SWOT analysis is a framework in strategic management that helps the management evaluate a company’s competitive position and develop a strategic plan. The framework analyses both internal and external strategic factors that affect a company’s current and future business operations. Therefore, to understand and evaluate a McDonald’s competitive position, the SWOT analysis of McDonald’s Company will come in handy in providing a realistic and data-driven look at the strength and weaknesses of the company within the fast-food industry.
In this article, we shall delve into the SWOT analysis of McDonald’s Company, one of the largest food chain companies in the US. The company has grown its capacities to be one of the ideal places for affordable, fast foods. Founded in 1940 by two brothers, Maurice and Richard, as a BBQ joint, the company transitioned to a fast-food restaurant before initiating a franchise and later on a corporation. As of 2021, McDonald’s has grown among the top 10 global brands, with several franchises in countries like Italy, Canada, Germany, Australia, France, the United Kingdom, the Netherlands, and many more. This article aims to explore the latest dynamics in the SWOT analysis of McDonald’s Company, with a close look at how the company makes of its competitive advantage to gain authority in the fast-food industry.
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What is the SWOT Analysis of McDonald’s?
The SWOT analysis of McDonald’s Company highlights the Strengths, Weaknesses, Opportunities and Threats that give direction for the company’s growth. With this analysis, it becomes easier to understand where McDonald’s stands as a company. For instance, the strengths in the SWOT analysis of McDonald’s provide a preview of the strategies used by the company to sidestep the weaknesses. In addition to this, the SWOT analysis of McDonald’s Company also reveals potential threats that the company could encounter and how to manage them. Therefore, for McDonald’s to meet its long-term competitive advantage, the company must address concerns brought forward in the SWOT analysis of McDonald’s company.
What Are the Strengths of McDonald’s?
The strengths in the SWOT analysis of McDonald’s is the first step towards assessing the performance of the company. These strengths show the vital areas that have led the company to a good position within the market. Furthermore, the strengths in the SWOT analysis of the McDonald’s Company have helped the firm become one of the fastest-growing food chains. The strengths of McDonald’s include the following:
- Strong brand image, name and reputation
- Large market share
- Specialized training for McDonald’s managers
- Global network
- Innovative technology
- Strong marketing strategy
McDonald’s Strengths Explained
McDonald’s has managed to establish a strong brand image, name and reputation through effective promotional channels and the quality of food. As of 2021, McDonald’s is the number one fast-food company, with over 31,000 restaurants distributed in almost 120 countries worldwide. With the global widespread of McDonald’s restaurants, the company is now recognized everywhere and has managed to give itself one of the most powerful brand names globally. In addition, McDonald’s investment in an international presence further increases the brand’s strength.
In the food industry, McDonald’s is considered the largest player in both size and global reach. Even when major competitors like Burgers King and Wendy’s were losing the market share back in 2006, McDonald’s has increased its market share steadily. As of 2021, McDonald’s has a 19% market share, with Yum Brands at 9% and Burgers King and Wendy’s at 2%.
In the SWOT analysis of McDonald’s Company, training of managers is considered one of the company’s strengths. As a result, McDonald’s conducts a specialized training program for its managers to create a workforce with a professional management team. The training program, called the Hamburger University, has led to several well-trained managers who enhance company development.
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McDonald’s is also winning big because of the integration of innovative technology and brilliant marketing strategies. The company keeps up with the latest technological trends while maintaining a marketing strategy that cuts across its audience. In addition, the company conducts a thorough analysis of market needs resulting in marketing strategies that boost the company’s success.
What Are the Weaknesses of McDonald’s?
In the SWOT analysis of McDonald’s Company, the weaknesses are linked to the company’s market focus, the processes and the products by the company. In this section, the weaknesses highlight strategic factors that limit the company’s performance. McDonald’s main weaknesses include the following:
- Dependence on unhealthy food options
- Heavy dependence on franchises
- Aggressive competition
- Interruption in supply chain
- Employee Dissatisfaction
McDonald’s Weaknesses Explained
Among the greatest weaknesses of McDonald’s company is that it relies heavily on unhealthy food options. As a result, the company has attracted several controversial claims that have led to resentment from its target market. For instance, Morgan Spurlock created a documentary, “Supersize Me”, illustrating how McDonald’s and other fast-food chains contributed to the societal increase in obesity.
McDonald’s business model also has a heavy dependence on franchises which presents a weakness for McDonald’s. 90% of McDonald’s business depends on franchisees for operations which creates several limitations to the company. Several franchises translate to extra control on the business operations. Therefore, if a franchise does not cooperate, or the franchise’s financial performance is not on track, it creates a problem for the whole company. In other instances, the implementation of the main campaign or the choice of an essential strategy would be tough to make if there is no acknowledgement from any of the numerous franchises. As a result, the overall role of the franchisee becomes crucial and essential.
McDonald’s continues to receive strong competition from major brands such as Burger King and Wendy’s, which leads to the loss of customers who prefer other brands to McDonald’s. Moreover, the lack of employee satisfaction witnessed at McDonald’s has led to a lot of criticism from the employees. As a result, the workers have organized several strikes championing the increase in wages, which affects the company’s reputation.
The interruptions in McDonald’s supply chain are also among the most prevalent weaknesses in the SWOT analysis of McDonald’s Company. A disturbance in the supply chain would lead to a reduction in product availability, which is the heart of business operations in the company. In addition, if any raw material is not delivered as scheduled, an entire production would be affected. In regards to this, if a franchisee would be affected by the disruptions in the supply chain, the disruptions would increase operational expenses, which reduces the net profit and revenue.
What are the Opportunities of McDonald’s?
In the SWOT analysis of McDonald’s Company, the opportunities are dependent on the product mix and global growth. The opportunities of McDonald’s Company highlight the external strategic factors that support the growth of the business. McDonald’s’ main opportunities include the following:
- Growth of the fast-food industry
- Enhancement of the food menu
- Digital marketing
- Rebuilding of the brand image
McDonald’s Opportunities Explained
With the increased growth of the fast-food industry, McDonald’s has a chance to increase its business operations to meet the growing market demand. Additionally, more people continue to like fast foods, which increases the market for fast foods. Therefore, McDonald’s should conduct market research that would lead to the capture of more consumers.
Due to the increased demand for healthier food options, McDonald’s can improve its food menu to capture consumers who are more conscious of their health. Even though the company services a balanced menu, there is always room for improvement to capture more consumers. This way, McDonald’s stands a chance to capture consumers who are conscious of health and diet. McDonald’s should recreate its menu to accommodate the current generation for increased customer base and retention of existing customers.
The contemporary world has embraced digital marketing, with several leading brands indulging in digital marketing to increase their market share and revenue. Therefore, to increase its competitive advantage, McDonald’s devotes itself to digitalization. McDonald’s utilizes digital technology by running several social media platforms, including creating blogs and company websites to increase customer engagement. More so, McDonald’s has embraced digital technology for customer engagement, employee engagement, franchise management and supply chain management.
In addition to this, McDonald’s can initiate a strategy to curb the notion that fast food is junk food. This way, the company can rebuild its brands into a company that services customized and healthy offerings alongside the popular fast foods. Such development would easily increase sales, which reflect in the net profit.
What are the Threats of McDonald’s?
In the SWOT analysis of McDonald’s Company, the threats are based on sociocultural trends and aggressive rivalry. These threats also add to the strategic factors that hinder McDonald’s business development. The most common threats to McDonald’s Company include:
- Aggressive competition
- Campaigns for healthy living
- Regulatory pressure
- Economic recession
- Global pandemic
McDonald’s Threats Explained
With the increased growth of the fast-food industry, several companies are creating aggressive competition for McDonald’s. Companies such as Subway, Wendy’s, Burger King are strong competitors who continue to create a competitive environment in the fast-food industry. Even so, several other local brands continue to grow at a fast rate, thereby creating more competition for McDonald’s. With this rise of competition within the industry, McDonald’s needs to create a customer-centric business model, invest in market research and product invention.
The continuous campaigns for healthier food options pose a threat to McDonald’s and other fast-food restaurants. With the growing number of obesity and heart problems in the USA, major fast-food chains like McDonald’s face a reduction in net profit since consumers are beginning to seek healthier food options. Moreover, regulatory pressure from the government leads to an increase in operational costs, which lowers the net profit. Even when McDonald’s is seeking to venture into new markets, issues arising from higher regulatory pressure may limit the company’s business operations.
Other issues such as economic recession or fluctuation in different countries may deeply affect the business profit. With McDonald’s operating in several countries around the world, a crisis in any economy will impact the company’s general business operations.
The recent pandemic, Covid-19, has had an economic impact on McDonald’s, which has led to the closure of most of its outlets. The closure of outlets affects the brand’s financial standing.
Competitors of McDonald’s
McDonald’s major competitors in the fast-food industry include Burger King, Wendy’s, Yum Brands (Taco Bell, KFC, and Pizza Hut), Chipotle, Starbucks and Subway. These fast-food restaurants continue to pose more aggressive competition towards McDonald’s, which creates a need for more research and development.
What is the USP for McDonald’s?
USP refers to the Unique Selling Proposition of a company or a brand. The USP for a brand highlights the qualities of a brand that sets it apart from its competitors. For example, the USP for McDonald’s is Quality, Service, Cleanliness & Value for money. The company guarantees customers high-quality products, service with a smile, a clean and pleasant environment accompanied by affordability.
The SWOT analysis of McDonald’s Company highlights the company’s strengths, weaknesses, opportunities, and threats. The analysis shows that even though the company has managed to top the list of fast-food brands, there is a need to make vast improvements in growth and development. The rapid changes in the market scenario may affect its sales if they do not seek growth opportunities. The SWOT analysis of McDonald’s Company hints that there is a need to improve employee’s satisfaction and the company’s menu. With these improvements, McDonald’s will remain firm within the fast-food industry.