McDonald's Corporation is the world's largest chain of hamburger fast food

restaurants, founded in 119 countries and territories around the world and serve 58
million customers each day. McDonald's operates over 31,000 restaurants worldwide,
employing more than 1.5 million people. A McDonald's restaurant is operated by
either a franchisee, an affiliate, or the corporation itself. The corporation's revenues
come from the rent, royalties and fees paid by the franchisees, as well as sales in
company-operated restaurants. McDonald's revenues grew 27% over the three years
ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.
The McDonald's Corporation's business model is slightly different from that of most
other fast-food chains. In addition to ordinary franchise fees and marketing fees,
which are calculated as a percentage of sales, McDonald's may also collect rent,
which may also be calculated on the basis of sales.
In 2003, the company launched the Im lovin it campaign.
In 2005, McDonalds started its McDelivery service in Singapore.
In 2006, the chain announced that it will publish nutritional information on its
packaging of all its products, for the benefit of the customers.
Considering the huge success and brand McDonalds has become, the food chain
is spread across the world in almost all the major cities of the globe. Being economic
and user friendly, the success rate of the company cannot be doubted.








McDonalds Business Analysis
'In the s managers will be judged on their ability to identify,
cultivate, and exploit the core competencies that make growth possible
- indeed, they'll have to rethink the concept of the corporation it self'
C K Prahalad and G Hamel
Organizations do not exist in vacuum They operate within a competitive
industrial environment Analyzing its competitors not only enables an
organization to identify its own strengths and weaknesses but also help
to identify opportunities for and threats to the organization from its
industrial environment SWOT analysis is a systematic analysis of these
factors and the strategy that reflects th e best match between them
Let us analyze these principals in relation to the core competence of
McDonalds, one of the largest food chain companies in the world Let us
first start with the strengths and the positive aspects which define the
performance of this company How can we define the company's
strengths? Strength is a distinctive competence that gives the firm a
comparative advantage in the market place For instance financial
resources, image, market leadership and buyer supplier relations etc
McDonalds is the no: fast food chain stores with a 4 million
customers visiting it per day It has over 3, branches in
countries It derives 8 of its revenues from eight countries like
Canada, Brazil, Germany, France, Japan, UK, Australia and US The
greatest strength was creating an image in the minds of the people and
introducing them to the fast food culture Delivery speed, customer care
and cleanliness are the core strengths on which these stores expanded
They created a corporate symbol and their advertisement campaigns
were highly successful in establishing the brand image and logo in the
minds of the millions Two main competitors generally identified with
McDonalds are the Burger King and the KFC McDonalds marketing
strategy is concerned with the internal resources, external environment
and its basic competencies along with its share holders
McDonald's product value is also its greatest strengths Customers know
what to expect when they walk into a McDonalds store It gives great
emphasis to human resources by satisfying both the customer and the
employees Next is the innovation aspect wherein new products line up
to catch up with the new trends and tastes of the people Its diversity
into other new business ventures can also be considere d as its strengths
How effective are these strengths to the company in the long run?
McDonalds today is not that amendable as it was during its inception
What are the driving factors which results in its present decline in terms
of sales and services? To analyze this factor we have to look at the
weaknesses part of the companies business and marketing strategy
What can generally be termed as a weakness of a company? The same
factors which were considered as strengths also become a weakness if it
impedes the overall performance of the company
Customer trends change and so does their choices People are generally
tired of the same brands that they had been using over the years, so
when they do not see the expected innovation they migrate to new
brands Moreover people see McDonalds every where and this over
exposure might also be a reason for abstinence Moreover maintaining
the standards of such a huge chain becomes feasible and when there is
lack of quality service in one store it effects the whole brand
The secret of any marketing strategy is to reach the target audience
And here again the target audience should be chosen carefully In the
case of McDonalds as projected in its ads, the targeted audiences were
the kids Demographics and customer financia l and psychological aspects
define a business concerns success Health conscious women and senior
citizen comprise the major population but kids soon grow out to become
adults Recent law suits and documentaries resulted in the companies
recent innovation and a major change related to health related product
ranges and this switch over as per the needs of today's trend and needs
has increased the lost popularity of McDonalds a bit
All the above factors point out the external strengths and weaknesses
There are also internal factors which affect the performance and overall
benefits the company stands to enjoy Kids based marketing strategy
which was earlier a weakness has changed since 3 Now more
teenagers and adults rule the McDonalds ad world The rese arch and
develop which lacked earlier is also looked into and the brand quality is
being defined with various research and development options today
McDonald at one stage started concentrating on expansion and growing
big that it missed out on key factors like quality maintenance and R&D
One major threat to any brand is its relationship between the
management and the franchise dealers Organization strength is the
back bone of any concern and when that starts shaking the whole system
will collapse But slowing McDonald is recovering from all these
weaknesses as its brand managers can easily communicate, compare and
improve their services through the latest technological developments
wherein they can use the internet to motivate, compare and improve
upon other centers performances
The overall analysis of all the external and internal strengths and
weaknesses on this company should be linked in order to draft a
sustainable plan for the companies' further improvement For any
improvement or expansion the internal resources must be readily
available And thus analyzing this aspect can lead to a modified strategy
to suit its vision Keeping in mind the available resources the planner
should think globally Hence making use of all the core competencies the
firm can definitely sustain in the competitive market
The change in the top managerial level has creating a new wave in its
performance and major changes have been implemented to retain and
sustain the brand quality and innovation As the new CEO rightly quotes ,
"The world has changed Our customers have changed We have to change
too"
James R Cantaloupe, Chairman and CEO, McDonald's, 3
Now let us analyze the sustainable competitive advantage of the
company What is sustainable competitive advantage? How c an it be
related to McDonalds? SCA is the advantage a company has which is
difficult or impossible for other companies to possess or break through
It can either be the brand, dynamic customer care, cost structure or its
patent Whatever the advantage in o rder to be considered as sustainable
it should either be proprietary or distinctive Other than this three
different aspects that help in SCA are,
o The managerial and organizational process should share a good
integration and coordination The much needed 'value' is created thereby
as everyone strives to work for a common goal The organization should
learn and bring about changes according to the need of the hour and
should always be flexible to changes in the environment such as
customer trends, legal or government restriction and developments in
the technology McDonalds is presently concentrating on this advantage
by concentrating on organizational behavior and managerial expertise
Previously this advantage was ignored as the organization was more into
expansion of its outlets over the globe than strengthening its core
advantage As the result the revenue did not see much of a change while
newer outlets were open The company suffered a massive loss first time
since their inceptions which further lead t o the change in the managerial
heads
o Technological, structural and financial assets of a company are
excellent market position which helps in the SCA McDonalds no doubt is
abundant with such aspects like structure, technology and finance To
identify and implement these assets in the proper direction towards the
improvement of the company is all that is needed After 3 the
company has really started to concentrate on its greatest advantages
o Most of all the greatest advantage is the vision or the d ream with
which the company was started Sustaining this dream over the years is
any companies' greatest advantage A brand usually revolves around this
vision sustaining this vision and working in lieu with it is a great SCA
McDonalds was started out to help people who had very little time to
cook or was too busy to get into a proper restaurant The vision was to
provide quick service, cheap products and quality satisfaction Keeping
this vision in mind the company which slackened a bit because of
incompetent franchise holders is being weeded and new and better
people are put in this place as the torch bearers of the company
sustaining and living the vision
To sum it all up SCA means implementing the best value based strategy
using all the advantages which are unique to the company and that which
cannot be copied or replicated by other competitors The importance of
this SCA can be evident by the reply the great investment guru Warren
Buffet gave when asked about how he evaluates his investment portfolio
He simply answered 'sustainable competitive advantage' Hence based on
the dynamic integrated and intelligent human resources can always be
the only dependable and sustainable SCA
Outsourcing boom or doom in today's business environment
Today everything is outsourced from employee appointment to finance
and customer care No organization is best enough to handle all kinds of
work Moreover concentrating on every detail is not possible with a big
concern especially like McDonalds But great care should be taken not to
outsource the core competences of the company General advantages of
outsourcing are cheap service, knowledge of markets offshore, flexible
resources, speedy operations, expansion in supplier relationship etc
most of all the company can concentrate on its core competencies and
outsource rest of its operation Recently McDonald has tested its drive
through order facility Wherein it makes sure that the order placed with
the outlet is accurate The order taken by the outsourced company is
reverted back to the home restaurant These call center has a digital
camera which clicks the vehicle you drive through and the delivery man
back home can integrate the order and the person who placed it using the
image of the car Outsourcing thus helps in the increase of the external
suppliers and fills up the difficulties faced because of the lack of the
latest technologies and other innovations
What started of as a success story with McDonalds had to face a number
of risks, competitions and major set backs What makes it still strong
and ranked among the top business concerns is its core competences and
the sustainable competitive advantages both internal and external Of
course keeping up with the changing times the company has also set foot
in outsourcing but the point to keep in mind here is not to be driven away
by this outsourcing mania This company has started to revert back to
its golden glory recently because of large scale revamping of its
organizational and structural changes being implemented
Conclusion:
No particular competitive strategy is guaranteed to achieve success at
all times Risk attitudes can change and vary by industry volatility and
environmental uncertainty and several internal conditions also might be
involved Thus the "four P's" of marketing (product, price, place and
promotion) provide a good starting point for consideration of the
requirements of strategy implementation in the marketing function The
mix of these marketing elements should be appropriate and the plans for
each of the elements should also be appropriate
The marketing function is consumer oriented and hence marketing
decisions are based on the careful identification of consumer needs and
on the design of marketing strategies to meet those needs The
distribution system brings the product or service to the place where in
can best fill customer needs Access to distribution can mean all the
differences between success and failure for a new product Because
many products require support from distribution channels in the form of
prompt service, rapid order processing etc the choice of distributors,
wholesalers and jobbers is extremely important
Promotion is more than advertising The location, size and nature of
markets which the business strategy defines will guide promo tion mix
decisions and should indicate the content of promotional material as
well Pricing is a complex issue because it is related to cost, volume,
trade offs etc and because it is frequently used as a competitive weapon
Pricing policy changes are likel y to provoke competitor response Using
price to jockey for position can lead to price wars, which usually hurt all
participants
Marketing has received increasingly greater attention in the competitive
business since the early modern era The old concept of marketing
focused on the firms existing products and considered marketing to
consist of selling and promotion to maximize sales at a profit The new
concept however focuses on the firms existing potential customers and
seeks to earn profit through customer satisfaction with an integrated
marketing program
I am a freelance writer inspirational and hard working For me work is
worship I love to do deadline oriented jobs as it is a great test to my
vitality, skill and my creativity I have an unending pas sion to learn more
things I learn from my failures and drive through success equally
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