This report highlights the main business activities of the organisation, as well as provides an overview of the fast food retail industry and McDonald’s the competitive environment of McDonald’s. It is important to note that along with maintaining product and service standardization, McDonaldâs takes into account local tastes and preferences, when developing its menu and engaging in marketing efforts. View all posts by The Strategy … Question. âMcDonaldâs global brand is well known. the fast food industry is populated with several global and local brands. Managing a large and international business like McDonalds is not an easy task. The total amount that it generated in sales equalled 2.4 trillion dollars. This has led to higher marketing and promotion costs as well as research and development costs for international brands like McDonalds. (MEYER, McDonald’s Marketing Mix (4Ps) Analysis, 2015) Public relation McDonald’s do public relations activities help promote the business in target market. Its global parsec is major competence that has led to growth in sales and profits. The millennial generation should be engaged using modern technologies and other various methods for higher retention level. Mcdonald 's Business Strategy Analysis 1465 Words | 6 Pages. While the brandâs systemwide sales increased 7%, consolidated revenues decreased 7%. Firm Infrastructure: McDonalds has maintained a very large firm infrastructure that includes its offices as well as other important properties. these small variations are made in order to suit the taste of the local customers. 9 out of the ten restaurant managers currently had started at the entry level. 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. This organisation is the world’s best fast food restaurant. As of year end 2017, McDonaldâs employed 235,000 employees. McDonaldâs places heavy focus on customer service. While on the one hand any negative news has the potential to hurt sales and reputation a healthy and innovative menu has become essential to retain the millennial customers. In applying this growth strategy, McDonald’s develops new products over time, such as new McCafé products. There are other technologies also that McDonalds uses to collaborate internally out externally with its partners. McDonaldâs restaurants offer substantially uniform menu that comprises Â hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafÃ© beverages and other beverages.. The role of IT and digital technologies has kept growing in the McDonalds system. Supply chain and technology: McDonalds has a well managed supply chain which is among one of its major strengths. It started its operations in sixties and currently it is serving worldwide chain of 30,000 restaurants. the Millennial generation especially is highly health conscious and wants only affordable and good food. Overall the level of rivalry among the existing brands is very high. Its goal is to become 95% franchised over the longer term. Global comparable sales of McDonaldâs increased by 5.3% and guest count increased by 1.9%. Food quality related issues also erupt from time to time across the McDonaldâs system. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. McDonalds marketing strategy is concerned with the internal resources, external environment and its basic competencies along with its share holders. Business strategy In 2003, the company initiated its customer-focused “Plan to Win” strategy. Political factors have kept growing in importance in the 21st century. The stronger the brand image of a brand, the higher are its sales and profits. Another important strength of McDonaldâs is its supply chain management. The brand sells across more than 100 countries through its franchised and company owned restaurants. 90% of its restaurants are operated by franchisees. As of 2017, McDonalds employed around 235000 employees. The total amount that it generated in sales equalled 2.4 trillion dollars. McDonald’s restaurant will be selected to complete this assignment. However, for most of its raw material it has several options or several suppliers to source from. Marketing and promotional efforts focus on value, quality, food taste, menu choice, nutrition, convenience and the customer experienceâ. It is because social factors now play an increasingly important role in deciding the fate of the businesses. McDonaldâs is very popular in the global market and in various corners of the world. 1. while there are no significant barriers to entry, still to grow into, McDonaldsâ brand image is one major competence that gives the brand extra leverage in terms of marketing as well as sales. Having a large and loyal customer base is an important strength that can result in higher sales and profits. Such a consistence in taste has positive implications on consumer loyalty. Competition in every industry has increased and only the brands that. It is the millennial generation that constitutes the largest section of the global population. It is a global brand operating across more than 100 countries. The restaurant workforce of USA constitutes 10% of its entire workforce. #Five Forces Analysis of McDonalds: Bargaining power of suppliers: The bargaining power of most of McDonalds suppliers is low which is because of their small size and being scattered globally. Due to such a large system being heavily dependent on franchisees quality control sometimes become difficult. Legal compliance is now heavily important to find success in 21st century. quick-service eating establishments, casual dining full-service restaurants, street stalls or kiosks, cafÃ©s,100% home delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie bars was composed of 9 million outlets in 2016 and generated 1.2 trillion in sales. The company is engaged in an extensive utilization of economies of scale to achieve the cost advantage. To have the lowest cost possible McDonalds standardized its products and services. A large number of McDonaldâs restaurants had to be closed in India only because the brand could not manage its franchisees there well. While this has intensified the race on the one hand, on the other it has given customers higher bargaining power. Another important strength of McDonaldâs is its supply chain management. â It must focus on employee development and management. Inbound logistics: McDonalds has managed a large supply chain from which it sources raw materials. In case of McDonaldâs it is well known as the leading fast food brand of the world. It is especially so when the brand is heavily franchisee based. Moreover the company returned 7.7 Billion dollars to the shareholders through share repurchases and dividends for the year. Including more low cost items on the menu can also prove profitable for the brand and attract higher sales. the 21st century customer is equipped with information as well as technology and is also highly health conscious. the number of international brands in the fast food industry has kept growing. It is a well known name in most corners of the world and brand image is helpful in terms of marketing as well as sales both. Market leadership in the US 2. The number of franchisees in McDonalds system has continued to increase. McDonaldâs is primarily a franchisor with franchisees owning and operating more than 90% of its restaurants. McDonaldsâ 90% restaurants are operated by franchisees. McDonald’s is the best example of international franchising models. Abhijeet has been blogging on educational topics and business research since 2016. By the year end 2017, the company had 2,35000 employees in total which included the employees working in its offices as well as in the company operated restaurants. SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The bargaining power of most of McDonalds suppliers is low which is because of their small size and being scattered globally. This also leads to higher costs and issues. In 2016, the total revenue of the brand was 24,622 million dollars which fell to 22,820 million dollars. However, a very large part of the McDonalds system around 90% is run by franchisees. This has been leading to management and control related issues for McDonalds. The company, which had its origins in the United States of America in 1940, has expanded its operations to become a global chain of over 23,000 restaurants, spanning over 117 countries and employing as many as 400,000 people around the world. McDonalds operates in more than 100 countries and has to remain cautious about compliance so as to not become a target of law. McDonalds has a large customer base and enjoys very high level of customer loyalty. The brands that have invested more in technology are ahead of the others in market. It is why McDonalds is focusing on sustainability and trying to achieve higher sustainability in the long term. these distribution centres distribute products and supplies to Mcdonalds restaurants globally. Total debt also rose during this period from 25,956 to 29,536 million dollars. Further, they have utilised the marketing mix in order to achieve the marketing strategy by operating the outlets for longer hours, offering everyday value meals and enhancing efficiency in drive-thru. This was around 33 billion dollars higher than the previous year. Managing a large and international business like McDonalds is not an easy task. The number of restaurant locations in US is now higher than 1 million. The brands that have invested more in technology are ahead of the others in market. McDonald’s has adopted a Market Development strategy for expanding into growing economies, especially those of Asian countries. Franchising and licensing forms of new market entry is utilized within McDonald’s business strategy to a great extent. The market entry strategy of McDonald’s and a critical analysis of its marketing mix are also presented. Franchising and licensing forms of new market entry is utilized within McDonaldâs business strategy to a great extent. The threat from new entrants for McDonalds is also moderate. The operating income rose from 7,745 million dollars in 2016 to 9,553 million dollars in 2017. The report also illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porterâs Five Forces, Value Chain analysis and McKinsey 7S Model on McDonaldâs Corporation. The total revenue of McDonalds has continued to fall from 2013 onwards. It was because the industry was quick to adjust its menu and prices. It provides the most useful resource of knowledge to business starters, researchers, strategists, and students. Marketing, promotional and public relations activities are designed to promote McDonaldâs brand and differentiate the Company from competitors. â In the recent years McDonalds has reduced the expenditure on marketing and promotion. Even in the fast food industry the role of law is important. There are several reasons behind it apart from the increased competition. In this assignment will describe the vision, mission, objective, competitive strategy, external fit, PEST analysis, porter’s five forces regarding McDonald. McDonald’s strives to fulfill the demands of investors as a major stakeholder group in the business. Operating across more than 100 countries, the brand serves locally relevant quality food and beverages at various price points. the demographic composition of the world population has changed a lot in the recent years. It is because the brand has been able to build very high level of trust among its customers. The number of restaurant locations in US is now higher than 1 million. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. https://economictimes.indiatimes.com/industry/cons-products/food/why-mcdonalds-had-to-shutter-outlets-in-delhi/articleshow/59402309.cms, https://www.restaurant.org/News-Research/Research/Facts-at-a-Glance, https://corporate.mcdonalds.com/content/dam/gwscorp/investor-relations-content/annual-reports/McDonald%27s%202017%20Annual%20Report.pdf. Sustainable business model 4. McDonaldâs Corporation Report contains more detailed discussion of the companyâs business strategy. Competitive rivalry among the existing brands: The level of competitive rivalry among the existing brands in the fast food industry is very high. MCdoandls is known for its calorie heavy menu and has also received criticism in the past for its unhealthy food. As per the Euro Monitor International report for 2016, the entire restaurant industry had 19 million outlets. McDonaldâs systemwide sales accounted for 7% of the entire sales generated by the IEO segment while its eating out establishments only constituted 0.4% of the entire 9 million outlets. There are very few suppliers that cannot be replaced or can be replaced with difficulty which gives them some bargaining power. It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. Unhealthy food on the menu 2. Business Analysis of McDonald's Success. Another report by Nation restaurant Association showed that the US restaurant industry had sales worth 799 Billion dollars in 2016. 9 out of every ten restaurants in US have less than 50 employees. HR & Culture: The HR management and culture of an organization are important resources and every organization including McDonalds has its own culture. The paper would analyze the strategic analysis of McDonalds in great detail while considering its competition, success factors, strengths and weaknesses, and strategy measurement. There are several brands that are offering similar products or have similar menu items. McDonalds sources its raw material from all around the world. contact: [email protected]
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, Strategic Analysis of McDonaldâs Corporation. It is also a large employer and employs more than 14.7 Million people alone. However, the threat gets to be moderated by the brand image as well as, The threat from new entrants for McDonalds is also moderate. The company currently has a low but stable growth rate. McDonalds has a large customer base and enjoys very high level of customer loyalty. Of these 34,108 were franchised and 3133 were operated by the company. He graduated with a Hons. Regarding diversification, McDonald’s has set its sights on Asia, with the hope of adding more than 1,500 new restaurants. According to research by Euromonitor International, the IEO (Informal Eating out Segment) which constitutes the primary competition of McDonaldâs and includes quick-service eating establishments, casual dining full-service restaurants, street stalls or kiosks, cafÃ©s,100% home delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie bars was composed of 9 million outlets in 2016 and generated 1.2 trillion in sales. This has proved good for all the big and small restaurant brands operational in the US market including Mcdonalds. 8 out of 10 restaurant owners had started their careers as entry level employees. each brand is quite aggressive about competition and uses so many strategies like seasonal discounts and offers to lure customers away from the rival brands. 4.4. Such situations can affect restaurant businesses and bring their sales and profitability low. The brand is planning to operate 95% … Another key factor is affordability. McDonalds business strategy utilizes a combination of cost leadership and international market expansion strategies. The shape and condition of the US restaurant industry has continued to improve over the years and even during the recession, its performance was fine. â McDonalds needs to focus on managing its franchisees strategically. It has quality centres around the world that help ensure good quality raw materials being sourced from its supply chain. the political factors are also exalted to economic factors and an unstable political environment can cause business and supply chain disruption. The analysis of the international strategy of McDonald’s has revealed that although the standardization approach has proved to be successful, the evitable differences between cultures have created the need for adopting the localization strategy to some extent. 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