mcdonald's business strategy analysis

The company is engaged in an extensive utilization of economies of scale to achieve the cost advantage. Around the world the government oversight and regulation of businesses has grown. The most important strength of a global brand is its brand image and brand equity. Such a consistence in taste has positive implications on consumer loyalty. Overall the level of rivalry among the existing brands is very high. It is also a large employer and employs more than 14.7 Million people alone. the brand plans to turn it into 95% operated by franchisees. The threat is not just from the international brands but also from the local and smaller brands. While the brand’s systemwide sales increased 7%, consolidated revenues decreased 7%. The bargaining power of customers in the 21st century, the threat of substitute products for McDonalds is moderate. Support activities: This is a description of the support activities in McDonalds’ value chain. By the year end 2017, the company had 2,35000 employees in total which included the employees working in its offices as well as in the company operated restaurants. McDonald’s is a leading name in the world of fast food. Globally, health consciousness is rising and people want. Political factors have kept growing in importance in the 21st century. trust is important in this era and McDonalds has got a strong brand image which shows trust among its customers. Another report by Nation restaurant Association showed that the US restaurant industry had sales worth 799 Billion dollars in 2016. Another key factor is affordability. Competition in every industry has increased and only the brands that. According to  research by Euromonitor International, the IEO (Informal Eating out Segment) which constitutes the primary competition of McDonald’s and includes quick-service eating establishments, casual dining full-service restaurants, street stalls or kiosks, cafés,100% home delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie bars was composed of 9 million outlets in 2016 and generated 1.2 trillion in sales. It started its operations in sixties and currently it is serving worldwide chain of 30,000 restaurants. The number of restaurant locations in US is now higher than 1 million. Cheat prices is McDonald’s main competitive advantage. McDonald’s is very popular in the global market and in various corners of the world. Customer loyalty can also be  major advantage in times of economic uncertainty. – McDonalds needs to focus on managing its franchisees strategically. However, a  very large part of the McDonalds system around 90% is run by franchisees. McDonalds sources its raw material from all around the world. However, having this complicated web of franchised and company-operated restaurants expose the brand to certain risks. 9 out of the ten restaurant managers currently had started at the entry level. Testing the alternative strategies 17 6.0. McDonalds is also subject to severe regulations, control and oversight by the government authorities. The brands that have invested more in technology are ahead of the others in market. The total amount that it generated in sales equalled 2.4 trillion dollars. Legal compliance is now heavily important to find success in 21st century. Technology is heavily important for businesses to survive in the 21st century. There are several brands that are offering similar products or have similar menu items. Due to such a large system being heavily dependent on franchisees quality control sometimes become difficult. It also holds the largest market share n the fast food industry. Since each customer is valuable and none of the brands want to lose even a single one the focus has shifted towards customer and brands are trying to be more and more customer oriented. Moreover, from Dominos to Burger King there are several large and influential brands that are aggressively competing for market share in the fast food industry. It is one of the fast food brands that serves the largest variety. McDonalds existing organisational strategy is to create better service restaurant operations, menu varieties, and better beverage choices such as hot beverages (hot chocolate, latte etc). However, a possible strategic direction for McDonald’s continued growth is to establish more locations in developing economies and in countries where the firm has no market presence. However, still it serves a rather uniform menu globally with minor local variations to suit the local taste. the overall threat from substitute products and brands remains moderate. Not just this there are so many brands in the industry competing for market share. Compliance issues have grown bigger in the 21st century which is because of the higher level of legal and political  regulation of international businesses. In addition, the restaurants sell a variety of other products during limited-time promotions. McDonald’s Corporation Report contains more detailed discussion of the company’s business strategy. There are several brands that are offering similar products or have similar menu items. Core Strategy of the Company. the millennial generation is highly health conscious and wants healthier products. Here is how: Primary activities: This is a description of the primary activities in the value chain of McDonalds. quick-service eating establishments, casual dining full-service restaurants, street stalls or kiosks, cafés,100% home delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie bars was composed of 9 million outlets in 2016 and generated 1.2 trillion in sales. McDonalds has a large customer base and enjoys very high level of customer loyalty. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. The paper would analyze the strategic analysis of McDonalds in great detail while considering its competition, success factors, strengths and weaknesses, and strategy measurement. Therefore according to pestle analysis of McDonalds we can say that Trade agreements have the capacity to simplify or complicate the process of undertaking business activities in certain areas. However, a, External Analysis of the restaurant industry, What You Need To Know About Marketing for Your New Business, Easy Ways Businesses Can Incorporate Sustainability. The operating income rose from 7,745 million dollars in 2016 to 9,553 million dollars in 2017. In McDonald the business strategy for the company is to make food fast available to its customers at a very low competitive price but to get profit as well by reducing the cost of the product and expanding the business world wide. while there are no significant barriers to entry, still to grow into, McDonalds’ brand image is one major competence that gives the brand extra leverage in terms of marketing as well as sales. #Five Forces Analysis of McDonalds: Bargaining power of suppliers: The bargaining power of most of McDonalds suppliers is low which is because of their small size and being scattered globally. McDonald’s uses product development as a supporting strategy for growth. Another report by Nation restaurant Association showed that the US restaurant industry had sales worth 799 Billion dollars in 2016. However, the competition from other small and big brands in the restaurant industry has kept growing intense and continued success of McDonald’s depends upon how well it is able to innovate its menu, prices and style of customer service. 1. It has quality centres around the world that help ensure good quality raw materials being sourced from its supply chain. McDonald’s is primarily a franchisor with franchisees owning and operating more than 90% of its restaurants. Apart from that it tests new products regularly to make its menu exciting. The bargaining power of most of McDonalds suppliers is low which is because of their small size and being scattered globally. The role of IT and digital technologies has kept growing in the McDonalds system. 4.4. (MEYER, McDonald’s Marketing Mix (4Ps) Analysis, 2015) Public relation McDonald’s do public relations activities help promote the business in target market. True to ‘fast food’ format of its restaurants, McDonald’s is famous for the speed of customer service without compromising the quality of the service. the US restaurant industry has seen every fast growth once the recession passed. Brand image and equity help with marketing of the brand and help to derive better results from its marketing efforts. the demographic composition of the world population has changed a lot in the recent years. McDonald’s restaurants offer substantially uniform menu that comprises  hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages.[1]. McDonald’s systemwide sales accounted for 7% of the entire sales generated by the IEO segment while its eating out establishments only constituted 0.4% of the entire 9 million outlets. Managing the value chain well allows to eradicate performance bottlenecks as well as add extra value to the product and production process. Universality of the taste to a great extent represents another base of McDonald’s competitive advantage. He graduated with a Hons. There are other technologies also that McDonalds uses to collaborate internally out externally with its partners. The company procures raw material from suppliers around the world through its procurement teams. McDonalds business strategy utilizes a combination of cost leadership and international market expansion strategies. Rising health  consciousness and health related criticism: Globally, health consciousness is rising and people want  healthier food. (Annual report, 2017). The IEO (Informal Eating Out) segment on the other hand had 9 million outlets and generated 1.2 trillion dollars in sales. However, the threat gets to be moderated by the brand image as well as, The threat from new entrants for McDonalds is also moderate. In the way, political factors can affect business profitability. 90% of its restaurants are operated by franchisees. Environmental factors have become very important in the business industry given that  societies and governments are increasingly conscious of the environmental impact of businesses. In this assignment will describe the vision, mission, objective, competitive strategy, external fit, PEST analysis, porter’s five forces regarding McDonald. The following table illustrates McDonalds SWOT analysis: Strengths 1. https://economictimes.indiatimes.com/industry/cons-products/food/why-mcdonalds-had-to-shutter-outlets-in-delhi/articleshow/59402309.cms, https://www.restaurant.org/News-Research/Research/Facts-at-a-Glance, https://corporate.mcdonalds.com/content/dam/gwscorp/investor-relations-content/annual-reports/McDonald%27s%202017%20Annual%20Report.pdf. While the brand’s systemwide sales increased 7%, consolidated revenues decreased 7%. the political factors are also exalted to economic factors and an unstable political environment can cause business and supply chain disruption. It is a well known name in most corners of the world and brand image is helpful in terms of marketing as well as sales both. Inbound logistics: McDonalds has managed a large supply chain from which it sources raw materials. While on the one hand any negative news has the potential to hurt sales and reputation a healthy and innovative menu has become essential to retain the millennial customers. Materials sourced from these suppliers are bright to the McDonalds distribution centres worldwide. In case of McDonald’s it is well known as the leading fast food brand of the world. However, to make such large scale operations possible as profitably one must have economies of  scale as in the case of McDonalds. Business level strategy of McDonalds Business level strategy is an integrated & coordinated set of commitments and actions. Competition in every industry has increased and only the brands that  keep their customers’ taste and preferences in mind are being successful. McDonalds is also making heavy investment in technology for successful marketing and growth of its brand. Supply chain and technology: McDonalds has a well managed supply chain which is among one of its major strengths. The company currently has a low but stable growth rate. Operating across more than 100 countries, the brand serves locally relevant quality food and beverages at various price points. McDonald’s strives to fulfill the demands of investors as a major stakeholder group in the business. Global Presence: McDonalds is present in around 120 countries. The most important strength of a global brand is its brand image and brand equity. The Golden Arches have set their sights on penetrating Asian markets, as those markets have high income potential. Firm Infrastructure: McDonalds has maintained a very large firm infrastructure that includes its offices as well as other important properties. the number of international brands in the fast food industry has kept growing. Mcdonald 's Business Strategy Analysis 1465 Words | 6 Pages. Even in the fast food industry the role of law is important. Brand value and brand awareness 3. each brand is quite aggressive about competition and uses so many strategies like seasonal discounts and offers to lure customers away from the rival brands. Food quality related issues also erupt from time to time across the McDonald’s system. The market entry strategy of McDonald’s and a critical analysis of its marketing mix are also presented. Apart form social media, there are other tools and methods also to bring the millennial consumers closer. Millennials are a highly etch save generation  who want affordable products and  good customer service. Of the 37,241 McDonald’s restaurants that the brand operated in 2017, in 120 countries, 34,108 were franchised and 3,133 were operated by the company. Global comparable sales of McDonald’s increased by 5.3% and guest count increased by 1.9%. This has been leading to management and control related issues for McDonalds. Franchisee issues: The McDonald’s system is 90% franchisee based which is bound to give rise to franchisee related issues. This report highlights the main business activities of the organisation, as well as provides an overview of the fast food retail industry and McDonald’s the competitive environment of McDonald’s. The brand serves a diverse menu that includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages. This was around 33 billion dollars higher than the previous year. HR & Culture: The HR management and culture of an organization are important resources and every organization including McDonalds has its own culture. Consciousness is rising and it has led to higher competition among the existing in! 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