McDonald's Strategy Analysis: PESTLE, SWOT, Porter's Five Forces
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Introduction : McDonald's Strategic Analysis
Assessment of the Identification of the Organizational Strategy:
Pestle Analysis
The political factors affecting the operations of the company are the regulations to decrease salt and provide healthier food products in the community. The salt content was lowered by the company and all food ingredients and minerals were disclosed by them.
The economic instability of the current time has affected the operations as people are preferring their homemade food instead of fast foods and beverages. In 2008 the economic instability affected differently as the people were preferring the cheap items of McDonald's instead of daily grocery (Perera, 2017).
The social trends of the current generations of opting for healthier food options to reduce obesity and other health issues. The younger generations are demanding a sustainable supply chain from the companies providing daily products and this has disrupted the operations of the company several times.
The technical inductions in the supply chain of the company have enabled the companies to centralize operations such as inventory and order management. The marketing strategy of the company has focused on online marketing. Websites and apps are being launched by the company to gain a competitive advantage.
The global employee regulations have demanded the company to increase the wager of the small employees working. The profitability of the company has reduced as the company has a wide network of operations and a small increase has caused a significant impact (Karataev, 2015).
The beef production of the company entangled in environmental issues as the company was using deforested land for beef production. This led to the decreased brand image of the company as overall sales reduced. The company had to withdraw all operations from those land and involve in planning marketing strategies to rebrand their beef-related products (Rajawat et al, 2020).
SWOT Analysis
The SWOT analysis willanalyze the internal factors affecting the operations and business of the company.
Strengths
The company is a renowned brand and among the oldest companies in the industry. Customer loyalty is gained due to the long establishment of the company.
The product range of the company is large it offers many local and international fast food options to its customers.
The cheap cost of the products offers services to a wide variety of consumers (McDONALD,2016).
Weakness
Although having a wide product range the company fails to provide vegetarian products to its customers.
The brand image has reduced due to animal cruelty issues and deforestation caused in Amazon forest
The food products of the company have been labeled unhealthy by government and non-governmental bodies.
The breakfast options of the company are diminishing day-by-day and losing customer attraction.
Opportunities
The company has options to rebrand itself as a healthier food chain.
The vegetarian options are being increased allowing the company to widen its customer range with sustainable options (Akman, 2019).
The company is trying to increase its products by including kinds of seafood in its menu and attract seaside consumers.
The company has also introduced a coffee chain in the UK to increase its operations in the beverage market.
Threat
The company has high competition of the market and have to effectively plan their cost to stay ahead of their competition.
The company has been involved in issues with deforestation in amazon and the brand value was decreased (Liand Hopfgartner,2016).
Porter five force analysis
Competitive Rivalry:
The industry has high competition and McDonald's being a leader has high competition in the market. The Burger King, pizza hut, and KFC provide a high competition in the operations. The pricing strategy has a strong competition every company in the industry competes with their pricing strategy in the company.
The threat of new entry:
The company is an older establish hence provided customer loyalty. The company is operating for more than 80 years and the brand value is increased in the market. Thus, the threat of new entrants is low. Although many prominent companies are diversifying and many start-ups are coming up with their fast-food chains (Arline, 2015).
The threat of substitutes:
The consumers have high substitutes available, as the industry is filled with multiple types of food chains such as coffee and other beverages. Through integrating with Uber Eats and self-pickup services the company is trying to speed the supply chain and attract more customers. Substitutes such as Pizza Hut, Dominoes, and Taco Bell the company has a moderate threat of substitutes in the industry.
Bargaining power of Buyers:
The buyers have high bargaining power as there are multiple substitutes and competitors. The consumers can choose from multiple brands and choices present to buy fast food. Although the pricing strategy of the company has helped to attract more consumers main competitors like Burger King pose as a threat in this area too (Aithal, 2016).
Bargaining power of suppliers:
The company's main suppliers are the raw food supplies that are used in restaurants. The company has no merger or acquisitions with any other company or brand. Hence giving the company full control over the decisions. Thus, it can be concluded that the bargaining power of suppliers is low (Burnsand Dewhurst, 2016).
VMOS Analysis
Vision: the vision statement of the company is to move with velocity and drive profitable growth to become even better McDonald's and serving more people with delicious food every day around the globe.
Mission: The mission statement of the company is to be a favorite place and way of their customers to eat. The company claims to provide continuous efforts in improving the consumer's statement (Taiwo et al., 2016).
Objectives: The main objectives of the company is to serve delicious food to the people and simultaneously provide training to enhance the career growth of its employees.
Strategies: The business strategy of McDonald's include in providing fast food their customers at a lower price form their competition.
The company has adopted expansion strategies to grow in new markets, especially Asian markets. Market penetration is being utilized by providing value products that existed before.The company is using an adaptation strategy in a different market to smooth its operations and opening different food brands such as McCafe a coffee outlet diversifying its operations (Spear,2017).Many countries follow different regulations on food. Such as meat buying in Russia has to be from being in a specific way and due to these regulations, McDonald's has a different operational body to purchase meat.
Business Strategy
Value for money:
The main aim of the company to attract its customers is by providing low-cost products. The pricing strategy of the company is aimed to be ahead in the competitive advantage. The lowest available product costs lesser than a pound. Thus, providing value for money is one of the key strategies of the company (Haoand Yazdanifard, 2015).
Customer service:
Providing customer service has always remained a priority of the company. Although the recent evolving menu of the company and food products are getting more complex to prepare the brand faced service issues. During rush hours most of the outlets failed to manage the customers as the items took more time to prepare to result in negative feedback for the company. Thus, the company has moved to providing its menu and reintroducing its popular and simpler food items.
Marketing mix to assist in business strategy
Brand Marketing:
The company has faced a backlash from its customers due to animal cruelty and deforestation links surfaced in the past. Moreover, the industry is targeted by governmental and social organizations labeling as unhealthy foods. Thus, the company is including sugar-free items and other healthy items such as iced tea and salads. These products are mostly low in calories and carbohydrates (Leskaj, 2017).
Menu replacement:
The company is reshaping its items due to the complexity it faced by including newer and complex items in their menu. Many complex food items on the menu took longer preparation time resulting in dissatisfied customers. New and simpler items were added, fish-related dishes are also being included to increase customer range.
Online Marketing:
Third-party food dealers are used to delivering the products to the customers. The company is also introduced to apps and websites to serve customers in their doorsteps or self-pickup services. Marketing strategies are more inclined to promote products digitally as the target customers are easily attracted.
Recommendations
The company has a huge name and almost every country is familiar with the brand. The brand name can be used to expand market reach in Asian countries. Although the company is expanding its operations only metro cities are targeted. The suburban areas in developing countries have a huge potential customer base and launching cost-effective products in these areas will increase the reach significantly. Although, before launching itself to a new market the company should survey the demands carefully and introduce products with higher demands. Kinds of seafood and coffee should be used to diversify its operations.
McDonald's has play areas for children in some of their outlets. These outlets tend to attract more customers than others. Thus, the company should increase these play areas as most of the children are attracted to McDonald's for their special kid's meals. The play area is specifically a part where the competitors lack(Leskaj, 2017).
The company should train its employees more efficiently. The manager is professional in nature and can handle the customers carefully. Although the junior employees have poor performance in dealing with the customers. They need to be guided by the managers and patient and a mature attitude should be harnessed.
References:
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies, operating concepts & business systems. International Journal in Management and Social Science, 4(1).
Akman, M.K., 2019. SWOT Analysis and Security Management. European Journal of Management and Marketing Studies.
Arline, K., 2015. Porter's Five Forces: analyzing the competition. Business News Daily.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan International Higher Education.
Hao, M.J. and Yazdanifard, R., 2015. How effective leadership can facilitate change in organizations through improvement and innovation. Global journal of management and business research.
Karataev, O., 2015. Market Entry Strategies: Case: McDonald's entry on the Russian market.
Leskaj, E., 2017. The challenges faced by the strategic management of public organizations. Revista» Administratiesi Management Public «(RAMP), (29), pp.151-161.
Li, N. and Hopfgartner, F., 2016. To log or not to log? SWOT analysis of self-tracking. In Lifelogging (pp. 305-325). Springer VS, Wiesbaden.
McDONALD, M.A.L.C.O.L.M., 2016. Strategic marketing planning: theory and practice. The marketing book, p.87.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Rajawat, A., Kee, D.M.H., Malik, M.Z.B.A., Yassin, M.A.Q.B.M., Shaffie, M.S.I.B.A., Fuaat, M.H.B., AlDosari, N. and Santoso, M.E.J., 2020. Factors: Responsible for McDonald's Performance. Journal of the community development in Asia, 3(2), pp.11-17.
Spear, S., 2017. Impression management activity in vision, mission, and values statements: A comparison of commercial and charitable organizations. International Studies of Management & Organization, 47(2), pp.159-175.
Taiwo, A.A., Lawal, F.A. and Agwu, P.E., 2016. Vision and Mission in Organization: Myth or Heuristic Device?. The International Journal of Business & Management, 4(3).
