McDonalds strategic analysis Essay
Mcdonalds strategic analysis
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Strengths - McDonalds strategic analysis Essay introduction. McDonald’s has a well-established brand that appeals to customers of all age groups and nationalities. More than seventy percent of the company’s restaurants globally are possessed and run by independent local businessmen. McDonald’s is considered as one of the most famous and valuable brands the world over and seizes a chief share in the worldwide branded quick-service restaurant division of the casual eating-out marketplace in practically every nation in which McDonald’s conducts business. The business makes substantial investments in advertising and promotions to improve its brand image. It maintains its recognition as a leading franchising business globally.
The firm has a diversified geographic presence. McDonald’s operations are backed by strong supply chain capabilities. The company and its partners purchase food and related items from an approved group of suppliers. McDonald’s process of assuring quality not only entails continuing product evaluations, but likewise on-site assessments of suppliers’ amenities. Moreover, a board dedicated to assuring, consisting of the firm’s safety, technical and supply chain experts, offers strategic international headship for all facets of food safety and quality.
Weaknesses. McDonald’s, according to an internal document, is facing customer complaints owing to poor service quality. Rude employees in its restaurants are costing it millions of dollars in lost sales each year. Some of the more frequent complaints regarding service included wrong item included in order, product missing, incorrectly prepared product, condiments missing, inadequate portion, shortchanged or overcharged, and missing napkins, straws or utensils. Delay in service was the third-largest cause of customer complaints. Other complaints related to rude or unprofessional employees. Additionally, the company’s researchers found that, nearly 70% of the unsatisfied customers are further dissatisfied with the way the restaurant handled their complaint. Consequently, more than half of these unsatisfied customers reduce their visits to McDonald’s. Poor quality of service can have a harmful effect on the company’s image and lead to a corresponding decline in the number of its patrons.
Opportunities. In future, McDonald’s is planning to significantly increase its count of franchisee operated restaurants as well as a major design overhaul (Gogoi, et. al., 2006). In FY2007, the company witnessed noteworthy development improving the combination of company-operated and franchised restaurants, counting implementation of a strategy of developmental license, to make the most of long-standing brand returns and performance. Under this strategy, a domestic capitalist owns the venture, plus being in command of the real estate, and utilizes their resources and local information to construct the McDonalds brand and maximize lasting sales and profitability.
The firm is also planning on launching new products in order to accommodate a larger customer base the world over. This would allow McDonalds to use the current customer base to the best advantage and cross-sell other products. These projects, together with longer open-store hours and daily value, can compel augmented visits from customers and bigger sales. New products could increase customer traffic to older restaurants in developed markets and attract customers to new restaurants in developing markets.
Threats. McDonald’s, because of its nature of business may get affected by price fluctuations in beef, chicken and cheese, which are critical ingredients of the company’s menu. The company remains at risk to boosts in the costs of food resulting from factors outside its power, for instance, the general condition of the economy, cyclic fluctuation, weather situations, demand, concerns over safety of food and product retractions. The company may not be always in a position to pass on an increase in commodity price to its customers because of competition and the nature of the business. The outbreak of diseases such as bird flu and mad cow disease exerts a downward pressure on the consumption of poultry and meat products all over the world. Chicken products such as Chicken McNuggets are a central part of McDonald’s offerings. More importantly, chicken products have become strategically important to McDonald’s in markets such as India where a majority of population do not consume beef products. If these diseases assume epidemic proportions the revenue growth of the company is likely to slow down.
Main Strategic Choices
Business. Through ongoing strategic choices about its direction, McDonald’s which could once have been described as a “hamburger chain” no longer applies because its nature has been redefined. New markets are constantly being pursued as certain criteria are relaxed, tightened or revised; older products may be abandoned as the overall framework shifts based on new technological assumptions. This constant evaluation of what is in and what is out is a reflection of a shift in a dynamic strategy. As a result of competition in the fast-food industry
and increasing consumer preference for healthier food, McDonald’s has steadily expanded the range of food and drinks provided from the original offering of burgers, drinks and fries to include breakfast, sandwiches and salads. In addition to being sold as individual items, many of the products are packaged into special offers.
Functional. To handle the high volumes and meet the fast service required, there is a defined McDonald’s approach to each aspect of preparing and serving the food and drinks on offer, as well as longer hours (Arndt, 2007). The business coordinates directly with suppliers to support innovations, guarantee best practices and impel constant improvements. McDonald’s has specified quality standards to be met by the suppliers. The company enforces these quality standards through quality assurance laboratories which are strategically located the world over.
Corporate. With revenue in excess of $22.7 billion, McDonald’s has large scale of operation (Scott, 2007). The company is the world’s largest food service retailing chain, preparing and serving a range of foods. The company operates its restaurants in more than 118 countries around the world. McDonald’s generates revenues through company operated restaurants and franchisee restaurants. The company as a part of restaurant development selects the best locations within the marketplace to provide its customers with convenience. The company builds restaurants in neighborhoods as well as at airports, malls, toll ways, and colleges at a value for its customers.
Global. In future, McDonald’s is planning to significantly increase its count of franchisee operated restaurants. McDonalds gained truly global recognition when the brand moved from being simply a means of identifying goods to being a representation of core product values. McDonalds has been so successful in finding the global customer type and making each customer feel culturally comfortable. Despite its rigorous standardization in terms of product, service and quality, McDonalds allows franchisees increasing leeway in connecting the company to the local culture, which is proving to be an effective part of their global strategies.
Growth Strategies at McDonalds and Wal-Mart: A Comparison
Geographical expansion is a common growth strategy at McDonalds and Wal-Mart, which works well for them because they need a physical location to serve their customers. Also, like Wal-Mart who has adopted a strategy of a balanced brand mix, comprising private labels and external brands (Bianco, et. al., 2007) which enable the firm to reach out to a broader customer segment, McDonalds has taken steps to reach completely new sets of customers and market segment through maximizing the launch impact of new product categories at the grass-roots level by providing road maps for local market activities to work in tandem with national/international launches.
Arndt, M. (2007). McDonalds 24/7: By Focusing on the Hours between Traditional Mealtimes, the Fast-Food Giant is Sizzling. Business Week, 4020, 64.
Bianco, A., Der Hovanesian, M., Young, L., & Gogoi, P. (2007). Wal-Mart’s Midlife Crisis: Declining Growth, Increasing Competition, and not an Easy Fix in Sight. Business Week, 4032, 46.
Gogoi, P., Arndt, M., & Moiduddin, A. (2006). Mickey D’s McMakeover. Business Week, 3984, 42.
Scott, D. (2007). The New Rules of Marketing and PR. Hoboken, New Jersey: John Wiley & Sons, Inc.