Question 1One segment of the general environment that influences McDonald’s is the socio-cultural factor within its macro-environment. In this segment, McDonald’s has to contend with a widening wealth gap in the U.S., which provides opportunities for growth as most of the organization’s customers are from low and middle-income backgrounds (Sena, 2017). In addition, the healthy lifestyle trend in American society threatens McDonald’s reputation due to the perceived negative health effects of its products. Another segment that affects McDonald’s involves the economic trends and conditions in the organization’s macro-environment including increasing economic growth in the U.S. which provide growth opportunities. However, the slow and sluggish growth in the European economy threatens the organization’s future growth and revenues from the region (Sena, 2017). Further, slowing growth in China threatens growth in the Asian market, which is considered McDonald’s biggest growth market.
The bargaining power of buyers is a strong competitive force for McDonald’s. Currently, McDonald’s has to contend with customers that can easily impose their preferences and demands due to the ease with which they can change from McDonalds to another fast food restaurant (Sena, 2017). Furthermore, substitute food outlets, home-cooked meals, and artisanal bakeries threaten to eat into McDonald’s market share. McDonalds has attempted to counter this force by investing in mobile apps and social media presence to build loyalty, although they still lag behind Starbucks and Dunkin Donuts in web presence. The threat of substitutes, as a result, is another strong competitive force facing McDonalds due to low switching costs the high availability of substitutes (Sena, 2017). In the latter case, McDonald’s has attempted to counter this force by serving healthier food, but have not succeeded because of competition from health-focused outlets.
To better counter the increasing strength and power of buyers or consumers, McDonalds should develop focused strategies to improve the loyalty of its existing customers to prevent them from switching to other fast food outlets (Lee, 2016). For instance, McDonalds could develop a loyalty program to go with its current mobile phone apps in order to convert visits and downloads into sales. In this case, McDonald’s should improve personalized service and customer experience in order to drive conversion rates. On the other hand, in order to improve the ability to address the strong threat of substitutes, McDonalds should improve their product quality rather than focus solely on providing healthy foods. For instance, they should ensure that their chicken products are marked as antibiotic free and their milk products marked as artificial growth hormone free (Lee, 2016).
The three most significant threats facing McDonald’s are the GMO trend and regulations, the healthy lifestyle trend, and aggressive competition. Perhaps the most important threat is the growing apathy towards GMO foods, which constitute the vast share of McDonald’s products (Euromonitor, 2017). To deal with this threat, McDonald’s should develop new sourcing policies with regard to purchasing organic products, while also introducing new products that attract health-conscious customers. In turn, McDonald’s has several opportunities in the market including product diversification, development of the Middle East market, and expansion into developing nations. The most important opportunity is McDonald’s expansion into developing countries to lessen its dependence on the North American, European, and Asian markets (Euromonitor, 2017). Using market development strategies, McDonald’s can establish a presence in countries where they have no business by developing new products and customizing their menus to make the offerings more localized.
The greatest strength of MacDonald’s as a company is its brand name. MacDonald is known countrywide and worldwide for its fast food especially; chicken nuggets, desserts and quarter pounder. The recipe used in making the various foods that they offer is unique and can only be used to prepare their own products (Statista, 2017). As a result, a person from the United Kingdom will expect to get the same food with the same taste while in the United States when he or she visits a MacDonald’s restaurant. The best strategy to maximize this strength is to have the company open more restaurants in more cities and different countries.
The greatest weakness exhibited by MacDonald’s is the lack of new recipes in their menu. Since MacDonald’s is traditionally known to have a menu that is full of chicken products, it is difficult for them to introduce innovation within their many franchises. As a result, customers who do not like chicken products are bound to go to other restaurants (Statista, 2017). The best strategy to fix this weakness is to incorporate non-traditional menu within their fast foods products.
MacDonald’s resources include chicken farms where they rear their own chicken, which in turn are used in making the meals that they offer their customers (Statista, 2017). Moreover, MacDonald’s own the various drive ways in which their restaurants are located. Essentially, the land and buildings that host their restaurants belong to MacDonald’s as a company. MacDonald’s has the capability of entering in a new market especially a new country and it will manage to out maneuver the competition. This is due to its worldwide known brand name; it is able to compete in any fast food market worldwide. Core competencies include the fact that it is an already established brand name that people know from children to the elderly, and thus it will continue to dominate the industry of fast food (Statista, 2017).
MacDonald’s value chain is productive since they have farms whereby they rear their own raw products, in this case, chicken. They own the land and buildings where they process the raw products (the restaurants). MacDonald’s can create more value by focusing on delivering their products to customers at a faster rate. They should minimize the time it takes for a customer to order food and the time it will be delivered for consumption (Statista, 2017).
- Euromonitor. (2017, October). Fast Food. Retrieved October 29, 2017, from EuroMonitor International: http://www.euromonitor.com/fast-food
- Lee, J. (2016, March 14). Why McDonald’s Is Working On A Loyalty Program? Retrieved October 29, 2017, from Forbes: https://www.forbes.com/sites/greatspeculations/2016/03/24/why-mcdonalds-is-working-on-a-loyalty-program/#797769c5575a
- Sena, M. (2017, June). Fast Food Industry Analysis 2017 – Cost & Trends. Retrieved October 29, 2017, from Franchise Help: https://www.franchisehelp.com/industry-reports/fast-food-industry-report/
- Statista. (2017, June). Fast food industry – Statistics & Facts. Retrieved October 29, 2017, from Statista: https://www.statista.com/topics/863/fast-food/