Analysis of McDonald's Corporate and Business Level Strategies

This research paper analyzes McDonald's corporate and business level strategies, including its mission, vision, core values, and SWOT analysis. It also examines the company's customer base and its strengths, weaknesses, opportunities, and threats.

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Introduction of Management
Research & Analysis Paper – Part I Assignment
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Research & Analysis Paper – Part I Assignment
Summary
McDonalds is one of the largest chains of fast food restaurants worldwide operating in
food and beverage industry. Each day, McDonalds restaurants serve more than 47 million
customers globally generating approximately $15 billion returns annually. The first restaurant
of the company was opened in California of USA in the year 1954 that became instantly
recognised and respected among customers. In Canada, McDonalds first store was opened in
the year 1967 in Richmond of British Columbia. Presently, more than 2.5 million customers
are served by the company stores in Canada each day. The company deals mainly in fast
food like burgers and French fries along with serving soft-drinks like Coca-Cola. There are
various strategies used by the company due to which McDonalds have gained a strong brand
recognition worldwide. This report will analyse few of them concerning mainly corporate
vision, mission and value along with finding McDonalds corporate and business level
strategies. This report will also find environmental constraints of the company while
operating in global food and beverage industry by making a detailed SWOT analysis.
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Research & Analysis Paper – Part I Assignment
Table of Contents
Introduction................................................................................................................................3
Customer base............................................................................................................................3
Mission and core values.............................................................................................................3
Vision.........................................................................................................................................4
Corporate level strategies...........................................................................................................4
Business level strategy...............................................................................................................5
SWOT analysis...........................................................................................................................5
Strengths.....................................................................................................................................6
Weaknesses................................................................................................................................6
Opportunities..............................................................................................................................6
Threats........................................................................................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................8
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Research & Analysis Paper – Part I Assignment
Introduction
McDonalds is basically a franchisor which operates with store franchisees where more than
90% of the stores are owned by the company itself and are looked after by franchise partners.
Operating in more than 120 countries, this brand serves value meals and beverages with
superior taste and quality. Due to excellent business strategies implemented in local as well
as international level, McDonalds have grown highly competitive in past few years
(McDonald's, 2018). Nevertheless, few competitors like Subway and KFC who serves in
similar kind of products that gives tough competition to McDonalds for which the company
offers food menu that are more based on geographical grounds like home-grown taste and
community preference (Meyer, 2018).
Customer base
McDonalds market are based on demographic factors like lifestyle and age. The key targeted
customers of the company are teenagers and adults between 8-45 aged especially in urban
areas, but the most targeted segment remains children for whom the company offer various
promotions also. Lifestyle factors include targeting professional workers in occupational field
and students who look for cost effective and time efficient products (Dudovskiy, 2016).
Mission and core values
The mission statement of McDonalds is “to be our customers’ favourite place and way to eat
and drink” (McDonalds, 2018). This mission statement is supported by the company by
highlighting the position given to its customers and maintaining customers loyalty through
superior food quality and excellent service. McDonalds places its customers on top priority as
they believe their existence is only because of its customers. McDonalds corporate value
includes providing strong commitment to its customers that can foster and drive high
customer engagement level for continued success. The company operates after considering
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Research & Analysis Paper – Part I Assignment
ethics and CSR to conduct superior quality of business comprising integrity, fairness and
honesty. Being a strong market leader in food and beverage industry and publicly traded
company, McDonalds corporate culture provides its stakeholders with sustainable growth
opportunities by employing evolution and innovation in its business operations (McDonald's,
2018).
Vision
McDonalds vision statement is “to move with velocity to drive profitable growth and become
an even better McDonald’s serving more customers delicious food each day around the
world” (Meyer, 2018). The vision statement of the company shows that it aims in expanding
its operations in more locations by improving organisational efficiency. After looking at its
corporate vision, the company’s expected growth and overall expansion can be predicted in
upcoming years also (Meyer, 2018).
Corporate level strategies
Corporate level strategies of McDonalds focus aggressively on expanding into new and
emerging markets. These efforts of the company are established through successful
implementation of franchising model where presently company operates in major developed
and developing countries globally. However, McDonalds still believes in focussing to enter
into fresh markets to position itself amongst top companies dealing in food and beverage
industry. This strategy is fulfilled by company via reaching its customers through marketing
campaigns, promotional offers and advertisements made physically and in social media to
foster its marketing in new areas (Sinclair, 2015). McDonalds corporate strategy also
resembles proximity to monopolistic competition as food served in its chain of restaurants are
featured by diversified product offering as well as excellent pricing techniques that further
attracts its customers (Andino, 2015).
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Research & Analysis Paper – Part I Assignment
Business level strategy
The business level strategy followed by McDonalds shows that the company follows cost
leadership strategy by delivering superior quality food and service at cost effective prices. In
McDonalds store, it can be seen that innovation and technology is used in its core activities as
well as in its product manufacturing which makes it superior than other competitors in similar
industry. Brand differentiation strategy can also be associated with McDonalds case as the
company uses different branding according to the community and market force. For example,
in China the store of McDonalds is labelled in Chinese names due to political and legal
criteria followed there. McDonalds business level strategy is also supported by other
operational strategies followed by the company in its functional areas like food processing
and cooking, purchasing raw material, supply chain and assembly line for food making along
with automated methods used to deal with its customers. This low cost and brand
differentiation strategy of McDonalds have built strong brand loyalty that is very necessary
for sustainable growth within an industry along with gaining competitive position at an
international level (Han, 2008).
SWOT analysis
McDonalds maintains a strong position in global fast food industry through strategies that
addresses external and internal factors of company’s SWOT analysis. This framework
identifies most of the relevant environmental factors of the company that determines
McDonalds success. With implementation of variety of strategies and internationalisation of
operations, McDonalds deals with every constraint as well as favourable prospects
concerning factors stated in SWOT analysis framework of the company. McDonalds faces
many issues also that are majorly based on emerging conditions of global markets, however,
with strategic capabilities and sound management policies McDonalds surpasses them
tactfully (Dalavagas, 2015).
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Research & Analysis Paper – Part I Assignment
Strengths
The strengths of McDonalds include brand recognition and brand value that has been
developed by the company over the years under strong leadership control of Ray Croc
formerly and Steve Easterbrook presently (McDonald's, 2018). The human resource and
company’s employees’ policies also reveals one of the best recognised and renowned
globally which adds to the fact that McDonalds make constant effort in providing unique
opportunities to its employees, as acclaimed by CEO and human resource officers of the
company. Apart from people and brand recognition, the world-wide distribution networking
and cost leadership strategy adds to McDonalds strengths (Han, 2008).
Weaknesses
McDonalds lapses in few of its services area along with terms in providing customer
satisfaction in few of its stores, that may be due to giving more emphasis on speed and
volume in sales. Standardisation and customisation differences further makes the company
strive for gaining standardisation in its marketing mix as it becomes very difficult to be
achieved and managed in highly volatile food and beverage industry. Along with it, the
lawsuits that have been filed against few of its stores have affected company’s reputation
severely (Dalavagas, 2015).
Opportunities
Opportunities for McDonalds lies in its expansion strategy where the company can introduce
more stores with diversified products pertaining food and beverages like freshly cooked food
and fresh juices. Bargaining power of suppliers as well as buyers also seems weak for
McDonalds that can assist company in focusing on its pricing structure along with product
turnover rather than focussing merely on cost differentiation of products and delivery services
(Dalavagas, 2015).
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Research & Analysis Paper – Part I Assignment
Threats
The most significant threat that lays in front of fast food and beverage industries is growing
concern among people towards health and hygiene where most of the people are considering
in consuming products that contain low fat and obesity substances in them. Furthermore, the
highly competitive market with new entrants of substitute products remains a constant threat
to the company. Few threats are been faced by McDonalds due to its internal management
also where the company faces constant pressure from its workforce, as seen in numerous
strikes that have taken place in past few years to increase labour wages. Remonstration for
labour remunerations have increased alarmingly in past few decades especially in food and
beverage industry that also impacts McDonalds and its other employees’ relationships
(Andino, 2015).
Conclusion
The above report has made an analysis and evaluation of McDonalds Corporation that
reflects upon major factors influencing the company’s management, environmental
constraints on management, leadership and planning along with strategic management in
business and corporate level. The report has collected sufficient data from company’s website
along with other relevant sources to evaluate core values, customers base, vision and mission
of McDonalds along with identifying core strategies adopted by the company while operating
in global food and beverage industry. After making a detailed SWOT analysis, this report
recommends McDonalds to consider health related issue in its products and enhanced labour
wages to remain ahead of the game.
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Research & Analysis Paper – Part I Assignment
References
Andino, R. (2015). McDonald's Strategic Analysis. Retrieved from
http://www.academia.edu/12017539/McDonalds_Strategic_Analysis
Dalavagas, I. (2015). McDonald’s Corp.: A Short SWOT Analysis. Retrieved from
http://www.valueline.com/Stocks/Highlights/McDonalds_Corp___A_Short_SWOT_
Analysis.aspx#.W8SDnGgzbIV
Dudovskiy, J. (2016). McDonalds Segmentation, Targeting and Positioning. Retrieved from
https://research-methodology.net/mcdonalds-segmentation-targeting-and-positioning/
Han, J. (2008). The Business Strategy of Mcdonald’s. International Journal of Business and
Management, 03(11), 72-74.
McDonald's. (2018). McDonalds annual Reports. Retrieved from
https://corporate.mcdonalds.com/content/corpmcd/investors-relations/financial-
information/annual-reports.html
McDonalds. (2018). McDonalds: Mission and Vision. Retrieved from
https://www.mcdonalds.com.my/company/mission-vision
McDonald's. (2018). Mission & Values. Retrieved from
https://corporate.mcdonalds.com/mcd/our_company-old/mission_and_values.html
Meyer, P. (2018). McDonald’s Mission Statement & Vision Statement (An Analysis).
Retrieved from http://panmore.com/mcdonalds-vision-statement-mission-statement-
analysis
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Research & Analysis Paper – Part I Assignment
Sinclair, L. (2015). McDonald’s launches digital marketing push. Retrieved from
https://www.theaustralian.com.au/business/media/marketing/mcdonalds-launches-
digital-marketing-push/news-story/94d0c7a757e83884c0c06c4e9bcba8b4
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