McDonald's Strategic Analysis

This assignment presents a detailed strategic analysis of McDonald's utilizing various analytical frameworks. It employs Ansoff's Matrix to assess growth strategies, PESTLE analysis to evaluate external factors, the BCG matrix for product portfolio evaluation, and a value chain analysis to understand operational strengths. Additionally, the analysis includes a stakeholder mapping exercise to identify key players influencing McDonald's operations. The assignment aims to provide a holistic understanding of McDonald's strategic position within the competitive landscape.

STATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
ASSIGNMENT 1.............................................................................................................................1
INTERNAL ANALYSIS.................................................................................................................1
BCG matrix for McDonald's.......................................................................................................1
Value chain analysis for McDonald's..........................................................................................3
EXTERNAL ANALYSIS................................................................................................................5
PESTLE analysis for McDonald's...............................................................................................5
Ansoff’s matrix for McDonald's.................................................................................................7
Stakeholder analysis for McDonald's..........................................................................................8
ASSIGNMENT 2.............................................................................................................................8
Covered in PPT...........................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
ILLUSTRATION INDEX
Illustration 1: BCG matrix analysis.................................................................................................2
Illustration 2: Value chain analysis..................................................................................................4
Illustration 3: PESTLE analysis.......................................................................................................6
Illustration 4: Ansoff Matrix............................................................................................................7
Illustration 5: Stakeholder analysis for McDonald's........................................................................8

INTRODUCTION
Strategic management can be defined as formulation and implementation of important
goals and objectives which are undertaken by top executives of business venture on behalf of
their potential stakeholders. These decisions are made by considering important resources and
also by assessing the internal and external environment of the venture (Freeman, 2010). Further,
Strategic management is also considered as a process of continuous planning, visualizing,
monitoring and analysing important activities which need to be considered by business enterprise
in order to achieve their specific goals and objectives (Gregor and Hevner, 2013).
By taking the above topic into consideration, this present report has been prepared on
McDonald's which is a leading hamburger fast food chain which has its effective operations
whole around the globe. Further, cited firm has more than 36,000 restaurants in more than 120
nations which serves meals like French fries, burgers and different other products. Cited firm aim
is to satisfy the needs and demands of customers and earn revenue accordingly. Organization aim
is to give customers the best meals which satisfies their needs and demands effectively This
present document consists of analysis of internal and external environment. This report will also
showcase new strategy for cited venture which will be based on comprehensive analysis of
venture's current strategic direction.
ASSIGNMENT 1
Environmental analysis is a strategic tool, which help business venture to identify their
external and internal element so that the performance of organization do not pamper. Internal
analysis helps McDonald's to see their competitive position in competitive market and with
proper analysis; they come to know their potential strength and weakness. Firm can scan their
internal environment by implementing BCG matrix and value chain analysis. On the contrary,
side, cited fast food firm can imply PESTLE analysis and Ansoff matrix if organization is
planning to expand their operations to some other country (Craig and Campbell, 2012). These
two analysis plays a crucial role in the success of business venture and direct them to achieve
their strategic goals and objectives.
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INTERNAL ANALYSIS
BCG matrix for McDonald's
BCG matrix is a portfolio which is based on prior observation where business units can
be diversified into different categories which are based on market growth and share respectively.
These categories are dogs, question mark, stars and cash cows. Further, the need of this strategy
for McDonald's is to expand their existing products in promising market as with that they will be
able to expand their operations and achieve their goals and objectives respectively. Moreover,
cited firm also getting tough competition from their major competitors who are working in same
industry. These are KFC, Subway, Pizza hut, etc. From the view point of Uhrenfeldt and et. al.,
(2014) market growth measures the attractiveness of industry and McDonald's is doing its best in
order to extend their brand image and profitability. Further, cited firm has different varieties in
their product range and they give best of the products to customers in order to satisfy their needs
and wants.
 Stars: Stars shows high growth and high market share. McDonald's is at star position
because mentioned firm has high growth and market share whole around the globe.
Further, company has diversified products which attracts large customer's base towards it.
Burger, French fries, Spicy McCrispy, etc. are their star products. The main reason why
organization stands in this category is because of their immense goodwill and customers
response towards their products. Organization serves millions of customers on daily basis
 Cash Cows: It reveals low growth and high market share. Cited firm have that much of
assets as they can earn more fund as compared to market growth rate. Profits and cash so
generated are also high, and because of the low growth, investment so made need to be
low. Organization competitors like Burger king, Pizza Hut and KFC falls in this category
because they have high market share but their growth is significantly low.
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Illustration 1: BCG matrix analysis
(Source: Using the BCG matrix for effective portfolio
management.2016) Dogs: Dogs have low growth and low market share. McDonald's need to avoid and
minimize these factors in order avoids expenses. Apple pie and Strawberry custard pie
are some of the products which are not in much of sale and mentioned firm need to
substitute these by making some major changes or by introducing some new ones (Using
the BCG matrix for effective portfolio management, 2016). Moreover, they should also
reduce the strength of employees if their exist addition person. Venture can either transfer
the individual to other outlet or can give them termination.
 Question marks: This segment show high growth and low market share. Under this
segment, McDonald's products grow rapidly but at the same time consume more amount
of cash (Motro and Smets, 2012). However, these products are less accepted by the
audience and thus generate not much cash.
Value chain analysis for McDonald's
Value chain analysis is considered as a useful tool which is used by business ventures to
create best of the value for customers. It is also a chain of activities that firm operates within
specific industry in order to deliver best of the product for whole market. This analysis further
looks towards every step through which McDonald's goes. The ultimate aim of firm is to deliver
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maximum value to customers at best of the price so that customers become the loyal base for
venture.
Primary activities
Inbound logistics:
McDonald's buy vegetables and raw materials from their fixed suppliers. Thus, with the
increase in labour and capital, business venture will be able to increase their performance.
Moreover, organization has implemented backward vertical integration by replacing most of
their suppliers. This has been done due to reduce cost and ensure that products they serve must of
the best quality. Moreover, firms have their fix suppliers and these suppliers get paid after
specific time period. These suppliers also feel proud as their products are been used by the
biggest fast food retail chain.
Operations:
McDonald's implements same practices in all outlets in order to maintain the uniformity.
Organization can change the look of their kitchen and turn that into speedy kitchen by
implementing following ways:
 A large grill where one worker can cook lot of burgers at the same time
 A dressing station where one worker can add different spices on different eating meals
 A soda fountain for desserts and different drinks. Pay counter where individual can self check-out by making payment of the bill either
through cash or with help of debit/credit card.
Outbound logistics:
This includes the warehouses which McDonald's have to store adequate amount of food,
paper products and cleaning supplies. Further, McDonald's is known for its high quality of food
and superior services (Hair and et.al. 2012). Venture works with different franchises and
suppliers in order to satisfy customers need and increase firm's revenue and productivity.
Organization mainly gets into franchisee contract and individual or organization who takes the
same get good amount of return as well. However, the operations is managed by them as well in
order to have smooth functioning of business operations.
Marketing and sales:
McDonald's fast food restaurants exist in 119 different countries and venture is serving
more than 58 millions customers every day. Cited firm has broad advertising campaign and they
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use advertisement, media, social media for effective promotion of their existing as well as newly
launched products. Advertisement techniques also play crucial role in order to promote the
product in the eyes of the target audience. With this, firm will be able to make a huge market
base of their loyal customers which will help them in giving competitive advantage over the
major competitors who are working in the same industry.
Services:
McDonald's provide free Wi-Fi services at their outlets where customers can enjoy their
meal and can also complete their urgent work (Value Chain Analysis, 2016). Organization also
provides effective infrastructure where customers will not feel hectic in completing their work.
Further, there are no interventions as well and they can sit for long hours and enjoy the venture
food.
Illustration 2: Value chain analysis
(Source: Value Chain Analysis. 2016)
Support activities
Firm infrastructure:
Mentioned organization has modern outlets and McDonald's use advanced IT technology
for speedy results. Further, they also maintain the green activity and provide eco-friendly
environment to customers. Apart from it, energy efficient lighting have been used which leads to
reduction in the electricity bill. Through this, organization is giving their best in growth and
development of nation.
Human resource Management:
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Employment opportunities with McDonald’s exist immensely because cited firm also
provide part-time jobs (Lee, Kim and Park, 2012). Further, organization has large base of
employees who are giving their productive services throughout the globe. Organization also
provides flexible working hours option where person can engage into different activities as well.
Moreover, firm also has large employees base and they are giving their productive services
throughout the globe. HR head of particular area need to satisfy the needs and demands of their
employees and should motivate them from time to time so that workers get motivated and they
work with best of the efficiency and capability to achieve organizational goals and objectives.
Technology development:
Cited firm changes their technology constantly in order to give stiff competition to their
major competitors who are working within the same industry. Easy entry menu and earlier
payment has reduced the work of employees as well. Apart from it, continuous changes in
technology has lead into various upgradation and it is necessary for firm as well to implement
new techniques so that they get competitive advantage over their major fast food competitors.
Procurement:
McDonald's E-procurement system is one of their best reason for the successful supply
chain management. Organization prepares the food in their kitchen but they purchase all the
materials i.e. from uniform to hamburger from their suppliers. Thus, the suppliers of McDonald's
need to be efficient and they need to produce the best raw materials without any fault so
customers will have best eating experience.
EXTERNAL ANALYSIS
PESTLE analysis for McDonald's
Political:
McDonald's has its operations in different countries so its political exposure is whole
around the globe. Mentioned organization also needs to follow all the rules and regulations
imposed by the local government in respect to health and hygiene and employment of individual.
Therefore, it is necessary for business venture to consider all the political points before
expanding their operations to different nation as sound relation with government will help
McDonald's to run operations in smooth manner.
Economic:
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While working in international market, McDonald's faces some problems relating to
taxes, inflation, etc. Further, economy has also influenced the sale of product up to some extent
and individuals who not have that much of income do not prefer organization products even they
like the same (Mowday, Porter and Steers, 2013). Further, some ventures also produce substitute
products which influence productivity of firm. By considering this factor, cited firm will produce
products according to the needs and demands of customers.
Social:
Customer’s perception also influences the demand of products and McDonald's cannot
force individual to purchase that product. However, they can promote their products with the best
of the way as it increases the customer's attraction towards the same. Further, the introduction of
products also differ from country to country as individuals in UK mostly prefer hamburgers and
French fries where people in Asia prefers rice as common meal (What is PESTLE Analysis?
2016). Therefore, the perception of customers need to be considered effectively in order to have
smooth running of business operations and with that firm will also achieve their mission and
vision statements. Products which are not accepted by customers need to get either altered or
should make necessary changes.
Illustration 3: PESTLE analysis
(Source: Self Attempted)
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Technological
Technology plays a crucial role in the fast food industry and McDonald's is upgrading
their systems rapidly in order to get competitive advantage over the major competitors who are
working within the same industry. Recently cited firm has introduced 60 seconds packaging for
their Big Mac products. Thus, technological development of products will make venture efficient
in producing best of the product in quick manner so that they get an competitive edge over their
rival competitors.
Environmental:
Every individual cares for environment and organization also need to take initiative to not
to pollute the environment, McDonald's consider this thing effectively and implements waste
management practices. Venture care about problems like water pollution and also the effect of
waste packing have on environment (Perry, Hondeghem and Wise, 2010). Organization consider
environment protection act effectively. In order to meet this, firm has used paper wrapping of
their products instead of using polythene which saves the environment from harmful waste.
Legal:
McDonald's have to adhere different laws relating to employment, corporate and tax
requirement and need to function accordingly in order to increase their goodwill. Legal acts has
great impact on the organization performance and venture have to consider it effectively in order
to have smooth functioning.
Ansoff’s matrix for McDonald's
This analysis is most suitable for venture as cited firm used to make continuous change in
their products and services. This is the most suitable marketing model for McDonald's and the
description of same has been discussed down under: Market penetration: In this, McDonald's emphasize on selling their existing product to
existing market so that they are able to maintain the base of their loyal customers with
increase in revenue and profitability. Hamburgers, cheese burgers, French fries,
milkshakes, etc. are some of the products which are most popular in every McDonald's
outlet.
 Product development: In this strategy, cited firm develops new products for existing
market. This gives customers a new blend to taste the new products of the venture
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(Armstrong and Taylor, 2014). Further, with this cited firm will be able to increase
customer base by attracting new individuals towards the product.
Illustration 4: Ansoff’s Matrix
(Source: Ansoff's Matrix. 2015) Market development: In market development, McDonald's emphasize on developing new
market with their existing products. Further, with the franchisee contract, cited firm can
increase their market share, profit, revenue and goodwill. This element has certain risk as
well but organization consider it effectively by scanning the environment
 Diversification: In diversification, organization focuses on establishing their new market
with new product. In this, the risk is relatively high and if project do not get successful,
then venture have to bear the losses (Ansoff's Matrix, 2015). However, if things goes
good then organization will be able to increase their brand image and the sale for the new
product will also increased significantly.
Stakeholder analysis for McDonald's
Stakeholder analysis plays a crucial role in the success of enterprise and venture has to
consider that who are the stakeholders for the venture. McDonald's have different stakeholders
and they have interest in the success of business enterprise. Further, their major stakeholders
involve customers, employees, suppliers, shareholders, government and communities. After,
identifying the stakeholders, mentioned firm has to prioritize them as per their interest and
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functioning. Stakeholders are also considered as key for organization success and venture is
obliged to satisfy their needs so that they get best of their support and venture achieves their
goals and objectives.
Illustration 5: Stakeholder analysis for McDonald's
(Source: Self Attempted)
ASSIGNMENT 2
Covered in PPT
CONCLUSION
From the above report, it is inferred that McDonald's is a leading hamburger fast food
chain and cited venture has their effective operations throughout the globe. This document
showcases the internal and external analysis which will help business enterprise to achieve their
goals and objectives. This report is also evident of different models namely BCG matrix, Value
chain, PESTLE, Ansoff’s matrix. With this cited firm will be able to know their competitive
position in the dynamic environment and they will make necessary changes accordingly.
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REFERENCES
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maximum impact. MIS quarterly. 37(2). pp. 337-356.
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modeling in marketing research. Journal of the Academy of Marketing Science. 40(3). pp.
414-433.
Lee, H., Kim, M. S. and Park, Y., 2012. An analytic network process approach to
operationalization of five forces model. Applied Mathematical Modelling. 36(4). pp.
1783-1795.Zhu, Y. and et.al., 2012. Grey relational evaluation of innovation competency
in an aviation industry cluster. Grey Systems: Theory and Application. 2(2). pp.272-283.
Motro, A. and Smets, P., 2012. Uncertainty management in information systems: from needs to
solutions. Springer Science & Business Media.
Mowday, R. T., Porter, L. W. and Steers, R. M., 2013. Employee—organization linkages: The
psychology of commitment, absenteeism, and turnover. Academic Press.
Perry, J. L., Hondeghem, A. and Wise, L. R., 2010. Revisiting the motivational bases of public
service: Twenty years of research and an agenda for the future. Public administration
review. 70(5). pp. 681-690.
Uhrenfeldt, L. and et. al., 2014. Collaboration: a SWOT analysis of the process of conducting a
review of nursing workforce policies in five European countries. Journal of nursing
management. 22(4). 485-498.
Online
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What is PESTLE Analysis? 2016. [Online]. Available through: <http://www.focus-on-
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