McDonald’s SWOT and PEST

Analysis

Professors Matt Benner & Ajay Kaushal

 SWOT Analysis
Strengths
• Brand Recognition:
- Strongest in the Industry
• Restaurant Network:
- 2nd Largest in the Industry
• Supply Chain Maturity:
- Strong alignment supports
rapid global growth
Opportunities
• Diversification:
- Develop acquisition
program akin to Macro Beer
company acquisition of Micro-
Brewers
• Loyalty Program:
- Rewards Program aimed at
increasing and improving
Mobil Ordering, Home
Delivery and Overall
Restaurant
("McDonald's Corporation SWOT Analysis 2019,” 2019; Siddique, 2015 )
Weaknesses
• Menu Intricacy:
- 120 items on menu
- Avg Drive-thru time slowest
in the industry
• Digital Technology:
- App Based Systems Lack
Maturity/Efficiency Basis
• Company Debt:
- 2017 to 2019; debt grew
from $29.53 to $44.73
Billion
Threats
• Competition & Innovation:
- Wendy’s, Chik-Fil-A and BK
are constantly innovating and
testing new products
- Starbucks with its massive
chain of restaurants is quickly
becoming a breakfast service
hub of healthy choices
• Restaurant Utilization:
- Quick Service Restaurants
threatened by four-year declining
restaurant utilization trend-line
 Loyalty Program Opportunity
• Current Loyalty Program revolves around coupons and coffee
purchases – needs to be revamped with a focus on efficiency and
customer experience

• Key Recommendation: Develop a Loyalty Program designed to

increase efficiency and customer experience by leveraging
Digital and Demand Based Technology:

- Make this program App/Demand Based

- Create Loyalty Rewards for Mobil Pick-ups, Home/Work

Deliveries and Drive Thru Orders

- Offer price/rewards incentives driven by AI Algorithm for App

utilization during peak hours – results of program:

* Improve efficiency of Drive-Thru Experience – cut down on

the time customers spend in the Drive-Thru area

* Improve Overall Customer Experience for Drive-Thru,

Home/Work Delivery Options and utilization of Mobil Pick-
Up Parking Spaces
(Harmon, 2019; "McCafe Loyalty Terms & Conditions: McDonald's Canada", 2019)
 PEST Analysis
Political
• Health Regulations:
- Global Trends towards
regulation of unhealthy food
choices
- Trend is particularly strong
in Western Europe, Canada
and some progressive states
and cities in the U.S.
• Trade Agreements:
- Open markets and create
opportunities
Social
• Lifestyles:
- Global trend towards
healthy life-styles in
western countries
- Busy Lifestyles in urban
areas support fast food
service (emphasis healthy)
- Global Climate Change
movement is influencing
what food we consume and
how we consume it
(Greenspan, "McDonald's PESTEL/PESTLE Analysis &
Recommendations", 2018; Jurevicius, 2013; Kim-Keung-Ho, 2014)
Economic
• Global Growth:
- Developed countries slow
and stable
- China economy very slow
growth in 2019
- Past recession data indicates
revenues and profits
increased during economic
downturns
Technology
• Automations/Mobil Growth:
- Industry trend toward
greater and greater store
automations (fewer
employees)
- Industry trend towards
greater and greater utilization
of Mobil Applications and AI
in the customer
service/experience process
 Healthy Lifestyles Opportunity
• Current Menu Options revolve around the traditional beef
burger and fries option – this in spite of changing consumer
trends towards healthier food options

• Key Recommendation: Develop a Plant Based substitute for beef

in burger form in order to address issues related to healthy
eating and potentially the environment as well

- Continue to work with “Beyond Meat,” as discussed in Fall

2019 media release

- Continue to develop Test Markets in Canada, the United

States and Western Europe

- A Tasty Product is a must – since McDonalds has built much

of its success around sensory branding (taste in particular).

- A successful product will tie the company to Global Climate

Change movement in a positive way! Many potential
customers believe that eating beef hurts the environment
(Jurevicius, 2013; Taylor, 2019)
 Summary and Conclusions
To Remain Competitive:
• McDonald’s must develop a “Loyalty Program,” designed to
increase efficiency and customer experience, and it must leverage
Digital App/AI Based Technology

• McDonalds must develop a “Plant Based,” a substitute for beef in

burger form in order to address issues related to healthy eating
and potentially the environment as well

Ongoing Challenges:
• Menu Complexity will be an ongoing challenge in a changing,
diverse and highly political/regulated global environment – core
values of “McDonald’s Burger and Fries Business,” can be best
preserved via a “tasty plant-based beef substitute

• There is limited down-side politically/economically to embracing

various aspects of the “Climate Change Movement – as it applies
to beef production – young stakeholders demand it
 References
Cisco Systems, Inc. SWOT Analysis. (2019). Cisco Systems, Inc. SWOT
Analysis, 1–8. Retrieved from https://search-ebscohost-
com.proxy1.ncu.edu/login.aspx?direct=true&db=bth&AN=13
9070529&site=eds-live

Greenspan, R. (2018, September 5). McDonald's PESTEL/PESTLE Analysis &

Recommendations. Retrieved January 25, 2020, from
http://panmore.com/mcdonalds-pestel-pestle-analysis-recommendations

Harmon, A. (2019). SWOT analysis. Salem Press Encyclopedia.

Retrieved from https://search-ebscohost-
com.proxy1.ncu.edu/login.aspx?direct=true&db=ers&AN=10
0259317&site=eds-live

Jurevicius, O. (2013, February 13). If it's Time to be Brave a PEST may be your Best
Defense. Retrieved January 25, 2020, from
https://strategicmanagementinsight.com/tools/pest-pestel-analysis.ht

Kim-Keung-Ho, J. (2014). Formulation of a Systemic PEST Analysis for Strategic Analysis.

European Academic Research, II(5), 6478–6492. Retrieved from
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.433.5631&rep=rep1
&type=pdf
 References Continued
McDonald's Corporation SWOT Analysis 2019. (2019). Retrieved January 25, 2020, from
www.strategicmanagementinsight.com

McDonald's Long Term Debt 2006-2019: MCD. (n.d.). Retrieved January 25, 2020, from
https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/ long-term-debt

McCafe Loyalty Terms & Conditions: McDonald's Canada. (2019). Retrieved January 25,
2020, from https://www.mcdonalds.com/ca/en-ca/terms-and-
conditions/mccafe-loyalty.html

PPG Industries, Inc. SWOT Analysis. (2019). PPG Industries, Inc. SWOT
Analysis, 1–7. Retrieved from https://search-ebscohost-
com.proxy1.ncu.edu/login.aspx?direct=true&db=bth&AN=13
9042548&site=eds-live

Siddique, M.C. (2015). A Comparative Study of Strategic

Planning Practices of SMEs and Large-Sized Business Organizations in
Emerging Economies: The Case of UAE. Strategic Change, 24(6), 553–567.
https://doi-org.proxy1.ncu.edu/10.1002/jsc.2039

Taylor, K. (2019, September 26). McDonald's is testing a veggie burger made with Beyond
Meat, but it isn't 100% vegan. Retrieved January 25, 2020, from
https://www.businessinsider.com/mcdonalds-beyond-meat- burger-test-
not-100-percent-vegan-2019-9