Strategic Management Report: McDonald's vs. KFC Analysis, UK

This report provides a strategic management analysis of McDonald's and KFC, focusing on their competitive positions and the external factors influencing their business. The report begins with an introduction to strategic management and its importance in the dynamic business environment. It then examines the external factors affecting McDonald's and KFC using PESTEL analysis, considering political, economic, social, technological, environmental, and legal factors. The report identifies resources that contour their competitive positions, followed by a SWOT analysis to evaluate their strengths, weaknesses, opportunities, and threats. The report analyzes how McDonald's and KFC cope with market changes, and the challenges of evolving competitive landscapes. The study highlights McDonald's dominance and its strategies for maintaining its position, focusing on market research and customer satisfaction. The conclusion summarizes the key findings and emphasizes the importance of strategic management in achieving sustainable competitive advantage in the fast-food industry. The report also provides a comparison of the two companies and concludes that McDonald’s is the market leader and that KFC is still working to evolve in the industry.

Strategic Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. External factors that affect competitive position....................................................................1
2. Identification of resources that contour competitive position.................................................4
3. Sustainable competitive advantage including external factors and internal weakness...........7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is highly dynamic and complex. Strategic management is the
creation and implication of main objectives and aim that are set by employers and leaders of a
company in order to achieve success through analysing internal and external business
environment in industry (Luo, Sun and Wang, 2011). This assists an organisation in designing of
plans, allocation of resources in a balanced way, direction of enterprise and its operations along
with analysing and adopting various effective models and approaches that exist in the market.
This assignment will study the strengths and weaknesses of McDonald’s as compared with KFC.
Also, it will evaluate different effective external factors of company here.
TASK 1
1. External factors that affect competitive position
McDonald’s is the largest food restaurant chain in all over the world with ruling market
from last few decades and expanding its business in various countries. This company serves
millions of people each day. Company has a unique brand image in the market as it portrays a
positive image through facilitating quick and quality food along with best customer services.
Market is dynamic as it keeps evolving (Mahoney and Qian, 2013). Competitors are dominating
and increasing through assistance of effective promotional techniques. Some rivals of
McDonald’s are KFC, Burger King, etc.
Competitive Positioning –
Competitive positioning is the technique through which company creates a unique
position of itself in market by offering different services in comparison to other organisations
and building a positive perception in the minds of consumers.
External Factors of McDonald’s and KFC -
To identify the external factors that influence competitive position of company, PESTEL
analysis would be more helpful which is mentioned as below:
McDonald’s KFC
Political 1. Hike in trade agreements
foreign levels and enlargement
in the supply chain
1. Change in political
environment can affect
company positively or
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2. Change of state in pending
tax which avoid law
interruption in processes of
McDonald’s (Greco, Cricelli
and Grimaldi, 2013).
3. Development in public
health related terms which can
be considered as an
opportunity to grow.
negatively according to
situation.
2. Taxation policies on
incentives and taxes.
3. Governments concept and
opinion over and cultural as
well as religious aspects may
restrain its growth.
Economic 1. Stable but slow evolvement
in UK economy which is
restraining the growth of
McDonald’s.
2. Present financial condition
of enterprise in Europe can be
cause of loss in future.
3. Company is being
threatened after delay in
Chinese economy framework.
1. Less budget and revenues
because of which company is
terminating employees.
2. Economic growth rate,
inflation and interest level as
well as business cycle is
affecting KFC’s financial
situation.
Environmental 1. McDonald’s has increased
CSR activities in order to reach
society and make a positive
image as well as promoting
ecological practices (Vogel and
Güttel, 2013).
2. Environmental change can
prove as a threat as company is
thinking of going green and
using organic products.
3. Accelerative importance on
1. Environment friendly
services despite utilizing
plastic bags for packaging.
2. Contribution for decreasing
global warming through paper
glasses, cups and other initiate.
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sustainable enterprise planning
that can make negative as well
as positive impact of it in
community.
Legal 1. New legal minimum wage
level is determined in U.S.
which can be a cause of
increase expansion in cost of
revenues in different processes.
This can lead to enlargements
in cost of services that
McDonald’s provide.
2. Local Health regulations in
schools and colleges that can
impact negative as well as
influence the supply chain of
organisation.
3. Animal Welfare regulation
which can restrict in
production of non-vegetarian
food (Killen and et. al., 2012).
1. New animal safety laws can
restrain the growth of KFC as
it is specialised for its non-
vegetarian food majorly.
2. Environmentalist is highly
criticise this company which
may make circumstances to
create any law of it that can be
as a threat for it.
Technological 1. McDonald’s can develop its
websites or app for ease of
customers in which they can
conveniently order food online.
2. To enhance productivity of
goods, McDonald’s can use
more advanced technologies
and automation in their
restaurants in respect to satisfy
1. Technology development,
alternative changes in
techniques and production
process have created some
positive aura for KFC to
evolve.
2. Digital payment, Bluetooth
and wireless headphone for
staff have increased
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consumer and accomplish its
goals.
productivity as well as
performance which is
deploying customer
satisfaction rates.
Social 1. McDonald’s aims to those
services which is cheaper in
order to serve middle class or
aggregate income earning
people. They can also focus
over process of products
distribution according to
customer which are more in
population.
2. Diversified cultured
workplace can assist
McDonald’s in producing more
productive and creative
commodity through utilizing
promotion mix (Priem, Li and
Carr, 2012).
3. Organisation should be more
aware about quality of product
as some professional have
criticised its services because
of its negative impact over
consumers.
1. There may have many
demographic content that can
affect company's development
rate in future.
2. U.K is independent country
and new customer and market
trends have improved sales of
KFC products not only in
country but globally.
KFC is trying to evolve in the market of food chain but McDonald’s is still is the king of
fast food restaurants. Also, through creating or changing threats into opportunities unlike others,
McDonald’s cope up with external environment elements as well as competing with its rivals.
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2. Identification of resources that contour competitive position
SWOT is evaluation of abilities, limitation, possibilities to grow and restriction of
upcoming time which help in improvise systematic management of enterprise.
For identifying and measuring entire resources and their value in industry, companies like
McDonald’s require to perform SWOT analysis for identifying own limitation and power as well
as abilities in future and present context. Through scaling or comparing with competitors,
organisation can make with of all activities and enhance productivity of manufactured
commodity in respect of their competitors. This helps in differentiating USP of both and assist a
new way or concept to perform. Here is SWOT of McDonald’s and KFC as below:
McDonald’s KFC
Strengths 1. Wide range of services and
commodity they provide.
2. Presence in demographical
and geographically largely.
3. McDonald’s culture as well
as mission and competitive
change according to the
circumstances of market
(Goetsch and Davis, 2014).
4. Franchisee and
administration support
availability in industry.
1. Brand Equity.
2. 11 species and herb's
confidential formula.
3. Proper communication with
market through effective use of
promotion mix.
4. Chains for menu variety and
its ease.
5. Accurately managed staff
and qualified employees.
6. Hygiene management at
restaurants
Weakness 1. Strong competitors such as
Pizza Hut, Burger King, KFC
and others.
2. Consumer attitudes and
expectation differ largely
among various limitations as
well as religions.
1. Dearth of analysis and
evolution of KFC.
2. Lack of consumer
information and knowledge.
3. Prices are higher than
McDonald’s.
4. Squander products and
missing services.
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Opportunities 1. Providing franchisee is
major opportunity that is help
in increase revenues in present
and may be prove as biggest
assets of company (Strategic
Analysis (SWOT, PESTEL,
Five Forces) of McDonalds,
2012).
2. Going more health
conscious which is attracting
consumer.
3. Effective innovation
strategies for products is keep
monitor potential buyer stick
with enterprise.
1. Develop of 19- 25 age
groups of demographics.
2. Delivery of home meal
business will pass.
3. Menu upgrade and
modification.
4. Participation in global or
international events.
Threats 1. Independent firms such as
Mcspotlights and other
campaigns against
McDonald’s is decreasing its
credibility.
2. Competitors is using
effective marketing and
promotion strategy is creating
strong competition.
3. Legal limitation against
company's advertising,
promotion, fast food and other
aspects creating a major threat.
1. Bird flu is the major threat.
2. Frozen products affect
health more negatively.
3. Threat of culture of Muslim.
4. Vary in demands of
consumers.
Through SWOT analysis of both companies it is clear that McDonald’s keep performing
new strategies in market in order to develop trends with analysis market and its trends (Foss and
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Knudsen, eds., 2013). KFC is evolving in industry and still trying to fit among competitors
whereas McDonald’s is dominating industry from last few decades through effective strategic
management and implementation. Company focuses over its threats and weaknesses as well as
overcome with them by transforming them into opportunities and strengths.
Now through optimizing appropriate resource and designing an effective strategy, McD
can enlarge and expand its business in different market for attracting new and potential buyers
and increase its sales as well as revenues.
3. Sustainable competitive advantage including external factors and internal weakness
McDonald’s is a leading corporation which performance in financial context have
emerged in between 2002-2011. Later these years, company's growth have been decreased in
industry because of raising rivals offering same products with better quality but, it has still a
unique and non-controversial recognition in market. Organisation keep developing effective
strategies in market and through implication of them as well as understanding consumer
expectation and different market changes in nations, they manage their evolution. It have been
noticed that McDonald’s spend 25% of its revenues in market and customer research which is
major reason of domination of this firm.
Relation between External and Internal Factors -
Internal environment includes strengths, weakness, opportunities and threats of company
whereas external consist of political, economic, social, legal, technological and environmental
factors. These elements affects several parameters but they all are interrelated in context of
various aspects.
Political and economic factors can strengthen organisation's capacity as well as ability
and help in sustaining in market through creating more opportunities to grow (Stead and Stead,
2013). This can also weaken the company's terms and situation through affecting it negatively.
Legal and environment factors whereas determines the techniques of manufacture and
production that an enterprise use which must be according to eco-friendly. Though in regard of
not proper following of legislation, firm cannot be able to sustain and evolve positively in
market. It can reversely affect as well when organisation do not lead the appropriate way
according to these components, then it may cause in benefit or loss as well as reputation
discrimination.
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(Source: Factors to Consider When Expanding Your Supply Chain Globally, 2014)
Social and economic factors as well affect internal body of a company. Commodity is
being exchanged by organization in society. For that, they are required to manufacture products
and services according to the expectations of consumers as well public that affect economical
aspect of it which can be considered as one of the strengths.
Competitive Advantage -
McDonald’s is increasing its competitive advantage through using various aspects and
concepts which they rely over in order to compete competitors in the dynamic market. The
process includes various elements including franchisee, product adaption, globalization,
consistency of market and standardisation. These aid company in the expansion of business as
well as sales with helping in increasing revenues.
Internal and external factors affects competitive advantage through increasing revenues
as well as growth. Which helped it in expanding business in many countries so as these process
and its stages (Gamble and Thompson, 2014). Through globalization and standardisation,
deployment has become easy in populated countries like India, China, Africa, etc. Product
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adaption and renew as well as refreshment services provide new facilities which are required for
strategic management. This is how such analysis helps a firm in management and operation
functioning along with better administration.
CONCLUSION
In the conclusion of this report, it can be stated that for proper strategic management of a
company, it is required to study competitive positioning of firm with the help of analysis of
external and internal environment along with assessing competitors in market. It has been
assessed that this evaluation can assist organisation to identify and understand the significant
factors which can affect or influence its growth and sales. These elements often are interrelated
with each other rendering a unique impact which an enterprise can use for development.
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REFERENCES
Books and Journals
Barney, J. B., 2012. Purchasing, supply chain management and sustained competitive advantage:
The relevance of resource‐based theory. Journal of supply chain management. 48(2).
pp.3-6.
Foss, N. J. and Knudsen, C. eds., 2013. Towards a competence theory of the firm (Vol. 2).
Routledge.
Gamble, J. E. and Thompson Jr, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-
Hill.
Goetsch, D. L. and Davis, S. B., 2014. Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Greco, M., Cricelli, L. and Grimaldi, M., 2013. A strategic management framework of tangible
and intangible assets. European Management Journal. 31(1). pp.55-66.
Killen, C. P. and et. al. 2012. Advancing project and portfolio management research: Applying
strategic management theories. International Journal of Project Management. 30(5).
pp.525-538.
Luo, Y., Sun, J. and Wang, S. L., 2011. Comparative strategic management: An emergent field
in international management. Journal of International Management. 17(3). pp.190-200.
Mahoney, J. T. and Qian, L., 2013. Market frictions as building blocks of an organizational
economics approach to strategic management. Strategic Management Journal. 34(9).
pp.1019-1041.
Priem, R. L., Li, S. and Carr, J. C., 2012. Insights and new directions from demand-side
approaches to technology innovation, entrepreneurship, and strategic management
research. Journal of management. 38(1). pp.346-374.
Stead, J. G. and Stead, W. E., 2013. Sustainable strategic management. ME Sharpe.
Vogel, R. and Güttel, W. H., 2013. The dynamic capability view in strategic management: A
bibliometric review. International Journal of Management Reviews. 15(4). pp.426-446.
Online
Strategic Analysis (SWOT, PESTEL, Five Forces) of McDonalds. 2012. [Online]. Available
through: <https://writepass.com/journal/2012/12/the-term-restaurant-is-an-establishment-
where-food-is-prepared-and-served-to-the-people-and-alwaysalmost-refers-to-any-sort-
of-dine-in/>. [Accessed on 8th September 2017].
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