Material Sources: Issues Answers | Assessment Answer


1. Evaluating the vision of McDonald and its relation to the core strategic direction

McDonald’s mission

“To be the preferred choice of place to eat and drink, the focus of global strategy promotes plan to win providing a world class customer experience based on 5P (People, product, Place, Price and Promotion) Concept.”

A mission statement of the company expresses the reason behind its existence and how it works with the objective of creating value for all its stakeholders namely customers, employees, investors, government, local communities, and media (Hawkins and Mothersbaugh, 2009). The importance of mission statement of the company is that it emphasis on the core value. On evaluating the core value of the company it is observed that McDonalds’s mission statement exhibit six core value and guiding principles of the company as mentioned below

Provide a positive environment in the workplace and cultivate the concept of respect and self-esteem among employees.

Promote the cultural diversity as part of the company culture and way of conducting business.

Implement highest standard of excellence in the process of purchasing, preparation and delivery of service.

Provide customer delight by effective customer service on consistent basis.

ustify;">Make positive contribution to the society and environment.

Accept the importance of profitability for the future growth of the company.

McDonald’s Vision

The vision statement of the company is related with the purpose and objective of the company with orientation towards the future. The mission of the company focus on the purpose of being while vision of the company focus future goal and objective based on the purpose already stated in the mission (Zeithaml, Bitner, and Gremler, 2006). The strategy designed is directly based on the vision with believe that the strategy is made by the company to achieve the set vision by satisfying the mission of the company. The vision of McDonald is

“Establish McDonalds as the premium service provider of the world without compromising the core value in the process of growth.”

Roles played by Mission and Vision

Both the Mission and Vision statement of McDonald when evaluated provided three significant roles and they are

Communicate the value and purpose of the company to all the stakeholders.

The strategy developed by the company to be well communicated to ground level for better implementation.

Develop SMART objectives for effective control.

[Source: Self]

Figure 1Key role of Mission and Vision

The first mission and vision emphasis on the effective communication of the value and purpose of the company to all the stakeholders so that everyone work together to achieve the mission and vision set by the company (Cravens and Piercy, 2008). The second mission and vision focus on setting target for the development of strategy and the success of the strategy is evaluated by observing how effectively it assist the company in attaining the mission and vision.

On evaluating how this vision of McDonalds has been at the core of its strategic direction it is observed that the mission and vision of the company is well communicated to the field staff and they are supported by the strategic measures related with operation, delivery and customer by focusing on the 5P (People, product, Place, Price and Promotion) Concept. Each employee of the company work to establish McDonalds as the premium service provider of the world without compromising the core value in the process of growth (Chaffey et al., 2009). The strategy direction of the company focus on recruiting right people, selling right product, with wide distribution network (place), provide reasonable price and effective promotion. The company emphasis on the delivery commitment that is not compromised and expanding to achieve the growth thereby working towards attaining the vision with the help of the mission set.

2. Using strategic capabilities to create a strong and sustainable competitive advantage

The importance of competitive advantage cannot be denied by business entity with the aims and objective to create a strong and long term business. In the process of achieving the competitive advantage every company evaluate the internal resources and capability (Atasu, Sarvary, and Van, 2008). If the company can use the internal resources and capability to create value for customers and if that competencies cannot be imitated by the rival players in the industry then it can definitely help the company in achieving the competitive advantage in the market place. Many companies use the SW framework part of SWOT analysis to evaluate the internal resources and capability that enhance the competency level. The SW framework help to identify the core strength of the company in terms of human resources, financial resources, marketing resources, production resources, service resources, information technology resources (Doole,  and Lowe, 2008.). Similarly it helps in identifying the weaknesses like lack of research and development, operation, economies of scale, supply chain issues, marketing mix and segmentation issue. If this strength and weaknesses are identified properly it assists in the next stage of building on the strategic capabilities by reducing the weaknesses.

There are many examples from the business world that exemplify that identified by the strength and weaknesses and used them to create value for the customers and make that resources note easily imitable by the rival. P&G, Unilever, Toyota, BMW, Amazon, Google, Nike and Rebook are brand that used strategic capabilities to gain competitive advantage and promote sustainable growth (Quester, et al., 2007).

In this context Google is case study Company whose strategic capabilities will be examined to understand how the company worked on internal resources and capability to create a strong and sustainable competitive advantage. Google Inc is company established in 1998 by Larry page and is leading multinational company focusing on the internet related products and services. The company identified technology and World Wide Web as the core strength of the company and growing competition in the industry as major weaknesses (Baker, 2014). The goal of most strategies undertaken by the company aims at gaining competitive advantage by using marketing mix and market positioning to gain economy of scale and attract target customers or identifying the internal resources and capability like people, capital, or technology to deliver superior product and services (Chiuet et al., 2006). The business conduct regular strategy reviews and change the strategic direction and structure of the company based on the evaluation of the industry and projection on how the future will shape. The company used the technology resources and capability to read and act on signals and adapt to reshape the information landscape of the technology industry.

Google used the technology resources and build the competency by using algorithms to renew the place of an ad using two parameters and they are ad relevance of personal search or website and examining the advertiser’s key word’s bids. As advertiser pay per click if the ad is more relevant it leads to higher click generating more revenue for the company. The company linked the advertising data and operation directly thereby responding changing ad condition in fraction of a second and it can be done without interference of decision makers of people (Berthon, et al., 2012). This technology competency provided unique competency in the digital advertising world for Goggle and the company gained competitive advantage that is not easily obtained by other rival players in the industry. This is the reason why the Goggle is the market leader in the online advertising and enjoys completive edge compared to any other players operating in the digital platform by being the preferred choice for customers.

3. Organization achieving sustainable competitive advantage by the cost leadership approach

Porter’s generic competitive strategy is strategic tool used by the business to evaluate competition in the industry. According to Michael porter it is choice between cost advantage and differentiation that help the company to achieve competitive advantage (Chen and Xie, 2005). A company can use the two strategies in different segment or just few and three generic strategies are developed and they are leadership strategy, differentiation strategy and focus strategy. The reason why this is known as generic strategies is based on the fact that these strategies are not industry oriented.

A Company using the cost leadership strategy lowers the price of the product or services in most of the segment to gain competitive advantage. If the company sells the product or services at price matching the industry average then it can earn higher profit compared to its competitors while of it sells the products or services below the industry average prices it can increase the market share (Payne, Ballantyne, and Christopher, 2005). The various strategy explored by the company to use cost leadership strategy include enhancing the operation effectiveness, economies of scale, experience curve effect and outsourcing. The low cost leadership strategy signifies overall cost being lower and it is not just related with low cost production. The main focus of the company using cost leadership strategy implores low cost in comparison to the competitor in the market. A Company using cost leadership is the airline company Ryanair. It is a leading player in the aviation industry of Europe and the company decreases the price of tickets compared to other airlines operating in the industry to gain competitive advantage (Payne, Ballantyne, and Christopher, 2005). It charges below the aviation industry price with eye on the volume business increasing the market share. The main problem with cost leadership strategy is that the company adopting this strategy decreases the brand image and considered to be inferior product or services compared to other rival players in the industry. As such the premium customers who are regular customer cannot be attracted with the help of this strategy. Thus mass customer is lured by the cost leadership strategy and it helps the company to achieve sustainable competitive advantage.

On the other hand the product differentiation strategy focus on developing a superior product with unique features that provides premium value of the customer. The company using product differentiation strategy use the premium pricing strategy with a view to recover the additional cost spent in the product and thereby increasing the profit margin of the company (Graham,  2008.) The differentiation can be attained by the company with help of various strategy like providing premium quality of product or performance, providing unique product or service features, rapid innovation of product or service and more effective customer service creating differentiation. The cargo companies FedEx (superior service), Toyota (superior product) and Caterpillar (premium spare parts).  The other strategy of Porter;s generic strategy is the focus strategy where the company put the marketing effort on few selected segment with the help of cost leadership strategy or product focus (Perreault et al., 2006). The cost leadership and product differentiation used in focus strategy are similar but the difference of the focus strategy is related with capability of the company to create niche market segment for the product or service of the company. In the case the cost leadership used to gain competitive advantage.


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