BDM1314: Principles of Management - McDonald's SWOT Analysis Report

This report provides a detailed SWOT analysis of McDonald's, a prominent player in the fast-food industry. The analysis examines both internal and external factors, meticulously assessing the company's strengths and weaknesses within its internal environment, and identifying opportunities and threats within the external environment. The report delves into McDonald's operational strategies, market positioning, and competitive landscape. It highlights key strengths such as brand recognition and global presence, while also addressing weaknesses like high employee turnover and negative publicity surrounding health concerns. The analysis further explores opportunities for international expansion and leveraging technology, alongside threats such as intense competition and economic downturns. Based on these findings, the report offers four strategic recommendations for business improvements, including new CSR strategies, sustained global development, enhanced home delivery services, and increased product innovation. The conclusion summarizes the key takeaways and emphasizes McDonald's potential to maintain its leading position in the global fast-food market by effectively addressing its challenges and capitalizing on its strengths.

Running Head: MANAGEMENT
0
Principles of Management
BDM1314: Principle of Management
(Student details :)
8/16/2019

Management
1
Contents
Principles of Management-II......................................................................................................2
Introduction................................................................................................................................2
SWOT Analysis.........................................................................................................................2
Internal Strategic Factors (Strengths of McD).......................................................................2
Internal Strategic Factors (Weaknesses of McD)...................................................................3
External Strategic Factors (Opportunities for McD)..............................................................4
External Strategic Factors (Threats for McD)........................................................................5
Recommendations for business improvements..........................................................................6
First Recommendation...........................................................................................................6
Second Recommendation.......................................................................................................6
Third Recommendation..........................................................................................................6
Fourth Recommendation........................................................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................8

Management
2
Principles of Management-II
Introduction
This paper is based on a detailed SWOT analysis of an organization. In order to
conduct a SWOT analysis for the company, the company McDonald's has been selected. In
this context, the SWOT analysis is going to focus on the internal as well as external
environments, while assessing the strengths along with weaknesses within the internal
environ as well as opportunities with threats within the external environ. Apart from this, a
critical analysis will be discussed on how the chosen company could leverage on the SWOT
analysis for their business improvements. McDonald's Corporation (McD) is an American
fast-food restaurant series. Additionally, it was founded in the year 1940 as a fast-food
restaurant functioned by Richard and Maurice McDonald. The major operations usually
executed in San Bernardino, California, the US as its headquarters of the McD.
The fast-food chain corporation McD is providing quality, delicious and safe foods
since May 15, 1940, which people can enjoy happily in a comfortable dining environment
(McDonalds Co., 2019). Besides, the mission of the company is to be its customers’ favourite
place and effective way to eat and drink. Moreover, the vision of the company is to move
with velocity to drive profitable growth as well as become better while serving more
customers delicious food each day all across the world (Corporate McDonalds, 2019). In this
way, McD is a global fast-food brand having restaurants in around 100 countries worldwide.
SWOT Analysis
This section is dedicated to revealing competitive strategies with the help of which
McD has become the top successful fast-food restaurant series corporation while
continuously dominating the global fast-food industry. With the SWOT analysis, this report
will identify the major strong points, limitations, threats, and opportunities which usually
affect the company largely (Helms & Nixon, 2010).
Internal Strategic Factors (Strengths of McD)
Being the second-largest restaurant chain, McD is serving their loyal customers all
across the 120 countries. Apart from this, the firm as well as its franchisees in total operate

Management
3
37,241 restaurants within more than 120 nations. The brand is known as the second-biggest
restaurant in the world as the Subway is in the first position. In this way, some of the key
strengths of McD are as follows:
As of now, McD is the most popular and recognizable brand in the whole global
restaurant industry. While McD’s reputation has been struggled a lot in the past years, The
Company is still recognized for its innovations in the global fast-food industry (Cavusgil,
Knight, Riesenberger, Rammal, & Rose, 2014). In this way, the American business values the
McD brings to the other nations of the world act as the key strengths of the company.
Source: (Corporate McDonalds, 2019)
Apart from this, some other strength is diversified income as well as a strong global
brand in the world.
Internal Strategic Factors (Weaknesses of McD)
There are some weaknesses which can be effectively converted into strengths with
advanced technology and corporate awareness; some of these weaknesses of McD are as
follows:
High Employee Turnover: it has been found that most of the jobs at McD are low pay and
low skilled which is ultimately pose a weakness for the company. In this way, employee
turnover of the company is too much high as compared to its competitors. Subsequently, high

Management
4
employee turnover causes training costs which ultimately creates excessive pressure on the
company’s bottom line (Teeple, 2016).
Negative publicity: as we know that many of the world people own a perception that McD’s
food us unhealthy. It is because the food is full of salt, carbs, sugar, and fat. Moreover, the
fast-food chain has been broadly evaluated for encouraging harmful eating habits; hence it is
allowing many of their consumers to put on pounds. Thus, health-conscious customers do not
prefer having a meal at McD, despite the company’s efforts for introducing healthier options
at times ( THOMPSON, 2018).
Apart from the above two, there are many other weaknesses found in this SWOT
analysis, as follows:
 Weak product development
 Decelerated revenue and income growth
 Deteriorating market share
 Discontented franchises
 Taste and quality of food products (Teeple, 2016).
External Strategic Factors (Opportunities for McD)
 As an opportunity, the company can extend its international businesses and operation
as international expansion.
 As the company is serving only 1% of the total world population, hence it can be an
opportunity as well.
 The company can grow their dining-out market as well
 McD can build joint ventures with several retailers of the world
 With the help of consolidation of retailers, better sites for McD franchisees can be
located
 McD may expand the international business into emerging markets of India and China
 The new McCafe with Wi-Fi internet should be used for attracting segments
 By installing attractive children parks as well as diverting focus on educating
customers about fitness and health, McD can grow their business worldwide
 Continue focus on CSR activities while reducing the effect on the earth as well as
community linkages, the company can enhance its business all over the world.

Management
5
 As a big opportunity, the company can strengthen their value proposition as well as
offerings, in order to motivate their consumers who come into coffee shops of McD.
 With the use of CRM and database marketing, the company can efficiently market its
consumer target groups easily.
 The company mat responds to social changes with the help of innovation and
technology. For example, their move towards hot baguettes as well as healthier snacks
is supporting their new brand positioning largely (Panmore, 2017).
External Strategic Factors (Threats for McD)
The threats can always be converted into opportunities with the help of continuous
efforts and business intelligence. In this context, issues related to fatness levels might lead to
enhanced levels of taxation upon fast-food, which would squeeze profit margins for McD. In
this way, it would leave a huge impact on customers as such tax may be passed on to them
through price increases when McD is not able or sluggish to change the fat contents in their
food (Retail ET, 2018). In this way, in terms of internal and external environments for
business, economic threats to the company also need to be considered as the risk of slowing
growth in the global economy (Hill, 2008). In this way, some more threats recognized with
this SWOT analysis are as follows:
Intensity Competitors: fast-food brands like Wendy’s and burger king posing threats for the
company’s business. Moreover, many fast-food dining restaurants are growing their burger
offering while declining their food product prices. In this way, intense competitors are acting
like threats for McD (Mathur, 2017).
Public health crisis: it is well-aware that obesity cases are increasing among Americans.
Besides, people are facing heart problems more seriously, hence society needs healthy as well
as nutritious food and lifestyle which is creating threats for McD’s business ( THOMPSON,
2018).
Serious environmental issues: in general, our environment is the base of everything we do,
hence any action that impact the earth as well as human life are always evaluated strongly.
Therefore, if McD will keep using HCFC-22, then the company may miss consumers,
specifically who truly care about the environment of the globe (Enterslice, 2017).
Economic recession: As we know that, the corporation’s revenue rates are broaden the
horizons based on the length of the stagnation; hence the company is inevitably negatively

Management
6
impacted with trickledown effect. As a big threat, down-turn and stagnation in the economy
might upset the retailer sales ( Neate, 2015).
Recommendations for business improvements
Post doing a SWOT analysis of internal as well as external environments of the McD,
it has been found that the company is continuously facing fierce competition, and thereby a
stimulating subset of the populace which is healthy eating attentive (Helms & Nixon, 2010).
First Recommendation
In this way, new business and CSR strategies will be helpful to offer more solidity to
the chosen company. In addition to that, the stock can be a good alternative at the moment for
short term investors, however presumptuous the success of their international initiatives,
there can be some appeal for longer-term investors as well. The company should work
towards converting threats such as mature overstored industry, and fluctuation of foreign
exchange rates, recession and evolving demographics into business opportunities
(McDonalds Co., 2019).
Second Recommendation
The SWOT analysis conducted in this report shows that McD can improve their
business viability with the help of sustained global development, specifically into high-
growth marketplaces. In addition to that, the chosen company may also reduce risks through
evolving new products or inflowing into new global industries in relation to the fast-food
restaurant industry worldwide (Thompson, 2019).
Third Recommendation
Post analysis and critical evaluation, it has been found that home delivery services are
not so great in the context of McD food delivery all across its operating nations and regions
(Shenkar, Luo, & Chi, 2014). Here, people all across the world are highly interested in
receiving good, healthy, tasty and safe food at their residences, homes, offices and other
places wherever they stay hungry. In this way, the third recommendation to McD can be in
terms of home delivery services. It means that the writer of this report is suggesting that McD
should improve, plan, strengthen and enlarge their existing home delivery services all across
the globe (Buckley & Ghauri, 2015).

Management
7
Fourth Recommendation
As we all know, innovation is the key to success within the international business
market. If McD uses innovation into their product development and R&D units, then the
company will get success positively (Buckley & Ghauri, 2015). This recommendation by the
writer suggests that McD should get more innovative products for their vegetarian markets
within nations like India and many more. By increasing more product variety into nations like
India, McD can expand their business all over the world by positive publicity and brand
image.
Summary
In conclusion, the paper has successfully conducted SWOT analysis focused on both internal
as well as external environs, while assessing the key benefits, limitations in the internal
environ. On the other hand, threats and opportunities in the external environment have been
identified efficiently. Apart from this, a critical discussion on how the chosen company can
leverage on the SWOT analysis for their business improvements in terms of four
recommendations took place. In this way, it has been found that McD has undergone
countless changes since their origin in California. Besides, McD as a fast-food restaurant
chain has oppressed the U.S. market and hence it is focusing now on the whole world.
Moreover, McD, along with their strengths and opportunities, is working for sustaining their
international market position. It can be said that the firm is doing very well and keeps trying
within countries like China, Africa, and the Middle East, that will be continued resource of
revenue during upcoming years. In this way, when McD can overwhelm all of their
challenges, while making use of strengths and evolves correct strategies; then undoubtedly it
will win the market and thereby hold fast to the leading position within the global fast-food
commerce.

Management
8
References
Neate, R. (2015). McDonald's: a brief history in 15 facts. Retrieved 12 02, 2018, from
https://www.theguardian.com/business/2015/may/02/mcdonalds-a-brief-history-in-15-
facts
THOMPSON, A. (2018). McDonald’s Organizational Structure Analysis. Retrieved 12 02,
2018, from http://panmore.com/mcdonalds-organizational-structure-analysis
Buckley, P., & Ghauri, P. (2015). International business strategy: theory and practice.
London: Routledge.
Cavusgil, S., Knight, G., Riesenberger, J., Rammal, H., & Rose, E. (2014). International
business. Australia: Pearson.
Corporate McDonalds. (2019). Using our scale for good. Retrieved 07 08, 2019, from
https://corporate.mcdonalds.com/corpmcd/scale-for-good/using-our-scale-for-
good.html
Enterslice. (2017). Introduction and Types of International Business Environment (IBE).
Retrieved 12 02, 2018, from https://enterslice.com/learning/international-business-
environment-ibe/
Helms, M., & Nixon, J. (2010). Exploring SWOT analysis–where are we now? A review of
academic research from the last decade. Journal of strategy and management, 3(3),
215-251.
Hill, C. (2008). International business: Competing in the global market place. Strategic
Direction, 24(9).
Mathur, S. (2017). Glocalization in Fast Food Chains Glocalization in Fast Food Chains: A
Case Study of McDonald's. Strategic Marketing Management and Tactics in the
service industry, 330-347.
McDonalds Co. (2019). McDonald CSR Report 2018. Retrieved 08 05, 2019, from
http://www.mcdonalds.co.jp/content/dam/web/mcdonalds/company/csr/images/
CSR2018_e.pdf

Management
9
Panmore. (2017). McDonald’s Organizational Culture Analysis. Retrieved 07 08, 2019, from
http://panmore.com/mcdonalds-organizational-culture-analysis
Retail ET. (2018). Go green: McDonald's switching to environment-friendly packaging and
recycling. Retrieved 07 08, 2019, from
https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/
go-green-mcdonalds-switching-to-environment-friendly-packaging-and-recycling/
62524710
Shenkar, O., Luo, Y., & Chi, T. (2014). International business. London: Routledge.
Teeple, E. (2016). Look out McDonald’s, the" Wheel” is rolling. The 1979 Academy of
Marketing Science (AMS) (pp. 380-380). UK: Springer.
Thompson, A. (2019). McDonald’s Organizational Structure & Its Characteristics – An
Analysis. Retrieved 07 08, 2019, from http://panmore.com/mcdonalds-organizational-
structure-analysis