-

“ORGANIZATION’S ANALYSIS OF INTERNAL AND EXTERNAL

FACTORS: MCDONALD.CO”
INDIVIDUAL ASSIGNMENT 1

FACULTY FACULTY : FACULTY OF SPORTS SCIENCES AND

RECREATIONS (FSSR)
PROGRAM : BACHELOR OF SPORTS MANAGEMENT
(HONS.)
PROGRAM CODE : SR241
COURSE : SMG 605 STRATEGIC MANAGEMENT
SEMESTER : 8
NAME : MOHD ALZAIRUDDIN BIN MAININ
(2015955727)
GROUP : NSRB3A

SUBMITTED TO:

MADAM HAJAR ASMIDAR BINTI SAMAT

SUBMISSION DATE:

29 JUNE 2020
 TABLE OF CONTENTS Page Number

1.0 EXECUTIVE 3

1.1 ORGANIZATION HISTORY AND INTRODUCTION 4

1.3 MISSION STATEMENT 4

1.4 VISION OBJECTIVES 5

1.5 STRATEGIES 5

2.0 PRODUCT INFORMATION 6

2.1 PRODUCTS INTRODUCTION 6

2.2 COMPETITORS 14-17

3.0 METHOD
17

3.1 SWOT ANALYSIS 17-22

3.2 EFE MATRIX REPORT 23

3.3 IFE MATRIX REPORT 24-26

3.4 CPM MATRIX REPORT 26-27

4.0 STRATEGY RECOMMENDATIONS 28-31

5.0 CONCLUSION 33

REFERENCES/ APPENDICES 34-37

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1.0 EXECUTIVE SUMMARY

McDonald’s Corporation is a “Centralized, International company”, which is the largest chain

of fast food restaurants with more than 30,450 fast-food restaurants in 121 countries worldwide.
Fifty eight percent of these stores are operated by franchisees, twenty eight by the company, and
fourteen percent by affiliates. McDonald’s expand its market into foreign countries through three
primary methods, franchising, company owned restaurants, and joint ventures which will help
McDonald’s easily to be accepted into unfamiliar markets and franchising continues to contribute
heavily to McDonald’s international success. Although its expansion rapidly, McDonald's still
manage a tight grasp on operations, cost and quality by using a centralized, international structure.
However, McDonald needs to face the risk of its change in operation strategy.
The competition among the fast food restaurants has intensified over the last decade and
with them fighting for bigger market share. In lieu with the said event, the world's biggest
hamburger chain, McDonald’s, is facing an onslaught of competition from better-burger chains. On
January 29, 2015, McDonald’s Corp. said that it was replacing CEO Don Thompson with its chief
brand officer, Steve Easterbrook after seeing their own customer visits decline at established U.S.
locations for two straight years. It was the latest in a string of changes the company has announced
in hopes of appeasing investors and winning back customers.
McDonald’s has built a global empire based on the consistency of its products, down to the
thickness of fries and the number of pickles on a sandwich. However, the upstart rivals have been
able to capitalize on consumer demand for food that is perceived as healthier and made with
fresher, natural ingredients. Last but not least, McDonald's is simplifying menus, tailoring food to
local tastes, offering custom burger and sandwich options, rolling out mobile services such as
payments and ordering, and opening a social media "dialogue" with customers to cater their
growing concern of decreasing sales due to the tough competition in the industry.

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1.1 INTRODUCTION

One of marketing problems affecting restaurant businesses is the tough competition in the
industry. Trying to get a business stand out in a crowded marketplace is tough. Even large chain
restaurants are facing tough competition from their rivals. The answer to this problem doesn’t start
with expensive advertising and more exposure but meeting the customer demands and discovering
its edge in making it different and more appealing than its competitors. The restaurant business is
tough. Everyone in it knows it. Therefore, top officers should create stringent measures to make it
float in the industry and to prevent it from flunking in the long run. In view of this, customers need a
reason to come in their business instead of their competitors. While it is good to think that the food
is so good that people will line up out the door to eat it, millions of mistaken restaurant owners are
now out of business.
In this marketing plan, the most famous known fast-food chain, McDonald’s, was being
chosen to be given analysis since recent news about its decreasing sales triggered a drastic
response from their top executives. Refreshing its image in the market and adapting to the wants of
today’s generation and trend were seen to be their response in the very tough competition that they
are facing against their competitors. Indeed, it is not easy to maintain the top position in the
industry but knowing what satisfies the customers and allowing the company to always provide with
fresh presentation of their products may give them a competitive edge over their competitors.

1.2 MCDONALD’S BACKGROUND

McDonald was founded and start it’s franchising in 1955. The operations of McDonald
corporation in over 121 countries and over 35,000 locations around the globe with more than 1,5
million employees and become the largest fast food service and supplier in the world which serves
approximately 70 million customers per day. McDonalds earns revenue by operating restaurants,
franching and investing in properties. However, they view themselves primarily as a franchisor and
believe that franchising is important to delivering great customer experiences and gaining
profitability. At year end 2013, more than 80% of McDonald’s restaurants were franchised
worldwide. McDonald's revenues gain $28.1 billion in 2013.

1.3 VISION STATEMENT

"McDonald's vision is to be the world's best quick service restaurant experience. Being the
best means providing outstanding quality, service, cleanliness, & value, so that we make every
customer in every restaurant smile." Their mission confirms that they offering exellent quality,
service, cleanliness, and value so that they can make their customer in every restaurant smile and

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satisfy with their products. They attain best value by providing top quality products at reasonable
prices.

1.4 MISION STATEMENT

McDonald's mission is to be our customers' favorite place and way to eat and drink by
serving core favorites such as our World Famous Fries, Big Mac, Quarter Pounder and Chicken
McNuggets with inspired people who delight each customer with unmatched quality, service,
cleanliness and value every time. We invite you to be the part of this winning team and give
yourself an opportunity to grow with the family of people striving to create smiles on the faces of
millions of people everyday. Organization’s focus is mainly towards the external and internal
customers such as consumers and employees. Furthermore, the company is committed to
innovate and use the latest technology to earn huge profits.

1.5 OBJECTIVES

With the strategy more restaurant locations are opened the more customers will be served, and
gain higher profit and this plan has been successful, both in the domestic and foreign markets.
The Main Objectives of a Business are:
1) To maintain the leadership in fast food restaurant industry
2) To serve the customer with good food in a friendly and fun environment
3) Providing the quality food and value of money to the customer
4) Providing the shareholder a positive return on their investments
5) To meet the social and ethical responsibility

Aims & Objectives of McDonald’s’ – “it’s what I eat and what I do…I’m lovin’ it”

McDonalds objectives are to reverse the decline of sales, to continue staying ahead of the
competition in the fast food industry and to find new strategies that would help the restaurant
successfully compete in the a fiercely competitive market.

1.6 STRATEGY

The strength of the alignment among the Company, its franchisees and suppliers (collectively
referred to as the "System") has been key to McDonald's success. By leveraging the system,
McDonald are able to identify, implement and scale ideas that meet customers' changing needs
and preferences. In addition, business model enables McDonald's to consistently deliver locally-
relevant restaurant experiences to customers and be an integral part of the communities that

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served. McDonald's customer-focused Plan to Win ("Plan") provides a common framework that
aligns McDonald global business and allows for local adaptation. McDonald continue to focus on
our three global growth priorities of optimizing our menu, modernizing the customer experience,
and broadening accessibility to Brand McDonald's within the framework of McDonald Plan.
McDonald initiatives support these priorities, and are executed with a focus on the Plan's five pillars
- People, Products, Place, Price and Promotion - to enhance McDonald customers' experience and
build shareholder value over the long term. These priorities align with McDonald customers'
evolving needs, and combined with competitive advantages of convenience, menu variety,
geographic diversification and System alignment - will drive long-term sustainable growth.

2.0 PRODUCT INFORMATION

2.1 NATURE OF BUSINESS

The Company franchises and operates McDonald’s restaurants in the food service
industry. Prior to May 2008, the Company had a minority ownership in U.K.-based Pret A
Manger, which it sold in 2008. The Company previously operated Boston Market in the
U.S., which it sold in August 2007, and had an ownership interest in Chipotle Mexican Grill
(Chipotle), which it disposed of during 2006. All restaurants are operated either by the
Company or by franchisees, including conventional franchisees under franchise
arrangements, and foreign affiliated markets (affiliates) and developmental licensees under
license agreements.

2.2 PRODUCTS

Some of the products of McDonalds

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2.3 BUSINESS ANALYSIS

McDonald’s has adopted a Market Development strategy for expanding into growing
economies, especially those of Asian countries. The Golden Arches have set their sights on
penetrating Asian markets, as those markets have high income potential. McDonald's already
enjoys unqualified success in Tokyo, Seoul, Beijing, India, and the United Arab Emirates, to
name a few Asian markets. There are many other markets throughout the Asian region that
offer the promise of high sales, market share and profit for the creative fast food company that
is fast enough on its feet to set up operations there.

2.4 FRANCHISING

To carry on the expansion strategy the company used the franchising strategy worldwide. It
has successfully replicated its business model, not in the US but also in the global locations.
Today more than 80% of the restaurants of the company are operated through the
franchisees. The contribution of the franchisee business is as follows:

2.4.1 FRANCHISED MARGINS

In milions 2012 2011 2010

U.S $ 3,594 $ 3,436 $ 3,239
Europe 2,352 2,400 2,063
APMEA 924 858 686
Other Countries & Corpotare 567 538 476
Total $ 7,437 $ 7,232 $ 6,464

2.4.2 PERCENT OF REVENUE

U.S 83.9% 83.9% 83.4%

Europe 79.0 79.1 78.2
APMEA 88.8 89.5 89.3
Other Countries & Corpotare 85.6 86.1 86.0
Total 83.0% 83.0% 82.4%

Source: Market Realist, 2013 Stability of McDonald’s franchise mode

2.4.3.1 MCDONALD’S IS NOT JUST A RESTAURANT

This sentence not only accurately covers business philosophy of McDonald's, but also
reflects franchise concept of McDonald's. McDonald's is not just a restaurant for sale, and as
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well as the concept of corporate culture. Initially, McDonald's franchise can be a new store, or
it can be an old one. The investment costs for new stores and old shops are different. In the
medium of 2004, McDonald’s opened a regular chain first, and then converted them to
franchised outlets. That franchise can use depreciation equipment; shops, furniture and
decoration, and the joined costs are correspondingly reduced. McDonald's franchisee is a
long-term partnership that the franchise agreement for a period of 20 years.

2.4.3.2 MCDONALD’S FRANCHISE MODE

McDonald's Corporation is one of the most successful franchises in the world, it creates
a unique franchise model: the company will buy or rent the shops, and then subleases it to the
franchisee. These real estates are the important property of McDonald’s, while rental income
of these shops also accounted for a significant proportion of the income.

2.4.3.3 THE FEATURES OF MCDONALD’S STORES SELECTION

McDonald’s expands their scale though the chain of business, however, the first step in
achieving this objective is through comprehensive market information and the location of the
evaluation criteria to select suitable store locations. It will make the stores more standardized
and more simplistic at headquarters management. The preferred terms of McDonald’s
business success is selecting good location. McDonald's will not spend huge investment to
develop the new markets, but rather to search for their own market all over the world. So
mostly, they choose fully copy shop store locations as possible.

2.5 INPUT, TRANSFORMATION AND OUTPUT

Traditionally it is believed that the operations management is as a transformation

process that takes set of inputs and transforms them into the out put. The output can be the
goods or services. This includes the effective planning, scheduling and control of the activities
that produce the required outcomes. (Cecil C. Bozarth, Robert B.Handfield, 2008)Operations
management plays a key role in determining the success or failure of an organization. To
carry forwards the inputs of each unit all together and getting turned it into the outputs is the
real synergy, which helps organization to set the directions towards climbing the heights of
success.
According to the William J. Stevenson as he state in his operations management book
‘Operations management is the management of the system or process that create goods
and/or provide services’ this involves various inputs, he add, ‘ the creation of goods or services
involves the transformation or conversion of inputs into outputs. Such as capital, labour and
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information are used to create goods or services using one or more transformation processes’.
Although the goods and services go hand in hand, there are some very basicdifferences
between the two. This can be determined through its nature of the business. Some
organizations can have higher degree of tangibility or intangibility.This can be determined
through its nature of business. For instance, if theorganization is selling goods, it can be
determined high level of tangibility andotherwise if its selling services then level of intangibility
will be high.
A process is any part of an organization that takes inputs and transforms them into
outputs that, it is hoped, are of greater value to the organization than the original inputs
(William J. Stevenson 2005). McDonald’s, at each of its restaurants, uses inputs such as
hamburger meat, lettuce, tomatoes, and potatoes. To these inputs, trained labour is added in
the form of cooks and order takers, and capital equipment is used to transform the inputs into
hamburgers, french fries, and other foods.

2.5.1 INPUT

McDonald’s, at each of its restaurants, uses inputs such as hamburger meat, lettuce,
tomatoes, and potatoes. To these inputs, trained labor is added in the form of cooks and order
takers, and capital equipment is used to transform the inputs into hamburgers, French fries,
and other foods.

2.5.2 TRANSFORMED RESOURCES

1) MATERIALS

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The ingredients including beef, fish, chicken, salad ingredients, buns, milk… and that are
delivered to MCDONALD’S restaurants in one lorry under 3 sections; chilled, ambient, and
frozen; for being converted into finished products on the FIFO basis to remain the freshness.

2) PACKAGING

McDonald’s uses boxes of burgers, tumblers for drinks and various bags for chips. This fast
food restaurant uses cardboard because it is clean, recyclable and that what’s make a
responsible and ecological company as well as to insure the convenient freshness and safety
of its products.

3) CUSTOMERS

consumers of all ages, from children to elderly people and families, MCDONALD’s is for all
classes but mostly for working and middle classes.

4) FACILITIES

Kitchen equipment, such as equipment of food concession and food processing. Etc Staff:
restaurants staff, restaurant management, office staff and franchisee staff, these people are
working in delivering a high quality of services and products to the MCDONALD’S customers.
McDonald’s revolutionized the hamburger-making process by developing a high-volume
approach. A diagram of McDonald’s traditional process is shown in Exhibit 1. Until recently,
hamburgers were grilled in batches. Standard hamburgers (for example, the “Big Mac”
consists of two beef patties, sauce, lettuce, cheese, pickles, and onion on a sesame seed bun)
were then prepared and stored in a holding bin for immediate delivery to the customer. A
person who judged current demand and placed orders to keep inventory in the bin at an
appropriate level controlled the whole process. This is a highly effi cient make-to-stock process
that produces standard products that can be delivered quickly to the customer. This quick
process appeals to families with small children, for whom speed of delivery is important.

2.5.3 MCDONALD’S PROCEESS FLOW

OLD PROCESS

Raw Cook Assemble Finished Delivery

material goods

Customer
10 | P a g e place order
NEW PROCESS
Customer
place order

Cook Work Delivery

Raw progress
material
Assemble

The new McDonald’s process introduced in 1999 ( Exhibit 1) is a hybrid process. Cooked
hamburger patties are inventoried in a special storage device that maintains the moistness of
the cooked patties for up to 30 minutes. The process makes extensive use of the latest
cooking technologies. Hamburger patties are cooked in less than 45 seconds. Buns are
toasted in only 11 seconds. Individual items on each customer order are transmitted
immediately to the area where the hamburgers are assembled, using a specially designed
computer system. The assembly process that includes toasting the buns is designed to
respond to a customer order in only 15 seconds. By combining the latest technology and
clever process engineering, McDonald’s has developed a very quick response process. The
product is fresh, delivered quickly, and made to the exact specifi cations of the customer. Each
of the processes used by these companies has its strengths and weaknesses. McDonald’s is
the high-volume leader, catering to families with young children.

2.6 OPERATION/SUPPLY CHAIN OF MCDONALDS

A supply chain is a system of organizations, people, technology, activities, information

and resources involved in moving a product or service from supplier to customer. Supply chain
activities transform natural resources, raw materials and components into a finished product
that is delivered to the end customer. The company’s recognition as having one of the best
supply chains in the world speaks for itself in terms of the strengths of the company in the

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area. The company has its unrelenting focus on speed, with Just-in-Time Delivery (Small
Business) and the economies of scale that it reaps on account of its global presence exerting
considerable influence on suppliers, serving as its strength.
McDonald’s focuses on three main concepts in maintaining the supply chain that helps
14,000 restaurants in the United States run smoothly: ethics, environment and economies.
This goes hand-in- hand with another philosophy McDonald’s has, called the three-legged
stool method. This method is unique to McDonald’s business, incorporating achievement, trust
and “personal”. When it comes to McDonald’s supply chain, the main focus is bringing food
from cow to plate. This is a short way of saying that the company wants to know every detail
about how their ingredients are brought into the restaurants. McDonald’s has such a great
relationship with their suppliers that they trust them enough to have no written contracts with
them. Of the 14,000 United States restaurants there are, no contracts have been written up to
ensure that every restaurant has beef, for example, each day. This is pretty impressive.
McDonald’s also tries not to completely knock out a supplier’s entire crop and make it
so they cannot work with them again. The company always tries to gain a lasting relationship
with all of their suppliers; this is a great thing for the farmers and is also a positive for farmers
to keep these long lasting relationships. The relationships between McDonald’s and their
suppliers are the center to the three- legged stool method. Another interesting aspect of
McDonald’s supply chain is how they decided what menu items are available. For example,
over the summer, McDonald’s offered Blueberry Banana Nut Oatmeal as a breakfast choice;
however, the oatmeal has been in the works for a long time. Before it could hit the nationwide
menu, though, McDonald’s needed to find enough suppliers to grow the blueberries that they
would use in restaurants. Since McDonald’s is such a large market, finding some of the fresh
ingredients can become a problem. For example, if McDonald’s wanted to create a Pineapple
Salad, they would not be able to because the pineapple supply in the world is not large enough
to supply all of McDonald’s restaurants.

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2.6.1 OPERATIONS

In terms of operations, the company has invested heavily in information technology, as

seen in the state- of-the-art order processing systems and the high end communication
equipment that the staffs are armed with, to provide services that are at par with the best in the
industry. Further, the standardisation achieved by McDonald’s throughout the distribution
system, enforcing its codes of conduct among the extensive network of franchisees would
count as its strength. However, the high turnover rates found in fast food industry (Chicago
Tribune, 2007) means that the company should keep struggling against the trend and try to
keep staff stick to the company and invest heavily in investment in people and in training.

2.6.2 SUPPLY CHAIN PROBLEM

These are the two major problems on a global scale of Mcdonalds supply chain.

2.6.3 PERCEPTIONS MATTER

For starters, there is the perception problem. The restaurant chain became popular
with consumers during a fast food era. The convenience of fast food fit perfectly into a post-
industrial society, where time was a premium commodity. Even as competitors gained
popularity with millennials with their fast casual food, the McDonald’s menu remained

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unchanged and, to a certain extent, quaintly unhealthy and old-fashioned. For McDonald’s, the
emphasis on fresh and locally sourced ingredients and artisan sandwiches is a radical
paradigm shift in operations. This is because, much like any other large organization, the
company’s supply chain is complex and depends on mass production and supply. Changing it
overnight would disrupt entire product economies.

2.6.4 THE BAGGAGE OF OPERATIONAL COMPLEXITY

Like most other large organizations, McDonald’s has collected a large amount of
baggage over the years. That baggage ranges from an overly complex menu that confuses
customers, to a clamorous set of investors intent on unlocking value from its real estate
holdings. There are other operational issues outside the restaurant. For example, last year, the
restaurant chain was embroiled in a food safety scandal in China. The company also had to
cut down its supply of fries to Japan after a labor dispute at the Port of Los Angeles. While the
incidents may seem like isolated instances, they represent the problems of managing complex
operations. As the company transitions to a new demographic (and toward new geographic
markets), the size and scope of such problems can make a significant impact to its bottom line.

2.7 COMPETITORS

McDonald’s (MCD) is probably the biggest name in the fast-food industry. It has a lengthy
history of innovation and offers quick meals that are relatively inexpensive. Thanks to extensive
marketing, McDonald’s is also one of the most recognizable brands in the world. As consumer tastes
evolve, restaurants like McDonald's find themselves fighting to keep up with changes in demand. Other
players made their way into the market by offering healthier food and different choices to fast-food
consumers. In this article, we look at McDonald's and its biggest competitors in both the fast-food and
fast-casual markets.

KEY TAKEAWAYS
 McDonald's is one of the largest and most well-known fast-food chains in the world.
 Privately-owned Burger King is McDonald's closest competitor.

 Yum Brands operates Taco Bell, KFC, and Pizza Hut.

 Subway is the largest restaurant chain in the world in terms of size, but sales have been sliding
since 2012.

 Chipotle was formed as a spinoff from McDonald’s with a 2006 IPO and offers a range of
Mexican-inspired menu items.
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2.7.1 MCDONALD'S OVERVIEW

The first McDonald's restaurant was opened in San Bernardino, California, in 1948 by two
brothers, Maurice and Richard McDonald. They sold their first hamburgers for 15 cents each. This
concept of fast food, which eliminated the need for wait staff, worked out so well that it developed into a
franchise system. In 1955, salesman Ray Kroc entered into a partnership with the McDonald brothers
and helped build the corporation. Kroc bought the company from Maurice and Richard McDonald in
1961. The next year, the chain's popularity increased when the company introduced the famous golden
arches as its logo. In 1963, the company introduced corporate mascot Ronald McDonald, and
McDonald's as we know it was born. Since then, the firm has expanded, with more than 38,000
locations in more than 100 countries.

McDonald's reported revenue of $21.1 billion for the full year ending 2019. As of March 13,
2020, the company's market capitalization was around $132 billion, with the stock trading at about
$177 per share. The average trading volume was roughly four million shares. The burger giant
continues to make changes aimed at increasing its market share. In September 2018, for example, the
chain cut out artificial ingredients from its seven classic burgers. However, it faces significant
competition from other quick-service brands, such as Burger King, Wendy’s (WEN), Taco Bell, KFC,
and Subway. Fast-casual restaurants are also close competitors, with names like Chipotle Mexican
Grill (CMG), and Panera Bread Company. Starbucks (SBUX) is a specialty quick-service brand that
has some offerings that overlap with McDonald’s. As the food and beverage sector grows, McDonald's
must face an increasing number of competitors.

1) BURGER KING

Burger King is probably the most direct competitor for McDonald's, with its staple Whopper
challenging the Big Mac in the burger war. Burger King recorded over $1.65 billion in revenue for the
full year ending 2018. As of the end of 2018, Burger King had more than 17,000 locations in more than
100 countries, with roughly 11 million daily visitors worldwide. Independent franchisees own nearly all
of those restaurants. Once a publicly-traded company, Burger King became private after it was
purchased by 3G Capital in 2010 for $3.3 billion. Shareholders received $24 per share in cash. Burger
King is owned by parent company Restaurant Brands International, which also owns Tim Hortons and
Popeyes.

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 2) WENDY’S

Wendy’s is a fast-food restaurant chain with more than 6,700 locations worldwide. Like Burger
King and MacDonald's, Wendy's focuses on burgers, fries, and other classic American food. As of April
24, 2020, Wendy's had a market cap of $4.1 billion, with the stock trading around $18 per share.
The average trading volume was about 6 million shares per day. The company reported revenue of
$1.71 billion in 2019. However, total system sales were higher because sales at franchised locations
are not included in consolidated revenues.

3) YUM BRANDS

Yum Brands (YUM) operates several large quick-service restaurant chains, including Taco Bell,
KFC (Kentucky Fried Chicken), and Pizza Hut. The 2019 annual report notes that the company had
more than 50,000 restaurants with 287 country-brand combinations; more than 98% of them were
franchised. The company's stock was trading around $78 per share and had a market cap of $23.6
billion as of March 13, 2020. The company's revenue exceeded $5.6 billion for the full year in 2019.

4) SUBWAY

Subway is the largest restaurant chain in the world in terms of size, with nearly 41,000 locations
in nearly 100 countries. All Subway locations are owned by franchisees, of which there are more than
21,000. The company’s menu consists primarily of sandwiches and salads. Subway reported 2018
sales of $10.4 billion in the U.S., but its sales have been falling since 2012. Since Subway is a
privately-held company, it isn't traded on any stock exchange.

5) CHIPOTLE

Chipotle is a fast-casual restaurant chain serving tacos, burritos, bowls, and salads. The
company was formed as a small local chain which earned signifiant investment from McDonald’s
before its 2006 initial public offering (IPO). Chipotle operates more than 2,500 locations in the U.S.,
Canada, the United Kingdom, Germany, and France—none of which are franchised. The company has
a higher price point than its fast-food competitors, and its slogan is "food with integrity." Chipotle
reported revenue of $ 5.59 billion in 2019. As of April 24, 2020, Chipotle’s market cap was $24.4 billion,
and its share price was about $880.

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 6) STARBUCKS

Starbucks is the world’s largest coffeehouse chain. As of November 2018, the company
operated more than 31,000 stores in 76 countries, including more than 15,000 in the United States.
None of the company’s U.S. locations are franchises. Starbucks serves coffee, espresso, cappuccino,
tea, pastries, sandwiches, and other foods. The chain markets itself as a high-quality option at a high
price point. The company reported revenue of $27 billion for 2019.2 4 As of April 24, 2020, Starbucks’
share price was about $75, and the firm's market cap was $87.8 billion.

3.0 METHOD SWOT

3.1 SWOT ANALYSIS

A McDonald’s in Helsinki, Finland. McDonald’s SWOT analysis highlights global

expansion and diversification to ensure business growth. McDonald’s maintains its position as
the top layer in the global fast food restaurant industry through strategies that address the
internal and external factors in this SWOT analysis. The SWOT analysis framework identifies
the most relevant internal and external business factors that determine the firm’s success.
McDonald’s uses a variety of strategies to deal with these factors.
However, the company faces considerable issues based on emerging conditions in the
global market. This SWOT analysis points out the most pressing concerns that McDonald’s
must address to keep its leadership in the industry. This SWOT analysis of McDonald’s
Corporation shows that the company must address diversification and process flexibility, as
well as expansion and innovation.

3.2 MCDONALD’S STRENGTHS (INTERNAL STRATEGIC FACTORS)

McDonald’s strengths make it a leading contender in the fast food restaurant market. This
aspect of the SWOT analysis shows the internal strategic factors that contribute to
organizational viability. McDonald’s main strengths are as follows:
 Strong brand image

 Moderate market diversification

 Standardized processes

McDonald’s has a brand image that makes the business competitively strong. Another
major strength is market diversification based on the firm’s presence in most regions around

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the world. This factor reduces market-based risks. In addition, McDonald’s has a
comprehensive system of standardized processes, which is a strength that contributes to
business efficiency and product consistency. This aspect of McDonald’s SWOT analysis
shows that the company has the capability to maintain effective operations.

3.3 MCDONALD’S WEAKNESSES (INTERNAL STRATEGIC FACTORS)

McDonald’s weaknesses are linked to the company’s market focus, products and processes.
This aspect of the SWOT analysis indicates the internal strategic factors that limit firm
performance. McDonald’s main weaknesses are as follows:
 Limited process flexibility

 Low product diversification

 Vulnerability to Western market decline

McDonald’s standardization ensures consistency but also reduces the company’s

flexibility in responding to market variations. Low product diversification corresponds to the
firm’s focus on food and beverage products, which is a weakness that makes the business
highly vulnerable to slowdowns in the restaurant industry. In addition, majority of McDonald’s
revenues are from the U.S. and other Western economies. This is a weakness because it
makes the firm easily vulnerable to economic decline in the Western world. This aspect of
McDonald’s SWOT analysis shows that the company needs to globally expand, improve
flexibility, and widen its product mix.

3.4 OPPORTUNITIES FOR MCDONALD’S (EXTERNAL STRATEGIC FACTORS)

McDonald’s opportunities are linked to its product mix and global growth. This aspect of the
SWOT analysis points to the external strategic factors that support business growth.
McDonald’s main opportunities are as follows:
 Expansion in developing countries

 Market development in the Middle East

 Product diversification

Considering its dependence on Western markets, McDonald’s has the opportunity to

grow and expand in developing countries, such as Asian economies. The company can also
use a market development strategy to establish operations in Middle Eastern countries that it
has not yet entered. In addition, to address market-based risks, McDonald’s has the
opportunity to develop new products or enter new industries. This aspect of McDonald’s

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SWOT analysis shows that the business has significant opportunities for global growth and
expansion.
3.5 THREATS FACING MCDONALD’S (EXTERNAL STRATEGIC FACTORS)

The threats to McDonald’s are based on competitive rivalry and sociocultural trends. This
aspect of the SWOT analysis deals with the external strategic factors that limit business
development. The main threats to McDonald’s business are as follows:
 Aggressive competition

 Healthy lifestyles trend

 GMO trend and regulations

The restaurant industry is highly competitive. Aggressive competitors threaten McDonald’s

status as the market leader. Also, the healthy lifestyles trend is a threat because it discourages
consumers from eating at McDonald’s, which is often criticized for unhealthful products. In
addition, GMO regulations are a threat because they have the potential to limit McDonald’s
products. The firm currently does not have a comprehensive policy on GMO ingredients.
This aspect of the SWOT analysis shows that McDonald’s needs to develop new policies
regarding GMO ingredients, as well as new products to attract health-conscious consumers.

3.6 CAUSE AND EFFECT DIAGRAM

To make rational decisions using data obtained on the product, or process, or from
the consumer, organizations use certain graphical tools. These methods help them to
know the characteristics of a process, its operating state of affairs and the kind of output
we may expect from it. Graphical methods are easy to understand and provide
comprehensive information; they are a viable tool for the analysis of product and process
data. These tools are effect on quality improvement. One of the tools is cause and effect
diagram. It is first developed by Kaorv Ishikawa in 1943 and is sometimes called as
Ishikawa diagram. The diameter helps the management trace customer complaints
directly to the operations involved.
The main quality problem is referred to Fish-head, the major categories of
potential cause structural bones and the likely specific causes to ribs. It explores possible
causes of problems, with the intention being to discover the root causes. This diagram
helps identify possible reasons for a process to go out of control as well as possible
effects on the process. McDonald decided to chooce cause and effect digram for late
delivery. McDelivery is a McDonald's service that delivers food to the customer's door.
The service was introduced in parts of the United States beginning in 1993 and is
available in many Asian, Middle Eastern and Latin American countries using motorcycle

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couriers. In some countries, delivery is available 24 hours a day, and in at least one
location, the service is free with a minimum order.

3.7 STRATEGY ANALYSIS

As one of the most successful fast food chain in the world, throughout the development
of McDonald’s, we could easily identify many successful business strategy implementations.
The McDonald’s business structure is based upon a geographic structure. When log on their
website, you will be asked to choose the country that you are interested in. Actually,
McDonald’s divided its operations into five geographical divisions. McDonald’s, the most
important strategic approach for maintaining its leading position is to keep their major markets
at the same time expanding their business into the other emerging markets. However, different
consumer groups in different countries may have very different tastes and/or requirements.
So each full functional geographic unit of McDonald’s was required to wholly response for
producing and marketing its products in that region. Through this regional structure,
McDonald’s could not only satisfy the local consumers’ needs in different geographical areas
but also pursuing ‘maximum local development’.
Actually they produce and market slightly different types of products in different areas,
and they even have different prices. As Jim Skinner, the vice-chairmen of McDonald’s
illustrated that ‘if you are looking for a command center with one push button that operate our
restaurant in every corner of the world, you won’t find it’. McDonald’s targets the similar
consumer segments that need fast service, affordable price and good standard hygiene. So
their main products are similar in most countries, where they provided service, including beef,
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chicken, bread potatoes and milk. As the consumers in different countries having different
foods requirements, McDonald’s keep launching new products for their regional consumers.
3.8 CURRENT STRATEGY BY MCDONALDS

3.8.1 VALUE FOR MONEY

McDonald’s aims to lure price sensitive customers with its value for money meals such as the
Buffalo Ranch McChicken and the Jalapeño McDouble (Lutz, 2014). The company initially
targeted high- priced value items in its menu but has recently shifted its focus towards lower-
priced products.

3.8.2 CUSTOMER SERVICE

McDonald’s has always focused on its service excellence to provide customers with
high-quality food served quickly and in clean surroundings. However, with increasing demand
and a complex food menu, the restaurant has been experiencing service delays due to the
longer preparation time required for menu items (Lutz, 2014). Speed of service is one of the
most crucial aspects of fast food. During peak traffic times (lunch and dinner rush times),
customers expect to receive their orders within about one minute after placing them. During
slower times, customers are willing to wait two or three minutes for their orders before they
start to form negative opinions about the company. McDonald's has realized that a return to its
former reputation for serving quality fast food quickly means elimination of certain menu items
and greater focus on its more traditional menu items, such as Big Macs, Quarter Pounders,
Fish, Chicken, and French Fries.

3.8.3 BRAND MARKETING

McDonald’s has been adversely affected by the growing health concerns of consumers
all over the world. The products of McDonald’s have been labeled as junk food and declared
unfit for daily consumption. McDonald’s now aims to increase the trust of its customers in the
food quality and brand of McDonald’s products as healthy food options (Lutz, 2014). To do
this, it has started offering salads, iced tea, sugar free drink options, fruit juices, and other
options that are either low in calories and/or low in carbohydrates.

3.8.4 MENU STANDARDIZATION

McDonald’s has implemented menu customization for various countries of operations

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that has actually complicated the menu items and increased the preparation time and thus wait
time for customers (Lutz, 2014). McDonald’s needs to standardize and simplify its menu items
to include food items that can be prepared quickly and served in the shortest possible time.
Again, McDonald's is focusing on its traditional menu of Big Macs, Quarter Pounders, McFish,
McChicken, French Fries, sugar-free drink options, juices, and breakfasts.

3.8.5 DIGITAL MARKETING

McDonald’s has shifted its focus on digital marketing strategy so as to engage and
target the young online audience through social media networks such as Facebook and
Twitter. The company hired its first digital marketing officer Atif Rafiq in the year 2013
(Morrison, 2014). Digital marketing is paying off, as results show that more young people are
visiting McDonald's than before. The drop-off in sales and market shares is among families;
that is where McDonald's Corporation's challenge lies

3.8.6 BREAKFAST MENU ITEMS

McDonald’s has recently launched new additions in its menu items and offers an
expanded breakfast menu with coffee, milkshakes and pastries for customers (Moskowit,
March 2014). The strategy is quite successful for the brand and the demand for breakfast
menu items have increased substantially for the company. One possible solution that
McDonald's might want to consider is to follow the lead of one of its smaller regional
competitors, Jack-in-the-Box, which sells breakfast 24 hours per day. With the popularity of the
Golden Arches' breakfasts, it might be a successful way to snag some additional market share
and bolster sales and profits.

3.8.7 COMPETITIVE STRATEGY

According to Michael Porter's competitive strategy theory, generally, companies

choose a strategy that brings competitive advantages. These advantages are based on either
a lower cost than competitors or a significant difference from the competitors. Competition
strategy consists of the following three strategies: cost leadership strategy, differentiation
strategy and focus strategy. The following figure 4 shows the three kinds of strategies. (Porter,
M.E. 1998)

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3.9 EFE MATRIX REPORT

EXTERNAL FACTOR EVALUATION MATRIX (EFE):

Weigh Weighted
Key external Factor Rating
t Score
Opportunities
Growing health trends among consumer. 0.08 3 0.24
Globalization, expansion in other countries. 0.12 4 0.48
Diversification and acquisition of other quick-service 0.04 3 0.12
restaurants.
Growth of the fast-food industry. 0.10 3 0.30
Worldwide deregulation. 0.04 2 0.08
Low cost menu that will attract the customer. 0.08 2 0.16
Freebies and discounts. 0.08 1 0.08
Threats
Health professionals and consumer activists accuse 0.10 3 0.30
McDonald’s of contributing to the country’s health issue of
high cholesterol, heart attacks, diabetes, and obesity.
The relationship between corporate level McDonald’s and 0.09 3 0.27
it’s franchise dealers.
McDonald’s competitors threatened market share of the 0.12 4 0.48
company both internationally and domestically.
Anti-American sentiments 0.07 2 0.14
Global recession and fluctuating foreign currencies. 0.04 3 0.2
Fast-food chain industry is expected to struggle to meet the 0.04 2 0.08
expectations of thecustomer towards health and
environmental issues
Total 1.00 2.85

EXTERNAL FACTOR EVALUATION MATRIX (EFE)

The EFE Matrix was used to assess Starbucks’ current business conditions. It helps
Starbucks to better visualize and prioritize the opportunities and threats to which the
business is exposed. The EFE Matrix can be compiled using the following four steps:5

1. Compile key external factors: key external factors are the opportunities and
threats that can be complied from the external analysis of Starbucks.
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 2. Assign weights: assign weights that range from 0.00 to 1.00 to each factor. The
weight should be assigned according to each factor’s importance to Starbucks’
overall business strategy.

3. Assign ratings: assign ratings on a scale from 1 to 4. The ratings indicate how
effective the company’s current strategy responds to each factor. A rating of 1
represents a poor response, a rating of 2 represents a response below average, a
rating of 3 represents a response above average, and a rating of 4 represents a
superior response.
4. Multiply and sum: multiply the weights with the ratings and sum all products to
reach the final score.

The average score is 2.5. A score exceeding the average indicates a strong strategic
ability to respond to external factors. A score that is under the average indicates a weak
strategic ability to respond to external factors. The EFE Matrix shows McDonald
managing it’s oppoturnities and threats average and has resulted in a final score of 2.85,
which scores slightly above the average score of 2.5 meaning that with its current
strategic orientation McDonold is only marginally able to respond to external factors.

Actions:

 Acquire small food companies to attract heavy traffic

 Make contract with major educational institutions and corporations

 Introduce healthier products with low calories and fats

3.10 IFE MATRIX REPORT

INTERNAL FACTOR EVALUATION MATRIX REPORT

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 Weigh Weighted
Key Internal Factor Rating
t Score
Strengths
Strong brand name, image and reputation. 0.12 4 0.48
Large market share. 0.10 4 0.40
Strong global presence. 0.04 3 0.12
Specialized training for manager known as Hamburger University. 0.04 3 0.12
McDonalds plan to win focuseson people, products, place, price 0.12 4 0.48
and promotion.
Strong financial performance and position. 0.08 4 0.32
Introduction of new products. 0.06 4 0.24
Customer focus (centric). 0.06 4 0.24
Strong performance in the global marketplace. 0.08 4 0.32
Weakness
Unhealthy food image. 0.08 1 0.08
High staff turnover including top management. 0.04 1 0.10
Customer losses due to fierce competition. 0.04 1 0.04
Legal action related to health issues; use of trans fat & beef oil. 0.04 2 0.08
McDonald’s uses HCFC-22 to make polystyrene that contributing 0.04 2 0.08
to ozone depletion.
Ignoring breakfast from the menu. 0.06 1 0.06
Total 1.00 3.16

ANALYSIS OF IFE MATRIX:

The IFE Matrix was used to evaluate major strengths and weaknesses in functional areas of
Starbucks and determine whether or not the company has a strong or weak internal
position. The IFE Matrix can be compiled using the following four steps:

1. Compile key internal factors: key internal factors are the strengths and
weaknesses that can be complied from the internal analysis of Starbucks.
2. Assign weights: assign weights that range from 0.00 to 1.00 to each factor. The
weights should be assigned according to each factor’s importance to Starbucks’
overall business strategy.
3. Assign ratings: assign ratings on a scale from 1 to 4. A rating of 1 represents a
major weakness, a rating of 2 represents a minor weakness, a rating of 3
represents a minor strength, and a rating of 4 represents a major strength.
4. Multiply and sum: multiply the weights with the ratings and sum all products to
reach the final score.
The average score is 3.16. A score exceeding the average indicates a strong internal
position. A score that is under the average indicates a weak internal position. The IFE
Matrix has resulted in a final score of 3.16, which scores significantly above 2.5 and thus
indicates a strong internal position.

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Actions:

 It should maintain it’s leadership position to overcome it’s weakness

 Should provide the healthy low calories food disclose the proper information to
customer to avoid legal action

3.11 CPM MATRIX REPORT

COMPETITIVE PROFILE MATRIX REPORT FOR MCDONALD’S

 
McDonald’s YUM Burger King
Critical Success Weight Rating Weighted Rating Weighted Rating Weighted
Factor Score Score Score
Brand Name 0.10 4 0.40 3 0.30 2 0.20
Product Quality 0.09 2 0.18 3 0.27 3 0.27
Public Image 0.07 2 0.14 3 0.21 2 0.14
Market share 0.09 4 0.36 3 0.27 3 0.27
Price Competitive 0.05 3 0.15 2 0.10 3 0.15
Innovation 0.03 3 0.09 2 0.06 2 0.06
Advertising 0.06 4 0.24 3 0.18 2 0.12
Market Expansion 0.07 4 0.28 4 0.28 4 0.28
Customer Service 0.06 3 0.28 3 0.18 2 0.12
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Financial Position 0.05 4 0.20 3 0.15 2 0.10
Sales Distribution 0.07 3 0.21 3 0.21 3 0.21
Strategic Partnership 0.04 3 0.12 3 0.12 2 0.08
& Alliances
Number of Locations 0.09 3 0.27 4 0.36 3 0.27
Corporate Social 0.05 4 0.20 3 0.15 3 0.15
Responsibility
Geographic Coverage 0.08 3 0.24 4 0.32 2 0.16
Total 1.00 3.26 3.16 2.58

Competitive Profile Matrix (CPM) is used to design wise offensive or defensive strategies by
identifying the major strengths and weaknesses of a firm in relation to the rival’s firm strategic position.
Two types of systems can be used for the construction of competitive profile matrix i.e. weighted rating
system (each measure of critical success factor is assigned a weight based on its perceived
importance) and unweighted (each critical success factor measured is assumed to be equally
important) rating system.  It is important to note that the meaning of weights and total weighted scores
is same in both EFE (external factor evaluation) and CPM (competitive profile matrix).

 
3.11.1 DIFFERENCES BETWEEN EFE AND CPM
 
Following are some of the important differences between EFE (external factor evaluation) and CPM
(competitive profile matrix).
1) In competitive profile matrix, critical success factors include both internal and external issues.
2) In external factor evaluation, critical success factors are grouped into opportunities and threats
whereas such grouping does not exist in competitive profile matrix.
3) In external factor evaluation, total weighted scores of a firm can not be compared to the total
weighted scores of rival firms whereas such comparison is possible in competitive profile matrix.
 
3.11.2 STEPS IN THE CONSTRUCTION OF CPM
 
Here we will be using weighted rating system for the construction of competitive profile matrix. Some of
the important steps involved in the construction of competitive profile matrix are given below.
1) In the first column, lists down all the key success factors of Industry (usually from 6 to 10).
2) In the second column, assign weights to each factor ranging from 0.0 (not important to 1 (most
important). Greater weights should be given to those factors which have grater influence on the
organizational performance. The sum of all weights must equal 1.
3) Now rate each factor ranging from 1 to 4 for all the firms in analysis. Here, rating 1 represents
major weakness, rating 2 shows minor weakness. Similarly, rating 3 indicates minor strength

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 whereas rating 4 shows major strength. It means that weakness must receive 1 or 2 rating while
strength must get 3 or 4 rating.
4) Calculate weighted score by multiplying each factor’s score by its rating.
5) Find the total weighted score of all the firms by adding the weighted scores for each variable.

The overall competitiveness of a firm can be evaluated on the basis of its overall strength rating. If
the difference between a firm’s overall rating and the scores of lower-rated rivals is higher then the firm
has greater net competitive advantage. On the other hand, if the difference between a firm’s overall
rating and the scores of higher-rated rivals is bigger then the firm has greater net competitive
disadvantage. In the above example, competitive profile matrix shows that the total weighted score of
McDonald’s is higher than Yum Brands and Burger King which means that McDonald’s enjoys the
strongest competitive position. On the other hand, Burger King has net competitive disadvantage
because of its lower total weighted score than McDonald’s and Yum Brands.

4.0 STRATEGY RECOMMENDATIONS

4.1 MCDONALD’S GENERIC STRATEGY & INTENSIVE GROWTH STRATEGIES

A McDonald’s in Oporto, Portugal. McDonald’s generic strategy, based on Porter’s model, is

effectively supported through the firm’s intensive strategies for growth. McDonald’s generic strategy
determines its basic approach to developing its business and competitive advantage. As the biggest
fast food restaurant chain in the world, McDonald’s uses its intensive growth strategies to support
continued business development and expansion. The related strategic objectives dictate the
company’s operational activities, especially in responding to economic changes and the actions of
competing firms.

Variations in market conditions impose pressure on the business to adapt or reform its
strategies. As such, McDonald’s generic strategy and intensive growth strategies change over time to
ensure long-term business viability. McDonald’s generic strategy defines the firm’s overall business
approach for competitiveness. The intensive strategies determine McDonald’s approach to growing its
business in the global fast food restaurant industry.

4.2 MCDONALD’S GENERIC STRATEGY (PORTER’S MODEL)

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 McDonald’s primary generic strategy is cost leadership. In Porter’s model, this generic strategy
involves minimizing costs to offer products at low prices. As a low-cost provider, McDonald’s offers
products that are relatively cheaper compared to competitors like Arby’s. However, the company also
uses broad differentiation as a secondary or supporting generic strategy. This secondary generic
strategy involves developing the business and its products to make them distinct from competitors. For
example, through McCafé products, McDonald’s applies the broad differentiation generic strategy.
Vertical integration is a strategic objective linked to McDonald’s cost-leadership generic
strategy. For example, McDonald’s owns facilities that produce standardized mixtures of ingredients.
Also, cost minimization is a financial strategic objective based on the cost leadership generic strategy.
In addition, product innovation is related to McDonald’s broad differentiation generic strategy.

4.3 MCDONALD’S INTENSIVE STRATEGIES

1) MARKET PENETRATION.
McDonald’s uses market penetration as its primary intensive strategy for growth. In applying
this intensive strategy, McDonald’s grows by reaching more customers in markets where it already has
operations. For example, McDonald’s opens new restaurants in North America and Europe by
franchising, joint ventures or corporate ownership. A strategic objective connected to this intensive
growth strategy is global expansion through new locations. McDonald’s generic strategy supports this
intensive growth strategy because low costs and low prices empower the firm to easily penetrate
markets.

2) MARKET DEVELOPMENT.

In its early years, McDonald’s used market development as its primary intensive strategy for
growth. However, market development is now a secondary intensive growth strategy because
McDonald’s already has restaurants in most regions around the world, except Mongolia, some parts of
the Middle East and west Asia, and the majority of African countries. A strategic objective for this
intensive growth strategy is to establish new locations in new markets, such as new McDonald’s
restaurants in African or Middle Eastern countries where the company currently has no operations.
Based on its generic strategy of cost leadership, McDonald’s supports this intensive growth strategy by
using low prices to compete in new markets.

3) PRODUCT DEVELOPMENT.

McDonald’s uses product development as its tertiary or supporting intensive strategy for growth.
In applying this intensive growth strategy, McDonald’s develops new products over time, such as new
McCafé products. These new products may be variations of existing products, or entirely new products.

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The strategic objective for this intensive growth strategy is to capture more consumers by attracting
them to new products. This intensive growth strategy agrees with McDonald’s broad differentiation
generic strategy in terms of new products that make the company distinct.

4.4 STRATEGIC ANALYSIS AND RECOMMENDATION FOR MCDONALD’S

McDonald’s generic strategy of cost leadership enables the company to sustain its market
leadership. The company’s broad differentiation strategy also helps. 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. The recommended strategic goal is to fuel
business growth through a combination of the market penetration and market development intensive
strategies. McDonald’s faces some difficult challenges that can only be overcome through following
ways. Key to its future success will be maintaining its core strengths and unwavering focus on quality
and consistency while carefully experimenting with new options.

These innovative initiatives could include launching higher- end restaurants under new brands that
wouldn’t be saddled with McDonald’s fast food image. The company could also look into expanding
more aggressively abroad where the prospects for significant growth are greater. The company’s
environment effects, while important, should not overshadow its marketing initiatives, which are what
the company is all about. McDonald's has definitely struggled to keep up with the growth of fast casual
restaurants like Chipotle in recent years, not to mention that it has come under fire for the detrimental
health effects of its food and how much it pays employees. Still, McDonald's is wealthy and powerful,
so we shouldn't count the fast food restaurant chain out just yet. McDonald's should consider making
these six changes if it wants to get back on top.

1. EMBRACE JUNK FOOD AND NOVELTY ITEMS

Practically every day it seems like a fast food chain is coming out with a new monstrosity.
Since McDonald's already has a reputation for not serving very healthy food, I think it should
just own it and go crazy with its menu items.

2. STAY AFFORDABLE

McDonald's recently announced that it will be launching the Sirloin Third Pounder, which will
set diners back $4.99 and is a lot more expensive than that double cheeseburger you can get
on the Dollar Menu. This isn't the first time McDonald's has sold a premium burger. The fast
food chain offered a line of Angus Third Pounder burgers that sold for $4.49 each in most
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markets before discontinuing them after four years on the menu in 2013. McDonald's
customers want cheap food, not a fancy, schmancy burger

than you can probably get a way tastier version of over at Five Guys for a little bit more money.
McDonald's will keep its loyal customer base happy and coming back for more if it keeps its
prices low.

3. PUT MORE FOCUS ON BREAKFAST

Breakfast is one of the areas in which McDonald's is currently doing things right, so this isn't so
much a suggestion as it is encouragement for them to keep doing what they're doing. The fast
food giant recently began testing all-day breakfast in the San Diego market, which is what
McDonald's customers have wanted since breakfast came to the fast food chain. Since U.S.
consumers increased their visits to restaurants to get breakfast for the fourth consecutive year
in 2014, according to an NPD Group study from March 2014, beefing up its offerings for the
first meal of the day could be a major win for McDonald's.

4. SPRUCE UP THE INTERIOR OF THE RESTAURANTS

Though McDonald's commercials make the locations of the fast food restaurant look all warm
and delightful inside, at least from my experience, they are not like that in real life. The interior
of most McDonald's restaurants are cold and outdated. It is a far cry from the big, comfy chairs
and melodic light acoustic tunes playing at Starbucks. Maybe if McDonald's actually made its
restaurants look more inviting, people would be more likely to go to the restaurant and spend
some time there.

5. PAY EMPLOYEES A LIVING WAGE

In recent months, protests asking McDonald's to increase the minimum wage for employees
have placed a dark cloud over the fast food chain. A huge wave of protests asking the fast
food chain to increase its minimum employee wage to $15 an hour just took place on April 15.
McDonald's announced earlier this month that it plans to raise wages by more than 10
percent for employees at the company-owned U.S. restaurants. However, workers at
franchise-operated locations were excluded from this wage hike. Of course, paying employees

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more is going to deepen the company's costs, but it will also help McDonald's improve its
public image, not to mention that improving the lives of its employees could also improve
business operations too.

6. GET SOME GOOD PRESS

Along those lines, McDonald's desperately needs some good press. The health of its products
and the alleged treatment of its employees has come under question. Its two new advertising
campaigns this year to revitalize its image backfired and didn't do anything to help its image.
People don't want to eat food from a place that inspires negative thoughts and feelings.
McDonald's needs something, maybe something viral, to put the company back in a positive
light. The above Twitter post from It Girl Gigi Hadid is certainly a step in the right direction.

5.0 CONCLUSION

McDonald’s has exploited its strengths in standardisation of operations, sales and

marketing, supply chain management and brand building initiatives. The community initiatives
and display of corporate social responsibility go on to strengthen the brand image, involving
local communities into the corporate brand and reaching out to a wider market. However, there
is room for improvement when it comes to service standards, customisation to suit local
cultural values, addressing health issues associated with its diet and focussing more on
customer satisfaction, than having a pure and unrelenting focus on business turnover and cost
leadership alone. This would help in sustaining the market leadership in a volatile market
scenario with high levels of rivalry within the industry players, where customers have no
switching costs in terms of choosing alternative brands or substitute products, and in an
industry that has minimal entry and exit barriers and hence has high threat of substitutes and
new entrants. Mcdonald’s is considered to be the King of the fast food.To achieve this
greatness Mcdonald’s has tried hard for ages to prove itself in the competitive environment of
Fast food.The key factors in success of Mcdonald’s in my view is
innovation,customisation,good management and above all best Marketing strategies adopted
by Mcdonald’s. Mcdonald’s has a very bright future because of the customers
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bank,customised approach from Mcdonalds towards its customers and above all the strong
brand Image.

REFERENCES

1. Anupindi , R. ; S. Chopra ; S. D. Deshmukh ; J. A. van Mieghem ; and E. Zemel . Managing

Business Process Flows . 2nd ed. Upper Saddle River, NJ: Prentice Hall , 2005.
2. Downie, R. (2020). Who Are McDonald’s Main Competitors?. Retrieved 16 June 2020, from
https://www.investopedia.com/articles/markets/102815/who-are-mcdonalds-main-
competitors.asp
3. Gargasas, A., & Mugiene, I. (2012). Intensive growth strategy development trends in logistics
services for agricultural organization providing companies. Management Theory and Studies for
Rural Business and Infrastructure Development, 34(5), 47-53.

4. Hill, T., & Westbrook, R. (1997). SWOT analysis: it’s time for a product recall. Long Range
Planning, 30(1), 46-52.
5. McDonald’s Corporation (2015). International Franchising.

6. McDonald’s Corporation (2015). McCafé.

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 7. McDonald’s Corporation Form 10-K 2014.

8. Merchant, H. (2014). Configurations of governance structure, generic strategy, and firm

size. Global Strategy Journal, 4(4), 292-309.

9. Miller, D. (1992). The generic strategy trap. Journal of Business Strategy, 13(1), 37-41.

10. Parnell, J. A. (1997). New evidence in the generic strategy and business performance debate:
A research note. British Journal of Management, 8(2), 175-181.

11. Varadarajan, P., & Dillon, W. R. (1982). Intensive growth strategies: A closer
examination. Journal of Business Research, 10(4), 503-522.

12. www.mcdonalds.com

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APPENDICES

Appendix 1: Comprehensive Strategic Analysis Framework

Current Situation Analysis Solution Analysis Recommendation

Assessment Analysis

Internal
Goals and
Characteristics
(background,
Evaluation
organization)
Criteria

Current
Past and Expected Propose Strategic Recommendation
Summary of
Strategy Current Performance Strategic Strategic Choice and justification
Current
(corpora Financial of Current Direction + Alternatives (corporate and of strategy
te and Solution competitive
competi Performance Performance Strategy selection
tive Analysis Analysis level)
level)

External
influences
( environmental
, industry)

Source: Own illustration

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 Appendix 2: Organizational chart

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 Appendix 3: McDonald value chain

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 Appendix 3: McDonald’s locations

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