Strategic Management Analysis
STRENGTHS:
- Large Brand Name: McDonald’s is present in the market for the 50 years now, and is serving more than 50 million customers. This shows the bigness of the brand, and how long it has been serving the consumers. It is as a result of this customers trust McDonald’s and new products introduced under the umbrella of this brand are going to win the consumer’s trust..
- Largest fast food Company: McDonald’s has around thirty thousand retail outlets around the world. This has given McDonald’s a unique advantage in terms of economies of scale, and large customer base to serve.
- Corporate Social Responsibility: McDonald’s donates large amounts of money in charity and for noble causes. As a result, it is perceived by the world as socially responsible brand, and people like to buy things from McDonald’s..
- Market Research to Become More Customer Oriented: McDonald’s spends millions of dollars in market research to give consumers what they want, and as a result enjoys a unique position in the market, and consumers’ always like McDonald’s products and market offerings.
Weaknesses:
- McDonald is too large to Handle: McDonald’s is present in six continents and serving 130 countries around the world. It is also under pressure to provide same taste, and service quality to consumers around the world, and as result faces a problem in handling such a large organization.
- McDonald’s charges Premium Prices: It is also a common belief that McDonald’s prices are higher than its competitors and that McDonald’s charges a premium price. As a result, McDonald’s is becoming somewhat uncompetitive due to increasing competition in the market, and competitors offering lower priced products than what McDonald’s are offering.
- Advertisement needs to change: McDonald’s started as a brand that targeted baby-boomers and teenagers. However, times have changed, these baby boomers have become adults, and McDonald’s target market has also changed. Therefore, it needs to change its advertising policies to make sure that they fit the characteristics of the new target market of McDonald’s.
Opportunities:
- Technological Advances: It has helped McDonald’s to control its business throughout the world. It has also helped McDonald’s to cut its costs which has increased the profitability of the business. McDonald’s is enjoying the new technology in the form of better communication among its outlets around the world, and better management for its outlets that are located in the different parts of the world. McDonald’s can use this modern technology in different parts of the world to meet its target of consistent quality and taste everywhere in the world.
- Recycled Paper: Many brands are using recycle papers and recyclable product these days which is good and environmental friendly approach. This will give a good brand name to all the businesses using it.
Threats:
- Financial Crises of 2008: It has reduced the purchasing power of people, and since McDonald’s target the lower income working class, it has been widely hit by the financial crises in terms of slower growth rate and lower profitability.
- Health Consciousness: Fast food is considered as an unhealthy food and many people are shifting away from fast food and are looking for food which is health for them.
- Increased number of competitors: Prices are falling in the industry and profitability is coming down as a result of cut throat competition in the industry. Therefore, the businesses are trying to seek new ways to cut cost and increase revenue. Many companies have entered the industry and are offering new products at a lower price which is harming the industry.
Challenges and Opportunities:
The biggest opportunity for the company is to use the technology to further fuel its growth and to make sure that the business managed better than before. With the advancement in technology the communication between the various outlets of McDonald’s located in the different parts of the world is no longer an issue, and McDonald’s can manage them well without compromising on service quality or the taste. Similarly, McDonald’s can introduce healthier items in it menu like Fruit Juices and Salads. It will help McDonald’s target the market of health conscious people and will help McDonald’s to increase its business as it will have one more market to target.
The biggest challenge for McDonald’s is the cut throat competition in the industry and declining margins and prices. This is a tough situation, and McDonald’s should deal with it very cleverly. It cannot increase its prices because then the consumers will turn to its competitors. Similarly, it cannot afford to see the profits continue to fall, as the shareholders will ask questions about the direction and the management of the company. The situation is very tough for McDonald’s as the industry is attracting new competitors and prices are constantly falling. McDonald’s should develop a new strategic marketing approach to tackle the issue, and make sure that its profits rise.
References
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Mcdonalds.com.pk, (2014). McDonald's » Corporate Social Responsibility. [online] Available at: http://www.mcdonalds.com.pk/page/corporate-social-responsibility [Accessed 7 Dec. 2014].
McGrath, M. (2014). McDonald's Posts Smaller-Than-Expected October Sales Slump. [online] Forbes. Available at: http://www.forbes.com/sites/maggiemcgrath/2014/11/10/mcdonalds-posts-smaller-than-expected-october-sales-slump/ [Accessed 7 Dec. 2014].
Miel, R. (2014). Plastics News by the year: 1990 - Plastics News. [online] Plastics News. Available at: http://www.plasticsnews.com/article/20141124/NEWS/141129978/plastics-news-by-the-year-1990 [Accessed 7 Dec. 2014].
Mourdoukoutas, P. (2013). McDonald's: Three Strategies To Reignite Sales Growth. [online] Forbes. Available at: http://www.forbes.com/sites/panosmourdoukoutas/2013/11/23/mcdonalds-three-strategies-to-re-ignite-sales-growth/ [Accessed 7 Dec. 2014].
Patton, L. (2014). McDonald’s Profit Drops 30% as U.S. Sales Slump. [online] Bloomberg. Available at: http://www.bloomberg.com/news/2014-10-21/mcdonald-s-profit-drops-30-as-u-s-sales-slump.html [Accessed 7 Dec. 2014].
Rt.com, (2014). US fast-food chains ‘disproportionately’ targeting black youth – study. [online] Available at: http://rt.com/usa/205851-fast-food-black-children/ [Accessed 7 Dec. 2014].
