McDonald's SWOT Analysis and Recommendations
McDonald's SWOT analysis and recommendations
- Strong brand name, image and reputation
McDonalds has built up huge brand equity. It is the no 1 fast food company by sales, with more than 31,000 restaurants serving burgers and fries in almost 120 countries. The image of McDonalds is recognized everywhere. This brand is in top ten of the most powerful brand names in the world with Coca-Cola, Nokia or GM.
- Large market share
McDonalds is considered as the largest player in size and global reach. When Wendy’s or Burgers King are losing market share in 2006, McDonalds still increases its market share. Market share of McDonalds in the recent time is about 19% while Yum!Brands is 9% and both Wendy’s and Burger King is 2%.
- Specialized training for managers
McDonalds is very serious on training managers. This company has its own program to train managers the most professionally, which is called Hamburger University. As a result, McDonalds has many good managers who can help company development well.
- McDonalds Plan to Win
McDonalds customer – focused Plan to Win provide a common framework for its global business yet allows for local adaptation. Through the execution of initiatives surrounding the five elements of its Plan to Win – People, Products, Place, Price and Promotion – McDonalds has enhanced the restaurant experience for customers worldwide and grown comparable sales and customer visits in each of the last eight years. This Plan, combined with financial discipline, has delivered strong results for company’s shareholders.
- Introduction of new production
McDonalds is considered the first one enter to fast food industry. It initiates to other brand to enter this industry. As a result, when think about fast food, customers always remember McDonalds first. In fact, in some big countries, especially in US, McDonalds is the first choice of a large number of customers.
- Technology Innovative:
McDonald’s is keeping at the forefront of technology around the globe. For example, In Brazil McDonald’s is currently studying the installation of Internet access terminals in some outlets as well as enabling customers to order online. This will create a more efficient process that will reduce the amount of lag time between a customer’s orders and pick up of the order.
- Good marketing strategies:
No matter the continent, children and adults know the face of Ronald McDonald is synonymous with the colossus restaurant chain. This results in wonderful marketing strategies among management which conducts a very thorough market analysis, resulting in much success around the globe.
- Unhealthy food image
McDonald's has been impacted by negative press like the documentary "Supersize Me" by Morgan Spurlock in which he contributed our society’s obesity to McDonald's and other fast food chains. In fact, each McDonalds dishes provides large amount of calories but not too much nutrition.
- Customer looses due to fierce competition
McDonalds has to compete with many strong brand name in fast food industry such as Wendy’s, Burger King or Yum!Brands. This fierce competition makes McDonalds loose a large number of customers who prefer favor of other brands.
- Problem related to health issue
McDonalds use Trans - fat and beef oil in their food. Although it is not illegal, it affects badly on customer’s health because Trans – fat is causes of some kind of cancer. Consequently, a number of customers who care about their health stop eating at McDonalds restaurants. It makes revenue of company decrease.
- Legal action:
McDonald’s has been involved in a number of lawsuits and other legal cases in the course. For example, there are many case which involved with trademark issue. McDonald’s force many others restaurant, company of just a coffee shop to change their brand name because of keeping “Mc” letters.
- Unbalance meals:
Although McDonalds tries to update its menu by healthy criteria, McDonald’s meals are still unbalance. For example, there are many dishes with chicken (both grilled and fried), bacon, beef, rib or egg. Besides, just several dishes are salad with vegetable and fruit. Moreover, amount of fruit or vegetable is not much.
- High employee turnover rate
Although McDonalds has many good managers as well as skillful employees, the turnover rate is still high. Every year many of their employees are fired out of the restaurants. Moreover, many others quit their jobs, especially part time employees because of low salary as well as too high working pressure.
- Action related to environmental issue
McDonalds uses HCFC – 22 to make polystyrene that is contributing to ozone depletion. The company has to repair this weakness if doesn’t want to be criticized.
- Dissatisfied Franchisees:
Franchisees are beginning to become very dissatisfied with the fees that McDonald’s are forcing them to pay. As the company continues to expand, they are also increasing the amount of fees franchisees have to pay for the use of the notorious fast-food brand. Many people are not very happy about this and as a result many franchisees are selling their businesses.
- Growth of the fast food industry
Fast food industry now is developing significantly. The change of lifestyle leads to the change in people eating habit. In the past, if just workers, drivers or someone who had to work busily and didn’t have enough time for a home meal choose fast food; nowadays, almost people eat fast food and a major of them like fast food very much. It is a huge chance for fast food brand to increase their revenues, especially McDonalds.
McDonald should research green energies and green packaging solutions and incorporate these finding as a part of their marketing strategies and advertisements.
- Globalization, expansion in other countries
McDonalds has more than 31,000 restaurants serving in almost 120 countries. Of the 31,000 restaurants, at least 14,000 are in US. However, now, because the care of McDonalds about favors and cultures in each countries it enters, McDonalds can open more restaurant in new areas such as China or India – the countries which culture influences on people lifestyle deeply. They are very potential markets. The expansion of these areas is big opportunities For McDonalds.
- Low cost menu is preferred by large number of customers
With low cost menu, McDonalds can attract customers who just have low income. This segment makes up a fairly remarkable part, especially in the recent time, when global economic is struggling. It is not difficult for McDonalds to apply low cost menu on all restaurants.
- Appearance of freebies and discounts
Discounts given on every food item may help them gain more customers. Moreover, a new trend is rising among customers that they like freebies and discounts, even when they don’t need it or don’t use these freebies after.
- Diverse tastes and needs of customers
Customer’s tastes now become more diverse. As a result, they require new format of service in order to satisfy them. McDonalds, with new format of business such as McCafe, it can attract new segment of customer; for instance civil service, who prefer coffee as well as want to use Wi-Fi to work when drink coffee.
- Growing health trend among the customers:
Although people concern about how McDonalds influence badly on their health, it is also a chance for McDonalds. This company can develop new products, specifically fresh burger or healthy dessert.
- Intensity competitors
Along with the development of fast food industry, there are many new fast food brand enter to the market. It is nothing to say if there is no strong brand which can compete with McDonalds. However, in fact, there are some and they are stronger gradually, for example Yum!Brands, Wendy’s or Burger King. Although market share of these brand are lower than McDonalds, they try to gain more customers from McDonalds. Moreover, more casual dining restaurants increase their burger offering and decrease the price. If we are not really hurry, we may choose this kind of restaurant instead of fast food restaurants. They also become the competitors of McDonalds.
- Public health crisis
With a growing number of obesity cases among Americans, fast food chains like McDonalds will continued to be overshadowed by their previous products offerings, for example Supersized Meal, no fruit or yogurt, slim salad selection. Besides, people nowadays are facing heart problem more seriously. As a result, they require nutritious and healthy food as well as lifestyle.
- Economic recession
The company's revenue streams are diversified, but depending on the length of this "recession", they will inevitably be negatively impacted by the trickledown effect. Recession or down turn in economy may affect the retailer sales, as household budgets tighten reducing spend and number of visitors.
- Serious environmental issue:
Environment is one of the hottest topics all over the world. Any action which influence on the earth and human life is criticized strongly. Consequently, if McDonalds keep using HCFC -22, it may lose customers, especially who really care about the earth.
McDonalds is a powerful brand name. Thus, its strategies seem so good. However, in my opinion, I still have several recommendations for this company. Besides, looking at the grand matrix and SWOT matrix, there is something McDonalds should do with its strategies:
The first, although saturated in the United States, McDonalds has great expansion capabilities abroad. According to the grand matrix, market development is one strategy that McDonalds should implement. Company should prepare an international strategy which focus on big cities along with high populated areas, especially in Asia. There are not many McDonald restaurants in this potential market. Japan is the only Asian country which has a lot of McDonald’s fast food restaurants. In contrast, China is considered as one of the biggest market in the world because of this country’s population. Nevertheless, according to the recent figures, China is just in ninth position among the countries which have McDonald’s restaurants with about 1000 restaurant while this number in US is about 14000. If McDonalds can develop more and more in Asia, it is a huge advantage for company to gain market share.
The second is about the name recognition. Everywhere, millions of people are familiar with the Golden Arches that are on top of every McDonalds restaurants. McDonalds should use this advantage to gain more attraction from customers. It does not mean that this company should become involved into many areas of the food industry. In fact, soft drink and fast food bring large profit for McDonalds. However, if keep involving in other areas, it would increase the potential for liability to the company because of many intensity competitors. McDonalds has built the McDonald Hotel in Zurich, Switzerland. Needless to say it is a very unique hotel. A lot of customers in other countries want McDonald open the same hotel in their countries. As a result, McDonalds should care about this chance more than developing new kind of food business which the company is not sure about this success. In addition, aside from exploiting brand name, company can exploit its sources of food and drink in McDonald’s fast-food restaurants for the hotel, as well as service skills of employees.
In addition, McDonald’s strength as I told above is that introduction to new production. Company should focus on this strength to develop stronger. However, the company seems not diversify its products regularly while competitors are stronger and have new products gradually. Because of this reason, McDonalds should spend more money on Research and Development to create new products and services as well as increase the efficiency of operations. First, one thing McDonald should focus on is that the play place for kids. McDonalds has play place but not in every restaurants. If you eat in McDonald’s restaurant, you can be free to party while your children play at the place for kids. Customers love this service. Thus, if it is popularized in all restaurant of company, customers will be more satisfy and of course they want to comeback regularly. Moreover, toys have to be cared much more with many new interesting toys as well as safety. Jolly Bee is one brand which applies this strategy very successful. McDonalds can learn from Jolly Bee developing this service to improve its market position. Next, even if the company’s menu is still relatively inexpensive compare to that of its competitors, it is not totally enough. Because apart from price, customers also make decision rely on menu. After bring a fresh menu with tuna sandwich and salad in some restaurants, especially in Britain and get support from a lot of customers, there is no new one like that. McDonalds focus too much on cheese,beef or chicken menu, more than vegetable. For instance, McDonalds has fruit slice in menu. However, it is served once a week. In the recent time, with the change in eating habit of a large part of customers, McDonalds also should change. Company should bring new vegetarian products to restaurant’s menu. An organic menu is very necessary. This would give customers an alternative while allowing McDonalds to maintain its market share globally.
The last one is also about customer service. Managers of McDonalds are trained professionally. As a result, they can train employees well. McDonald’s employees are evaluated high by customers because of their behaviors as well as attitude. However, customers are not pleased at the idea of waiting in long lines and insufficient employees to handle the volume of customers. Just the minority, but sometimes the employees are rude forcing the customers to go to a competitor’s restaurant next time. At the market which has high market share and very huge number of customers such as USA, Canada or United Kingdom, this issue occurs more frequently. McDonalds should find a way to solve it. For example, the company has to rent more employees and increase their salary in order to keep them working for a long time. This time is just enough for them to get skills to service customers well. Besides, it is necessary to increase the number of employees at the weekend or in the lunch time. More employees means that pressures are shared and avoid the bad attitudes.
McDonalds has undergone several changes since its inception in San Bernardino, California. The fast food chain has conquered the US and it now focusing on the rest of the world. McDonalds, along with this trend, continues to strive toward customer satisfaction while still enhancing its international market position. The company is doing very well and keeps trying in Africa, China, and the Middle East, which will be continued source of revenue for many coming years. If McDonalds can overcome all of its challenges, makes use of advantages and has right strategies, it will win the market again and hold fast to first position in fast food industry.