The total amount that it generated in sales equalled 2.4 trillion dollars. Universality of the taste to a great extent represents another base of McDonaldâs competitive advantage. Technology is heavily important for businesses to survive in the 21st century. McDonald’s generic strategy of cost leadership enables the company to sustain its market leadership. A VRIO/VRIN analysis and value chain analysis of McDonald’s Corporation, in the resource-based view, underscore the strategic significance of organizational resources and capabilities pertaining to process efficiency, operations management, and human resource management strategies to sustain the company’s value … Non-compliance in any industry results in hefty fines and losses. Moreover, there are so many laws related to food safety, health, quality and labor that brands have to manage local compliance teams for each region they are operating in. McDonalds business strategy utilizes a combination of cost leadership and international market expansion strategies. Customers know what to expect when they walk into a McDonalds store. The IEO (Informal Eating Out) segment on the other hand had 9 million outlets and generated 1.2 trillion dollars in sales. This has been leading to management and control related issues for McDonalds. these small variations are made in order to suit the taste of the local customers. SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. HRM: In the 21st century, financial growth is not possible without investing in human resources. 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. The company currently has a low but stable growth rate. Another key factor is affordability. McDonalds has got an innovative menu which is largely uniform with small variations over the globe from market to market and region to region. Competition in every industry has increased and only the brands that. Society is at the centre of the entire picture and brands have to keep in mind the changing social trends. McDonaldâs sources its raw material from suppliers around the world. 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.. Technology: A smart value chain is not possible in the 21st century without investing in technology. It has a strong brand image in the market that, Operations: McDonalds is operational in around 120 countries. McDonalds sources its raw material from all around the world. McDonald’s uses product development as a supporting strategy for growth. In the way, political factors can affect business profitability. The millennial generation should be engaged using modern technologies and other various methods for higher retention level. Another important strength of McDonaldâs is its global presence. Another report by Nation restaurant Association showed that the US restaurant industry had sales worth 799 Billion dollars in 2016. however, the brand will have to focus on managing its quality there and better management of franchisees in these regions. However, a, External Analysis of the restaurant industry, What You Need To Know About Marketing for Your New Business, Easy Ways Businesses Can Incorporate Sustainability. The stronger the brand image of a brand, the higher are its sales and profits. This shows the growing role of technology in the success of the fast food industry. The brand sells across more than 100 countries through its franchised and company owned restaurants. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. â In the recent years McDonalds has reduced the expenditure on marketing and promotion. All these competencies have enabled it to grow its market share and customer base. Economic factors have a direct effect on the sales and profitability of businesses. Support activities: This is a description of the support activities in McDonaldsâ value chain. 7709 words (31 pages) Dissertation. 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. Increased focus government authorities on the environmental matters can affect McDonalds both directly and indirectly. Around the world the government oversight and regulation of businesses has grown. Mcdonald's Pestle Analysis On Effective Business Expansion Strategies. McDonald’s strives to fulfill the demands of investors as a major stakeholder group in the business. In case of McDonaldâs it is well known as the leading fast food brand of the world. However, McDonalds needs to rethink its management structure for better management of its franchisees. Global Presence: McDonalds is present in around 120 countries. The number of restaurant locations in US is now higher than 1 million. As the US economy retrained in track , it eld to higher employment and higher spending by the consumers. the overall threat from substitute products and brands remains moderate. Materials sourced from these suppliers are bright to the McDonalds distribution centres worldwide. McDonalds is also making heavy investment in technology for successful marketing and growth of its brand. This was around 33 billion dollars higher than the previous year. 9 out of the ten restaurant managers currently had started at the entry level. Business level strategy of McDonalds Business level strategy is an integrated & coordinated set of commitments and actions. The social factors have also kept growing in relevance in the 21st century. Rising health consciousness and health related criticism: Globally, health consciousness is rising and people want healthier food. The number of QSR brands in the global fast food industry has grown high and McDonaldâs has continued to compete on the basis of price, quality customer convenience and flavour. the millennial generation is highly health conscious and wants healthier products. High level of profitability 5. McDonaldâs places heavy focus on customer service. The role of IT and digital technologies has kept growing in the McDonalds system. It also holds the largest market share n the fast food industry. Mcdonald 's Business Strategy Analysis 1465 Words | 6 Pages. Internationalisation Strategy 15 Think Global Act Local Option 15 Revamping Business Model 15 Franchisee and Joint Ventures 16 4.1. 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. The market entry strategy of McDonald’s and a critical analysis of its marketing mix are also presented. 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. However, to make such large scale operations possible as profitably one must have economies of scale as in the case of McDonalds. He graduated with a Hons. there are so many laws from health quality related laws that can affect fast food businesses. The bargaining power of customers in the 21st century, the threat of substitute products for McDonalds is moderate. Globally, health consciousness is rising and people want. Brand image and equity help with marketing of the brand and help to derive better results from its marketing efforts. However, the threat gets to be moderated by the brand image as well as, The threat from new entrants for McDonalds is also 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. McDonalds existing organisational strategy is to create better service restaurant operations, menu varieties, and better beverage choices such as hot beverages (hot chocolate, latte etc). 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. This has proved good for all the big and small restaurant brands operational in the US market including Mcdonalds. This in turn leads to lower consumer spending because of lower disposable income. contact: email@example.com, firstname.lastname@example.org, Strategic Analysis of McDonaldâs Corporation. Supply chain and technology: McDonalds has a well managed supply chain which is among one of its major strengths. The demographics of the global population have changed and this offers opportunities for menu innovation. Millennials are a highly etch save generation, Compliance issues have grown bigger in the 21st century which is because of the higher level of legal and political. Total debt also rose during this period from 25,956 to 29,536 million dollars. Moreover the company returned 7.7 Billion dollars to the shareholders through share repurchases and dividends for the year. Marketing and promotional efforts focus on value, quality, food taste, menu choice, nutrition, convenience and the customer experienceâ. In applying this growth strategy, McDonald’s develops new products over time, such as new McCafé products. The number of restaurant locations in US is now higher than 1 million. The signage of a McDonald’s fast-food restaurant in Madrid, Spain. Core Strategy of the Company. these distribution centres distribute products and supplies to Mcdonalds restaurants globally. McDonaldâs is a leading name in the world of fast food. Outbound logistics: McDonalds has approved a large number of distributors which are independently owned and operated. Description of winning strategy 18 7.0. Such situations can affect restaurant businesses and bring their sales and profitability low. However, several brands are also including modern technologies like AI and other marketing methods to reach out to the millennials and engage them. However, the competition from other small and big brands in the restaurant industry has kept growing intense and continued success of McDonaldâs depends upon how well it is able to innovate its menu, prices and style of customer service. Its goal is to become 95% franchised over the longer term. Moreover, product and service standardization lies in the cornerstone of McDonalds business strategy. Its global parsec is major competence that has led to growth in sales and profits. Moreover, the report contains analyses of McDonaldâs leadership and organizational structure, a brief financial analysis of the company and its marketing strategy and discusses the issues of corporate social responsibility. Cheat prices is McDonaldâs main competitive advantage. Changes are made to the menu to suit the local taste. It is especially so when the brand is heavily franchisee based. 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 is because the brand has been able to build very high level of trust among its customers. The Strategy Watch is a fast-growing multi-author blog on Strategic management, Business Planning, Investment, & Analysis. Overall the level of rivalry among the existing brands is very high. Franchising and licensing forms of new market entry is utilized within McDonaldâs business strategy to a great extent. Of these 34,108 were franchised and 3133 were operated by the company. The threat is not just from the international brands but also from the local and smaller brands. 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. It is why McDonalds is focusing on sustainability and trying to achieve higher sustainability in the long term. It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. Including more low cost items on the menu can also prove profitable for the brand and attract higher sales. Such a consistence in taste has positive implications on consumer loyalty. Although its menu differs across geographies based on local taste and preferences, the brand still serves a substantially uniform menu. McDonaldâs is primarily a franchisor with franchisees owning and operating more than 90% of its restaurants. the Millennial generation especially is highly health conscious and wants only affordable and good food. McDonalds is also subject to severe regulations, control and oversight by the government authorities. For example, company gives toys to kids on happy meals, the company offers discount coupons and freebies for certain products. In this assignment will focus on the business strategy. McDonalds sources its raw material from all around the world. These new products may be variations of existing products, or entirely new products. Managing a large and international business like McDonalds is not an easy task. 8 out of 10 restaurant owners had started their careers as entry level employees. It is one of the fast food brands that serves the largest variety. Regarding diversification, McDonald’s has set its sights on Asia, with the hope of adding more than 1,500 new restaurants. McDonalds is also subject to severe regulations, control and oversight by the government authorities. The Franchise business model. the world has been through, The social factors have also kept growing in relevance in the 21st century. the fast food industry is populated with several global and local brands. McDonalds business strategy is based around overall cost leadership. Risk Management 18 8.0. 90% of its restaurants are operated by franchisees. Global presence Weaknesses 1. Brand image and equity: One major resource of McDonalds that is above is its brand image and brand equity. There are several reasons behind it apart from the increased competition. Sociocultural factors have an increasingly important role in the context of marketing and business strategy both. It is because social factors now play an increasingly important role in deciding the fate of the businesses. Particularly, it is the international brands that are being most affected by the increased control. Brand value and brand awareness 3. Research and data collected by Euro Monitor International for 2016 also showed that the entire restaurant industry was composed of 19 million outlets and generated 2.4 trillion dollars in sales. Question. Another important strength of McDonaldâs is its supply chain management. This has led to higher marketing and promotion costs as well as research and development costs for international brands like McDonalds. Fast food brand are investing a lot in marketing as well as customer service. However, the threat gets to be moderated by the brand image as well as large market share of the McDonalds. (Annual report, 2017). Marketing, promotional and public relations activities are designed to promote McDonaldâs brand and differentiate the Company from competitors. While most brands are focusing more on marketing and promotions, reducing its efforts in this area can have a negative effect on sales. 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