McDonald’s Case Analysis COMPANY NAME: McDonald’s Corporation INDUSTRY: Food McDonald’s Corporation COMPANY WEBSITE: (www. mcdonalds. com) COMPANY BACKGROUND: Ray Kroc found McDonald’s corporation, a successful fast food restaurant, in 1955 were his vision was to create McDonalds restaurants all over the U.
S, and within 3 year of establishing the franchise the corporation was already selling its 100 millionth burger.The franchise has now became a successful global fast food restaurant that sells a variety of items and has a unique philosophy that Ray Kroc envisioned with building this franchise which was “To Build a restaurant system that would be famous for food of consistently high quality and uniform methods of preparation”(McDonald’s Corporation 2009). He wanted, “To serve burgers, buns, fried and beverages that tasted just the same in Alaska as they did in Alabama”(McDonald’s Corporation 2009). The case study concentrated on the financial strengths and struggles of the franchise.With the early millennium years 2001, 2002 and 2003 the franchise seen a tremendous dip in total revenue and net profits, it wasn’t until 2007 when the company seen a turnaround in total revenue and net profits.
Things were starting to look up for franchise. Currently the CEO at McDonald’s Corporation is Jim Skinner and he is providing the same vision that Ray Kroc was envisioning when he opened the doors. The company’s performance at yahoo. com/finances are up 0. 06 that’s a 0. 09% at 69.
65 but from past it’s has dropped from 60. 59, which is a change of 0. 91. SWOT Analysis:Strengths: McDonald’s Strengths came from day one when Ray Kroc’s vision was to create a successful and well-maintained fast-food restaurant. The company’s financial information provided at yahoo. com/finances and also the case study, have shown the strengths that the franchise has with its impressive figures.
The business is known for its service and its well-loved items that it sells Weaknesses: McDonald’s internal weaknesses would have been finding the right CEO within the company the first time whose philosophies were the same as the founder. This would have been the biggest enefit the company could have done so it could focus on its opportunities. Opportunities: McDonald’s biggest opportunity would have been by solving there weakness stated before so that the business would have a foundation and leader to important events that were rising or have came. The franchise was blinded when it came to the market change and had to play catch up with its competitors to claim the #1 spot. Threats: McDonald’s threats came from the competition because they were a step ahead of McDonald’s since the franchise was working with internal issues first.
McDonald’s was hurting themselves, but we know not intentionally, because as in the core values and foundation of the company the original owner would not have allowed for this to happen. Threats also came from customers demand in healthier foods and simply the change of fast food that came about with grocery stores offering quick meals and convenient stores also offering competitive items. Porter’s Five Forces Model: Threat of new entrants: McDonald’s isn’t much threatened by new entrants until recently with the new movement of eating healthier.This change opened the door for many existing companies and also stores to start offering what McDonald’s offers. Bargaining Power of Buyers: Power of buyers have a big impact on McDonald’s especially since buyers are not trying to eat healthier and are more conscious about what they eat.
McDonalds customers hold a credible threat because they are in demand of certain items and McDonald’s was having a hard time getting satisfying items to please the customers.Bargaining Power of Suppliers: Power of suppliers also has a big impact on McDonald’s because suppliers can dominate since there is a competitive market thus suppliers could raise/lower the prices and go to competitors. Substitute Products/Services: Substituting in the food industry happens all the time and is the biggest part of business lost. Substitution comes into play for McDonald’s because customers will settle or substitute their craving for McDonald’s for healthier or more exquisite food like sushi, burrito’s etc.Intense Rivalry: Rivalry is big when it comes to the fast food industry because each fast food restaurant wants each other’s customers base. There are customers out there that will only eat at McDonald’s or at Wendy’s or Burger King and its up to McDonald’s to stay ahead of the game and win over those customers so that they can succeed and stay ranked #1.
Strategy Used: McDonald’s creates and sustains its competitive advantage by focusing on Ray Kroc’s philosophies and visions.Ray Kroc philosophy was based on the simple principle of a “3 legged stool: one leg was McDonald’s, the second was the franchisees, and the third was McDonald’s suppliers. The stool was only as strong as the legs”(McDonald’s Corporation 2009). McDonald’s is using the focus strategy and difference strategy and yes I would say they have been successful in using both method, but lately they have drifted away from it since there primary focus was working on its internal issues.The strategy is used by the life cycle because this allows the franchise to gather data and focus on providing the service and quality that they want, which happens to putting a smile on every customers face.
Issues and Challenges Facing this Company: McDonald’s held a great competitive advantage over its competitors over the years of existence, but lately the franchise has been declining and looking its vision of being and staying the #1 fast food restaurant.The competitive advantages the corporation has are the stellar items that are on the menu for sale, the known friendly service that you use to get most of all the experience you got when any customer when to McDonald’s. It is not all McDonald’s fault that there slipping from #1 because it is the competition that is catching up quick and also the customers vision is changing. Thus the issues that McDonald’s seem to be facing are long-term trends with food items and the rapid change in consumers and their consciousness of eating more healthier and better tasting.Also another issue the franchise is facing is that quick meals are starting to become available from supermarkets, convenience stores and vending machines thus McDonalds not getting its regular customers it use to get when these issues were not faced.
Course of Action Recommended: The course of action that McDonald’s needs to take is that they need to transform itself into a restaurant that caters to the customers trends since customers are what makes the business a success.They have actually according to the article already experienced a great achievement with this transformation reclaiming the #1 spot in the fast food restaurant business like it once owned. A strategy that I can think about would be to 1) Gather information from what customers are looking for once again with the fast food restaurant. Get polls, surveys, and customers’ opinions when they come in the store.
2) With this data analyze it and make beneficial changes. For example use less fat in your oil that you use to cook your fries, or use 100% beef when you are cooking hamburgers. (Listening to the customers is key. 3) I would change the nutrition menu giving customers the data of what they are eating and give recommendation of what items to pair up to get a healthy well balanced meal. With the other concern that fast food services are becoming available in supermarkets and etc. revamping restaurants and going through intense training like it once did delivering consistent, fast and friendly service that is enjoyable and puts a smile on all customers faces is needed to bring the success back in the restaurant.
Opinion: This case study didn’t come as a shock to me because I could see this being a concern eventually.As I look at it styles and trends are only good for so long until new styles and trends come in and take over. It’s businesses like McDonald’s jobs to understand when to shift change into this new style or trend that has come about. I feel that McDonald’s throughout this case has learned a lot as a successful business and I could say they grew as a franchise for the good. This drop in performance that the article talks about and its hardship with finding a successfully CEO are issues that looking to the future have been overcome and now have strengthen the corporation.This information helped me because it gave me an understanding that even successful corporations have concerns that they need to either overcome or need to maintain if they want to stay one step ahead of there competitors.
References McDonald's Corporation, Initials. (2009). The Ray Kroc Story. Retrieved from http://www. mcdonalds.
com/us/en/our_story/our_history/the_ray_kroc Yahoo, Initials. (2010). McDonald’s corp. Retrieved from http://finance. yahoo. com/q? s=MCD
