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1.2.2 Weaknesses
1.2.3 Opportunities
MacDonald’s sold its Donatos Pizzeria back to its founder in 2003 and discontinued
Boston market operations outside of the US. The company will instead focus on
Chipotle Grill which is the company’s most successful non MacDonald’s branded
chain of restaurants.
1.2.4 Threats
Strength
• Strong brand
• Customer intimacy
• Product innovation
• Supplier integration Weakness
• Low depth and width of products
Opportunity
• Expand into tier2 and tier3 cities
• Entry into breakfast category Threat
• Changing customer lifestyle and taste
• Increased competition from local fast food outlets like burger king
1.2.5 Entry to Tier 2 and Tier 3 cities – The main target customer for McDonald’s
is the new urban Indian family. With the customer demographics constantly changing
and tectonic social and cultural shifts being observed in Tier 2 and Tier 3 cities
due to globalization, the company is now expanding to Tier 2 cities like Pune and
Jaipur.
1.2.6 Rolling out McBreakfast across all outlets – In India, the company has
recently launched its entry into the breakfast food category. This is now launched
on a pilot basis on select stores.
1.3 PESTEL Analysis of McDonald’s
PESTEL analysis is concerning the Macro-environment surrounding a Company, usually
in Strategic Analysis Report (SAR).
1.3.1 Political -
- Trading policies
- Employment Law
- Taxation (Corporate; Consumer)
1.3.2 Economic -
- Interest Rates
- Inflation
- Economic growth
- Exchange rates
- stage of business cycle
1.3.3 Socio-Cultural -
- Branding
- Demographics
- Lifestyle changes
- Health and welfare
1.3.4 Technological -
- Stock Control
- Government spending on research
- Energy use and costs
1.3.5 Legal -
- Competition Commision
- Employment Law
- Trade Regulations.
1.3.6 Environmental -
- Packaging
- Recycling
1.3.7 Table
The goal of these activities is to offer the customer a level of value that
exceeds the cost of the activities, thereby resulting in a profit margin for
McDonalds.
As Per the Porter's 5 Forces analysis McDonalds deals with factors outside an
industry that influence the nature of competition within it, the forces inside the
McDonalds influences the way in which the firms compete, and so the industry’s
likely profitability is conducted in Porter’s five forces model. A business has to
understand the dynamics of its industries and markets in order to compete
effectively in the marketplace. So McDonald’s rivalry in this competitive market
is blooming.
Americas McDonald’s
Placing products in the BCG matrix results in 4 categories in a portfolio of a
McDonalds:
1. Stars (=high growth, high market share)
• Frequently roughly in balance on net cash flow. However if needed any
attempt should be made to hold share, because the rewards will be a cash cow if
market share is kept. So, McDonald’s USA is under Star position.
2. Cash Cows (=low growth, high market share)
• Profits and cash generation should be high, and because of the low growth,
investments needed should be low. Keep profits high.
3. Dogs (=low growth, low market share)
• Avoid and minimize the number of dogs in a company.
• Beware of expensive ‘turn around plans’.
4. Question Marks (= high growth, low market share)
• Have the worst cash characteristics of all, because high demands and low
returns due to low market share