Analysis of Opportunities and Threats - McDonalds - Case Study Example

E-business: McDonald Name Institution Analysis of Opportunities and Threats The company’s macro-environmental factors define its opportunities as well as threats. McDonalds are committed to capitalize on new innovative modifications in an attempt to keep up with the changing times. Devising a strategy for growth and expansion is a multitasking undertaking. It calls for extensive feasibility study aimed at predicting to some extent the market trends that are likely to be experienced in the immediate future and in the long run. Operating in different localities and regions implies being capable of adapting to the diverse requirement of the customers. The wave of transformation in the food industry cannot be slighted. The level of competition has gone levels higher and marketers of modern times are devising sophisticated means of survival. It is worth noting that McDonalds has been on the fore front in the fast-food industry in leading the wave of change. But remaining at the top is a new challenge for any business executive. The plan herein identifies the opportunities that there are for the company to retain its market status and probably strengthen its position in the industry. It also evaluates the threats that may hamper progress or realization of that goal and devises the competitive advantages that the company would apply to achieve its objectives. Opportunities (a) Expansion Currently McDonald’s is able to serve less than one percent of the world population. There is a common argument regarding US market stating that it is saturated but the same cannot be said of the other regions of the world particularly Western Europe and Asia Pacific regions. The opportunities that there are in these regions are immense. Firstly, is the anticipated world population growth. According to United Nation’s projections, the world population will continue on the rise going forward with an anticipated increase of 2.3 billion people before the year 2050. Population represents market and hence its growth cannot be slighted by marketers (Robert, Andrew & John, 2005). The food industry in most parts of the world being highly fragmented. There exists no strong dominance as exhibited in other industries like software or automobiles industries. This is a plus for McDonald’s. This industry is frequented by supply shocks thanks to unpredictable weather patterns that adversely affect agricultural production. Nevertheless, there are inherent characteristics such as ready demand for food items that make the industry the most enticing. McDonald’s should not hesitate using its experience and customer goodwill to venture into more and more new regions. Going by the statistics of the world population then geographical expansion would represent the most viable opportunity that would see the company move its revolution to the next level. (b) Price Adjustment McDonald’s can also take advantage of the anticipated increase in per capita income of the households. To capitalize on this attribute, McDonalds can raise the price products at discriminatory scheme. This is where price of the same product is quoted differently depending on the income levels of that specific locality. According to a United Nations report the income of households will continue to be on the rise, with the world economy having successfully negotiated the crisis of 2008. Income levels of persons living in developing countries are expected to rise by 7% while that of residents in developed nations will rise by 2%. What this implies to the food industry is that as people’s income stabilizes, they run for quality food products as well as increasing their levels of recurrent expenditure (Crawford & Benedetto, 2006). The well being of the African population is also on great rise and many investors are taking keen interest in this new development. There is now an approximated figure of three hundred million people in Africa who are now living in the middle class life. This is an interesting factor for business executives as it implies a population with a stronger purchasing power. The opportunity that e-business offers is to enable businesses to disfranchise customers and the online data they access. This means that information accessed from the company website will vary with location such that a consumer gets the price of the product depending on the region he/she accessing internet from. This is the dynamism of emarketing and entities should embrace it fully. (c) Diversification McDonald’s has an immense opportunity to venture into other areas of food industry. The strongest bargaining power is the name recognition the company has made for itself thanks to its longevity in the industry and first class services it offers its customers. Threats (a) Competition Being the number one corporation in the versatile industry comes with its inherent challenges. One of the tricky aspects is that the entity becomes the point of interest of all competitors. Each player knows that being number one entails beating the best. This means that all competitors take keen interest in the day to day operations of McDonald including insider information. They devise ways and means of countering its initiatives. The situation is made worse by use of e-business where information in shared electronically and transactions closed by the internet. Competitors are likely to hack vital information regarding the entity they regard the strongest competitor. They may also disclose to customers who are charged higher than normal prices of the price discriminatory practices of the company and this may not auger well for the public image of the company. (b) Mad Cow Disease This pandemic has been recurrent in many parts of the world but more so in Europe. This instills fears in the customers making them shy away from buying the beef products. Whenever this happen sales drop rapidly and this is a big threat for business. (c) Supply shocks in the agricultural sector McDonald’s is largely dependent on the produce of farm. The trends of agricultural production are highly unpredictable and hence it is difficult to forecast changes in supply. In many third world countries agriculture is still dependent on rainfall. This scenario leads to great frustrations in periods of drought. Sources of Competitive Advantage The e-business objective is aimed at modernization of consumer relations management by placing the customers at the center of all marketing operations. That means that all online initiatives are dedicated at providing what the customer perceives as valuable. This is a total marketing perspective. In essence the first stage is ensuring that what the customer needs is availed in the place he/she would most prefer and on time. Market information and real time data is passed to the consumer to guide him/her on the buying behavior. This is with regard to new models, change in prices, packaging, branding and such attributes (Weller 2007). In this regard online shopping should be made the most convenient and easiest way of interacting with customers. The information they may want to have regarding the most recent market trends is made ready for them for use for the mutual benefit of the consumers and the company. Marketing automation and increasing of the customer contact points will facilitate this move. McDonald limited can apply a number of strategies some of which are inbuilt in the company’s operational processes to keep the edge in the competition. Some of them are discussed as: 1. Brand Name Recognition This is a pure focus to the consumer. Brand name has a strong psychological appeal to the customer. Business success can be realistically realized when a marketing plan is strategically designed to focus on the customer. Pundits agree that a properly formulated and implemented marketing strategy is enough to differentiate a business from the rest in the same industry or market. What many businesses struggle and sometimes fail to achieve is brand name recognition. Attaining this feat is dependent upon proper marketing initiatives and a consistent service provision framework. Brand name recognition is never reached in a fortnight and the resources required for the undertaking is a hurdle worth its due attention. These are a few obstacles that entities will always want and strive to negotiate in an effort to become differentiated on the basis of brand name. McDonalds has already established brand name recognition meaning that it is a step ahead of the competitors though that does not mean that business is complete. What needs to be done is to devise ways and means to use this extra arsenal to outshine the competitors. There is also an added duty of ensuring that as the company continues with its expansionist goals using franchising strategy the recognition should not be diluted. The procedures, values, principles and practices should continue being embedded in the operations of all its business lines. McDonalds cannot run away from the reality of electronic business approach which is the tone of trade in the twenty first century. This, however, should not be seen as a challenge to operations or a deviation from the norms of the company. On the contrary it should be used as an instrument of enhancing brand name recognition. This is possible given the efficiency there is with emarketing and e-promotion. To this end the company should employ all the available means to flood company information in the online communities. Such include the company website and marketing blogs, to social media. The prime aim is to use brand name recognition as the power to instigate and influence the buying behavior of the consumers. 2. Business Alliances The position of McDonald’s enables it to negotiate good business deals many of which close competitors cannot afford. The extensive geographical coverage will enable it to have people with diverse needs, making them to be part of the operational team of the capacity. For example the company has wide range of choice of the suppliers to do business with. This provides an option to choose the one who offers the most competitive prices. The size of McDonald’s gives it huge economies of scale. This implies that it can offer the most competitive prices in the market. Furthermore, it has the opportunity to source the right partners. Formidable contracts are a big complement in cost management. 3. Wider Marketing Approach The wider engagement with franchisees is a strong marketing complement. Should the company engage all these entities in its e-promotional scheme then it would have gone a notch ahead of competition. A good move can involve allowing local operators in different countries to use McDonald’s logo and colours in their promotional campaigns. Massive agent engagement creates massive awareness that converts buyer desires to buy, into a more realist need. With the age of emarketing, the blog spots and accounts of the franchisees in social media is a huge resource to reach out to the marginalized consumer groups. Domain Name: mcdonalds.com The origin of the domain name was creation by an author of a wired magazine. The top level domain name “.com” is acceptable as a general name for any country. The second name, in this case “mcdonalds” is convenient for identification as it is identifiable to the renowned name of the company. This domain name is in line with the requirements of the department of policy and business practices under the international chamber of commerce. Web site Hostage The best move would be to apply the self-hosting service. This would probably be the most expensive option but the best in terms of security. The self hostage helps the company to apply security measures to protect vital information from hackers. References Crawford M. & Benedetto A.D. (2006). New Products Management, Boston, MA: McGraw Hill. Weller, S.A. (2007). Fashion as Viscous Knowledge: Fashion's Role in Shaping Trans-National Garment Production, Journal of Economic Geography, Vol.1 pp.39–66. McDonald’s Australia Limited, 2012:” Australian Packaging Covenant Action Plan 2011 to 2012 “ABN: 008 496 928 21 – 21 CENTRAL AVENUE THORNLEIGH NSW 2120 http://www.packagingcovenant.org.au/documents/File/McDonalds%20Australia%20Limited%20AP_11_12.pdf . Retrieved 4th October 2012. Read More