McDonald's Strategic Analysis: Porters Five Forces and Recommendations

Running head: CAPSTONE EXPERIENCE IN INTGRATION AND STRATEGY 1
Capstone Experience in Integration and Strategy
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CAPSTONE EXPERIENCE IN INTEGRATION AND STRATEGY 2
Executive Summary
The Porters Five Forces are effective in analyzing the external environment in which an
organization is currently operating. McDonald’s, for instance, operates in an environment that is highly
competitive, thus it faces the threat of substitution. The corporation experiences challenges that range
from competition, bad marketing, poor management, and lack of changes to customer needs. This calls
for the McDonald’s to come up with strategies that would assist it to retain its market share such as
designing its menu to include nutritional foods and remove meals that may affect its customers’ health.

CAPSTONE EXPERIENCE IN INTEGRATION AND STRATEGY 3
Table of Contents
Executive Summary.....................................................................................................................................2
1.0 Introduction........................................................................................................................................4
1.1 Value Proposition...............................................................................................................................4
1.2 Market Position..................................................................................................................................4
1.3 Competitive Advantage......................................................................................................................5
2.0 External Environment Analysis..........................................................................................................5
2.1 Current Environment..........................................................................................................................6
2.2 Porters Five Forces.............................................................................................................................6
2.2.1 Competitive Rivalry........................................................................................................................6
2.1.2 Bargaining Power of Buyers...............................................................................................................6
2.1.3 Bargaining Power of Suppliers...........................................................................................................7
2.1.4 Threat of Substitutes...........................................................................................................................7
2.1.5 Threat of New Entrants.......................................................................................................................7
3.0 Strategic Issues...................................................................................................................................8
3.1.1 Customer Service.............................................................................................................................8
3.1.2 Opposing Viewpoint........................................................................................................................8
3.1.3 Health Factor......................................................................................................................................8
3.1.4 Competition.....................................................................................................................................9
3.1.5 Slim Down the Menu.......................................................................................................................9
4.0 Conclusion and Recommendations.....................................................................................................9
References.................................................................................................................................................11

CAPSTONE EXPERIENCE IN INTEGRATION AND STRATEGY 4
1.0 Introduction
McDonald’s is an international corporation that possesses several fast-food restaurants
across the globe. The corporation was founded in 1937 by Richard and Maurice McDonald in
California. The corporation serves a worldwide chain of more than 30,000 restaurants. The
purpose of this essay is to analyze McDonald’s value proposition, market position, competitive
advantage, external environment, strategic issues, as well as coming up with recommendations
for the organization.
1.1 Value Proposition
McDonald’s has a unique value regarding its offerings in the marketplace. The
organization achieves maximum performance and productivity by coordinating its areas of
operations. First, McDonald’s operates to provide its clients with affordable products. The
organization makes sure that it is serving sizes and prices that are according to the consumers'
expectations (Banytė, Tarutė & Taujanskytė, 2014). Second, McDonald’s ensures that it
maximizes product quality and the high quality is consistent and the methods of preparation are
uniform. By introducing the limited menu fast-food restaurant, the company has revolutionized
the restaurant industry. The corporation is also concerned about its staff such that it encourages a
workplace that values every employees’ unique contribution. McDonald’s aims at making its
staff positive about work by educating and training them.
1.2 Market Position
When it comes to the fast industry, McDonald’s is the international market leader. The
corporation is considered to be an almost perfect industrial system. This means that its conveyor
belt is in an environment that is inadvertently designed as a blueprint of the traditional
manufacturing company (Choo, 2013). The company’s low-cost leadership, as well as its
business strategy, are supplemented by McDonald’s geographical structures together with its