McDonald's Strategic Management in India

This assignment examines McDonald's strategic management in the Indian market. It analyzes the company's supply chain using frameworks like Porter's Five Forces and Value Chain Analysis. The assignment also explores strategic management concepts such as Ansoff's Matrix and the BCG Growth Matrix to understand McDonald's position within the Indian fast-food industry.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
BUSINESS ANALYSIS .................................................................................................................1
Company background.................................................................................................................1
Business environment analysis...................................................................................................2
Competitive analysis...................................................................................................................5
STRATEGIC ANALYSIS...............................................................................................................7
Global strategy analysis..............................................................................................................7
Strategic capability analysis........................................................................................................7
Strategic performance in the economy......................................................................................10
STRATEGIC DEVELOPMENT FOR BUSINESS GROWTH....................................................12
Strategies to defend core business practices.............................................................................12
Global branding.........................................................................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
ILLUSTRATION INDEX
Illustration 1: Value chain analysis model.......................................................................................2
Illustration 2: Porter Five Force analysis.........................................................................................5
Illustration 3: BCG Growth Matrix..................................................................................................9
Illustration 4: Porter's generic forces ............................................................................................11
Illustration 5: Ansoff's Matrix........................................................................................................12

INTRODUCTION
Strategic management is the concept whereby companies develop and design competitive
business position within the market by effectively analysing their capabilities. These strategies
help the business units in attaining effective and well developed competitive edge within the
economy (Sharma, 2013). Present study will focus on undertaking an extensive research on
strategic management plan developed by McDonald's. The research will analyse the company's
operation in order to evaluate its business environment. Moreover, application of theoretical
models for competitive and strategic analysis will help in determining the present market
position and its impact on business operations. In addition to this, strategic capabilities and
performance of the business will be evaluated to investigate business issues and strategic
measures to overcome the same. Hence, the overall report will develop an in depth and clear
analysis of various business operations of the business and measures to enhance the same in the
current competitive economy.
BUSINESS ANALYSIS
Company background
McDonald's is a globally renowned fast food chain operating efficiently in more than 118
countries of the world. The company has developed as the largest chain of food services. It has
established about 36,000 outlets around the world and serves around 68 million consumers on
daily basis (Mcdonalds, 2015). The company was started in United States in the year 1940 as a
single outlet of hamburger which now has set the record for selling highest amount of burgers in
minimum time in the world. Global business operations of the entity are well managed and are
operating effectively. Strategic thinking and management resulted in turning a simple business
idea into massive business success for the management (Mcdonalds, 2015). Changing lifestyles
and preference of people has contributed in the success of the company. According to Watson,
2014, fast food industry is the fastest growing because of the concept and consumer convenience
factors. McDonald's focuses on effective market analysis and regular business development to
manage an edge within the economy. Rising global competition and awareness about health
issues within population has posed some futile challenges for business development. The
company however is focusing on maintaining competitive advantage in the market through
strategic management and business development.
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Business environment analysis
Business environment is defined as the situations or surroundings in which organisations
operate for effectively managing the business activities. The core aim of environment is to
provide the companies with well developed foundation for operating internal and external
operations (Crouch, 2014). The environmental analysis of McDonald's will help in effectively
analysing the growth opportunities of the business and its impact on organisational development.
Internal environment analysis
Value chain analysis of McDonald's will help in reflecting a clear picture about internal
business environment of the company.
Illustration 1: Value chain analysis model
(Source:Strategic Management Journal. 2014 )
§
ACTIVITIES ANALYSIS
PRIMARY ACTIVITIES
Inbound logistics McDonald's has developed positive supplier relations at different
location to attain quality raw material on cost effective measures for
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business operations (Howard, 2010).
Operations The company has implemented robotic technology for product
development and e-logistic management which has helped in
developed a transparent means of working in time and cost effective
means.
Outbound logistics Product delivery for the business is quick. McDonald's provides the
quickest fast food services managing well developed environment
for its consumers to enhance market demand (Arnold, 2013).
Employees are trained and managed in an effective manner for the
same.
Marketing and sales The company has established more than 36,000 outlets around the
world and focuses on the strategic business policy “think global act
local” which has contributed widely in enhancing, marketing
measures and expanding company sales within the market.
Services Consumer services by McDonald's are well structured and effective.
Friendly environment, quality products, quick services, supportive
staff, effective communication and effective feedback system have
helped the business in enhancing value for the product (Zhou and
Wu, 2010).
SECONDARY ACTIVITIES
Infrastructure The business structure of McDonald's focuses on effective
leadership programs for proper management of business operations.
Moreover, uniform outlet designs and renowned locations help in
enhancing sales by attracting maximum consumers.
Human resource
management
Trained and qualified employees are recruited and trained to manage
business operations and deliver quality results.
Technology development McDonald's has adopted technologically advanced measures to
manage quality of product and deliver uniform taste all over the
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world (Wheelen and Hunger, 2011).
Procurement The company has developed the largest and strong distribution
measures and supply chain management for carrying out
unrestricted business operations.
External environment analysis
External environment of the business will be analysed using PESTEL analysis model.
POLITICAL SOCIAL ENVIRONMENTAL
The impact of government
regulation and policies is high
on food industry hence;
McDonald's focuses on
franchising for international
growth and development.
Market trends and consumer
preferences for food and health
awareness is changing vastly
in the market. The impact of
the same has been observed
through declining sales of
McDonald's (Tyler, 2012).
Environmental change has a
direct impact on agricultural
market which may affect the
availability of raw material for
the business. McDonald's has
adopted environmental
friendly measures to carry out
business operations.
ECONOMIC TECHNOLOGICAL LEGAL
Factors such as inflation,
population rate, growth rate,
employment, education rate
etc. has direct impact on
business prospects of food
industry (Teece, 2010).
McDonald's, thus, undertakes
effective market research for
enhancing business operations
Changing technology refines
business operations,
management and cost factors
of business in food industry.
McDonald's has adopted
advanced and well developed
technological factors to
manage and maintain the
business operations and
efficiency.
The impact of legal and
legislative frameworks is wide
on the business operations of
the company. The business
policy of McDonald's is
developed in accordance to
local regulations and
government policies (Akan
and et.al., 2010).
4

Competitive analysis
Illustration 2: Porter Five Force analysis
(Source: Kim, 2011)
The competitive analysis of the business helps the company in analysing the competitive
position of the business within the market. It is one of the most significant tools for analysing
business growth and developed within the market (Larsen, Tonge and Lewis, 2011). Companies
undertake competitive analysis in order to analyse the competitive business position and develop
strategic planning to manage competitive edge. The competitive analysis for McDonald's is as
follows:
AXIS IMPACT ANALYSIS
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Supplier's power Low Raw material needed for the production of
products are agricultural based and easily
available.
Buyer's power Moderate McDonald's has developed unique demand
and brand recognition within the market.
Consumer loyalty is high for business and
price sensitivity is low (Akan and et.al.,
2010). However, buyers have moderate
bargaining power in the market.
Threat of new entry Moderate Food industry is growing widely and
individual cafes and food trucks have
developed highly within the market. These
new entrants have subsided with the
business operations substantially for the
company in different parts of the world.
Threat of substitutes High Companies such as Burger king, KFC,
Burger king, Subway, Pizza Hut etc. has
posed high challenges for the business
development and growth (Aljukhadar and
Senecal, 2011). Consumers have
subsequent option to shift to different
business units in absence of McDonald's.
Industry rivalry High Food industry is expanding vastly and
frequently within the economy.
Developing health consciousness within
the economy has posed wide market threat
for the company. Companies such as
Subway, Retail giants as Tesco, M&S etc.
are posing threats to McDonald's directly.
6

STRATEGIC ANALYSIS
Global strategy analysis
The strategic analysis of the business plays a significant role in determining the
competitive positioning and growth opportunities within the market. McDonald's has developed
well developed brand recognition within the market. The growth measures of the company are
high and well measured (Matzler and et.al., 2013). The mission of the business is to become
consumer's favourite place to eat and drink while aligning the global operations towards
developing good environment for people to work and creating positive presence in the
community. It focuses on delivering quality, services and value to consumers by developing a
symbol of trust.
The stated mission statement of the business reflects its focus on attaining the expectation
of every stakeholder of the business including employees, consumers and community. The
strategic policies of business is to maintain quality and deliver value to the consumer (Cameron
and Green, 2012). It has been effectively examined that the business operations of McDonald's
are aligned with its internal business policy. It strategic mantra 'think global act local' has helped
the business unit in attaining high growth and development prospects. Moreover, well structured
means of control, communication and expansion has helped the company in creating flagship for
its products and services.
Strategic capability analysis
The internal and external business analysis of McDonald's has helped in effectively
analysing the business operations and growth measures for the company. The capability of the
business may be evaluated by summarizing the business operations and its strategic position.
SWOT analysis will be carried out to analyse he same.
STRENGTH WEAKNESSES
 Renowned brand image globally
 Strong financial position
 Well managed supply chain in the
international market
 Cost effective business operations
 Innovation and creating integral
 Low market valuation (valuation of
burger king higher that McDonald's)
 Declining brand reputation due to
unhealthy products
 Limited product variety
 Cost of maintenance high
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business parts (Diefenbach, 2011)
 Well structured business management
 Strong employee policies and measures
 Competitive business policy
OPPORTUNITIES THREATS
 Product development product line
expansion
 Promotional gaps in the market
 Menu development for healthy food
services
 Rising competition in the market
 Changing consumer perception for
unhealthy products
 Rising health conciousness in the
market
 Declining market sales (Mcdonalds,
2015)
 Negative promotion in the market
8

From the SWT analysis of the business it can be effectively determined that the business
operations and management of McDonald's has developed effective impact on the growth of the
business however issues related to changing consumer perception and rising conciousness for
healthy products has created an ineffective impact on business development. The BCG growth
matrix will thus analyse the product line and strategies that the company has implemented in
order to analyse the capability of the business.
Different quadrant of the BCG Matrix reflects link between market growth and market
share of the business unit. McDonald's presently falls in the Cash Cow quadrant as it has
developed vast market share globally but growth opportunity of the business has become limited
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Illustration 3: BCG Growth Matrix
(Source: Strategic Management - Meaning and Important Concept. 2015)

due to rising demand for healthy products and services. The organizational capability for the
same is as follows: Stars: These considered the hit products of the company which has high market growth
and high market share in the economy. These products create an effective impact on the
sales of the company (Wheelen and Hunger, 2011). Products such as Big mac, Egg
muffin, McVeggie, Fries etc. are carried in the category. These products have help the
business to grow and expand within the economy. Dogs: This quadrant of the business represent products which has low market share and
low growth aspects within the economy. McDonald's has few variants which falls in this
category and has created an effective impact on the sales of the business. Products such
as McFlurry. Cash Cow: This quadrant represent products and services which has low growth aspects
within the economy but has developed high market share. Products such as fries and
classic ice-creams of McDonald's falls in this category as these are the core competencies
of business (Strategic management. 2014). In order to enhance business growth the
company must focus on product development to enhance competitiveness in the market.
 Question mark: This quadrant represents products which has low market share but has
high growth aspects within the economy. Products of McDonald's such as slim menu, low
calorie burger etc. falls in this category and has developed an effective impact on
business development measures within the economy.
Strategic performance in the economy
The strategic performance of the business creates an effective and well developed impact
on strategic management of the business. The analysis of business performance of McDonald's
has helped the company in creating an effective and well developed impact on strategic
development in this highly competitive market. The use of Porter Generic strategies will help in
analysing the business strategy of the company which has helped it in developing an edge within
the economy.
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Illustr
ation 4: Porter's generic forces
(Source: Strategic management. 2014)
 Cost leadership: McDonald's has developed an effective a well developed means of cost
effectiveness within the market. The company offers affordable food product of high
quality and taste in low cost. This has developed a global demand for the business. In
addition, this strategy has helped the company in delivering high value to its target
market(young consumers) (Akan and et.al., 2010). McDonald's has developed strong
internal operations to attain the business objective for the company. Differentiation: This strategy demands variety of products and services in order to meet
different consumers choices and needs within the economy. McDonald's focus on
strategic growth has focused on product differentiation widely. The company focuses on
innovation and creation efficiently within the market (Arnold, 2013). This has helped the
business in attaining high business growth within the market. For example develop of
slim menu helped in attracting wide range of consumers and buyers in the economy.
 Focus: This generic strategy focuses on analysing focused needs and demands of the
buyers. McDonald's lacks efficiency in this segment of business. The strategic growth
and development of the company has helped in attaining effective brand recognition
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however current market trend and changing needs of the buyers has resulted in declining
sales and shifting consumer needs. The implementation of focus strategy by developing
healthy products and services in the present market will help it in attaining high brand
value. McDonald's has low range of healthy products which has impacted the sales of the
company adversely.
STRATEGIC DEVELOPMENT FOR BUSINESS GROWTH
Strategies to defend core business practices
The overall analysis of the business operations of McDonald's has revealed that the
company has become the largest food chain in the world and has developed high brand value in
the economy. However, changing perspectives of the consumers and rising awareness about
health related products has affected the business sales of the company adversely. In addition,
negative promotion of the business has also affected the global sales in the market. The impact of
this has been observed by analysing shift of consumers towards substitute products and low
consumer loyalty as well (Kim, 2011). In order to overcome the stated issues effective the
implementation of Ansoff's growth matrix has been done.
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 Market penetration: This strategy focuses on developing current product in current
market. McDonald's has effectively adopted this measures to enhance business sales and
growth within the economy (Sharma, 2013). The company effectively managed the
business excellence by developing well developed promotional measures while analysing
the local needs and preferences of the people. This has helped the company in enhancing
local demands and sales maximization in the local market. However, with changing
social perspective the impact of sales promotion and business development is low in the
economy. Market development: This strategy focuses on international business development. The
economic growth impact of the business is high and well developed. McDonald's focuses
on expanding its business operations widely within the market which will helps the
company in attaining advantage of local demand. This strategy has helped the company
in developing the largest food chain in the world however falling sales in the market is
now rising concern for the business.
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Illustration 5: Ansoff's Matrix
(Source: Strategic Management - Meaning and Important Concept. 2015)

 Product development: This is yet another strategic measures which helps business units
in creating effective and well developed impact in competitive market. The major
business concern of the company is falling sales and shifting consumer demands. In order
to effectively deal with the issue the company is now focusing of product development
and differentiation (Howard, 2010). The current need for healthy products and services in
the market is addressed by McDonald's by offering innovative and new product range to
consumers. The slim down menu of the company is an effective example for the same.
Moreover, business idea related to low calorie burger and healthy products focuses on
attaining competitive edge for the business.
 Differentiation: This business strategy focuses on diversifying the business from core
businesses in order develop market leadership and wide sales within the economy.
McDonald's has developed a market leadership in the current market and product.
Moreover, this will be a very risky and costly strategy for the business. Hence, the
company is presently focusing on developing business growth through unique measures
and strategies.
Global branding
In order to manage market leadership within the economy McDonald's have adopted a
well developed means of strategic growth and development. The focus of the business is to
expand business operations while attaining consumers needs efficiently. The marketing and
promotional strategy of the business is well developed and effective for present market
competition. Global branding has helped the business in developing effective brand image in the
international economy. McDonald's has adopted A stabilized means of branding strategy where
the operational business has adopted localised strategy however the strategic planing and
development is done on the standardised basis. This has helped the company in effectively
attaining local needs and requirements. The product development of the company has adopted
localised approach for the business (Zhou and Wu, 2010). This has helped the company in
effectively attaining local needs and requirements of the consumers. However functional
planning branding measures such as store layout, physical design, product quality and taste etc.
are developed on the standardised basis. This has created an effective and well developed impact
on business growth and development of McDonald's. Hence, on the basis of above report it can
be effectively analysed that McDonald's has adopted an effective and well planned strategic
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operations. The impact of the same has been analysed on the profitability and growth of the
company.
CONCLUSION
Every business organization operates with the motive to earn maximum profits through
sales maximization and high revenue generation. Changing market environment and rising level
of competition has created wide challenges for business development. Global factors such
international market trends, changing consumer preferences, global demand, distribution
measures etc. has complicated the industry widely within the economy. The impact of the same
is observed in strategic planning and development of business units. McDonald's is quite
successful in fast food industry with efficient strategies and quality standard products and
because of it has enabled to gain competitive advantage. It can be witnessed because of the
international market growth of the company.
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