McDonald’s Company: Practical SWOT Analysis
The purpose of this paper is to create a SWOT analysis of the McDonald’s corporation. McDonald’s is a popular quick-service food chain selling burgers, french fries, drinks, and more. It operates in more than 100 countries and has over 36000 total locations (About Us: McDonald’s Facts and Story, no date). The company is developing in several directions; however, this analysis will focus on the core part of the business, without considering McCafé and other sub-brands. Due to the vast geographic diversity, this study will concentrate primarily on the US, which has always been one of the most competitive regions for McDonald’s.
The McDonald’s corporation is organised in a way that allows it to be flexible and easily take advantage of expansion opportunities. It operates as a franchise, only owning some of its restaurants, having most of the chain managed by franchisees.
The company has strict qualifications for prospective investors, including an obligatory 12-18 extensive training program and steep financial requirements (Franchising FAQs, no date). This is in line with McDonald’s history, as it has always prioritised “Quality, Service, Cleanliness and Value” (Our History: Ray Kroc & The McDonald’s Brothers, no date). At the moment, McDonald’s is facing the COVID-19 crisis, which imposes numerous challenges on the restaurant industry.
|Internal||Strengths: ||Weaknesses: |
|External||Opportunities: ||Threats: |
The SWOT was produced from the information available on the McDonald’s corporate website, other reports, and personal experience with the company. Elements from the PESTEL model have been used to evaluate threats and opportunities more accurately. The following section provides further information on the main items from the SWOT matrix, supported by “hard” and “soft” evidence, as well as motivation for choosing these particular points.
The first strength is streamlined operations; it refers to the company’s ingenious menu system, which allows outstanding variety while maintaining flexibility. The company uses a locally-relevant system, which means that individual restaurant owners can select the items they would like to sell from a uniform global list (McDonalds SWOT Analysis (5 Key Strengths in 2020), 2020).
This allows franchisees to optimise their business and increase sales by accounting for local preferences and diversifying offerings. What is more, since each restaurant sells a limited selection of dishes from the extensive global menu, speed and quality are not compromised either. This strength has been selected because it is a distinct advantage over some competitors that have a fixed menu.
Also relevant to the company’s flexibility is its franchise structure, which allows it to expand rapidly, with relatively small upfront costs. In 2016, over 80% of McDonald’s locations were owned and operated by franchisees, and this number has only increased (Dudovskiy, 2016). The corporation’s vast geographic coverage has also contributed to its third strength – brand recognition.
The McDonald’s brand name is known in all parts of the world, as it is part of the top ten international brands and the highest value fast-food brand (SG, no date). The importance of these points is undeniable, as they represent the company’s most notable achievements.
The first two weaknesses of McDonald’s are interconnected, as the company’s reputation for being unhealthy contributes to the fact that millennial customers switch to other chains. Despite its focus on quality, McDonald’s has been at the centre of multiple controversies and carries a reputation for selling junk food (Khandelwal, 2019).
This results in some consumers becoming disillusioned with the fast-food chain’s value proposition, as they realize the negative impact it has on their health (Quinones, 2019). The last weakness is the understaffing of restaurants as a consequence of cost-saving efforts by franchise owners. This is a serious issue because it leads to rude and unprofessional behaviour from the company’s overstressed workers.
The first threat of the McDonald’s corporation originates from a combination of social and legal factors arising from the COVID-19 pandemic and the subsequent drop in restaurant traffic. The latest quarterly report indicates a 3.4% decline in global sales and states that 99% of restaurants in the US have remained open (McDonald’s Reports First Quarter 2020 Results, 2020).
Competition continues to be a concern regardless of the crisis, with other chains providing more fresh and premium offers, while McDonald’s is mostly appealing to value-seeking customers. The company is currently making efforts to address environmental factors, but waste and greenhouse emissions remain an issue (Our Planet, no date). These threats have been chosen as they are the most current external problems facing the company.
The opportunities presented in this paper are based on the technological factors that could enable the company to circumvent the current healthcare crisis. Offering an advanced delivery service, such as the company’s recent integration with Uber Eats, is an excellent way to reclaim the sales losses caused by the quarantine. McDonald’s could also invest in some form of delivery drones, similar to those used by Amazon, or acquire a start-up that develops ground-based carrying robots. To take advantage of the newest social trends, the chain could offer contactless delivery, which is likely to attract health-conscious customers at no additional cost.
In conclusion, the company is advised to take advantage of the opportunities presented by the current crisis. It can combine its extensive infrastructure and efficient processes with technological breakthroughs to gain a competitive advantage that cannot be duplicated. This could also solve the issue of the corporation’s low appeal to millennial buyers as they are likely to be fascinated and attracted by the new delivery methods.
As a more conservative option, McDonald’s could adopt and expand the virus-safe practices of its competitors, which seem to be the key to success in the present conditions. Finally, to remain competitive in the extremely saturated US market, the company is advised to focus on a specific feature that would differentiate its range of products from a growing number of alternative offerings.
About Us: McDonald’s Facts and Story (no date). Web.
Dudovskiy, J. (2016) McDonalds Value Chain Analysis. Web.
Franchising FAQs (no date). Web.
Khandelwal, R. (2019) McDonald’s Menu Struggles to Shed Its Junk Food Rep. Web.
McDonald’s Reports First Quarter 2020 Results (2020). Web.
McDonalds SWOT Analysis (5 Key Strengths in 2020) (2020). Web.
Our History: Ray Kroc & The McDonald’s Brothers (no date). Web.
Our Planet (no date). Web.
Quinones, L. (2019) McDonald’s Core Competence and Competitive Advantages. Web.
SG (no date) McDonald’s SWOT Analysis. Web.