The Business Strategy of Mcdonald’s

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Abstract

This report briefly investigates the strategies that McDonald’s has used to create and sustain competitive advantages. It also pinpoints the issues and options facing the organization currently. It analyzes the internal environment of McDonald’s, and studies the external environment using PEST analysis. Then it investigates the current situation using Porter’s Five Forces model. Finally, an analysis of the growth strategies used by McDonald’s is made. The article concludes McDonald’s maintains competitive advantages by a combination of cost leadership, strategic alliances, market development and franchising.

Content

Abstract…………………………………………………………………………..2 Introduction………………………………………………………………………4 1.External environment analysis (PEST) ………………………………………..5 1.1 Political Factors……………………………………………………………..5 1.2 Economic Factors…………………………………………………………....5 1.3 Socio-Cultural Factors……………………………………………………….6 1.4 Technological Factors……………………………………………………….7 2. Internal analysis………………………………………………………………..8 2.1 McDonald’s CHIEF EXECUTIVE OFFICER (CEO) ……………………..8 2.2 Hamburger University………………………………………………………8 2.3 McDonald’s franchising ……………………………………………………9 2.4 Financial…………………………………………………………………….10 2.5 Restaurant facilities…………………………………………………………10 3. Generic strategy………………………………………………………………..11 4. Porter’s Five Forces……………………………………………………………12 4.1 Threat of New Entrants……………………………………………………..12 4.2 Power of the Supplier……………………………………………………….12 4.3 Power of the Buyer…………………………………………………………..13 4.4 Threat of substitutes…………………………………………………………..13 4.5 Competitive rivalry…………………………………………………………..14 5. Growth Strategy………………………………………………………………….15 5.1 Ansoff Product Growth Matrix………………………………………………15 5.2 Market Penetration…………………………………………………………...15 5.3 Market Development…………………………………………………………15 5.4 Product Development…………………………………………………………16 5.5 Strategic Alliance…………………………………………………………….16 Conclusion…………………………………………………………………………18 References…………………………………………………………………………..19 Appendix……………………………………………………………………………21 Group Log…………………………………………………………………………...23 Reflections…………………………………………………………………………..25

Introduction
The intention of this report is to analyze the strategies of McDonald’s in how to build up and achieve competitive advantage. There are a number of strategic current issues and options that are faced by McDonald’s.

McDonald’s is the world market leader in the fast food industry. It serves about sixty four million customers every day in one hundred nineteen countries all over the world. McDonald’s began as a barbecue restaurant in 1940 with the founder Richard and Maurice McDonald; transformed into hamburger stand business with the principles of production line in 1948; then Ray Kroc joined McDonald’s in 1955 as franchising agent. Afterwards, he bought all the share of McDonald’s and managed its growth.

This report will be divided into three sections. First of all, the external environment of McDonald’s will be analyzed by using PEST. Secondly, the internal environment also will be analyzed. In addition, the report will focus on using the Porter’s five forces to analyze the operating environment of McDonald’s. Moreover, the growth strategy of McDonald’s will be discussed in this report.

External Environment Analysis (PEST):
In the following section, PEST analysis is used to analyze the external macro environment in which McDonald’s operates. PEST stands for the political, economic, social and technological factors.

Political Factors
The operations of McDonald’s in the United Kingdom are highly influenced by different regulatory bodies and pressure groups. For instance, the Royal College of Physicians called for the ban of junk food advertisement in all forms (Scotsman, 2010). It claimed that the growing rate of child diabetes was a sort of health implication of eating junk food. As the ban of the television...
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