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Business and Strategic Philosophy The business strategy of a company is intrinsically linked to its marketing strategy.

This section assesses the business strategy of McDonald s and compares it to the way in which products are marketed. Marketing is not just advertising: it is an assessment of consumer preferences and views too, which means that the link between marketing and business strategies is a two-way link. The marketing strategy of McDonald s is shaped by four major inputs: 1. Organisational objectives and resources 2. Attitude to change and risk 3. Competitor strategies 4. Market structure and opportunities
Brassington, F & Pettitt, S (200x) p.846

1. McDonald s is driven by its Mission Statement: Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience.
Student Research [online] Accessed 17/10/10. http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html

When people talk about company resources they often only consider cash and assets but it in fact They include skills and expertise...any area of the organisation that can help to add value and give a competitive edge. Brassington, F & Pettitt, S (200x) p.845. These resources can lead to intangible assets such as a loyal workforce, good customer services and a good brand image. McDonald s introduced qualifications for its employees to work towards which initially received bad press, being called the McJob . It has soldiered on and now they state 96% of our people think the skills they ve gained at McDonald s will be useful to any future employer, and that 8 out of 10 employees see the job as a long term career. Learn how we work
[online] Accessed 2/12/10 http://www.mcdonalds.co.uk/static/pdf/aboutus/education/mcd_prospectus.pdf

The company also has many employment-related accolades including being in The Times Top 100 employers list for 10 years in a row. 2. McDonald s is a company which is now well practised at changing its image and taking risks when need be. The company has 32,000 outlets in around 117 countries and so is always risking money by trying out new markets. McDonald s over the years has endured a lot of criticism and bad press, most notably the 2004 documentary Supersize Me and the McLibel trial which started in 1994 and ended two and a half years later. The company markets itself as a much more progressive company these days with recent TV adverts focusing on the British weather and its benefits to the British and Irish Farmers and the Just Passing By campaign [Accessed 2/12/10 www.youtube.com] which looked at the broad spectrum of customers. Junk food is a hot topic in the British Press so McDonald s have moved away from advertising it, which goes to show that they are very capable of adapting to changes in food fashions.

3. McDonald s is the dominant force in fast food in Britain today and it is a market leader in terms of business and marketing strategies. The original competitors such as Burger King and KFC follow in McDonald s footsteps. McDonald s does not expand into making chicken products as much as it could because KFC is the most popular choice and so the market is saturated in this respect.

4. New competition arises in the form of Subway and also coffee shops such as Costa and Starbucks. McDonald s has introduced new marketing strategies and product lines to compete in these alternative and arguably more upmarket sectors. Further opportunities for expansion can be sought abroad as growth is limited in established markets due to people being able to only eat so much! Both points will be discussed later on. The Role of Government McDonald s is affected a lot by governmental organisations such as the Food Standards Agency the , Department of Health, and OFCOM. The main issue is the advertising of junk food or HFSS (High Fat, Salt & Sugar) foods to children. Pressure had been mounting throughout the 2000s for the advertising regulator OFCOM to restrict the marketing of HFSS foods to children. The Children s Food Aact 2004 states that The Appropriate Authority shall by regulation prohibit any person... from marketing to children any foods and drinks which contain content which the FSA has decided... is detrimental to the health of children. Children s Food Bill [online] Accessed
2/12/10http://www.publications.parliament.uk/pa/cm200304/cmbills/110/2004110.pdf

These rules were introduced for under 10s in April 2007, by January 2008 covered under 16s and by January 2009 the advertising of HFSS foods on children s channels was also banned. The ban included the use of celebrities, licensed characters, health claims and promotional offers aimed at under 16s. This bad press became a significant problem for McDonald s which, in 2003, recorded its first ever loss in the UK. The Government intervention, along with media criticism, meant the consumer body as a whole were turning away from McDonald s. McDonald s started to change its image and set out its Plan to Win which has been discussed earlier on.

Figure shows McDonald s stock price over past decade. Accessed 2/12/10 [online] http://quote.morningstar.com/stock/chart.aspx?t=MCD&region=USA&culture=en -US

Note the very low stock price around 2002/2003, when the press attention for McDonald s was particularly bad. The change in the advertising laws in the UK did not have a massive effect on the stock price, meaning that the company must have found alternative ways of marketing, for instance, online advertising to children was still permitted though frowned upon; Health campaigners have warned that fast food giants are increasingly turning to the internet to circumvent moves designed to curb advertising aimed at children. Johnson, B & Gibson, O (2006) Internet used to push fast food to children, say
campaigners [online] http://www.guardian.co.uk/uk/2006/mar/27/advertising.digitalmedia

1. http://www.mcdonalds.co.uk/people/schools-and-students/schools-and-students.shtml [14th November 2010] LEARN HOW WE WORK. PDFs finance, marketing, customer services from here. 2. http://www.aboutmcdonalds.com/mcd/csr/report/looking_ahead.html [14th November 2010] LIVING OUR VALUES. PDF of 2009 Report from here 3. http://www.aboutmcdonalds.com/mcd/csr/report/overview.html [15th November 2010] Doing the right thing is important to us. 4. Marketing Guidelines in Nutrition and Wellbeing http://www.aboutmcdonalds.com/mcd/csr/report/nutrition_and_well-being/promotions.html 5. www.mcdonalds.co.uk/about-us/franchise/overview.shtml COMPANY PHILOSOPHY 6. http://www.aboutmcdonalds.com/etc/medialib/aboutMcDonalds/investor_relations0.Par.17264.Fil e.dat/2009%20AR%20Report%20-%20Print.pdf [2nd December 2010] 2009 REPORT PDF 7. http://www.aboutmcdonalds.com/mcd/our_company.html [2nd december 2010] GETTING TO KNOW US 8. http://www.mcspotlight.org/case/trial/story.html MCLIBEL 2/12/10 9. http://www.mcdonalds.co.uk/static/pdf/aboutus/education/mcd_prospectus.pdf PROSPECTUS 2010/2011 2/12/10 10. http://www.youtube.com [2/12/10] FAVOURITES, WEATHER, BREAKFAST adverts. 11. http://quote.morningstar.com/stock/chart.aspx?t=MCD&region=USA&culture=en-US 12. http://www.publications.parliament.uk/pa/cm200304/cmbills/110/2004110.pdf 13. http://news.bbc.co.uk/1/hi/business/4665205.stm 14. http://www.guardian.co.uk/uk/2006/mar/27/advertising.digitalmedia 15. http://news.bbc.co.uk/1/hi/health/6515245.stm 16. http://en.wikipedia.org/wiki/Fast_food_advertising

17. http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/documents/digitalasse t/dh_089123.pdf 18. Principles of Marketing Third Edition (2002) Brassington, F & Pettitt, S Financial Times/ Prentice Hall