Name: Athitaya Nuchkamnerd
Student number: D17129513
Lecture’s name: Maebh Coleman
Module: Business and entrepreneurship
Submission date: 2018/10/31
The purpose of this paper is to focus on the internal and external environment of the company and to analyze the performance of the company based at the company and product level. The chosen company for this assignment is McDonald.
McDonalds is one of the most famous names in the world of fast food. McDonald’s brand is one of the ten most popular brands worldwide in all industries. It is a global brand operating in almost every country in the world, founded in 1940 by the two brothers, Dick and Mac MacDonald opened the first McDonald’s restaurant in San Bernardino, California. Initially, they owned a hotdog stand but later on serving 25 items, which were mostly barbequed. In 1948, the brothers closed and then reopened the restaurant to sell only hamburgers, milkshakes and French fries and established as McDonald’s corporation in 1955, after the ownership of the company changed hands, McDonalds went on to conquer the world expanding into every major market. The rise of McDonalds is well documented in the film ‘The Founder’ which depicts the hostile takeover and how McDonalds went on to own the land that each restaurant was founded on. It is the largest chain of fast food restaurants in the world by a long way. The company logo is McDonald’s with a big yellow “M” and its mascot is the infamous Ronald McDonald. There were more than 6,000 domestic branches by the early 80’s and this growth continued. McDonald’s first venture overseas was to Canada In 1967. By 1985, its total abroad sales accounted for about 20 percent of its domestic business. More than 18 million visit McDonald’s on a daily basis in more than 40 countries. Nowadays, McDonald’s has more than 3,4000 locations worldwide with an annual revenue of 27.56 billion US dollars.
The paper provides key findings based on the company level and product level analysis by pestle analysis, core competencies, s-curve and SWOT analysis.
McDonald’s line product
Burgers ; Sandwiches
Snacks ; Sides
Desserts ; Shakes
Salads Key findings on company level analysis
On the basis of company level analysis of McDonald’s. The PESTLE Analysis shows that McDonald is a highly preferred fast food outlet McDonald has a great advertising and marketing strategy and has large budgets to advance its operations. McDonalds is a household name that keeps innovating with its products and marketing strategies. Political instability of local state’s affects McDonald’s business and it also comes under examination from different parties, countries, governments and pressure groups. Issues like the stability of political environment, government policy on the economy, trading agreements, public behavior and government attempts to influence market structure have to be constantly scanned and analyzed (Worthington & Britton, 2006). This is going to be the case for such a large company that operates in every country where political and cultural differences are present. Economic factors which impact on McDonalds include international, national, and local conditions due to it being a global brand (McDonalds 2018). Falling sales can also be attributable to changing tastes and increased competition in the industry. The changing of consumers can impact on McDonalds in terms of their sales because in these days people focus on health and concerns regarding obesity. Changing demographics ensure that McDonalds needs to meet changing demands such as the health and the price conscious nature of its millennial customer base consistently. In order to sustain demand and to increase its sales, McDonalds constantly adapts their menu choices to include low fat and healthy options (McDonalds 2018). McDonalds has needed to provide healthier choices for all of its customers, and particularly children. The health effects of McDonalds were brought to life in the shocking documentary ‘Supersize Me’ where the star subjected themselves to eating only McDonalds every day for a month and the health effects were severe. This led to change for McDonalds. Also technology can assist McDonalds in strengthening its brand by providing different channels for ordering by customers, such as in-store self service and collection or online ordering (McDonalds 2018) and even through smart phones. Online ordering can enable organizations to gather data on customers and undertake personalized marketing through promotions while providing ease of access. Some of the environmental issues being faced are in food production and this includes issues such as deforestation, water levels and food miles where Mcdonalds have taken an active role. One of the ways in which McDonalds addresses this is to phasing out polystyrene in favor of paper-based packaging, which breaks down into organic ingredients much more quickly in the environment.
Key findings on product level analysis
The company is providing various ranges of fast food products to its diverse customer base. The main product that McDonalds sells is burger but it is constantly expanding its product range to include Chicken, fish and Vegan options. McDonalds has a large range of breakfast items and is a strong player in the morning coffee market in many industries taking market share from many competitors. McDonald’s has expanded internationally. Features several products on their menu that are permanent and do not change, but “Burger” is not a culture in many countries. From this situation McDonald’s regularly develops innovative new products to suit each particular region. McDonald’s developed a product and created several products to meet consumer demand in the local markets and is advertising vegetarian value priced meals in markets like India to attract more customers and to give customers something new to experience. In China McDonald’s has most certainly had a profound effect. When the first McDonalds opened in Beijing tens of thousands of people lined up to observe a Big Mac and get their picture taken with the infamous Ronald McDonald. In addition to developing new products for local markets, this strategy makes that local customers have foods to fit their tastes.
According to the SWOT analysis of McDonald. The most important thing of a global brand is brand image and brand equity. McDonalds is famous brand as the leading fast food brand of the world. Another important thing of McDonalds is global presence. McDonald’s make a strong focus on customer service. It helps at attracting a new customer as well as retaining old customers. Aside from gentle staff, the brand also uses a variety of technologies to serve and engage customers. Moreover, the restaurants sell a variety of other products during limited-time promotions. (Annual report, 2017)
On the other hand, The McDonalds system is the giant franchisee based which can lead to issues with franchisees on occasion. Such a large system being heavily dependent on franchisees, sometime a quality control becomes difficult and this is offset with the use of systems and process. On these day consumers around the world are trying to eat a healthy food and diet with fruit and organic products as possible.
Conclusion and Recommendation
To conclude, McDonald’s is still a leading company in the fast food industry since they are well prepared for what is going to happen in the future. No matter how hard the obstacles they might have to face, is strongly believed that MacDonald’s will still be the world famous fast food chain in the world, furthermore, their menus also offer customers a handy package, as well as, the concept of quick and easy, which is believed to be their strong points. The companies are also looking for healthier practice of food, hence, it provides those who want to consume fast food, but at the same time, want to stay in a good shape a variety of add-on vegetables and salads; makes the food appears to be healthier. Nonetheless, the ability of coping with economic difficulties of the company is considered to be very well-prepared. Macdonald’s is now heading towards the healthy trend of eating habit and to be number one fast food restaurant in the market.
AppendixAppendix 1: Company level analysisPestle analysisPestle analysis of McDonald.
Political factors: Economic factors: Social factors:
Important Political factors have kept growing in importance for McDonalds. The government oversight and regulation of businesses has grown around the world. The business operation is always influenced by the policies of state and government. There are also high to economic factors and an unstable political environment can cause business and supply chain disruption. In the way, political factors can affect business profitability.
Business of McDonald is under the control of government’s rules and regulations. Political instability of local state is also affects McDonald’s business. However, the current relations between the United States and Russia may threaten their business ability to function and turn a profit in the Russian Federation. Economic always come as important thing to business organizations and a direct effect on the sales and profitability of businesses. During the time of low economic activity, employment level falls as well. All companies are affected by ongoing global economic slowdown. Due to international business operation, McDonald’s faces different scales of tax and revenue quantification in many countries. McDonald’s also faces misery because of international currency swing especially in global food distribution.
This, in turn, leads to lower consumer spending because of lower disposable income. Such situations can affect restaurant businesses, decreases sales and profitability. The US restaurant industry has seen every fast growth once the recession passed. As the US economy retrained in track, it led to higher employment and higher spending by consumers. This has proved to be good for all big and small restaurant brands, operating in the US market including McDonalds In this time social factors have also kept growing in relevance The life style of people is changing and the demand of this change affects McDonald’s and have an effect on sales performance, moreover, this changing demand is different in society to society and country to country. For example, Vegetarian prefer vegetables, Muslim, they don’t eat pork but people in western countries such as the United States they may enjoy hamburgers and French fries, people in Asian countries, for example, they prefer rice. A few years back, McDonald’s promoted a burger made from rice instead a bun in China; it is now promoting rice for dinner in that nation. To fulfill the customers’ expectation, McDonald’s needs to research the market and also needs to provide effective food menu. Sociocultural factors get more important role in both for the context of marketing and in business strategy.
Technological factors : Environmental factors : Legal Factors :
Technology is heavily important for businesses. The impact of technological innovation is also considerable to meet the customers’ expectation. McDonald’s has to ensure the all technological access to influence the customers. Modern and speedy distribution channels, easy and quick payment facility, customer entertaining in-store equipment, wireless internet facility in all stores etc. can help McDonald’s to keep on its success. fact, high technology helps organizations improve their management and productivity, while reducing a waste of time and resources. Also can help with scheduling, forecasting sales, ordering and foot traffic, and easy for customer to pay for food. Technology can also easy to use, cheap advertising on the Internet, providing Wi-Fi and even computer devices to fulfill the needs of customer. Environmental factors have become very important and a big problem in the business industry given that societies and governments are higher conscious of the environmental effect for businesses. . Environmentalists criticize McDonald’s because of food packaging based on polystyrene it was using for sandwiches. McDonald’s responded to criticism by use a few polystyrene in favor of paper-based packaging, which breaks down into organic ingredients much more quickly in the environment. . Legal complying is very important to find success on these day. Non-complying in any industry results in hefty fines and losses. Even in the fast food industry the role of law is important as well. McDonald’s must adhere to many legal requirements, such as the labor and employment law, corporate law and tax requirements, to name a few. McDonald’s, as a huge food chain, has to be seriously responsible regarding legal issues. In Muslim countries, it is important to have Halal food authorization and McDonald’s should care the customers’ belief on it
Company’s core competencies:
Food variety and quality
McDonald skill sets are in their system of preparing and delivering food in very fast and consistency of quality, production of food.
36,000 restaurants in more than 100 countries.
Providing a low cost food for the customer’s money and when people want and need a fast service.
Strong brand image
McDonalds has a strong brand image in the market that it has built over the years and continues to strengthen through new campaigns and a smart strategy.
Appendix 2: Product level AnalysisSWOT analysis McDonald’s the one of the largest food chain all over the world its position as the top player in the global fast food restaurant industry through strategies that address the internal and external factors in this SWOT analysis.
-Competitive price -Changing staff frequently
– Growth of the industry
-Market expansion in Asian markets -Heavy competition
-Health related criticism
Source : Aditya Betala(2016)
In this product life cycle chart clearly show the products stages. According to the stage of the product resources will be invested. When a new product comes need resources to advertise the product through media which need money. Organizations have a portfolio of products in different stages of its product life cycle. In McDonalds has a several products which grows to popular according the demand, The BIG MAC is a product which clearly in a maturity level of the product lifecycle.(Essays, UK,2013)
In the case of McDonald burger products, company is the largest hamburger and fast foods chain of restaurants in the world. In this stage, the strong growth in sales by the company is decreasing. At this point the competition may show up with substitute products. The company should focus on when at this stage of the product life cycle is to defend its market share and try to maximize it profits and also, the features of its products might be enhanced or the company might try to implement other products in order to create a stiff competition for its competitors (Sparks 12). For example, the company has made a new product that targets its health-minded customers.
Brittany Krone.(March,2013) Retrieved from: https://prezi.com/iv792djs-5mj/mcdonalds-product-mix/ Accessed 26 October 2018on 8 March
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Essays, UK. (November 2013). Product life cycle of McDonalds. Retrieved from: https://www.ukessays.com/essays/marketing/product-life-cycle-of-mcdonalds-marketing-essay.php?vref=1 Accessed 26 October 2018
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