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SWOT Petry Analysis McDonald's
Company Overview The McDonald`s Corporation was born from brothers Richard and Maurice McDonald from a single drive-in restaurant in San Bernardino , California in 1948 to the largest food service organization in the world. By 1991 McDonald`s owned $13 billion of fast-food industry, operating 12,400 restaurants in 59 countries (Ezine). Currently it is the number one food service retailer in the world with over 30 ,000 restaurants in 119 countries; it serves over 47 million customers daily. In the past 52 week period, McDonald`s stock value has risen from 43.74 up to 63.69, showing that even today McDonald`s continues to flourish and be successful (Yahoo Finance) . The company's mission is to leverage the unique talents, strengths, and assets of our diversity in order to be the world's best quick-service restaurant experience (McDonalds.com, 2008). SWOT Analysis - Strengths, Weaknesses, Opportunities, Threats of the McDonald`s Corporation Strengths Brand equity- positive associations created through the yellow arches. Ever since we are young children we are taught to love McDonald`s, with their happy meals,
Petry 2 playscapes, and hamburgers. Marketing techniques used with childhood customers stay with the person as McDonald`s keeps these same customers when they grow into adults--stay successful as a business. Currently maintains 42% of US Hamburger business- Burgers are so popular that McDonald`s is a household name, people all over the world see the commercials, hear the signature song, and see McDonald`s restaurants everywhere-this domination of the hamburger business gives McDonald`s a huge advantage over the rest of the market . (McSpotlight Press) Consistency of food/Fast service every time you go into McDonald`s you know what you`re going to get, when you`re going to get it; your expectations will always be fulfilled. Since the entire menu is generalized and mass produced, every restaurant will make meals the same way. Successful "brand name" items- for example: Fries, Happy Meal, Big Mac, Egg McMuffin- these items are well-known and McDonald`s utilizes them in their marketing techniques. These meals are ingrained into the consumers mind--gives McDonald`s a big advantage because once these meals are integrated into one`s routine/diet McDonald`s has gained a loyal consumer over competitors (such as Burger King or Wendy`s). Promotions- McDonald`s Monopoly game, giveaways, birthday parties, etc. all attract more consumers to the restaurant . Give customers yet another reason to come to the restaurant--increases sales even more. Spread market overseas- international success has made McDonald`s a famous brand name all over the world. Everyone knows what McDonald`s is, recognizes the golden arches and has consumed the food- the worldwide spread of the restaurant has greatly influenced financial success. Balance Sheet Success- financial assets continue to rise each year as McDonald`s only continues to grow as a thriving company all over the world . Yahoo Finance shows all kinds of statistics and figures of the McDonald`s corporation over the years; one of the most telling facts to their continuing success is that their gross profit has doubled from 2005 2007: from $6,324,200 to $12,967,600.
Weaknesses Quality and taste of products- Anyone who`s ever had a real burger made on the grill can taste the artificial processed materials McDonald`s utilizes in their foods . Overexposure- consumers get to a point when they get tired of the same old thing . Since McDonald`s establishments are so greatly populated, consumers have started to move to more healthier, better tasting brands for their take out fix (such as Quiznos, Cosi, Subway). Target audience- their ideas of focusing on kids through their advertisements may work for a little while, but eventually these same kids will grow into health conscious adults and abandon the McDonald`s diet.
Petry 3 Health risks/Consumer Intelligence- media such as the movie Supersize Me` and the book Fast Food Nation` have shown the general public the great health risks and what will happen to those that consume food from McDonald`s on a regular basis as consumer intelligence rises, less people will buy their food. Low customer service ranking- customer service is the lowest among all fast food chains- McDonald`s does not treat their employees/individual franchises well. (Ezine) Restaurant quality has decreased- stores have gradually become more run-down, messy, unorganized, dirty- sends a negative message towards consumers. (McSpotlight Press) Order accuracy is low- in comparison to other chain fast food restaurants McDonald`s is one of the lowest , which lowers consumer satisfaction (Ezine) . Opportunities International expansion- if McDonald`s can continue their move overseas and gain popularity in other nations they can guarantee more financial success. Currently they are situated in 119 countries- 31 new countries in the past 3 years. (McSpotlight Press) Only serving 1% of the world's population- much more room for expansion- if they can appeal to a percentage higher of the population and continue their world wide spread they will have a positive future. (McSpotlight Press) Growing dining-out market- society has caused family lives to become more hectic/crazy--makes it more convenient/easy to eat out at a fast food restaurant . McDonald`s fast service is a huge plus for busy families always on the road. Low-cost menu- opportunity to attract different customers: people with low-incomes, teenagers, college students. Retail merchandise- could potentially be used to increase company revenue- for example could institute the production of more McDonald`s based toys for children. Threats Mature industry- the fast food industry has been around for so long that it`s hard to find new ways to stay ahead and make positive changes to be successful. Strength of competition- starts price wars, increased product innovations, marketing techniques from other companies trying to gain any edge they can on McDonald`s- if they want to stay successful and at the top of the market they must fight them off and keep coming up with new improvements. More health-conscious consumers- citizens become more concerned with staying healthy and fit as well as avoiding the obesity epidemic. These consumers are demanding food with better quality, healthier items on the menu. Changing demographics- McDonald`s will have to deal with the struggle of losing much of their previously thriving demographics- adults as well as younger people will understand how dreadful and appalling McDonald`s food is for their health, McDonald`s will have to respond to this.
Petry 4 All fast-food chains expected to struggle to meet new consumer health expectations- the difficulty of making cheap food healthy and nutritious is going to be an extremely hard task as consumers demand healthier food- all fast food companies will most likely suffer from this. McDonald's Competitive Advantage In order to gain any sort of competitive advantage over businesses in the same market , a company must find some sort of differentiation to exploit--McDonald`s is no different . They have focused their marketing advantage on good food with fast service as well as their willingness to change and innovate. An example of this can be found with the implementation of Chicken McNuggets. At first, people were not thrilled with the idea to eat meat with their hands but McDonald`s responded by added BBQ sauce for dipping , which caused McNuggets to explode onto the scene. McDonald`s successful name brand recognition has spread all over the world, and with their competitive advantage, and marketing campaigns dominating over competing companies they look to stay at the top of the fast food business for the foreseeable future.
3 Actions that McDonald's should take to be successful in the future: 1. Implement new healthier food options into their menus. It`s obvious they are already trying this to some extent with offerings of milk, fruits, and salads, but they most do more to continue to flourish. In order to stay above the negative press about the health risks (Supersize Me, etc), McDonald`s must bounce back by altering their menu in a positive, health-conscious way--dramatically change their food choices.
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2. Refurnish restaurant franchises by changing the entire look of what the inside of a McDonald`s looks like. Instead of the old fashioned tiles and outdated tables and chairs McDonald`s should employ a more contemporary new-age` look. By doing this they will change the way consumers think of McDonald`s as just a fast-food joint, instead sending them the message that it is instead a higher-scale restaurant. By simply changing the physical surroundings inside McDonalds (as well as adding a few TVs and modern amenities), the restaurant will appeal to many more people who have been overexposed to the same old thing,` as well as giving them more excitement/enthusiasm to come and eat at McDonald`s.
3. McDonald`s should work more to expand beyond its namesake franchise . As a company they should take advantage of the name brand recognition associated with the McDonald`s brand and create other brands producing new, dynamic types of food. By moving into adjacent markets McDonald`s can use their current success to their advantage by starting to become involved in diverse food markets, which will only increase revenue in the long run.
Bibliography
Petry 6 -"About McDonald's ". McDonald's Corporation. March 18th, 2008 <http://www.mcdonalds.com/corp/about.html>. -"New York Stock Exchange: Listed Company Directory - McDonald's Corporation". New York Stock Exchange. March 18th, 2008 <http://www.nyse.com/about/listed/mcd. html>. - "McDonald's Corp. (MCD)". Yahoo Finance. March 18th, 2008 <http://finance. yahoo.com/q?s=mcd>. - McDonald`s Business Analysis. Ezine Articles Online. March 18th, 2008 <http://ezinearticles.com/?McDonalds-Business-Analysis&id=687438> -Fascinating McFacts about McDonald`s International. McSpotlight. March 18th, 2008 <http://www.mcspotlight.org/media/press/prnews_9dec96.html>