Mcdonald's Case Analysis

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McDonalds Case Analysis


INDUSTRY: Food and Service
McDonald’s is one of the largest leading restaurant chains in the world, and for good reason. Two brothers named Dick and Mac McDonald first established this casual burger joint in 1940. Initially, McDonalds opened as a hot dog stand. The small business gained in popularity but the brothers yearned for simplicity. They closed their ‘doors’ only to reopen in 1948 as a designated burger restaurant; only selling burgers, fries and milkshakes. Since many young adults were the flush of post-war affluence, it quickly turned into a popular teen hangout. Luckily for young adults, hamburgers were sold at an affordable price of only 15 cents, (McDonald’s History, 2010).

McDonalds applied strategically planned assembly line techniques to food production, which ultimately enabled them to open four restaurants by 1953. Taking note to the brothers’ success, Entrepreneur Ray Kroc bought the right to franchise the McDonald’s System in 1955. Renamed the McDonald’s Corporation in 1960, Kroc focused his marketing efforts on family meals and children. Kroc spent most of his money on television advertising, which promoted Ronald McDonald who was a child-friendly clown mascot. Today, the McDonald’s franchise exceeds 30,000 restaurants globally and serves over an astounding number of 50 million people in more than 100 countries each day, (Botterill, J. & Kline, S. 2007)! SWOT ANALYSIS:

Strengths: One of McDonald’s biggest strengths today is that is holds a strong global presence and is considered a market leader in both the domestic as well as international markets. Because of this, the franchise holds one of the worlds most recognized logo and spokes character (Ronald McDonald the clown). McDonalds is also a community oriented, socially responsible company. More than 259 Ronald McDonald House(s) that provide room and board, food and sibling support at a cost of only $10 a day for families with children needing extensive hospital care, (Botterill, J. & Kline, S. 2007). Since McDonalds is world renown, it adapts to the cultural differences regarding the region where the restaurant is established. One of the ways it does so if by offering menu items that correlate to cultural beliefs. McDonalds also was the first to provide customers about nutrition facts.

Weaknesses: McDonalds has a very high employee turnover rate, which only leads to more money spent on training. Surprisingly, the franchise has yet to embark on the trend of providing organic foods. Because McDonalds menu items are mostly known to be generally unhealthy, it is a weakness that it’s advertising frequently targets children. Also, McDonalds can’t seem to keep consistent in net profits, which could ultimately impacts investor relations. For example, net profits were $2,602 million in 2005, $3,544 million in 2006, and $2,395 million in 2007, (Botterill, J. & Kline, S. 2007).

Opportunities: Since today’s society tends to very health conscious, the introduction of a health hamburger us a great opportunity. Currently, McDonald’s and its competition’s health choice items do not include hamburgers. Plus, McDonalds could start offering allergen free foods such as gluten free and peanut free food to its menu items. The business could promote “Going Green” by changing its packaging which will work as a part of their promotional effort as well as fulfill their social responsibility. McDonalds could also build and renovate many of their establishments in select areas in order to appeal to a more upscale target market. In order to accomplish this, it could slow down the level of expansion in order to increase profitability of the organization.

Threats: Because McDonalds uses standard pricing for its food items regardless of which country it’s built in, foreign currency fluctuations are regarded as a major...
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