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Introduction

McDonald’s is a well-known chain of restaurants serving over 68 million customers and whose brand is recognized globally. Over 80% of the restaurants operate under a franchise system whereby a given entrepreneur acquires the right to operate under the McDonald’s brand by providing products related to the brand. McDonalds obtained its strong brand name through its business model that seeks to provide a consistent dining experience as well as quality and first service throughout all the restaurants. However, with its strong recognition the company faces various challenges as discussed in the SWOT analysis below. This study also analyzes how the company adapts to change and opportunities it can utilize to maintain its market relevance.

Economic, Legal and Regulatory Forces and Trends

Economic forces and trends entail factors that have an impact on the spending as well as the consumer purchasing power. Different economic factors that influence McDonald’s for instance since it operates within various countries it will have to set product prices about the economic status of these countries. A competitive pricing has been McDonald’s strategy in curbing competition and ensuring economies of scale. Most of McDonald’s market is within America where the economy is stable giving it an opportunity to grow in a steady manner. However, the dependence on this market could pose threats if economies change. Economies in other countries are mostly unstable with high economy recession posing a threat to the company’s businesses, for instance, the Chinese economy has not been stable to assure a sustainable business (Greenspan, 2015).

Different policies and laws govern the operations and mandate of McDonald’s while the governments that the company operates in initiate these regulations. In the U.S, the company has to follow strict employment policies that for instance set out the minimum wage levels. McDonalds must meet local health regulations for the food as well as animal welfare regulations within the supply chain operations. Due to the threat of lawsuits about the health status of their food McDonald’s is trying to ensure the provision of healthy products.

How McDonalds Adapts to Change

There are different ways in which McDonald’s has ensured that it has adapted with the changes in the market. According to (Mourdoukoutas, 2011) uniformity is one strategy that the company has used to ensure that they remain competitive. It is amazing that no matter the McDonald’s outlet one visits they will experience the same services since all its operations are standardized and with the same marketing strategies. Segmentation has been a strategy for adaptation of the company, most of their marketing has been targeting children for instance in America children could watch over 250 McDonald’s advertisements each year. This strategy has enabled them to reach out to a vital population that is always in need of the services they offer.

Innovation has also been significant in adapting to change since the company encourages creativity in the provision of its services and products. Through innovation, McDonald’s has been able to sustain competition, for instance, the introduction of the McCafe where cheap products are offered to ensure affordability of their products. Globalization and collaboration have also been essential for McDonald’s adaptation to changes in the market (Shaw, 2014). McDonald’s exported the American culture to other countries through its brand. It afterward transformed into the particular cultures of the countries through franchising. Collaboration has been ensured when McDonald’s works together with other recognized brands like Coca-Cola. Collaboration has provided that the competitiveness of the company surpasses that of rivals.

Experimentation or testing has been part of McDonald’s culture for adaptation. Testing is vital since it ensures the right products are in the menu by deleting those that are less profitable or have a lower demand (Mourdoukoutas, 2011). McDonald’s experiments some of its products especially in the international market to ensure they provide what is on demand. Finally, for adaptation McDonalds has started ensuring health consciousness to make sure that consumers get products that are healthy for their life.

Supply Chain Analysis

Currently, McDonald’s has a well-established supply chain system with appropriate infrastructure to support the new division. McDonald’s has its specific suppliers who they have developed a close relationship. The suppliers are either direct who produce food for McDonald’s or indirect who supply ingredients to direct suppliers (University Alliance, 2015). With the new division, the amount and schedule for deliveries will increase from the average thrice a week to once in two days due to the daily need of products. The company will stick to its suppliers even with the new division but sourcing for other suppliers can be done if the demand exceeds the supply.

McDonald’s is a company that has an excellent brand recognition, company image, and financial strength to enable the implementation of the division. The core competency of McDonalds has been dependent on its diversified infrastructure, well-established operations and a developed supply chain. The proposed division will contribute into its core competency by ensuring that they are always at disposal for the needs of customers.

Major Issues/Opportunities

According to the analysis, the greatest challenge that McDonalds faces involves the health consciousness that is increasing among the consumers. Consumers are more concerned and aware about their health more than before, and they are demanding high-quality products that are healthy. According to Frost (2015), a survey conducted on McDonald’s last year illustrated that over 48% of customers reduced their visits to the food outlet especially due to concerns about the food. Most of the food e.g. meat has been perceived not to be organic and contained higher levels of hormones and antibiotics.

Pricing could also be an issue for McDonald’s and even though it is a cheap food outlet, the pricing could be hurting the business. A hypothesis that can be created by anyone is that cheap fast food from McDonald’s is unhealthy. In such a pricing strategy, it will also be hard for the company to increase their pricing since customers are used to cheap prices. These challenges serve as opportunities for improving the brand and making it acceptable to a bigger population. The company has introduced different initiatives that could help in reducing the impact of these issues, for instance, their campaign to remove antibiotics from its products by 2017.

Conclusion

The SWOT analysis of McDonald’s illustrates that like any other business, it requires regular review of its strategies to ensure that it remains relevant in the market. The company has a strong brand name and a great competitive advantage but also faces intense competition. The strategies that the firm has used in adapting to the market changes have been helpful in sustaining the business. The company still has opportunities to improve its activities for instance through new divisions and innovation. 

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