Strategic Management Plan for McDonald's in Ireland

This assessment focuses on developing a strategic management plan for McDonald’s in Ireland to gain and sustain competitive edge. It includes situational analysis, internal and external analysis, and strategic alternatives. The TOWS matrix is used to recommend corporate and business strategies. The output is in json format.

Running head: STRATEGIC MANAGEMENT 1
BA (Hons) Business Studies
Strategic Management 1
Student’s name:
Name of the university:
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Table of Contents
Introduction......................................................................................................................................2
1. Situational Analysis.....................................................................................................................2
1.1 Internal Analysis....................................................................................................................2
1.2 External analysis....................................................................................................................7
2. Strategic Alternatives: Recommended Corporate & Business Strategies.................................10
2.1 Corporate strategy................................................................................................................10
2.2 Business Strategy.................................................................................................................13
Conclusion.....................................................................................................................................14
Reference List................................................................................................................................15

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Introduction
This assessment focuses to develop a strategic management plan for McDonald’s. As the
companies move forward in the twenty-first century, gaining and sustaining competitive edge to
be necessary to have a significant impact on market share. As stated by Liu et al. (2018),
employing strategic management analysis provides forward-thinking perspectives to drive
business onward as the world marketplace continues to evolve. This particular assessment
requires applying strategic analysis models and findings based on McDonald’s. McDonald’s is
an American fast food chain and it was started its operation in the year 1940. McDonald’s has it
headquarter in Chicago and current revenue of the organisation reached US$ 22.82 billion.
McDonald’s has its operation over 120 countries and it has more than 69 million customers.
McDonald’s sells mainly hamburgers, French fries, chicken products, soft drinks and breakfast.
McDonald's started its journey to Ireland in 1977 and it came with drive-through restaurant in
Ireland (Mcdonalds.ie 2018).
This assessment critically appraises the relevance of strategic management concept and
empirically research on McDonald's. This assessment features on developing the strategies which
help McDonald's to make position in Ireland market favourably in relation to competition. In the
following section of the assessment discusses the resources and capabilities of McDonald's in
terms of ability to confer sustainable competitive advantage. McDonald's strategies for exploiting
foreign entry are discussed in this assessment.

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1. Situational Analysis
1.1 Internal Analysis
SWOT analysis
Strengths 1. McDonald's is the largest fast food network in McDonald's.
McDonald's is the second largest restaurant chain in the world as it has
more than 37,240 restaurants in more than 120 countries. McDonald's
can share its costs over many restaurants as it makes McDonald's as one
of the best and cheapest places to eat.
2. McDonald's identified the better ways to perform the tasks as it
manages the restaurant and hires new people to gain huge revenue.
3. McDonald's exercises its market power and they bring the products
from the suppliers' very lower prices.
4. McDonald's restaurant allows the chain to reach more customers and it
is the most recognised brand in the restaurant industry of Ireland.
Weaknesses 1. McDonald’s faces issue in finding the perfect locations for the stores
to be opened.
2. Annual dividend hikes are likely to continue and the growth rate is
slowing
3. McDonald's has declined its income growth and revenue
4. In Ireland, McDonald’s is experiencing its declining market share to
Subway
Opportunities 1. McDonald’s has its opportunities in international expansion and it

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serves only 2% people in the world
2. Growing interest in outdoor eating can be helpful for the organisation
3. Joint Ventures with retailers will be helpful for McDonald’s
4. The organisation needs to bring social change through innovation
within healthier lifestyle food
5. McDonald's can increase the business through using CRM and it has
improved in a value proposition
Threats 1. High competition in the industry is obvious
2. It is in the matured or overstored industry (Euromonitor.com 2018)
3. More health-conscious consumers are in the rise
4. McDonald's has been observing the fluctuation of foreign exchange
rates in the economy
5. McDonald’s has also been observing recession in Ireland which may
affect the retailer sales
Value chain analysis
Primary Activities
Inbound Logistics McDonald’s purchases raw materials and raw vegetables from the pre-
defined and fixed suppliers. McDonald’s uses the strategy of using the
same suppliers to make their food items to stop increasing labour and
capital. McDonald's has also used backwards vertical integration as
they replaced some of the suppliers to reduce the cost and to ensure
the products to be well priced (Jaligot et al. 2016). Inbound logistics of

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McDonald’s are associated with local grocery stores with fresh
vegetables.
Operations McDonald’s changed their design of kitchen as they don’t use lots of
equipment and stations to prepare food. McDonald’s makes their
preparing operation in front of the customers so that they can make the
food preparation transparent. At many of the stores of McDonald’s
Ireland, the customers have self-service kiosk (Mudambi and Puck
2016). McDonald's has a mass production process and its own
distribution network so that the stores can handle the enormous
amount of restaurant needs. Computer system keeps track of the
billing and the stores have regular schedule instead of waiting request.
Outbound Logistics McDonald's focuses on energy conservation and sustainable packaging
along with waste management. McDonald's is dedicated to innovation
and they use environment-friendly bikes to reach the customers with
food. McDonald's continues to optimise the menu choices.
McDonald's has its own distribution channel and it has resolving
conflicts among the channel entitles.
Marketing and Sales McDonald's does an extensive advertisement campaign using social
media like Facebook, Twitter and Instagram. McDonald's males the
advertisement using billboards, Signage and sponsors. McDonald's
uses the logo in the sports league. McDonald's has its tie-up with many
co-operative advertising agencies. McDonalds's also prepares
Television advertisements.

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Service McDonald’s provides free Wi-Fi where the customers can get their
work done
McDonald's has a self-service system
McDonald’s gives Arch Card as it is a pre-paid card to the customers
to use the quick and convenient way to pay at the stores (Crawford
2017)
McDonald’s also provides party rooms where the customers can
celebrate their occasion. McDonald’s also uses arrangement for play
places for the children.
Support Activities
Firm infrastructure McDonald’s has one of the best infrastructures in modern days where
the management has used advanced IT and they maintain green
activities.
McDonald’s strives to give eco-friendly stores and it reflects on the
sustainability
McDonald’s has come up with Digital Document Infrastructure
Human resource
management
In Ireland, McDonald’s has more than 32,000 employees and
McDonald’s uses proper recruitment and selection policy to recruit the
employees in hourly paid positions (Begum 2015).
McDonald’s uses the flexible working hours and the employees are
engaged in activities like responsibilities. McDonald’s has reward
policies for the employees to have the current and future supplies and
demands of works.

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Technology
development
McDonald's has entered a deal with Fujitsu regarding IT support and
McDonald's has IT outsourcer which would support point-of-sale
system and back-office operations for franchise outlets.
McDonald’s has started providing digital ordering platform and kiosk
at the stores which can reduce the rime take for the meal. McDonald’s
has been using the technologies in menu innovation, door delivery and
an efficient platform.
Procurement McDonald's uses E-procurement System which is basically the main
reason for the well-maintained supply chain management. It provides
the backbone of the logistics operations. Procurement hub of
McDonald's Ireland was launched in the year 2001. Procurement of
McDonald's reduced the cost also.
1.2 External analysis
PESTLE analysis
Ireland is parliamentary, representative democratic republic and the real power of the
nation is vested upon the leader of the government. Ireland has 15 cabinet ministers and political
condition is at present stable for the nation. The average value of political stability in Ireland is
1.16 points which show good and strong politics (Chubb 2018). Political power helps the
companies to grow in the domestic market.
Current GDP of Ireland reached US$ 325.83 billion and GDP growth of Ireland is 6.7%.
An inflation rate in Ireland is 0.2% and the labour force of Ireland is at present 2.22 million

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(O’Hagan and Newman 2014). The average salary of the people in Ireland is €2,479 monthly and
Ireland is ranked 17th in Ease-of-doing-business. In Ireland, the restaurant industry costs €2.1
billion and restaurant industry has its growth rate of 4.9% (Euromonitor.com 2018). In Ireland,
the restaurant industry shows strong economic performance, strong tourism statistics, continued
growth in employment and uncertainty over the ultimate impact of Brexit and food inflation can
create profitability challenges.
In social factors, Ireland experienced rising disposable income, busy lifestyles in cities
and increasing cultural diversity which would help to increase the sales of food items. In recent
time, the people in Ireland started eating the healthy food and leading life healthy lifestyle trend.
Buying habits of Ireland are changing with time which impacts on business activities. Disposable
income of Ireland reached 233013 EUR Million in 2017 (DeVogli et al. 2018).
In technology, Ireland focuses more on online security, social commerce and advanced
machine learning. In the food industry, Ireland has been experiencing changes in increasing
business automation. McDonald's will face increasing sales through a mobile app and
McDonald's can moderate the R&D activities in the industry.
In Ireland, the firms have to pay the corporation tax of 12.5% and The Finance Act of
2014 removed the requirement of accounting. The Companies Act 2014 consolidates the pre-
existing companies. McDonald’s may face the issue regarding the increasing health regulations
and rising minimum wages.
Ireland drives by EU policies in case of the environment. In the restaurant industry;
companies may follow the issue of rising interest for corporate environmental programmes,
increasing emphasis on sustainable business and changes in climate conditions.

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Porter’s Five Forces Analysis
Porter’s Five
Forces
Description Forces
Industry rivalry Industry rivalry is high in Ireland as there are many other
fast food chains apart from McDonald’s, Supermac’s,
Five Guys, KFC, Subway and Abrakebabra. Value of the
fast food industry in Ireland has estimated 9 billion Euro
in the year 2020 (Euromonitor.com 2018). Franchisee
based business in Ireland has been observing the rapid
growth in recent time.
High
Threat of
substitutes
Eight major food chain companies are registered
members of the Irish Franchise Association. McDonald’s
substitutes are AIL Group, Supermac’s, O’Brien’s
Sandwich, Bagel Factory and Abrakebabra.
High
The threat of
new entrants
Fast food store opening does not need large capital;
however, marketing and promotions are costly for the
new entrant to compete with McDonald’s.
Medium
Bargaining
power of buyers
Bargaining power of the customers is high as they have
enough options in the market to switch their choices.
McDonald’s Irish market is very strong and McDonald’s
has loyal customers here (Nightingale et al. 2015).
Medium
Bargaining
power of
Suppliers' play important role in setting the price for the
food items. However, McDonald's has its own suppliers
Medium

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suppliers that provide the raw materials at very cheap prices
(Hanson et al. 2016).
2. Strategic Alternatives: Recommended Corporate & Business Strategies
2.1 Corporate strategy
TOWS Matrix
External Factors
Internal Factors
Opportunities (O)
1. Healthy alternatives and
increase menu options
2. Strengthen its presence in
the mobile phone
3. Strategic expansion in
the unsaturated market
Threats (T)
1. Increase labour cost
2. Increase foreign
exchange risks
3. Intense competition
Strengths (S)
1. International presence
2. Focus on the quality of
the food items
3. Menu diversification
and food items
innovation
SO
Using the strength of
international presence and
its power of having menu
diversification, McDonald's
can expand the market in
Asian countries where they
do not have stores or have
ST
McDonald’s needs to
use their food quality
to overshadow the
competitors from the
market. Negative
publicity is an issue
for McDonald’s; they

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very fewer numbers of
stores. Therefore,
McDonald's needs to have
the strategies which would
help to increase the market
share.
can use their better
food quality in order
to make an impression
of positive publicity
in the market.
McDonald’s needs to
use technologies and
equipment to lower
down the use of
labour.
Weaknesses (W)
1. High employee
turnover rate
2. Finding issue in
finding locations for
stores
3. McDonald's is facing
the issue in declining
income growth
WO
McDonald’s has been
facing the issue of declining
the income growth and
revenue generation,
therefore, McDonald’s can
use the mobile phone
platform to strengthen the
presence in the market and
they can reach wider
customers through the
mobile platform.
WT
High employee
turnover in
McDonald’s stores is
an issue and
McDonald's has a
threat in increased
labour cost.
Therefore,
McDonald’s needs to
use the training
strategy so that they
can retain the existing

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employees.
Strength-Opportunities (SO)
Using strength and opportunity in the market, McDonald’s can use the growth strategy of
market development. McDonald's can try to expand the business in Asian countries and
unsaturated places. Market development strategy is involved in selling existing products into the
new markets (Harrington et al. 2017). McDonald's, therefore, can enter the new geographical
market with the diversified menu and human resources.
Strength-Threat (ST)
By focusing on the quality of the food items, McDonald's can tap large numbers of
customer-base. Food quality and wide international presence will help the organisation to have
positive publicity. Positive publicity is a great marketing stunt for the organisation and it would
help to reach a wider customer base.
Weakness-Opportunity (WO)
It has been observing that more people use Smartphone for daily use and McDonald’s
have the weakness of lower revenue generation in recent time. Therefore, McDonald’s can use
the strategy of mobile marketing to aim at reaching the target audience via mobile app, SMS,
Social Media and MMS.
Weakness-Threat (WT)
Learning and development strategy is helpful to retain more employees as the employee
turnover rate is high in McDonald’s. The aim of the training and development to make the

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employees skilled for the current job role and it would help to develop the skills of the
employees in future responsibilities and roles.
2.2 Business Strategy
Porter’s generic competitive advantage
As stated by Tansey et al. (2014), firm’s relative position in an industry makes the firm’s
profitability and it is the fundamental basis for the average profitability and sustainable
competitive advantage of the organisation. There are two basic kinds of competitive advantage
for the organisation to possess; differentiation and low-cost leadership strategy. Focus strategy
has its two different variations differentiation focus and costs focus.
Cost leadership strategy: Cost leadership strategy sets out the firm to become the low-
cost producer in the market and the organisation has to find out the sources of the cost of
advantage to depend on the structure of the industry. Low-cost production always exploits all
sources of the advantage of the cost (Banker et al. 2017). McDonald's uses the primary generic
strategy of cost leadership as it helps the firm to reach large numbers of customers as the
customers always find the products with lower cost and with the best quality. McDonald's offers
products which are relatively cheaper compared to another fast food chain in the industry of
Ireland and across the globe. Menu diversification of McDonald's makes in such a way so that
the company can offer the product with lower cost. McDonald's takes the raw materials from the
same set of suppliers and McDonald's has its own suppliers from the local market. Inventory
system of McDonald's is very unique and use of equipment also helps the firm to provide the
food item in lower price. McDonald's uses vertical integration as it is one of the strategies of the
firm to make a combination of two stages. Low cost in the industry provides better profit and it

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increases the market share in the new market and existing market. Cost leadership strategy in
Ireland helps to improve the sustainability of the organisation and it also creates more capital
which can be used for the growth of the organisation.
Differentiation: Through differentiation strategy, an organisation wants to be unique in
the industry which must provide value to the customers. McDonald's uniquely positions itself
through diversified menu options where the customers can also find a self-service kiosk.
McDonald's gets the reward for the uniqueness with premium positioning and McDonald's does
the strategy in a different way to target the family customers so that the broader base can be
targeted. Taste and quality of the food items of McDonald's make the organisation different from
others. McDonald's started to prepare the food items in front of the customers and it increased
the transparency for the customers.
Conclusion
It has been noticed that the external environment of Ireland has been helping McDonald's
to increase numbers of stores in Ireland market. Strengths and opportunities of McDonald's help
the firm to increase the global presence. Porter's five forces analysis also proves the fact that
McDonald’s needs to consider the competitors in the market as the Ireland market is full of the
fast food chain. McDonald's can use the achievement of growth strategy through market
development as McDonald's can use their strengths and opportunities to expand the market in
different sections of Ireland and in the Asian community. Competitive strategy of McDonald's is
lower cost strategy through vertical integration which would help McDonald's to reach wider
customers from all sections.

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