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McDonalds Case Study

The report is been written about the McDonald’s Corporation which is been situated in America. It is one of the largest fast food chain which is spread all over the world and one of the most successful food based restraint throughout the world. The company was founded in the 1940 at San Bernardino, California by Richard and Maurice McDonalds. Later the transformation of McDonalds from a restaurants to a corporation by Ray Kroc (Noordyanto 2021). The purpose of the report is to use the marketing tools to identify the position of the business in the market.

About the company

McDonald's is the nation's most profitable food based restaurants company with approximately 69 million daily customers served across 37,855 locations in over 100 countries. McDonald's is recognized for their cheeseburger, hamburgers, and fried foods, but they also provide chickens, morning meals, soft drinks or beverages, milkshake, wrappers, and desserts. The business recently introduced salad, seafood, milkshakes, and fruit to its menu in response to shifting consumer tastes and a negative criticism over the health implications of its meals. Rental, royalty, and costs charged by franchises, and also sale in company operated eateries, provide income to the McDonald's Company. McDonald's, with 1.7 million employees, is the world's second-largest private employer, as per two reports published in 2018. (Behind Walmart with 2.3 million employees). McDonald's does have the 9th highest worldwide brand valuation as of 2020 (West 2019).

Corporate Overview

McDonald's restaurants offer 69 million people per day in 100 countries and territories throughout the worldwide. As of the end of 2018, McDonald's had 37,855 outlets around the world, employing over 210,000 employees. Here are 2,770 corporation now stores and 35,085 franchise stores locations, with 21,685 conventional franchised locations, 7,225 progressive license locations, and 6,175 international affiliated destinations.

McDonald's started trying to distance themselves of many other businesses it had bought during the 1990s in order to focus on its core brand. McDonald's owned a majority share in Chipotle Mexican Grill until October 2006, when the business completed a stock exchanges divestiture. It owned Donatos Pizza until December 2003, and from 1999 to 2001, it possessed a tiny stake in Aroma Café. McDonald's sold Boston Market to Sun Capital Partners on August 27, 2007 (West 2019).

McDonalds Business Models

The corporation owns all of the land that its restaurants are built on, which is worth between $16 and $18 billion. Rentals contributions by franchises account for a substantial amount of the company's profits. Between 2010 and 2015, these rent payments increased by 26 percent, accounting for one-fifth of the corporation's entire earnings.

The business model in the United Kingdom and Ireland differs from that in the United States in that fewer than 30% of restaurants are franchised, with the bulk owned by the firm. Hamburger University, located at McDonald's headquarters in Chicago, is where franchisees and managers are trained. McDonald's outlets are run by McDonald's Company and various regional companies or governments in other countries (Wu 2020).

SWOT Analysis

Strength

Weakness

·       The brand value of the company.

·       The real estate business of the company.

·       The use of the technological

·       The use of improved quality control and health protocols.

·       Providing Quick Service restaurant

·       The use of franchisee based business model.

·       The interruptions in the supply chain.

·       The employees are not satisfied

·       The menu of the company has lost its charm.

Opportunities

Threats

·       The introduction of the value meals

·       The innovative products

·       The expansion of the business globally

·       Providing mobile orders.

·       The investments on the new technologies.

·       The competitors in the market

·       The issues from the culture where the business is operating

·       The new generation are avoiding fast food.

 

The strength of McDonalds

  • The brand value of the company helps the company to gain a competitive advantage over the other competitors in the market as they already have loyal customers.
  • Many does not knows that McDonalds has other business apart from the restaurants business. There is a real estate business from where the company earns additional revenue.
  • The use of the technological instruments in the business has made the service quality of the company easier.
  • The use of improved quality control and health protocols in the business like using air fried fries etc. attracts more customers.
  • Providing Quick Service Restaurant which allows to reduce the time of the process and satisfy the customers efficiently.

The weakness of McDonalds

  • The use of franchisee based business model leads to the risks of financial deterioration, customer dissatisfaction, and low revenue.
  • The interruptions in the supply chain leads to the lack of availability of the products to meet the customer expectation.
  • The employees are not satisfied due to low wage rate which is below the standards of the industry.
  • The menu of the company has lost its charm as there is lack of innovation and they are continuously offering the same things for long period of time.

The opportunity of McDonalds

  • The introduction of the value meals like providing food at $2 to $5 which will help to increase the market share and customer base.
  • The innovative products will help to attract new customers and will bring back the spark in the menu again.
  • The company has already expanded its business globally and has the potential to further expand deeply in the markets.
  • Providing mobile orders or delivery service will increase the customer’s availability.

The threat of McDonalds

  • The investments on the new technologies can be a risk for the company as there is no data regarding the success of the new technology, as a result if the technology fails the company will suffer loss.
  • The competitors in the market present both internationally and also the local players give a tough competitions to the company.
  • The company is a worldwide company as a result the company face the problem from the different cultures of the regions where the company operates its business.
  • The new generation of the customers are more interested towards the fitness and the health as a result, they avoid the consumption of the fast food which is harmful for the company (Akman 2019).

 

PESTLE Analysis

Political Factor

Economical Factor

Social Factor

·       Growing the number of international trade agreements

·       Diet and health recommendations from the government

·       Public health policies are changing.

·       Developed countries are growing slowly yet steadily.

·       The Chinese economy is slowing down.

·       Developing countries are seeing rapid growth.

·       Increased disposable income

·       Urban lifestyles are characterized by a high level of activity.

·       Increasing the diversity of cultures

·       Healthy living is becoming more popular.

Technological Factor

Legal Factor

Environmental Factor

·       Increased business automation and moderate R&D effort in the industry

·       Boosting revenue with mobile devices

·       Health standards in the workplace and in schools are becoming more stringent.

·       Animal welfare standards are becoming more stringent.

·       Legal minimum salaries are increasing.

·       Corporate environmental programs are gaining popularity.

·       Increasing the focus on long-term business strategy

·       Climate change in several parts of the world

 

The Political factors influencing McDonalds

  • Growing the number of international trade agreements which can affect the business to run business in different countries.
  • Diet and health recommendations from the government this policies can reduce the revenue of the fast food industry.
  • Public health policies are changing as a result the company need to adopt the new norms to run in the market.

The Economical factors influencing McDonalds

  • Developed countries are growing slowly yet steadily as a result the company need to focus on developing countries and plan accordingly.
  • The Chinese economy is slowing down leads to the downfall of the business.
  • Developing countries are seeing rapid growth in the industry which need to be focused upon by the company.

The Social factors influencing McDonalds

  • Increased disposable income as a result new opportunities is opening for the company.
  • Urban lifestyles are characterized by a high level of activity which includes chilling in restaurants, party, etc. benefit the company.
  • Increasing the diversity of cultures as a result the company will face problem of focusing on particular culture.
  • Healthy living is becoming more popular as a result the fast food industry will suffer loss and downfall due to this, similarly the company will also get affected.

The Technological factors influencing McDonalds

  • Increased business automation and moderate R&D effort in the industry which will help to increase innovativeness within the business.
  • Boosting revenue with mobile devices like introducing apps or tying up with third party apps to increase reach.

The Environmental factors influencing McDonalds

  • Corporate environmental programs are gaining popularity as a result the company need to focus on that.
  • Increasing the focus on long-term business strategy by considering the environmental factors.
  • Climate change in several parts of the world so the company should focus accordingly to offer their product.

The Legal factors influencing McDonalds

  • Health standards in the workplace and in schools are becoming more stringent towards bad eating habits like fast food.
  • Animal welfare standards are becoming more stringent company will face issue regarding raw materials.
  • Legal minimum salaries are increasing as a result the company need to give more salary to the employees which increases companies cost (Perera 2017).

Conclusion

The report is been written upon McDonalds and in this report the detail analysis of the marketing strategy of McDonalds is been done. The tools used in this report is the SWOT analysis to identify the company’s internal and external analysis and the Pestle analysis is done to understand the external factors that is affecting the business.


 

Reference List

Akman, M.K., 2019. SWOT analysis and security management. European Journal of Management and Marketing Studies.

Noordyanto, N., 2021. Fungsi Signage Mcdonald’s Drive Thru dalam Perspektif Sosial Budaya. Ars: Jurnal Seni Rupa dan Desain24(1), pp.21-32.

Perera, R., 2017. The PESTLE analysis. Nerdynaut.

West, H., 2019. McDonalds and Al-Qaeda. Undergraduate Journal of Political Science27(6), p.15.

Wu, F., 2020. An Analysis of McDonald’s Business Model Based on Business Ecosystem Theory. In RSU International Research Conference (No. 1, pp. 1756-1763).

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