Internal and External Analysis
McDonald’s is among the leading brands around the world. Although, the currently increasing market competition has put pressure on the market environment, the strategies employed by firm keeps it relevant and popular among the target audience. The firm serves millions of consumers totaling to about 60 million users in a single day. Substantial transformation has been witnessed over the last decade, subject to its ability to offer a variety of quality products. For instance, the institution promotes new products and organic meals especially for the consumers who are cautious about their health. According to nutritionist, organic foods are more nutritional, and have low calorie levels. Although, a majority of the restaurants are within the US, the company has expanded over other regions. The company now has over 15500 restaurants and franchises in different places around the world (De Vogli, Roberto et al). It is dependent on the over 1 million employees that serve and support its operations in its numerous establishments within the U.S while over 760000 work overseas. The source of the firm revenues comes from varied ventures sources, such as franchise fees, restaurant proceeds and royalties.
During the fourth quarter of 2015, the company made over $2.3 billion in dividends and share repurchases that was remunerated out to shareholders . The company paid over $9.5 billion for the entire 2015, which translated to a sales increase of 5.8% (“Marketing Environment Analysis for Mcdonalds Marketing Essay”). Its working income grew by over 30%, as the operations were driven by positive comparable sales, as well as the sale of a its strategic restaurant assets. As such, McDonald’s a consumer driven firm that focuses on the delivery of excellent customer service in the markets.
The company success can be attributed to its ability to effectively analyze and implement it SWOT analysis provisions. Some of the company’s strength includes a stronger band value and public awareness, standardized processes, market diversification, high levels of profitability, a strong global presence, and a sustainable business model. The weaknesses include unhealthy foods, limited flexibility in its processes, low product diversification, negative publicity and vulnerability to markets that are already developed. Priority is set on the strengths and weaknesses, which is an analysis that is conducted based on the success that the company has realized (De Vogli, Roberto et al.). The strengths of McDonald’s is indicative that several factors including having standardized processes, strong image, high profitability and wide public awareness has a positive impact on the performance or productivity of the company. During its operational time, McDonald’s has exploited on its strengths to counter like firms, and attain higher competitive position.
Externally, the company exists within a full service restaurant service although it operates under the fast food category. It is one of the most lucrative sectors because of the profit margins enjoyed by most businesses in the industry. The company realized revenue earnings of over $198.9 billion and there are expectations that the revenue will reach $223 billion by the year 2021 (“Marketing Environment Analysis for Mcdonalds Marketing Essay”). It pays quite a number of American workers with over 25% of the American working population receiving wages from the company. Branding is an important area of consideration in this sector especially if business prospectors are interested in the particular business. This means that most consumers are attracted by the big brands especially if their preferred brand has substantial following in the market.
Brands that intend to succeed in any market must develop less complicated brands that will also have consistent products to match their performance. Advertising has also played an essential role in the popularity of the company because the constant media advertisement tend to make the images of the products stick on the mind of the consumer. The company also boasts of having some of the best locations that make it convenient for consumers to visit the establishments (“Strategic Analysis (SWOT, PESTEL, Five Forces) Of Mcdonalds”). The main target consumers for this restaurant chain are the working class who can order their food while at work. The locations works well for them because many of their consumers are keen on saving time and going back to their work. The external analysis has addressed some of the factors revolving around the Porter’s Five Forces with regard to the full service restaurant industry. The factors denote different levels of strengths in the market. Competitive rivalry is high in this business environment and increased instances of business rivalry in the market. Despite the fact that McDonalds is dominant player in the industry, it receives substantial competition from other establishments such as Burger King and Wendy’s. The PESTLE analysis focuses issues such as societal norms, culture and demography (“Strategic Analysis (SWOT, PESTEL, Five Forces) Of Mcdonalds”). It has provided illustrations on the behaviors of certain communities which is important for any business that seeks to succeed. The demographic data also illustrate how individuals including children and youths behave and their behavior could help the company make important decisions regarding their services.
The external analysis has focused on the opportunities and possible threats that the business is likely to face. The opportunities include branding, efficiency, supplier power, market penetration, location and technological advantage. The threats include consumer power, competitive rivalry, political interference, economic issues, social issues, threat of new entrants and threat of substitutes.
The table below is a representation of the most important Strengths, weaknesses, opportunities, and threats after the external and internal analysis.
a stronger band value and public awareness, standardized processes,
high levels of profitability
a strong global presence, and
a sustainable business model
limited flexibility in its processes,
low product diversification,
negative publicity and
vulnerability to markets that are already developed
Threat of new entrants
Threat of substitutes
The company is dependent on good strategies because of its market dominance and an influential brand name. The company can still make several improvements within and beyond its SWOT matrix. Firstly, the company should consider prioritizing market development strategy to ensure it gains a greater market share overseas (“Marketing Environment Analysis for Mcdonalds Marketing Essay”). It should consider preparing a robust strategy to cater to the international market that serves the densely populated areas and major cities. Asia is one prospective region that can help the company enlarge its overseas market. China is the leading market of any world products that organizations should consider targeting. There is still a chance to open up additional shops in that country and other Asian nations
The fact that the company boasts of an easily recognizable name provides better opportunities for the company to increase its market share. The company need to come up with strategies to attract and retain potential consumers. It may consider diversifying into other segments like it has ventured into the hotel industry in Zurich and Switzerland. Many consumers have expressed the desire to see the company open up similar hotel investments in their countries, which is a great opportunity for the fast food giant. Even though, there may be plans to setup other business ventures associated with food, the company should prioritize the chance to get into the hotel industry and make a considerable impact (“Strategic Analysis (SWOT, PESTEL, Five Forces) Of Mcdonalds”). The brand name is the greatest asset that the company can depend on in in establishing itself as a worthy entrant in the hotel sector. The company may also consider its reliable food sources to enhance its success by ensuring that it produces high quality products once it enters the hotel service industry. The service skills of its employees are considered a great advantage and optimizing this resource is likely to turnaround the fortunes of the company and improve its dominance significantly.
The company may focus on its intention to introduce new production units to improve its strength in the market. The inference is that the firm should use more finances on research and development projects. This will help the company create new services and products as well as increasing the efficiency of its business operations. The company’s idea to develop a play place for children has impacted its operations well (“Marketing Environment Analysis for Mcdonalds Marketing Essay”). However, it does not have such a place for all its restaurants and there is a need to focus on this area as it may completely outdo its competitors in this area.
The idea has pleased many consumers and the company may consider introducing interesting toys or learn from other service providers such as Jolly Bee, which has tried the sort of service. The idea is likely to boost the company’s position in the market as many more consumers will be attracted to visit the company because of its unique products and services.
The customer service of the company is considered to be one of the best in the fast food industry. However, some consumers have noted that some staff members are rude and portray a bad attitude when they serve them. The company should make use of its professionally trained managers to train the workers that show consumers rudeness or a bad attitude. Finding a resolution to proper customer service is likely to improve customer service and productivity at the company.
In addition, the company offers a relatively cheaper menu compared to what is offered by its main competitors. However, what is offered in the menu is not enough, as such, McDonalds should consider expanding the menu to introduce additional foods. The fact that the consumers rely on the menu to make decisions makes it a necessity for the company to make significant improvements to its menu. The increasing demand of organic foods should also prompt the company to increase its supplies in the area. The company should introduce new vegetarian products in its menu to attract more consumers that prefer healthier foods. The management of the company is best placed to take action in the efforts to implement the proposed recommendations.
In conclusion, McDonalds has experienced substantial changes over the time, allowing the capture of the fast food sector in the United States. Currently, the firm is focusing on the enlarging its potential market share by expanding globally. In order to achieve success, capitalizing on its strengths is critical, thus implementing of the proposed recommendations is critical. Some of the recommendation key to its future performance includes, developing an international expansion strategy, introducing a kid’s play place, and introducing additional foods in their menu. The time required for the implementation of all the stated recommendations is twelve months including areas where research is required. The firm should dedicate the first three months for research, the following two months to realign its strategies and integrate new decision making structures, six months for implementation and the last month for follow-up
“Marketing Environment Analysis For Mcdonalds Marketing Essay”. Ukessays, 2017, https://www.ukessays.com/essays/marketing/marketing-environment-analysis-for-mcdonalds-marketing-essay.php.
“Strategic Analysis (SWOT, PESTEL, Five Forces) Of Mcdonalds”. The WritePass Journal. n.d., 2017. Web. 5 Apr. 2017.
De Vogli, Roberto et al. “The Influence of Market Deregulation on Fast Food Consumption And Body Mass Index: A Cross-National Time Series Analysis”. 2017,. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3949530/
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