Week 15 Case Study Analysis Presentation

Nation Wells

MCDONALDS

Porter’s Five Force Model :

The Five Forces is a framework for understanding the competitive forces at work in an industry and which drives the way economic value is divided among industry.

By Denis Fadeev - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=32946157

Porter's Five Forces	McDonald's Analysis
Threat of New Entrants	High barrier due to economies of scale, brand recognition, and capital requirements
Bargaining Power of Suppliers	Low due to McDonald's size and purchasing power
Bargaining Power of Buyers	Low for individual customers, but shifts in consumer preferences can impact McDonald's
Threat of Substitute Products or Services	High due to the availability of many substitutes
Rivalry Among Existing Competitors	High due to the intense competition in the fast-food industry

VRIO framework

VRIO is a strategic framework used to analyze a firm's internal resources and capabilities for competitive advantage. It stands for Valuable, Rare, Inimitable, and Organized. Here is a breakdown of McDonald's VRIO analysis:

V - McDonalds is widely recognized around the world as one of the valuable brands with a large and loyal customer base. Its global network of restaurants ensures that it is easily accessible to several consumers.

R - The unique menu offerings like Big Macs, Chicken McNuggets and Happy Meals set McDonalds apart from fast food chains. The company’s efficient supply chain management guarantees the delivery of high-quality ingredients while maintaining consistency.

I - McDonalds has safeguarded its property and trade secrets, such as trademarks, recipes and operating systems that are challenging for competitors to duplicate. Its strong brand reputation and customer trust are hard for rivals to replicate.

O - With an established culture centered on customer service, cleanliness and value McDonalds emphasizes training programs to cultivate a skilled workforce. Overall McDonalds possesses a variety of resources and capabilities that give it an edge in the fast-food industry.

SWOT :

examines the company's strengths, weaknesses, opportunities, and threats

Vertical value chain:

Financial Analysis :

According to McDonald’s corporate, Global comparable sales have grown 9% for the year and over 30% since 2019. Systemwide sales to loyalty members were over $20 billion for the full year and over $6 billion for the quarter across 50 loyalty markets, with full year growth of more than 45% over prior year.

https://corporate.mcdonalds.com/corpmcd/our-stories/article/Q4-2023-results.html

Debt to equity ratio of -7.733, Mcdonalds capital structure is skewed more towards equity than debt

Current ratio of .83 means liabilities are higher than assets

Return on assets at 14.07% means high return on assets

References:

MCD (McDonald’s) Days Sales Outstanding. (n.d.). Www.gurufocus.com. Retrieved July 21, 2024, from https://www.gurufocus.com/term/days-sales-outstanding/MCD

Wilson, Michael. “Afflink.” Afflink.com, 2017, www.afflink.com/blog/6-things-weve-learned-from-mcdonalds-procurement-management.

PhD, Kedar Karkare. “McDonald’s Sustainability: The Good & the Bad.” Karma Wallet, 22 June 2023, karmawallet.io/blog/2023/06/mcdonalds-sustainability-the-good-the-bad/#:~:text=McDonald.

SWOT Analysis

Strengths:

M

Opportunities:

Threats:

Strong Business Model

Brand Recognition

Menu Diversity

Weaknesses:

Health Concerns

Employee Dissastisfaction

Lack of Innovation

Healthier food options

Expansions into new channels

Diversifying product offerings

Changing consumer preferences

Healthier competition

Frequent negative publicity

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