Strategic Management at McDonalds - Case Study Example

General Environmental Analysis This analysis looks into the external factors and helps to understand the manner in which the working style of McDonalds gets affected due to it. This also takes into consideration the demographics, innovation and environment which will help to understand the impact it is creating on the business of McDonalds. The analysis is Political Factors McDonalds has been influenced by political factors and have an important role in determining the manner the company will perform. Being able to tackle the political factors in the best possible manner ensures that the business will be able to grow. This can be seen in the case of Europe & United States where certain act of the government raised concern regarding the medical value of fast food. The harmful substance like cholesterol created a negative influence which was tacked by brining in innovation and ensuring that the product has low cholesterol and is more fir for consumption. The pressure from political front can also be seen in India where the government had to stop the sell of burgers from McDonalds due to the fact that it contained animal fats which were against religious customs. McDonalds through innovation and development made the changes and ensured that the political influence reduced to a large extent (Chrisan, 2001) Economic Factors McDonalds working gets influenced by the economic situation of the country as inflation and exchange rate has an effect on the business of McDonalds especially in international transaction. This results in creating a ripple effect and the effect of recession or inflation gets reflected in the domestic markets making it difficult for McDonalds to conduct their business smoothly. The fact that McDonalds look towards targeting the younger generation so an effect on exchange rate or inflation or recession has an effect on the number of customers visiting their outlet which has an effect on their overall business (McLaney, 2003). Socio-Cultural Factors McDonalds is aimed at the younger generation and the targeted audience for the company is thereby people who are young. This has made McDonalds look towards a lot of customers from different section of the society but having something in common which is the urge to eat n McDonalds. This has thereby given shape to the socio-cultural environment and has enabled McDonalds to be able to create a market for itself. Through this methodology McDonalds has also been able to understand the consumer behavior and requirements in this regard and has been able to work on the smaller aspects which has permitted McDonalds to revolve their business. This has acted as a good system in determining the customer requirements which has thereby enabled McDonalds to function smoothly (Berkman & Gilson, 2001) Technological Factors McDonalds has used technology to attract people especially the younger generation towards their product and outlet. The company has used technological advancements in ensuring that certain gifts like toys are provided in their product which has differentiated them and enabled them to show the validity of using technology and matching them with the business requirements. McDonalds further has used technology in maintaining their stock and developing their value chain so that they are able to use technology and ensure easy availability of the products at the correct time. This has further helped McDonalds to be able to ensure that they have the required inventories and using innovation along with it has enabled McDonalds to ensure that the best method present in the system is used. This has thereby enabled McDonalds to be able to deal with technology in the best possible manner (Firoziyan, Hasangoli & Stiri, 2009) Legal Factors McDonalds is facing a huge challenge in this direction as increasing concern towards obesity and cholesterol served in fast food has raised legal concerns. This has also affected the brand name of McDonalds to a large extent and has made them look towards finding ways through which McDonalds will be able to deal with it (Schlosser, 2001). The importance of legal consideration can be seen from all directions and McDonalds has to look into it and deal with it effectively so that they are able to continue with their operations in the most fruitful manner Environmental Factors McDonalds has shown concern towards the environment by ensuring that they are able to contribute towards the society. This has made McDonalds look toards using products which are recyclable. This has thereby reduced the impact of environment risk on the business as McDonalds have been able to identify the different areas which will increase their concern towards the environment. McDonalds also has ensured that their products can be reused as by developing a method through which the concern for the society is developed will help to deal with the impact that the factors have on the environment. McDonalds thereby has looked towards understanding the external factors and based on it has developed a mechanism through which they will be able to work on the required areas that will help them to improve their business for the future. SWOT Analysis The SWOT analysis will throw light on the manner the internal and external factors that can be used by McDonalds to ensure the different areas which they can work on. This will work on the strengths, weakness, opportunities, and threats that McDonalds that will help them to improve their business and will thereby ensure that the business is able to gain efficiency for future developments in the future. The analysis is as Strengths McDonalds has a strong presence in the market and has almost double the share than its nearest competitors. This has helped McDonalds to ensure a strong presence in both the global and local market which has helped them to penetrate the market and capture a larger chunk of the market. Having a huge size as seen by the market share has enabled McDonalds to gain economies of scale as having a huge size has enabled the business to reduce cost at the same time reduce the risk that the business faces. This has helped McDonalds to take advantage of the long term potential growth opportunity that the market provides and has helped McDonalds to build their brand name (Ismailpour & Ghafarieashtiyani, 2002) McDonalds has a strong portfolio of estates as having outlets at most locations to ensure increase visibility and traffic handling has helped McDonalds to have huge assets. This has helped McDonalds to develop a strong brand recognition which has ensured increase sale and has increased the outlets for McDonalds every year. This has added positively towards their sale volume and contributed immensely towards the long term potential of the company (Corsini, 2009) McDonalds has adopted a policy where they look towards aggressive marketing policy. This has helped the company develop products for their targeted segment and has also ensured that more and more youth is captured towards their product. McDonalds through their strategy has been able to evolve the market and has developed the market for their long term future potential of the company Weakness McDonalds faces a problem from the food industry as the market is highly saturated. This has multiplied the difficulty level for McDonalds as being able to ensure high rate of development when the market has different players is a problem which McDonalds has to deal with. In addition to it the market is expected to grow as 2% and the degree of competition and saturation seen in the food market complicates the situation for McDonalds (Daniel, Charls & Joseph, 2003) McDonalds also faces competition with regard to the pricing issues. Competitors in the industry look towards providing the same products at a cheaper rate which has made McDonalds follow the same strategy. This has affected their business as some section of the society feel that the quality of food has been compromised to ensure lower price. The risk from this has been marginalized to some degree by having a variety of items with different ingredients in their menu but is largely limited. This has thereby made it difficult for McDonalds to be able to charge a higher price for their product McDonalds faces another problem with regard to development of new products so that their product line improves. McDonalds still looks to follow the old age traditional menu which gives customers a limited option. This has thereby made certain section shift to other products. The inability to add new products has thereby affected their future strategies and decision making Opportunities McDonalds should look towards making changes in their menu by adding new products based on customers taste and preference. McDonalds need to lay stress towards identifying the different products which the customers want and have to add those in their menu. This will help McDonalds to be able to provide something to every section of the society and will help to increase the customer base of the company McDonalds can look towards increasing their business by identifying more domestic and global destinations which provides an opportunity to cater to a larger section of the society. This will help to improve the presence of McDonalds and by having outlets at places where there is no presence will ensure that McDonalds is able to increase their brand recognition. This will also help McDonalds to be able to achieve more penetration and reduce the risk of the business as by having stores at different locations will help to deal with the environmental effects in a better manner McDonalds have an opportunity to provide something extra to the customers visiting their outlets. This will act as a differentiation strategy as being able to ensure that the company is able to provide facilities like internet access, privilege cards will ensure that McDonalds is able to differentiate their services. This will provide an opportunity for McDonalds to create a niche market through which they will be able to build their brand and ensure a better customer base Threats McDonalds faces a threat of global economic recession as having outlets at different locations increases the likelihood of the recessionary effects being witnessed in international countries to the domestic ones. In addition to it McDonalds has to deal with the risk that is associated with fluctuations in the currency rate which is a major threat that McDonalds faces McDonalds faces threats from increasing cost and reducing profit margins as the food industry is becoming saturated. This has made McDonalds to adopt towards increased promotional campaign which has reduced the profits margin and has increased the risk on falling into a liquidity trap. McDonalds has looked towards making some changes in the menu but the food industry is also doing the same which has increased the risk for the business (Awni, 2008) McDonalds faces another threat from the bad impression that the industry is witnessing due to rise in the obesity. Obesity is one of the major considerations for McDonalds as increase concern both on the government and personal level has multiplied the risk for McDonalds. This is being followed by increasing disease due to obesity which has raised concerns in every direction and has made people look at different factors and objectives while looking towards having food with higher oil and fats (Hawkins, Best & Coney, 2006). McDonalds thereby has identified the different areas which when worked on will help to improve their future performance and will shape their work culture to match the different requirements through which McDonalds will be able to work on the opportunities that the marker presents. Refernces Awni, R. (2008). Strategic position indicating. Translated by SeyedAmir Poya seyfzadeh, Management Selected Monthly, no.78, p.70. Berkman, H. & Gilson, C. (2001). Consumer Behavior Concepts and Strategies, Kent, Boston Chrisan, P. (2001). Marketing: A Behavioral Analysis, McGraw – Hill. New York Corsini, R. (2009). The Dictionary of Psychology. Philadelphia: Brunner/Mazel, pp.19. Daniel, C., Charls, L. & Joseph H. (2003). Marketing, 5th edition, south-western. New York. Firoziyan, M., Hasangoli, T. & Stiri, M. (2009). Investigation of the effectiveness of the services on different processes affecting consumer decision. Commercial Management Magazine, 1 (3), pp.125-146. Hawkins, D., Best, R. & Coney, K. (2006). Consumer behavior, compilation of the marketing strategy, Translated by Ahmad Roosta & Atiyeh Botahi, Sargol publication, Tehran. Ismailpour, H. & Ghafarieashtiyani, P. (2002). Marketing, 3rd edition, Auniversity of Tasmania, Australia McLaney, E. (2003). Business Finance, Theory and Practice – 6th Edition. Pearson Education Limited Schlosser, E. (2001). Fast Food Nation. New York, USA: Mifflin Company. Read More