Real World companies - Essay Example

 Real World companies McDonalds and Kentucky Fried Chicken Corporation (KFC) are American fast food restaurants. These companies have expanded globally owning several franchises in big economies such as China, the USA, United Kingdom, Japan and other several countries. The growth of these two brands has been influenced by various factors, both internal and external, competition, as well as the business strategies used by the organizations. This paper will seek to research into which environmental factors had an impact on the growth of their business, the competitive advantages that each had over the other as well as the various strategies that each company used to gain such an advantage over its rival. It will further seek to find out how each company measured its own strategy effectiveness and how effective are such measurement. McDonald’s is the biggest chain of restaurants in the world. Started by Ray Kroch with a staff of three to four people and offering only a limited menu, it has grown into being the largest fast food chain in the world (McDonald’s, 2013a). Various internal and external factors have contributed to such growth. Internal factors are those that affect the staff, managers and management of a company and they are essential in making the companies achieve locally and globally. These factors have great influence on the business as they can prese4nt the excellent opportunities of affecting their common result of the business project. The McDonald’s has made great strides in how it encourages the relationship between the employees, management and stakeholders. The company encourages a respectful relationship between the employees and the management. It also hires the most suitable applicants who have shown effectiveness and commitment towards customer satisfaction (McDonald’s, 2012, p.1). Also excellent management has inspired the growth of this brand. Skinner is a good example of a leader who brought in major changes to revive an otherwise underperforming company. His quick actions and decisiveness led to elimination of foods that were not adding value and added new dishes like salads and chicken sandwiches. In order to ensure it succeeds in the other markets outside the US, it has had to make changes to its process to cater for the unique preferences of the clients in the respective countries. The McDonald’s has also got to do with a lot of external factors that have had their influence on the business. For instance the world economy has experienced several recession periods in which the business has experienced fall in profits. An economic recession affects the purchasing power of people generally and thus even they cut down their expenditure on meals. Legal factors have also had their effect felt in the McDonald’s. McDonald’s started by targeting young people and young families as their main market. In order to attract more customers to its outlets, MacDonald’s used two competitive advantages: pricing and fast service. With most of the restaurants selling hamburgers at high prices, McDonald’s sold theirs almost half the market price. Rather than having the customers wait for the food to be ready, at McDonald’s the food was ready in zero time. Using these two key classic strategies, McDonald’s gained popularity and was a choice for many. In order to keep up with the competition McDonald’s keeps on changing its strategies. For instance it expanded its market target and now it includes children and the elderly thus covering all ages of customers. They also have expanded the line of foods being offered to attract variety of customers as well as abandoning their tradition of being the low price competitor: price is no longer a competitive advantage. To gain competitive edge over its rivals, McDonald’s has adopted different strategies that include a developed and consistent products and service, involving the community, and convenience by virtue of its number of locations. McDonalds creates value for the customers in several ways which include offering combo meals for a discount as well as having a value menu which has lower priced food options. McDonald’s measures its strategic effectiveness through assessing the main performance priorities of its CEOs like sustainable profitable growth; progress in balanced active lifestyles initiatives and talent management (McDonald’s, 2013b). Other guidelines include the returns on the assets as well as stock price. Kentucky Fried Chicken Corporation (KFC) is one of the leading American brands that boast a rich, decades-long history of success and innovation. It is the world’s most popular chicken restaurant chain. Just as McDonald’s, KFC has had to go through its own ups and downs over its growth. Several factors both internal and external have contributed to the brand KFC. The internal factors that have greatly influenced this growth include: In management, the managers are highly trained so that they could cope with the running of the company. They also offer new creations like the bowl fish snackers which became very popular and bouffets were also offered. KFC have also expanded both domestically and internationally like into China where they are the main fast food brand after overtaking the McDonald’s (Stnn, 2006). In terms of personnel, KFC provides jobs and also encourage community diversity by giving equal opportunities. Its good stability and security coupled with loyal employees and franchises was caused by the owner’s efforts to meet workers’ pensions and benefits. Just like McDonald’s, they have a chain of franchises in order to increase their sales and revenue. These internal strengths have helped KFC keep an upward path to challenge its competitors like McDonald’s. Externally, KFC has given back to the society through charities, animal welfare programs and scholarship programs. Although not at per with McDonald’s, KFC has set itself apart from its competitor by having a secret recipe. Apart from giving back to the society, KFC also offers different varieties of food choices to different cultures in other parts of the world like China. KFC has managed to stay among the top fast food restaurants by keeping its special recipe intact (Liu, 2008). It also expanded earlier into emerging markets (China and Japan) than its competitors; had managerial experience in international markets and a strong brand name ensured that it had a competitive edge over rivals. This has helped it have a competitive advantage over its rivals KFC uses their ability of adapting to different cultures and thus expand outside the US as evidenced by the large number of restaurants outside the US. To beat competition KFC have also come up with innovative and unique advertising campaigns along with new items on their menu list an example the boneless variety bucket advert(Stnn, 2006). KFC’s growth strategy is similar to that of McDonalds in that growth can be achieved through direct growth, vertical and horizontal integrations. More specifically these include acquisitions, mergers, partnerships, franchising and strategic alliances (Kwok, 2010). However KFC has specialized in expanding outside the US and thus its effectiveness has been realized in markets such as Japan and china. For instance KFC has used localized multidimensional policies to catering Chinese consumers to emerge winner of the fast food industry in China, unlike the McDonald’s which uses standardization and globalization to ensure high uniformity focusing on maintaining their good image. References Kwok D (2010) McDonald’s aims to expand franchise trial in China. Reuters (May 6) http://www.reuters.com/article/2010/05/06/us-mcdonalds-china-idUSTRE6451W420100506. Liu W (2008) KFC in China: Secret Recipe for Success (John Wiley & Sons (Asia), Singapore) McDonald’s (2013b). Our History (webpage). (accessed 08.09.2014). Available from: http://www.mcdonalds.com Stnn (2006). Who is more Chinese localized? KFC or McDonald’s (wepage). (Accessed 08/09/2014). Available from: http://www.stnn.cc/global/global_sp/t20060113_118949.html Read More