Introduction
The report will shed light on the international strategy report of the selected organization namely McDonald’s, one of the major brand names in the food and beverage industry of the US. In the initial parts of this report, an overview of the organization will be provided along with external macro forces and competition that influences the organizational business has been analyzed with the help of suitable models. In addition, the organizational strategy has been evaluated using several models along with preferred market entry strategies as well.
Company overview
This present study has been done by focusing on a selected organization namely McDonald’s, an American fast-food company founded in 1940 (Mcdonalds.com, 2021). This organization has gradually become one of the most reputed organizations among the American fast-food chain for its famous hamburgers. After the establishment of the organization, the managerial professionals have realized that franchisees need to be established in order to achieve success. Based on this realization, this organization has been able to establish 34000 outlets in more than 115 territories and countries (Mcdonalds.com, 2021). In the current year, this organization is running successfully with more than 1.9 million employees (Mcdonalds.com, 2021). The overall market revenue of this organization is nearly 21.076 billion US dollars and the net income is $6.025 billion.
| Mission | The mission statement of this company is to be their customers’ favourite place to eat and drink |
| Vision | The vision of this organisation is to move with velocity for driving in profitable growth and establishing a better version of itself by serving more customers more efficiently. |
| Objectives | ● To serve food in a fun and friendly environment
● To offer good returns to its stakeholders ● To offer high standards food to its customers with quick service and value for money |
Table 1: Company information
(Source: Mcdonalds.com, 2021)
Analysis of external forces macro forces on markets and competition
SWOT Analysis
In order to evaluate the strengths and weaknesses of the organisation, SWOT analysis of the organisation has been discussed in the below section:
| Strengths | Weaknesses |
| ● Food safety guidelines are strictly maintained within the organization
● This organization has global operations all over the world
● The cultural diversity of the location and region reflects on the foods and in menus as well. ● Along with the food, nutritional information has been provided to the customers (Namugenyi et al. 2019). ● All the outlets and food centers have been located in an excellent location |
● As the employee turnover rate has been increased, the training cost has been increased accordingly.
● Minimal varieties are available in the seasonal products ● A significant impact has been created on the investors as a large indifference has been encountered in operating marketing profits and net profits (Sari et al. 2021). ● The organization only focuses on offering grease fried foods and burgers and the other healthy options are being avoided. |
| Opportunities | Threats |
| ● This organization has started opening new outlets and franchises by following joint venture strategies (Rajawat et al. 2020).
● Recently introduced the Wi-Fi availability within the branches through advertising ● The organization has started expanding its business in newly developed parts of the world ● Upscale appearances have been created with an intention to attract more upscale customers |
● Being a fast-food chain, this organization has targeted the population from children to adults.
● This organization has no focus on offering healthier food to its customers rather than only fast food (Soegoto, 2020). ● According to a new market trend, the organization has been unable to introduce meals including fresh fruits and vegetables. ● The organization has been labeled with allegations of adding addictive additives. |
Table 1: SWOT analysis
(Source: Chia et al. 2020)
Analysis
In accordance with the above table of SWOT analysis of the organization, namely McDonald’s, several opportunities, threats, weaknesses, and strengths have been evaluated. In the above table, it has been seen that this organization has possessed several strengths, which have appeared as the beneficial aspects to have more business expansion in future (Chia et al. 2020). These identified strengths have been able to create different opportunities for this organization for gaining more customer retention rates of the organization.
Porter’s 5 forces
In order to evaluate and analysis of the competitors who are existing in the target market of that organization, porter’s 5 forces have been used and described in the below section:
Threats of competition (High)
Analyzing the external environment of the business of this organization, it has been encountered by several studies that the organization has been able to achieve the advantages of high competitiveness. The present target market of the fast-food industry has become very competitive which can create hurdles in the way of gaining high customer retention. It has been stated based on the view of Nataraja and Grantham (2020), who encountered that several companies have been included in this fast-food chain that offers almost the same foods or menu to the target audience of this organization. Some of the competitive companies have started offering more healthy foods rather than only fast foods and unhealthy ones. Additionally, the location of the outlets of the competitors like burger king and Yum Brand INC has influenced the competitiveness. These phenomena have created a strong competitive market for the organization namely McDonald’s.
Figure 1: Porter’s five-force analysis
(Source: Nataraja and Grantham, 2020)
Threats of a new entrance (High)
Present studies have discovered that this organization can be confronted by the risks of the new entrance into its target market (Raj and Singh, 2021). It has been identified by the market analysis that the organizations who have the intention to step into this industry need to have low start-up costs as the market has offered easy accessibility.
Threats of substitutes (Moderate)
It has been encountered by an effective market analysis that the strong competitors in the target market have been able to attract this organization’s customer base by supplying almost the same foods (Pyanikova et al. 2020). Therefore, it can be stated that the availability of substitute products in the target market can create an impact on the customer retention rate of McDonald’s.
Powers of suppliers (Low)
The bargaining power of the suppliers for this organization has been considered lower than other competitors who are existing in the target market. As per the view of Neacşu (2020), it can be stated that this organization has already gained a strong reputation in the food and beverage industry. Therefore, this organization has possessed high bargaining power over its suppliers.
Powers of Buyers (Low)
It has been discovered that, for this particular organization, buyers’ have very low bargaining power as the brand image is strong and reputed as well (Wu, 2020). This organization has been able to ensure the customers’ fewer chances of switching toward any other high brand image as this organization has offered low-quality purchases.
Analysis and evaluation of Company strategy also using appropriate models
Ansoff Matrix
In order to evaluate and analyze the organizational strategy, Ansoff Matrix has been used and described in the below section
| Present | New | ||
| Markets
|
Market penetration
● Happy meal ● Market pricing ● Speedy service ● Drive-through |
Product development
● Masala grill ● Mc Aloo Tikki ● Masala bun ● Paneer burger |
Present
|
| Market development
● Have outlets in 121 countries ● Have the intention of business expansion in Armenia, Nigeria and many more. |
Diversification
● Chipotle ● McCafe ● McStops |
New | |
| Products | |||
Table 2: Ansoff Matrix
(Source: Zanjani et al. 2020)
Analysis
Market penetration
The organisation has applied several strategies for promoting its existing products in the existing market. For instance, the company offers happy meals for kids, which has drive-through its consumers (Mcdonalds.com, 2021). The organization has also offered the advantage of home delivery to attract more customers under its brand name.
Market development
This organization has prepared its customer base in any new market by introducing its existing products. The presence of outlets of this reputed food chain organization in 121 countries helps the organization in promoting its existing products (Weiwei, 2021). On the other hand, this organization has intended to open outlets in countries like Nigeria, Armenia and many more. Additionally, this organization has launched its menu according to the taste of the religion and country.
Product development
The term product development refers to the activity of launching new products in the existing market of the organization. For instance, it can be stated that a majority of the Indians do not prefer beef, they have launched aloo Tikki burgers instead (Bakhtadze, E. and Phalavandishvili, 2020). On the other hand, this organization has offered McArabia in the state of Saudi Arabia.
Diversification
Several studies have confirmed that McDonald’s have worked on horizontal diversification rather than vertical diversification. McCafe and McStops have been established to compete with Starbucks (Jintana et al. 2020). In addition, this organization has an intention to open a new hotel in Switzerland to offer proper and strong competition to the existing competitors of this organization.
SAFe framework
In order to improve the marketing strategy of McDonald, the SAFe framework has been used and discussions regarding this framework have been discussed in the below section:
Figure 2: SAFe framework
(Source: Duan et al. 2020)
Engagement
In accordance with the performance of this organization and the peasant status of the target market, it can be proposed that this organization has been successful in increasing the engagement level of the customers (Duan et al. 2020). The variety of the offered foods and the preparing menu is based on the taste of local people that have increased the engagement of customers with this brand name at the rate of nearly 3.25%.
Productivity
The organization, namely McDonald’s, has been productive, as it has offered several different products based on the local people’s tastes and diverse cultures (Xia, 2020). Therefore, it can be stated that the productivity of this organization is efficient and effective to gain customer support.
Quality
It can be stated that the quality of the offered food is not well in accordance with the demand for healthy food among the current group of customers (Duan et al. 2020). The new trend of the food industry is to have a healthy and green diet, which is not served by this organization.
Time to market
The organization first started in 1940 and is continuing its food production and offering to the customers. This organization has normally set the marketing time between 7 AM to 12noon (Mcdonalds.com, 2021). However, in some other countries, the duration of the marketing time of this organization is only 2 hours.
Preferred Market Entry Strategy
The organization namely McDonald’s have followed the franchising strategy in order to have an effective market entry mode. This model has appeared as one of the beneficial ones as this strategy has helped this organization in placing existing products in new territories (Mcdonalds.com, 2021). In this way, without offering new products, this organization has managed to build a strong customer base in new territories.
In addition, as this organization has followed the franchising strategy for having an effective market entry mode, this organization has been able to reduce the product placement cost in accordance with the low opportunity cost. Additionally, this organization has been able to build up a strong brand image, therefore, the bargaining power of customers and stakeholders have been distressed accordingly (Bretas and Alon, 2021). Based on this discussion and the evolution of the market status of McDonald’s, the chosen market entry mode that is franchising has been beneficial for the business profitability of this fast-food chain.
Conclusion
This study has described the background of the organization namely McDonald’s and, in order to evaluate the market status and market entry strategies, several frameworks and models have been used. It has been evaluated in the above study that this organization has possessed several strengths and opportunities to bring more customer support under its brand name by offering the existing food items in new territories. On the other hand, it has been encountered by the competitor analysis that this organization has strong competitors and possesses a high risk of the presence of substitute offerings. This phenomenon has been considered a threat. In order to have a winning point against the identified risk factors, this organization has chosen and followed the franchising strategy as a market entry mode in new places.
References
Bakhtadze, E. and Phalavandishvili, N., 2020. IDENTIFYING TOURISM MARKET GROWTH OPPORTUNITIES AND RISKS IN THE AUTONOMOUS REPUBLIC IN AJARA (GEORGIA). ECONOMIC SCIENCE FOR RURAL DEVELOPMENT 2020, p.35.
Bretas, V.P. and Alon, I., 2021. Franchising research on emerging markets: Bibliometric and content analyses. Journal of Business Research, 133, pp.51-65.
Chia, X.R., Kee, D.M.H., Khor, S.T., Chin, K.Y., Lok, T.X., Almutairi, H.A., Quttainah, M.A., Balakrishnan, H. and Kulkarni, S., 2020. Contributing Factors to Organizational Success: A Case Study of McDonald’s. International journal of Tourism and hospitality in Asia Pasific (IJTHAP), 3(2), pp.38-47.
Duan, Q., Quynh, N.V., Abdullah, H.M., Almalaq, A., Do, T.D., Abdelkader, S.M. and Mohamed, M.A., 2020. Optimal scheduling and management of a smart city within the safe framework. IEEE Access, 8, pp.161847-161861.
Jintana, J., Sopadang, A. and Ramingwong, S., 2021. Idea selection of new service for courier business: The opportunity of data analytics. International Journal of Engineering Business Management, 13, p.18479790211042191.
Namugenyi, C., Nimmagadda, S.L. and Reiners, T., 2019. Design of a SWOT analysis model and its evaluation in diverse digital business ecosystem contexts. Procedia Computer Science, 159, pp.1145-1154.
Nataraja, S. and Grantham, B., 2020. Rivalry amongst top-five major airlines in the us market. International Journal of Research-GRANTHAALAYAH, 8(7), pp.160-173.
Neacşu, N.A., 2020. QUALITY-A FACTOR FOR INCREASING COMPETITIVENESS ON THE ROMANIAN CAFE MARKET. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, 13(2), pp.109-116.
Pyanikova, E.A., Kovaleva, A.E., Galchenko, S.I., Kobchenko, S.N., Ovchinnikovа, E.V. and Pikalova, M.B., 2020, August. Digitalization of Restaurant Business as a Factor of Competitiveness Increase. In Russian Conference on Digital Economy and Knowledge Management (RuDEcK 2020) (pp. 546-550). Atlantis Press.
Raj, S.K. and Singh, N.K., 2021. Strategizing of Fast Food Industries using A Balanced Scorecard Approach: A Case Study of McDonald’s Corporation. Raj, SK & Singh, NK (2020). Strategizing of fast food industries using a balanced scorecard approach: A case study of McDonald’s Corporation. International Journal of Humanities, Arts and Social Sciences, 6(6), pp.258-273.
Rajawat, A., Kee, D.M.H., Malik, M.Z.B.A., Yassin, M.A.Q.B.M., Shaffie, M.S.I.B.A., Fuaat, M.H.B., AlDosari, N. and Santoso, M.E.J., 2020. Factors: responsible for McDonald’s performance. Journal of the Community Development in Asia (JCDA), 3(2), pp.11-17.
Sari, A.N., Pangestu, S., Erisya, Y. and Putri, A.M., 2021. Analisis Strategic Management Pada Restoran Cepat Saji McDonald’s. Jurnal Pendidikan Tambusai, 5(2), pp.2917-2927.
Soegoto, F.A., 2021. Product Development using SWOT Analysis. International Journal of Entrepreneurship & Technopreneur (INJETECH), 1, pp.1-10.
Weiwei, L., 2021. Analysis of Ansoff Growth Strategy: a Case of Chinese Yunnan Baiyao Company. Industrial Engineering and Innovation Management, 4(2), pp.1-6.
Wu, F., 2020. An Analysis of McDonald’s Business Model Based on Business Ecosystem Theory. In RSU International Research Conference (No. 1, pp. 1756-1763).
Xia, J., 2020, November. Linguistic Realizations of Metadiscourse in Advertising Slogans: A Case Study of McDonald’s. In 2020 5th International Conference on Modern Management and Education Technology (MMET 2020) (pp. 696-699). Atlantis Press.
Zanjani, S., Iranzadeh, S., Khadivi, A. and Feghhi Farahmand, N., 2020. Designing a Corporate Growth Strategy Based on Ansoff Matrix Using Fuzzy Inference System. Innovation Management in Defense Organizations, 3(2), pp.151-178.
Websites
Mcdonalds.com, 2021. Homepage. Available on: https://www.mcdonalds.com/us/en-us.html [Accesed on 4th December 2021]
