Franchisee: McD enters into different market through the concept of franchising. In such markets almost 80% of chains are opened through independent franchisees. Through this strategy McD saves more time in perfecting its serving system and advertising campaigns. 5. Partneship: McD uses the raw material of famous brands only like Heinz Ketchup, and offers other brands such as Coca Cola. Through which it generates more revenue and stand in the market. 6. Advertising budget: Mc Donald is spending around 2$ billion in advertising campaigns, which create competitive edge over the competitors like subway. WEAKNESS 1.
Junk Food: Burgers are known as junk food. As McD caters to children market where eating junk food leads to obesity. McD is known for its unhealthy menu, which included oily patties, coke, French fries that leads to obesity. 2. High Employee Turnover: McD gives lesser pay to its employees. As the Mc D job requires less skilled employees, because of which they higher less skilled staff and gives less salary which creates frustration among employee and they are force to leave the job. 3. Low Differentiation: McD is still counted in Fast food chain, where others companies have also jumped in like Jumbo king, Subway etc.
McD is not able to differentiate itself from other fast food chains; it is focusing more on Lessing the price instead of adding some additional features. OPPORTUNITIES 1. Demand for Healthy Food: Now a day the customers are more conscious towards their health. In such scenarios Mc D should introduce new varieties=s in menu which has more nutritive value. 2. Home delivery: Most of the global fast food chains are entering into Home delivery strategy. In fact customers are more interested for Home delivery of their orders as its saves their time and petrol.
But still McD has not full flegedly started the concept of home delivery 3. Remodeling: Mc D has redesigned its logo and restaurant in 2006 and has applied the changes in the restaurants, where they have 8-9% higher market share. Thus Mc D should remodel all its restaurants and practices as soon as possible. 4. Targeting new Customer Groups: Till date Mc D is catering to youngster crowd, it should include new menu cards, varieties, concepts so that it can attract other customer group too. THREATS: 1. Too many Competitors: In developed countries there are too many fast food retail chains. Eg KFC, Jumbo King, Subway, Piza hut etc. 2. Changing Trends: Due to so many campaigns by government and NGO’s towards fight against obesity, customers are becoming more health conscious. 3. Local Fast food chains: the trend has changed; people like to eat outside home. They want more varieties but in their local taste. The local fast food chains are best options where the customers various demand can be fulfilled with their own local taste. 4. Currency Fluctuations: As the firm is operating in so many countries and the revenue generated from them has to be converted into dollars.
When dollar is appreciating against other currencies, the firm profit is affected. INTERNAL ANALYSIS OF Mc DONALD Mc Donald is one of the leading global fast food chain retailers, having presence in 119 countries with local 30000 restaurants and daily serving around 55 million people. For any firm to operate globally should do proper analysis of its internal and external environment. The firm have proper marketing plan, with a starting point and proper analysis of the market. On the basis of it company’s objective, tactics, vision, mission are drawn in order to achieve organizational success and profitability.
The external environment contains may factors which can be broadly classified into macro and micro environment. The macro environment consists of political, economical, social, technical, legal and environment factors. The micro environment includes factors like market structure, competitors, suppliers, distributors, public type. On the other hand internal environment company’s marketing mix and service mix. It also includes other factors such as sales, profit, and market share and customer loyalty. Main Product and the Markets: The main products of Mc Donald’s revolve around the varieties of hamburgers, French fries, salad and desserts.
The taste and filling may vary as per the market type. After the global crisis McD has recovered surprisingly fast and still the growth rate is increasing. The key success factor in recovering the losses was not to convince people to spend money at Mc D and eat, they just said we have improved our breakfast menu with new frappe drinks at lower prices which attracted more customers generated revenues. 5P’s Of Mc Donald’s 1. Promotion: McD promotes itself with various tag lines like: “I’m Loving it’, which is a worldwide campaign. It uses all sources of advertisement like billboards, TV, internet etc.
The price of McD products is lesser in comparison to other global food retailers. 3. Place: The restaurants follow the same interior all over the world, also provide music, Wi-Fi, and flat screen which keeps the customer involved and busy, so that he can eat more and order more. 4. Products: Mc D keeps on introducing new menus, as per the local market like aloo tikki burger for vegetarian market, rice burgers, salad for health conscious customers. 5. People: The Mc D employee are given proper training and induction program to better serve the customer and serve in time.
How to be dressed and to serve with a smile. How to maintain the hygiene in the store and follow the dress code. EXTERNAL ANALYSIS OF Mc DONALD’S PESTLE ANALYSIS 1. POLITICAL FACTOR: The international operations of McD is under the influence of different governments. In different countries Mc D faces different political factors for eg in Europe and US the government demand that there should be nutritive value and medical value of meal offered as fast food to the nation. When Mc D entered Indian market, it was a major loss to Mc D because they served meat burger which was against the right and religious law.
Actually meat burger in Mc D menu was an offensive step towards Indian religion. McD has also argue with the problems of employment practices, like in some country part time employment is not allowed. 2. ECONOMICAL FACTOR: As stated above the revenues generated from the other countries have to be converted into Dollars. In case of dollar appreciation, there will be a loss to the company. Also it prices products as per the spending capacity of its customers. 3. SOCIO-CULTURAL FACTORS: It has been noticed that company has given choice in lunch to US market.
They strive to win customer loyalty. It promises to deliver high quality food. The company tries to identify the need of the market and accordingly bring changes in its menu for a particular country. 4. TECHNOLOGICAL FACTORS: Mc D restaurants use technical machines where the product is ready without human touch that too in front of the customer. The vending machine speed up the serving time. With such technical factor introduction in the restaurant they attract more customers and decrease their waiting time. 5. LEGAL FACTORS: Such factors talk about CSR..
Corporate social responsibility. McD has been sued several times for serving such food which increases obesity. For Eg in Muslim countries, their meat corresponds to Halal as per the law. Other legal concepts factors faced by MC D are tax obligation, employment practices. 6. ENVIRONMENTAL FACTORS: This means charges from harm to environment. In Hong Kong McD faced problem related to use of plastic glass which is not decomposable. FIVE FORCE MODEL For a business to compete effectively and intensively in the marketplace has to understand the dynamics of its industries and market.
Michael E. Porter has given the Five Forces Framework. The five forces are interconnected directly to the company’s ability to serve its customer and to make a profit. If there is any change in any one of these forces, a company is required to re-assess it competitive strategies. The five forces are: 1. COMPETITIVE RIVALRY: If a company’s entry into the market is easy, then similarly the entry of its rivalry is likely too high. Mc Donalds enters into a particular country; simultaneously its rivalry for eg Burger King likely will be entering the same market. 2.
In fast food Industry entry of new chains is easy as there is no legal barrier for them. For entering a new market Mc D has to face various challenges like economies of scale, distributor chain, advertising capital, so that it can enjoy a long life into the market, but entry into ne markets is not easy for big brands because they has to face price competition with the local brands. 3. SUPPLIER BARGAINING POWER: Mc Donald’s whole business rotates around the suppliers, because MC D restaurants use the same products from the same suppliers all over the globe.
In case if Mc Donald loses any of its supplier than it has to change its whole menu. Thus suppliers of Mc Donald enjoy high bargaining power. 4. BUYER BARGAINING POWER: Buyers of the Mc Donald are the customer who orders through internet, telephone or in the restaurant. If the fast food chain is not able to satisfy their need they will shift to other food chain. In fast food industry wining customer loyalty is very difficult as the taste of the customer keeps on changing. 5.
THREAT OS SUBSITUTES: In fast food industry there are so many firms whose costs is low, high with Mc D product or may be giving same quality product to the customers. Such factors lead to threats from the substitutes. CRITICAL SUCCESS FACTOR From the above research the critical success factor of Mc Donald are: 1. STANDARIZATION: Mac Donald maintains its quality by standardizing its production process and method. In different countries Mc Donald’s adjust their menu as per their local taste like spicy for Asian countries, veggie for Buddhist countries.
Thus it achieves balance by maintaining standardization in its products with local taste. 2. ENVIRONMENT ORIENTED: Mac Donald is committed towards protecting the environment for its future generations and also business leaders are acting as a environment leaders. 3. ONE DOLLAR MENU: With such price strategy, the company lures the customer at lower prices. 4. WILLINGNESS TO INNOVATE: While entering into different countries, Mc D keep innovating with its menu as per local taste and also adding new varieties in the menu to serve the other customers too.
Eg they introduce salads for health conscious generation. 5. FOLLOWING HEALTHY FOOD TRENDS: In response campaigns related to obesity from junk food, Mc D has introduced other food like coffee, ice-cream, salads, wraps etc. CONCLUSION At last we can conclude saying that Mc Donald one of the leading global fast food chain company owes 32000 local restaurants in 119 countries worldwide. It enjoys 75% of business through franchising so that it can spend more time increasing service speed, serve standardized products and marketing strategies.
The vision of the company is to be the world’s best quick service restaurant along with provider of high quality, cleanliness and high quality food to the customer. McDonald thinks globally but acts locally. The strengths and weakness of the company are the internal factors and are crucial in strategic decision making and implementing these strategies. Although some of the weaknesses can be minimized but not all. There are lot of issues which the company is facing like advertising, use of animals for their product, employment, environment etc. Above we have also talked about the 5 force model for the company and key success factors.