Strategic analysis
McDonald’s Mission Statement
“McDonald’s vision is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile”.
Comments from management
In the company’s annual reports of the year 2010, the Vice Chairman and CEO, Jim Skinner notes that the company began to build its brand and strength around the world. Jim also acknowledges that the business environment during the year 2010 was challenging.
The company managed to drive its business through focused consumer insights in order to align its strategies, and improve on its key business areas, particularly the menu, restaurants, core values and convenience. In addition, McDonald’s management continued to invest in human resources and restaurants so as to increase customer experience (McDonald’s Corporation, 2010).
McDonald’s current positioning strategy
According to Andy McKena, the company Chairman, McDonald’s has a Plan to Win strategy. The company has used this strategy to implement its objectives for the past eight years. McDonald’s strategically position itself using the Plan to Win strategy, which has the core drivers of its business.
These include the 5Ps of price, promotion, product, place, and people. The company management has realized the potentials in every P, and it intends to exploit all the Ps. McDonald’s is using this strategy in order to focus on its right priorities, such as keeping its brand relevant and meeting the needs of ever-changing customers more so with regard to healthy food.
The Plan to Win strategy enables McDonald’s to be decisive, flexible, demonstrate strong business sense in order to meet the demands of their customers, particularly with regard to health issues.
The company believes that positioning itself with the Plan to Win strategy as served it well, and will continue to do so in the subsequent years. We can notice the above ideas of the company’s top executives in its mission statement.
McDonald’s SWOT analysis
McDonald’s SWOT analysis reveals that the company enjoys a higher ranking in the global food industry. It derives its strength from locations, such as airports, theme parks, busy roads and in Wal-Mart stores. It also uses quality food produce, such as quality chicken products, beef, and pork, among others. McDonald’s only uses brand names and supplies nutritional information on the food packages (Adcock and Halborg 2004).
McDonald’s weaknesses include high staff turnover. This has increased its staff training cost. The company also failed in the pizza test. This created limited competition ability among pizza providers. The issue of obesity is fast affecting fast food industry. However, McDonald’s does not focus much on organic food. Occasionally, there are concerns of quality due to franchises around the global. McDonald’s specializes in certain types of food. Therefore, it has no much variation in different seasons.
McDonald’s still has several opportunities to exploit. The company can still partner with several retailers. It also has an opportunity to focus on healthy and organic food in order to fight obesity concerns among its customers.
McDonald’s can also respond positively to social responsibilities such as concern for the environment. The company can exploit advertising avenues in its restaurants, provide play grounds for kids, and increase partnership with beverage companies.
McDonald’s faces several threats. The advertisement pundits criticize the company for luring small children and adults alike. At the same time, it also faces lawsuits because of serving addictive and unhealthy foods. In this context, McDonald’s cannot focus on healthy food as per every customer needs. Occasionally, there are cases and risks of food contamination, particularly e-coli. McDonald’s also faces competition from other fast food restaurants and consumption also depends on economic stability.
How McDonald’s spend its money and time
McDonald’s spends it time and money doing marketing and promotional activities. These include soft marketing tactics such direct advertisement, charity work and donations to enhance its corporate image. The company associates its image with benevolence so that children and their parents can it and its products. The company also spends its money and time on acquiring and training new employees.
Alignment of McDonald’s activities of the past and the Mission Statement
Most of McDonald’s activities are in line with its mission statement. The company strives to open restaurants and franchises everywhere around the world, and provide unique customer experience. However, issues and risks of food contamination are affecting its image.
Objectives for first food industry in the new business environment
Short-term objectives
- To provide varieties of organic food to its customers within six months.
- To provide conspicuous nutritional information on every food package.
Long-term objectives
- To improve the public’s health through nutrition, food safety, and soft drinks.
- To improve its corporate image as a healthy food restaurants.
Fast food industry is facing criticisms from the public about the nature of its unhealthy and addictive foods. In addition, there are also lawsuits regarding issues of obesity because of consumptions of fast food. Therefore, the current business environment requires the participants to align their objectives and strategies in promotion of healthy diets.
Key Performance indicators
The short-term key performance indicator to measure the achievements of these objectives lies in the consumers’ reaction to subsequent promotional activities. Promotions of healthy foods will result into increased customer buying behaviour. On the other hand, we can measure the objectives with the long-term key performance indicator. The objectives will result into reduced lawsuits and low number of complaining customers.
Why the objectives are legal and ethical, and the resources and financial capabilities to deliver them
These objectives are ethical and legal. They aim at reducing customers’ complains on issues of obesity and at the same time, promote healthy diets and eating habits. McDonald’s has the resources and financial capabilities to deliver these objectives. This is evident from the way the company has managed its past objectives for the past eight years using Plan to Win strategy.
Risk management strategy for operating in the new business environment
Product affected in the healthy range of menu items
McDonald’s French Fries and hamburger are the range of menus affected. This is because the two fast foods are popular and most addictive. Hamburger has become the most popular among McDonald’s fast foods. This is because McDonald’s serves it alongside other vegetables and some food additives.
Strength of the product (hamburger)
Hamburger is delicious and consists of beef. McDonald’s can use modern technology to reduce the fat contents, and reduce risks of contamination by removing E. coli and salmonella. This way, hamburger will create a strong brand for McDonald’s. McDonald’s can capitalise on reduced fat contents, risk and contamination free, and work with food safety institutions to advertise the product.
Capitalising on strength of the product using marketing strategies and promotions
Promotions and advertisement activities of healthy hamburger must reflect the above objectives of promoting a healthy diet and help in fighting obesity among its customers. These promotions are ethical and legal since they promote and advertise healthy diets.
Foreseen weakness of the product and contingencies to safeguard it from weakness
McDonald’s has a global presence. Therefore, not all franchises will be able to meet the requirements of healthy hamburgers. It would also be difficult for consumers to believe the company’s claims with regard to nutritional contents. McDonald’s must put contingencies to safeguard the product. The company must seek endorsement of food, nutrition and safety organisations to help it market its healthy hamburgers.
As consumers continue to demand healthy foods from fast food companies, McDonald’s healthy hamburger will be prone to imitation by competitions. Consumers may also reject the product due to chemical treatments it undergoes to eliminate E. coli and salmonella bacteria. McDonald’s must assure its consumers of safe and healthy meals. However, product imitation may be difficult to prevent (Solomon, 2006).
Reference List
Adcock, D. and Halborg, A., 2004. Marketing Principles and Practice. 4th ed. London: Prentice Hall.
McDonald’s Corporation, 2010. McDonald’s Corporation: 2010 Annual Report. Oak Brook, IL: McDonald’s Corporation.
Solomon, M., 2006. Consumer Behavior. New Jersey: Prentice Hall Europe.