Strategic Analysis of McDonald's: Business and Strategic Management

This article provides a strategic analysis of McDonald's, including PESTLE analysis, Porter's Five Forces, SWOT analysis, and strategic options. It also discusses the quick-service restaurant industry and the impact of external factors on McDonald's operations.

Business management and strategic management

Business management and strategic management
Table of Contents
Strategic analysis of the McDonalds...............................................................................................1
Environmental analysis....................................................................................................................1
Overall analysis of the Quick-service restaurant industry...........................................................1
PESTLE ANALYSIS...................................................................................................................1
Porter five forces..........................................................................................................................2
INTERNAL ANALYSIS.................................................................................................................2
SWOT ANALYSIS......................................................................................................................2
Strategic options..............................................................................................................................4
References........................................................................................................................................5
Strategic analysis of the McDonalds
Environmental analysis
Overall analysis of the Quick-service restaurant industry
This is one of the famous quick service restaurant industries which serves quality food and
emphasizes on satisfying the customers.
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Business management and strategic management
PESTLE ANALYSIS
Political factor
McDonalds manages its operations in more than 100 countries so the top management has to
face more interference of the government. The focus is given on various rules and regulations
which are imposed by the government to maintain health and hygiene factors. The company also
takes into consideration trade agreements in specific areas so that operations can be managed
smoothly.
Economic factor
It has been analyzed that the exchange rate affects the operations of the company and also weak
side of the US dollar enables the better exchange rate. Due to increase in tax rate, the company
has to face the issue and there are many outlets which are closed due to this reason.
Social environment
Due to the change in the customers taste, the impact can be seen on the overall sales of the
company. Now society is also health conscious so it is important for the company to focus on
offering products and services by considering the hygiene factors for the society. So,
McDonalds has to offer menu choices in relation to the low-fat choices (Puzakova, Kwak & Bell,
2015).
Technological environment
It is important for the company to consider proper scheduling so that it can be simple to maintain
the sales of the products in the competitive market. The company also considers the external
factors related to research and development which enhances the overall opportunity.
Legal factor
The company considers legal requirement related to labor and employment law. The essential
legal factor for the company is related to the new legal minimum wage levels in the US.
Environmental factor
The company focuses on the CSR activities which can help in achieving success in the market.
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Business management and strategic management
Porter five forces
Competitive rivalry
The competitive rivalry is high for the company as there are many companies of various sizes on
the global platform.
Bargaining power of buyers
High bargaining power of the buyers is one of the external factors and in this the factors are
related to low switching cost, many sellers and also high range of substitutes.
Bargaining power of suppliers
The bargaining power of the suppliers is weak. It can be seen that the suppliers of the company
are not integrated vertically and also there is lack of control on the distribution channel (Cao &
Kim, 2015).
Threat of substitutes
High rate of substitution can be seen in relation to the company. There are many bakeries and
outlets the products same as McDonalds.
Threat of new entrants
New entrants are high and it impacts the overall market share of the company. There are many
new entrants like burger king.
INTERNAL ANALYSIS
SWOT ANALYSIS
Strength
One of the strengths of the company is related to good image of the company. It can be seen that
the company has a good market share which has enhanced the overall profits of the company.
This also promotes the overall services and products of the company in the market. The training
which is given to the employees is also one of the essential factors which boosted the overall
productivity of the company and this is also giving direct impact on the competitors. So, by good
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Business management and strategic management
image in the market it can be seen that the company possess the core competencies which helps
to be successful in the market and also it helps in competing for the long time (Boo, 2017).
Weakness
In the market, the company has an image related with unhealthy food image which is important
to be improved so that growth can be attained. It can also be analyzed that company has the slow
process in relation with the innovation of the product. Market saturation has also enhanced the
difficulty for the organization to enhance its market share. It is important for the company to
consider the right steps so that it can be easy to attain the goals.
Opportunities
The company has the opportunity to maintain the overall chain of the outlets. It is important for
the company to grab the opportunity related to innovation so that it can be easy to enhance the
market share. It is necessary for the company to consider the strategy related to new product line
so that expansion can take place in an easy manner. The company should focus on the reducing
the cost of the products so that it can be easy to maintain the large customer base (Armstrong,
Adam, Denize & Kotler, 2014).
Threats
The threat is from the competitors prevailing in the market. It can be seen that competition level
is so high that it is impacting the overall growth of the company in the competitive market.
There are many competitors like Burger king from which the company has to face threat and it is
also impacting the growth and profits. It is important for the company to also focus on
fluctuation pattern so that risks can be reduced (Aaker & Biel, 2013).
Strategic options
One of the strategic options that should be considered by the company is related to focus on
advertisements or promotional techniques. It is important for the company to focus on promoting
the products by proper promotional techniques so that it can be easy to attain the large market
share. Through this, it can be easy for the company to enhance their demand in the competitive
market.
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Business management and strategic management
Customer satisfaction is also one of the major factors on which the focus should be given. The
customers will be satisfied if proper services are offered with low price. So, it is important to
maintain the services at low price so that demand of the products can be enhanced.
Also, the latest technology is one of the major factors that should be considered by the company
as it helps in maintaining the overall delivery services of the customers. If latest technology is
considered then products and services can be delivered on time to the customers and it will
directly enhance the overall sales and profits of the company in the market. So, these are
considered as one of the important factors that should be considered by the company to enhance
the market share (Janssen, Davies, Richardson & Stevenson, 2018).
References
Aaker, D.A. and Biel, A.L., 2013. Brand equity & advertising: advertising's role in building
strong brands. Psychology Press.
Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson
Australia.
Boo, H.V., 2017. Service environment of restaurants: findings from the youth
customers. Journal of ASIAN behavioural studies, 2(2), pp.67-77.
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Business management and strategic management
Cao, Y. and Kim, K., 2015. How do customers perceive service quality in differently structured
fast food restaurants?. Journal of Hospitality Marketing & Management, 24(1), pp.99-117.
Janssen, H.G., Davies, I.G., Richardson, L.D. and Stevenson, L., 2018. Determinants of
takeaway and fast food consumption: a narrative review. Nutrition research reviews, 31(1),
pp.16-34.
Puzakova, M., Kwak, H. and Bell, M., 2015. Beyond seeing McDonald's fiesta menu: The role
of accent in brand sincerity of ethnic products and brands. Journal of Advertising, 44(3),
pp.219-231.
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