Situational Analysis of McDonald

Running Head: Situational Analysis of McDonald
Situational Analysis of McDonald
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Running Head: Situational Analysis of McDonald
Table of Contents
Executive Summary........................................................................................................................................................3
Background of the Company..........................................................................................................................................4
PESTEL Analysis...........................................................................................................................................................4
Political factor.............................................................................................................................................................4
Economic Factor.........................................................................................................................................................4
Sociocultural factors...................................................................................................................................................5
Technological Factors.................................................................................................................................................5
Environmental Factors................................................................................................................................................5
Legal Factors...............................................................................................................................................................6
Porter’s Five force Analysis............................................................................................................................................6
The competitive rivalry of McDonald’s– Strong Force..............................................................................................6
Bargaining power of buyers at McDonald’s – Strong Force......................................................................................6
Bargaining power of suppliers at McDonald’s – Weak Force....................................................................................7
The threat of substitutes at McDonald’s – Strong Force............................................................................................7
The threat of new entrants for McDonald’s – Moderate Force..................................................................................7
Conclusion......................................................................................................................................................................8
Recommendation............................................................................................................................................................8
References.....................................................................................................................................................................10
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Running Head: Situational Analysis of McDonald
Executive Summary
McDonald’s is the major player in the fast food industry. Few of the major reason for the
growth is the brand’s global presence, massive promotions and advertising, convenience, and
healthier menu options. They provide consistently faster services which draw many customers.
But lately, the brand is getting negative perception from the public. The perception of the
brand is not keeping pace with product sales. The company is consistently ranking lower in terms
of quality perception as compared to their rivals. Several factors which influence this negative
perception include the involvement of animal cruelty, obesity issue from fast foods, and social
media commentary (Abratt& Bendixen, 2018).
This report studies the external environment of McDonald through PESTEL and Porter’s
analysis and recommends ways to overcome problems at McDonald’s.
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Running Head: Situational Analysis of McDonald
Background of the Company
McDonald’s is the major player in the fast food industry, in 119 countries across the
world. Through its 33,000 stores in various locations, McDonald's serves over 70 million
customers per day. In the year 2016, McDonald’s was rated as the largest player in the U.S snack
industry. Over the last few years, the sales increase and FY 2016 reported the eighth consecutive
financial year of positive growth. Ahead of Burger King (6.8% market share), McDonald's has
the highest market share of 7.2% (IBIS, 2019).
PESTEL Analysis
Through PESTEL analysis, McDonald’s management can focus on the trends and
influence that affect the fast food industry business. The company can develop strategies that
match the business environment.
Political factor
The most significant political factor that influences McDonald is the ever-increasing
international trade agreements, which is an opportunity for the company as they can expand the
multinational business and enhance global supply chains (Crawford, 2015). Another factor is the
government’s guidelines for health and diet, which is both an opportunity and a threat. In a way,
it puts pressure on McDonald's to improve quality as they often get subjected to criticism on
consumer’s health. Governments also have to change public health policies, which pose a threat
and an opportunity for McDonald's (Harrington, Ottenbacher&Fauser, 2017).
Economic Factor
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