McDonald's - SWOT and Competitor Analysis, International Strategy - Case Study Example

Strаtеgiс Frаmеwоrks Name Institution Strаtеgiс Frаmеwоrks McDonald is a renowned company that operates in more than 100 countries. The company’s international system consists of both company-owned and franchised restaurants. The franchised restaurants are usually owned and operated under structures such as developmental license, conventional franchise or affiliate. McDonald’s restaurants worldwide provide a considerably identical menu, but there are geographic variations meant to suit local consumer tastes and preferences (Jones, 2010). One of the countries where McDonald decided to expand its operations is India. This paper will give a critical examination McDonald’s strategic framework especially with respect to expansion strategies in India. To achieve this, a SWOT analysis, Competitor analysis and International strategy of the company will be assessed. SWOT analysis According to Jones (2010), McDonald’s business model in India is based on four major pillars namely; fresh food, fast service, affordable prices and limited menu. The company had earlier invested in the development of unique cold chain which resulted to the pillar of fresh food. Affordable pricing is a pillar that had been deemed to differentiate the company from its competitors. The limited menu chain is subject to change as a result of preferences and eating habits of the Indian community. Strengths The strengths of McDonald in the growing market of India include supply chain management. Appropriate supply chain allows success in the competitive market. The company’s supply chain structure allows it to reduce its costs thus maximizing on profits. In turn, this helps maintain high quality standards. McDonald invested heavily in its supply chain model way before it commenced business in India as a way of establishing its delivery mechanism. A suitable supply chain structure coupled with modern technologies brought significant changes in the food industry in India (Pangarkar & Subrahmanyan, 2011). Joint ventures with local distributors and suppliers have also helped McDonald to be proactive and thus reduce on costs, enhance quality and build intimacy in the market. Innovation and flexibility in products is a strong point of McDonald’s. McDonald has properly adapted to the Indian market especially with regard to meeting the cultural and religious demands of the customers. The company decided to introduce vegetarian products and drop beef, ham burgers and mutton from its menu as per the religion, lifestyle as well as eating habits of the Indians. There is also the issue of 100 percent vegetarian sauces and different packages for children and family. The company responds fast through innovative ways. Employing local people is also a plus that creates trust among the customers. Affordable pricing is a strong point and a strategy that has widened McDonald’s customer base in India. The availability of different price strategies for the customers and various foods to match the target market is a positive move by McDonald (Pangarkar & Subrahmanyan, 2011). Flexible and innovative offers attract customers. Weaknesses Limited menu is a weakness of McDonald. The menu offered by McDonald is somehow limited compared to the market demands. The Indian culture is quite diversified, with various regions having different religions. The differences are a challenge to the company as it requires a high level of diversification. McDonald is also deemed to cause global warming as a result of the packaging material it uses, which is harmful to the environment. The company is therefore not accomplishing its social responsibility with regard to conserving the environment. There is also an issue of inefficiencies in home delivery where the speed is not good thus hampering sales (Jones, 2010). Opportunities Nandini (2014) asserts that McDonald can easily expand in the Indian huge market. Its expansion strategies and business model of expansion offers an opportunity to improve its market share. This can be possible by opening outlets in other parts India. There are many parts in India that are not served by McDonald and hence there is huge potential of growth. Large population and double income group can also be seen as opportunities. Providing out-of home breakfast, better home delivery and environmentally friendly packaging could also pose as opportunities for McDonald. Threats A major threat to McDonald’s operation in India is political and religious confrontation. There is also an issue of changing customer’s preferences. Customers may prefer more healthy food as opposed to fast foods as a way of dealing with health issues such as obesity (Goyal & Singh, 2007). Competitor analysis Competition is always there in the business setting. To a large extent, McDonald can be said to be highly competitive in the industry in India and other parts of the world where it operates its businesses. Some of McDonald’s competitors in India include KFC, Pizza Hut, Subway and Dominos. To remain competitive in the market, McDonald has had to exercise various strategies such as lowering its prices. For instance, as a way of fighting its premium image among the public, McDonald did selective price cutting and also participated in some periodic promotions. In February 1999, McDonald reduced the price of soft-serve ice-cream cone to Rs 7 from R 16 and that of vegetable nuggets to Rs 19 from Rs 29. This is a strategy that can be ascribed to the development of a local supply chain that is low-cost in nature as well as the pricing strategies of multinational corporation rivals. The special promotions and pricing strategies at McDonald were influenced by rivals and this shows that competition in the industry is real (Pangarkar & Subrahmanyan, 2011). McDonald’s policy of adding around 70-900 restaurants per year is a positive move that allows the company to enter new markets through lower prices. It is an aspect that translates to a great barrier to entry for competitors. Jones (2010) states that despite the fact that McDonald has enjoyed being a leading fast food outlet; it has had different competitors getting into the market share. In addition to the traditional rivals such as KFC and Pizza Hut, there are also new competitors such as Jumbo King. This company makes use of a back to basics approach that involves swiftly serving up burgers for time-pressed customers. It is also worth noting that KFC is still a potent competitor when it comes to the quick service field and it is taking away customers from McDonalds. There is therefore a need for a new critical success factor or strategy. The company needs to create a satisfying experience for the consumers as a way of retaining them. McDonald can use service and experience based competition against Jumbo King and other competitors. International strategy Apart from striving to perform well locally, there is also a need to be successful on an international level. As stated earlier, McDonald is a company that operates both locally and internationally. It has spread it operations in different parts of the world, India being one of the. According to Jones (2010), McDonald is one of the most successful international restaurant chains in the world. This can be largely attributed to the use of effective global expansion and management strategies especially when it comes to entering new markets and gaining a share of the foreign fast food market. The company has invested in creating brand and customer loyalty for its goods and services. McDonald has the policy of thinking global and acting local. It utilizes a transnational strategy when it comes to global integration and local responsiveness. The company realizes that overseas market needs an incredibly high degree of local responsiveness. Also, the fact that the business has expanded, it recognizes that there is a need to effectively manage business across different regions. A transnational strategy is best suited for this. When constructing the value chain, some of the factors that should be considered include political environment, economic environment as well as the local culture of the community involved. The franchise business model is also a tool that has been linked with the company’s great success. Adaption and innovation is also an aspect that is worth noting when discussing the international strategy for McDonald (Jones, 2010). Designing fresh products and services meant at addressing the needs of a diverse consumer market as dictated by local, economic and demographic factors in different parts of the world has contributed to the company’s overall success. In India for example, McDonald was integrated as a wholly owned subsidiary in 1993 and it later entered into two joint ventures. The degree of adaptation needed in India was considerably greater compared to other areas where the company had ventured. It faced some challenges and had to come up with strategies such as menu development through customer feedback (Pangarkar & Subrahmanyan, 2011). From the above discussion, it is apparent that despite the fact that McDonald is a leading company in the fast food industry in India and other parts of the world, it still faces competition from rivals. In India, McDonald has implemented various strategies with an aim of emerging the best in the industry as well as enhancing its productivity and profitability. This includes promotional activities and lowering prices for their products among other strategies. To achieve greatness and prove itself as a leading brand in the competitive environment, McDonald has invested in aspects such as innovation, good management and marketing strategies and customization among others. The future for McDonald in India could be bright because of its strong brand image and its customized approach for its customers. References Goyal, A., & Singh, N. P. (2007). Consumer perception about fast food in India: an exploratory study. British Food Journal, 109(2), 182-195. Jones, G. R. (2010). Organizational theory, design, and change. Upper Saddle River: Pearson. Nandini, A. S. (2014). McDonald's Success Story in India. Journal of Contemporary Research in Management, 9(3), 21. Pangarkar, N., & Subrahmanyan, S. (2011). Beefing up the beefless Mac: McDonald’s expansion strategies in India. Case Study 8, pp. 120-127 Retrieved from http://www.studymode.com/essays/Case-Studies-737294.html Read More