McDonalds’ External and Internal Environments
McDonalds Corporation is a leading food service business and recognized all over the world. It operates in the food industry (John, 2008). The corporation took off with the help of two brothers, dick and Mac McDonald, as a small, fast-food joint in the year 1948. A sales representative named Raymond saw significant opportunities in the market and advised the two brothers to spread out their operations and open more restaurants. Close to nineteen years later, McDonalds had opened more branches outside the United States of America.
Market segments
A market segment is the strategy used by company to divide the larger market into small groups depending on the consumers wants. McDonalds has the best market segment because in the beginning the brand name had only one size, which is one kilogram. Only the rich could afford this and no one else. It later considered those living in the rural areas using demographic and geographic segmentation.
For demographic, it meets the needs of all ages starting from the parents to the children. For geographic segmentation, McDonalds divided the nations, states and cities and served them just as they wanted. This has been a big plus for the company and it has seen all the consumers well catered for. Not forgetting that McDonalds started as a very small brand but its market segment strategy has taken it to the greater heights. The brand name upon beginning targeted the children and many had the perception that the burgers and cereals are for the little ones. The marketing and campaigns that McDonalds did transformed the perception and other people apart from the children started getting the cereal as a favorite meal for breakfast (Trout, 1969).
McDonald’s governance issues
McDonalds suffer from political threats coming from wars between the countries it operates in moreover, governments. On top of legislation, it has forced them to provide health warnings on their product. The reasoning behind why McDonald has turned out to be the focus of attacks and terrorism groups is that they have become a symbol of capitalism and Americanism. The political factors are beyond their control, and this led to more suffering. The only way they could turn away from the crisis is through leaving the war-stricken countries. Leaving would mean closing down some outlets and, therefore, loss in revenue (John, 2008).
Lately, economical problems too are heartwarming McDonald. From its fast food business, McDonald has established a recent fall in sales. The drop in sales is a suggestion that customers want more freedom of choice than the current offer. This is difficult to get from McDonald since it does not support that. This has resulted to buying other companies such as Prêt a manger with the aim of increasing revenues by offering more varieties to customers as they demand (John, 2008).
McDonald has over the years, refined its managing and process of its stores making it more efficient as it possibly can. This has advantage over the competition whereby they can produce more effectively and efficiently than other small companies hence still the number one. Through the introduction of healthy and a wider variety of alternatives, McDonald has tried to diversify the company. However, the attempts seemed not to have taken off.
Competition forces
competition
McDonalds leading competitors within the quick food industry are continually coming up with strategies that tend to put them top by getting more customers and market share. Many firms in the industry are jockeying for greener pastures and better position in the market using strategies that are offensive. As a result, other firms including McDonalds have to take defensive measures to guard against the offensive strategies.
Substitute products
McDonalds gets pressure from other firms because they come up with more substitute products aimed for competition. Substitute products in the quick food industry are a big plus and customers always prefer them. Since fast foods are not always the best when it comes to health, selling substitute products becomes a big advantage.
New entrants
New potential suppliers with more bargaining and competitive power are a threat to McDonalds. As a result, suppliers remain neutral since they are multiple suppliers for the same products. Having many physical locations is a good way to overcome this competitive force.
New menu items
The more a company has many menu items the more the customers it has. McDonalds has made sure it incorporates many new items in the menu, which attract more customers. These items could come with cheaper prices or more prices depending on their nutrient and content value. Incorporating more healthy food in the menu puts McDonalds in the leading edge and it has become a favorable choice to many who prefer more items to choose.
Fast service
The fast service look and face of a restaurant is a competitive force by itself since many people prefer quick foods to save time and money. There are people who hardly get free time to go for lunch and fast service becomes the ideal choice for them. McDonalds is the leading fast service outlet in the industry and it is growing each new day as it penetrates too many countries in the world.
Strategic moves in the near future
Many competitors present in the fast food industry have gone far ahead beyond their traditional ways of getting revenues from the fast food outlets. To remain in the competitive end, McDonalds has come up with some strategies like creating more awareness to the customers, more product familiarity and even opening more stores depending on the culture.
McDonalds has the best strategies of all time and it is evident on the cash register and annual returns. McDonalds has ensured that its employees are familiar with their products and there easy to explain to customers. The restaurant has deadlines to certain sales because it knows that many people meet deadlines and this happens when they have certain foods on offer.
SWOT Analysis
Strengths
Weaknesses
1. In 2008, the company ranked the number one and the company with the most admired food.
2. McDonald has the most recognizable logo in the world.
3. They are a global country operating in more than 119 countries and more than 24000 restaurants from all over the world.
4. They open new restaurants in different cultures and successfully and easily adapt.
5. McDonald is a brand name that has strength in it and known for close to 2 decades worldwide.
6. The company has a relatively mature market share of close to 44% of the total United States fast food industry.
7. It is exceptionally easy to predict that in future people will still have McDonald as the favorite choice, since they have already accustomed to the products.
8. The reliability of its products has created its own culture, in both America and the whole world. In the last decade, McDonald has been successful in penetrating other new foreign markets from all over the world. This includes Asian market and the entire Asia pacific countries.
1. Their marketing test for pizza failed and they can however not compete with other pizza outlets.
2. They have a very high turnover of employees hence a lot of money spent during training.
3. They do not concentrate much on making money from organic foods.
4. They have problems with fluctuations in net and operating profit.
5. McDonald has enormous problems that could bring it down in the future. These problems could even distort McDonald’s reputation in the near future. From the analyst’s findings, it has discovered that McDonald has continued to decline in terms of the market share.
6. Researchers have indicated that compared to its franchises, McDonald has low-employee productivity in the same commerce
1. They should provide free food items like sugar free foods.
2. The introduction of healthy hamburger considering today’s health conscious societies.
3. In 2008, the business concentrated more on breakfast items.
1. They make impact to children of young age, which is the right way since the children grow up knowing McDonald’s products are the best.
2. The food supply being contaminated.
3. The major competitors are like K F C, steers and choices.
Analysis recommendations
The main reason as to why McDonald could be declining in the market share, in the latest performance, is the inability to develop its products. Although the older customers are still attracted to its products, young people are getting used to the same quality products. McDonald has no variety in its products. The young people want surprises for new products each new day, but that is not one of McDonald's marketing policies. McDonald should change the similar meals and improve on the variations. Franchise structure is another problem for McDonald. Since it has low or no barriers to its new franchisees, McDonald has enormous problems with the new, naughty franchisees that cause instability and poor working conditions in the counter.
Company’s resources, capabilities, and core competencies and analysis
The markets in which McDonalds operate are dynamic in nature. When it comes to products, there is a constant evolution and there is introduction of new technology, regulatory framework, government, customer taste and preference. McDonalds gets 100% extra branding and consumer promotion because it is the main product for the company. The company that is home to beef burgers and fries manages the brand and its brand equity perfectly. For the company to sustain a longer of time, it is necessary for them to get good strategies for effective and better brand management. The effective brand management and equity has a big role in changing consumers’ perceptions. Without brand equity overtime, there can be no success in McDonalds (Trout, 1969).
Growth of marketing may have a lot to do with competitive positioning. Positioning is an important component of high tech marketing in the WWW’s age. Using the search engines such as Yahoo, Bing, Google and EBay to position McDonalds has greatly helped in the marketing and seeing the company where it is today. For so many years, the company has dominated the cereals and burgers for breakfast market. Positioning is the best thing a company could do for a brand to gain popularity amongst consumers and the market at large. McDonalds has incorporated its brand name in the web oriented shopping. One can easily shop for it online and it is present in all shops, supermarkets, chain stores hotels and even quick snack outlets (Trout, 1969).
Economic as well as legal and regulatory forces
and trends
The main competitors of McDonalds have gone way far beyond the known forces and trends and the traditional ways of getting money from the outlets. There are new economic and legal regulatory forces and trends and in one way or another, they help the company to remain on the competitive edge. McDonalds has come a long way and trends shown are promising since they are legal. The trends and forces help regulate the economic issues and without knowing, they become strategies thus making the company better. In every company, it is good to have the forces and trends that favor the customer and the employees too.
McDonald’s adaptability to change
Change is one thing that keeps disturbing the organization. There are many possible causes of change including culture and target audience. McDonalds however has no problem adapting to new change because the strategies give room to new possible changes. If McDonalds did not have good ways of adapting to change, then it could not be where it is today. It is because of the plus that it is progressive and aggressive in the global market. When McDonalds introduces new stores in different regions of the world, change is inevitable but it has its own good ways of adapting to those changes and many global companies should borrow a leaf.
The supply chain operations of the organization
McDonalds is a chain of fast food outlets and this is what has made it possible for it to penetrate in many countries without making loses. The chains of supply operate from one main office, which regulates the prices and maintains standards of all the rest. The outlet in one country has the same standards, colors and terms but different employees and customers. Food is different in the outlets depending on culture and tradition. Target audience does not necessarily matter because there is no big difference on what adults and children eat. McDonalds supply chain operates in a very good way making its employees enjoy working and at the same time attract more customers. Without good operations, a company cannot make profits.
Major issues and opportunities of the company
The issues and opportunities in the SWOTT analysis are all major and they all matter to the company. There are different circumstances that surround all of them including culture and tradition. The circumstances cannot be classified as they are many and each outlet has its classifications alongside there importance. The importance of classification is that the company is able to know where to make changes and where to improve. The SWOTT analysis says everything about McDonalds and each threat, strength, opportunity and weaknesses means a lot to the company. It is therefore important to have such an analysis in every company to help in operations.
Conclusion
McDonalds is the best fast food outlet so far and many people regardless of age, class, status and class can comfortably enjoy the products they offer. Their products come in packages of different sizes to meet the wants and needs of its consumers. Without good marketing and campaigns, consumers would still have the perception that McDonalds is only for kids. After the transformation of the perception, McDonalds got a bigger market share because the clientele widened and this time it was good for all meals.
References
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