The company I decided to research was McDonald’s because it is one of the most well known fast food restaurants around the world that has continued to stay on top. McDonald’s competitive strategy is mainly based on low-cost leadership strategy. This means that they focus on gaining their competitive advantage by being the lowest-cost producer of their products, which in this case is in fast food industry. They are able to achieve this through standardization of their products and services which allows their food to have the same taste wherever you go. They also engage in extensive use of economies of scale to achieve their cost advantage over other restaurants. McDonald’s compensation policy is also much more extensive than most people would assume. They utilize both intrinsic compensation and extrinsic compensation to help keep their employees engaged and motivated to do well. They offer their employees medical insurance, dental and vision insurance, life insurance, paid time off, free uniforms, stock options, tuition matching program, 401(k), and many more benefits.
McDonald’s approach to their compensation appears to be genuinely intended to not only improve their competitive strategy but also keep their employees satisfied and happy. They do this through using strategic compensation to encourage their employees to follow the best practices to help the company achieve and maintain their competitive strategy and advantage in the industry. Their compensation program accomplishes this through recognizing employee’s contributions and recognizing their needs outside of the workplace. For example, McDonald’s has regular scheduled reviews of all employees to give them an opportunity to receive recognition and raises for the work that they have done for the company. They also provide their employees with all the necessary benefits they need to live a comfortable life like insurance plans and paid time off along with many other things. Their product market and labor market greatly affect their compensation practices because the competition amongst food franchises is very intense and in order to retain employees they must offer incentives for people to stay and to come work for them. Along with the increasing competition in this market there also has been increased scrutiny in recent years to increase pay for fast food workers. All of these factors combined have helped influence McDonald’s compensation practices and their competitive strategy.
