McDonald’s Company’s SWOT Analysis

Introduction

The daily operations of any organization are characterized by situations that act as strengths, weaknesses, opportunities, or even threats to the success of the business. This paper will use McDonald’s to demonstrate how such a situation plays out in its business. McDonald’s opened its first store in 1971 in Yagoona in Sydney, Australia. However, the company had been in operation in the USA after having opened its first store at Illinois, Chicago, in 1955.

Today, McDonald’s is one of the largest fast-food retailers not only in the USA but also in other parts of the world such as China and Australia. It has about 30,000 stores across the world, although new stores continue to be established. Across the world, the presence of McDonald’s is experienced in about 119 countries. In all these nations, the company experiences various situations that present as intimidation, opportunities, limitations, or strengths to the business.

SWOT Analysis

Strengths

MacDonald’s has various strengths that include its global presence, a worldwide brand image, and a good reputation. Statistical findings indicate that McDonald’s opens a store after four to five hours (Greco and Michman 12). The company applies its global presence strategy in every market it enters. However, it is crucial to note that the company does not neglect the local cultures and preferences of people in its foreign markets.

The company can offer attractive and innovative products to woo customers. For instance, McDonald’s introduces several different groundbreaking commodities and services regularly. Besides offering happy meals for children and giving out a range of toys with the children’s meal, the company plans for birthday parties. The company offers customers great services at a reasonable value for money.

McDonald’s has been in operations for a long time. This length has made it develop large customer patronage. Its large size and global reach have enabled it to utilize economies of scale to increase profitability. For example, in Australia, the company has about 730 stores while it has about 800 stores that are currently operational in China. It has a large pool of talented employees who have been pivotal in supporting business expansion strategies. McDonald’s employs about 390,000 people who serve approximately 54 million people across the world per day. In 2005, the company reported revenue of about 21 billion US dollars.

McDonald’s has an effective business expansion strategy. It expands through the opening of franchises whereby it re-engineers its products to meet the needs of local people in foreign nations. The case of China where the company found out that the Chinese people preferred chicken to beef exemplifies this approach to the development of new products. McDonald’s had to make products that had a chicken flavor for it to establish and/or retain its market share in China.

Weaknesses

Although McDonald’s has all the above strengths, it encounters some weaknesses such as quality challenges across the global franchise network. Consumers demand the same quality of food in all the franchises. This situation is challenging. Another weakness is the company’s poor reception of its advertisements by some people. For instance, the company has had cases of under par advertising or marketing, particularly in the Asian market.

In these incidents, natives regarded the advertisements as offensive. The situation negatively affected McDonald’s brand image. Poor perception of fast foods constitutes a major weakness that continues to lower the sales of its flagship products such as hamburgers.

McDonald’s has experienced a myriad of changes in its operational environment, especially by noting the increasing emphasis on the need to change eating behaviors to avoid the danger of health risks that are associated with eating unhealthy foods. Health specialists classify foods that contain high calories such as fast foods, which form the menus of McDonald’s, as unhealthy. Campaigns incepted by health organizations against such products have resulted in the emergence of demand for fiber-rich foods.

For this purpose, creativity and innovation are necessary for the effort to come up with new products that meet emerging customer needs. In the effort to proactively deal with the weakness of negative profiling, McDonald’s pays substantive attention to protecting its brand image by responding to negative critics of the company’s products, particularly with criticisms that fast foods are closely linked to obesity and its associated ailments.

Opportunities

Opportunities available for McDonald’s to capitalize on to enhance its success include the introduction of a new segment, which supports the latest trends of health-conscious groups, the fast growth of the fast-food industry, and Joint Ventures (JV) with supermarkets. Other opportunities include free Wi-Fi for customers and the deployment of environment-friendly products, including processes that can help to achieve corporate social responsibility.

Media attention on organizations’ operations may result in building the success of organizational marketing strategies or even destroying them. For MacDonald’s, the company aims to achieve three fundamental aims via harnessing media. It seeks to:

  1. Create customer awareness about the products of the company.
  2. Make clients have a positive feeling about the products.
  3. Make customers remember the products offered.

Customers constitute an important microenvironmental factor that influences McDonald’s operations. Clients have different likes, choices, and even reasons why they buy. MacDonald’s has a large number of employees who constitute both young and old people from multicultural populations. These people have different needs and cultural affiliations, which MacDonald’s has to harness to yield success. Therefore, clients offer an attractive opportunity for supporting the sustainability of McDonald’s business.

Adopting green business strategies is key to the success of sustainable supply chains. Green business strategies underline the reason why McDonald’s should consider researching about green technologies and/or the use of green energies in its business operations. Successful deployment of these techniques should be communicated to consumers through marketing strategies. This plan is necessary since consumers are now overly concerned about environmental sustainability and the efforts that corporations have made in ensuring ample protection of the environment.

Threats

MacDonald’s experiences some threats such as the stiff competition from other companies. As the fast-food industry continues to grow, new firms are venturing into the industry. Even though McDonald’s has established a strong brand, others such as Yum!, Wendy’s, and Burger King are growing fast to the extent that they have now become a major threat to McDonald’s. Public health concerns associated with fast foods are a major weakness to not only McDonald’s but also all organizations that deal with fast foods. This weakness can be resolved by the inclusion of healthy food alternatives in McDonald’s menus.

Consumer spending is adversely affected by global economic crunches. Recession reduces household disposable incomes (Holt and Quelch 69). This situation has the effect of reducing the money that is available to spend on fast foods. Environmental issues such as the effects of organizations’ operations are crucial determinant factors for the retention of customers who are overly concerned with the earth. To this extent, in case McDonald’s continues with its practice of using HCFC-22, environmental cautious customers may opt to turn to competitors who are cautious about the environment.

McDonald’s Problem and Solution

The company’s level of profitability has been growing with time, although it experiences fluctuations. For example, according to the data filed by the company with the Securities and Exchange Commission, the company reported revenue that amounted to US$25.413 billion in 2015. However, this figure was a decline in profitability since the business had reported profitability of US 27.441 billion. Similarly, profitability in 2015 declined when compared to 2014. In 2015, the company reported a profit of US$4.529 billion while it had reported a turnover of US$4.758 billion the previous year.

Therefore, moving forward, the company has a noble task of streamlining its areas of weaknesses that lower its revenues and hence profitability. One such mechanism entails deploying its strong product innovation team to not only develop items of mass appeal but also respond to consumers’ needs and concerns such as healthy eating habits. The company should focus on “repositioning itself to appeal to a broader audience, particularly by redesigning its outlets and making them more modern, comfortable, and upscale” (Wilhelm par.2). To this extent, brand management and brand protection are some of the strategies used by McDonald’s to enhance its success in a competitive and dynamic fast-food business.

Conclusion

The main aim of conducting a SWOT analysis entails ensuring that threats are turned around to become opportunities. It provides a mechanism through which an organization can consider how to deploy strengths to overcome weaknesses in its operations. McDonald’s can deploy its strong financial capability, employee potential, and even managerial experience to continue developing products that have not only global appeal but also ones, which can change with the emerging consumer needs and concerns.

Works Cited

Greco, Alan, and Ronald Michman. Retaining Triumphs and Blunders: Victims of Competition in the New Age of Marketing Management, New York, NY: Quorum Books, 2005. Print.

Holt, Arthur, and Timpson Quelch. “How global brands compete.” Harvard Business Review 7.3 (2009): 68-75. Print.

Wilhelm, Rachael. McDonald’s Formal Business Structure, 2011. Web.