Detailed Strategic Appraisal of McDonald's Company Analysis

This report provides a comprehensive strategic appraisal of McDonald's, a leading fast-food company. It begins with an introduction to McDonald's, its mission, and vision. The analysis includes an external analysis using the PESTEL framework, examining political, economic, social, technological, environmental, and legal factors impacting the business. Internal analysis utilizes the value chain and VRIO frameworks to assess McDonald's strengths and weaknesses. A SWOT analysis is also conducted. The report then explores strategic options for growth using the Ansoff Matrix and Bowman's Strategy Clock. Finally, it evaluates strategic options and their implementation, offering a conclusion and references.

FULL STRATEGIC
APPRAISALS OF
MCDONALD'S COMPANY

Table of Contents
FULL STRATEGIC APPRAISALS OF MCDONALD'S COMPANY.........................................1
INTRODUCTION...........................................................................................................................3
PART I ............................................................................................................................................3
External analysis.....................................................................................................................3
Part II...............................................................................................................................................8
MacDonald value chain analysis-...........................................................................................8
VRIO Analysis of MacDonald's...........................................................................................10
SWOT analysis of McDonald's............................................................................................10
Part III ...........................................................................................................................................11
Bowman's Strategy Clock of MacDonald's..........................................................................11
Part IV............................................................................................................................................13
The issues and challenges of MacDonald's and its strategic options for growth explained with
the help of Ansoff Matrix.....................................................................................................13
Part V.............................................................................................................................................17
Evaluations of the strategic options for growth and implementations. ...............................17
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21

INTRODUCTION
McDonald's is one of the fast food American company. It was founded by Richard and
Maurice McDonald's in 1940. McDonald's is one of the largest chain by revenue. It is serving 69
million customers daily in 100 countries. McDonald's is known for the number of it fast food
products such as- hamburgers, cheeseburgers, French fries, chicken products, breakfast items,
soft drinks, milkshake and desserts. It is founded in 120 countries.
Mission of McDonald's is to become the favourite place and ways to eat and drink. And
vision is to move with the velocity from the profit maximization and become and even better
serving more customer favourite food every day around the world. This file discusses about the
external analysis and internal analysis of the organisation, and what are the company's business
strategies and issues, challenges and strategic options for growth. Evaluation of strategic option
of growth and implementation.
PART I
External analysis.
McDonald's PESTEL analysis-
Political factor affecting the
business of McDonald's-
Political effects refers to the government policies and
actions on the economy and business of the McDonald's.
Government internation helps to determine the path and
rate of business development. Nowadays government is
controlling the marketing and the fast food production of
the company just because of the health issues are coming
such as- Cholesterol and obesity issues among the children
and young person. Government of county also controlling
the licences for the fast food. MacDonald has good
relationship with government(Žabkar and et.al., 2018). This

type of mutual relationship helps to create benefits of the
company as well as government such as – TAX,
Employment. There're are many external political factors'
ion fast food restaurant chain. And these factors written
below-
1. Governmental guidelines for health- it can be a
opportunity and threat for the MacDonald
company so this factor can affect in both the ways.
2. Evolving public health policies- public health
policies made by the government for the fast food
companies. There are some limitations for every
fast food company for their productions of fast
food. So this factor can also affect in both the
ways.
3. International trade agreements increasing-
MacDonald is expanding its business across the
world and it is improving the international trade.
Economic factor affecting the
business of McDonald
 This factor directly and indirectly affect the
performance of business. Because
somewhere global, national and local
economy affect the business of
MacDonald. There are some economic
factors which are affecting the business in
both the directions (positive and negative)
of MacDonald and these are written below-
 Slowdown of Chinese company- it can be a
threat for the company because there is big
contribution of Chinese companies in
MacDonald revenues.
 Stable but slowdown growth of developed

countries- it is a big opportunity for the
company to expand its business in
developed countries for the stability of
them business chain restaurants.
 Continuous growth of the developing
countries- MacDonald is expanding its
business ij the developing markets such as-
Asia.
Social factors affecting the
business of MacDonald.
 Change in the customer preference and
taste can affect the business of any
company. For the example- MacDonald has
developed Mac-cafe menu to provide an
alternative to Starbucks.
 Socio- culture factors are written below-
 Rising disposable income- this factor is an
opportunity which is based on the rising in
the disposable incomes. So MacDonald has
the opportunity to increase the numbers of
customers to buy the food products of the
company instead of cooking food at home.
 Busy life style- this tendency is also
affecting the business because there are
some people in the society who has very
busy schedule. So busy lifestyle in urban
environment also affect the business of
MacDonald.
 Increase in diversity of culture and health
lifestyle trends both factors are affecting
the business in positive and negative both
the ways. People are being health

conscious. So it can be a threat also.
Technological factor This factor is mostly affecting very positively just because
of the research and development activities for the
production, business automation, and marketing of
business through the different media devices.
Environmental factor This factor helps to rise interest for MacDonald
environmental preprograms. This factor also helpful for
emphasis to create new business strategies. But some
times change environment and climate can be affect
negatively.
Legal factors This factor is affecting because of new laws. Health
regulations ad laws are increasing for the workplace and
in school. And increasing in legal minimum wages. Both
the factors can affect negatively
SWOT analysis of MacDonald-
Strength-
 MacDonald has its strong image,
reputation and its brand name In the
market.
 MacDonald has its large market share.
Company is world famous. And
spending a large amount of money
Weakness-
 MacDonald is also known for the
unhealthy fast food.
 Health issues of customers.
 A number of laws and regulations and
legal actions.

behind its business.
 McDonald is focusing on plan to win.
 Innovation in new food products.
MacDonald has introduced many types
of fast food. Company is based on the
innovation of products.
 Adoption of new marketing strategies.
MacDonald is using different
marketing strategies to expand its
business.
 Most of the employees are switching
workplace(Lodhia, Martin and Rice,
2018).
Opportunities-
 MacDonald has various types of
business opportunities to expands its
business because fast food companies
are growing rapidly.
 MacDonald can also use the green
energy to innovate new products and
packaging system. MacDonald is
expanding is business across the world
so globalization can be a big
opportunity for the company.
 Diversity of products can also increase
the opportunities of business.
Threats-
 There is a huge number of other fast
food companies which has entered in
the market. There are some brands
which are giving the competition to
MacDonald such as- Burger king,
YUM Brands.
 All the public health issues and
deceases can be threat of the company.
There are many people who has their
busy schedule and they are eating only
fast food day and night.
 Environmental can problems can be a
cause of threat for the company.
MacDonald is engaged with HCFC- 22,
it can lose the customers of MacDonald
who are serious about earth issues.

Part II
MacDonald value chain analysis-
It is a tool to identify the business activities which can create the competitive advantage and
value to the business of MacDonald.
Primary activities
Inbound logistics
Operations-
MacDonald company franchised and
owned a number of restaurant in the world.
There are more than 80% restaurants are
operated by independent franchisee. All the
franchisee restaurants have these formates-
 Conventional franchising- this type of
franchising is all about to paying rant
and percentages of sales on the initial
fee when opening a new restaurant. In
this type of franchising MacDonald
owns a building or any restaurant for
the long term business goals.
 Development license- this type of
franchising licensing provide the
capital for the business activities. This
type of structure has been adopted by
the more than 70 countries and the total
numbers of restaurants are 5,228.
 Affiliates – is another type of
franchising where MacDonald
Support activities-
Procurement- this activity provides all the
important and necessary things. That is
required by MacDonald to accomplish all the
primary activities.
Technology development- technology require
a heavy amount to invest. And it takes a lot of
time for research and development.
Human resource management- this
department is responsible for all the primary
activities of several departments in
MacDonald. Key responsibilities of this
department is selection, promotion, retention,
transfer, appraisals. Etc.

company collects the royalties from the
restaurants on their percentage of sales.
MacDonald has 3,100 affiliated
restaurants in Japan.
 Outbound logistics- all the
MacDonald restaurants are operated
according to this formates-
1. Sit down restaurants- this type of
restaurants involves waiters and
waitress for taking order and serving
food. This type of restaurants are based
on the conventional process.
2. Drive- thru and ski- thru – both
restaurants are mainly focusing on the
food delivery.
3. Counter service outlet- this type of
restaurants include self service
Marketing and sales- MacDonald is
using different types of strategies for the
marketing and sales of the products.
MacDonald is using the print and media for the
purpose to deliver its marketing message to the
targeted customers segments. MacDonald is
using the various channels for the promotion of
business. And advertising its products through
the media. Company is also investing a huge
amount to create the public relations, sales and
marketing, promotions(Song, Wang and Zhu,
2018).
Infrastructure- this management system
includes all the activities inside the MacDonald
company such as- finance, quality control,
legal, planning, etc.

Service- high speed of customer
service is one of the biggest advantage of
MacDonald. Company is providing the
excellent customer services. It is human
tendency to attract toward the fast services.
VRIO Analysis of MacDonald's
The VRIO analysis is an effective tool to understand the strengths and weaknesses
of an organisation. The below analysis explores the Strengths and Weaknesses of
MacDonald's with the help of VRIO analysis
Value MacDonald's is one of the highly respected fast food brands around the world.
The organisation tends to hold and maintain a high value with accordance to
the image of its brand. Along with it, the company is also having a high value
in its exploitation of the resources available which has led MacDonald's to
evolve successfully since last five decades(Booth and et.al., 2017).
Rarity Its resource utility might be franchise oriented and is spread through its breadth
yet the main control still remains with top 50 management authorities. The
franchisee of MacDonald's has to follow the rules of the company very strictly
to run the operations of the brand.
Imitability In aspect of the product MacDonald's is not very difficult to be imitated. Its
products are very easy to create and can be copied by any new start-up or
company to sell under their name as well. Its product's functionality and
standard has seen to be difficult to achieve.
Organisation
support
The company is always seen to be ready to explicit new resources and the
structure of the organisation is well organised. Along with it, MacDonald's
provides a really good support to the operations of its franchise.

SWOT analysis of McDonald's
Strengths The company has recently managed to launch its items such as smoothies,
coffees and Angus Burgers which are allowing it to expand its menu choices.
Its strong product offerings has allowed the company to earn income in
recession as well which can be seen as a major strength of the company. Along
with it, the company's operations are spread throughout the world which helps
the company to not exposed to a single currency or economy(Dawes, 2018).
Weaknesses It has become harder for the company to look for prime locations in building a
set of golden arches. The company is looking for opening its restaurants
internationally but the cultural challenges are major risk in doing so.
Opportunities The company has seen a great opportunity in opening new restaurants in Asian
markets where it has seen an increasing demand in fast food outlets. Countries
such as China and India is having a huge consumer base for the company to
grow its business.
Threats Governments of the countries in which MacDonald's is operating from a long
time are considering regulations that target fast food chains. Also, new
products have to go head-to-head with already established players such and
Jamba and Starbucks coffee.
The above explored SWOT analysis explains the Strengths and Weaknesses of MacDonald's
along with the threats and opportunities that the organisation is facing.
Part III
Bowman's Strategy Clock of MacDonald's
The Bowman's strategy clock model helps in determining the strategic focus of
MacDonald's. It explores strategies such as cost (low cost), hybrid or non-competitive strategies
and differentiation (high differentiation). Below assessment explores the Bowman Clock of
MacDonald's:

Low cost strategy: The organisation is promoting the strategy of low cost in markets such
Philippines, Vietnam and India as well(Echchakoui, 2018). The organisation is trying to reduce
the number of value meal promotions. Along with it, it has chosen to continue the dollar menu in
these countries. The countries have a higher demand of the products of MacDonald's and the
organisation has seen a good response as well. The low cost strategy is going to prove itself a
better option in these markets.
Hybrid Strategy: MacDonald's supplementation of its existing food with low costs such as
coffees and health drink of high quality in the markets of United States and United Kingdom.
The company has adopted hybrid strategy in the countries which are developed and are having
huge markets. It allows the company to develop on a particular pace and maintain the overall
organisational value.
Product differentiation: In United Kingdom the company has improved their product
differentiation. In terms, the company has reduced the salt content in their fries and have
introduced food options which are healthy and fresh(Ellis and et.al., 2017). This effort is made
by MacDonald's to differentiate itself from other fast food companies.
Differentiated focus: MacDonald's have adopted a differentiated focus with its launch of salad
and sandwich shop in Australia. This shop caters the customers which are looking for product
that is niche. This approach has helped MacDonald's in generating success while maintaining the
brand's reputation as well.
The above mentioned Bowman Clock model showcases the organisations strategies that
MacDonald's has used to reach to the consumer in different markets. Along with it, it also
explores how these markets have been targeted as per the needs of these consumers. Various
strategies such as differentiated focus, product differentiation, hybrid strategy, and low cost
strategy have been explained in terms of increasing the business of MacDonald's.

Source: MacDonald's strategy, 2017
Part IV
The issues and challenges of MacDonald's and its strategic options for growth explained with the
help of Ansoff Matrix
MacDonald's is facing a lot of issues while improving its services worldwide. Along with it, the
company has seen huge problems in its market growth as well. The below mentioned Ansoff
Matrix explains how MacDonald's has managed to continue its market growth and the strategic
options the company has adopted to continue providing its services worldwide:
Illustration 1: Bowman Clock Strategy

Product Expansion MacDonald's is having products that are high
quality and good for health as well. It has been
seen that consumers are attracted towards
MacDonald's because of its healthy and fine
quality products. The organisation is now
increasing its product's share in the market
where it has decided to develop new products.
These products are developed with keeping in
mind the needs and requirements of a
particular consumer base. These consumer
bases are targeted with keeping in mind their
cultures and traditions, the food they eat, their
preferences etc. Products such as new range of
burgers, coffee and different salads have been
introduced in these markets(Grant, 2016).
Market Expansion MacDonald's has seen a good amount of
consumer attraction in new markets. Countries
such as Italy, France, India, China and
Philippines are now leading in demand for new
outlets of MacDonald's. These countries are
now being considered by the organisation to
grow its market into. It has become important
for MacDonald's to observe the demands of
these consumers and markets before its
competitors place their foothold in these
countries. MacDonald's is now constantly
looking for sources and investing in
franchisees in these countries to open its new
outlets as soon as possible. It has made the
company to reach global consumers in one go.

The organisation is trying to explore new
markets with the help of effective techniques in
advertising and promotions. The above are
being constantly observed and its consumers
are offered by a variety of advertisements on
television, radio and newspapers. This strategy
is making the organisation reach to different
consumer in these regions and also creating a
good word of mouth as well(LaVoie and et.al.,
2017).
Market Penetration MacDonald's has chosen to penetrate the
market of India and China by opening new
outlets. These outlets are opened at different
places with keeping different consumer
demands in mind. Opening more outlets has
allowed MacDonald's to explore new
communities and cultures. Along with it, the
company is making itself better as its serving
capabilities in these regions. From self-service
to the table service, in which customer do not
have to wait in the line to get their food. It has
also allowed the company to gain market
growth and observe an increase in its
profitability.
Also, market penetration has allowed
MacDonald's to improve its market share
where the company is having a good number
of stores in market than it had before. It has
raised the organisations profits as well. Using
this strategy the company is trying to gain
consumer bases which were not aware of the

fast food chain. The markets of India and
China are huge and if the company becomes
successful in these markets, there is a chance
that it might lead it towards earning huge
profits.
Diversification MacDonald's has chosen to gain its market
share with the help of diversification. The
company has diversified its products and
services to serve its consumers worldwide.
Along with it, the company has seen different
market demands from different consumer
bases. The demands vary as per the needs of
the consumers and their cultures and traditions.
A variety of people and their choices impact
the needs of the market where the organisation
has to adopt changes to provide these
customers with their necessary needs and
demands.
MacDonald's has diversified its product ranges
such as providing vegetarian foods options in
the Indian market where people do not tend to
eat a lot of non vegetarian foods. The company
has also decided to not serve options such as
beef and pork considering the countries
cultural heritage. In China, the company is
providing services with better communication
techniques with its customers. This has
allowed the company to gain more consumer in
Chinese market and increase its value as well.

The above mentioned Ansoff analysis explore the types of strategies being used by the
MacDonald's to increasing its growth and market share. The strategies also explores the types of
products and services the company is trying to achieve its organisational goals.
Part V
Evaluations of the strategic options for growth and implementations.
Making the strategic choice is considered to be as very much difficult task as wrong
selection of tactics can have negative effect on the business performance of MC Donald. Before
selecting the strategy for fostering growth, it is required by manager in MC Donald to determine
the criterion which can be utilised for assessing the strategic options. SFA framework is
considered to be as an effective strategic framework which can be utilised for analysing the
strategic possibilities. It is considered to be as an effective model measuring the suitability,
acceptability and feasibility of the strategies which has been selected by an organisation for
fostering growth. There are three strategies these are diversification, product expansion, market
penetration and acquisition(Martin and et.al., 2016). The strategy selected for MC Donald's is
diversification.
Suitability :It is considered to
be as the most crucial factor in
SAF strategy model.
There are different criteria
which can be set by manager
in Mc Donald for measuring
the suitability of
Diversification strategy these
are expectation and capability.
In context of Conglomerate
diversification strategy, Mc
donald by implementing this
strategy can foster growth .
As Mc Donald has good brand
Acceptability : It involves
evaluation of risk or return
which is directly associated to
the implementation of specific
growth strategy.
In context of Mc Donald,
Decrease in the shareholder
value is considered to be as a
major risk associated in
implementing conglomerate
diversification strategy. By
implementing the
conglomerate diversification
strategy, an organisation can
get higher return on
Feasibility : It involves
determination of resources or
capabilities required for
implementation of strategy.
Manager in Mc Donald is
required to analyse cash flows.
In context of MC donald, an
organisation has sufficient as
well as valuable resources such
as good brand image,
utilising which business entity,
wide network, Skilled
workforce, strong free cash
flows etc. Utilising which
business entity can implement

image and company is
financially strong, business
entity can launch a new cafe.
In addition to this, an
organisation can offer healthy
food items such as Salads ,
sandwiches, brown rice etc.
This strategy will help an
enterprise in increasing the
sales and
profitability(Shakhshir, 2014).
investment.
In addition to this,
implementation of
conglomerate diversification
strategy can be quite risky.
It is required by manager in
Mc Donal to conduct market
research before implementing
the strategy, as this tactic will
assist business entity ion
ensuring that whether
consumers in the new market
will potentially like the new
products.
Cost benefit, profitability
analysis, shareholder value
analysis can be executed by
manager in Mc Donald before
implementing conglomerate
diversification strategy.
diversification strategy for
fostering growth.
Resources required for implementing the strategies
Huge amount of resources are required for formulation as well as implementation of
strategy. Examples of few resources which are needed for implementing the diversification
strategy are capital, human resource, technology, communication devices, proper infrastructure,
time etc. Lack of any single resources can create big obstacles in execution of strategy. In
context of McDonald, an organisation has skilled and talented team of employees and good
brand image which can be useful as well as helpful in implementation of diversification strategy.
Diversification- it is a risk management tool which identify the variety of investments in a
portfolio. A portfolio shows the different kinds investments. Diversification is a process of

analysis the proper way for the investment where MacDonald company can minimize the
MacDonald is a multinational company which has different types of products. So this thing can
be beneficial for the company. MacDonald company use this strategy when it enters to a new
market segmentation. This strategy is generally used when company. It is all about exploring
new markets, building new strategies. This strategy is also used by small business. This strategy
can be helpful to maximise the profit(McDONALD, 2016).
Joint venture- it is business activity where two or more than two business works together to
achieve particular goal. Joint venture is helpful to achieve long term goals of the company. Joint
ventures helps to combine the resources, combine the expertise and save the money. It can be
helpful for the MacDonald include different small companies of food. So they can work together
to reach out a specific goal. It will also help to share the risk and return and governance. So
MacDonald should work together with other companies.
Strategic alliance- It means an organisation is working in a joint venture or another arrangement
in the joint venture. An agreement between two or more parties which help the both organisation
to make profit with competitive advantage. McDonald's entered into a number of strategic
alliances. McDonald's is in strategic alliance with Wal-Mart, Chevron, Amoco, Disney and
Coca-Cola. It also invested in the land business to increase its business in all around the world.
In recent month Evergrande and Country Garden Group also signed long-term strategic
cooperation agreements with McDonald’s China. It is for help the firm speed up its expansion in
China.

CONCLUSION
From the above study it has been summarised that McDonald used the strategies from
which they could approach to the target. External factors effect the environment too much and its
main factor was technological factor which affected the organisation in positive manner.
Through use of the best technology McDonald increased its clients and customers. It was known
from its test and architecture. The logo of McDonald was too famous and this thing attracted the
customers too much. Through porters five forces analysis the situation analysis of the
organisation could possible. McDonald had many opportunities which existed in the market. It
was the organisation with a few competitors and made competitive advantage in the world of
competition. Through swot analysis the condition of the McDonald understood by the
management. Reasons had to known to the management that how the customers liked its product
too much, brand position in the market, product analysis etc. In the end of this file suitability,
feasibility and acceptability test which through it had known that in which field McDonald was
good and the another strategies applied by the organisation were formulated in right manner or
not. These all things conclude from the report.

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