SWOT Analysis of McDonalds in Saudi Arabia

This report discusses the SWOT analysis of McDonalds in Saudi Arabia, including its strengths, weaknesses, opportunities, and threats. It also includes a competitor's analysis, demographic trends, and the Ministry of Health initiatives taken by the company.

Running head: STRATEGIC FINANCIAL PLANNING AND DECISION MAKING
Strategic Financial Planning and Decision Making
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1STRATEGIC FINANCIAL PLANNING AND DECISION MAKING
1. Introduction
The food and restaurant industry is one of the fastest growing and high revenue
gaining industries in the contemporary world (Popkin, 2014). One of the significant players
in this industry is McDonalds. It is one among the well-known international restaurant chains
to enter in Saudi market. This report shall elaborate on discussing the key strengths and
weaknesses of McDonalds in the Saudi Arabian region. It shall also assess the opportunities
and threats present for it in the Arabian market. A simple SWOT analysis tool shall be used
for identifying and assessing the internal strengths, weaknesses and external threats and
opportunities for McDonalds. Furthermore, this paper shall also present a brief competitor’s
analysis of the company along with its demographic and the ministry of health initiatives
taken by it.
2. Discussion
2.1. SWOT analysis of McDonalds
Strengths: It is one of the oldest and well-known brand in the fast food industry
(Boyland, Kavanagh-Safran & Halfor 2015). It has a very strong global brand image. With
the same, the company have a very strong position in both domestic and global market and is
at the same time, very strong in financial context. The quality of the food is also good and has
Halal certifications. There is a very strong customer and marketing engagement in
McDonalds.
Weaknesses: There is lack of product innovation within McDonalds. With the same,
many customers have claimed that most of the products of McDonalds are calorie heavy
(Kanagal, 2015). Also, in past few years, the reputation of McDonalds has been declined due
to several HR issues and legal hassles that the company has faced. Along with this, one of the
significant weaknesses of McDonalds is the dissatisfied franchises. The franchise of

2STRATEGIC FINANCIAL PLANNING AND DECISION MAKING
McDonalds have said that they feel pressurised for adopting the new value menu of the brand
and add new products and new equipment (Ishak, Khalid & Sulaiman, 2018). Also, they
pointed the installation of kiosks as one of the points of friction.
Opportunities: One of the significant opportunities for the company is offering
innovative product lines to the Saudi Arabian market such as fruit snacks and hot baguettes. It
could also make its business model CSR focused and make use of green energy and
recyclable packaging. Furthermore, the company could also get engaged in co-branding
activities with the other partners like the UAE government for reducing its carbon footprint
and diversify its services.
Threats: The threats present for McDonald in the Arabian market is many. It faces
stiff competition from the national and the international retailers of the food products. It is to
note that McDonalds compete on the basis of factors such as price, variety of men,
convenience, quality of the product and service. Although it is doing a good job on most of
these metrics, it is to mention that the quality of product is something, which management
needs to be working on its quality of product as customers are now more conscious about
their health and the product quality.
2.2. Competitors’ analysis
McDonalds KFC Corporation Burger King
Strengths  Good brand
image
 Strong product
value
 Innovative in
producing new
lines of products
 Strong trade
market recipes
 Market leader in
the world
 Strong brand
image
 String position in
Saudi Arabia
 Strong market
position
 Robust financial
performance
 Greater franchise
mix in Saudi
Arabia
Weaknesses  Over exposure in
global market
 Children are the
target audience
 Slow drive by
 Negative
publicity
 High rate of
employee
turnover
 Scattered
marketing
campaign
 Market
concentration

3STRATEGIC FINANCIAL PLANNING AND DECISION MAKING
means of
services
 Lack of strong
efforts on
marketing
2.3. Demographic trends
The demographic segmentation of McDonalds in Saudi Arabia is based on three
segments in terms of:
Age group
As far as the age group is concerned, it can be argued that most of the McDonalds
customers are teenagers and adults. Though the official age group segmentation is based on
8-45 years. In this context, the research of Lees Winchester & De Silva (2016) it is important
for an organization to deal with the age group demographic segmentation properly in order to
render a better market capitalization.
Cultural
In case of the cultural segmentation, McDonalds is very concerned about its Islamic
customers. As most of the customers in Saudi Arabia are belonged to Islam therefore the
services and food products are also followed the specific norms (Mumuni & Mansour, 2014).
Halal Certificate is very important to open a business in Saudi Arabia and McDonalds
follows this respectfully.
Gender
The gender section is also an intricate part of the demographic segmentation of
customers. Most of the McDonalds customers are females. Nevertheless the male customers
are also visit the McDonalds outlets.
2.4. Ministry of Health initiatives taken by the company
McDonald’s in Saudi Arabian region is very scrupulous towards following the laws
related to health and food of the KSA Central, the Northern and the Eastern regions so as to

4STRATEGIC FINANCIAL PLANNING AND DECISION MAKING
make sure there is a highest Halal and Food Safety measures (Henderson, 2016). It is to note
that the food safety regulations varies from one nation to other and there are several range of
standards that are set by the local government authorities for global regulatory bodies like the
WHO (World Health Organisation). However, McDonalds generally sets the standards of its
own country above the highest of the international standards. The meat patties of McDonalds
are produced from 100% pure halal beef and that too, with no added preservatives and
additives or any kind of other harmful enhancers. Also, they prepare and package the beef
patties at the McDonald’s approved meat plants only. Along with the inspections of the beef
arrivals, the suppliers undertake different separate quality checks on all batch.
3. Conclusion
Hence, from the above analysis it is to state that McDonald is working successfully in
the Arabian continent. It is taking several initiatives to ensure highest Halal and Food Safety
measures in its operation. However, there are several weaknesses it possess and several
potential threats that it confronts in present days. Hence, it is very important for it to take
necessary actions for turning its weaknesses into strength and the threats into potential
opportunities.

5STRATEGIC FINANCIAL PLANNING AND DECISION MAKING
4. References:
Boyland, E. J., Kavanagh-Safran, M., & Halford, J. C. (2015). Exposure to ‘healthy’fast food
meal bundles in television advertisements promotes liking for fast food but not healthier
choices in children. British Journal of Nutrition, 113(6), 1012-1018.
Henderson, J. C. (2016). Halal food, certification and halal tourism: Insights from Malaysia
and Singapore. Tourism Management Perspectives, 19, 160-164.
Ishak, S., Khalid, K., & Sulaiman, N. (2018). Influencing consumer boycott: between
sympathy and pragmatic. Journal of Islamic Marketing, 9(1), 19-35.
Kanagal, N. B. (2015). Innovation and product innovation in marketing strategy. Journal of
Management and marketing research, 18, 1-25.
Lees, G., Winchester, M., & De Silva, S. (2016). Demographic product segmentation in
financial services products in Australia and New Zealand. Journal of Financial Services
Marketing, 21(3), 240-250.
Mumuni, A. G., & Mansour, M. (2014). Activity-based segmentation of the outbound leisure
tourism market of Saudi Arabia. Journal of Vacation Marketing, 20(3), 239-252.
Popkin, B. M. (2014). Nutrition, agriculture and the global food system in low and middle
income countries. Food policy, 47, 91-96.

6STRATEGIC FINANCIAL PLANNING AND DECISION MAKING
5. Appendices:
Appendix 1: SWOT analysis of McDonalds in UAE
Strengths
Good brand image
Strong product value
Innovative in producing
new lines of products
Weaknesses
Over exposure in global
market
Children are the target
audience
Slow drive by means of
services
Opportunities
Partnership with the UAE
government to reduce
the carbon footprint
They have the ability to
add healthier lines of
food
Advertising strategy
Threats
Changes in commodity
prices
Emergence of other fast
food
Competitors Burger King
and KFC
Heavy investments on
promotion campaigns