A planning process that helps to identify the strength, weakness, opportunities and threats of an organization is referred to as SWOT analysis (Ge 2020). Here, the strength, opportunities, weakness and threats of the company McDonald’s is discussed. Get case study help.
There exists fierce competition in the restaurant industry. However, McDonald’s dominates this industry with its incredible brand value. It is ranked as the 10th most valuable brands in the world (Comino and Ferretti 2016). The food offerings of the company are considered as one of the best in the fast-food industry, which attracts large numbers of customers. Thus, the demand for the burgers and French fries of the company remained highest among the peoples in the United States. Other than the fast food industry, it also dominates the real estate market with its multi-billion business. Therefore, diversification is one of the vital strengths of the company. The total numbers of restaurants of the McDonald’s include 37,855 across 120 countries of the world in 2018, out of which 2770 are company operated restaurants and 35,085 are franchises (Hertrich and Mayrhofer 2021). The business model of McDonald’s allows the company to earn profit from the rent payment as it owns the land and operates as a landlord and from the recipes, brand name, processes and ingredients to franchisees. The technology initiatives of McDonald's have offered competitive advantage to the company.
The structured composition and strategy of McDonald's highlights the weakness of the company. There are risks such as low revenue management, mismanagement, financial deterioration and customer dissatisfaction associated with the franchise business model of the company, which acts as the weakness for the company. It is difficult for the company to control the franchises that work independently. The renowned food chain business of McDonald’s faces issues like disruption in supply chain (Akman 2019). Thus, it increases the operational expenses of the company, which in turn affects the level of profitability and revenue. Another weakness linked with the business model of McDonald’s is lack of employee satisfaction related to the wage rate. Breakfast menu of the company remained unbeatable in the US market for past decades, which has witnessed a downfall in recent years. In order to gain its competitive advantage in the US market, the company needs to take proper initiatives to fix this issue. Therefore, fierce competition in this market may act as a weakness for the company.
The company took various initiatives in the form of launching value meals for the value conscious consumers in order to increase sales. In 2018, the company launched a 2 for $ 5 Mix and match deal and $ 1, $ 2, $ 3, which was considered as the successful attempt. Another opportunity that added value to the growth of the company include innovative products. In 2018, McDonald’s launched a new beverage MIX by sprite Tropic Berry to tap the customers that look for innovative products from other new food outlets (Rajawat et al. 2020). The expansion of the business of the company outside the market has created a significant opportunity for the growth of the business. As a result, it has also helped the company to overcome the issues faced in the domestic market. It is necessary for the business of McDonald’s to divert its focus from offering only junk foods to customized and healthy offerings in order to rebuild the brand image among the health-conscious customers. The company also tied up with Uber eats for the online delivery of the food offerings of McDonald’s from other platforms to strengthen its customer base. You can use the plagiarism checker tool to check the plagiarism.
Threats of McDonald's prevent the company from achieving the potential growth. The company invested a significant amount on the technology initiatives. However, the returns for these initiatives may slow, which can act as a risky investment for the company. Other than Burger King, Chick-Fil-A is also another big competitor of the company that poses a threat for the growth and expansion of the business of McDonald’s (Duggal and Alexander 2018). Though the expansion of the business in various countries of the world facilitates the growth of business, it also brings cultural threats for the company. It is essential for McDonald's to understand the cultural aspects of varied countries to operate the business successfully. Therefore, it may deteriorate the brand image of the company. The traditional menu and offerings of McDonald's may make it difficult to operate in the highly competitive environment. Therefore, the company should take the route of experimental recipes and menus. You can get study help.
The policies and actions of the government of the US plays a crucial role on the macro-environment of the business. Therefore, the growth and expansion of the business of McDonald’s largely depends on government intervention (Kwinta 2018). The initiatives of the government of the US related to international trade agreements acts in favor of the business environment of the company. Moreover, the public health policies influence the business of McDonald’s significantly. Many fast foods of the company are subject to criticism due to its negative effects on the health of the people.
The US is one of the highly developed countries of the world. Thus, the sound economic condition of the country acts in favor of the business of McDonald's. However, in recent years the growth rate of the US remained slow but steady, which may bring challenges for the company (Bak 2020). The expansion strategy of the company helps it to tap the opportunities of the potential emerging markets. The rapid growth of the emerging markets supports the business growth of the company. China is one of the fastest growing emerging markets of the company. It is one of the largest contributors for the revenue of the company. In 2020, the advent of global pandemic COVID-19 has threatened the growth of the economies along with the businesses.
Socio cultural factors play a huge role in the growth and sustenance of the company in the food chain market. In the US market, the rising disposable income of the people acts in favor of the business of McDonald’s. The growth of the sales of the company also largely depends on the busy lifestyle of the peoples in urban environments (Ohnuki-Tierney 2020). As a result, it increases the demand for the food offerings of the company. However, there exists a healthy lifestyle trend in various countries across the world, which may pose a threat to the macro-business environment of the company. Furthermore, increasing cultural diversity due to the expansion of the business worldwide may hamper the growth of the business.
One of the major facts that impact the macro business environment of the company is technological factors. Therefore, the success of McDonald's highly depends on the technological factors. The research and development activities in the restaurant industry supports the macro business environment of the company. Another technological factor is increasing business automation in this industry, which accelerates the growth of sales of the business (Zhu, Anagondahalli and Zhang 2017). It has made it easier for the company to operate in the highly competitive market. The launch of mobile applications takes the business to a next level. It has made it easier for the customers to put orders for their favorite foods through their mobile devices. Hence, it is one of the potential opportunities for the growth and sustenance of the business.
The legal system including rules and regulations to operate a business shapes the macro business environment. Here, the macro business environment of McDonald's depends on the legal system of the US. Therefore, it can be said that the health regulation of the country related to creating awareness about the right food choice in schools and workplace may threaten the position of the company in the restaurant industry (Kumar and Marwah 2019). Many people also stay reluctant to have animal food products due to the increasing animal welfare regulations. Therefore, it may increase the number of people who choose vegan food products. As a result, it may result in threats as well as opportunities for the company. The legal system of the country forces the company to raise the legal minimum wages. Therefore, it poses a great threat to the business structure of the company.
Environmental factors play a vital role in influencing the macro business environment of a company like McDonald’s. The environmental factors that affect the business include changes in climate conditions in some regions due to the higher level of carbon emissions in the environment. It not only poses a threat to the environment but also impacts the business environment of McDonald’s. In order to lower the environmental risks, many countries emphasize on the sustainable business strategies for the companies. Therefore, these sustainable business strategies of the company will support the future growth of the business (Dilip et al. 2021). In recent years, there is growth of interest for corporate environmental programs. Business stability and potential growth depends on the corporate environmental programs. Thus, it will create opportunities for the company.
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