McDonalds Case Analysis
Business Policy /BUSN412
CASE ANALYSIS: MCDONALDS CORPORATION
HISTORY: McDonalds has been well known since 1940 as the standard for ultra convenient family friendly meals. According to the company’s website, the fist restaurant opened in San Bernardino, California as a barbeque restaurant but eight years later Dick and Mac McDonald restyled the restaurant and streamlined the menu to nine convenient items including their famous 15 cent hamburger. In 1954, a mixer salesman saw potential in the business and opened the first McDonalds franchise in Des Plaines, Illinois. In four short years the chain had grown to at least 100 restaurants. Today, McDonalds is an international corporation with stores in as many as 100 different countries. CEO: Jim Skinner began as the current president and CEO of McDonalds in 2004. He worked his way up from restaurant manager in 1971 without ever receiving a college degree. (McDonalds History, 2010) His “Plan to Win” strategy has increased world wide restaurant sales 41.1 percent from $50.1 billion to $70 billion in 2008, making it one of only two Dow Jones Industrial Average stocks to end the year with a gain. (Chief Executive Magazine, 2009). Today it appears resilient to the current economic downturn. McDonalds recently released its 2009 4th quarter earnings results which show that overall revenue rose 7 percent to $5.97 billion with a net income of $1.22 billion or $1.11 per share. (Berr, 2010) SWOT ANALYSIS:
STRENGTHS: McDonalds has a large market share, strong brand name, image and reputation. CEO Jim Skinner and the previous CEO James Cantalupo quickly and efficiently enacted a strategy that allowed the company to recover from its first loss ever in 2003. (Dess, 2007) The “Plan to Win” strategy focuses on people, place, price and promotion. Their willingness to please customers with new and healthier menu items and their reputation for convenient, friendly service in a family friendly environment are a recipe for success. McDonalds has established a strong global presence. Improved sales in Europe are evidence of their ability to perform in the global marketplace. WEAKNESSES: Less control over franchised stores has affected the cleanliness, speed and service at some locations and negatively impacted McDonald’s reputation for quality. Cutbacks in staff training and high turnover affected customer service. Media criticism led to customer concerns and even legal action over McDonald’s unhealthy food image and especially their use of trans-fats in cooking. (Dess, 2007) Although the chain has had a positive response to its increased emphasis on healthier foods, the healthy food options has proven to have higher costs for the company. They also suffered a series of failures of new menu items due to poor promotional efforts and a lack of proper customer research. OPPORTUNITIES: The growing trend for healthier foods offers McDonalds an opportunity to develop new menu options to meet customer concerns and still remain a favorite option for the growing number of busy families who rely on the convenience of fast food. Pullbacks in consumer spending have had little effect on sales for McDonalds and have even been a benefit as consumers look for inexpensive eating options. Other opportunities for McDonalds include expanding their global presence in countries like China and India. Global efforts focused on franchising allow expansion to new locations with little overhead and cost to the company. (McDonalds MCD, 2010) THREATS: Naturally one threat to McDonalds is its competitors such as Burger King, Wendy’s and others as they compete for market share both internationally and domestically. Globally they have to endure anti-American sentiments and the effects of global recession and fluctuating currencies....
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