Business Strategy of McDonald's Corporation: A Comprehensive Analysis

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Running head: BUSINESS STRATEGY
Business Strategy
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Running head: BUSINESS STRATEGY
Table of Contents
Executive Summary.........................................................................................................................3
Vision and Mission Statements.......................................................................................................3
McDonald’s Corporate Mission Statement.............................................................................3
McDonald’s Corporate Vision Statement................................................................................3
Section1...........................................................................................................................................4
PESTEL Analysis....................................................................................................................4
Political Factors.......................................................................................................................4
Sociological Factors.................................................................................................................5
Technological Factors..............................................................................................................5
Environmental Factors.............................................................................................................5
Legal Factors...........................................................................................................................6
Section 2..........................................................................................................................................6
Porters Five Forces..................................................................................................................6
McKinsey 7’s Model.............................................................................................................10
VRIN Model..........................................................................................................................11
Section 3........................................................................................................................................12
TOWS Matrix........................................................................................................................12
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Section 4........................................................................................................................................13
Strategic Options...................................................................................................................13
Bowman’s Strategic Clock....................................................................................................13
Section 5........................................................................................................................................14
Goals and Objectives of the Company..................................................................................14
Action Plan............................................................................................................................14
References......................................................................................................................................16
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Executive Summary
The purpose of the reports to evaluate the business strategy and the strategic decisions including
the planning and monitoring and controlling of the processes present in the McDonalds
Company. The report involves the analysis of the company with the help of these frameworks:
PESTEL Analysis, Porter’s Five Forces model, McKinsey 7-s model, VRIN, TOWS Matrix. The
report also includes the goals and objectives implementation of an action plan on the basis of
evaluation made.
Vision and Mission Statements
In the world business, it is mandatory for any company to have a mission and vision.
McDonald's Corporation makes adjustments accordingly in a mission and vision statement. The
factors that influence the change include the changes in the Global foodservice industry
environment. As one of the fastest food restaurant chain in the world, the company considers The
Vision and Mission statements as one of the essential policies and the strategic management tool
to make sure the growth is consistent.
McDonald’s Corporate Mission Statement
McDonald's corporate mission statement is “to be our customers’ favorite place and way to eat
and drink. “This mission statement highlights how the company is concerned about the
customers while maintaining its market position as one of the leading food and beverage in
company. At the main components of the mission statement, the team focuses on being the
favorite place and way for the customer to eat and drink.
McDonald’s Corporate Vision Statement
McDonald's corporate vision statement is “to move with velocity to drive profitable growth and
become an even better McDonald’s serving more customers delicious food each day around the
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world.” The statement shows how the company is approaching the growth factors without
compromising on the quality factors. In 2017, there was a different mission statement. The major
components of vision statement of McDonald's Corporation include moving with the pace of the
industry to make sure they have a profitable growth and to become better every day to serve
several customers with tasty food around the world.
Section1
PESTEL Analysis
In this analysis, the political, economic, social, environmental, technological and legal factors of
McDonald's Corporation have been discussed. As a single organization, it is not possible for the
team to who directly affect the external factors that impact the business.
Political Factors
McDonald's Corporation is one of the fastest growing businesses in the Fast Food Industry and
this obviously a target for the government initiated who are focused on improving the health of
the public. To be very specific, in the European countries there are certain communities that
protest against these fast food spaces. After the 2003 publication of a report describing the
general levels of salt intake in the UK population, the government introduced certain initiatives
to lessen the salt content in the food products and this had an impact on the McDonald's
Corporation. As a response to this initiative, theme reduced the salt content for about 14% in the
menu for UK residence (Zhu et al., 2015). Accordingly, in Germany, recent initiatives requested
the fast food restaurants to come up with a clear indication of the nutritional factor added in their
meals including the levels of sugar and salt and calories. Similarly, there are other initiatives in
United Kingdom, France and the Netherlands who focus on having the nutritional label clear in
the meals consumed by the residents, the researchers say that this idea has a lesser impact on
overall demand within the Fast Food Industry. Either way, the company must be adhering to the
government approved instructions and certain considerable request from these governmental
initiatives.
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Running head: BUSINESS STRATEGY
Sociological Factors
While McDonald's has managed to who are the two most of the regulations that focus on
improving the health of the residents who consume fast food product, they have not been very
successful in eliminating the negative public opinion regarding the same. In general, fast food
has been seen as one of the unhealthy foods in the food chain and various health-focused
organizations and initiatives are against companies like McDonald's Corporation. However, as a
response to the request made by the initiatives in the US and UK the meal content and the
nutritional content in a mail has been altered accordingly. In addition, they have also launched
certain marketing campaigns emphasizing on the fact that they care about customer health and
offering healthy alternatives.
Technological Factors
The emergence of the internet has opened several possibilities for marketing across the world.
Apart from taking the step to establishing a proper social media presence in all popular social
media channels, McDonald's also focus on running successful marketing campaigns online. Ask
McDonald's YouTube campaign is one of the well-received bill received campaigns in 2012.
Also, certain articles on Facebook and Twitter about the company and the issues regarding the
usage of contaminated human meat and so on and false information can spread easily (Papulova
and Gazova, 2016). This may have had an impact on the company however, they have planned to
manage it.
Environmental Factors
In recent years, people are taking environmental issues very seriously and the rise of green
initiative within the corporate environment is true to that. Several companies are involved in the
green initiatives portraying their interest to keep the environment clean to the public. On the
same note, McDonald's also participate actively in such initiatives. Also, there is the day of
action repeated every year on the same date and the protesters strongly stand against the
promotion of junk food and unethical targeting of children including animal cruelty and
environmental damage. In 1997, McDonald's to protestors for their false allegations. However,
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other few allegations seemed to be true including default advertisements of their food being
nutritious and not risking the health of their long term regular customers. Also, the concept of
animal cruelty had been an issue until now. As per the environmental factors, there is a lot for
maintenance Corporation to improvise.
Legal Factors
McDonald's adheres to the legal regulations of the countries they have branches in. The food
hygiene rules and generic fast food chain rules differ from one country to another. Apart from
that, the company also has its own rigorous standard that is being used by the government
Agencies as examples to set its own regulations (Vignali, 2001). There are also a lot of factors
regarding employment laws to be considered starting from weekly working hours to the tax and
payroll requirement. In this way, McDonald's can be considered as a dedicated company
focusing on these.
Section 2
In this report, the five forces analysis has been done according to the factors that impact the
organization. Upon assessment, it is clear that the company has a weaker force when it comes to
the bargaining power of suppliers and the moderate force to the threat of new entrants or a new
entry. On the other hand, the company has strongest and when it comes to the competitive rivalry
for competition, bargaining power of buyers and customers, and threats of substitute for
substitution.
Porters Five Forces
Buyer Power
To improve business performance it is mandatory for the company to address the power of
customers. In McDonald's case, the low switching costs, the highest number of providers and the
availability of substitute actor stronger forces that influence the bargaining power of buyers.
Supplier Power
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Running head: BUSINESS STRATEGY
Suppliers influence the company when it comes to production and capacity and that is influenced
by the availability of raw materials. In the case of McDonald's, this week bargaining power of
suppliers is based on some factors like a large number of suppliers including the increased
overall supply and the lower forward vertical integration of the suppliers that act as weaker
external forces that influence the company.
New Entrants
When it comes to new entrance impacting the market for the McDonald's market share and the
performance after company financially, strongest force like lower switching costs and moderate
force like we highly variable capital cost make sure that the company has some modest and when
it comes to reading which is a threat of new entrants or new entry (Morris, 2005). Also, the brand
development cost is highest and this acts as a weaker force in this scale.
Substitutes Threats
Since McDonald's corporation is present in the fast food chain there are a lot of chances that the
new companies we might enter the market every day. However, McDonald's Corporation thinks
that there substitute availability including the low switching costs and high performance to cost
ratio of substitute actors is stronger forces that ensure the company does not have the threat of
substitutes for substitution. In addition, the brand has established itself very strongly in the
market especially among the audience with the dedicated fan base for the brand.
The Degree of Rivalry
With a stronger stand in facing the toughest of competition, McDonald's has the external factors
including the higher number of branches with appropriate aggressiveness and the lower
switching cost as the strongest contributing factors for the team to deal with the competition in
the industry.
Complementary Products
A complimentary product has a negative cross elasticity of demand which states that the price
changes in the compliment may impact the demand inversely for the good. For example, with the
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Running head: BUSINESS STRATEGY
decline in the burger buns prices, the demand for burgers might increase. For McDonald's, the
slide change of price in one product has led to a significant change in the demand for other
products.
Stakeholder Power/Interest Matrix
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The major stakeholders of McDonald's corporation are their employees and customers. On the
other hand, the investors and communities also contribute as the stakeholder group to the
company.
Internal Analysis
The internal elements do impact the company equally at the external elements do. The only
difference between the internal and external elements is that the company will not be able to
influence the external elements while they can find out and rectify the internal issues present in
the environment.
McKinsey 7’s Model
McDonald's McKinsey framework demonstrate the methods in which seven different elements of
business has been analysed to improve effectiveness. According to the Framework strategy,
systems and the structure can be considered as hard elements wilder skills and shared values and
style including the employees are soft elements. The same for how the elements and other
elements that cause the change.
Application of McKinsey 7-s model in the Context of the Company
As a part of a hard element, McDonald's Corporation pursues the business strategy of aggressive
international market expansion and cost leadership. The company will be able to operate within
the budget when it comes to operational costs and this is because of the economies of scale that
is inserted into a huge extent.
On the structure part, the structure of the company is subjected to certain modifications
according to the new chief executive officer and President who took charge in 2015 to improve
the Global operations. Under the new structure, four different segments were created and a leader
for each segment it was appointed who will report to the chief executive officer. This proved to
be a great strategy.
When it comes to the systems, it refers to the day to day activities within the restaurants which
are modified to improve the speed and quality of food and to serve clients efficiently. In the
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Running head: BUSINESS STRATEGY
aspects of Style, McDonald's as an indicator and flexible style that is liked by its customers. As
for the skills, staff and shared values, the company has a strong stand with several full-time
employees who receive a good level of motivation and rewards for their contribution. The staff
also have distinct values and a strong knowledge of their department.
VRIN Model
Value
When it comes to the value, McDonald's is valued over 40 million dollars as of now. This
company has 38 billion dollars assets including property with nine billion dollars of property fees
to drive revenue. In addition, the team ensures the pricing sir feasible for the new products. The
value of not only the product but also the customer has also been considered.
Rarity
In the concern of rarity, Their logo and brand endorsement techniques are unique. One the
McDonald's Corporation purchases a property, then it makes sure that the competitors may not
use it and if a franchise is willing to contribute, then the brand name should definitely be used.
The markets tend to saturate the three locations and this is a rare case.
Inimitability
The company is well protected with Trademark and patent laws with proper certification. Their
trade secrets and complicated details are protected with the trading loss which is necessary to
successfully run the company when it comes to larger scale. The company will not be imitated
given the fact that they have strong legal support.
Non-sustainability
McDonald's corporation is the only brand that is associated with its popular products with
feasible pricing. The company is always ready to exploit the new resources and in support of this
strategy, the team and sure the organizational structure is well organized to provide proper
support to the franchise operation.
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