A. Situation Analysis
1. The Company:
* Very strong Brand Name| * Lack of growth opportunities| * Market Share| * Market is over saturated|
* Large Target Market| * Negative public image of food| * Broad Geographic Locations| * Young employees and High Turnover Rate| * Large scale of operation| * Legal actions related to health issues | * Play area for Children| * They have yet to capitalize on the trend towards organic foods| * Specialized training for managers known as the Hamburger University| | * Ronald McDonald Children’s Charity * Business relationships with toy manufactures i.e. Barbie, Disney, Hotwheels| | Opportunities:| Threats:|
* Growing health trends among consumers i.e. salads| * Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC and any mid-range sit-down restaurants| * Globalization, expansion in other countries (China & India)| * During economic recession people spend less on take-out food| | * Any contamination of the food supply, especially e-coli| * Menu expansion | * They have been sued multiple times for having "unhealthy" food, allegedly with addictive additives, contributing to the obesity epidemic in America| | |
2. The Environment:
McDonald’s major competitors are Burger King, the number two hamburger chain, and Wendy’s, number three. McDonald’s also competes with Yum Brands, Inc., which actually is the largest fast-food operator in the world in terms of number of locations, with more than 34,000 outlets in more than 100 countries. Yum Brands restaurants include the number 1 chicken fryer, KFC (with more than 13,500 units), and top pizza joint Pizza Hut (about 12,500), and quick-service Mexican leader Taco Bell (more than 6,000). Yum Brands also operates the Long John Silver’s seafood chain, along with several hundred A&W burger stands. Along with competition from fast food restaurants McDonald’s is competing with Tim Horton’s and Starbucks with their McCafe launch. Demographics:
One of the big decisions McDonald’s has to make is whether or not they want to market to the aging baby boomers. While there are many families with children, there is a great deal of potential if they can attract the aging senior population. To do so, they will have to provide menu items that are easy to digest and smaller portions. Another attractive market is young singles in the working world. Appealing to the afterhour’s crowd, McDonald can focus on their late night menu. Providing internet access will also draw in students and young professionals. “McDonald’s Canada is renovating its 1,400 restaurants across the country, replacing dated interiors with contemporary designs; and introducing softer seating, flat screens and fireplaces. The chain also launched free Wi-Fi nationwide in May.” Social and Cultural:
After several lawsuits against McDonald’s by people who have blamed their obesity on the food chain, McDonald’s has taken precautions. McDonald’s has sought to shield itself from future actions by promoting 'personal responsibility' and diversifying its menu options and changing its advertising style. McDonald’s announced its commitment to balanced lifestyles and it would educate, assist, and engage consumers in ways that change individual behavior, resulting in better food/energy (calorie-in/calorie-out) balance in their lives.
McDonald’s is an elastic good and has many substitutes, from the competitors mentioned above to food cooked at home. Given that it is less costly to eat-out; people whose incomes are squeezed may decide to avoid fast food all together. On the other hand, the continuing need for a two income family makes it easier for parents and care givers to rely on the convenience of a drive thru, so sales may be unaffected. Political:...