McDonald's Strategic Management Analysis Assignment Sample

Introduction of Analysis of Strategic Management Of An Organization (McDonald's) Assignment

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In this report, the strategic analysis will be done on an organization. This will help to understand that particular organization's business model and structure. Apart from these, the strategy will help the company leverage the core competition in the food industry. McDonald’s is the largest food supply chain that has emerged from its population globally. Porter’s Five Forces model discloses the challenges faced by the company. This report will conclude the competition and the threats to the company. The staff of that organization works as a conveyor system to serve up dishes. This system of them has come into light and become an instant hit and more demanding. Their system was accepted by the customer like a sweet candy as customers placed the order and in less than a minute, the food was ready to serve. As the demand was gradually increasing and their customer graph was going high, they thought of opening a franchise with their new concept of serving people. And then this will help to evaluate the company's position in the market. Analysis of an organization is the only way to study and make a recovery plan to resolve the occurring problems. The comparison between the two theories will help to classify the need of the report and it will be easier to find the best way to find the result and emphasis that.

Overview Of McDonald’s inventors Mac and Dick who were two brothers

McDonald’s inventors were Mac and Dick who were two brothers. In 1948 Mac and Dick shut down their restaurant which they had been running for the last eight years for alterations. After a couple of months when they again re-opened their restaurant it had become a drive-in and featured an innovative and unique food system. They have planned a Speedee service system where the customer places the order and food was received in less than a minute. Their main menu was on that time was hamburgers. The staff of that organization works as a conveyor system to serve up dishes. This system of them has come into lame light and become an instant hit and more demanding. Their system was accepted by the customer like a sweet candy as customers placed the order and in less than a minute the food was ready to serve. As the demand was gradually increasing and their customer graph was going high they thought of opening a franchise with their new concept of serving people. Then they jointly made McDonald’s. The first outlet of McDonald's was opened in 1955 in a Chicago suburb and sold 18 franchises in a year. Ray who opened the first outlet of Mcdonalds had understood that if these drive-in restaurants were to be hugely successful then the franchises should be implemented as a tee. He planned to merge the real estate business with a hamburger-selling company(Jelonek, et al.,2022). McDonald's is a successful business as their set up was so good, mainly their fast service to their customers. Their rivals are KFC, Burger King, Pizza Hut, etc but their fast service to customers can’t compete with others. Their happy meal box creates great attention among children. As their rivals are not doing that among children, this food pays great attention to children, so it's a common fact that McDonald's has a huge customer base. They also offer a good combo as others. Mcdonald's biggest rival is Burger king. It faced aggressive competition with them concerning pricing Mcdonald's offers a higher price than burger king so many of the customers prefer burger king as a pocket-friendly restaurant(Singireddy, 2020). McD has gained great fame among consumers which makes them irreplaceable (Boyar).

Application of Two Theories:

In this report, the two most important theories will be compared the appropriate one will be used to analyze the PESTEL Theory, and the other is Porter’s Five Forces Theory.

PESTEL ANALYSIS:

It is key to analyzing the external factors of an organization which involve political, economic, sociological, technological, environmental, and legal. It can be used to differentiate the scenarios of the company. The focus of the analysis is to identify the social environment and emerging trends. The main purpose of this is to understand the external factors which can affect the company’s growth and become an obstacle to its competitive edge.

Porter’s five forces analysis: this framework is a remarkable part of analyzing which elastrate important five competitive factors which identify the backhead of a company. This helps to clarify the competitive edge that a company faces. Though it was created many years ago, it become an important component to analyse a company’s strategy. The five factors of this analysis are threats of substitutes, power of supply, threats of new entrants and power of buyer. The most important component is the rivalry between competitors.

Burger King is a famous food chain who have outlets across the world. The pestle analysis of burger king helped the company to find its political issues, economic factors, social environment, technical implementation, legal components, and environmental choices that incredibly affected the organization. This highlights the offers which will improve the external business factors, also it helped in growth and expansion, especially entering new markets. This will improve the product and give strategies for new developments. It emphasizes the strategy to understand the sustainability of a company (Langert, 2019). The components are discussed below:

• Political: Most governments are supporting the concept of globalizing the business. And it helped Burger King to expand its business and make revenue out of it.
• Economic: this food chain has a global sources of operation, and is affected by inflation rates of different economies as the consumers are from different markets and economic backgrounds. It affects the wage rate, lifestyle, spending power, etc.
• Social: Nowadays consumers are looking forward to diversity in their choices and adopting new trends and this help a business to bring some innovative ideas.
• Technological: Almost every industry has adopted digital technologies, and as burger king used technologies efficiently, this added value to their products and increased sales.
• Legal: Burger king follows import and export sanctions and followed the rules of different countries.
• Environmental: climate change has concerned people around the world to look after their health and the condition of the environment.

Burger Kings porter’s five analysis of the threats of new entrants is considerable and it helped the company to understand the competitive advantages and simplifies their strategies to implement in their business. The components are competitive rivalry, power of supply, power of buyers, threats of new entrants, and threats of new substitutes. These are discussed below:

• Competetive rivalry: The quick service of the restaurant market has become the most saturated part, in terms of products, it strongly affected Burger King’s sustainability.
• Power of supply: Burger King has low cost and a moderate percentage of consumer satisfaction. This helped them to stay ahead of others.
• Power of buyers: consumers significantly affect the revenue structure of Burger King. It influences the empowerment of a consumer.
• Threats of new entrants: these can disrupt the performance of Burger King and enrolls sustainability in another way.
• Threats of new substitutes: this technically competes against Burger King’s products and determines the influence of external factors.

After both of analyses, it is clear that Porter’s five forces framework is the best way to understand the company’s competitive edge and analyze the strategy (Alon, I. and Banai, M, 2017).

Theory and Analysis:

Porter's Five Forces Model helps to execute the company their operations and strategy to compete the rivalry. This framework is applied to identify the economic state of a company. It contains five components, which are competing in the industry, threats of new entrants, power of supplies, power of customers, and last, is threats of substitutes (Caballero-Morales, and S.O., 2021)

• Competitive Rivalry/ Competition in the industry: In every sector, there is a significant scope to have competitors who can be an obstacle to organizational growth. In the case of McDonald’s, the supreme competitors are Subway, KFC, Burger King, Starbucks, etc. This organization has competed with all these well-known companies over years. Although Mcdonald’s is a leading company, it has expertise in the global food market. Burger King is the biggest rival of this organization. The significant grilled burger of burger king has degraded the iconic item of the company which is their fried chicken burger. McD has taken a larger place all across the world. Despite this also KFC is trying to backhead the food company, so they will be able to take the position in the industry. McD's pricing is higher than Burger King which helped raise the company's business. This gives the company a competitive advantage (E Soliman, 2022.).
• Threats of New Entrants: competitors can easily enter the industry, compete with existing firms, and take market share. There is a reduced profit potential as more competitors are in the industry. Threats of a new entrant mean the company is going to have a possible rival who will outcome its popularity and influence among consumers. The new generation is now coming up with various innovative ideas, in the case of the food industry the innovative variable product attracts customers the most. The main element is low cost, if a company provides new yet high-quality food at an affordable range it will gather buyers and make a profit (Cook, 2022). McD has a high pricing list of products. On the other hand, Burger King offers affordable charges which can benefit the lower economic consumers. New entrants can consolidate the outdated food structure as the young generation wants a different food structure(Izquierdo-Yusta, 2019).
• Power of Supplies: It has the power to influence price, as well as the availability of resources. These components are most overpowering when companies are dependent on them and cannot switch to other suppliers because of higher costs or a lack of alternative sources. They influence an organization in terms of the capability to produce products and the availability of products. This power of suppliers is based on three factors: a large number of suppliers, low integration, and a supply chain. The large population of the world and the popularity among them helped McD to affect their power of supply. This became a weakness of the company. There is a lack of a strong regional supply of food and beverages in the global stores. In this analysis, the low integration makes it weak. This reduces the reductive rate of supply of meats and other products in the outlets.
• Power of buyers: Consumers have the capability to influence the price and the amount of revenue. Powerful buyers can bargain on volume or switching costs or they can find substitute products. Price sensitivity also impacts the buyer/seller relationship. McD has a great fan following among the customers. Though there are two types of customers, one is who looks forward to getting affordable products and another one who does not compromise the quality and never thinks about the pricing. The company has the majority of type two consumers who never compromise the quality of services. These consumers are the backbone of the company. Also, the tendency of customers to change to new restaurants influences the business performance of McDonald’s. Because of the market saturation, consumers can choose other fast food chains other than McD which will be more interesting.
• Threats of Substitutes: Nowadays there are so many food outlets introduced in the market. Companies are concerned that substitute products or services can take the place their own. The threat of substitution is high when rivals, or companies outside the industry, offer more attractive and/or lower-cost products. Substitutes are a vital concern about McD as there are so many burger-selling fast food companies available in the industry. Also apart from food chains, there is a possibility to change McD with packaged food. This is a big threat to the company. In this era people want to have easy access to food, in that case, packaged food is their big threat.

As a result, the organization has emerged a lot of challenges and overcome them within a certain period. Although Burger king has tried to take over the market value of McD. But failed due to the product quality and diversity of the organization. Mcdonald’s has faced many issues while supplying products on their food corners. Despite this, it has many substitute products that can backlog the company but McD has become trustworthy for its service over the years and consistent food quality. McD has innovated many new things which complement the food taste of different regions. McD has commenced its business globally and gone against all the obstacles. As a food chain, it has a great influence on consumers.

The efficiency of McDonald’s:

The business strategy of McDonald’s enhances a unique combination that includes international market expansion and cost leadership. They open new franchises all over the world and enter the market very often. This extension helps McD to have a great business strategy. This food chain owns the largest number of properties in the world, so this made McD the giant fast-food company. Their major source of finance comes from leasing the property. This helps to evaluate their business and invest more than others. This strategy makes McD sustainable(Frueh, et al, 2014). Apart from this, product and service quality standardizes the efficiency of the organization. The organization takes efforts to provide products as per the local preferences and they implement the local choice of flavors in their products, as example in India, they include various Indian iconic combinations in their food items like Mac Aloo Tikki, etc. This versatility of taste to a great extent represents the base of McD. The consistency of taste and quality helped the food chain to gain customer loyalty and become trustworthy. The main competitive advantage of McD is its cheap price. The organization keeps engaging its extensive utilization as a strategy to catch every consumer from different economies. The meaning of ‘Fast Food’ has been explained by McD appropriately as it always serves customers food within a very short time. Another reason for McD’s success is its execution. The employees create an impact on customers through their services. This fast-food chain has been managing its kitchen and types of equipment with efficiency which improves the energy of services. McD's process and capacity structure is cantered on the effectiveness of cost minimization and operation management. It has been seen in the history of McD that they have a blend of four factors in operation management which allows them to rise in their competitive edge. The four management functions are - planning, organizing, leading, and controlling. They train their employees and leave them to train themselves passively(Pan, et al, 2019). This strategy helped them a lot in employee productivity. Their business model is about leveraging its products like fast food, beverages, drinks, etc. They franchise to people who need properties to lead. McD has unique scientific management that provides a bonus system to encourage employees for their good performance.

Recommendation

After the Five porters Analysis, McDonald’s should need to improve their strategy in some cases. They should prioritize the strategic issues regarding consumers, competition, and substitutes. This will create a strong force on the food chain which will emphasize the external environment. The threats are significant to the organization’s food service efficiency. McD needs to focus on the service which implies their service at each step while the customer is ordering. Another way to enhance sustainability is to train the employees and assure high-quality service to their customers(Hite, 2022). It should add an integrated professional mix that contains a combination of modern and traditional strategies for Brand promotions. McD must recognize the importance of media and its influence on people. This can help them to gather more customers from different regions and countries. The digital advertisement took a vast area in the industry of promotions. Also, they can avail the opportunity of customer satisfaction by adding product and services which are on demand and easy home delivery through various apps and also by themselves. This will help to attract the customers and it will affect the revenue as well. Also, McD should use the strategy of adding healthier things and follow the newer diet trends. Like Subway, they claim their food to be healthy and diet friendly. This is great opportunity to attract the attention of customers who are fond of eating healthy products (Wajid, 2021).

Conclusion:

As conclusion of this report, it is clear that strategic analysis clarifies a revoloution of an organization’s work environment. This model is the major factor to define its organization. It helps to find goals and construct s structure. McD can implement the new technologies and avail their competitive advantage. In a nutshell, McD has huge popularity among consumers and can improve their strategies by analysing. The porter analysis helped to fine the lags of company (Nabilah, et al, 2022). Strategic Managements plays a important role in an organization. It causes many developments in a company. In the food market this is really important to have a management strategy.

References:

Caballero-Morales, S.O., 2021. Innovation as recovery strategy for SMEs in emerging economies during the COVID-19 pandemic. Research in international business and finance, 57, p.101396.

Jelonek, D., Tien, N.H., Dao, M.T.H. and Minh, D.T., 2022. Comparative analysis of business strategy of Vietnamese real estate developers: the use of Hoffer matrix. International journal of multidisciplinary research and growth evaluation, 3(1), pp.197-204.

Pan, W., Chen, L. and Zhan, W., 2019. PESTEL analysis of construction productivity enhancement strategies: A case study of three economies. Journal of Management in Engineering, 35(1), p.05018013.

Wajid, M.A. and Zafar, A., 2021. Pestel analysis to identify key barriers to smart cities development in india. Neutrosophic Sets and Systems, 42, pp.39-48.

Langert, B., 2019. The battle to do good: Inside McDonald’s sustainability journey. Emerald Group Publishing.

Boyar, L.B. and Davis-Friday, P., 2019. Assessing a golden opportunity: CEO performance at McDonald’s. The CASE Journal.

E Soliman, M., 2022. Why franchising is a smart business model: a comprehensive review. ScienceOpen Preprints.

Hite, L.M. and McDonald, K.S., 2020. Careers after COVID-19: Challenges and changes. Human Resource Development International, 23(4), pp.427-437.

Cook, M., Lischer-Katz, Z., Hall, N., Hardesty, J., Johnson, J., McDonald, R. and Carlisle, T., 2019. Challenges and strategies for educational virtual reality. Information Technology and Libraries, 38(4), pp.25-48.

Izquierdo-Yusta, A., Gómez-Cantó, C.M., Pelegrin-Borondo, J. and Martínez-Ruiz, M.P., 2018. Consumers’ behaviour in fast-food restaurants: a food value perspective from Spain. British Food Journal.

Lee, M.A., Kunkel, T., Funk, D.C., Karg, A. and McDonald, H., 2020. Built to last: Relationship quality management for season ticket holders. European Sport Management Quarterly, 20(3), pp.364-384.

Alon, I. and Banai, M., 2017. Executive insights: franchising opportunities and threats in Russia. Journal of international marketing, 8(3), pp.104-119.

Frueh, B.R., Musch, D.C. and McDonald, H.M., 2004. Efficacy and efficiency of a small-incision, minimal dissection procedure versus a traditional approach for correcting aponeurotic ptosis. Ophthalmology, 111(12), pp.2158-2163.

Nabilah, N.A., Atiqah, N.A., Najwa, N.A., Zulaika, N.A. and Kasih, J., 2022. Consumers’ Satisfaction Toward McDonald’s during Covid-19 Pandemic in Malaysia. International Journal of Tourism and Hospitality in Asia Pacific (IJTHAP), 5(2), pp.51-64.

Singireddy, M., 2020. Mcdonald's: Global Marketing. International Journal of Health and Economic Development, 6(2), pp.16-27.