Executive Summary
The current research relates McDonald’s – the largest fast food restaurant chain in the world. Nowadays, the company is operating in many countries and succeeded to develop a strong brand. The current tendencies of the food industry include healthy nutrition that is inconsistent with the concept of McDonald’s. The company faced the necessity of changing menu towards more healthy, introducing more healthy products, and changing its concept (IBIS World, 2014). The current paper contains SWOT analysis aiming to analyze the situation and make propositions related the new concept of McDonald’s. There were suggestions related the new products lines made. A new marketing strategy was developed taking into account the issues the company faced. The analysis of the proposed target market, new product description, and the discussion related the value for customers was included in the current report.
Introduction
McDonald’s is a well-known brand all over the world. However, its reputation is seriously damaged by multiple lawsuits connected with the quality of food offered by the company to the customers (Dow Jones & Company, 2014). An analysis of the current market tendencies showed that the company needs to change the concept of presenting its food to the customers. An analysis of the current situation of the company and opportunities that could be used by the company is shown in the Table 1. The value of SWOT analysis is that it helps evaluate strengths, opportunities, weaknesses, and threats thus developing the strategy for future growth (Fine, 2009).
Background of the Company
At the present time, McDonald’s is a global leading fast food restaurant chain. There are more than 35,000 local restaurants serving more than 70 million of customer in 119 countries. Approximately 80% of the restaurants are operated by independent franchisees (McDonald’s, 2013). The major product lines are presented by hamburgers, cheeseburgers, milkshakes, and ice-cream.
Traditionally, McDonald’s is considered one of the most popular fast food restaurants in the worlds. However, the company faced many lawsuits connected with unhealthy menu offered to the customers. Food offered to the customers is heavy, contains high calories, and provokes obesity. McDonald’s started changing its menu by offering wider variety of salads and more fish. However, the desserts remained high-caloric with high content of sugar. Taking into account the current tendency for healthier low-calorie food, there is an opportunity for McDonald’s to take advantage of this situation by changing its menu and offering healthier food to the customers. The current strategy of McDonald’s is to optimize menu broadening accessibility to the brand and modernizing customers’ experience. Business model used by McDonald’s enables the company to deliver locally-relevant restaurant experiences to customers. The current tendencies in the food industry must be taken into account when presenting a renewed brand image and implementing the concepts of healthy nutrition (IBIS World, 2014).
SWOT Analysis
McDonald’s succeeded to reach the largest segment of customers all over the world. McDonald’s is currently one of the most recognisable brands. At the present time brand recognition values $40 billion. Advertising budget of the company is equal $2 billion (McDonald’s, 2013). Company uses an individual approach to its customers by offering adapted menu and special menu for children.
Reputation of the company was seriously damaged by negative publicity caused by unhealthy menu offered by the company. Despite the great popularity of fried potatoes and hamburgers, this food is not healthy. The company should change its menu towards more healthy food in consistency with the current market trends (Pride, Hughes and Kapoor, 2012).
The company can take advantage of increasing demand for healthier food and become one of the first fast food companies promoting healthy style of life. This strategy will help the company differentiate in the saturated Australian fast food markets and reduce the number of lawsuits. Also, McDonald’s can introduce home delivery service in order to differentiate in the market and compete more effectively with local fast food restaurant chains (Fleisher and Bensoussan, 2002).
Findings
The strengths, weaknesses, opportunities, and threats were ranked according to the importance of these components of SWOT analysis. The most important components were assigned the highest rating, the less important succeeding components were assigned lower rating, and the lowest rating was assigned to the least important component. For example, brand recognition was put on the first place because this component becomes more important in a highly competitive environment. Customers tend to buy from well-known brands that ensure high quality products and excellent service.
McDonald’s gained a bad reputation because of poor menu choice: the company used old-fashioned menu developed long ago that does not meet the requirements dictated by the contemporary style of life including less physical activity.
Despite offering locally adapted menu, McDonald’s faced competition from local restaurants. It means that the company should use the strategy of differentiation to succeed in the market. Also, there are many fast food restaurants that contribute to the market saturation making the task of differentiation more complicated.
However, the company can differentiate using the current opportunities offered by the market: demand for healthy food and home delivery services. These two opportunities can be used to develop a significant competitive advantage in a highly competitive environment.
Recommendations
New products may include organic food, expanded salad menu, and low-calorie desserts. For example, coarse bread and more vegetables can be used for making hamburgers. Vegetables and fruits must be cultivated with the help of organic methods. Using more fish in the hamburgers will help create light snacks in comparison to hamburgers with meat. For those who like meat, poultry meat (chicken, turkey, quail) can be used. New desserts must contain more fruits, cottage cheese, honey, but less dough and sugar. Target audience for this new menu could be customers suffering from obesity, children, people keeping on a diet, and those who are willing to lead healthy style. The new product will help change customers’ preference towards healthier nutrition. At the same time, a new product should be nourishing and tasty. Low-calorie desserts’ menu should be developed as well. The new products will help reduce the rate of obesity, support healthy style of life, and reduce consumption of excessive calories. Besides, using more vegetables, fruits, fish, and cheaper sorts of wheat will reduce the costs of food. Also, the value for customers is presented by healthier nutrition, lower risk of obesity and reduction of the level of blood cholesterol. Actually, McDonald’s can save the audience it targeted before. However, large advertising budget will be required to explain the new concept of the company (Grant, 2013).
Customers are supposed to buy from McDonald’s because of its brand reputation. Also, changing concept of the fast food restaurant will help change the customers’ minds towards unhealthy nutrition at McDonald’s. Customers used to visit McDonald’s not only because of an opportunity to have a quick and nourishing snack, but because of comfortable interior design, special atmosphere, family outing, and opportunity to meet friends. Thus, the customers will have the opportunity to combine healthy nutrition with communication in the future (Warner, 2010).
References
Dow Jones & Company, 2014. McDonald's reports fourth quarter and full year 2013 result.
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Grant, R.M. eds., 2013. Contemporary strategy analysis. New Jersey: Wiley & Sons, Inc.
IBIS World, 2014. Fast food services in Australia: market research report. Available at:
<http://www.ibisworld.com.au/industry/default.aspx?indid=2005> [Accessed 15 April
2014].
McDonald’s, 2013. Annual report 2013, Sydney: McDonald’s 2013. Available at:
<http://www.aboutmcdonalds.com/mcd/investors/annual_reports.html> [Accessed 15 April 2014].
Pride, W.M., Hughes. R.J. and Kapoor, J.R., 2012. Business foundations. Sydney: Pearson
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