Value Proposition for McDonald’s Product Development

Question

Task: You are required to write a 2000-word report for a novel business proposal you have developed. The business proposal must build upon your novel value proposition developed in assessment 1 for the existing business or organisation selected in assessment 1. You must use appropriate headings to structure the body of the report.
Your report must demonstrate:
1. Logical and persuasive articulation of: business model description; value proposition development; business operations development; supply chain development; competitive advantage; financial value capture and strategic fit (this includes elements 5 to 10 in the disciplined entrepreneurship canvas and elements 3 to 9 in the business model canvas). 40%
2. Logical and persuasive argumentation in regard to how assumptions and uncertainties related to: customer desirability; technical feasibility; and financial viability have been addressed to date and how they will be addressed in the future as described in a phased development plan. 16%
3. Logical and persuasive argumentation for the selection of the innovation tools and techniques used to support the report findings and recommendations. These must be beyond the tools and techniques used in assessment 1. Minimum five (5) additional tools and techniques must be selected from the provided list of tools and techniques. 6%
4. Logical and persuasive application of the selected innovation tools and techniques used to support the report findings and recommendations. These must be different to the tools and techniques used in assessment 1. Minimum five (5) additional tools and techniques must be applied from the provided list of tools and techniques. 8%
5. Candid and critical self-reflection about assessment 2 tasks including: a reflection on the development of personal innovation capabilities and practices; identification of own personal strengths and weaknesses; supported with suggestions for self-improvement. 10%
6. Clear flow of thought throughout the report with: a convincing executive summary; clear and succinct purpose described in the introduction; relevant structure and content within the body of the report; and a clear and succinct conclusion. 6%
7. Critical review skills and integration of relevant academic and professional literature. A minimum of ten (10) academic and professional references must be used. 4%
8. Appropriate in-text referencing and reference list. Adherence to CQUniversity APA reference style. 4%
9. Clarity of expression, grammar and spelling. Appropriate report format with good use of bullet points, illustrations and figures. Within ±10% of the word limit for report, excluding references and appendices: 2000 words. 6%

Answer

Executive Summary
Based on the current concern of developing profitability and new product development, this study has created a value proposition analysis on McDonald’s product development and initiative of promoting well-being alongside health via smart connected products. This study has been divided into identifying, the potentiality of the organization to achieve a competitive advantage, value proposition study, business model and entrepreneurship canvas to in-depth organizational effectiveness review. On the other hand, this study has concentrated on the supply chain, business operation aspect and financial value analysis based on the new product innovation idea. Emphasis has been given to uncertainties and proposed ways of mitigation also in this study.

1 .Introduction
This study will focus on McDonald’s product development and marketing in the Australian market. As part of the novel value proposition, the initiative of promoting well-being alongside health via smart connected products has been selected. This study will be divided into several parts, which will be effective in understanding how the value proposition by the selected company could be done. The first part of this study will investigate information about business model, value proposition operations development criteria and supply chain initiatives. On the other hand, this study on McDonald’s product development will concentrate on financial value, strategic fit in the market, competitive advantages and related business expansion risks for McDonald’s. With the help of tools and techniques, this study will investigate business innovation, critical and self-reflection and recommendations at the end.

Targeted problem and opportunity
It has been currently seen that this company is facing problems in sustaining its profits with the burger chain and menus, they are providing in different countries and markets. It has been reported that though the UK and France have seen an increase in profits, the profit margin in the USA remains batting average (mcdonalds.com, 2020). On the other hand, another targeted problem identified is development in the existing menu. Healthy eating habits are becoming one of the priorities of consumers around the world and in Australia. Thus, through this new product marketing, McDonald’s product development would be able to increased profit margins and competitive value opportunity in this market will also go up. The key insight in the targeted problem and opportunity is to provide maximum value of money to the consumers and developing the brand value as well.

2.Business model description for McDonald’s product development

Table 1: Business model canvas
(Source: Created by the learner)

Table 2: Disciplined Entrepreneurship Canvas
(Source: Created by the learner)

3. Value proposition for McDonald’s product development

Table 3: Value creation analysis for the McDonald’s product development
(Source: Created by the learner)

4. Business operations development
The business environment map for McDonald’s product development is listed below;

Table 3: Business environment map for McDonald’s product development
(Source: Created by the learner)

5.Supply chain development

Figure 1: Supply chain capability and channel
(Source: Weiet al., 2019)

As per the above graph presented in this study of McDonald’s product development, it could be said that the new supply-chain development for the product identified will be simple. McDonald’s with directly communicate with the food material suppliers from the local market and logistics will be managed by the supervisor, whose main responsibility will be taking care of the quality and quantity of the food materials (Wei et al., 2019). After that smart connected products will be produced in the outlets of the company. The sales and marketing team will work on corresponding messages regarding new offers, availability of the food item in outlets. After that direct food will be served to the consumers.

6.Financial value capture
The financial value capture will be based on two parameters that are listed below;

Life Time Value (LTV):
The lifetime value of the product obtained through McDonald’s product development plan will be counted as a first purchase, repeat purchasing, how the company channelize their marketing policies to retail their consumer base such as changing in the price or adding variety to the products and calculation of total revenue after a year (Wang, Liu& Miao, 2019). For instance, if the product is priced as $50 then through consumer lifetime renew value could be added as $100 more and the lifetime value will be $150.

Cost of Customer Acquisition (COCA):

Figure 2: Cost of consumer acquisition
(Source: Friar & Mulki, 2019)

7. Competitive advantage
Core capabilities compared to competitors
The core capabilities compared to the market competitors of McDonald’s in this context are providing value for money as the new product will have cost less than the usual burgers. On the other hand, providing healthy fast food is something new in the market against competitors that needs to be considered during McDonald’s product development process. Bringing innovation to the products that this company is specialized for will always stand out against the competitors (Kumar&Pansari, 2016).

What are the unique benefits for customers obtain from the product developed through McDonald’s product development process?
Consumers will be directly benefitted from food quality, healthy food options without compromising their tastes. The customization options wit value for money will also help consumers switch to this product.

8. Strategic fit
The above proposal of bringing healthy food options in the fast-food menu of Macdonald compatible in various respects. First of all, as the problems identified, this proposal focuses mainly on the consumer aspect and how through this company could ensure profitability. The product selected here is effective for the parent company to product and market to the target consumer base. This product has the potentiality to bring and retain the consumer segments as per its food and value for money. Now, if the profitability issues are discussed, then it could be said that with unique marketing and promotional capabilities of the parent company and their exclusive partnership with suppliers’, sales volume could be double. People will trust the brand and product purchase value could be developed. 

9. Identification and assessment of assumptions and uncertainties
The main uncertainties related to this McDonald’s product development plan are listed below;

Table 4: Business assumptions and uncertainties
(Source: Created by the learner)

10.Phased development plan to address uncertainties

Table 5: Mitigation of assumptions and uncertainties
(Source: Created by the learner)

11. Selection of innovation tools and techniques
Selection of innovation tools and techniques has been done through identifying the mission and what are the project deliverables will be. In this regard, it could be said that McDonald has done SWOT analysis and Porters' five forces evaluation for better understanding of organizational capability to launch a new product segment and the macro-environment in which they are going to market this product. On the other hand, the consumer profile has been developed as per the targeted consumer segment. Both of these innovative tools are attached in the Appendix.

SWOT Analysis

Table 6: SWOT Analysis
(Source: created by the learner)

Porter’s 5 Forces

Table 7: Porter’s 5 Forces
(Sources: created by the author)

12. Candid and critical self-analysis
While doing the tasks and investigating the market and business capabilities, I have understood that the food industry around the world and in Australia is competitive and there are other potential competitors exist in this market. Another thing I have understood while doing this project is that switching to healthy food options is becoming popular among young working people due to their busy lifestyle and health concerns. I have also pointed out the fact that Government initiatives in healthy food supply and production are becoming strict in this country; therefore making healthy fact food for consumers would be a great chance for Macdonald to gain competitive advantage.

13. Conclusion and recommendation
From the above analysis and discussion on the new product marketing and launching, it has been understood that McDonald’s product development is capable of capturing interests and attention of the targeted consumer segment through their established brand image and retaining the quality of the food they are going to serve. Additionally, developing and regular communication with the suppliers and stakeholders would be effective for the business and it will help retain the value of money for the business growth. It could be recommended that Online promotions and communication with potential consumers should be developed more so that regular interaction and feedbacks on products could be collected.

14.References
Ajmal, M. M., Khan, M., Hussain, M., &Helo, P. T. (2017). McDonald’s product development Conceptualizing Social Sustainability in the Business Operations.

Friar, J. H., & Mulki, J. P. (2019). The company that would not bid: A small business using a high cost of customer acquisition approach. SAGE Publications: SAGE Business Cases Originals.

Kumar, V., &Pansari, A. (2016). Competitive advantage through engagement. Journal of marketing research, 53(4), 497-514.

Linder, M., &Williander, M. (2017). Circular business model innovation: inherent uncertainties. Business strategy and the environment, 26(2), 182-196.

Mcdonalds.com (2020). Retrieved 2 April 2020, from https://www.mcdonalds.com/us/en-us.html

Wang, X., Liu, T., & Miao, J. (2019). A Deep Probabilistic Model for Customer Lifetime Value Prediction. arXiv preprint arXiv:1912.07753.

Wei, S., Ke, W., Liu, H., & Wei, K. K. (2019). Supply chain information integration and firm performance: are explorative and exploitative IT capabilities complementary or substitutive?. Decision Sciences.

Zondag, M. M., Mueller, E. F., &Ferrin, B. G. (2017). The application of value nets in food supply chains: A multiple case study. McDonald’s product development Scandinavian Journal of Management, 33(4), 199-212.

15.Appendices
Target customer profile

Market route and consumer focus