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McDonald's SWOT Analysis

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McDonald’s corporation was founded in 1955 in Illinois. The founders of the company were two brothers, Richard and Maurice McDonald. They have been working in the restaurant business since the 1930s. McDonald brothers started from an average carhop drive-in but they managed to establish a brand new level of quality there. They paid much attention to their kitchen arrangement and discipline of the staff members. The restaurant workers developed an impressive efficiency that allowed the company to lower the prices. At this point Ray Kroc, a seller of milkshake machines, suggested brothers to franchise the restaurants all over the country. Furthermore, Kroc volunteered to do it himself, and in 1955, he established the first restaurant in Des Plaines near Chicago (Pederson & Gant, 2004). In four years, Kroc opened above 100 restaurants across the country. In 1962, McDonald’s famous logo, the Golden Arches, was created. During the 1960s-1970s, the restaurant business flourished. The secret of their success consisted mainly in skilled marketing and flexible response to customer demand. In the 1980s, McDonald’s competitors Burger King and Wendy’s grew stronger. Yet, McDonald’s enhanced its menu and continued to attract customers preserving the service and food quality on the identical level. At that time, the company opened its restaurants in 58 foreign countries such as Australia, Germany, Great Britain, Japan, and France. As a result, “much of the growth of the 1990s came outside the United States” (Pederson & Gant, 2004). In the 2000s, McDonald’s image underwent drastic change. Customers started accusing the fast food restaurant chain for promoting unhealthy food. McDonald’s responded with more healthy cooking and introduction of products lower in calories. It still follows the strategy of making its products healthier and lower in fats. The mission statement of McDonald’s is to be its “customers’ favorite place and way to eat and drink” (McDonald’s mission and values, 2014). Its goal is “quality, service, cleanliness and value for each and every customer, each and every time” (McDonald’s mission and values, 2014). At the same time, the business model of McDonald’s consists in balancing the interests of its owners, suppliers and company employees.


Organizational Strengths and Weaknesses

First organizational strength of McDonald’s is its strong brand name and image. McDonald’s, as an organization, can boast about huge brand equity. The company's brand is one of the most recognized in the world, owing to its famous logo of Golden Arches and Ronald McDonald clown. People recognize McDonald’s everywhere, and the company's brand is worth approximately $40 billion (Pederson & Gant, 2004). McDonald’s is among the ten most powerful brand names in the world, together with such brands like Coca-Cola, Nokia and GM (Forster, 2002). This strength is a distinctive competence because few fast food restaurant chains can boast of owing such a strong brand name. McDonald’s has developed enormous brand equity. It is the leading fast food chain, and it has over 31,000 restaurants operating in nearly 120 countries (Forster, 2002).

Second organizational strength of McDonald’s is locally adapted food menus. It is the strength as flexibility brings positive results in a global business today. As a rule, global corporations adjust to the local markets, and McDonald’s follows this strategy. This food restaurant chain is working in diverse cultures trying to correspond to different tastes in food in every particular location.

Fortunately, McDonald’s is aware of the fact that food preferences in Asia may be different from those in the United States or European countries. Hence, its ability to adapt to local food preferences is one of the strength of this company. This strength is a distinctive competence because other fast food chains do not adapt to the local markets and therefore cannot appeal to local customers. Meanwhile, many customers prefer traditional food to the fast food, and they would make choice in favor of McDonald’s where this kind of food is served.

First organizational weakness of McDonald’s is unhealthy food menu. It is known that McDonald’s uses trans-fat and beef oil in its meal preparation. In 2001, McDonald’s was sued for adding beef extract to vegetable oil for flavoring purposes (Gogoi & Arndt, 2003). There are no legal enforcements that prohibit these substances but they have extremely negative influence on one’s health. Researches indicate that trans-fat may lead to cancer (Grainger, 2003). As a result, those customers who care about their health cease eating at McDonald’s. Thus, the company loses considerable sums of money. The organization can minimize this weakness by introducing healthier choices in its menu. It can add organic foods to the menu and shift the stress from burgers and fried food to salads and baked food.

Second organizational weakness is low differentiation. Unfortunately, McDonald’s has lost its capacity to differentiate itself from other similar companies. By now, this fast food chain chooses to compete by price instead of additional features. The absence of characteristic features worsens the general impression of McDonald’s as a unique restaurant chain. The organization can minimize this weakness by introducing new attributes that the customers would associate with McDonald’s solely. The management of organization should implement a strategy related to the unique image of this fast food restaurant chain.

Organizational Opportunities and Threats

Low cost menu is the first opportunity for McDonald’s. This opportunity arises from the economic dimension, which plays an important role in the general environment. Unemployment is the force coming from that dimension as it affects the number of customers. The reason is that many unemployed people and those with low income prefer low cost menus. Adjustment of prices may attract the significant market segment. Taking advantage of this opportunity is appropriate today more than ever as the global economy is unstable. McDonald’s can put low cost menu in practice in all restaurants and the number of the customers will increase.

Second organizational opportunity of McDonald’s is meal delivery. This opportunity comes from the technological dimension of general environment. Technological environment relates to the invention of new methods and implementation of production of services or goods. In case of McDonald’s, the technological force is the change in services distribution. Home meal delivery is an opportunity for McDonald’s because food delivery can increase its customer reach. As a result, food delivery would benefit the company. Besides, this opportunity can become the company’s strength in the future as few McDonald’s competitors provide this service.

First organizational threat is local fast food restaurant chains. This threat comes from the external environment and relates to task environment. At the same time, one can notice socio-cultural force related to this dimension. It is so because it deals with customers’ consciousness and preferences. While McDonald’s has its loyal customers worldwide, there are still many customers, who prefer other restaurants, including local fast food restaurant chains that have been opened long before McDonald’s and know local mentality better. Additionally, they attract their customers by menus, which correspond to local tastes, larger burgers and lower prices. The increasing quantity of local fast food chains and their cheap meals is a threat to the company because it loses its customers.

Second organizational threat is healthy eating trend. This threat comes from the socio-cultural dimension of the general environment. The socio-cultural dimension covers a particular society's lifestyle, culture and consumer culture. The driving force in this case consists of customers' preferences. In particular, preference of healthier eating may affect the company. The trend towards healthy eating is the treat to the company because people who prefer eating healthy food would not eat in McDonald’s. The reason is that McDonald’s has not many healthy options in its menu. Disregarding this consumers' trend, McDonald’s would lose its customers and the revenue would decrease.

To sum up, McDonald’s is a strong brand name. People all around the world recognize McDonald’s golden arches. McDonald’s has to use this advantage to attract more customers. Strong brand name would expectedly help the company in taking advantage of both opportunities. These opportunities are implementation of the low cost menu and home meal delivery. Adjusting prices based on customers' income may attract the significant market segment, including those with low income. Hence, putting low cost menu in practice in all restaurants will increase the number of the customers. Another strategy aimed at attracting more customers is food delivery as it can increase McDonald’s customer reach.

Both threats of the organization come from the sociocultural dimension of the general environment. McDonald’s can neutralize the threat of local fast food restaurant chains by adapting its own menu to local tastes. Besides, McDonald’s should invest in the market research to recognize local peculiarities in every given instance. The company can neutralize the threat of healthy eating trends introducing healthier food choices in its menu. It can diversify the menu and introduce food delivery to meet the customers’ demands. Flexible response to customer demand has always been the distinctive mark of McDonald’s business, and the company should invest in it.

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