Strategic Decision Making Report: Analysis of McDonald's Strategies

This report provides a comprehensive analysis of McDonald's strategic decision-making processes. It begins with an executive summary and introduction to the company, followed by an examination of both external factors (political, economic, social, technological, ecological, and legal) and internal factors (competitive rivalry, bargaining power of customers and suppliers, threat of substitution, and threat of new entry) impacting the business. A detailed SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is presented, followed by a discussion of strategic choices, including international business expansion, environmental considerations, and local management. The report evaluates McDonald's strategies, considering cultural adaptations and marketing approaches, and concludes with recommendations for future strategic actions, emphasizing market expansion, name recognition, product innovation, and improvements to customer experience. References and appendices support the analysis.

University
Strategic decision making
By
Name
Date
Lecturer’s Name and Course Number

Strategic decision making
Contents
Strategic decision making............................................................................................................................1
Executive summary:....................................................................................................................................3
Introduction:...............................................................................................................................................3
External factors:......................................................................................................................................3
Internal factors:.......................................................................................................................................5
SWOT analysis:........................................................................................................................................6
Strategic choices for McDonald's:........................................................................................................7
Strategic evaluation of McDonald's:....................................................................................................9
Recommendation:.............................................................................................................................10
Conclusion:................................................................................................................................................12
References:................................................................................................................................................13
Appendices:...............................................................................................................................................13
Page 2 of 16

Strategic decision making
Executive summary:
This report is based on McDonald's external and internal factors in business. The report also
consists of a SWOT analysis. There are also some strategic choices, and their evaluations along
with a recommendation and appendices are given below.
Introduction:
McDonald's is an American company which is famous for its fast foods and hamburgers. It was
established in 1940 as a grill restaurant managed by Maurice McDonald and Richard. In 1948,
they updated their company as a hamburger place, using invention line ethics.
External factors:
 Political factors affecting the business: McDonald’s thinks about the impacts of the
supporting political atmosphere on its business. In McDonald’s situation, the most
important political outer issues are as depicts:
1. Increasing global trade concurrences.
2. Pending Tariff reorganization.
 Economic factors: Economic transformations around the planet manipulate McDonald’s
manufacturing environment, given its international personality. In McDonald’s situation,
the most distinguished financial external features are given below:
1. Deliberate but steady expansion of the U.S. market.
2. Steady but dicey European cost-cutting measures.
Page 3 of 16

Strategic decision making
 Social factors: McDonald’s should react to social alterations in its distant or macro-
environment. In McDonald’s state, the most considerable social exterior aspects are given
below:
1. Widening prosperity gap.
2. Increasing educational assortment.
3. The healthy standard of living style.
 Technological factors: McDonald’s achievement partly relies on technical relevance.
McDonald’s should address the subsequent technical external aspects:
1. Temperate R&D movement in the business.
2. Escalating business mechanization.
 Ecological factors: Ecological outer factors influence McDonald’s customers and,
consequently, the company’s presentation. In McDonald’s production, the most
noteworthy ecological exterior factors are given below:
1. Rising attention for commercial environmental plans.
2. Increasing importance of maintainable business approaches.
 Legal factors: McDonald’s should pursue legal needs compulsory on its secluded or
macro-environment. The most considerable legal outer issues for McDonald’s are given
below:
1. New authorized minimum salary ranks in the U.S.
2. Local strength policy in workplaces and institutions.
Page 4 of 16

Strategic decision making
Internal factors:
Competitive rivalry: McDonald’s deals with strong competitions. In McDonald’s situation, the
tough energy of competitive enmity is based on the subsequent external issues:
1. The high amount of centers.
2. The high assertiveness of companies.
3. Low maintenance expenses.
Bargaining power of customers: McDonald’s should tackle the momentous command of
consumers. In McDonald’s state, the bargaining powers of customers are:
1. Diminutive operating cost.
2. Great figure of traders.
Bargaining power of suppliers: Dealers also control McDonald’s. In McDonald’s industry, the
following bargaining factors are:
1. A huge number of sellers.
2. Low advance vertical combination.
The threat of substitution: Substitutes are a major apprehension for McDonald’s. In
McDonald’s state, the given external aspects make the menace of replacement a sturdy force:
1. High replacement accessibility.
Page 5 of 16

Strategic decision making
2. Little switching expenses.
3. High recital to cost percentage.
The threat of new entry: New competitors can affect McDonald’s business share. In
McDonald’s situation, the sensible risk of new entrance is based on the subsequent external
features:
1. Small switching expenditure.
2. Moderate investment expenditure.
SWOT analysis:
 Strengths: McDonald's has a very strong reputation and known brand name. It has a
huge market share all over the world. The company trains their managers in a special
way; they have their process to train the managers. McDonald's launches new inventions
every year. Their technologies are very modern and innovative. Their marketing
strategies are very good, and that is why they are appreciated all over the world (Hung,
2013).
 Weaknesses: McDonald's have an unsanitary food image which is bad for the business.
They use beef oil and fat in their foods, which influences the fitness issues of the
customers. The extreme market competition also reduces its customers. Apart from all
these, some lawsuits are also filed against McDonald's. Also, their employee turnover
cost is very high (Mohammad Arabzad an, 2012).
Page 6 of 16

Strategic decision making
 Opportunities: the growth of fast food lovers provides an opportunity for McDonald's.
They can expand their business globally. They should consider eco-friendly strategies for
their business. Discounts and low price menu can attract a lot more customers, so they
should focus on this aspect.
 Threats: the huge amount of competition is a big threat for the company. Public
healthiness predicament is another point of threat to look after. Environmental problems
and financial recession are also huge risks for McDonald's (Vaněk, Mikoláš, and Žváková,
2012).
Page 7 of 16

Strategic decision making
Strategic choices for McDonald's:
 International business: To expand their business internationally, McDonald's should
follow the motto of ‘think global but act locally.' Their assessment chain needs to be
created by local culture and political, economic environments.
 Environmental issues: The approach of being ecological friendliness is a latest
emerging conception. Environmental sociability in result brings helpfulness to the
business and also offers the opportunity to manufacture a brand name.
 Local management: Local supervision is healthier to the outer atmosphere. Moreover
employing local workers would convey more recognition of the association in local
bazaar and corporation can get easy admittance to bureaucracy related to the neighboring
government. This takes up the background of innovation, responsibility and better
consumer responsiveness. This plan also allows the franchisee to tackle employees’
problems more efficiently Pride, W. (2017). Foundations of business. 1st ed. New York:
Cengage Learning...
 Political sensitivity: Political choices, procedures or circumstances may influence
country’s industry atmosphere in many ways. The political threat issue is thus very
significant for the company.
 Social networking: Social networking is very important for any business. Therefore the
company needs to stay socially active so that people will know about their foods (Gould,
2010).
 System and process standardization: As a global company it is important to have a
consistent system and progression in position for effectual and competent administration
of the company running in diverse regions. This strategy would facilitate the company to
Page 8 of 16

Strategic decision making
decrease their expenditure, diminish physical work, improved receptiveness to
shareholders, etc.
 Pricing strategy: Companies inflowing into dissimilar countries for selling have to
assess their costing of foodstuffs based on earnings allotment of the general public, local
price rises and money exchange velocity (Mottram, 2011).
 Growth Strategy: Growth approach should be based on three fundamentals- growing
number of eating places; capitalizing on sales and earnings, and humanizing international
productivity. These elements can be achieved through enhanced procedures,
reinvestment, and invention development, successful marketing, etc. (Qureshi and Hassan,
2013).
 Qualitative foods: The quality of food should be the major priority for a fast-food chain
like McDonald's. The good quality of food will attract more customers and help to
expand the business and its reputation.
 Modern technologies: New and modern technologies should be welcomed by the
company. Modern technologies can help them to make new strategies about how to grow
their business (Israelite, 2010).
 Improvement in turnover cost: Employee turnover cost must be improved. It will
encourage the employees to work hard and ultimately help the organization.
 Financial establishment: Employees should get a permanent position in McDonald's.
This way the financial recession would be a little less (Faisal, 2016).
Page 9 of 16

Strategic decision making
Strategic evaluation of McDonald's:
There have been various circumstances, yet, where McDonald’s has modified its product to
equivalent spiritual laws and traditions in a state. For instance, to equal the requirements of the
citizens in India, McDonald’s supplies Vegetable Nuggets and a Maharaja Mac based on mutton.
India is a country contained Hindus, who does not consume beef, Muslims, who does not
consume pork, and Jains, who reject to devour meat of any type. In the readings, we erudite that
it could be the pinnacle of American egotism to presume that what works in America must work
in different places that encompass big and perhaps much wealthier cultures than America. This
is a wonderful illustration of McDonald’s compassion to other customs and technique in which it
incorporated itself, as a product, into those particular markets (McDonalds Case Study, 2012).
Maybe the most attractive feature of McDonald’s promotion mix is its exercise of
endorsement. Endorsement consists of five chief tools: publicity, direct advertising, sales
sponsorship, public associations and promotion, and individual selling. Though the motivating
strength behind McDonald’s promotion is to endorse its international figure, the corporation still
points on the desires of the districts they are inflowing (Mcdonalds, 2011).
In its publicity, McDonald’s expresses one general picture with altered qualities in
diverse cultures. They focus on regulating the product name but containing marketing
operations. For instance, in Asia, McDonald’s commercials are devised toward kids, to whom it
tributes much of its accomplishment in that area (Pride, 2017).
According to the theories, one of the most imperative marketing civic relations performances is
the creation of optimistic publicity for the product and business. In stipulations of public affairs,
McDonald’s usually has contained its labors. Nevertheless, there are a few cases in which the
Page 10 of 16

Strategic decision making
corporation has approved a more comprehensive policy. In 1997 they harmonized up with Walt
Disney, which certified them to distribute exclusive advertising privileges for everything from
movies to foodstuff, for the subsequent ten years. This was a very successful international public
association’s exertion as Walt Disney has a global demand. An additional way McDonald’s gets
positive exposure through its communal relationships is through the exercise of games
sponsorships. The association supports a vast range of games on both the public and
international level. Internationally, it improves its name with relations with the World Cup and
Olympic Games. On a national scale, it associates itself with groups like NASCAR and
the NBA (Rodrigues, Nikhil, and Jacob, 2016).
The evaluation also discusses the inconvenience of language barricades in international
marketing. It is not sufficient to learn verbal communication from a book. Even in a nation, not
everybody knows the connotative significance that language picks up through practice. In
dealing with this problem, McDonald’s applies primitive writings. They are also powerfully
dedicated to recruitment locally and endorsing from inside, appointing only supervisors who
comprehend both the commercial and local traditions in which they function (Aitalieva and
Panasyuk, 2016).
Recommendation:
McDonald's is a commanding product name. Therefore, its schemes seem so high-quality.
However, after looking at the PESTLE medium and SWOT analysis, there are some steps that
McDonald's should consider:
Page 11 of 16

Strategic decision making
At first, while inundated in the US, McDonald's has immense expansion potentials out of the
country. According to the PESTLE analysis, market enlargement is one policy that McDonald's
must apply. The company must organize an international policy which focuses on large cities
down with lofty inhabited areas, mainly in Asia. If McDonald's could extend more food chain in
Asia, it is a vast advantage for business to increase market allocation (Mujtaba and Patel, 2011).
The second point is concerning the name acknowledgment. In all places, millions of individuals
are recognizable by the Golden Arches that are at the peak of all McDonald's bistros.
McDonald's have to utilize this benefit to expand more appeal from consumers. It does not
indicate that this corporation has to be implicated into several parts of the food production. In
reality, fast food and soft drink convey large revenue for McDonald's. Nevertheless, if continue
relating in other regions, it would amplify the perspective for accountability to the business
because of numerous amount of competitors.
In adding up, McDonald’s power as told over is that opening of the new invention. The
company must focus on this vigor to grow stronger. Nonetheless, the company appears not
branch out its commodities frequently while opponents are stronger and comprise latest products
progressively. Because of this cause, McDonald's have to use more funds on study and growth to
make new stuff and facilities as well as enhance the competence of procedures. At first, an
individual thing McDonald must focus on is that the amusement sections for children.
McDonald's has amusement or play sections but not in each restaurant. Clients love this facility.
Therefore, if it is admired in all bistro of the company, consumers would be more please, and
they would want to reappear repeatedly. An organic set of choices is very essential. This will
give regulars an option while letting McDonald's to sustain its market profit internationally.
Page 12 of 16