Justification Report - McDonald's Corporation

Running head: JUSTIFICATION REPORT 1

JUSTIFICATION REPORT 6

Justification Report

Name of the Student

Name of College/University

Date

Your Name

Your Address

New York, NY- 45981

March 8, 2014

Mr. Richard Martins

General Manager, McDonald's Corporation

67238 Northeastern St

Oak Brook, IL 56916

Dear Mr. Richard:

I hereby submit this report on the benefits of introducing a low-carb McFlurry ice cream as one of the products of the company. The report is based on a SWOT analysis and literature review of credible sources regarding the company. Findings of this report indicate that there is a need for the company to address the needs of its health-conscious customers to ensure that the company retains its customers and attracts new ones. Providing low-carb ice cream could help to attract customers who have problems related to weight and sugar. Besides, the company stands to experience increased revenue because of the inflow of new customers. Therefore, I am proposing that you implement the recommendations of the report as these promises to ensure the competitiveness and viability of the company.

Best regards,

(Your Name)

(Your Title)

Table of Contents

Page No.

Executive Summary………………………………………………………………..4

Introduction…………………………………….………………………………… 5

Problem Statement…………………………….………………...…………………5

Method Used………………………………….………………………...………….5

Findings……………………………………….……………………………………6

Analysis…………………………………….…………………………………...…..6

Conclusion………………………………….……………………………………….6

References…………………………………………………………………………..7

Appendices………………………………………………………………………….8-9

Executive Summary

This report focuses on the introduction of a low-carb McFlurry ice cream at McDonald’s. The objective of this move is to meet the needs of health-conscious consumers, especially the ones with weight and sugar problems. The introduction part provides an overview of the company and the reasons that have played a key role in its success. This part also introduces the problem to be addressed in the report and the possible benefits associated with the introduction of the low-carb ice cream. The next part of the report is the problem statement, which presents the problem that McDonald’s should address to ensure that it meets its customers’ needs in a satisfactory manner to avoid losing its market share to competitors. This part shows that today’s consumer is highly informed, which has contributed to the current trend toward the consumption of healthy foods. This part also discusses some of the most serious consequences of consuming unhealthy meals such as overweight, obesity and cardiovascular diseases. This part also shows that other restaurants have started offering healthy meals to clients that are more health-conscious, which could cause the company to lose its clients. This report has relied on books, journals and a SWOT analysis of the company to obtain vital information relating to the problem identified. Findings of this report indicate that there is a need for McDonald’s to introduce the low-carb McFlurry ice cream because it could help to address the needs of its customers, particularly those that are conscious about their health. Such a move will not only help the company to retain its customers and attract new ones, but will also help to increase its revenues significantly.

Introduction

McDonalds is one of the leading and most recognized fast food restaurants in the world with thousands of branches in all continents of the world (Schlosser, 2012). McDonald’s has been operating for many years and has achieved remarkable success. To ensure this success, the restaurant strives to provide its clients with excellent foods and top-notch services in a consistent manner. The organization has invested significantly in understanding its clients’ needs and ensuring to live up to the maxim of delivering the best to ensure customer satisfaction and loyalty. Being a leading restaurant, its customers have high expectations from the company in terms of both product quality and the level of service provided. One of the expectations that have increasingly become common among customers in the recent times relates to the consumption of healthy meals. In particular, customers demand to have low fat in its ice creams. McFlurry is one of the best performing products of the company and ice cream lovers all over the world would relate to this product (Gilbert, 2008). Therefore, providing customers with low-carb McFlurry ice cream would be a sensible move because it would not only help to meet the needs of health conscious customers, but also boost revenues of the company. This means that this report will be of much benefit to the management and other senior officials at McDonald’s.

Problem statement 

Customers have increasingly become health conscious in the recent times. This research hopes to provide a solution for the health-conscious customers by promoting the low-curb ice cream. Today’s customer is more informed about the healthy foods to take, including the consequences associated with taking unhealthy foods. This has necessitated restaurants and other businesses in the food and hospitality industry to become watchful of what they provide to their customers. America is one of the countries with the highest number of overweight and obese people in the world (Levine, 2011). Awareness with regard to the health consequences has increased and more people are taking appropriate measures to prevent or control the problem. Accordingly, there is a trend by restaurants to offer foods that are more nutritious to prevent escalating the problem. Therefore, it makes perfect sense for McDonald’s to provide its clients with low-carb McFlurry to demonstrate its commitment to providing high quality products.

Method used

To gather useful and relevant information relating to this issue, this research consulted various academic sources, as well as relied on information obtained from a SWOT analysis of the company. The research relied on books and journal because these are reliable and credible sources that can be relied upon to make meaningful conclusions. Books and journal articles offer a wide range of information, which helps in the making of informed decisions on the pertinent issues relating to the research. I determined the credibility of these sources by finding information regarding the authors’ qualifications, relevant work experiences and professional affiliations. This information is necessary because it enables me to determine the ability of the authors’ to provide valuable and relevant information relating to the issue. I found these sources from the library and the Internet.

Findings

This research produced highly valuable findings that could be of much benefit to the management and other influential leaders at McDonald’s because it provides information relating to customer preferences and the reasons for the move towards the consumption of healthy foods (Peppers & Rogers, 2010). According to Schlosser (2012), a significant number of consumers have problems relating to overweight, obesity and cardiovascular diseases, among others. In other words, there are many people in America and other parts of the world struggling with sugar and weight problems, most of whom would like to take the necessary steps to prevent, treat and/or control these problems. The SWOT analysis has demonstrated that McDonald’s is one of the leading companies in the foods and hospitality industry with ability to initiate new ideas successfully because it has a large and loyal customer base. Levine (2011) clearly shows that low-carb diet could help to control problems relating to overweight, obesity and cardiovascular diseases appreciably. In addition, Schlosser (2012) shows that today’s consumer has become quite informed about health matters, which clearly justifies the need for McDonald’s to provide foods that are more conscious on health.

Analysis

This research has provided significant findings that could help management officials of McDonald’s make timely, informed and accurate decisions regarding the introduction of low-carb McFlurry in the market. SWOT analysis of the company revealed that the company has a large, consistent and loyal customer base such that the new ice cream would perform well. Besides, McDonald’s is a relatively strong brand compared to its competitors, which would ensure the success of most of its products, including McFlurry ice cream. As noted in the findings, many consumers have become health-conscious, which means that they seek products/foods with nutritional benefits, as well as products that do not expose them to diseases. Accordingly, the idea of introducing the low-carb McFlurry is appropriate and timely because it will meet the needs of consumers with weight and sugar problems effectively (Levine, 2011). This move will be appropriate because there is a trend in the market for a switch to healthier foods by other restaurants. For that reason, the introduction of the low-carb McFlurry ice cream will help to fight competition and enable company maintain its foothold in the industry. More importantly, the move will help to attract new customers and maintain its existing ones, thereby improving its revenues appreciably.

Conclusion

To conclude, this research shows that there is a need for McDonald’s to introduce the low-carb McFlurry ice cream in the market. It is highly critical that the company makes this decision because it will ensure to meet the needs of health-conscious consumers. Findings of this research have provided sufficient evidence indicating that the consumption of foods with high carbohydrate levels leads to many health complications such as obesity, overweight, and cardiovascular diseases among others. Thus, the introduction of health-conscious ice cream will help to retain and attract new customers to the business, thus boosting its competitiveness and viability in the industry. Accordingly, it is highly recommended that the management of McDonald’s review this report and implement its recommendations (Peppers & Rogers, 2010).

References

Gilbert, S. (2008). The story of McDonald's. Mankato, MN: The Creative Company.

Levine, J. A. (2011). Poverty and obesity in the U.S. Diabetes, 60 (11), 2667-2668.

Peppers, D., & Rogers, M. (2010). Managing customer relationships: A strategic framework. Hoboken, NJ: Wiley.

Schlosser, E. (2012). Fast food nation: The dark side of the all-American meal. Boston, MA: Mariner/Houghton Mifflin Harcourt.

Appendices

McDonald’s SWOT

Strengths - High brand recognition compared to rivals - Has operations in all parts of the world - Adheres to strict food safety guidelines - Strategic locations in airports, theme parks, common roads, Wal-Mart stores - Demonstrates cultural diversity in its food offerings depending on the location	Weaknesses - High turnover costs, elevates training costs - Franchised operations lower quality of products and services - Failure to focus more on organic foods - Failure to focus more on healthy foods (it focuses more on burgers, which are oily) - Minimum variation in offering seasonal foods
Opportunities -Expansion to other developing parts of the world - Engaging in joint ventures with various retailers - Trying out allergen-free products such as gluten-free foods and peanuts - Expanding its range of beverage products - Engaging in more serious advertising campaigns, focusing on the environment	Threats -Numerous lawsuits relating to unhealthy foods - Trend among consumers focusing on healthier eating habits - Numerous fast food restaurants offering similar products and services - Harsh economic conditions forcing people to avoid eating out

Strengths

One of the strengths of McDonald’s is that the brand is well recognized and accepted all over the world, which helps to improve sales. In addition, the company has branches in all parts of the world, which helps to increase its competitiveness and ability to maintain profitability. McDonald’s also takes the necessary steps to ensure production of foods that meet the highest standards of food safety. The strategic location of its stores helps to increase its revenue and viability in the industry. Lastly, the approach to cultural diversity helps the company to attract customers from all ethnicities and racial backgrounds.

Weaknesses

One of the major weaknesses of the company is the high turnover rate, which often results in elevated training costs. The failure to concentrate more on organic foods and foods that are healthier is also a factor that causes the company to lose its customers to its main rivals. In addition, the company does not take advantage of seasonal foods that may help to lower its production costs as well as increase its revenues.

Opportunities

McDonald’s has numerous opportunities for expanding its operation, providing better services and increasing its profitability. For instance, the company could expand its operations to other parts of the world, especially those parts that are developing. In addition, it may consider partnering with other retailers to attract more customers and provide better services. Moreover, the company could increase its range of products and services, especially the beverage range, as well as focus on providing foods that are allergen-free and those that contain less fats and carbohydrates to attract customers that are more health-conscious. Lastly, engaging in more vigorous advertising campaigns, especially those focusing on environmental conservation could help to attract customers that are environmentally-conscious.

Threats

The numerous lawsuits relating to unhealthy foods offered by the company could work against the company in the long term. There is a trend among consumers to take foods that are healthier. Moreover, the various restaurants offering similar foods could pose as a significant competition for the company. Those threats combined with the risk of operating in a harsh economic environment could have a negative impact on the company’s performance.