Article Summation: The word phrase ‘fast food’ is synonymous with McDonalds, the world’s leader in fast food restaurants. There is no questioning the international stature and presence of McDonalds. With a net worth of $61.5 billion, over 30,000 restaurants, and employing over 700,000 US citizens, it goes without saying McDonalds is a pivotal corporation throughout the world (cite). After review of Wong’s “Four Reasons McDonald’s Is Worried about the near Future,” one may have a new view of the fast food giant. If you were to ask any American citizen to describe McDonalds in three words, cheap fast food, will be the consensus. Wong believes the cheap fast-food approach “… strategy isn’t likely to overcome totally the global factors that spell trouble in the near future.” She bases this assumption off four findings: Indigestion for Casual-Eating Companies around the World, Under Cost Pressure, Fast-Food Appetites Are Shifting, and The European Economy Is Bad for Burgers.
(MORE)
Application from the Literature: Throughout the article Wong brings to the forefront informational management topics that have been discussed in class or assigned texts. Grand strategy is a major issue that McDonalds is being forced to deal with. The corporation might have to reevaluate the grand strategy of “less expensive fare” (Wong) [where is the pg #]. Although the company has had tremendous success with low cost fast-food, the overall market of “the informal eating out market,” (Wong) is shrinking. The article suggests that MCD should reanalyze the external opportunities and threats in order to establish a revitalized grand strategy. An emphasis is placed on the company performing self-evaluation in order to solve the predicted third quarter woes. There are organizational threats which Kinicki defines as “environmental factors that hinder an organization’s achieving a competitive advantage,” that have affected the company in the second quarter and have potential to alter future earnings (176). In the section, ‘under cost pressure,’ Wong gives detail of the effects of economic forces on the corporation. The mega corporation is not exempt from the world-wide economic pressures of “higher labor and commodity costs” which leads to the contraction of margins “giving the company ‘less ability to take price, cost pressures’” (Wong {pg #?}). Due to the effects of economic forces, MCD is considering “future price increases in the U.S.” (Wong {pg. #?}). The affects of the general environment are also explained in the article as Wong mentions how “Fast-Food Appetites Are Shifting” (Wong). This section reflects Kinicki’s thoughts of sociocultural forces which are defined as “influences and trends originating in a country’s, a society’s, or a culture’s human relationships and values that may affect an organization” (78). As simply put, “American tastes are changing,” whether it be from the increased interest in health and fitness or from the growth of “fast-casual” restaurants, McDonalds has felt the pressure of sociocultural forces (Wong {pg #}?). As a result of sociocultural forces, MCD strategic position has been compromised leading to a decrease in sustainable competitive advantage. International forces have also contributed to MCD problems. Europe is one of MCD major international markets and is home to MCD second largest geography, with over 7,400 restaurants, and employing over 415,000 European citizens (mcd Europe). International forces are defined as “changes in the economic, political, legal, and technological global system that may affect an organization” (Kinicki 79). The economic issues of European