McDonald's: Analyzing Innovation, Capabilities, and Market Position

This report provides a comprehensive analysis of innovation management at McDonald's, a global fast-food corporation. It examines the organization's existing innovation performance and capabilities, highlighting examples such as McDelivery, recyclable cups, and coffee sustainability initiatives. The report delves into McDonald's innovation history, tracing its evolution from a barbecue restaurant to a fast-food giant with over 32,000 restaurants worldwide. It also assesses the industry landscape in 2021, considering factors like the COVID-19 pandemic and changing consumer preferences. Through SWOT, PESTLE, and Porter's Five Forces analyses, the report offers insights into McDonald's internal strengths and weaknesses, as well as external opportunities and threats. Ultimately, the report underscores the importance of innovation for McDonald's to maintain its competitive edge and adapt to evolving market dynamics.

Managing Innovation
in Business

Executive summary
Innovations in today's time plays an important role in the success of the business. This
facilitates the business to add more values in the products and services through which a business
attracts more and more customers. The report has analysed that innovation plays a major role in
the growth of the business. It can be analysed that it helps the business to take the advantages of
the new technology through which they can make the products and services more effective. This
has be evaluated that innovation crates a better image of the business in the eyes of the
customers. This report has included various innovation techniques and capabilities of the
companies that are Mc Delivery, recyclable cups and coffee sustainability. These innovations
facilitated the company to attract more and more customers towards their business. Innovation of
the organisations has been evaluated which they have done in past. This report also included the
present performance of the organisations. SWOT analysis of the company have also been
analysed in order to better understands the internal as well as external factors of the business.
Along with that, PESTLE analysis and Porter's five forces have also been analysed. This report
told about the various innovation methodologies by which it helps the business to perform better
in the market.

Table of Contents
Executive summary .........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
TASK...............................................................................................................................................4
The Organisations existing Innovation Performance and Capabilities.................................4
The Organisation and its Innovation History.........................................................................7
The Industry in 2021..............................................................................................................8
CONCLUSION .............................................................................................................................12
REFERENCES:.............................................................................................................................13
Books and Journals...............................................................................................................13
Online...................................................................................................................................13

INTRODUCTION
Innovation is very important for the business as it adds values to the products and
services of the business. This helps in surviving in the competitive market. Innovation helps to
grow the business in the market which ultimately increases the profits of the business. This also
facilitates the companies to take the advantages of new techniques of production through which
products can be produced effectively. This helps in making the better product which adds more
values in the eyes of customers (Yuana, et.al 2021). For this report, McDonald's is taken into
account. McDonald's is a fast food corporation that has operations across globe. It is founded by
McDonald's Philippines in 1940. This report contains the organisation overview and how the
company carry out its operations. There will be discussion of the innovation history of the
company. This also includes the present innovation performance and capabilities of the
company. In last of the report there is a discussion on the present conditions of the company.
MAIN BODY
TASK
The Organisations existing Innovation Performance and Capabilities
McDonald's is American food company that was founded in 1940 by the McDonald's
Philippines. It is the world's largest food chain in terms of the revenue. They started their
business by selling the hamburgers and now they have variety of food items in their menu. They
have introduced various innovations in their business in order to carry out the operations
effectively. McDonald's have the capability to perform much better in the market as they enough
resources with them.
Innovation means applicability of the new ideas practically or to introduce the new ways
and method of production in order to serve goods and services in the market. This is a wide term
as it includes the development of a product and services which serves more values to the
customers. Through innovation effective and efficient product can be produced which helps in
satisfying the needs of the customers (Phan, 2019). It plays an important role as innovation
enhances the competitive power of a company. New businesses can also be set up after
introducing the new products and technologies in the market. Innovation requires skilled and

professional employees in the organisation who can develop the new ideas and plans in the
business. It also needs high level of research and develop program through which a company can
make a valuable product and services in the market (Madsen, 2020). Innovation also focuses on
improving the technology of the company and enhances the relation between the customers and
suppliers. Through innovation business a company can increase the product range which helps in
attracting more customers towards the business (How Has McDonald's Been So Successful for So
Long?, 2020). There are various kinds of innovation that are as radical innovation, modular
innovation, incremental innovation etc. These innovation helps the business organisation to
survive in the market and helps them in getting more share in the market. Various innovation that
McDonald's have introduced in their business that are as follows:
Mc Delivery
McDonald's firstly carrying out the operations of the business through stores only. But
the innovation department of the McDonald's has introduced the delivery option which provides
facilities to the customers to order from home. They have also collaborated with the online food
apps through which they can serve to the large segment of the market (McDonald's Plans Digital
Innovations Amid Slow Growth In 2021, 2021). They have introduced this innovation globally as
they have their business across the world. This innovation helps them to solve the problem of
overcrowding in their stores and this helps them to increase their sales. Through this delivery
facility they have develop a very convenient way for the customers.

Recyclable cups
They have eliminated the use of plastic cups and introduced the environmental friendly
cup which helps them in contributing in the sustainable development. This is one of the main
innovations of the McDonald's as they are committed to save the environment (Pieroni,
McAloone, and Pigosso, , 2019). This also helps them in creating the good brand image in the
eyes of their customers. They have also collaborated with the famous coffee brand Starbucks in
order to make recyclable cups for their business.
Illustration 1: https://play.google.com/store/apps/details?
id=ph.mobext.mcdelivery&hl=en_US&gl=US

Self-service kiosk
McDonald's have enhanced their technological sectors as they offer the customers to
place order without standing in a queue. They have introduced the new way of carrying out their
business activities as in this customer get the orders directly by the employees. They can make
the payments through their mobile phones. This facilitates the company to provide quick service
to their customers without taking too much time. This innovation helps the company to become a
global leader in the food industry (Fajardo-Toro, and et.al 2019).
Illustration 2:
https://fortune.com/2016/10/05/mcdonalds-
coffee/
Illustration 3:
https://www.forbes.com/sites/edrensi/2018
/07/11/mcdonalds-says-goodbye-cashiers-
hello-kiosks/?sh=463cb5ab6f14

Coffee Sustainability
Coffee sustainability is also a very effective innovation of the McDonald's as they have a
another brans that deals in the coffee segment and it is known as Mc Cafe. They have introduced
the new way of sourcing the coffee beans for their coffee brand (Saharuddin, et.al 2019).
McDonald's source their coffee beans sustainably without harming the environment. This helps
the company to create a valuable image in the global market.
The Organisation and its Innovation History
Mc Donald's is basically a fast food restaurant which is one of the largest franchises in
the united states as well in different countries. It was first founded and started by Maurice and
Illustration 4:
https://www.vitamojo.com/blog/benefits-self-
service-restaurant-kiosks/
Illustration 5: https://www.eatthis.com/best-
worst-mccafe-drinks-mcdonalds/

Richard McDonald's who are brothers. The first restaurant was started in 1948 in their drive
through barbecue restaurant. The company is most focused in its burgers, fries and milkshakes.
Its strategy which the company always used is selling the price and in half in comparison with
the competitors. There popular desert foods for which they are also known are the apple pie and
their breakfast sandwich, the egg MC muffin (Rondi, De Massis, and Kotlar, 2019) . At present
times there is more than 32000 restaurants. Placed in more than 117 countries. Company more
than 75 percent of restaurants are owned by individual owner by purchasing franchises of Mc
Donald's. The organisation has many several norms and ethical policies which involves social
responsibility for the restaurants they own and provide franchising (McDonald’s turns to tech to
build the future of fast food, 2019). These policies consider the system of rewarding its
employees regularly and providing recognition as per performance basis and customer
experience, the company put customer experience at their first priority which helps the company
to enhance the quality and grow the company. Mc Donald takes risk strategically by using risk
assessment tool , they use to determine the risks which includes location they are present and
what are the social culture of that place, supplies and resources they have, employees assessment
and management (Öberg, and Alexander, 2019).
Mc Donald have very innovative history as it has established very efficient business
model and brand. The company has rapidly grown for more than 70 years and it gained lot of
loyal consumers with growth they are opening new restaurants steadily. The business has seen
many innovation over the period of time from years like in 1937 first the brothers started hot dog
stand and getting into the food service business (Wirtz, and Daiser, 2018). Further they opened a
barbecue restaurant. As the process of corporate work field began the company began to expand
aggressively and changed it model from traditional business model . It acquired companies like
chipotle and merged completely with the main company. Later in early days of 2015 the
company did lot of efforts regarding their menu changes and with huge risk they added breakfast
menu in their list of foods in outlets. As the risk involved this resulted in huge failure as it break
the existing customer in preferences rather than jointly increasing the customer segment. Later

McDonald's released its special coffee which was only available on evening. which resulted a
controversy and large competition between Starbucks which resulted in growth but in smaller
proportion of revenue and not as they expected from the change (Szopinski, et.al 2020). Mc
Donald always tries to innovate with their menus over the time and keep changing as per
customer needs in the locations. The company always prefer the culture of the location they are
present to serve the customers.
The Industry in 2021
Mc Donald is an food serving organisation whose focus is beverages and fast food. Yet
changing people towards heath oriented products and food did not have any effect on the
organisation and showed statistical upward growth in the year 2021 also (Kilimova, and et.al
2021). As the wave of covid pandemic and other mass recession economic downstream and other
reasons had some impact on the business but it maintained there sales through online business
and online sales through apps, and websites. As per surveys and data MC Donald increased their
employee payroll despite the loss in labour market.
Work place change: The company increased their staff capacity numerously in 2021 as
the normal opening hours and post covid period has ended the increase in staffing and better
benefits were given to the employee to provide motivation (Ibarra, Ganzarain, and Igartua,
2019). The demand for company services and food item has increased largely from past decade
Illustration 6:
https://www.news18.com/news/buzz/viral-
video-claims-all-employees-at-a-
mcdonalds-outlet-in-us-quit-mid-shift-
3928865.html

and resulted in increasing prices of some food menus like big macs burgers, chicken MC nuggets
and other food items. Mc Donald's revenue showed large increased numbers due to this changes.
As per revenue report the surge in the revenue was recorded 21 percent more than the year 2019.
after the revenue the major changes in side the organisation was observed in 2021 are the
company launched three major new sandwiches. The debut sandwiches were three new chicken
sandwiches (Lestari, and et,al 2020). The crispy chicken sandwich, the spicy crispy sandwich,
and the deluxe chicken sandwich all were introduced by the company in the month of February.
By this introduction of sandwiches the company reported huge traffic in their websites and apps
which resulted in good amount of profit.
Impact of pandemic: Another change which was done by the organisation is closing
down its locations inside big malls in some places. Due to the pandemic the stores were none of
use and company was paying good amount of rent to hold the stores who are not benefiting the
companies (La Ode Sumail, 2019). Company decided to close the store permanently and focused
more on drive thru premises. Another big change in their menu was re introducing a drink
beverage named Hi c orange. The drink was closed to being served after 2017 as due to
considering it as a loss making drink.
Investment: The company invested lot in advertisements in past years and introduced
new ways of marketing for the organisation like collaborating with celebrities. The start was
done with Travis Scott in 2020 and then after a successful collaboration, it was followed by
collaborating with J balvin, saweetie, BTS and Mariah Carey (Oliva, et.al 2019). The BTS col
lab was very much successful and the meal which was introduced by the band resulted in huge
sell through of the product and setting new sales record. One the major change the company
decided in taking it back, the membership program was to record, as previously company used to
give loyalty points to customers after buying food from the outlets. Which can be redeemed
further by
using as benefits to get discount on foods products online or offline.
Strength Weakness
 One of their main strengths in that they
have a strong brand image in the
market and brand values in the eyes of
their customers. This does not enables
 Their main weakness is that they have
huge number of employees and
everyone faces so many pressure in the
company. So they faces the issue of

any other competitor to come and give
competition to them as that are well
established as a food chain across the
world(Ge, 2020) .
 Technology innovation is also their
major strengths as the they keep on
introducing the new techniques of
production in order to keep up with the
demands of the customers.
retention of their employees in the
company.
 They have the franchise model and it
comes out as a weakness for them. It is
hard for the company to analyse the
performance of each outlets across the
world (Sari, and et.al 2021).
Opportunities Threats
 Expansion in Asian markets with
entering in countries.
 Innovative and healthier menu options
 partnership with other brands and
restaurants
 marketing opportunities born of
changing customer demographic
structure
 Intensifying competition
 poor economic situation in global with
other established countries
 weakened dollar in some countries
 increasing rate of health consciousness
PESTLE ANALYSIS
Pestle analysis is a framework that is used to analyse the external factors of the
businesses that are present in the market. It is an effective tools that can be used to find the
advantages and disadvantages of a business plans and strategy. Pestle analysis include various
factors like political, economical, social, technological, environmental, legal. These are the
factors that facilitates the business to find new opportunities in the market. Pestle analysis in
relation the McDonald's is as follows:
 Political factors: This factors means that at which extent the government policies and the
rules can affects the operations of the business. It includes various factors like tax policy,
trade restrictions, tariffs etc. McDonald's has its headquarters is in United States and the