competition from existing firms is a major threat to the survival ...