SWOT Analysis of McDonald`s

Group Members Names:

1. Ali Mahmood Alam Reg # 4289
2. Lal Muhammad Reg # 4414
Submitted to : Sir Adnan Anwar
Course : Managerial Policy
Class I.D. : 70348
Semester : Fall 2015

McDonald `s SWOT Analysis

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McDonald `s SWOT Analysis

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McDonald `s SWOT Analysis

Strengths
1. Largest fast food market share in the world. McDonalds is the largest fast food
restaurant chain in terms of total world sales (8%). It is the second largest outlet
operator with more than 34,000 outlets, serving 69 million consumers every day in
119 countries.
2. Brand recognition valued at $40 million. Companys brand is the most recognized
brand in fast food industry and is valued at $40 billion. McDonalds is also famous by
the Ronald McDonald clown.
3. Locally adapted food menus. The fast food chain is operating in many diverse
cultures where tastes in food are extremely different than those of US or European
consumers. Thus ability to adapt to local tastes is one of McDonalds strengths
4. Partnership with best brands. McDonalds offers only most popular brands in its
restaurants, such as: Coca Cola, Dannon Yogurt, Heinz ketchup and others.
5. More than 80% of restaurants are owned by independent franchisees. Therefore,
McDonalds can focus more on perfecting its serving system and marketing
campaigns.

6. Children targeting. The business successfully targets very young children through
offering playgrounds, toys with its meals and advertisements.
7. McDonalds spends on advertising more than the next 4 fast food restaurant chains
combined.

Weakness:
1. Negative publicity. McDonalds is heavily criticized for offering unhealthy food to its
customers, stimulating obesity and strong marketing focus on very young children.
2. Unhealthy food menu. Although McDonalds tries to introduce healthier choices in
its menu, the menu is largely formed of unhealthy meals and drinks. Such menu
offering prompts protests by organizations that fight obesity and hence, decreases
McDonalds popularity.

3. Mac Job and high employee turnover. Mac Job is a low paid and a low skilled job,
which is often seen negatively by its employees. This results in lower performance
and high employee turnover, which increases training costs and add to overall costs of
McDonalds.

4. Low differentiation. McDonalds is no longer able to substantially differentiate itself

from other fast food chains (at least not enough to gain some market share) and opts
to compete by price rather than by additional features.

Opportunity:
1. Increasing demand for healthier food. While demand for healthier food increases,
McDonalds could introduce more healthy food choices in its menu and reverse its
weakness into strength. McDonalds is trying to seize such an opportunity and soon
plans to open only vegetarian restaurant in India.
2. Home meal delivery. McDonalds could exploit an opportunity of delivering food to
home and increase its reach to attract customers.
3. Full adaptation of its new practices. McDonalds has redesigned its logo and
restaurant design in 2006. In addition, it has introduced some new practices. In a
result, remodeled restaurants have seen 8-9% higher than average market growth.
McDonalds should finish remodeling all of the restaurants and adapt the best
practices in them as soon as possible.
4. Changing customer habits and new customer groups. Changing customer habits
represent new needs that must be met by businesses. So far, the company has been
successful in introducing its McCaf, McExpress and McStop restaurants to meet the
changing customer habits and the needs of previously untapped customer groups.

Threats:
1. Saturated fast food markets in the developed economies. The fast food market in
the developed countries is already overcrowded by so many fast food restaurant
chains and this already proves to be a threat to McDonalds as it barely grew through
2012.
2. Trend towards healthy eating. Due to government and various organizations
attempts to fight obesity, people are becoming more conscious of eating healthy food
rather than what McDonalds has to offer in its menu.
3. Local fast food restaurant chains. Local fast food restaurants can often offer a more
local approach to serving food and menu that exactly represents local tastes. Although
McDonalds does a great job in adapting its own menu to local tastes, the rising
number of local fast food chains and their lower meal prices is a threat to
McDonalds.
4. Currency fluctuations. The business receives a part of its income from foreign
operations. The profits that are sent back to US have to be converted into dollars and
may be affected by the exchange rates, especially when the dollar is appreciating
against other currencies. In 2012, McDonalds profit was largely affected by
appreciating dollar.
5. Lawsuits against McDonalds. McDonalds has already been sued for many times
and lost quite a few lawsuits. Lawsuits are expensive as they require time and money.
And as McDonalds continues to operate more or less the same way, there is high
probability for more expensive lawsuits to come.

References:
1. McDonald`s Corporation Case Study prepared by Henry C. K. Chen of the University
of West Florida.
2. The New York Times (2012). How McDonalds came Back Bigger than Ever.
Available at: http://www.nytimes.com/2012/05/06/magazine/how-mcdonalds-cameback-bigger-than-ever.html?pagewanted=2&_r=0&ref=mcdonaldscorporation
3. McDonalds Investors (2013).Company profile. Available at:
http://www.aboutmcdonalds.com/mcd/investors/company_profile.html
4. United States Securities and Exchange Commission (2012). 10-K Form McDonalds
Corporation. Available at:
http://sec.gov/Archives/edgar/data/63908/000119312511046701/d10k.htm
5. Inter brand (2013). Best Global Brands 2012. Available at:
http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands2012.aspx