SWOT Analysis report on McDonald
Introduction
The objective of this report is to present the SWOT analysis of an organization based on personal experience and find out the strengths and weaknesses of the leader of the organization. For the attainment of this objective and fulfilling the requirement of the personal experience, McDonald’s has been considered for the assignment. The paper has been segmented into three chief sections. Section A contains the information regarding the business, leadership practices of a leader, and effects of leadership on culture. Section B, presents the key strengths, weaknesses, threats, and opportunities for the firm. However, the segment evaluates leadership practices of the restaurant’s leaders by using leadership theories.
Section A. Introduction of organization and its leadership
Description of an organization
McDonald’s is a fast food restaurant and has the largest chain of fast food hamburger restaurants in the world. The organization was founded in 1940 in California, by Maurice McDonald and Richard MacDonald’s. Currently, the business had 420000 employees around the work and considered the second, larger employees after Wal-Mart, as mentioned in the report on BBC News published in 2012 (Alexandera, 2012). Fast food lovers have deeply fallen in love with the company by dint of standards set by the company both in terms of taste and quality services. People like the deals and find food valued for money. Repeat purchase is the strength of the organizations and proves customer loyalty. McDonald’s has loyal customers, as they visit the restaurant multiple times in a month. The company around the world on a daily basis severs million of people. According to some resources, the restaurant feeds 68 million people on a daily basis around the world with its diverse branches. The company is growing in its profitability as well as in magnitude of its business (The Statistic Portal, 2014).
Leadership practices of current prime leader of McDonald’s
The current chief executive officer of the organization is Steve Easterbrook; he took the charge as a CEO of the company in early 2015. Steve Easterbrook since his joining in 1993 at McDonald’s like a financial reporting manager has held several leadership roles (McDonalds’s News, 2016). Leadership is not just about leading people; it is an art. A productive leader is one who uses his or her judgments and experience for the application of proven practices to a particular situation. Leaders through their practices lead organizations towards success. Some of the leadership practices of Steve Easterbrook have been mentioned as follow (DiChristopher, 2015):
A good leader has an ability to influence people or utilize the tactics through which he or she can make an impact on people. A good leader knows to convince people on his or her ideas. Steve Easterbrook has been a proven leader, as Steve Easterbrook turnaround the business of McDonald in Europe and reshaped the image of the brand in the United Kingdom.
A superior leader knows to use the resources efficiently and effectively that benefit business. This practice of leadership is evident by Steve Easterbrook efforts of elevating the McDonald’s marketing.
Leaders are known for their innovative practices, and McDonald’s menu innovation is the evidence of Steve Easterbrook’s leadership practices (DiChristopher, 2015).
Effects of current leadership in the culture of McDonald’s
The leader created the sense of urgency in the culture of the MacDonald’s. Even, he is planning to start mobile ordering system in multiple overseas markets. The cultural shift led by the MacDonald current leadership was the most important thing that was required to happen for bringing operational change to overcome from bad driving issues (Sozzi, 2016). Since his arrival, a behavioral change has been experienced among employees. Staff now is encouraged to make decisions regarding the improvement of experiences of customers. The focus is on fresh food and friendly and inviting environment rather just serving customers rapidly.
Section B: SWOT Analysis of the Company
In the evaluation of the company’s strengths, weaknesses, opportunities, and threats, the effects of communication practices, technology, ethics, and globalization have been considered in the business. Based on these factors below is the evaluation of the organization.
Strengths of the organization:
The company has several strengths such as low cost food, high quality products, wider and unique menu and so on so forth. However, in this segment, the most important two strengths have been addressed.
The company has the privilege of being a leader when it comes to expanding the fast food business worldwide. Even though there are many successful followers of them including KFC, Subway, King Burger, and many others, yet the credit of trendsetting cannot be taken away from McDonald’s. Increased globalization gave multiple companies the opportunity to gain their profitability, enhance customer base, and their global presence through expanding their businesses internationally. MacDonald has been an impressive example of globalization; the company expanded its business operation in several countries and enhanced its market share and therefore profitability. Currently, the company is operating in more than 100 countries in 36000 different locations. The firm has wider access to its customers. The global presence and huge network is one of the strengths of the business, as because of its operations in all over the world the business has become a well renowned brand and serves the organization as a competitive advantage as compared to its competitors (About McDonald, 2016).
The second key strength of the company is its menu; status of pioneer in expanding the chain of fast food business, Bloomberg News gives credit to “Dollar menus” of McDonald’s for their maintaining low price standards. The menu of the company enables it to create differentiation from rivals and drive customer traffic to the store. The business has flexibility in its menu and changes it according to the culture of countries that provide the company a competitive edge over rivals. Example include the introduction of veggie burgers in India.
Weaknesses of the organization
The food chain has been accused of environmental disruption due abundant inclusion of meat items into their menus and some unethical activities as well, such as the case of selling expired meat in China (Li, 2014). All this contributes a lot detriment the reputation of McDonald’s and such scandals occurred as the weakness of the company.
Another important weakness of the company is it lacks effective communication practices. Employees of the company are the strength of the organization and present the face of the organization through providing effective and efficient services. In the organization, many people feel that they are not provided with appropriate support, benefits, and the environment. This perception of employees can be observed from diverse employees review the websites of McDonald’s as well (Indeed, 2016). All these problems show the lack of communication and management that is the weakness of the business.
Opportunities for the organization
McDonald’s are looking into many options to boost their profitability like examining the ways to produce customizable burgers, healthier food items, and bring betterment in environmental protection policy (abandoning polystyrene in favor of paper packing is a good example of that approach) (Levy, 2014). This, certainly, opens up many doors of possibilities for growth in the company’s profitability.
Technological advancement is an important factor; utilization of new technology can speed up the operating process, reduce the waste activities, and wrong order taking issues. The company has an opportunity to improve the effectiveness of its operations through the deployment of new technology and continuous meeting of the ethical standards.
Threats of the organization
Ethics demands the proper response to social challenges (Bowen, 2007); socially the company enjoys many edges over their competitors. For instance, the modern-day customers are more inclined towards sophisticated items than ever before. Many of McDonald’s competitors, including Burger King and Hamburgers could not maintain the same level of sophistication that they were known for. That provides a rock-solid base for people’s preference for McDonald’s. Nevertheless, Yuece (2012) perceives that people are growing more health consciousness with the passage of time that can be translated as a new challenge for McDonald’s adherence to taste hygiene formula. With technological advancement, the awareness of people increased regarding health issues, and it became an ethical issue for fast food restaurants to keep their menu full of healthy options. This is a growing threat to the organization; if the company does not pay attention to this issue, then it may have to lose a significant portion of sales.
Furthermore, in order to compete with its competitors, McDonald’s spends a significantly higher proportion of their total budget for advertising and marketing purposes. Rising prices of raw material is yet another challenge. People want quality and healthy food but at the lowest possible prices, maintaining low cost advantage with the higher food quality and rising raw material prices may not longer be possible for the organization that can pose a significant threat to the profitability of the company.
Section C: Evaluation of leadership strengths and weaknesses
McDonald’s leadership is well in keeping with the motto of the company (to ensure long term sustainability by adopting diversely managing different cultures). From different studies of organizational behavior, it is clear that the food chain has created diversely cultural compatible mechanism to meet the specific temperamental and mood requirements of different nations around the globe. McDonald’s has now taken a step further with their attempt to remove any stigma of blame regarding environmental disruption. On one hand, they have prohibited the use of polystyrene for the purpose of packing and, now, relying on paper packing (considering former violating to environmental protection). On the other, their participation in different welfare programs where animal welfare program is in the spotlight clears the hygienic intentions of McDonald’s leadership (Source Watch, 2015).
Briefly, the success of McDonald’s and their prominence despite all their competitors’ utmost efforts to outperform them is the product of their diversification management in terms of culture where leadership has to be given chief credit. However, the aim of this section is to evaluate the strengths and weaknesses of the current primary leader of McDonald’s called Steve Easterbrook. Moreover, to present recommendations for maximizing the future success of the leaders and the company based on theories. For this purpose, the section has been separated into three subsections as follow:
Three strengths of Steve Easterbrook
If the transformational leadership theory is considered then, it is one of the most sophisticated concepts of leadership. Transformational leadership refers to systematic approach through which leaders first realize the need for change then attempt to make a change (Chapman, 2002). Such leadership practice is known as proven practice. Steve Easterbrook follows this practice, as the leader first realized that the declined profit and bad image is the reason of its bad operations. The leader then attempted to bring change to the organization and transformed it through taking several initiatives (Sozzi, 2016).
Leaders are liable to change the culture of the organization and inspire people to adopt the change through generating enthusiasm. Leaders just not talk, but they follow their talks, or it can be said that they walk on their talk. Steve Easterbrook successfully practices these characteristics of leadership that is evident from the experience of McDonald’s; he inspired people to adopt the change and brought urgency into the organizational culture. He just not talked to people, but by taking steps to bring advanced technology and transforming the organization proved his instance of following the words he says (Kets de Vries, 2015).
Effective communication skill is the quality of a good leader. To communicate to employees that why the change is needed, what change is brought to the organization, and how this change will affect the organization or will be beneficial for the business, it is essential that leader has good communication skills. Lack of communication within the company between employees and managers is an issue at McDonald’s; but if considered for Steve Easterbrook, then he has good communication skills that can be seen from his ability to convince the staff to adapt technological, cultural, and operational changes (Kibbe & Chen, 2015).
Three weaknesses of Steve Easterbrook
Transformational leaders accept the risks with the aim of making innovations, but excessive risk can affect the organization pessimistically. Steve Easterbrook after a short time of his position of being chief executive officer undertook an aggressive transformation process. For example, he undertook the closer of underperformed restaurants, enacted cost saving plans, launched and expanded the all-day breakfast, and many other initiatives simultaneously. So many changes at the same time can create confusion, which is the weakness of the leadership practice of Steve Easterbrook.
Transformational leaders are not just coaches, but they are a mentor as well; they offer their employees opportunities to pursue their career development through providing them the options of training and conferences. They enable people to develop their skills and expertise. Steve Easterbrook is a good communicator, has an ability to motivate people. Compensations, rewards, and incentives are the important tactics that are used by leaders to motivate employees, but Steve Easterbrook did not make any effort in this regard by saying that this is the responsibility of franchisees, which is the major weakness of his leadership (Strom, 2015).
Collaborative culture and shared knowledge environment are essential for innovative organizations. Leaders build the collaborative culture of the organization based on the values of business. However, lack of communication between employees, lack of support from management, and other issues clearly communicate that Steve Easterbrook did not practice this characteristic of leadership, which is the weakness of the firm.
Recommendations for Steve Easterbrook
Transformational leadership theory says that leaders grow the organization through empowering people. Leaders are not afraid of mistakes; they believe in forgiveness, which means they give the opportunity to their employees to grow fully and offer them the changes to express their ideas. Steve Easterbrook is suggested that he should empower people. People should be given an opportunity to make decisions and participate in the decision-making process, and their views should be valued. Failure is a part of each process; not every idea from employees may be a success for the organization. Therefore, rather discouraging employees or avoiding taking advice from them, Steve Easterbrook should forgive the mistakes as it is the only way to lead the organization ahead.
For building the culture where creativity and innovation is the constant process, it is essential that the culture of collaboration and shared learning is built. Therefore, it is recommended to Steve Easterbrook that he should consider the deployment of new technology for enhancing the collaborative and shared learning culture in the organization, as it will maximize the success of the leader and organization as well.
Inspiring people is one amongst the several qualities of people and rewards, and incentives are the major aspects that play an immense role in motivating people. Steve Easterbrook rather just communicating with people and trying to motivate them through sharing the vision, should focus on the well-being of employees and should encourage them through appreciation their efforts by giving them monetary rewards as well.
Conclusion
The aim of this paper has been to conduct an analysis of the company’s strengths and weaknesses and its leadership based on the personal work experience. The paper discusses the strengths, weaknesses, opportunities, and threats of McDonald’s. Steve Easterbrook is the current chief executive officer or a primary leader of the business. Therefore, his strengths and weaknesses have been considered as well. The paper also provides recommendations to Steve Easterbrook for the improvement of his leadership. Recommendations have been derived from the weaknesses of the leader and based on transformational leadership theory. It is expected that through the implementation of recommended behavior, the leader will be able to have more success in his future as shared learning and collaborative working culture will allow the leader to come up with multiple new ideas from which he can adapt the most effective one to deploy. Application or adaption of these characteristics will lead both leader and organization towards the door of success and McDonald’s will be able to have a sustainable competitive advantage.
References
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Alexandera, R. (2012). Which is the world's biggest employer?. BBC News. Retrieved April 17, 2016, from http://www.bbc.com/news/magazine-17429786
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Chapman, J. (2002). A framework for transformational change in organizations. Leadership & Organization Development Journal, 23(1), 16 – 25.
DiChristopher, T. (2015). New McDonald's CEO faces many problems: Experts. CNBC. Retrieved April 17, 2016, from http://www.cnbc.com/2015/01/29/how-mcdonalds-new-ceo-can-turn-around-the-company.html
Indeed. Com. (2016). McDonald's Employee Reviews in United States. Retrieved April 17, 2016, from http://www.indeed.com/cmp/McDonald's/reviews?fcountry=US&start=20
Kets de Vries, M. F. R. (2015). Telling Fairy Tales in the Boardroom: How to Make Sure Your Organization Palgrave Macmillan.
Kibbe, M. R., & Chen, H. (2015). Leadership in Surgery. New York: Springer.
Levy, G. (2014). The Strengths, Weaknesses, Opportunities, and Threats Facing McDonald’s Today. Retrieved April 17, 2016, from https://grewallevymarketing.com/2014/10/21/the-strengths-weaknesses-opportunities-and-threats-facing-mcdonalds-today/
Li, Z. (2014). China's tainted meat scandal explained. CNN. Retrieved April 17, 2016, from http://edition.cnn.com/2014/07/29/world/asia/explainer-china-meat-scandal/
McDonalds’s News. (2016). Steve Easterbrook. Retrieved April 17, 2016, from http://news.mcdonalds.com/US/Executive-Team/Corporate?executive_id=1818872
Source Watch. (2015). McDonald's. Retrieved April 17, 2016, from http://www.sourcewatch.org/index.php/McDonald's
Sozzi, B. (2016). What's Happening at McDonald's Is Much Deeper Than All-Day Breakfast. The Street. Retrieved April 17, 2016, from http://realmoney.thestreet.com/articles/03/28/2016/whats-happening-mcdonalds-much-deeper-all-day-breakfast
Strom, S. (2015). McDonald’s C.E.O. on All Day Breakfast, Hourly Wages and Wall Street. The New York Times. Retrieved April 17, 2016, from http://www.nytimes.com/2015/11/13/business/a-conversation-with-steve-easterbrook-of-mcdonalds.html?_r=0s
The Statistic Portal. (2014). Statistics and facts on McDonald's. Retrieved April 17, 2016, from http://www.statista.com/topics/1444/mcdonalds/
Yuece, I. (2012). SWOT Analysis of McDonald’s and Derivation of Appropriate Strategies. Retrieved April 17, 2016, from https://m.grin.com/document/200837
