McDonald’s Company Strategic Prospects Essay

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Table of Contents

Introduction
Current Situation at McDonald’s and Threats
Opportunities for Recovery and Growth
Conclusion
Works Cited

Introduction

McDonald’s is one of the largest fast-food restaurant networks in the world. It works as a global franchiser; more than 80% of their restaurants are possessed by independent businesspersons (‘Our Business Model”).

According to the official website, the company serves approximately 69 million clients every day, in nearly 36,000 restaurants located in more than 100 countries of the world (“Company Profile”). In 2014, it had total revenue of $27,441 billion, and a net income of $4,758 billion (“MCD Income Statement”). So, is there any prospect for growth for such a large company, and if yes, what is it?

Current Situation at McDonald’s and Threats

Despite the fact that McDonald’s is among the largest fast-food worldwide networks, it is still planning to grow and develop. For example, in 2013, McDonald’s plans for 2014 were to introduce a wider selection of foods and drinks, as well as to offer free WiFi. It also planned to open nearly 1,500 new restaurants and get an operating income growth of 6-7% (Campos par. 7).

However, according to MCD Income Statement, the organization’s operating income in 2014 accounted for 90,7% of the operating income in 2013 (whereas the income in 2013 was 101,86% of 2012). So, the company has, in fact, suffered a great decline in sales in 2014. According to Udland, this is due to a rise in the levels of obesity and the increase in customers’ preference for healthy food (par. 3).

Thus, it can be inferred that competitors of McDonald’s are not only other major fast-food restaurants such as KFC, Yum Brands, Burger King, or Wendy’s, but, more importantly, various restaurants (both local and worldwide) that serve healthier food. It is stated that consumers in New York are willing to pay more for meals that resemble home dinner in restaurants that look more like a kitchen than manufacturing (Hussain).

Opportunities for Recovery and Growth

Udland claims that in such a situation, when McDonald’s’ sales are steadily falling, and the company is confronted by a long-term crisis, the only chance for its recovery and/or growth is to swallow other businesses of the same type, such as Wendy’s or Starbucks (par. 5).

On the other hand, Brumley asserts that there is much opportunity for McDonald’s business in one particular region, which is China: the company’s CEO and his team “see China as the most productive place to foster change … even if only because China is the only place they truly understand how to improve” (par. 7). So, a possible way of improving the company’s situation is to focus on the development of the Chinese market.

Another prospect of improving the current situation might be related to the food McDonald’s offers. As we mentioned before, clients often opt for other restaurants due to the fact that they offer healthier meals. Thus, McDonald’s might consider changing the menu and adding more types of healthy food to it, such as salads or analogous vegetable dishes. This practice is not new; in fact, McDonald’s already has the experience of introducing healthier types of food (such as carrot sticks). Perhaps it is time to conceive additional similar options.

Conclusion

As we see, McDonald’s, despite its famed reputation and being a worldwide company, nowadays suffers a great decline in its sales. According to the authors cited, the decline is, to a great extent, the result of changing tendencies and preferences of the customers who opt for healthier food choices.

There may be not a great perspective for the company’s development nowadays; most analysts are concerned with the problem of declining the drop in the sales. On the other hand, the company might still be able to develop further in some regions (particularly in China), and it might improve its own performance in markets by introducing new products that would correspond to consumers’ wishes.