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McDonald’s Competitive Strategy. The number of total systemwide restaurants of Mcdonalds operational across 120 countries reached 37,241 in 2017. McDonald’s uses product development as a supporting strategy for growth. HR & Culture: The HR management and culture of an organization are important resources and every organization including McDonalds has its own culture. To have the lowest cost possible McDonalds standardized its products and services. (McDonalds Annual report 2017). There are other technologies also that McDonalds uses to collaborate internally out externally with its partners. Marketing and promotional efforts focus on value, quality, food taste, menu choice, nutrition, convenience and the customer experienceâ. Regarding diversification, McDonald’s has set its sights on Asia, with the hope of adding more than 1,500 new restaurants. For instance, World Wildlife Fund (WWF) experts led an independent analysis of the supply chain of McDonald’s in 2010 to help it identify the raw materials that represented the biggest sustainable sourcing opportunities for it to prioritise (McDonald’s, 2019). This has proved good for all the big and small restaurant brands operational in the US market including Mcdonalds. The company currently has a low but stable growth rate. 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. Cheat prices is McDonaldâs main competitive advantage. Franchising and licensing forms of new market entry is utilized within McDonald’s business strategy to a great extent. the political factors are also exalted to economic factors and an unstable political environment can cause business and supply chain disruption. 7709 words (31 pages) Dissertation. Another report by Nation restaurant Association showed that the US restaurant industry had sales worth 799 Billion dollars in 2016. McDonalds operates in more than 100 countries and has to remain cautious about compliance so as to not become a target of law. McDonalds is increasingly relying on technologies for service and food delivery. Two ways: First, with a franchise business model that allows its franchisee-members, management and shareholders to share the risks and rewards from … 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. â It must focus on employee development and management. The Franchise business model. The brand is planning to operate 95% … Apart from that it tests new products regularly to make its menu exciting. While the business of McDonald’s is stable overall, franchisee issues still crop up from time to time. McDonald’s addresses these concerns through stable business operations. There are several brands that are offering similar products or have similar menu items. Apart form social media, there are other tools and methods also to bring the millennial consumers closer. Moreover, the brand is present in around 120 countries which also allows the brand access to a very large customer base. these distribution centres distribute products and supplies to Mcdonalds restaurants globally. Its global parsec is major competence that has led to growth in sales and profits. 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.. McDonald’s with 36000+ outlets all over the world is fighting hard with other popular chains like Subway, KFC, and Dominos etc. Overall the level of rivalry among the existing brands is very high. This was around 33 billion dollars higher than the previous year. However, McDonalds needs to rethink its management structure for better management of its franchisees. However, to make such large scale operations possible as profitably one must have economies of scale as in the case of McDonalds. the world has been through, The social factors have also kept growing in relevance in the 21st century. Mcdonald's Pestle Analysis On Effective Business Expansion Strategies. Outbound logistics: McDonalds has approved a large number of distributors which are independently owned and operated. Fast food brand are investing a lot in marketing as well as customer service. However, having this complicated web of franchised and company-operated restaurants expose the brand to certain risks. Apart from courteous staff, the brand also uses a variety of technologies to serve and engage its customers. the overall threat from substitute products and brands remains moderate. 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. As per the Euro Monitor International report for 2016, the entire restaurant industry had 19 million outlets. Even in the fast food industry the role of law is important. The most important strength of a global brand is its brand image and brand equity. The interests of these stakeholders include profitability and growing revenues. It was because the industry was quick to adjust its menu and prices. the brand is investing heavily in new technologies to improve its level of customer service as well as to engage its customers. Such situations can affect restaurant businesses and bring their sales and profitability low. Managing the value chain well allows to eradicate performance bottlenecks as well as add extra value to the product and production process. Non-compliance in any industry results in hefty fines and losses. In this assignment will describe the vision, mission, objective, competitive strategy, external fit, PEST analysis, porter’s five forces regarding McDonald. Task: Identify main factors influencing your business operation by performing a McDonald's Pestle Analysis case study. the demographic composition of the world population has changed a lot in the recent years. The QSR industry has grown highly competitive in the recent years. Legal compliance is now heavily important to find success in 21st century. The IEO (Informal Eating Out) segment on the other hand had 9 million outlets and generated 1.2 trillion dollars in sales. Rising health consciousness and health related criticism: Globally, health consciousness is rising and people want healthier food. Apart from that the brand has invested in technology down its supply chain as well as in other processes including internal and external communication as well as customer service. 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. 7 out of ten restaurants in US are single unit operations. It is because social factors now play an increasingly important role in deciding the fate of the businesses. However, the threat gets to be moderated by the brand image as well as, The threat from new entrants for McDonalds is also moderate. McDonaldâs competitive advantage is based on the following points: It is important to note that McDonaldâs competitive advantage based on costs can be difficult to sustain in long-term perspective, since new competitors may emerge with access to cheaper resources…. Operations: McDonalds is operational in around 120 countries. The threat is not just from the international brands but also from the local and smaller brands. However, it does work to manage its quality standards and enforces them with the help of quality teams. However, the threat gets to be moderated by the brand image as well as large market share of the McDonalds. Each brand is trying to snatch market share away from its rivals. In this way, there performance the US restaurant industry is expected to keep improving over the coming years. It is expected that. Strengths, Weakness, Opportunities and Threats of McDonalds ... With a strong interest in developing and improving Business Strategy and to Conduct Business Analysis, he started The Strategy Watch in 2013 (Previously known as GotAbout Business Idea, Strategy, & Analysis). There are very few suppliers that cannot be replaced or can be replaced with difficulty which gives them some bargaining power. All these competencies have enabled it to grow its market share and customer base. However, both operating income and net income of the brand have kept rising during the last three years. the threat of substitute products for McDonalds is moderate. After analysing Porter’s Five Forces regarding McDonald’s competitive position, it can be concluded that in order to stay competitive, McDonald’s strategy can be seen most appropriately as a Cost Leadership strategy– minimizing costs to deliver products at low price.. With many other direct competitors also providing value menus, McDonald’s … The company is engaged in an extensive utilization of economies of scale to achieve the cost advantage. Both India and China are major markets which can be penetrated deeper. Market analysis in the Marketing strategy of McDonald’s – The fast food market is flooded with MNC’s and local food joints eating each other market shares. McDonalds is also subject to severe regulations, control and oversight by the government authorities. These factors moderate the threat from any new brand. Even McDonald has built in America but in recently, to describe McDonald’s restaurant, it is … In case of most their small size and isolated position does not give them much bargaining power. Operations strategies play a very important role in achieving organizational goals. Support activities: This is a description of the support activities in McDonaldsâ value chain. McDonaldâs is very popular in the global market and in various corners of the world. 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. Another report by Nation restaurant Association showed that the US restaurant industry had sales worth 799 Billion dollars in 2016. The restaurant workforce of USA constitutes 10% of its entire workforce. That also includes maximum utilization of the available human resources, such as labor (Hambrick and Donald, pp.567-575, 1980). In addition, the restaurants sell a variety of other products during limited-time promotions. The brand sells across more than 100 countries through its franchised and company owned restaurants. McDonalds is also making heavy investment in technology for successful marketing and growth of its brand. 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. It uses a variety of digital solutions to serve its customers including point of sale, and other in-store systems or platforms. McDonaldâs Corporation Report contains more detailed discussion of the companyâs business strategy. The company chosen for the purpose of analysing Strategy in Action is McDonald’s, one of the largest food chains in the world with global operations. Political factors have kept growing in importance in the 21st century. Declining brand image 3. In case of McDonaldâs it is well known as the leading fast food brand of the world. The stronger the brand image of a brand, the higher are its sales and profits. Legal factors are also just as important for successfully doing business in the 21st century. McDonald’s has adopted a Market Development strategy for expanding into growing economies, especially those of Asian countries. Diversification strategies by McDonald’s in McDonald’s corporation analysis include the incorporation of internationalization. Inbound logistics: McDonalds has managed a large supply chain from which it sources raw materials. Around the world the government oversight and regulation of businesses has grown. Materials sourced from these suppliers are bright to the McDonalds distribution centres worldwide. 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. It has quality centres around the world that help ensure good quality raw materials being sourced from its supply chain. This in turn leads to lower consumer spending because of lower disposable income. Technological systems like point of sale, and other in store systems or platforms and technologies that support McDonaldâs digital and delivery solutions. Compliance issues have grown bigger in the 21st century which is because of the higher level of legal and political regulation of international businesses. It is because the brand has been able to build very high level of trust among its customers. The paper would analyze the strategic analysis of McDonalds in great detail while considering its competition, success factors, strengths and weaknesses, and strategy measurement. the political factors are also exalted to economic factors and an unstable political environment can cause business and supply chain disruption. Big Mac tastes almost all over the world due to the use of the same ingredients in the same quantities and application of the standardized ways of cooking around the globe. McDonalds sources its raw material from all around the world. Such a consistence in taste has positive implications on consumer loyalty. However, still it serves a rather uniform menu globally with minor local variations to suit the local taste. Moreover, product and service standardization lies in the cornerstone of McDonalds business strategy. McDonaldsâ 90% restaurants are operated by franchisees. trust is important in this era and McDonalds has got a strong brand image which shows trust among its customers. 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. â In the recent years McDonalds has reduced the expenditure on marketing and promotion. It is especially so when the brand is heavily franchisee based. McDonald’s generic strategy of cost leadership enables the company to sustain its market leadership. the world has been through recession some years ago and during such times of low economic activity, employment level falls. MCdoandls is known for its calorie heavy menu and has also received criticism in the past for its unhealthy food. The signage of a McDonald’s fast-food restaurant in Madrid, Spain. Operating across more than 100 countries, the brand serves locally relevant quality food and beverages at various price points. contact: email@example.com, firstname.lastname@example.org, Strategic Analysis of McDonaldâs Corporation. 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. 9 out of the ten restaurant managers currently had started at the entry level. McD has some important competencies including a well managed supply chain and a pool of talented employees. McDonalds is already known for customer service. 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. Millennials are a highly etch save generation who want affordable products and good customer service. McDonalds is a large and global brands with a string brand image.  Annual Report (2014) McDonaldâs Corporation, Interpretivism (interpretivist) Research Philosophy. It started its operations in sixties and currently it is serving worldwide chain of 30,000 restaurants. the millennial generation is highly health conscious and wants healthier products. He graduated with a Hons. It has a strong brand image in the market that, Operations: McDonalds is operational in around 120 countries. As the US economy retrained in track , it eld to higher employment and higher spending by the consumers. For example, company gives toys to kids on happy meals, the company offers discount coupons and freebies for certain products. Environmental factors have become very important in the business industry given that. Moreover, product and service standardization lies in the cornerstone of McDonalds business strategy. Business Analysis of McDonald's Success. The brands that have invested more in technology are ahead of the others in market. The millennial generation should be engaged using modern technologies and other various methods for higher retention level. McDonalds has a large customer base and enjoys very high level of customer loyalty. This McDonald’s SWOT analysis reveals how the most successful fast-food chain company of all time uses its competitive advantages to continue dominating fast-food industry. 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. The most important strength of a global brand is its brand image and brand equity. McDonald’s menu is very uniform that is composed of hamburgers, cheeseburgers, fish filet, chicken sandwiches, French fries, salads, and shakes McDonaldâs is primarily a franchisor with franchisees owning and operating more than 90% of its restaurants. Unhealthy food on the menu 2. (Annual report, 2017). 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