Business Paper
Assignment II: Analysis of McDonalds Corp 2
Assignment II: Analysis of McDonalds Corp 1
Assignment II: An Analysis of McDonalds Corporation
Heather Ureno
Strayer University
BUS499 Business Administration Capstone
Dr. Grizzell
Dr. Gardner
November 4, 2019
An Analysis of McDonalds Corporation
McDonald's is one of the most prominent fast-food restaurants globally. These restaurants have managed to penetrate and be very successful in the global market. That is they have been able to set up restaurants in one hundred and nineteen countries owning over thirty-one thousand restaurant stores. All these stores operate optimally, giving back high returns as profits to the organization. The brand enjoys several strengths from its operations. Firstly, McDonald's has a very strong brand image. This makes McDonald's competitively strong (Greenspan, 2017). This strong brand image enables it to enjoy excellent brand awareness which is another strength. The corporation focuses on marketing and customer service which has helped the brand to grow its recognition higher. Additionally, the corporation owns many restaurants, which has given it an edge over its competitors as this large number or restaurants helps in making the brand easily known and recognized. Furthermore, the company has had several successful advertising and promotional campaigns that were promoting specific individual products but having the ripple effect of promoting the brand as a whole. This has further increased its brand awareness (Pratap, 2019). Another strength of McDonald's is its large and diverse menu. The restaurants serve a large and diverse menu in its hundreds of stores. The restaurants serve a uniform menu apart from minor variations to cater for specific geographical needs in some restaurants. However, apart from these strengths the McDonald brand also has several weaknesses. Firstly, is the brand's business model that makes it over-dependent on franchisees about ninety percent of the McDonalds business is operated by franchisees. In as much as the McDonalds business model is stable there usually arises issues with the franchisees, which makes it difficult for the company owner to be able to implement some business decisions very fast and also it makes it difficult for the company to run effectively if the franchisee does not agree with some of the policy decisions (Pratap, 2019). Secondly, McDonald's weakness is that there is lack of employee satisfaction. The whole Quick Serve Restaurants (QSR) industry is faced with this challenge of employee satisfaction in that these restaurants have a reputation for recording the highest profits but underpaying its employees. McDonald's has faced several protests and strikes of its employees as they were demanding an increase in their minimum wage. Additionally, McDonalds Corporation is highly dependent on western markets. A large percentage of the corporation’s revenue is from the United States, followed by European countries like the United Kingdom, France and also Canada. Its income from the Asian market is low which signifies that it has a low market penetration and any economic disruptions in its core markets will have a significant impact on its revenues. The McDonalds corporation can utilize its strengths so that they can be able to continuously increase its revenues and further stay ahead of the competition. This can be done by adopting a strategy of adopting new technology and maximizing on its advantages to further build the brand image and its awareness, this can be done by utilizing online platforms such as blogs, and the company’s website to further increase marketing platforms (Pencak, 2019). The brand could further work on its menu, in as much as it is diversified, they could innovate new menu items that would be appealing to the millennials as the current view that they hold is that McDonald's is for oldies and sell food that is high on calories. The brand could develop a menu for the health onerous people this will increase the corporation's revenue percentages (Pratap, 2019). In order for the corporation to reduce its overdependence on the western markets, it could employ a strategy of increasing its market share in the Asian and also African markets, which will help it ensure that its revenues are not easily affected by economic changes in its main markets. Also the corporation can further deal with the issue of employee satisfaction by better compensating their employees and dealing with employee-related challenges like overworking (Bstrategyhub.com, 2019).
McDonald's has a large capital base from its stakeholders which enables it to open many new restaurants. It has many stores worldwide and a team of competent and trained staff and managers. The corporation has several core competencies that is experienced and highly trained employees, continuous online and on job training ensures that the staff is adequately equipped with the relevant skills, other competencies include, superior customer service, fabulous locutions, continuous product development, and utilization of advanced technologies. They also emphasize on teamwork and have a clear role and requirement list for each employee.
One of the segments of the general environment that affect McDonald as a corporation and the industry as a whole is the political factors which include government regulations. Due to the nature of foods served in restaurants such as McDonald's they are purported to be the cause of lifestyle diseases like diabetes and hypertension governments have now passed regulations that recommend the sale of healthy food state for its population. This has had an effect on the foodservice industry as restaurants like McDonald, have now been forced to make changes to its menu items which have had a negative impact as the operational costs have increased. The second environmental factor is the socio-cultural factors. McDonald's operates globally, meaning that when they are making decisions and policies, they have to take into consideration the social cultural factors of the countries that they operate in. For example for Islamic countries, they have to ensure that they use ‘halaal’ ingredients and products (Frue, 2018).
The two forces of competition for McDonald's is the high availability of substitutes and new entrants in the market. The company has responded by rolling out new products and allowing additions to the existing food chores like one can add protein to the fruit smoothies. This has helped so as to provide a diversified menu for its customers. Regarding the new entrants, in as much as they are not a significant threat globally, locally they present a meaningful risk. McDonald's has dealt with this threat by increasing its promotional campaigns and ensuring that their services are customer-centric. The company can further deal with these competitive forces by further diversifying and expanding its menu to include more healthy items and also by focusing on further expanding in the Asian and African countries so as to increase its revenue and market share (Gregory, 2018).
One of the greatest external threat that McDonald's corporation faces is the change in the consumer's tastes and preferences. In recent years many people have become health conscious about what they take. This is because there has been a drastic increase in lifestyle chronic diseases like diabetes, hypertension, obesity, heart attack and stroke. McDonald’s is faced with the threat of losing its customers as they how move to restaurants that rotter mon organic and healthy menu items as compared to McDonald's which persevered to have a menu that has high amounts of sodium and sugar in their menu items (Frue, 2018). McDonald's is losing its millennial clientele to upcoming small restaurants like Panera and Chipotle as explained by (Jargon,2014) which offer more appeal to the younger generation as they offer more organic and natural food supplements and also a variety in their menus. This provides a stronger appeal to the millennials. The corporation can easily face and overcome this threat by expanding its menu so as to accommodate the needs of the health-conscious clientele and potential customers. For example, McDonald's competitors like Burger king introduced salads to their menu and this has had a positive impact on them. This solution is supported by ( pestheanalysis.com, 2015) who suggests that McDonald's can continue to survive as the dominant fast-food brand in the industry if it successfully manages to change and reform its menu so that it is adaptable to the current changing times.
The greatest opportunity presented to McDonalds Corporation is global expansion. Considering that McDonald's is overly dependent on Western markets, the brand has the opportunity to expand and grow into the developing countries. Market development strategy can be utilized by the company to enable it to establish and grow its operations in the Middle East countries when it has not yet ventured in. Also, by developing and increasing its market coverage of the Asian market the company can be able to increase its revenue returns and also shield itself from economic strains from its main markets (Greenspan, 2017). Furthermore, other than expanding into different states of America the company has the potential of expanding its operations globally to many other countries and focusing more on the international markets (Bstrategyhub.com, 2019). The company can also focus on increasing its restaurant chains in China and Asia as a whole as further suggested by (Krull, 2018) this will provide a great opportunity for the corporation to spread its business economic risks over a large market cushioning it from economic fluctuations that might have a great impact on the business.
References
Frue, K. (2018). PEST Analysis of McDonald’s: Which factors affect their future success. Retrieved 4 November 2019, from https://pestleanalysis.com/pest-analysis-of-mcdonalds/
Greenspan, R. (2017). McDonald’s SWOT Analysis & Recommendations - Panmore Institute. Retrieved 4 November 2019, from http://panmore.com/mcdonalds-swot-analysis-recommendations
Gregory, L. (2018). McDonald’s Five Forces Analysis (Porter’s Model) & Recommendations - Panmore Institute. Retrieved 4 November 2019, from http://panmore.com/mcdonalds-five-forces-analysis-porters-model
Jargon, J. (2014). McDonald’s Faces ‘Millennial’ Challenge. The Wall Street Journal. Retrieved from http://online.wsje.com
Krull, R. (2018). McDonald's: Strengths, Weaknesses, Opportunities, Threats | The Motley Fool. Retrieved 4 November 2019, from https://www.fool.com/investing/general/2010/08/25/mcdonalds-strengths-weaknesses-opportunities-threa.aspx
Pencak, S. (2019). 3 Steps To Use Your Strengths and Weaknesses To Improve Your Performance. Retrieved 4 November 2019, from https://silviapencak.com/strengths-and-weaknesses/
Pestleanalysis.com. (2015). McDonald’s SWOT Analysis: Strengths and Threats. Retrieved 4 November 2019, from https://pestleanalysis.com/mcdonalds-swot-analysis-strengths-threats/
Pratap, A. (2019). McDonald's SWOT Analysis 2019. Retrieved 4 November 2019, from https://notesmatic.com/2019/08/mcdonalds-swot-analysis-2019/