Documente Academic
Documente Profesional
Documente Cultură
MBA (1.5)
Semester: 2nd
Group Members:
Maria Nisar
Aiman Gillani
Waleed Rehman
Jalal ul din
Ahmed Khan
Introduction:
The fast-food industry is dynamic with a variety of competitors. This report identifies the current
factors influencing the industry before specifically focusing on McDonalds Corporation, who is
considered as the current market leader. The report identifies several areas for improvement and
makes strategic recommendations for McDonalds to enhance its position.
PESTEL Analysis:
The following framework provides an analysis of the external international marketing
environment, relating to the fast-food industry:
Factors
Impact of Factor
Potential Opportunity
or Threat
Threat
Economical
*Inflation rate
*High unemployment
rate
Threat
Social
*Health consciousness
and safety awareness
*Population and its
growth rate
Opportunity
Opportunity
Political
Technological
Environmental
Legal
1. Political:
*Lobbying for
environmentally friendly
material
*Monitor the waste
disposal
*Advertisement
regulations
*Health lawsuits
Opportunity
Major threat
The fast-food firms must comply with country-specific political requirements, such as national
minimum wage regulations, affecting costs. Hygiene and quality regulations vary significantly
between nations and may influence the quality of products provided by fast-food outlets.
Different countries set varying regulations regarding labeling and packaging.
2. Economical:
The company also has to consider the economic standing of the state on which they operate on.
The rate at which the economy of that particular state grows determines the purchasing power of
the consumers in that country. Hence, if a franchise operates in a particularly economically weak
state, hence their products shall cost higher than the other existing products in the market, and
then these franchises must take on certain adjustments to maintain the economies of scale.
3. Social:
Obtain the relevant information from the target market in addition to the individual customers of
the organization. It is imperative that before a franchise is granted to a particular market, a well
drafted and comprehensive market research should be conducted initially so as to establish the
acts that would conform to good customs, public policies, and morals of the said state. Similarly,
the company should find out the shifts in areas like the consumer behavior and purchasing
patterns of the market. Fundamentally, this is the key condition for executing a suitable customer
relationship management system.
4. Technological:
McDonalds generates a demand for their own products (2006).The companys key tool for
marketing is by means of television advertisements etc. As consumer familiarity with new
technology increases, fast-food firms are using channels such as social media websites to engage
with their customers. For example, McDonalds is the 9th most liked brand on Facebook
(CNBC, 2012).
5. Environmental:
6. Legal:
Global operators must comply with country-specific regulations and legislation. This includes
opening hours, taxation and employment regulations such as the National Minimum Wage
Regulations (1999) in the UK. Firms are often required to meet national food standards such as
the requirements set out by the US Food and Drug Administration (FDA). Furthermore,
authorities are becoming increasingly worried about childhood obesity associated with the
industry (WHO, 2012) and have tightened regulations regarding targeting children.
Due to low switching costs, customers can easily move from McDonalds towards new fast food
restaurant firms. As well as the moderate capital costs of establishing a new restaurant makes it
moderately easy for
McDonalds. It is difficult and expensive to build a strong brand that could match the
McDonalds brand. Thus, this element of the Five Forces analysis shows that the threat of new
entrants is a considerable issue for McDonalds.
McDonalds have many substitute products like as products from artisanal food producers and
local bakeries. Customers can also cook their food at home. It is also easy to shift from
McDonalds to these substitutes (low switching costs). In addition, these substitutes are
competitive in terms of quality and customers satisfaction. In this case of McDonalds,
substitutes are a major issue that the company must address through approaches like product
quality improvement.
Fast food restaurant industry has many organizations of various sizes, such as global chains like
McDonalds and local fast food restaurants. Most medium and large organizations aggressively
market their products. McDonalds customers experience low switching costs that means they
can easily transfer to other restaurants whenever they want. This element shows that competition
is among the most significant external forces on the business. Although McDonalds and Burger
King almost hold a duopoly in the burger segment. McDonalds spent over $650 million on
global advertising in year 2009.
Due to the ease of changing from one restaurant to another (low switching costs), consumers can
easily impose their demands on McDonalds. In relation, because of market saturation, customers
can choose from many fast food restaurants other than McDonalds. in addition with this, there
are many substitutes to firms like McDonalds. These substitutes include food outlets, artisanal
bakeries, as well as foods that one could easily cook at home. Based on this element,
McDonalds must develop strategies to increase customer loyalty that really matters for firms.
The large population of suppliers weakens the effect of individual suppliers on McDonalds. This
is especially due to the lack of regional or global alliances among suppliers. In relation to this
most of McDonalds suppliers are not vertically integrated. It means that they do not control the
distribution network linked to McDonalds facilities. Also, the relative abundance of materials
like flour and meat reduces suppliers influence on McDonalds.
supplier power is a minimal issue for McDonalds.
2) Speed of Service:
Fast food that lives up to its name gains more business than fast food that is actually slow. Many
people grab fast food on the way to work or to another destination. The reason that drive-through
windows are popular is that people don't even want to take the time to get out of the car. The
faster a restaurant can deliver the ordered food, the happier the customer is. Setting up efficient
and standardized kitchens and focusing on foods that can be cooked quickly are two of the ways
that McDonald's became so successful in this competitive industry, according to Business Week.
3) Adaptation of Localization:
Localization is the process of making the content relevant to a target culture, complete with
correct spelling and the use of local and cultural references. It can involve everything from
communication style to design preferences. For example, many Asian cultures tend to prefer
more interactive, colorful websites, so videos, pop-up text, and a number of different entry points
are commonly used in those cultures. In contrast, Scandinavian and Northern European
customers prefer more minimalist, text-heavy designs.
Ideally, localization of content should be an integral part of the creation process. McDonalds
involves its international teams at an early stage of product development, ensuring it can adapt
their most effective marketing strategies to each individual culture where its campaigns are rolled
out. Its in-country translation and localization teams ensure that the content strikes the right note
in each country.
Of course, not all content marketers will have the resources for full-time marketing teams based
in each country. An alternative is hiring native-speaking translators or localization experts, as
required, to ensure the content is tailored for the target audience.
4) Quality of Food:
McDonald's, Burger King and Wendy's are examples of extremely successful fast food branding.
Their signs, logos and slogans are recognizable around the world. Fans of fast food like
predictability, and they want to know exactly what they are going to get before they go through
the doors, according to the website Customer Service Zone. By providing consistent, easily
recognizable and simple branding, a business reassures customers that nothing has changed.
Simple slogans that lodge themselves in the brain are repeated endlessly on television and radio
commercials, ensuring that when customers see the fast food outlet, they are primed to respond
because the brand is already "inside" of them.
6) Environment:
According to the U.S. Department of Labor, approximately 7.7 million employees are working in
the food and beverage serving industry. Many of them age 16 to 19. Although working in this
industry is generally safe, employees are often exposed to hazards that threaten their health and
safety. Fast-food chains are required by state and federal laws to have internal policies to secure
the health and safety of employees. The employees and managers of fast-food restaurants are
responsible for implementing these safety regulations.
7) Kitchen Visit:
With pride and transparency, McDonalds open their doors and welcome us to tour their kitchen
and take a close look at the quality of their products. The Open Door Program is a chance for us
to be assured that they are committed to serve the best quality products, prepared with
compliance to the highest standards of safety and cleanliness by a qualified team.
High quality is their standard.
McDonald
KFC
Burger King
Subway
Location
Speed of Service
Adaptation of Localization
10
9
7
9
8
7
9
8
Quality of Food
Menu Selection and Pricing
9
10
8
9
7
7
9
8
Environment
Kitchen Visit
9
10
9
0
8
0
7
0
12
10
8
6
4
Mcdonald
KFC
Burger King
Subway