SWOT Analysis of McDonald's Corporation - Case Study Example

McDonald’s Corporation By (Name) Name of Class Professor University Date McDonald's Corporation McDonald's Corporation (McD) refers to a restaurant that provides fast foods and American hamburgers. The corporation was established in 1940 in San Bernardino, California. It started as a restaurant that produced barbecue and was operated by Maurice McDonald and Richard. It is a public restaurant with its global headquarters based in Oak Brook, Illinois in the United States (Napoli, 2016). Its headquarters is yet to be moved to Chicago in 2018. In 1948, using principles of production lines, their business was reorganized to being a hamburger stand. Currently, McDonald is known as the world's largest chain restaurant that offers fast foods (Napoli, 2016). It serves about sixty-eight million customers on a daily basis across one hundred and nineteen countries having 36,615 points of service. McDonald's corporation produces cheeseburgers, chicken products, wraps, hamburgers, breakfast items, soft drinks, French fries, milkshakes and desserts. Because of the consumer tastes that keep on changing, the company has been able to expand its menu to incorporate fish, wraps, smoothies, salads and fruits (Green, 2015). The restaurant's operations are either conducted by an affiliate, franchisee or even by the corporation. The McDonald's Corporation gets revenues that accrue from the rents, royalties, franchisees’ fees and the sales in the restaurants operated by the company. McDonald's has many restaurants in approximately 119 nations and other regions in the world. It serves 68 million clients on a daily basis. The corporation has more than 420,000 employees. Currently, it owns a total of 6,056 locations and 30,559 franchised locations. Among those include, 21,456 places that are directed to conventional franchisees. There are 5,742 locations that are licensed to licensees of development and 3,361 locations that are given to affiliates that are foreign in nature (Napoli, 2016). McDonald also operates other brands of restaurant like Piles Café. The company has increased its shareholder dividends. In terms of business model, the corporation earns revenue as an operator of restaurants. Its model has slight differences from that of other restaurants chains that offer fast foods. Currently, the company owns its property which is estimated at $16 to $18 billion. In some nations, the restaurants are directed by joint ventures of its corporations, local entities and governments (Napoli, 2016). Regarding its policy of operation, McDonald does not produce direct sales from its food. It is known as the largest private operator of the United States’ playgrounds. It is also known as the largest beef purchaser, potatoes, pork and apples. McDonald's has increased standards of service in the market that it enters (Green, 2015). It has various types of restaurants. Most of its standalone restaurants provide both drive-through services and counter service. Its restaurants are; McDrive, McCafe, Create Your Taste restaurants, McExpress and others. SWOT Analysis Strengths McDonald's Corporation has a strong brand name, image and reputation. The corporation has been able to build up huge brand equity. It is ranked number one company that provides fast foods through its sales with over 31,000 restaurants that serve fries and burgers in approximately 120 nations (Napoli, 2016). The image of the corporation is known worldwide. It has a brand name that is among the top most powerful ones in the global world. Secondly, McDonald's has a market share that is large in nature. It is known as the largest player in global reach and size. When other companies lose their market share, McDonald's increases its share in the market (Napoli, 2016). Another strength is the specialized training for its managers. It incorporates a serious training to its managers through various programs. The training done are professional. Based on that, McDonald's has good and effective managers that help in the growth and development of the company (Mattern, 2011). McDonald's also has the strength of good marketing strategies. It markets its products in the global market, making it known by even children. The corporation also emphasizes on technology innovation. The use of advanced technology enhances its service delivery strategies to its customers. McDonald's is also associated with the introduction of new productions (Napoli, 2016). When people think about first foods, they see McDonald's first. It has a primary plan of winning. It provides a common framework for its global business. The other strength is the diversified income streams. Its fast food chain's revenue originates from different regions, countries and even products. The corporation does not rely on one source of income unlike its competitors. Its market leadership also reinforces its brand name (Green, 2015). Therefore, it increases the loyalty of its customers hence it experiences more returning customers that lead to its growth. Weaknesses McDonald's faces several weaknesses. First, it experiences dissatisfied Franchisees. They are becoming dissatisfied with the fees that they are being forced to pay for the company. As the corporation expands, it increases its fees (Napoli, 2016). Many Franchisees are not happy with this. Secondly, it faces actions related to environmental issues. It uses a substance that depletes the ozone in making of its polystyrene. It results to critiques to the company. It faces high turnover rate of employees. Despite it having skilled and professional managers, it still experiences an increased turnover rate of its employees. Employees also face a higher working pressure due to increased number of customers (Napoli, 2016). The corporation faces another weakness of unbalanced meals. Its meals remain unbalanced despite it updating its menu with more food products like salads. The corporation has also been involved in certain lawsuits and legal cases in the course of its operations. For example, it experienced the cases of trademark issues (Mattern, 2011). The other weakness is that it loses its customers due to the fierce competition in the business market. It competes against other strong fast food industries with strong brand names such as Yum Brands and Wendy's Burger (Green, 2015). It faces a weakness that is health-related. It uses beef oil and Trans-fat in their cooking. It affects the health of its customers. It has also been given a negative image like the documentary of supersize me that says it offers unhealthy food. Opportunities The opportunities for McDonald's are varied. The first opportunity is the growth of the fast food industry. There is a significant development in the fast food industry. The Corporation develops because of the changes in lifestyle of people. Nowadays, almost everyone prefers to consume fast foods. The second opportunity is conservation (Green, 2015). The corporation should research on green packaging solutions to enhance their marketing and advertisement strategies. Its third opportunity is globalization or expansion of its services in many countries in the global world. It has many restaurants in about 120 countries. It can open more restaurants in new areas to increase its growth and development (Mattern, 2011). There is also the preference of low-cost menu which is preferred by many customers. If it establishes a low-cost menu, it can attract many customers who have low income. More opportunities for McDonald include offering discounts to its clients. Through that, it can gain many customers. Customers tend to like discounts and freebies even if they do not need it. Diverse tastes and needs of customers is another opportunity for McDonald's. With new formats in business, McDonald's can attract new customers (Napoli, 2016). Other needs of clients may involve free use of customers. With the increased demands for healthier food, McDonald's can take the opportunity of introducing some healthier foods in their menu. It can also explore home delivery techniques. It can put in place opportunities to deliver foods to homes and this will increase its reach to customers. They can also finish remodelling of the restaurants and then incorporate new practices. Threats McDonald's faces many threats in the global business market of fast foods. First of all, there is intense competition. There are new fast food industries that offer new brands of fast foods. McDonald's experiences competition with other like Yum!Brands (Napoli, 2016). The second threat is the public health crisis. It has been realized that fast foods bring more harm to the health of people. Based on that, people are required to take healthy foods. The environmental issue is another threat. If the corporation continues to use HCFC-22, it may experience massive loss of customers (Green, 2015). Lastly, McDonald's may face the threat of economic recession. Recession in the economy may have effects on the sales of the corporation. Also, local fast food restaurants can offer local approaches to food delivery and they may have choices of food that are for local tastes. There are also saturated fast foods in the market of the developed economies. Competitive Analysis McDonald's has many competitors and each competitor seeks to share the same business market. The company is not only in competition with the large burger and chicken chains but also with other small chips and fish shops. Therefore, McDonald must develop competitive strategies to counter the rest (Mattern, 2011). McDonald operates in a market that is highly competitive and nonetheless, it has still managed to be the top one. It maintains its competitive advantage because it serves a larger number of people of about 68 million customers in the whole world (Green, 2015). Its success lies on its strong competitive advantages that the company is still building. It achieves its competitive advantage through its impressive supply chain. Also, McDonald's develops the trend of going to the new markets with an excellent distribution channel (Napoli, 2016). The corporation maintains a competitive advantage over the rest because it unites consumer insights, innovation and execution. It focuses on the customers' needs and demands. It helps them to realize their flaws and fix them immediately. McDonald explores new markets and selling strategies to maintain a competitive advantage over the rest of its competitors (Napoli, 2016). Profitability Potential McDonald's is in the real estate business. It has various centers in the world. It, therefore, serves millions of people. Through its services, it achieves enough profit for the company. Because it is in the real estate system of business, it earns more income and also diversifies its portfolio (Mattern, 2011). It makes profits by buying properties and selling to the franchisees. Through this, the company generates greater income. McDonald's is the second largest company in making profits (Green, 2015). Profit margins are low for restaurants and especially the ones owned by individual franchisees. McDonald's is highly profitable at its corporate level. It gains a lot of profits from its many services that are worldwide. The corporation is familiar in the global market and therefore many prefer to use it. Through that, it attracts more profits to the company. International Strategy McDonald's has successful strategies in the global market. It uses effective management and strategies of global expansion to enter into the new international markets. McDonald's creates brand loyalty to its customers and then becomes familiar in the global market. It uses further international strategies to market its products (Napoli, 2016). For example, McDonald's establishes restaurants in many places throughout the world. Its strategy is to attract all the customers from every part of the world through their brand loyalty. In conclusion, McDonald's as the top most restaurant of fast foods has achieved great successes. Amidst the achievements, it has also faced certain minor challenges. The corporation can maintain its future success through a proper maintenance of its strengths and opportunities. It needs to direct its efforts on its close competitors and the companies that are developing rapidly in the global market. McDonald's achieves much success because of its enhanced worldwide services that give it a competitive advantage over the rest of the fast food companies. It should develop new strategies of business so as to maintain its competitive advantage over the other companies. References GREEN, S. (2015). McDonald's. Minneapolis, Minnesota : Bellwether Media, Inc MATTERN, J. (2011). Ray Kroc: McDonald's restaurants builder. Edina, Minn, ABDO Pub. NAPOLI, L. (2016). Ray & Joan: the man who made the McDonald's fortune and the woman who gave it all away. Read More