Business Health Check Report: McDonald's Performance Analysis

This report provides a comprehensive business health check for McDonald's, a prominent player in the fast-food industry. It begins with an introduction to the concept of a business health check and its importance, especially within the rapidly expanding hospitality sector. The report then delves into McDonald's objectives and the factors that influence its operations, including both internal strengths and weaknesses, and external opportunities and threats. It conducts a thorough SWOT analysis and PESTLE analysis to assess the business environment. Furthermore, Porter's Five Forces model is used to analyze the competitive landscape. The report explores potential improvements using Ansoff's growth matrix. It also evaluates the effectiveness of various business areas and develops plans to enhance them. Finally, the report examines the current skill sets of McDonald's management and staff and proposes plans for their skill development, including methods to enhance their capabilities and address any identified gaps. The report concludes with recommendations to ensure McDonald's continued success in the competitive market.

Business Health
Check

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
1.1 Objectives of the Businesses............................................................................................4
1.2 Factors that impact on the business..................................................................................5
1.3 Potential improvement to the business organisation and operation.................................8
M1 SMART objectives.........................................................................................................10
D1 Analyse how the elements of Ansoff’s Growth Matrix have contributed to improvements
..............................................................................................................................................10
TASK 2..........................................................................................................................................10
2.1 Effectiveness of the business..........................................................................................10
2.2 Develop plans to improve the business, justify their value............................................11
M2 Evaluate how effectiveness of areas of the business can contribute to organisational
growth...................................................................................................................................12
D2 Critically analyse how plans developed can lead to an improvement in business.........12
TASK 3..........................................................................................................................................13
3.1 Current skills of management and staff..........................................................................13
3.2 Plans for the development of skills for management and staff......................................14
M3 Analyse the effect current experience, skills and abilities of management and staff....15
D3 Methods that can be used to develop the skills of management and staff.....................15
CONCLUSIONS............................................................................................................................16
RECOMMENDATIONS...............................................................................................................16
REFRENCES.................................................................................................................................17

INTRODUCTION
Business health check involves comprehensive evaluation of important business
elements. In simple terms, business health check is simply diagnostic of organisation which will
assist in minimising upcoming threats as well as help in gaining future opportunities (Abdelhak,
Grostick and Hanken, 2014). For hospitality sector company business health check is important
because it is fast and wide growing industry. Thus, it is essential for organisation working within
this sector to check health of their business. This assignment is based on McDonald's which is
part of hospitality sector founded in 1940. Richard and Maurice McDonald is founder of
company as well they are serving at worldwide level. Respective reports will going to discuss
environment of business firm through conducting PESTEL, SWOT as well as porter's five force
model. In addition to this, for further improvement within organisation Ansoff's growth matrix
will be utilise that help in possible improvement. Furthermore, effectual areas of business will be
explained along with this improvement plan will also design. In the end of project, present skills
of management and staff will be discussed as well as for their development of these skills plan
will be designed.
TASK 1
1.1 Objectives of the Businesses
McDonald's is fast food serving organisation founded within 1940 by Richard and
Maurice McDonald (Arntz-Gray, 2016). They are serving at worldwide level but their
headquarter is at San Bernardino, California, US. Respective organisation is famous as well as
well known for their milkshakes, hamburgers, soft drinks, cheeseburgers and so on. In addition
to this, McDonald's is largest chain by their serving facilities which is approx. 69 million
customers per annum within approximately 100 countries as well as they have across 37,855
stores in 2018.
Every business firm have their some objectives behind running it same as McDonald's
also having which are long term as well as short term. Thus, main objective of respective
organisation is to be customer's favourable place to eat food. In addition to this, McDonald's
make sure that products and services offering by them are of fine quality and satisfy customers
need and wants.

1.2 Factors that impact on the business
For running business in competitive market, both internal and external factors can
influence and impact their operation and activities. The internal factors can be controlled as they
are within organisation whereas external factors are uncontrollable as they are outside
organisation. For knowing their impact on business activities of McDonalds, SWOT and
PESTLE analysis has been done which is described below:
SWOT Analysis
This approach is used for analysis of internal business which has positive and negative
impacts to organisation. It is strategic tool that assist in identification of strengths, weaknesses,
opportunities and threats for assigned project. In order to know strong and weak point, SWOT
analysis has been conducted by McDonalds which is as follows:
 Strengths- McDonalds has strong brand name, reputation and image in the market. It is
considered as first fast food organisation which consists of more than 31000 restaurants
providing fires and burgers in 120 countries (McDonald's SWOT Analysis, 2019). This
has large market share which is 19% from others and providing high quality products.
The respective organisation focuses on training their manager to serve their consumers in
effective manner.
 Weaknesses- There is some weaknesses faced by McDonalds in terms of unhealthy food
image, problem related to health issues, losing of consumers due to high competition,
high staff turnover, dissatisfied franchisees. The dishes provided by respective
organisation contain large calories but no nutrition and large number of consumers
support other brand such as Burger king, Yum and others.
 Opportunities- McDonalds has an opportunity to growth in fast food industry as
requirement of consumers are changing day by day which leads to chance to grow in
respective sector (Thorat and Neuman, 2012). They can use green packaging and energies
solution for advertisement and marketing strategies. It has also opportunities to expand
business in other countries as people favours and like dishes provided by respective
organisation. They can develop new products for their consumers such as healthy dessert
and fresh burger.
 Threats- There is some threats which can impact business of McDonalds. There are
many competitors of respective organisation such as Burger king, Yam; Wendy’s

providing same types of dishes to consumers. The dishes provided by McDonalds is
creating health crisis as they contain more calories than nutrition.
PESTLE Analysis
It is described as techniques which are used to monitor and analyse macro environmental
factors which impact business performance and its activities and operations. This is used by
organisation when they want to enter at global level or start new venture. It comprises of six
elements which impact business and functions. The PESTLE analysis of McDonalds are
described below:
 Political Factors- This factor can provide both opportunities and threats to growth and
success of respective organisation (PESTEL Analysis of McDonald's, 2019). Due to
increase globalisation there is high government plans and policies towards public health
which can impact business and increases their cost. The trade agreement can make
positive and negative impact to McDonalds as each and every countries has their own set
food standards for undertaking business activities and operation. For example, if
ingredients are banned or rise in taxes on fast food then it can impact McDonalds for
running their business successfully.
 Economic Factors- McDonalds is impacted through economic factors at local, national
and international level because of global brand. The recession took place in 2008 has
impacted USA and Europe and respective organisation as it leads to increase
unemployment, fall in income of people, wage stagnation. The need and demand of
consumers are changing which create problems in falling of sales and rising competition
among industry. The organisation is also impacted through exchange rate because of
weaker dollar values.
 Social Factors- This factor includes age, culture, change in taste and preference, values,
beliefs and others (Tong, Song and Zhu, 2013). Due to change in taste and preferences of
consumers leads to impact on McDonalds in terms of sales and productivity. This leads
McDonalds to develop McCafe for providing coffee requirement of consumers which is
alternative for Starbucks. The people of today’s generation are more health conscious
where dishes of McDonalds contain high calories which can create health issues to them
and lose sales of respective organisation. For sustaining and growing in market, it is very

essential for McDonalds to adapt new menu choices which contain low fat and calories
for their consumers. This can help their consumer to use their food product for health.
 Technological Factors- The change in technology not only leads to improve process of
McDonalds like reducing waste, reordering, but also creates and develop connection and
relationship with consumers (Uronen and et. al., 2017). Technology assist McDonalds
for strengthening their brand value in market by providing various channels for consumer
ordering like self service in store, collection, payment and others. The respective
organisation can take help from online ordering where they can collect data and
information of consumers and use for personalised marketing and promotion. This can
assist in creating convenience for consumers and fulfils their requirements. It can lead to
reach large market through use of social media and internet strategies.
 Legal Factors- The legal factors has impact on success of business. High regulations
stifle growth and success of business whereas low regulation leads to profits of business.
All the legal laws such as minimum wages, sick pay, holiday package and others should
be followed by McDonalds in order to sustain in market. In UK, there is increased using
of zero hour contracts that firms has used for gaining flexible working force which is
required in food industry which is operating business 24 hours per day.
 Environment Factors- It is an important factor which impact business and their
operations. For running business in environment it is very essential for McDonalds to
follow all environmental laws and regulation for carrying their activities in effective and
efficient manner. The issues which are faced by McDonalds are in terms of food miles
and deforestation. In order to resolves these they can purchase beef and milk from
farmers of UK.
Apart from internal and external impact to business, there are other framework which helps
in knowing about competitors. In order to know about industry and their competitors,
Porter’s five force model is used. It is described as framework which helps in analysis of
competition of business. There are five forces which help in knowing about industrial of
McDonalds which is described below:
 Competitive Rivalry- The fast food industry is most competitive business in market.
With increase in local and multinational restaurants having same menus creates
competition among each other such as McDonalds with Burger King. The competitors

are spending high on advertisement, innovation and others for dealing with their
consumers. McDonalds has strong power because of rise in number of competitors.
 Threat of New Entrants- In order to get success and grow like McDonalds, new threats
need to have large number of outlets in different countries which requires huge money,
time that is not possible for new entrants (West and Dawson, 2012). It is not possible for
international outlets to give competition to McDonalds but local has capacity to open two
or three at same time where power of new threat is moderate for respective organisation.
 Bargaining Power of Suppliers- The raw materials used by McDonalds such as
potatoes, chicken are available at large number so they can order from any suppliers.
There are many suppliers who want to provide raw materials to McDonalds for
increasing profits and gain. They can easily switch from one to another where bargaining
power is very low.
 Bargaining Power of Buyers- There are various options available for consumers to buy
such products from others as they can switch from one to another which does not requires
any switching cost. Due to increase in competitors there is declining of loyal consumers
from market. The consumers of McDonalds has capacity to protest for price changes and
shift to other competitors. Therefore, buyer of McDonalds has strong bargaining power to
switch from one to another in order to fulfil their requirements.
 Threat of Substitutes- The substitute of McDonalds products can be taken from Pizza
hut, KFC, bakery products dealing in same type of goods. These helps in providing
consumer satisfaction to their users. The users can easily switch to other without facing
switching cost. Due to rise in health consciousness among consumers leads them to prefer
substitute products. Thus, substitute threat is strong against McDonalds.
Therefore, it is very important for McDonalds to analyse internal, external and
competitor’s factors in order to survive, sustain and grow in competitive market for
achievement of their set goal and objectives. With analysis of such factors helps them to
make correction if required by them.
1.3 Potential improvement to the business organisation and operation
Ansoff's growth matrix is marketing tool which provide assistance to an organisation in
determining their products and market growth strategy (Chadwick and et. al., 2012). Along with
this, respective model is important for strategic marketing planning as well it also help

organisation in generating more revenue by entering within new market or through brining new
product and strategies. There are four major growth strategies with Ansoff matrix explanation of
these in relation of McDonald's are as follows:- Market penetration – It is the development strategy in which organisation existing
product and services will be sale by company within present market segment. Market
penetration is less risky growth strategy because it leverages several existing resources as
well as capabilities of business firm. But for McDonald's respective growth strategy is
not much suitable because after sometime satisfaction level of customer will get decrease
by the same offering. Product development – In this growth strategy company develop new product for their
present market segment (Chang and et. al., 2016). As well product development growth
strategy is not much risky because company know about their present market and
preferences of customers. This strategy will be more suitable for McDonald's as they are
bringing new range of healthy drink within existing market with the motive of increasing
product sales by 30% more. Market development – This is growth strategy in that company sell their existing product
and services within new market area. Moreover, as compare to market penetration
respective strategy is more risky due to new targeted market. Market development
strategy is not adopting by McDonald's because it include risk because every country
population have different taste and preferences. Thus, there is chances that offering of
respective organisation will not match their taste.
 Diversification – In this strategy organisation come within new product within new
market area. Diversification growth strategy is more risk for organisation because
company don't have much knowledge about the nation they are entering (Ghaddar and et.
al., 2012). McDonald's will not use diversification strategy within their working as it is
much expensive, include high level of risk and time consuming process.
Thus, for McDonald's product development strategy will be beneficial and result in their
growth as well as development. Respective organisation is coming up with new range of healthy
drink for increasing their sale by 30% in present market.

M1 SMART objectives
SMART objectives are acronym which organisation can use to guide goal setting. It is
important that goals have to be clear as well as reachable, each one have to be specific,
measurable, achievable and relevant and time bound. SMART objectives of McDonald's: “To
introduce new range of healthy drink within 8 months in order to enhance product sale 30%
more”.
D1 Analyse how the elements of Ansoff’s Growth Matrix have contributed to improvements
Ansoff matrix implement in organisation with the motive of growth and development as
well as it involve four matrix of development i.e., market penetration, product development,
market development and diversification (Goins and Pye, 2013). Out of these four organisation
can implement any one which will be beneficial for them. McDonald's is using product
development strategy by which they are bringing new range of healthy drinks within their
existing market for increasing sale by 30% more.
TASK 2
2.1 Effectiveness of the business
It is define as process of outcome of output bases on the task that was assigned to
managers as well as to employers of the company. In respect of McDonald's, business
effectiveness will be effective when managers and employers will work co-ordinately with each
other to accomplish organisational goals and objectives (Hyppönen, Hämäläinen and Reponen,
2015). Effectiveness states the goals and objective that are attained and the issues which are
solved.
 Product and services: For running business effectively, company produces product and
services as per the demands of the customers. In respect of McDonald's, company
provide products such as burgers, cold-drinks, ice cream, French fries, and so on. Along
with this it provide its best services to its customer by delivering their orders on time
(Laws, 2015). This, it results in increased profitability and business effectiveness.
 Marketing: It refers to the process to attract customers by providing quality products and
services to achieve marketing objectives. In context of McDonald's, company make
effective use of marketing strategies such as market analysis, advance technologies,

promotional techniques of competitors and so on. These strategies will increase the
effectiveness as well as productivity of the organisation.
 Sales: Sales refers to the exchange of commodity in respect of money or another
commodity i.e. barter system (Lehto, Oinas-Kukkonen, Pätiälä and Saarelma, 2012). In
McDonald's, company uses several sales techniques such as offers, discounts, but 1 get 1
free which in turn increased the sales of the company. These techniques help to attract
customers which result in increased efficiency of the business.
 Finance: It refers to the arrangement of large amount of funds, majorly by government
and large scale business. It the main factor of the company for raising its effectiveness.
As per McDonald's, company's finance department manages the financial activity,
financial statements and resources of the company. This department guides the optimal
utilisation of funds as well as resources so that it results in low cost.
 Staffing: Staffing refers to the process of hiring, delegating position as per the right skill
and managing employees in an organisation. In respect of McDonald's, staff are well
trained and developed with good communication skills that will help to communicate as
well as understand the need of customers.
 Record-keeping: It is also referred as record and information management that stores
data and information related to the business such as employees personal details, sales,
profits and so on. In context of McDonald's, record is stored by the finance manager who
manages the important data of organisation and updates it on regular basis.
2.2 Develop plans to improve the business, justify their value
Planning for the business is a legal document which provides business with the accurate
data and information. Business plan has also covered different aspects such as financial position,
nature of firm, sales and market strategy. McDonald needs to focus on all the business aspects by
formulating appropriate business plan (Lencioni, 2012). These areas are
Planning Marketing - McDonald is required to form the business plan in accordance to
satisfy their customers’ expectations. The company needs to evaluate and analyse the market
properly so that to formulate the business plan to sustain in the competitive market.
Sales and Productivity - For increasing the profit margin the company needs to works
on increasing sales and productivity by producing high quality products to their potential

customers. Here MacDonald is required to focus on the buying behaviour of the customers for
their higher productivity.
Planning Organisation's Financial Management System - MacDonald needs to focus
on allocation of the funding to each department in such a manner so that it may lower the cost of
operation and achieve the targeted goals.
Planning the Roles and Responsibilities of Staff and Management - every business is
required to assign the task to different different department and to carry out the operations of the
firm there should be a proper allocation of authority and responsibility to the personnels.
Planning Performance Monitoring - To monitor and measure the performance of their
employee's MacDonald will use some techniques and tools which are 360 degree appraisal ,
management by objective (Lundén and et. al., 2014). So that it would increase the working and
enhance the performance of the organisation.
M2 Evaluate how effectiveness of areas of the business can contribute to organisational growth
To increase the performance and effectiveness the business is required to consider
various areas such as marketing, services, staffing. Every business have is USP which helps them
to capture the minds of customer and make them aware about the brands and their products. The
company needs to focus on the marketing activities and the process of staffing to build
relationship with their customers who will leads to growth and development of the organisation.
D2 Critically analyse how plans developed can lead to an improvement in business
There is a requirement of planning at each and every step of business. MacDonald is
required to make a plan for each business procedure from planning about product , its
production, staffing , marketing and providing services. This would reduce their chances of
duplication of work and would enhance their capabilities (Philbin and Kennedy, 2014).
Following a proper series of plan may drive them towards growth and development . They are
also required to focus on customers’ demands, what type of products and services they want ,at
what time so that by satisfying the demand of customer, the company may leads towards
successful organisation.