Introductory Management BDPP1103

Faculty of Business and Management

September 2014

BDPP1103
Introductory Management

NAME

Ahmad Norakmal Bin Ahmad Sulaiman

MATRICULATION NO:

950319145439001

IDENTITY CARD NO.

950319-14-5439

TELEPHONE NO.

+60129133715

E-MAIL

anakmal@oum.edu.my

LEARNING CENTRE

PETALING JAYA LEARNING

CENTRE

Introductory Management BDPP1103

1.0 Introduction
In our daily lives, we see organizations everywhere. In the work place, at home, in
universities, and even in sports. McDonalds Corporation is one such organization. Every
organization wishes to succeed, and numerous measures would have to be employed to
work towards this end.
1.1 Strategic Planning
1.1.1 Definitions
Among the most essential of these measures would have to be strategic planning.
Strategic planning would be the kind of planning that involves the entire organization
or corporation. There are several definitions for strategic planning. Strategic planning
according to InvestorWords (2014) is the process of determining a company's longterm goals and then identifying the best approach for achieving those goals.
According to Ahoy (2014), strategic planning is a step by step process with definite
objectives and end products that can be implemented and evaluated. Competitive
Intelligence (2014) meanwhile postulates that strategic planning is a management
tool for organizing the present on the basis of the projections of the desired future.
1.1.2 Explanation
Strategic plans provide a blueprint for the overall aims and objectives of the
organization. They are usually made by those at the top of the organizations
hierarchy and implemented by those below them. This type of planning emphasizes
on the efforts of the organization to achieve its goals. These goals of course, have to
be realistic if they are to be implemented successfully. Strategic planning is usually
designed for usage on a long-term basis and is also the basis which tactical plans rely
upon for creation. Without strategic planning, organizations put themselves at a
disadvantage and may not go very far when compared to organizations that do utilize
it. Strategic planning comprises of seven steps which will be elaborated on
throughout the paper.

1.2 Background of Organization

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Name: McDonalds Corporation

Nature of Business: Restaurants
Products/Services: Fast Food, counter service, drive-through
2.0 Step 1: Identifying Mission, Objective and Strategies
2.1 Explanation
The first step to strategic planning would be identifying the mission, objectives
and current strategies. Every organization needs to have at least one mission statement
and multiple objectives to work towards. The mission statement has to be well
understood by employees if it is to be implemented well. Based on the broad mission
statement, multiple objectives that are more specific are drawn up, categorized and then
given to the relevant departments within the organization. These objectives are then met
by enacting strategies that have been devised specifically for said objectives. If the
organization has been in operation for some time, then strategies already exist and merely
need to be identified.
2.2 Examples
The following are several examples according to About McDonalds (2014) that provide
evidence for the explanation above.
1. McDonalds as an organization has a mission of its own, namely that it yearns
to be its customers' favorite place and way to eat and drink. With this clear
mission in mind, McDonalds entire employee base can be more focused and
dedicated with their careers.
2. McDonalds also has numerous values that serve as objectives to accompany
the mission statement. For everything that is done within the company, they
constantly seek to prioritize and keep the customer experience in mind. The
existing strategy to achieve this would be by constantly carrying out certain
practices such as keeping the premises clean, creating a very hospitable
environment and serving food with very high quality.
3. It is of course, a corporation and corporations must include generating profits
as a default objective. To achieve this, McDonalds utilizes several marketing
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methods as a strategy to continuously attract more customers to its brand and

franchise. Since it is a multi-national company, localization is very important.
Therefore its advertising is done in multiple languages and abides by different
decorums depending on the demographic being addressed. In doing so,
McDonalds ensures that it accommodates the differing perspectives and
cultures of multiple localities.
4. Operating its business in an ethical way is also among McDonalds objectives.
Ethics in a company builds trust and hence, customer loyalty. The strategy
outlined to achieve ethical business is by McDonalds setting and holding its
organization to high standards of integrity, honesty and fairness. With this in
mind, McDonalds ensures it conducts its business according to the standards it
set for itself.
5. Another objective of McDonalds, is to give back to the community.
Recognizing the very essence behind their success, it was only logical for
McDonalds to reward the community that sustains it. With the strategy of
leveraging its size, scope and resources, McDonalds also runs the Ronald
McDonald House Charities to support this endeavor.
6. A final example of an objective that McDonalds seeks to accomplish with a
strategy, is to be committed to its own staff. For McDonaldss staff to be fully
committed to the company, the company has to reciprocate. The strategy set
out by McDonalds to achieve this is by providing opportunities, developing
leaders, nurturing talents, and rewarding achievements by their staff. This
way, the staff who work for McDonalds feel satisfied with their careers.

3.0 Steps 2 and 3: Analyzing the environment and identifying opportunities and
threats.
3.1 Explanation
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Steps 2 and 3 to strategic planning both involve studying external elements that
nonetheless bear effects on an organization and its ability to succeed.
The second step to strategic planning would be analyzing the environment. If the
organization has been in operation for some time, then this second step is necessary for
managers to be able to define existing strategies usage and their relevance. If the existing
strategy is relevant to the environment, then the manager should be able to apply the
existing strategy. However, since we live in a dynamic world, the environment frequently
changes and new scenarios that are detected through analysis will need to be addressed.
Not only that, but the analysis of the environment should be as everlasting as the
organization itself and has to be done on a regular basis.
The third step to strategic planning would be identifying opportunities and threats.
There are many kinds of factors within the environment that influence an organization.
Opportunities would be positive factors whereas threats are negative factors. Since these
factors exist beyond the organization itself, the most the organization can do is adapt
itself to them. When formulating strategies, it is important to take these opportunities and
threats into consideration. They may render old or existing strategies ineffective and
provide vital information on whether these strategies have to be replaced.

3.2 Examples

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Such scenarios vary and examples of them would be changes in legislation, widespread
culture and popularization of trends, competition, changes in customer needs and wants,
etc.
1. Whenever McDonalds intends to open a branch, it has to study the
environment of the area where the new branch will be located. The habits and
tastes of potential customers are analyzed and the duration of the study may
depend on the size and diversity of the demographic being surveyed. Besides
that, even if the branch has already been launched, the studying of the
environment continues, and feedback from customers is always encouraged.
This is to ensure that McDonalds understanding of the environment is
constantly valid.
2. One opportunity for a McDonalds branch within the environment would be
customers who have little time for lunch breaks. Workers in metropolitan
areas usually work in offices and have to operate within strict working
schedules. Due to this ongoing rush, customers are more likely to demand
rapid service, which presents an opportunity for McDonalds since it can easily
fulfill these conditions.
3. Another opportunity for McDonalds would be culture and popular trends.
While social trends do come and go, to allow them to pass without making use
of them would be a true waste. Popular objects and practices include religious
commemorations, national celebrations, fashion trends and even the selfie
phenomenon. However, taking full advantage of these shifting trends can only
be done by implementing certain strategies at the right time.
4. One threat to McDonalds business would legislation. Complying by laws that
differ by country while attempting to sustain a brand built on reputation is not
easy. Certain countries may require certain standards on foods, such as Islamic
countries that mandate foods being prepared a certain way to be considered
halal or permissible for Muslim consumption. Other countries laws may filter
the content allowed for advertising and marketing. Since this can greatly
affect McDonalds customer base, this must be considered a serious threat and
requires strategic planning to address it.

Introductory Management BDPP1103

5. Competition is a constant threat to McDonalds. Other fast-food chains and

restaurants all have to share a slice of the same pie that sustains them:
Customers. The amount of potential customers for the food and beverage
industry may be large but it is still limited, so this means different
corporations must vie for the same customers. With each corporation looking
to stake their claim, McDonalds must use strategic planning to stay ahead of
the pack.
4.0 Steps 4 & 5: Analysing Organizational Resources and Identifying Strengths &
Weaknesses
4.1 Explanation
Steps 4 and 5 to strategic planning both involve studying internal elements that directly
affect the organizations ability to succeed.
The fourth step to strategic planning would be analyzing the organizational
resources. All organizations have resources, but what determines success or failure is how
well these resources are used. There are many kinds of resources that an organization has,
such as financial resources, human resources, information resources, etc. It is important
to inspect these resources so that they are being utilized by the organization both
effectively and efficiently. This ensures that existing resources arent being wasted. Also,
just like step 2, analysis of the environment, the analysis of organizational resources has
to be done frequently.
The fifth step to strategic planning would be identifying strengths and weaknesses
within the organizations resources. It is necessary to identify strengths to know an
organizations kernel capabilities and merits, which both give an indication of an
organizations resources overall worth and what it can provide to whoever it intends to
serve. Strengths also set the organization apart from other organizations and can be what
keeps the organization one step ahead. Weaknesses, on the other hand, are vulnerabilities
within the organizations resources that may prevent the organization from efficiently or
effectively achieving its objectives. These weaknesses, if they exist, have to be addressed
before they become more serious and it is important to give them due priority, while
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simultaneously remembering to commemorate strengths and to also give credit where

credit is due.
4.2 Examples
There are many examples of strengths and weaknesses within McDonalds resources.
1. One strength that McDonalds has among its resources would be the quality of
taste for its food. In any restaurant, how the food tastes is undoubtedly the most
important criteria for any customer. The process of how good food comes about is
a tedious one and many things can go wrong. Not only that, but since McDonalds
is multi-national, the company diversifies its menus worldwide and always caters
to local cultures, further complicating the process of consistently producing
delicious food. Nonetheless, McDonalds consistently manages this process of
getting the food from the farm to the customer in a very effective way, and as a
logical result the quality of the food is very rarely compromised.
2. Another strength of McDonalds would be its consistently clean and welcoming

premises. No customer would enjoy dining in filthy and/or uncomfortable

surroundings, and McDonalds takes every measure to ensure that their own
customers never have to experience such an environment. McDonalds premises
worldwide undergo strict quality control to ensure that whoever the customer may
be or wherever he may come from, if they look for McDonalds, they will always
find a clean and pleasant restaurant to dine in.
3. A notorious weakness belonging to fast food chains like McDonalds would be the
health effects fast food bears on customers. Diseases such as obesity and heart
disease are always high on the list of public fears. Doctors regularly warn patients
to abstain from eating fast food for their known health effects, and customers who
gain illness from eating certain foods on a regular basis will surely not be regular
customers. While efforts have been made to increase the healthiness of fast food
over the years, this issue still persists and remains a huge concern.
4. One more weakness of McDonalds would be the high pricing of its food. Quality
food most certainly cannot be cheap to sustainably produce, yet the resulting high
prices still affect customers nevertheless. Many people around the world truly
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enjoy eating food served by McDonalds, yet its high prices mean only certain
amounts would be able to consume them.

5.0 Steps 6 & 7: Re-evaluation of Mission & Objectives and Strategy Formulation
5.1 Explanation
Once the studying of both the environment and the organizational resources has
been done, step six of strategic planning, the re-evaluation of the companys mission and
objectives, can commence. The very purpose of implementing strategies is of course, to
obtain results. These results of the strategies are to be predicted beforehand. Once the
actual results of the strategy are obtained, these earlier predicted results can then be
measured against the actual results. According to Tee Keng Kok and Santhi Raghavan
(2011), the difference between these two outcomes is known as performance deficiency.
Based on this performance deficiency, managers must decide if either the strategies
decided upon earlier, or their implementation, need to be amended or not. Hence, after the
full analysis of the environment and organizational resources, if the situation calls for it
or if the organization is new, then the strategies identified in step 1 cannot be used and
new strategies will need to be formed.
Step seven of strategic planning, the formulation of strategies, if necessary, can be
carried out following the re-evaluation of the companys mission & objectives. There are
numerous strategies that can be utilized, namely the growth strategy, the stability strategy,
the retrenchment strategy and the combination strategy. Whichever strategy is to be
utilized greatly depends on the conclusions derived from the re-evaluation of the
corporations mission and objectives since each different strategy generates good results
in different situations.
5.2 Examples
McDonalds also has to undergo steps 6 and 7 when making strategic plans.
1. McDonalds mission is to make it its customers favourite place to eat and drink.
However, during Chinese New Year in Malaysia, many other restaurants
nationwide hold their own promotions and celebrations to make their restaurants
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seem special for the festive season. This changes, albeit temporarily, the entire
landscape for the food and business industry. McDonalds therefore cannot assume
that its predicted outcomes for strategies for normal periods can apply to the
festive Chinese new year period. If McDonalds carries on as it usually would
throughout other periods in the year, customers would simply head to other
restaurants that seem more fitting to the occasion, in this case, Chinese New Year.
In order for McDonalds to fulfill its mission and remain competitive, it has to
implement a new strategy.

2.

Its existing stability strategy may be suitable for normal periods throughout the
year, but for the Chinese New Year celebrations, a combination strategy involving
both growth and retrenchment methods may be best. McDonalds would normally
implement its growth strategy by focusing its advertising and marketing towards
certain limited time foods such as the Prosperity Burger, while practicing a
retrenching strategy on other food items that can be obtained in other periods.
This ensures that the cultural Chinese New Year celebration is fully taken
advantage of, since the idea of the prosperity burger being available for a limited
time makes it far more enticing. With this strategy, McDonalds is set to do well
despite the unusual turn of events.

6.0 Summary
It is necessary to identify all seven steps to strategic planning in order to truly
grasp its usefulness. Identifying the mission, objectives and current strategies has to be
done first and foremost. From there, analysis of the environment has to be done. Once
analyzed, opportunities and threats have to then be derived from the analysis. Next would
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be the analysis of organizational resources. After this has been analyzed, strengths and
weaknesses have to be identified. Once the opportunities and threats from the
environment, and the strengths and weaknesses of the organization have been collected,
the organizations missions and objectives can be re-evaluated. Finally, after all this has
been done, the formulation of strategies can take place.
Reflecting upon the entire strategic planning process, the second step, the analysis
of the environment is probably the most important and difficult task of all. This is
because if the strategy formed in step 7 is incorrect but the analysis of the environment in
step 2 is correct then it is possible to simply retry the strategy formulation of step 7.
However, if the analysis of the environment is wrong, then the strategy formulation will
also automatically be wrong, and it is not possible to merely form a new strategy. The
strategic planning process would have to restart from the analysis of the environment and
cannot be avoided.
The environment is also constantly changing, and it requires very sharp and acute
observations to be able to read it correctly. There are also many factors that are unseen in
the environment and it is from this that unforeseen scenarios are stemmed. Organizational
resources are easier to analyze since they are more stable and not as fluctuating as the
environment. This makes it very tricky to evaluate the environment.
In a nutshell, strategic planning is a very sophisticated but effective process. It ensures
that operations are well organized and also enables them to be carried out more
efficiently and effectively. The best managers all use strategic planning to its full effect
for the benefit of the organization, and have to comprehend and be capable of applying
each and every step correctly. These strategic plans are absolutely necessary if the
organization wishes to succeed at its mission and objectives. (2992 words)

ATTACHMENT

REFERENCES

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C. Ahoy (2014) Iowa State University Facilities Planning and Management. Retrieved
from http://www.fpm.iastate.edu/worldclass/strategic_planning.asp
Competitive Intelligence (2014) mirium.net. Retrieved from http://competitiveintelligence.mirum.net/strategic-planning/strategic-planning-definition.html
InvestorWords (2014) Biggest, Best Investing Glossary. Retrieved from
http://www.investorwords.com/4774/strategic_planning.html
McDonald's Mission and Corporate Values : AboutMcDonalds.com. (n.d.) Retrieved
from http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.html
Tee, K. K., & Raghavan, S. (2011). Planning. In Introductory Management (9th ed., p.
30). Kuala Lumpur: Open University Malaysia.

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