Comprehensive Analysis of McDonald's Business Strategy and Performance

This report provides a comprehensive analysis of McDonald's business strategy, examining the impact of the macro environment (demographic, economic, natural, technological, political, and cultural factors) on the organization. It delves into McDonald's internal environment using SWOT analysis, assessing its strengths, weaknesses, opportunities, and threats. The report further employs PESTLE analysis to evaluate the political, economic, social, technological, environmental, and legal factors influencing the company. Additionally, the VRIO framework is utilized to assess McDonald's resources and capabilities, focusing on their value, rarity, imitability, and organization. The analysis culminates in a strategic management plan that identifies strategic directions, objectives, and tactical actions to improve competitive edge and market position within the fast-food industry. The report also includes a discussion of the company's historical background and its strategic decisions.

BUSINESS-STRATEGY

Table of Contents
BUSINESS-STRATEGY...............................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1:...........................................................................................................................................1
Impact and influence of macro environment on organisation and its business strategies......1
TASK 2............................................................................................................................................5
Assessment of internal environment and capabilities............................................................5
M1 Critically analyse the macro environment to determine and inform strategic management
decisions...............................................................................................................................10
TASK 3..........................................................................................................................................10
Evaluation of a given market by applying Porter's Five Force Model.................................10
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation‟s internal capabilities, structure and skill set..................................................11
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes.........................................................................................................................11
TASK 4..........................................................................................................................................12
Applying of theories, concepts, models to understand and interpret strategic directions
available to a company.........................................................................................................12
Valid strategic directions, objectives and tactical actions....................................................13
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives..............................................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
Books and Journal..........................................................................................................................15

INTRODUCTION
Business Strategy for an organization is one of the key factors that direct the organization
towards the path of Asset Building for survival in a competitive market to achieve the
Organization's long term goals of an effective growth that lays the foundation of the
organization. The emphasis on Business Strategy here is to put stress on one of the Huge Giant's
Business Strategy that went perfectly well for it and took it so far in the International
Competitive markets (Aubry, and et. al., 2012). McDonald's is one of the well-known fast food
chain. McDonald's strategy of derailing franchisees took the organization to greater heights and
its uniformity in the courtiers is always appreciated because the discipline towards a formulation
of Business Strategy is what was acquired. Founded in 1940 as a restaurant with no dream of
reaching at heights by Maurice and Richard McDonald in California, USA; there was no future
planning but the plan followed a formulated Business Strategy for the short term goals of this
Organization. The content will discuss in an elaborative manner for your perusal the
comprehensive analysis of the Stakeholders and the Business followed by the different
prototypes of Porter's five forces, VRIO Framework, SWOT and PESTLE analysis.
TASK 1:
Impact and influence of macro environment on organisation and its business strategies
Demographic Environment: To study the population with a detailed statistics basis on age, birth,
deaths, disease, etc. is very crucial as it sets the stage for an organization and clears the way for a
cakewalk.
Economic Environment: The state of the economy of a particular country including its economic
policies that withstands in the markets are important as it comprises of the structural behaviour
of economy and is vital to study for an organization.
Natural Environment: The non-economic development of a country is considered as the
advancement in technology leads to growth for an organization but that comes up with
deteriorating the natural resources which result in air, water and noise pollutions in the physical
environment.
Technological Environment: The technological advancement in the rapidly changing culture and
the demands of customer increases. The culture of technology investment just to withstand in the
markets and to create a brand value is always valuable for an organization.
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Political Environment: The political environment is a commendable factor as policies of a
country set by political persons affect the bearing of a Business in the country. The political
environment of a country is considered as the growth of an organization is a factor which is
contributed by the political policies of the country.
Cultural Environment: The marketing of products becomes crucial if the values of the culture are
not determined. Every Business follows a certain code of conduct and that too is suppressed if
cultural values and environment is not considered.
SWOT Analysis
The Firmness of McDonald's in the SWOT Analysis is deliberately listed as follows:
The Ubiquitous nature of brand pertains to be existing in more than 100 countries. It has a
monster range of products that comes with an unbeatable quality such as burgers, wraps, shakes,
smoothies and various snacks that are served at various places. The firmness to the taste of the
product is brilliant as wherever you eat it remains the same (Burgess, and Radnor, 2013). The
diversity trend is followed by the company in different regions, vegans and non-vegans. For
example, the region where mostly vegans trend is there, the organization has launched products
according to the needs and demands for a better experience. The organization has gone so far
that it doesn't count on a specific region for its earnings. The largest fast-food supply chain is the
tag that it bears now and has become the most acknowledged brand.
McDonald's Weakness
The Company holds a weakness because of its strategic factors and the arising competition in the
market. Having a lot of achievements, the company still pertains to a weakness with a huge
brand value. The SWOT Analysis of the same is expressed as follows:
 Adverse media has played a crucial role in defining anyone's image in front of the general
population. Of late, the amount of adverse media published against McDonald's has
affected it badly resulting in a loss in sales numbers (Cacciolatti, and Lee, 2016). The
media pertained to be defining the various nutrition facts of the products sold by
McDonald's which made customers reluctant towards the brand.
 The cultural changes for the brand that brings economic changes also as the Burger
Industry in the United States are collapsing.
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 The slow and steady growth shown by the Company in the past few years can indicate the
opting out of potential investors from the Brand anytime in the upcoming future.
Opportunities for McDonald's
The Company doesn't have to seek for opportunities despite so many negative factors. Ample
Opportunities in the market are there that just need an emphasis upon for better fit. The various
opportunities for McDonald's unfolded are as follows:
 Underdeveloped countries must be a prime focus of the organization in the upcoming
years.
 Health proposition products can be of huge benefit if it plans to sell in the today' era
(Cserháti, and Szabó, 2014). Campaigns to promote products is the best way to earn a
commendable profit for decades and can be considered for customer-centric products.
 Joint ventures are always a big blow to the Organizations when the growth of any
company becomes slow and steady.
 The company should focus on premium competitors such as Starbucks and can launch
more Coffee products to give a tough fight at low prices.
 Corporate Social Responsibility can also play a major role at this stage for the Company.
The company can attract consumers by showing them its Corporate Social Responsibility
(CSR) and its contribution to the physical environment and showing them that the
company is not causing damage to the physical environment.
 Customer demand is a must check for the food industry periodically as it can tell you if
there is a change in it. McDonald's must launch premium products at few franchisees and
can be assured of it.
PESTLE Analysis Of McDonald's
The trends followed along with the demonstrations with respect to society needs to be known.
The developing strategies of the Company depend on this PESTLE Analysis of the Organization
which is confined and constrained with a lot of factors as follows:
Political factors: A franchise to collective sustain in a competitive environment can't ignore the
various political suppressions such as taxes imposed, government policies of a particular country
or region, various health hazard policies set by the government (Eason, 2014). These factors can
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not only put a negative impact on the growth of the company but also can be a disaster to its
established popularity.
Economic Factors: The utmost importance given to this area as setting up operations at a new
place and the various economic policies and constraints of a particular region is the area that can
uplift the growth if kept in mind resulting in greater profits.
Social factors – These include changing behavior and perception of customers towards products
offered by McDonalds. These have to be properly managed for attaining goals and targets of the
organisation.
Technological factors: Updated technology used by any company has shown proven results and
it's a fact when it comes to withstanding in strategic competitive markets (Hoque, 2013). The use
of modern technology always pushes the customer to visit as it becomes efficient in terms of cost
and effectiveness.
Environment factors: The state of mind of the customers and their needs can also be read by
these factors. The environment of a particular region decides what products will be mostly in
demand and will attract more consumers giving away a profitable business to the company. For
instance, a cold-weather region will always attract customers towards hot coffee and other hot
beverages that are good to have in cold-weather and in hot weather environment customers will
seek a chilled smoothie or a shake with the meal. Along with these what can be offered best is
the point which will decide how strategic policies of a company can do better.
Legal factors – McDonalds has to follow rules and regulations of various countries in which it is
operating. This helps in managing the company reputation worldwide.
Finally, it can be said, McDonald's has gained widespread popularity until now because of its
Business strategy to withhold its image in the strategic competitive markets. If right now the
growth has become slow and steady for the company then it must rethink its various strategies so
that it could continue performing better in the upcoming years (Kohtamäki, and et. al., 2012).
Maybe the Business strategy adopted by the company is quite old for now and was fabulous at
that time but it needs to be changed from time to time. The time has come that the organizations
start following a deep analysis of their own benefit. The periodical changes are necessary to be
made for any organization so that it doesn't depreciate its growth and value of brand so far
created by the sustained efforts made (Knott, 2015). The various factors that were stressed upon
in the above consideration not only cleared that how much an organization needs a formulated
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Business strategy but also tells us if it is not followed with a certain discipline then the business
will not rise but will fall.
TASK 2
Assessment of internal environment and capabilities
SWOT analysis of Mcdonalds:
Strength Weakness
 McDonalds is a well reputed
organisation which is serving food
items and beverages across the world.
This has completed many years of
keeping satisfied customers.
 There are wide range of loyal and trust
worthy customers.
 McDonalds has chosen integrated
approach of marketing which has
helped in managing the delivering of
quality food items.
 There is huge competition faced by
Mcdonalds in some countries because
of the local restaurants and fast food
trucks.
 They do not have effective strategies
for market their products effectively.
 There is standard portfolio of food
items sold by Mcdonalds.
Opportunities Threats
 McDonalds has the opportunity to
enhance market share and manage
effective place among different markets
of various developing countries.
 By choosing the best marketing
strategies, there are various ways by
which McDonalds can enter other
countries to expand market share.
 This company has experienced banning
of some food items because they were
against their culture.
 There is need of establishing various
strategies for competing with other
organisations dealing in food chain.
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VRIO analysis: It is a model or framework which is given for analysing as well as evaluating a
company’s ability to manage the business operations. There are basically four factors according
to this model which provides information about a company’s way to manage the accomplishment
of organisational objectives and goals (Lee, and Smith, 2018). There are some resources of
McDonalds which include human resource, global presence, cost strategy, differentiation
strategy.
 Valuable: This factor is associated with unique features and characteristics that a
company has. These enhance value of the organisation and help in achieving
organisational objectives and goals. This company is working worldwide and Global
presence of McDonalds is making it a respectful company which can enter any foreign
market. McDonalds is using Cost strategy while providing food items to customers, thus,
it is seen that this is a great strength of this company to attract more number of customers.
differentiation strategy is also used by this organisation which includes providing unique
facilities like drive through.
 Rare: Global presence is rare for organisations and every company cannot get the
opportunity for global expansion. There are unique features within organisations like
McDonalds like drive through which provides the opportunity to grab market effectively.
Differentiation strategy of McDonalds is unique feature of this organisation (Lee, 2014)
(Linn, Sanden, and Piekkari, 2018). Cost strategy is used for attracting customers and
this is also not rare concept. Human resource of McDonalds is strong ad employees are
provided various facilities that lead to managing of overall performance of company
effectively.
 Imitable: Global presence and human resource are the characteristics within McDonalds
that are making this fast food restaurant to work within market successfully. It is
concluded that main objective of this company is to manage the profits and sales and
enhance market. In present context of McDonalds, it s seen tat this company is able to
manage the achievement of gaols by working effectively within markets.
 Organization: There are various resources which are properly utilised within McDonalds.
These enable to manage the operations and business activities properly. There are three
resources including Human resource, global presence and cost strategy which are used
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properly within McDonalds. These enable to develop competitive advantage within
market.
Resource Valuable Rare inimitable organized
Human resource yes yes
Global presence yes
Differentiation
Strategy
yes yes yes yes
Cost strategy yes yes yes
Resource based view
There are generally two types of resources which can be used by companies including
tangible and intangible. In case of tangible resources, there are physical assets which company
has like factories, infrastructure of building, etc. The intangible factors includes image and
reputation of the company within market. These are known as capabilities which enables to
manage the resources properly. The development of marketing skills and relationships is very
important as it helps to manage the business activities properly. Some of the resources within
McDonalds that help in attaining organisational goals are mentioned below - Financial – McDonalds is a well reputed old organisation which has lot of money and
funds used for conducting the business operations. There are proper budgets prepared for
conducting various marketing campaigns, programs, etc. which are financed by the
management. Physical – This consists of physical equipment and geographic location of the company.
In context of McDonalds, it is concluded that geographic expansion of this company is
worldwide and headquarters are situated in UK. Human – These are associated with skills and abilities of workforce. The Employees and
workers must have strong skills so that they can work effectively for completing the
organisational goals.
 Organisational – These includes reporting structures and relationships. McDonalds is
ensuring that it is maintaining healthy relationship with customers.
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McDonald's VRIO framework Analysis
McDonald's uses its VRIO framework only to take its business to a profitable stage. These
kinds of factors only become the resources that are only capabilities contributing to strategic
competitiveness. There are a certain set of resources and capabilities that VRIO measures
incapsulate such as Value, Rarity, Inimitability and organization (Milovanovic, 2015). This
states the Resource-based View(RBV) of the organization. It imposes certain sustainable
stereotype advantages in the competitive environment so that it can withstand against various
competitors like KFC, Subway, Wendy's, Burger King, Starbucks and Dunkin Donuts. The table-
based view of the VRIO Analysis of the Organization is as follows:
 The Uniqueness in recipes showing arbitrate behaviour of the Organization as the
moderation of it can lead to both positive and negative impacts.
 Third-Party Delivery contracts to sustain growth and better care towards the customer by
making arrangements.
 Specific Advancement in technology for processing of orders that can always steal the
eyes of the general population.
 Efficient strategies that prove to be effective for Human Resource Development.
 Food Production strategies becoming more efficient in terms of cost and which comes up
with low prices.
 Growth in terms of size of International Operations with advancement and addition to the
restaurant franchise network.
 The profitability of a business depends totally on the expansion of its supply chain and it
can't be ignored.
 Sales and its economies is a conceived factor for the organization as sales decide the
growth of a business.
VRIO Core Competencies
Two core competencies are acknowledged in the VRIO Analysis of McDonald's. The Company's
Brand is a resource that is the most considerable factor in the VRIO analysis. The organizational
goals are set with an initiative to enhance and recall the brand value so that the brand sustains a
great value with an increased revenue generation. The value consolidated and sophisticated chain
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of the organization makes sure that the company keeps rising in the markets but an adverse factor
that retains with it is the adverse media that can come up anytime with no news of coming
(Morton, Wilson, and Cooke, 2015). The Organization make sure that it freezes there only and
no matter what but it doesn't make an inferno for the organization in that particular and
upcoming period. The core competencies also include the different trademarks, logos of the
organization that are a part of strategic competencies for fast food operations of the Organization
in the markets.
For instance, the trademarks, logos set by the organization not only defines the
uniqueness of the organization but also there a good chance of brand recall enhancing the value
of the brand in the markets. McDonald's create a trademark by a better brand recall even though
the products of competitors in the markets are a replica of the product offered by the organization
(Kim, Lee, and Shin, 2015). The core strength of the organization is defined only when it also
portrays its image of Brand recall to the customer in International Markets by giving better value
to it and with the ubiquitous nature of working of the Company.
Critically evaluating the strengths and weaknesses of the organization's internal capabilities,
structure and skill set
McDonalds evaluates strength and weakness by doing SWOT analysis of the company.
It is concluded by SWOT of McDonalds U.K. that it is having internal capabilities to expand
business effectively. It has well organised structure and managers collaboratively work for
attaining organisational goals and objectives.
M1 Critically analyse the macro environment to determine and inform strategic management
decisions.
This is evaluated from the PESTLE analysis of McDonalds that this fast food company has
opportunity to capture market effectively as it has strong marketing strategies. New technologies
are used for providing service and food to customers. This enhances the customer satisfaction
level and creates good relation among company and customers. Strategic decisions are made
within Mcdonalds by evaluating the PESTLE analysis.
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TASK 3
Evaluation of a given market by applying Porter's Five Force Model
Porters five forces model was given by Michael Porter by which companies are able to evaluate
various factors which can influence business functions and operations. For a perfect market
evaluation, there is need to have photos 5 forces model so that organization has a clear idea about
these strategies which can be used for implementing effective operations. There are various
factors which can affect business operations of McDonald's (Pasquinelli, 2014). Some of these
are mentioned below
 Bargaining power of supplier: raw material required in McDonald's include food items
like veggies, milk products, butter, etc. McDonald's is following low pricing strategy and
according to this, there is need to develop strong relationship with the supplier. This
enables to minimize bargaining power of suppliers (Rasula, Vuksic, and Stemberger,
2012). Then there is condition of high bargaining power, there is threat of reduced profits
and sales.The bargaining power of suppliers in case of McDonald's is very low.
 Bargaining power of customers: Clients and buyers are one of the Greatest asset that a
company has. McDonald's is famous for various food items such as burgers, beverages,
etc. There are several other competitors like Burger King, Pizza Hut which are also
providing fast food items like McDonald's. Hence, it is very important for this company
to keep competitive advantage and provide customers with high quality foo items. It can
be said that bargaining power of buyers is high in case of McDonald's.
 Threat of substitute: McDonald's is an organization which provides fast food items to
various customers and clients. Food items always have a substitute and hence, it is very
important for McDonald's to make some Fusion or innovate the food items and dishes so
that people will get a new food item every time. This will help in increasing the service
satisfaction provided by McDonald's.
 Threat of new entrant: this food organazation is providing services across the world and
when there is chance of expanding business in international market, there are strong
strategies used. There are various new business owners who can involve in starting on
you fast food restaurant or food cart hence it is very essential to maintain reputation
within market and innovate the existing food items within specific interval.
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