The Strategic Management Analysis of McDonald Fast Food Company - Report Example

Mc Donald’s Strategic Management Analysis This paper discusses the strategic management analysis of McDonald Fast Food Company. It expounds on the internal and external environment of the firm, its definition, mission, formulation, and the implementation that it has taken to create competitive advantage in the market. McDonald’s background McDonalds is an international food outlet, which serves the best interest for all groups of people across the world. In the year 1937, Patrick McDonald opened “The Airdrome” a restaurant that was located at Monrovia Airport, California. In duration of three years his two sons moved places and opened a new restaurant known as McDonald’s Bar –B-Que Restaurant in San Bernardino, California (McDonald’s, 2013). In 1963, the company had reached 500 restaurants. It was through this development that McDonalds ventured various markets like Canada, Japan, Europe, Singerpole, Australia, Central and South America and has continued with this trend to date (McDonald’s, 2013). McDonald has a mission statement that states “be our customers’ favorite place and the way to eat”. This statement has made it easier for them to build exceptional customer experience in regard to people, products, place, price and promotion (McDonald’s, 2013). . Swot Analysis McDonalds evaluates its business through strengths, weaknesses, opportunities and the threats so as to continue thriving in the market. Strength Weakness Opportunities Threats It enjoys a strong brand name all over the world. It correlates with other business partners in the market, making it easier to have products that are required for the growth of the company. It plays it part in social responsibility making it earn credit from the public. The company uphold cultural diversity because it operates in different countries with different cultural backgrounds. It takes pride in the loyalty of employee, management and customers. It provides recreational facilities for children amidst clean environment. The company experiences an employee turnover rate where most of the employees are fired from the restaurants on yearly bases. The restaurants do not deal with organic and healthy foods, complains that has been there since McDonalds’ inception. They have selective advertisements as most of them cover kids unlike their will in providing for every age group. At time they are faced by the issue of quality, which adversely affects the rest of the outlets. It is in a position to bring into the market healthy foods and drinks for its customers. To improve on the environment, they can use alternative packing material, which is easy to recycle. McDonalds could also be able to improve it social responsibility image by ensuring that they benefits more populace who are around their branches. After sale services like discounts on food items as it attract more customers. There has been persistent emergence of similar companies providing similar services. The company has been attributed to poor healthy habits because of the foods it provides. Recession automatically affects the entire company cutting across the world. Being a multinational company, current fluctuation became s a challenge to them. McDonald’s Environmental Analysis McDonald’s environmental analysis incorporates demographic trends, economic conditions, political or legal forces, social cultural conditions and technological changes. Demographic trends McDonalds being a fast food industry has its main target as the youth or the young people who are known to be the potential customers of fast food joints. If anything, they constitute the highest percentage of the population that has kept the company in the market since its inception. This is because youth like spicy and food that has high levels of sugar content. Never the less, the old and children also have a place in the fast food world. Never the less, the restaurants are equipped for all age groups (Green & Keegan, 2012). Economic conditions It is normal for ever y fast food Company to have concerns about economic conditions. There are changes especially due to the rise of living standards. In essence, McDonald’s branches and franchises have the tendency to experience hard times when the economies of various states have been hit by inflation and exchange rates. In regard to this, customers are faced with the stalemate of whether their budget is viable to cater for foreign fast food chains or not. This results to impact on operations for McDonalds to a point where they are forced to import raw materials in situation where there is a scarcity of supply. Never the less, the company has taken caution in their foreign operations for the success of their company in the market. Political /Legal forces The international operations of McDonalds are significantly influenced by policies entitled to specific states that practice them. The legal changes include changes in laws with reference to packaging. The policies in Europe and the United States put more emphasis on the regulations of fast food eating habits. This is due to increase cases of harmful elements such as consumption of cholesterol, which has adverse effects like obesity. These kinds of policies have greatly suppressed the efforts of fast food companies in maximizing their businesses (Wong, 2010). On the other hand, legal forces have enabled McDonald to use a more careful approach to its social responsibility. This has continually assisted the company in addressing the need to build a solid corporate reputation. Amazingly, the company has provided a freedom for customers to make decision on whether to use their products or not. Thus, McDonald conforms to ever y state requirement in individual states laws and regulations. Social –cultural conditions McDonalds has made efforts in building a positive mind –set from their potential customers, especially now that different customers have different kind of personalities. This is because there have been changes in the patterns of eating. In the United States, McDonalds has given an option regarding their dinning needs where it is said to have set some valuated set of food that gives out a dependable level of quality in specific markets where they operate (Haberberg & Rieple, 2008). Focusing on customer behavior and purchasing preference has also been put in place as one of the promising strategy for the company. Technological changes McDonalds is said to be generating a demand for its own products. Its principal tool in marketing has been the electronic media where it places advertisements. Moreover, there have been new techniques in food production. Basically, the company uses specific advertising tips that target the high population of potential customer who happen to be the youth. Various celebrities from across the board have occasionally been used in promotion details for the company. Additionally, new technologies have been employed in its operations such as inventory system and management of the value chain, which enables easy payments for their suppliers and other merchants (Wong, 2010). McDonald’s Competitive Analysis McDonalds Competitive analysis include suppliers, customers, new entrants, substitutes, as well as,, the rivalry among competitors. Intensity of Rivalry among competitors It is apparent that immense competition is present in McDonald’s company marked by numerous existing and upcoming small fast food businesses. Such competitors scrabble against each other in order to dominate the market, a situation that affect most of the branches associate to this company (Haberberg & Rieple, 2008). As such competition becomes prominent, and the McDonalds are compelled to focus on maintaining it’s competitive even harder. This has resulted to the company leading its main rivals in the market such as Taco Bell and Burger King. The threat of new entrants The most challenging issue in the global market is the threat of new entrants. Several companies have come up to compete especially in the fast food industry. Although competition is said to be healthy, McDonald has ensured that it stays put in the market to avoid been overtaken by the new players in the market. Thus, their products are constant on daily basis. The threat of substitutes It is said that several factors determine the possibility of a threat of substitute products in a given industry. In essence, where the customers have a weak factor in stopping them to buy a substitute of the industry product, then the threat of substitute products is bound to be high. An extra determining factor is when the substitute product is relatively cheaper than the products from the industry. Additionally, if substitute products have equal or superior quality, attributes, or performance to the industry‘s product this threats go higher. In reference to this, McDonalds has been able to handle the problem through elimination of low switching costs (Hill & Jones, 2009). Suppliers McDonalds have high supply chain because all of its branches require the same products that are acquired from the same suppliers. Obviously, the company concentrates on using the same products from the same suppliers all over the world. Thus, McDonalds has strategies that keep the suppliers intact as it is fully aware of the effects of losing supply of certain products. Hence, the company is cautious of losing loyal customers, and the hustle of changing the whole menu especially now that the company has several branches (Ungson & Wong, 2007). Customers In this age of development, fast food industries have the advanced to a point where their customers make orders through the internet and the telephone. McDonalds has come up with a system whereby it has been able to stand the demands of the fast food industry, hence bringing down the bargaining power of the customers. For instance, the company in the United States has a following of about one-fifth of the population. In light with this, they are certain about the loyalty of the customers’ .After all, through advertisement and good quality of food, their products have always stood out against the flooded fast food industry. Moreover, in fast food industry, customers are very rational in consumption and are capable of switching over to restaurants that offers best qualities (Reuer, 2004). McDonald’s Internal Environment Analysis Resource Types McDonalds has had different resource types. They includes services, staff materials and other assets that are changed to generate benefits. In turn, the benefit leads to increased wealth, and customers’ satisfaction. Presently, McDonalds is working on the way in which various products can be made healthier by using organic substances so as to reduce the incidences of poor eating habits (McDonald’s, 2013). Firms Capabilities Being a fast food industry, McDonalds has been supple in offering changes with regard to prevalence to the customers. This means that what was fashionable in 1970 is no longer fashionable today. The company has continually been upgrading and adjusting its products to go with the customers’ perception. Currently, McDonalds owns more than 32,000 restaurants across the world (McDonald’s, 2013). This expansion has highly contributed to safe and high quality food, affordability and convenience. This has been achieved through the establishment of the principles and a background of doing the right thing. Conclusion McDonald has constantly brought in new products into the market in a bid to replace the old ones. It has played its role well by ensuring that new products in the market do not tamper with the already existing ones. Its competitive aspect has kept it in market for the last forty years while still focusing on how to maintain its competitive advantage even harder. Moreover, the company has designed a system whereby the company has being able to lower the customer’s bargaining power. Through this, McDonalds is certain of remaining in the market for a longer time Recommendations McDonalds should focus more on ensuring that their entire customers globally are satisfied with the services that they offer. Essentially, they should reduce the perception of having contributed to health related diseases such as obesity and heart diseases. Moreover, they ought to participate in educating the public on the healthy eating habits that are, as well as doing more of organic as compared to fatty foods. Moreover, involvement in social responsibility for the communities around them to uphold their brand as a multinational company. References Green, M. & Keegan, W. (2012). Global marketing. New York: Prentice Hall. Oxford: Heinemann. Haberberg, A & Rieple, A. (2008) Strategic management: theory and application. Oxford; New York: Oxford University Press. Hill, C. & Jones, G. (2009). Strategic management theory: an integrated approach. Boston: MA: Houghton Mifflin. McDonald’s. (2013). Accessed on 30th Jan, 2013 from: http://www.mcdonalds.com/us/en/home.html Reuer, J. (2004). Strategic alliances. Oxford: Oxford University. Ungson, G & Wong, Y. (2007). Global strategic management. New York. Sharpe. Wong, K. (2010). Approved marketing plans for new products and services. New York: Sharpe. Read More