McDonald's Value Chain and SWOT Analysis

The assignment content discusses the value chain analysis of McDonald's Australia Holdings, which includes marketing, sales, and transportation of completed items and services to definite customers. The company has adopted advertising activities at a global level, including Olympic sponsorship and supporting the Coca-Cola brand. Additionally, it highlights the importance of developing new products to address the issue of healthy eating, such as rice with delectable foods grown from the ground or drain with extraordinary flavor.

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Executive summary
The aim of this report is to analyze the restaurant business using three different frameworks
which are Resource Based View, Value Chain Analysis and SWOT Analysis. The usefulness of
each framework is stated and illustrated using the example of McDonald’s in Australia.
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Contents
Introduction.................................................................................................................................................4
Business report............................................................................................................................................5
Resource Based View..............................................................................................................................5
Value Chain Activities.............................................................................................................................8
Primary Activities....................................................................................................................................8
SWOT Analysis.........................................................................................................................................11
Conclusion.................................................................................................................................................12
Recommendations.....................................................................................................................................12
References.................................................................................................................................................14
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Introduction
McDonalds is one of the largest running restaurant business in Australia. The organization has
been chosen to conduct analysis using three distinguished theories known as Resource Based
View, Value Chain Activities/Analysis and SWOT Analysis. The main aim of the report is to
explain the importance and usefulness of these theories and frameworks in managing the
restaurant business.
The resource based view (RBV) underlines the association's assets as the major determinants of
the organization’s good performance and its ability to gain competitive advantage.As indicated
by Barney (1991), a firm’s asset must be asses on the ground of its value, rarity, imitability, and
organization. A value chain analysis, conducts analysis on all the activities that are included in
the process of generating profits by the firm. It mainly constitutes of the inbound logistics,
operation, outbound logistics, marketing and sales and service. SWOT analysis consists of four
components, namely Strengths, Weaknesses, Opportunities and Threats. The strengths and
weaknesses are often related to the internal business environment, whereas the opportunities and
threats are usually more connected to the trends in the external environment in which the
business operates. These three theories will be used in this report with detailed description
focusing on the restaurant business in Australia.
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Business report
Resource Based View
The resource based view (RBV) framework considers the association’s assets as the basic
component of the general strategic planning of the organization. The main focus of this
framework is to gain competitive advantage in the industry using a unique combination of the
organization’s resources. This framework aims at converting a short-term benefit into a long run
competitive advantage by choosing the resources that are immobile and heterogeneous in nature.
Sufficiently, this standard proselytes into beneficial resources that can't be replaced or copied
without amazing effort. If the organization's strategy achieves this target, it can maintain an
above average return using its resources for a long run.
From various perspectives, business technique intends to gain competitive advantage over its
peers through the most ideal usage of progressive resources. Along these lines, the resource
based view offers some understanding with respect to what portrays key resources and in
addition what enables them to generate respectable profits. The top management ought to
exactly consider what resources are at the association's exchange and how these advantages may
compare to the operational motivating force through indispensable systems (Grant, 2001).
In order to understand how the restaurant managers can benefit from this framework, an VRIO
analysis of McDonalds in Australia has been conducted in the following section:
Value: This component of the framework is used to judge the worth of a particular resource in
the organization; where it can be used to empower the organization or not. In case of
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McDonalds, their most valuable resource is the organization’s highly reputed infrastructure. This
resource helps the restaurant to exploit the opportunities that are increasing every day in the fast
food industry. In this way, as far as value factor, the asset as accessible with McDonald has been
exceptionally viable from the perspective of permitting the association in accomplishing higher
general an incentive in its business forms. Aside from this, the HR has additionally been very
successful and capable and this is apparent from the way that they good quality of staff that is
sufficiently compelling in drawing in clients. This demonstrates the upper hand as far as sound
foundation and quality HR are vital regarding enabling the association to accomplish higher
incentive to the firm (Brown, 2007).
Rarity: This aspect of the framework decides whether the competitive advantage as controlled
by the firm is extraordinary or is it available in the business parts easily for the contenders. The
competitive advantage with an affiliation is considered as astoundingly intense if it is every not
easily available in the market. The case examination of McDonalds demonstrates that the strong
brand image of McDonald as the undisputedly superior association in the fast food industry has
been significantly intense and remarkable in light of the way that it is unrealistic for another
comer to set up the reputation for being delivered by McDonald over the globe. In such manner,
the subject of uniqueness or rarity has been capably satisfied in case of McDonalds and it thus
enhances the competitive advantage of the organization.
Imitability: Imitability is used to evaluate whether the inside competency as controlled by an
organization is imitable by others or not. Focus force is seen as significantly capable if it can't be
imitated by others. The case examination of McDonald Australia shows that the key competency
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with the affiliation is difficult to imitate in light of the way that it has developed a brand
reputation of being the transcendent association over the world inside the fast food industry. This
set up reputation of long quite a while by McDonald is difficult to impersonate. McDonald is
predominantly known for its cheeseburger over the globe and with such settled closeness
wherever all through the world, and by and large bigger measure of affirmation inside its
customers, it would be troublesome for another comer or a formally settled fast food retailer to
fabricate such picture. In this way, it is exceedingly difficult to duplicate the key offerings as
made by the association (Bernal, 2015).
Organization: This is the last inquiry inside VRIO model questions whether the important assets
that are uncommon or matchless are appropriately organized to accomplish the most extreme
level of commitment from it towards accomplishing more elevated amount of development. In
view of the execution of examination of McDonald Australia, it has been broken down that the
higher administrative adequacy has permitted the whole association in accomplishing the main
position all through the globe. Such a noteworthy level of development and notoriety on the
global level for McDonald demonstrates that the organization of assets of the association has
been performed in a proficient way. The assets and centre skills of the association are
proficiently sorted out at McDonald which has been the prime contributing variable towards
achieving higher general achievement (Bridoux, 2009).
Generally, the VRIO investigation uncovered that the centre skills of McDonald are exceedingly
significant that permits it in managing the authority position in the business over a longer
timeframe .
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Value Chain Activities
Value chain analysis is an analytical framework that assists in identifying business activities that
can create value and competitive advantage to the business. There are different essential
exercises that are incorporated inside the value chain of the organization and these are
extensively delegated essential movement and bolster action. The primary action incorporates
inbound coordinations, operations, outbound coordinations, advertising and sales and service.
The help exercises incorporate firm foundation, human asset administration, innovation
advancement and acquirement. These exercises take into account proficiently doing the
hierarchical procedures and they thus empower the association in accomplishing larger amount
of intensity regarding their operations.
Primary Activities
Inbound logistics: The inbound stream of materials is performed at the Just In Time (JIT)
premise and the operational procedures are additionally completed in a particular way crosswise
over McDonalds Australia keeping in mind the end goal to take into account the necessities and
prerequisites of client particular requests (Susanto, 2012). There has been larger amount of duty
of McDonald Australia workers towards giving fantastic nourishments and a predominant class
of administrations and this dedication level show the operational viability that has been pervasive
inside the association. The accomplishment of higher operational proficiency is guaranteed at
McDonald Australia as in the organization work with its representatives, establishment and
providers accomplish larger amount of viability (Institute for Manufacturing, 2017).
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Operations: The business of McDonald’s is conducted via a combination of company-owned
and franchised restaurants. The part of the business that operates under independent franchises
constitute to almost 81% of the total number of McDonald’s restaurants worldwide. The different
formats of franchises offered by McDOnal’s can be broadly categorized into Conventional
Franchising, Developmental License or Affiliate (Team, 2017).
Conventional franchising incorporates franchises paying rent and sways on the level of offers
close by the portion of early on charges when opening another diner. In this sort of broadening,
McDonald's Corporation has the land and amassing or secures a whole deal leases for the diner
zone and the franchisee pays for tools, signs, seating and décor.
Developmental license incorporates licensees, giving income to the entire business, incorporating
the land interest. In developmental license no capital is contributed by McDonald's itself. The
license holder pays the royalty on the level of offers despite paying the starting charges upon the
opening of another restaurant or permit of another allow. This structure of developmental license
ownership is used by McDonald's in more than 68 countries with an aggregate of 5,230
restaurants.
Affiliated is another sort of expansion represents a restricted number of remote related markets.
McDonald's gets powers from accomplices on the percentage of profits. The organization has
over 3,000 affiliated restaurants in Japan (O’Connor, 2016).
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Outbound Logistics: The outbound logistics component of significant value chain includes the
marketing, sale and the transportation of the completed items and administrations to definite
shoppers. In regard to McDonald, the advertising exercises as done by the association suggest
that it is engaged towards advancing its items and administrations among its focused on clients.
McDonald has embraced advertising activities at a worldwide level whereby it has gone into
Olympic sponsorship for advancement, and supported the Coca Cola mark too. McDonald
Australia is likewise considered for a vast number of wellbeing and health crusades and its
prominence is for the most part clear as far as the ground sirloin sandwich as offered by it. The
amicable client service takes into consideration achieving larger amounts of adequacy in regard
to after sales benefits of the organization. The friendly behavior with the clients is not the only
factor that emphatically underpins the association's operations, however, it is the viability of the
representatives working over the association, as they have a more elevated amount of
effectiveness in giving quality items and administrations to their clients (Nisam, 2010).
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SWOT Analysis
The biggest strength of McDonald's Australia Holdings is that the organization is the biggest
fast food company in the world, having a larger market share than any other restaurant business.
The second strength is their menus that offer various products based on the local taste of the
people, in other words, the items in Australia are constantly refreshed and in the meantime, their
personal preferences could be balanced and changed easily, which is the key point that draws in
loads of clients (Leo, 2016).
The biggest weakness for McDonalds is the growing amount of criticization of its products in
terms of the calorie content. Cheeseburgers, that happen to be one of the most selling products of
the company, come under the top 10 worst food categories. With an ever increasing number of
individuals giving careful consideration to their well being, the offering of the cheeseburgers that
is the fundamental items for McDonald's Australia Holdings could be influenced (Greenspan,
2017).
The third component of SWOT analysis talks about the opportunities. McDonalds can highly
benefit from the increasing trend of the Home Meal Delivery. In addition, the changing client'
propensities and the new client gatherings could be the other open door for them to investigate
the market. Advance more, the other open door is to change client propensities and new client
gatherings, for example, the propensity for evening tea in Australia, the Macdonald's espresso,
Macdonald's express and Macdonald's stop Eateries (Dalavagas, 2015). Every one of them are
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planned and created keeping in mind the end goal to meet the chance of changing propensities
for clients.
The last part talks about the threats The biggest threat for McDonalds in Australia is the growing
rivalry and intense competition in the food industry. As the entry into the industry is easy, a large
of new restaurants are opening recently, which eat up in the market share of McDonalds. Also,
due to growing awareness about fast food, healthy substitutes are capturing markets at a very
high pace (Christian, 2015).
Conclusion
To conclude, it can be said that all the three frameworks discussed above can be highly useful for
restaurant managers to increase their efficiency and profits. These frameworks not only give an
insight into the internal environment and competencies of the business, but additionally provide a
view of the external environment in which the business operates. Both these factors are equally
important to make the business successful in the long run. The example of McDonalds can be
used to find similar areas in the restaurant business on a general level. The analysis prove that
there are certain areas where McDonalds can improve and the relevant recommendations are
made in the next section.
Recommendations
 With regard to the key competency of brand image as controlled by McDonaldsu, it is
suggested that the organization should additionally endeavor to improve its reputation
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worldwide. This can be accomplished by aiming towards quality factor and furthermore
by streamlining its product offerings to incorporate more items that can be used to attract
increasing number of clients (Rothbort, 2012).
 It is additionally prescribed that the human resource department should look for using
fresher approaches and systems, with the end goal of dealing with the association's HR as
they are the centre in conveying the menus as offered by the organization. Consequently,
it is suggested that new arrangements ought to be concocted with a view to accomplish
viability concerning the conveyance of quality items and this can be decidedly
accomplished by the endeavors from HR chiefs.
 McDonalds should give careful consideration to the younger population, for example, the
younger children and students. So as to draw them in, some exceptional techniques
should be utilized including the understudies' coupon, the presents for kids etc.
 . In addition, there is a need to develop the new item keeping in mind the end goal to
address the issue of wellbeing eating, for instance, the rice with delectable foods grown
from the ground could be a decent decision. The drain with extraordinary flavor is
additionally an option for individuals in the Australia where there is sufficient and great
qualified drain (Pham, 2017).
 Furthermore, keeping in mind the end goal to pick up the chance of the expanding
requirement for the home conveyance, McDonald could develop the new route in this
field, and in the meantime, attempt their best to advance their propelled benefit and give a
more helpful support of the clients.
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References
Bernal, E. (2015, November). VRIO Framework. Retrieved from
https://www.linkedin.com/pulse/vrio-framework-enrique-bernal/
Bridoux, F. (2009). A Resource-Based Approach To Performance And Competition: An
Overview Of The Connections Between Resources And Competition. Retrieved from
https://cdn.uclouvain.be/public/Exports%20reddot/iag/documents/WP_110_Bridoux.pdf
Brown, E. (2007, November). Competitive Advantage and the Resource Based View of the Firm.
Retrieved from http://ericbrown.com/competitive-advantage-and-the-resource-based-
view-of-the-firm.htm
Christian. (2015, September). SWOT ANALYSIS OF THE HOTELS AND RESTAURANTS
SECTOR. Retrieved from http://www.aalep.eu/swot-analysis-hotels-and-restaurants-
sector
Dalavagas, I. (2015, May). McDonald’s Corp.: A Short SWOT Analysis. Retrieved from
http://www.valueline.com/Stocks/Highlights/McDonalds_Corp___A_Short_SWOT_Anal
ysis.aspx#.WbNHjrIjF1s
Grant, R. (2001). The resource base theory of competitive advantage: Implications for strategy
formulation. Retrieved from http://www.skynet.ie/~karen/Articles/Grant1_NB.pdf
Greenspan, R. (2017, February). McDonald’s SWOT Analysis & Recommendations. Retrieved
from http://panmore.com/mcdonalds-swot-analysis-recommendations
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Institute for Manufacturing. (2017). Porter's Value Chain. Retrieved from
https://www.ifm.eng.cam.ac.uk/research/dstools/value-chain-/
Leo, C. (2016, April). McDonald's SWOT Analysis and Recommendations. Retrieved from
https://toughnickel.com/industries/McDonalds-SWOT-analysis-and-recommendations
Nisam, M. (2010). McDonald’s Value Chain Analysis. Retrieved from
https://www.academia.edu/5691910/Mc_Donalds_Value_Chain_Analysis_001
O’Connor, T. (2016). Mcdonalds - Packaging and warehousing. Retrieved from
http://www.tlimagazine.com/sections/packaging-and-warehousing/2364-mcdonalds
Pham, J. (2017). McDonald's Sustainability Recommendations. Retrieved from
https://www.slideshare.net/JosephineVietHaPham/mcdonalds-sustainability-
recommendations
Rothbort, S. (2012, November). 4 strategies for McDonald's management. Retrieved from
http://www.marketwatch.com/story/4-strategies-for-mcdonalds-management-2012-11-21
Susanto, F. (2012, November). Value Chain and Competitive Advantage of McDonald’s.
Retrieved from https://fagansusanto.wordpress.com/2012/11/22/value-chain-and-
competitive-advantage-of-mcdonalds/
Team, U. (2017). Operations and Business Strategy of McDonalds. Retrieved from
https://www.ukessays.com/essays/international-business/very-popular-fast-food-
business.php
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