Unit 20 Business Health Check Assignment
Diploma in Hospitality Management
Unit Number and Title
Unit 20 Business Health Check
Unit 20 business health check assignment is based on the case study of McDonald’s and its business environment. There are in all 3 Tasks in the assignment. Task 1 will be discussing on the company’s business environment in terms of doing its PESTLE, SWOT and carrying out the assessment of the Porter’s 5 Forces Model. This task will also suggest on the areas that should worked out for the business improvement of the company. Task 2 would suggest on the ways in which the business health check of the company is carried out. It will also accordingly analyze the areas for the improvement of the business of McDonald’s. Task 3 would be in the form of a short report in which the skills of the management and the staff of the company would be analyzed. It will suggest on the ways and techniques through which this process is done. The complete assignment will concentrate on the business health check for McDonald’s as per the case study given.
(a) Critically analyze and evaluate McDonald’s business environment and its impact on the industry and McDonald’s business performance by applying:
Porter’s 5 force model:
Swot: McDonald’s has been in the fast food chain outlets that are providing the fast food products for almost all the age groups. The cost of the products is cheaper in the market and it also provides a take away facility to its customers. There has been observed to a worst sale for the outlet in August 2014 in the decade. This is due to the reason of the coming and launch of the new and innovative fast food products like: Chipotle and Burger King etc.
PESTLE Analysis of McDonald’s:
This will assess the business environment of the company with respect to the factors as discussed under:
- Political Factors – Mc Donald’s has been present as a global company in almost all the countries. The company has been developing its products as per the country’s specific political situations.
- Economic Factors – Based on the cost of living index and the purchasing power parity the company has been pricing its products and services.
- Social Factors – Although from the social front, the company has launched its products for almost all the categories yet it has not customized its products as per the customer’s specific requirements that other fast food chain outlets have done like Burger King.
- Technological Factors – The Company has been employing advanced machinery that helps in manufacturing and development of the products easily and fast.
- Legal Factors – As per the specific business and country’s legal systems, the company has been developing its products. It has been abiding by the requirements on the legal front (Gardner & Levy, 1955).
- Environmental Factors – The Company pays specific regulations and does not discharge its wastes openly into the environment. It makes sure that its products and its processes are environmental friendly.
Porter’s 5 Forces Model:
From the point of view of Porter’s five forces model, the evaluation of the business, its strategy and the environment is as follow:
- Bargaining Power of Customers – The Company’s has kept pricing of its products so that all kinds and levels of products can afford it. They are selling the products as per the competitive pricing policy.
- Threat from new entrants – The sale for the company has been on a decline in the year 2014. This is due to the reason that other entrants into the market in fast food like Burger King and Chipotle are selling products by giving choices to their customers for selecting their own ingredients in the manufacture of the products. This way the customers are able to eat up products as per their choices.
- Threat of Substitute products – McDonald’s has been popular in Burgers only whereas other competitors and the new entrants into the market have been providing other substitute products and choices like Puff, Rolls and other stuffing etc.
- Bargaining power of suppliers – The suppliers that are available in the market are selling same ingredients and raw materials to almost all the fast food chains which is creating a lot of competition. This way suppliers are selling their materials on a higher range which is giving competition to market (Sterritt, 2003).
- Competitive Rivalry within an industry - There are many kinds of rival products that are entering the market for the fast foods like Burger Kings and Chipotle etc. These are giving a lot of competition to it.
- The company has long history of presence
- It has talented and trained manpower.
- It has global presence and offers many kinds and varieties of burgers and product range for all age groups.
- It is not providing products that are customized and created by customer choices.
- The taste of the products is same for the last decade with no innovation in the products.
- It can develop all other kinds of fast food as people are interested for new choices and styles.
- Many local fast food retailers have already entered the market that is posing a lot of threat to McDonald’s.
All these conditions define that the products of the company have to be re-launched and re-developed so that they provide a new customer experience and fight with the existing competition in the market from local fast food retailers. These are the basic tools of analyzing the position of the company in the market and accordingly taking steps to improve its position in terms of the market standards and conditions. These are required to be assessed and evaluated on consistent intervals.
(b) Outline potential areas for business improvement to the business organization and its operations. You should consider the current business situation of McDonald’s – finance, market share, trends in sales and eating habits, etc.
Market and the customers have been changing. The customers require new, innovative, creative and tasty styles of the fast food products. They want that as per their choices, the products are developed. These options are provided by other fast food chains like Subway, Burger King and Chipotle.
As per the case study for McDonald’s it has been analyzed that the company’s sales and finances have come down to a large extent in the last decade. The sales planning at a global level have fallen by 3.7%. The finances are also reducing as the sales are coming down drastically. The eating habits of the people are also changing as they want products that are innovative and as per their tastes and choices that is offered by other food chains. The areas of improvement to the business organization are:
- Offering product diversification and choices.
- Meeting customer expectations by providing customized products.
- Offering choices and package options that fight competition.
- Opening outlets in every nook and corner of the world (Gilligan, 2010).
From the case study it has been analyzed that there is a requirement of competitive benchmarking by the company with other fast food chains and products that are available in the market. It will suggest on the options, alternatives and ways by which they could re-launch their products into the market making a global and dynamic presence.
(a) As a business development consultant to McDonald’s outline the steps you would take to carry out a Business Health Check (BHC) on McDonald’s (you may concentrate on one region or one branch of McDonald’s for the BHC)
In this case study, we have analyzed that McDonald’s should carry out very quick and detailed Business Health Check. This process will help the company in finding out the health related audit and check for its existing products thereby offering best choices to its customers. The region chosen is India. India has been a country that has religiously very strong feelings and expects the companies not to play with them. McDonald’s has to respect the religious sentiments of the people and develop the products accordingly. For example it should not develop and sell products. BHC has been used as a very primitive method of finding out the position and share of the company in the market and then suggesting on styles to improve it. The ways in which the Business Health Check (BHC) is carried out in Mc Donald’s are:
- Financial and Business Performance Reports and Charts – It is imperative study the business reports of the company in terms of its changing financials and the statistics of business. This will give us a trend line analysis of the business movements and changes that are required.
- Competitive Benchmarking – The products of McDonald’s have to be compared with that of the other products. This competitive benchmarking will help in finding the areas of improvisations.
- Taking regular customer service feedback and evaluation – To study the feedback and the evaluation of the products and services that has been given by various customers.
- Revamping Marketing and Sales to reorient business strategy – The sales and marketing strategy that is used by the company has to be analyzed and worked upon so that it defines the areas that went well or wrong. Marketing requirement will define the
- Assessing the skills and competencies of the management and the staff working for the company – The decision making of the management and its impact on the business and sales of the products and services of the company will give us a health check analysis and feedback.
- Innovation and Differentiation Strategies and styles – It has to be studied for the company on the business innovation choices and the differentiation strategies that it has employed. The ways in which it has started fighting competition and changing the way the business should be carried out.
- Employee Feedback and Evaluation Process – The internal customers for the company are its own employees. It should take a feedback from these employees on the way the business strategy is taken into action, the responses that the people give for the products on day-to-day basis and the new ways in which the business could be increased.
(b) Based on your findings in (a) and the information the case study, provide a business improvement plan for McDonald’s
The above sub-task discussed on the ways in which the Business Health Check is done for the company. These areas define on the areas that have to be reworked in order to improve the business strategy of the company. As per the BHC and Case Study, the improvement plan for the company is discussed as under:
- It should develop customized products and services for its customers. It should let them take options of developing their products and accordingly taste. This will hold them responsible for the kind of products and ingredients they have developed.
- Offering new choices and options for the fast food. It should launch new types of products besides the already popular burgers and then take feedback of the customers on it (Jenkins, 2000).
- It should take out various offers and packages that will have choices as per the menu styles and the costing. The customers should get the choice of selecting their own menu and styles of the food.
- It should follow and abide by the country’s legal and political strategies and regulations so that the political and economic system of the country favours them as Fast Food Company (Leonard et al, 2002).
- It should increase the morale and bring about team and morale building exercises for its employees so that they could also contribute to the success of the company.
You are the HR Consultant to the new chief people officer and he has asked you to provide an evaluation of the current skills of management and staff an outline of a development plan. Provide a short report on how you would evaluate the skills of management & staff in a branch of McDonald’s? The report should provide justification for why management and staff should be developed and trained. You should use your knowledge from the case study
The success of any company would depend on the quality and type of the staff and the management that works for it. The management and staff will accordingly work to obtain the success for the company. The management is to be very clear on the goals, objectives and the vision of the company. It has to make sure that all the strategies that are developed are in line with the model of operation of the company. This requires that the current skills of the management and the staff is assessed and evaluated so that the right kind of processes and trainings are provided to them. The various ways in which the evaluation process is carried out are:
- Developing the Performance Management Evaluation Form & Process – This is a set process and a format that would be filled for the staff and the management at timely intervals. This format will then be analyzed to find out the areas of improvement for the staff and the management of the company. This process is a very well tried and handled by almost all the companies in the market (Liu et al, 2010).
- Identification of the measures for the performance – The measures and the key areas for the performance of the people has to be clearly defined. These have to be mapped with that of the industry and the competitor standards. These measures will keep rating the individuals and companies in their performance and the strategies that should be adopted with time.
- Setting the guidelines for the feedback process – The process of the feedback has to be set so that the response to the products and image of the company in the market could be found out and worked upon. The guidelines have to be taken with proper care and mapped with time.
- Creation of the termination and disciplinary procedures – These procedures will help in taking the disciplinary actions against the people who have not been performing well within the company. The objective of the company is aligning the organizational goals with that of the management and staff’s individualistic goals. This is possible when people are evaluated and improved upon.
- Setting of the schedule of the evaluation process – This schedule has to be regular and on a timely intervals. These intervals have to be clearly defined and accordingly taken further. This schedule has to be adhered to unfailingly. This schedule varies as per the business model and requirements of the organization and even has to be benchmarked with that of the other fast food chains in the market.
All these ways will help in assessing the skills and the competencies of the management and the staffs working with McDonald’s. These are usually the techniques that are adopted even by the other competitors and companies in the markets.
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Business Health Check is a process that defines the situation and the condition in which the business strategy has been running. This is a metric that measures the health and performance of the company with respect to its market share, business sales and the other competitor responses. It is necessary that McDonald’s has to devise certain business changed strategies and alternatives by innovation and development of the customized and creative packages for fast food for its customers. These will surely help in attracting the new customers, retention of the existing ones and re-launching the products into the market. McDonald’s sales have been decreasing for the last decade. The major reason for it is the rise in the competition and other fast food retailer offering new, innovative and customized products into the market attracting even the clients and customers of McDonald’s. In the nutshell, it could be said that company has to keep evaluating its products, business performance and the customer and client retention strategies. This will help in timely change and modification in them and accordingly introducing the required changes in them. McDonald’s has to even evaluate the skills and competencies of its management and the staff. This will in turn develop new ways of training and equipping them with newer skills that will support in fighting competition. Hence BHC is mandatory and required to be done for timely feedback and changes within the company.
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