The strategic evaluation, involves us to go over its popular tools such as SWOT and PESTEL evaluation. Strategic evaluation is important which permits strategic planning which is very beneficial for the organization. This report will look beyond McDonald's facts, macro environment, industry five causes, internal research, and strategy diagnosis.
McDonald's is one of the world's largest food corporations. It really is American in origin, but currently it's the largest string of hamburger fast food restaurants all around the globe. It functions around 70 million customers in about 120 countries every day. It runs over 34, 000 restaurants worldwide. It is a story of success that started out with simple notion of making hamburger that commenced in 1940, with a restaurant exposed by brothers Richard and Maurice McDonald in California.
The step of heading internationally started when the functions were sure successful in 1952 and the first franchise was sold to Neil Fox who exposed a restaurant in Phoenix, Arizona and created the well-known fantastic arches of McDonalds. Fox experienced huge success with the store and the brothers were unwilling at first to commence a nationwide franchise system. Ray Croc joined the team as the exclusive franchise operator in america.
Type of products:
McDonald's products include: hamburgers, cheeseburgers, fowl, French fries, breakfast items, carbonated drinks, milkshakes and sweets, salads, wraps, smoothies and berry.
Company Mission:
McDonald's quest: "our objective is to be our customers' favorite place and way to consume. Our worldwide businesses are aligned around a global strategy called the Plan to Get, which focus on a fantastic customer experience - People, Products, Place, Price and Campaign. We are focused on continuously increasing our functions and improving our customers' experience. " This implies that the culture of McDonald's is keeping their customers happy and do whatever they can to make a wider customer base along with a product line that satisfies any taste.
Industry and section:
McDonald's is in junk food industry and their sections are school students, working specific, young families and kids because McDonald has Happy Meal with toys. Usually goal is under years 5-6, 12-15, 15-20 and over who have mostly middle income and upper category.
Macro environment (PEST) Analysis
The PEST research on McDonald's shows the next facts:
PEST
Factors
Political
Labor costs, there is no minimum income; there's lot of expats with low income and that will help MacDonald's because they will pay less and it'll help them to lessen costs.
Political stability- In the UAE it stable, but there's few problems with Iran, but it's not going to impact MacDonald's.
UAE's tariff of 5% was significantly less than the maximum tariff of 15% that may be charged under international trade polices.
Each Emirate has its own governmental organization so MacDonald's will deal with different departments in each Emirate.
Economical
Gross domestic product growth, the UAE's real economy expanded to attain 360. 25 billion US dollars in 2011 which increased spending electric power and that will help McDonald's because customer will buy more and the revenue increase.
Currency: Emirate dirham(Dh or AED)
Exchange Rate: 3. 67AED per UD dollar
Social
Culture, Al Ain has an increased percentage of Emirati nationals & most people are Muslims so female want to have private place also because of the culture some young families don't allow their daughters to set in blended restaurant.
UAE has Islam religion so McDonald's must sell Halal food.
Technological
Recent technical development which will help McDonald to provide quick services such as computer systems and smart cashiers.
Media- McDonald's useTV advertisings for marketing.
Industry Five Causes Analysis:
The Five Forces evaluation on McDonald's shows the following facts:
Threat of new entrants: The threat of new entrants for McDonald's and the fast-food industry is low. There are various sorts of fast-food restaurants already on the market. Entering at this point would cause issue for the new entrant because customer will be faithful for existing fast food restaurants and there will be no monetary of range for the new entrants and low syndication route and high existing vitality and government legislation. McDonald's is strong brand and that make it more difficult to enter the market because new entrants are faced with price competition and it requires much time for a new business to establish in the junk food industry.
Bargaining ability of suppliers: The suppliers ability of McDonald's is high because McDonald's restaurants use the same products from the same suppliers for example, you obtain the same Big Macintosh personal computer everywhere. Supplying these products to McDonald's about the world is the complete business for the suppliers. If McDonald's would lose one distributor it could have to change its products and this provides suppliers of McDonald's a higher power.
Bargaining ability of purchasers: Buyers electric power are low in the fast food industry since transitioning cost is suprisingly low. Also there are lots of buyers on the market so customers can't control prices.
Substitute products/services: Within the fast-food industry, including McDonald's, the threat of substitutes is increased now more than ever with the convenience food industry growing. More convenience food stores are providing similar products as the fast-food restaurants. You can find wide variety of choice products to choose or customer can use instead such as: Lebanon food like "shawarma" and "falafel" also UAE traditional food or Italian food like pizza and pasta.
Competitive rivalry: industry market composition of fast food is competition so are there high rivalry and a lot of competitors such as Subway, Burger king, Pizza hut, KFC, Hardees, Body fat Burger and Harvey's. Some franchisers were also complaining that McDonald's was supplying way too many franchisees too near to each other and also stealing business from each other. Furthermore, transitioning cost is low and that lead to high rivalry.
Lifecycle level:
Macdonald's currently is in the older stage because price fall and customer commitment is important, competitions high between organizations for the marketplace share, high barriers to entry and demand limited by replacement. McDonald's adapted to changes available on the market by innovating services and services for customers such as extended their menu so they can have healthier alternatives. An example of adapting to environment is being open late. McDonald's use ad to remind, preserve and gain more customers through advertisements in along highways and close to their locations also advertise in Television.
Internal Analysis
SWOT examination of McDonald's shows the next facts:
SWOT
Status of McDonald's
Strengths
Good communication and friendly environment amongst their employees and customers especially children because they entice them through happy foods and the toys and games in it
Own one of the world's best known brand name and that helps Macdonald's to keep and sustain their customers because of the strong brand which will make customers have strong loyalty
Macdonald's offer products for better people so they offers Veggie Burger, Salads, Super fruit, Roasted food and container drinking water and other low body fat and calorie alternatives
Weaknesses
High number of employees turnover that may cost MacDonald's a lot of money because they'll need to employ new employees and then training them
Focus on burger and french-fries which not better option for customers
Most advertises of MacDonald's food items are target children and we can observe that they always display advertising campaign of happy dishes and any other deal that is mainly for kids
Opportunities
Consider interpersonal changes - by becoming advancement and concentrate in healthier lifestyle foods such as healthier treats this opportunity give MacDonald's an opportunity to have new products which are more healthier such as Salad and Fruit
Opening up a web based service that permit customers their purchases from home
As they may be an integral part of environmentally friendly, they may use a packages of material that can be recycled of not harming the surroundings and consequently they'll gain environmental friendly people as a customer
Macdonad's servs different famous brand name such as, Dannon Yogurt, Kraft parmesan cheese, Nastle CHOCLATE, Heinz Ketchup, and Minute Maid Juice
Threats
Recession might be considered a threat because during downturn the ratio of unemployment increase and the GDP lower which is mean people will have less overall to spend that will affect MacDonald's negatively because if sales lower then the profit will lower.
Customers concentrating on nutrition healthier life styles so, now people are aware of the threat of unhealthy food which lead for an obesity so they could consider buy healthier alternative food
There are extensive competitors such as, KFC, Pizza Hut, Hardees, Burger Ruler, Subway, and Fat Burger meaning customers has wide selection of restaurant so they can decided to go with from when they would like to buy
Strategy Analysis:
McDonald's has attempted both complete market differentiation and low cost as strategies. McDonald's is known for their good deal products and has been competitive with other businesses in the industry. They were main on the market to do a very low-cost smaller menu of items on the product line. McDonald's has also tried out a differentiation strategy with different products like the McRib or the Big Mac. Also, ability to modify and change its products based on international likes and preferences. For instance, Teriyaki burgers in Japan, McPork Burgers and McTempeh in Indonesia, McSpaghetti in the Philippines and McLox Salmon sandwiches in Norway.
In order to remain a stable company, McDonald's will have to lower its arrears levels, and make an effort to keep costs to a minimum. Furthermore, McDonald's is regularly broadening, and using all manner of capital to increase its market talk about.
To keep complementing between objective and strategy, McDonald's is advised to follow to be a proactive market head. The principle of this is to constantly stay one step before their challengers. McDonald's has already been the industry innovator in the fast-food industry with a market talk about of 33 percent weighed against the number two chain in the industry, Burger King at 13 percent market talk about. They can stay out entry through the use of R&D and applying technological advancements by using in their restaurants to enhance the development methods or even to increase the ordering procedure for the client.
In addition, they can also create new or better product offerings to gratify the needs with their customers. The best procedure that McDonald's can take through this strategy is to improve their customer support. McDonald's customer support ranking was the cheapest in the fast-food industry. To boost after this substandard attribute, McDonald's should recharge their training process for newly appointed employees and expose new educational modules for presently employed staff.
Conclusion
McDonalds has seen many changes, bad and the good during its creation and length of the business. So long as the main competencies are recognized and never forgotten, then this business will continue to be successful. With every issue and challenge the organization faces, it gets the possibility to improve itself.
The key success factors of the business which really makes the business for what it is today, including franchises that provide quick, useful service in a clean friendly environment.
