McDonald's Strategic Challenges: A Business Analysis and Report

This report provides a comprehensive analysis of the strategic issues faced by McDonald's Corporation. It begins with an overview of the company's background, highlighting its position as a global leader in the quick-service restaurant industry. The report then delves into the key strategic challenges McDonald's must address, including customer service issues, operational inefficiencies, and intense competition from rivals like Taco Bell and Burger King. It identifies McDonald's core competencies, such as its extensive staff training and innovative product development, and analyzes its business model, emphasizing the roles of franchisees and suppliers. The external analysis explores political and economic factors impacting McDonald's, such as government regulations and economic conditions. The report concludes with recommendations for how McDonald's can improve its customer service, streamline operations, and maintain a competitive edge in the fast-food industry.

Running head: DYNAMICS OF STRATEGY
DYNAMICS OF STRATEGY
Name of the Student
Name of the University
Author Note

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Introduction
The aim of the research paper is to analyze the strategic issues that are faced by the
company in the present date. The paper will also include the abilities which will be used by the
company in order to address the issues in the company. It will also discuss the core competencies
of the company which will be followed by the company. The next part of the paper will clearly
discuss the business model used by the company in order to gain a good competitive advantage
over the competitors in the business. It will also discuss on the various types of strategies and
technological inventions which are used by the company in the present date (Matveev 2019).
The next part of the paper will be dealing with the company’s external environment that
will be dealing with the greatest impact on the company’s ability to sustain the competitive
advantage of the company.
Company background
McDonald is known for being one of the largest leading food service organization. The
company is known for generating more than $40 billion dollars in the System wide sales made in
the overall operation from all around the world. The company is known for operating in more
than 30000 restaurants in more than 120 countries all around the world and in six continents. The
company is known for gaining a good competitive advantage over the competitors in the
business and has come up with a strong financial position over the others. According to the
author Morgan, McKinlay and Gray (2017) the company is known for being the leader in the
area of social responsibility. With this McDonald is known for sharing the knowledge of food
safety and is thus committed to protect the environment for the near future. Accepting various
types of challenges the company has shown a constant growth over the years of operations
leveraging strength to serve the customers in a better way.

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With this since its incorporation in the year of 1955, Mc Donald has not only become
world’s largest and quick service restaurant organization but has also changed the eating habits
for the people living in America and has increased the eating habits of non-Americans.
The strategic issues that McDonald needs to address are
Customers – According to the research work which was initiated by the author Gonzále
and Lapointe (2019) it was found out that the company has been facing various types of
customers service related issues which is predominant from the last few years. The main reason
for the customers’ related issues in the company arises from the poor customer services provided
by the company employees. As of the customers service index completed in the year 2016 it has
been found out that the company has few of the lowest customer service ranking in the whole
food industry when compared with the other competitors in the country as well as outside the
country of its main operations. The research work found out the main reason for such lowered
service rate from the end of the company is just because of having highest employee turnover
rate from the competitors in the market.
Another important reason for the customers to pay lower amount of money for the food
provided by the company is just because of lower quality of food provided by the company. The
company is also known for suffering from various types of middle man services. The company
had a middle man window which served the role for offering the meat and other raw materials
required by the company to serve best the customers. It has been facing various types of raw
material food quality issues from the service provider which has led down the company in the
long term sustainability among the competitors in the business. This has directly impacted the
multinational fast food company by lowering down the quality of food served by them to the
customers. Along with this another most important contributing aspect of the lowered rate in

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customer service is the slow service at the drive through window. It has been researched and
found out that if the speed and accuracy of the company is compared with the competitors in the
business then it can be said that the company generates only 60%revenue from its overall
performances in worldwide. Whereas on the other hand the other competitors in the business is
known for achieving more than 100%. Therefore it can be said that the company is losing
97,0000 dollars annually with its lowered customer services.
Company – In terms of operations it can be said that the company is not able to provide
the customers with a broad menu and food offering which will be in a way attracting more loyal
customers towards the company. Therefore in order to attract more customers from the
competitors in the business, it has to lower down the rate of the food products from the
competitors and offer the customers with a wide range of food products so that it is able to meet
the needs and demands of the company. The company therefore should try to analyze the needs
and demand of fast food products according to the specific geographic location and then try to
decide the food offering thus creating a demand in the speculated market. Therefore in order to
be more efficient than before the company should try to get in touch with the local authorities to
get knowledge about the taste and preferences of the local people living in the specific area or
geographical area.
Competition – One of the major factor which is faced by the company is its competition
in the market. Taco Bell, Burger King are its major competitors in the low price segment
products. Tacoi Bell is one of the best company that is known for providing the customers with
few of the best services in low priced goods. It has 11,400 locations in more than 58 countries till
now and is still expanding in the long run. In the casual food segment Panera Bread is one of the
best company which is known for serving its customers and gaining competitive advantage over

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the others in the casual food segments. Panera Bread is known for producing and preparing foods
one of a kind, it is best known for making the casual food any way the customer wants them. In
the case of premium hamburgers Shake Shack is known for gaining good competitive advantage
over the competitors in the business. Therefore it is recommended that the company should try to
maximize the food offering to the customers based on the needs and wants of the customers
itself. It should also try to provide the customers food ta the best or cheapest price so that it can
gain competitive advantage over the competitors in the business.
The core competencies of McDonald
According to the research work initiated by the author Little, Crew and Tapping (2017) it
can be said that the core competencies for McDonald are endless. Having a good amount of
staffs and getting them trained thoroughly is a great way to meet the business needs.
The top managerial department of the firm should in a way try to differentiate its
products in order to create a direct demand in the market and gain a good competition over the
competitors in the whole fast food business. The company should thus try to create various types
of innovative products in a way which will be attractive and as well as price competitive so that
the company is able to gain good advantage, The company should thus try to innovate and
conduct market research over the fast food market so that they can create good in the low priced
incumbent segments, in the fast casual segment and as well as in the fast food services like the
hamburgers and many more drinks. Innovative products and better customer service will be
providing the company to differentiate itself from the competitors in the business. McDonald
needs to adapt itself according to the changes in the variety of products and services offered by
the companies all around the world in the category of fast food services.

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Therefore technology is another best competency for the company where the company
should try to innovate its products and services with the help of latest technological advancement
made in the present era. The company should thus try out to build a good food and drink product
line which will be offering the customers with customized equipment of food services, special
kinds of tapings and combo packs. Regarding the pricing of the products it should be obvious
that the price charged by the company will be optimistic that is least amount which will be
helping the company to gain advantage over the others in the competitive market. The company
should try to improve the standard menu and increase items according to the local customer.
The business model of McDonald
The power of the franchisees, suppliers and employees who are working together towards
the achievement of the common goal which is known for making the company to achieve a
leading and quick serving restaurant brand among the competitors in the business. The company
is linked with a wide range of middle man business enterprises which are known for offering the
brand with various types of raw materials to the company like the meat, vegetables, and spices. It
is known for having a wide range of small business which includes more than 80% to 90% in the
US itself. According to the author it can be said that these small business organization are owned
and operated by approximately 5000 independent, small, and mid-sized business and women.
Techniques like spreading the business to various types of middle men, collecting loyalty fees
and adding a percent to the total revenue earned by the company is one of the best way to
increase the revenues earned by the company. The company also initiated various types of
franchise rent on land and building services which are further added to the total revenue income
of the company. But according to the author Macdonald, Schmid and Phillips (2016) in a

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particular research it has been found out that the rent collected on the land and buildings owned
by the company are operated by the corporations.
External Analysis of the company
Political Factors affecting McDonald’s Business – this aspect refers to the effects of
governmental bodies and policies which impact the company on the macro environment of the
company business and economy. The governmental intervention can thus determine the rate and
path which the company should try to follow in order to develop the business in the best possible
way. The increase in the international trade agreement will thus be an opportunity for the
company to gain advantage over the competitors in the market. Whereas on the other hand the
increase in the government standards will also be a threat and as well as an opportunity because
it will be helping the company to increase its standard of living in the market and gain
competitive advantage over the competitors. The company thus should try to get involve with the
public health related policies which will help the company to get rid of heath and food
degradation issues which was previously faced by the company
Economic Factors affecting McDonald’s Business – This factor affects the economic
condition of the company in terms of smooth operations in the market. Economic changes are
directly and indirectly are known for indirectly influencing the performance of business.
Therefore the company should try to enter the market of developed countries which will directly
create an impact by helping it get a slow but stable growth. It will also help the company to boost
increase the business in high demanding areas or locations which will be a threat to the company
in the recent years. The slowdown of the Chinese economy is a great threat to the company as
because it is one of the best market of fast food service in the area. Therefore it can be said that

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the company should try to implement various types of innovative products so that they can
satisfy the demand of the customers in the business.
Social or Socio cultural factors affecting McDonald’s Business – The social conditions
which are known for affecting the business are the social market trends and as well as the
business environment in which they are working with. Therefore the most important social and
cultural factors influencing the company are the risk disposing incomes of the consumers in the
company which might be an opportunity for the company to gain effectiveness over the
competitors in the market they are working with. The company will also try to target the urban
environment which will be an opportunity for the company to get more customers over the
competitors in the business. The healthy lifestyle of the business will be one of the most
attractive thing that the business organization has to come up with in the recent time so as to gain
competitive over the market.
Technological factors affecting McDonald’s Business – Regarding the technological
factors, it can be said that the latest updates in the technological advancement will be enabling
the company to gain huge amount of advantage over the competitors in the market. With the
advent of new technologies. The use of latest technological factors of the company will be
helping it to increase the recent research and development of the company so as by leading to
various types of advancement in the business. It will also thus help the company to increase and
boost up the sales so as by increasing through the mobile delivery services in various types of
areas or networks. With the increase in the opportunities of the business the company will be
able to increase the sales of the company so as by providing the customers with the best services
among the competitors in the market.

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