Strategic ManagementIntroduction Strategic analysis is one of the most important processes of strategic management. The reason many strategies fail is because many managers want to formulate and implement strategies without carefully analysing the overarching goals as well as the internal and external environments. Quoting professor Les Worall of the Wolverhampton Business School, Downey (2007) describes strategic analysis as “a theoretically informed understanding of the environment in which an organization is operating, together with an understanding of the organization’s interaction with its environment in order to improve organizational efficiency and effectiveness” (p.
3). Lessard (2003) says that in a global setting, strategic analysis “involves competition in industries that extend across national boundaries and among firms with different national home bases that may tap into strategic resources in more than one location” (p. 1). This is paper gives an evaluation of McDonald’s marketing strategy using the PEST analysis and Porter’s five forces analysis. Several reasons led to carrying out this analysis on McDonald’s. First, its international presence; McDonald’s is one of the world’s largest fast-food chains in the world. There are over 20,000 McDonald’s restaurants in over 100 countries around the world (Vignali 2001).
Secondly, the Company faces increasing competition and lack of strategies to match with the changing customer needs. Although McDonald’s have become synonymous with globalization stereotype, Dumitrescu and Vinerean (2010) say that globalization has lost its hold since customers have stopped feeling the connection with the generic products and communications. Thirdly, Current eating trends skew towards eating healthy habits which pose a serious challenge to McDonald’s since it is a fast food company. Fourthly, it faces a major challenge because it offers the American traditional foods while facing competition from local restaurants that offer the country’s local dishes, for instance, in Europe McDonald’s have had to change from their fast food roots in order to gain competitiveness with companies like Starbucks.
They offer healthier meals and offer more upscale and comfortable restaurant space. In his opinion piece “McDonald’s International strategy: squander brand equity? ”, Sundar Ganapaty argues that, McDonald’s changing its strategy “not only dilutes the brand equity by adapting to local tastes, but it also McDonald’s even further away from its core competency as a fast food” (online).
While this is a contentious view, it holds some indications that McDonald’s need constant strategic analysis in order to remain viable. Another reason for settling on McDonald’s is the outcome of the analysis. Strategic analysis of McDonald’s will help it to be more sustainable, it will also help it to be more resilient since it will be able to anticipate the risks in the future and respond proactively. As a result of their familiarization with cutting edge practices, McDonald’s will be able to become more innovative and come up with new solutions to emerging problems.
Most importantly, the organization will be able to remain relevant. This is because strategic analysis aids in knowing the needs, preferences and expectations of their customers.