The operating income rose from 7,745 million dollars in 2016 to 9,553 million dollars in 2017. McDonaldâs restaurants offer substantially uniform menu that comprises Â hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafÃ© beverages and other beverages.. McDonald’s menu is very uniform that is composed of hamburgers, cheeseburgers, fish filet, chicken sandwiches, French fries, salads, and shakes there are so many laws from health quality related laws that can affect fast food businesses. 1. It is because social factors now play an increasingly important role in deciding the fate of the businesses. Mcdonalds has managed its value chain skilfully. The company’s phenomenal growth could be attributed to many factors, apart from the franchise model of e… However, several brands are also including modern technologies like AI and other marketing methods to reach out to the millennials and engage them. It is also a large employer and employs more than 14.7 Million people alone. McDonalds is already known for customer service. Internationalisation Strategy 15 Think Global Act Local Option 15 Revamping Business Model 15 Franchisee and Joint Ventures 16 4.1. The Strategy Watch is a fast-growing multi-author blog on Strategic management, Business Planning, Investment, & Analysis. McDonald’s is the best example of international franchising models. It is especially so when the brand is heavily franchisee based. Apart from that it tests new products regularly to make its menu exciting. In 1999, McDonald’s was leading the world catering market with a strong brand and total sales of $ 35 billion. In this assignment will describe the vision, mission, objective, competitive strategy, external fit, PEST analysis, porter’s five forces regarding McDonald. It has a strong brand image in the market that it has built over the years and continues to strengthen through new campaigns and a smart strategy. Change Management 19 Appendix- I 1 Appendix -II 1 The bargaining power of most of McDonalds suppliers is low which is because of their small size and being scattered globally. Legal factors are also just as important for successfully doing business in the 21st century. McDonalds sources its raw material from all around the world. Apart from courteous staff, the brand also uses a variety of technologies to serve and engage its customers. Such a consistence in taste has positive implications on consumer loyalty. Rising health consciousness and food quality related criticism can hurt the sales of fast food brands and it is why they need to focus on food quality and a healthier menu. McDonald’s restaurant will be selected to complete this assignment. Particularly, it is the international brands that are being most affected by the increased control. It is because social factors now play an increasingly important role in deciding the fate of the businesses. the brand plans to turn it into 95% operated by franchisees. The localization strategy of McDonald’s is based on culture (Bharucha, 2018, p.639). The shape and condition of the US restaurant industry has continued to improve over the years and even during the recession, its performance was fine. It helps at attracting new as well as retaining old customers. Another important strength of McDonaldâs is its supply chain management. The millennial generation should be engaged using modern technologies and other various methods for higher retention level. Franchisee issues: The McDonaldâs system is 90% franchisee based which is bound to give rise to franchisee related issues. It was because the industry was quick to adjust its menu and prices. The number of franchisees in McDonalds system has continued to increase. (MEYER, McDonald’s Marketing Mix (4Ps) Analysis, 2015) Public relation McDonald’s do public relations activities help promote the business in target market. Marketing and promotional efforts focus on value, quality, food taste, menu choice, nutrition, convenience and the customer experienceâ. Technology is heavily important for businesses to survive in the 21st century. However, the threat gets to be moderated by the brand image as well as, The threat from new entrants for McDonalds is also moderate. Competition in the QSR industry has kept rising and it has led to higher marketing and customer service costs for brands. the brand is investing heavily in new technologies to improve its level of customer service as well as to engage its customers. The company procures raw material from suppliers around the world through its procurement teams. Economic factors have a direct effect on the sales and profitability of businesses. This has kept adding to the intensity of rivalry in the fast food industry. Another important strength of McDonaldâs is its global presence. McDonald's already enjoys unqualified success in Tokyo, Seoul, Beijing, India, and the United Arab Emirates, to name a few Asian markets. View all posts by The Strategy … McDonald’s with 36000+ outlets all over the world is fighting hard with other popular chains like Subway, KFC, and Dominos etc. The brand sells across more than 100 countries through its franchised and company owned restaurants. The threat is not just from the international brands but also from the local and smaller brands. That also includes maximum utilization of the available human resources, such as labor (Hambrick and Donald, pp.567-575, 1980). Outbound logistics: McDonalds has approved a large number of distributors which are independently owned and operated. 90% of its restaurants are operated by franchisees. The most important strength of a global brand is its brand image and brand equity. McDonaldâs competitive advantage is based on the following points: It is important to note that McDonaldâs competitive advantage based on costs can be difficult to sustain in long-term perspective, since new competitors may emerge with access to cheaper resources…. â The focus of McDonalds must remain on both reputation management and menu innovation. Even McDonald has built in America but in recently, to describe McDonald’s restaurant, it is … McDonalds sources its raw material from all around the world. By the year end 2017, the company had 2,35000 employees in total which included the employees working in its offices as well as in the company operated restaurants. It is one of the fast food brands that serves the largest variety. However, for most of its raw material it has several options or several suppliers to source from. To have the lowest cost possible McDonalds standardized its products and services. There are several reasons behind it apart from the increased competition. In this way, there performance the US restaurant industry is expected to keep improving over the coming years. The number of QSR brands in the global fast food industry has grown high and McDonaldâs has continued to compete on the basis of price, quality customer convenience and flavour. Moreover, from Dominos to Burger King there are several large and influential brands that are aggressively competing for market share in the fast food industry. Both India and China are major markets which can be penetrated deeper. Materials sourced from these suppliers are bright to the McDonalds distribution centres worldwide. McDonalds is also subject to severe regulations, control and oversight by the government authorities. The number of total systemwide restaurants of Mcdonalds operational across 120 countries reached 37,241 in 2017. It is the millennial generation that constitutes the largest section of the global population. Technological systems like point of sale, and other in store systems or platforms and technologies that support McDonaldâs digital and delivery solutions. The Franchise business model. the world has been through recession some years ago and during such times of low economic activity, employment level falls. Brand image and equity help with marketing of the brand and help to derive better results from its marketing efforts. The signage of a McDonald’s fast-food restaurant in Madrid, Spain. In addition, the restaurants sell a variety of other products during limited-time promotions. Inbound logistics: McDonalds has managed a large supply chain from which it sources raw materials. Research and data collected by Euro Monitor International for 2016 also showed that the entire restaurant industry was composed of 19 million outlets and generated 2.4 trillion dollars in sales. The brand serves a diverse menu that includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafÃ© beverages and other beverages. As of 2017, McDonalds employed around 235000 employees. In this assignment will focus on the business strategy. Such situations can affect restaurant businesses and bring their sales and profitability low. This shows the growing role of technology in the success of the fast food industry. Two ways: First, with a franchise business model that allows its franchisee-members, management and shareholders to share the risks and rewards from … A large number of McDonaldâs restaurants had to be closed in India only because the brand could not manage its franchisees there well. The company currently has a low but stable growth rate. these small variations are made in order to suit the taste of the local customers. The QSR industry has grown highly competitive in the recent years. the fast food industry is populated with several global and local brands. The role of IT and digital technologies has kept growing in the McDonalds system. Increased focus government authorities on the environmental matters can affect McDonalds both directly and indirectly. the world has been through, The social factors have also kept growing in relevance in the 21st century. Description of winning strategy 18 7.0. Since each customer is valuable and none of the brands want to lose even a single one the focus has shifted towards customer and brands are trying to be more and more customer oriented. McDonalds business strategy is based around overall cost leadership. It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. 7 out of ten restaurants in US are single unit operations. McDonaldâs places heavy focus on customer service. McDonalds operates in more than 100 countries and has to remain cautious about compliance so as to not become a target of law. It was because the industry was quick to adjust its menu and prices. Regarding diversification, McDonald’s has set its sights on Asia, with the hope of adding more than 1,500 new restaurants. Testing the alternative strategies 17 6.0. In case of McDonaldâs it is well known as the leading fast food brand of the world. each brand is quite aggressive about competition and uses so many strategies like seasonal discounts and offers to lure customers away from the rival brands. The net income of McDonalds rose from 4687 million dollars to 5,192 million dollars. âMcDonaldâs global brand is well known. Global presence is an important capability which means a large customer base and higher sales and profits. Brands have to design their food menu with their preferences as priority. 7709 words (31 pages) Dissertation. Future Strategy 16 5.0. #Five Forces Analysis of McDonalds: Bargaining power of suppliers: The bargaining power of most of McDonalds suppliers is low which is because of their small size and being scattered globally. Here is how: Primary activities: This is a description of the primary activities in the value chain of McDonalds. Customers know what to expect when they walk into a McDonalds store. Total debt also rose during this period from 25,956 to 29,536 million dollars. McDonalds has a large customer base and enjoys very high level of customer loyalty. However, still it serves a rather uniform menu globally with minor local variations to suit the local taste.  Annual Report (2014) McDonaldâs Corporation, Interpretivism (interpretivist) Research Philosophy. There are several brands that are offering similar products or have similar menu items. contact: email@example.com, firstname.lastname@example.org, Strategic Analysis of McDonaldâs Corporation. quick-service eating establishments, casual dining full-service restaurants, street stalls or kiosks, cafÃ©s,100% home delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie bars was composed of 9 million outlets in 2016 and generated 1.2 trillion in sales. Managing the value chain well allows to eradicate performance bottlenecks as well as add extra value to the product and production process. It is expected that by the year 2027, it would have created 1.6 million more jobs in USA. McDonaldsâ 90% restaurants are operated by franchisees. Big Mac tastes almost all over the world due to the use of the same ingredients in the same quantities and application of the standardized ways of cooking around the globe. This has led to higher marketing and promotion costs as well as research and development costs for international brands like McDonalds. Rising health consciousness and health related criticism: Globally, health consciousness is rising and people want healthier food. Moreover, product and service standardization lies in the cornerstone of McDonalds business strategy. Environmental factors have become very important in the business industry given that. However, to make such large scale operations possible as profitably one must have economies of scale as in the case of McDonalds. Technology: A smart value chain is not possible in the 21st century without investing in technology. While the brandâs systemwide sales increased 7%, consolidated revenues decreased 7%. The number of restaurant locations in US is now higher than 1 million. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. It is also a large employer and employs more than 14.7 Million people alone. Around the world the government oversight and regulation of businesses has grown. However, for most of its raw material it has several options or several suppliers to source from. The number of restaurant locations in US is now higher than 1 million. McDonald’s addresses these concerns through stable business operations. McDonaldâs must design its menu as per the taste of the millennial regeneration and serve healthier products. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. Risk Management 18 8.0. The total amount that it generated in sales equalled 2.4 trillion dollars. Market analysis in the Marketing strategy of McDonald’s – The fast food market is flooded with MNC’s and local food joints eating each other market shares. Fast food brand are investing a lot in marketing as well as customer service. It is a well known name in most corners of the world and brand image is helpful in terms of marketing as well as sales both. For instance, World Wildlife Fund (WWF) experts led an independent analysis of the supply chain of McDonald’s in 2010 to help it identify the raw materials that represented the biggest sustainable sourcing opportunities for it to prioritise (McDonald’s, 2019). the number of international brands in the fast food industry has kept growing. Competition in the QSR industry has kept rising and it has led to higher marketing and customer service costs for brands. Support activities: This is a description of the support activities in McDonaldsâ value chain. (Annual report, 2017). These new products may be variations of existing products, or entirely new products. However, the threat gets to be moderated by the brand image as well as large market share of the McDonalds. McDonald’s strives to fulfill the demands of investors as a major stakeholder group in the business. There are very few suppliers that cannot be replaced or can be replaced with difficulty which gives them some bargaining power. The brand sells across more than 100 countries through its franchised and company owned restaurants. In case of most their small size and isolated position does not give them much bargaining power. Supply chain and technology: McDonalds has a well managed supply chain which is among one of its major strengths. Declining brand image 3. Moreover, the report contains analyses of McDonaldâs leadership and organizational structure, a brief financial analysis of the company and its marketing strategy and discusses the issues of corporate social responsibility. As per the Euro Monitor International report for 2016, the entire restaurant industry had 19 million outlets. It also holds the largest market share n the fast food industry. McDonalds is also subject to severe regulations, control and oversight by the government authorities. The demographics of the global population have changed and this offers opportunities for menu innovation. This in turn leads to lower consumer spending because of lower disposable income. This has been leading to management and control related issues for McDonalds. Even in the fast food industry the role of law is important. The company’s broad differentiation strategy also helps. Globally, health consciousness is rising and people want. The value chain includes all the activities from product conception to marketing and after sales service. Brand image and equity: One major resource of McDonalds that is above is its brand image and brand equity. Another important strength of McDonaldâs is its supply chain management. McDonalds is also making heavy investment in technology for successful marketing and growth of its brand. Another report by Nation restaurant Association showed that the US restaurant industry had sales worth 799 Billion dollars in 2016. It both owns and leases properties primarily related to the company owed and operated restaurants. The company chosen for the purpose of analysing Strategy in Action is McDonald’s, one of the largest food chains in the world with global operations. Sociocultural factors have an increasingly important role in the context of marketing and business strategy both. McDonalds existing organisational strategy is to create better service restaurant operations, menu varieties, and better beverage choices such as hot beverages (hot chocolate, latte etc). The company is engaged in an extensive utilization of economies of scale to achieve the cost advantage. It is a global brand operating across more than 100 countries. After analysing Porter’s Five Forces regarding McDonald’s competitive position, it can be concluded that in order to stay competitive, McDonald’s strategy can be seen most appropriately as a Cost Leadership strategy– minimizing costs to deliver products at low price.. With many other direct competitors also providing value menus, McDonald’s … The restaurant workforce of USA constitutes 10% of its entire workforce. McDonaldsâ 90% restaurants are operated by franchisees. It is why McDonalds is focusing on sustainability and trying to achieve higher sustainability in the long term. Moreover, there are so many laws related to food safety, health, quality and labor that brands have to manage local compliance teams for each region they are operating in. Non-compliance in any industry results in hefty fines and losses. Global comparable sales of McDonaldâs increased by 5.3% and guest count increased by 1.9%. However, McDonalds needs to rethink its management structure for better management of its franchisees. In 2017, a large number of McDonaldâs restaurants in New Delhi India were found to be serving low quality food and had to be shut down. However, it does work to manage its quality standards and enforces them with the help of quality teams. It is especially so when the brand is heavily franchisee based. Marketing, promotional and public relations activities are designed to promote McDonaldâs brand and differentiate the Company from competitors. Customer loyalty can also be major advantage in times of economic uncertainty. The interests of these stakeholders include profitability and growing revenues. while there are no significant barriers to entry, still to grow into major brand is not easy because there is still a large investment in marketing as well as having skilled human resources as well s having the other infrastructure required for growing into a large and global brand. Millennials are a highly etch save generation who want affordable products and good customer service. Competition in every industry has increased and only the brands that. McDonaldâs is primarily a franchisor with franchisees owning and operating more than 90% of its restaurants. The analysis of the international strategy of McDonald’s has revealed that although the standardization approach has proved to be successful, the evitable differences between cultures have created the need for adopting the localization strategy to some extent. the political factors are also exalted to economic factors and an unstable political environment can cause business and supply chain disruption. Global Presence: McDonalds is present in around 120 countries. Implication 16 4.2. The following table illustrates McDonalds SWOT analysis: Strengths 1. All these competencies have enabled it to grow its market share and customer base. The recommended strategic goal is to fuel business growth through a combination of the market penetration and market development intensive strategies. Along with this, justification of current corporate strategy and suggestions to overcome the potential barriers will be discussed in this case analysis. 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