Mcdonald's Case Analysis

Topics: McDonald's, Hamburger, Fast food restaurant Pages: 5 (1888 words) Published: September 27, 2006
McDonald's Corporation
Comprehensive Case Analysis
About everyone at some age, at some point or another, and in some country has gotten a sample of American's symbol for fast food through the golden arches of McDonald's. This report will attempt to analyze the external and internal sectors that affect the company's success. The external analysis will provide opportunities and threats while the internal analysis will show indicators of strength and weakness. It will then follow up with critical issues, strategic alternatives, recommendations and implementation. The case studied is found in Appendix 2 of Mary Coulter's "Strategic Management in Action" book. External Analysis

With the numerous fast-food chains found everywhere today, one can agree that rivalry is none other than a threat to the McDonald's Corporation. Any one of these restaurants has opportunity to formulate strategic plans to gain advantage without the competitors knowing. From the case, Coulter notes that the industry growth is slowing for fast food restaurants as well since the aging population prefers "full service" dining as opposed to a quick, but unhealthy meal. Switching costs are low as competitors like Burger King or Wendy's provide the same type of burger offerings. If the "rule of three" is inevitably a phenomenon that is true, than potential entrants will be limited and would not be a threat to McDonald's. The burger industry then remains at the aforementioned restaurants—Wendy's and Burger King. Bargaining power for fast-food diners are high in McDonald's situation. This can be attributed to the products offered as being undifferentiated, low switching costs, and the majority of diners coming from low income groups. Low-income customers will look for ways to reduce cost and that often means reducing costs of purchasing goods. This concept is proven by the company's roll out of the value menu where most essential products are offered for $1. Bargaining power of suppliers did have an affect on McDonald's in late 2003 when the first case of mad-cow disease was discovered in the United States. The final threat in Porter's five forces model is the availability of substitute products such as fried chicken or tex-mex offered by KFC and Taco Bell.

There also external sectors from the general environment that pose threats or offer opportunities to the McDonald's Corporation. Demographics definitely prevails as consumers from different income classes decide where to eat when eating out. Higher-income folks usually limit themselves to full-service restaurants while it is the low-income earning consumers who eat at fast food chains more than full-service diners. Age factor is also an opportunity for McDonald's as its Happy Meals geared towards kids. A personal observation among age groups dining at McDonald's is that many senior citizens, usually age 60 or older, eat breakfast at McDonald's. A sociocultural factor that was a major for threat for McDonald's in recent years was customers' changing attitude about food and health. Because of the lawsuits, and documentaries produced, McDonald's implemented a plan to upgrade their salads and offer pedometers and health guides with "healthy value meals." It took this threat as an opportunity to win customers by offering premium salads and fruit yogurt parfaits. Legal issues developed as lawsuits were filed against obesity as well during the big movement towards healthier eating in the recent years. Internal Analysis

To assess the strengths and weaknesses of the McDonald's Corporation, we will look at internal functional areas. The many McDonalds' trucks on the road with a big juicy burger or breakfast sandwich on the side definitely shows operations in addition to marketing efforts in place. I can not remember a time when McDonald's would not have enough of what I ordered. The company was weak in marketing strategies as it aimed most advertising towards children...
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