McDonald’s in Norway
McDonald’s is one of the most famous restaurants globally and one of the most prosperous businesses ever. Its success is made up of many details and factors that people sometimes do not pay attention to. The mission of McDonald’s is to be the favorite place and way for visitors to eat. The company is trying to achieve this by constantly improving the quality of food and service, striving to become more and more comfortable visiting the restaurant chain. This essay will discuss threats or opportunities for the firm and include an industry review, Pestel’s analysis, and Porter’s five forces examination. It is also intended to assess the market situation from the point of view of consumers and competitors.
McDonald’s Strengths
The organization’s strengths include a solid worldwide presence and leadership in the U.S. and international markets. The restaurant adapts to the culture of each country in which it opens a business. A diverse assortment is present, and there is food for different religions. Today there are more than 31,000 McDonald’s restaurants in 120 countries around the world (Shrivastava, 2021).
At the same time, there are both classic dishes (hamburger, French fries, cheeseburger) and typical for each country. For example, in Germany and Spain, visitors can find beer on the menu, and in Hong Kong, there are specific rice burgers. In Norway, customers are encouraged to taste a burger using a gluten-free bun – most Europeans adhere to the principles of a healthy lifestyle (Excell, 2019). McDonald’s is constantly improving the quality of its product ingredients. Customers accustomed to the taste of products in their home countries will not be upset by the quality of the products as McDonald’s strives to unify cooking standards.
McDonald’s Threats
The company uses imperfect management methods that do not provide economic incentives and extinguish interest in the full use of available reserves. In addition, employees have no interest in improving production efficiency. Environmental problems of the company are aggravated – the issues of waste recycling have not yet been solved (Cole, 2017), and for Norway, as a country that cares about the environment, these issues can be crucial. The slow introduction of new technologies, the immutability of the menu, and the general conservatism of the company may cause McDonald’s to lose its leading position in the market.
PESTEL Analysis
The company’s strategic priorities are defined as ensuring stable growth, impeccable customer service, maintaining the status of an efficient and high-quality manufacturer, and improving the qualifications of employees at all levels. The company also organizes experience exchange between divisions in different countries, constantly improving fast food concepts. McDonald’s encourages the development of new dishes, innovations in equipment, marketing, service organization, and technology. The carried out PESTEL analysis is a marketing tool for long-term planning in business, which allows considering the influence of environmental factors (Kenton, 2020). Predicting the consequences helps make informed decisions and minimize errors.
Political Factors
The green agenda was one of the dominant ones in 2021 in Norway. Norwegian voters turned their attention to environmental issues amid published reports of rising temperatures on the surface of the Earth. Accordingly, the position of parties whose political program is directly related to environmental problems will likely strengthen. And this could potentially lead to higher taxes or a ban on companies like McDonald’s, whose carbon footprint reduction efforts are not yet intensive enough.
Economic Factors
Norway is a highly developed, industrialized country with an open, export-oriented economy. As one of the wealthiest countries in the world, Norway also ranks first in terms of standard of living and life expectancy, national health, and housing conditions. The high level of material well-being is partly due to its wealth of natural resources and Norway’s inclusion in the industrialization process in Western Europe. The general state of the country’s economy and living standards are favorable for developing McDonald’s fast-food chain.
Social Factors
McDonald’s creates interesting advertising projects that are designed to draw attention to social issues. The pandemic has brought new dangers behind the wheel: ubiquitous video calling and chatting while driving. The rise of takeout services has also led to another distraction in the car: eating while behind the wheel. In Norway, a new McDonald’s campaign focuses on road safety and urges customers not to look at delicious fries while driving and dream of eating them right in the car. The ads, created by the agency Nord DDB, depict roads with yellow pavement markings reminiscent of French fries (Lepitak, 2021).
Fast-food consumers come from a wide range of social classes. Wealthy people may stop by and eat at the restaurant, as a matter of habit. Less affluent people can also occasionally buy their favorite foods since McDonald’s pricing is designed so that people of different income levels can afford to eat there.
Technological Factors
McDonald’s is starting to use Apprente technology at a drive-through – a robot will take orders and transmit them to the kitchen. The system is already being tested at several of the chain’s restaurants in Chicago; the introduction of the system will speed up order processing. Investing in point-of-sale remodeling to improve the customer experience can be a game-changer for the chain. This includes equipping outlets with digital devices to help personalize service. Due to its unique product tracking and identification program, the company can monitor the path of any shipment – from the manufacturer to the counter – within hours.
Ecological Factors
The world-famous fast-food chain is famous all over the planet both for its burgers and for the millions of tons of disposable packaging that have littered the continents and oceans of the earth for decades. In European countries, these restaurants are losing customers due to the negative image of one of the planet’s biggest garbage producers. For example, McDonald’s restaurants in downtown Oslo risk being closed because of the amount of trash left behind by drunken customers who come to the restaurant before it closes. McDonald’s says it continues to work to reduce packaging waste and eliminate single-use plastic products. However, so far, on average, one such restaurant produces more than 50 tons of waste per year.
Legal Factors
Norway’s business model is the backbone of the Scandinavian economy. Norway, despite the fact that it is not a member of the European Union, still falls within the legal framework of Europe, and all the legislation of this country concerning business correlates with its European model. It is essential to keep in mind that eating at McDonald’s restaurants has been proven to cause particular health problems. McDonald’s has repeatedly been a defendant in personal injury cases, which may be the reason why customers would choose to eat elsewhere.
Porter’s Five Forces
Michael Porter’s theory for assessing potential risks was developed back in 1979 but has retained its popularity to this day. It consists in evaluating possible adverse events that may somehow affect the business in the future. Porter’s five forces influencing business development are customers, suppliers, current competitors, potential competitors, and substitute products. The creator of the theory argues that each of these factors puts some pressure on the business. To some extent, they are considered external because the company cannot control them.
Power of Customers
Over the years, McDonald’s has managed to gain a broad and loyal customer base. However, younger diners are increasingly looking for fresher, healthier food. They prefer chains that offer slightly more options on their menus than the reduced price of their all-inclusive offerings. In addition, the consumer habits of Norwegians must be taken into account. For example, according to the concept of responsible consumption, so popular in Norway, priority should be given to companies committed to the principles of sustainable production. To help earn customer loyalty will help to provide additional services for free or at an affordable price and create a convenient order form so that the customer does not make unnecessary movements.
Power of Suppliers
The market power of suppliers is not the same in different markets. It is high in the case of a monopoly on resources and is low where there are many supplying firms with substitute goods in the market. McDonald’s purchases food from local suppliers that meet general quality standards. The Norwegian government ensures that only approved and high-quality food is used. For example, many kinds of seafood, including fish, are brought into restaurants in Norway from local water sources.
Competition in the Industry
McDonald’s is not the only fast-food chain known in the world. The brand has competitors: Subway, Kentucky Fried Chicken, Papa John’s Pizza, Pizza Hut, but the primary opponent in the competitive battle is Burger King. Management of the corporation is in no hurry to introduce new dishes, experiment with flavors and cooking techniques, unlike Burger King, which can lead to customers preferring to buy competitors’ products (Valinsky, 2021). The company’s emphasis is on the average class, so the quality and usefulness of the food sometimes lag. In this parameter, McDonald’s and Burger King are noticeably inferior to the Subway brand.
Potential of New Entrants into the Industry
The threat of new competitors – their influence is since their entry into the industry (usually with newer technologies, products, and sales techniques) redistributes market shares and limits the profits of existing competitors. The Norwegian food industry is represented by restaurants, bars, various eateries, pizzerias, and cafes. Recently, many customers have become increasingly concerned about such aspects as the technology of food production (Ritchie & Roser, 2020), the possibility of supporting small businesses, the level of employee wages. These factors can be a reason why McDonald’s would prefer another cafe or restaurant where these details would be taken into account.
Threat of Substitute Products
Fast food dishes are adapted as much as possible for quick cooking and quick serving to the customer. In most cases, fast food companies use semi-finished or prepared foods cooked to perfection directly in the customer’s presence. However, people’s concern for healthier alternatives or the search for new and exciting eating formats may reduce McDonald’s popularity. However, timely adaptation to customer needs and a detailed analysis of market trends can adjust the impact of these factors.
References
Cole, R. (2017). McDonald’s recycling and waste management ‘insufficient’, says French report. Resourse. Web.
Excell, B. (2019). 11 countries where gluten free McDonald’s actually exists. Mediavine Food. Web.
Kenton, W. (2020). PEST Analysis. Investopedia. Web.
Lepitak, S. (2021). McDonald’s wants drivers to keep their minds on the road and off its food. Adweek. Web.
Ritchie, H., & Roser, M. (2020). Environmental impacts of food production. Our World in Data. Web.
Shrivastava, D. (2021). McDonald’s corporation: The world’s leading fast food chain [McDonald’s case study]. StartupTalky. Web.
Valinsky, J. (2021). Burger King copies McDonald’s with celebrity meals. CNN Business. Web.