Business Strategy of McDonald's - Case Study Example

Business Strategy – McDonalds Introduction: In order to create a new strategy, the managers of an organization need to look at many factors that affect the strategic planning directly and indirectly. Different techniques of strategic planning can be used in order to create a new strategy, SWOT analysis being one of the main ones. McDonalds is a multinational organization which is set up in many countries and profitably serves its customers. A SWOT analysis, PESTLE analysis and stakeholder analysis will be carried out for McDonalds to review its position and strategic planning formulation (Betz, 2002, p. 31). Organizational audit for McDonalds: The SWOT analysis includes the strengths, weaknesses opportunities and threats for McDonalds. The strengths of the organization are many since it is an international food outlet with food for all kinds of age groups (Daft, Lane, 2009, p. 191). The main strength is its brand name as it is recognized as one of the ten strongest brands around the world. It strong brand name and image has led to a large market share serving in almost 120 countries. The company has its own program for the training of managers which enhances their service and helps the company to grow. McDonalds has adopted many innovative techniques for marketing such as the statue of Ronald McDonald in almost all outlets which is recognized by every adult or kid. The organization has also started using new technologies in their services for example ordering online. The weakness of McDonalds is the unhealthy food image supported by many documents around the world by journalists stating the intake of McDonald’s increases obesity and provides less nutrition. Due to the increased competition as well, McDonalds have suffered a loss in the number of their customers. Many customers worried about their health stop eating McDonalds because they use Trans fat which is unhealthy. Many legal actions have been taken against them, they serve unbalanced food with lesser fruits and vegetables, they have a high employee turnover rate and dissatisfied franchisees because of the high amount they have to pay. These factors have been the weaknesses of McDonalds since years (Ungson, Wong, 2008, p. 97). There are many opportunities for McDonalds for their future. As the fast food industry is growing rapidly, McDonalds has the opportunity to introduce new deals and products and increase their value of food. Globalization is an opportunity to spread their restaurants in more countries by adopting different marketing techniques. A low cost menu and discounted deals can attract more customers, even those with low incomes. A healthy meal would be a good way to get back the customers who worry about their health thus, diversifying the taste of their products as well as fulfilling the needs of customers through more options (Yuece, 2012, p. 5). Competitors are the biggest threat to McDonalds as more fast food restaurants are starting to serve the customers. The health crisis including obesity and nutritious food is a threat for the sales of McDonalds. Moreover, the economic recession may also turn down the number of customers eating McDonalds regularly. McDonalds uses HCFC-22 which affects the ozone, thus it is a threat for McDonalds as it would lose those customers that care about the earth and human life (Doole, Lowe, 2005, p. 109). Environmental audit for McDonalds: The environmental audit includes the external factors that influence the business strategic planning for example political, social, economical, legal, technological and environmental factors. The political factors that may influence the internal affairs of McDonalds are the policies of the countries in which they are operating such as the groups in India and United States are taking actions for the bad public health due to fast food. Some regulations also control the services of an organization such as the legal regulations of a specific state or city. There are also different laws for every country for the hiring, training or compensation of employees thus McDonalds need to operate with good relations with the government (Mohapatra, Singh, 2012, p. 310). The branches and franchises at different cities and states around the globe influence form the economical factors of that area such as the inflation rate, exchange rate and recession. The internal planning of the organization eventually disturbs when the economy affects the businesses of the area. The social factors of the area affect the organization as the needs and tastes of the customers vary according to which the organization plans its deals, discounts etc. The pattern of the market and the customer behavior affects the product personality. The technological factors also focus on the marketing techniques especially for the young adults to whom the social media and digital commercials attract more. Thus, internet is considered an effective tool to attract the young population of most areas (McDaniel, 2008, p. 42). McDonalds hold a responsibility towards the environment of the country according to which they should operate in their organization. These responsibilities involve the accusation of the environmental damage that can be caused because of the usage of abusive products in producing food, or waste material for example McDonalds should minimize the use of plastic cups and monitor the disposal of water. The legal factors that affect the strategies of McDonalds are the government regulations made on fast food restaurants. The laws in Muslim countries about the Halal meat, and laws of European countries against the genetically modifies meat products. With the help of the PESTLE analysis, the organization can strategically plan their goals in regard to the internal and external influencing factors (Thomson, Fuller, 2010, p. 78). Stakeholder analysis: Stakeholders play a key role in the strategic planning of an organization. It is important for every organization to understand the essential need for managing stakeholders in the organization. Stakeholders include employees, customers, local government, shareholders and any party which is directly related to the organization’s strategies and functions. It depends on the organization that which stakeholders are how important. While planning the strategies, the organization should make sure that the stakeholders are identified and understood. Stakeholders and their demands must be identified as they influence the business operations directly and are equally important as other internal and external factors (Bangs, 2002, p. 6). The relationship of the stakeholders with the business is an important aspect to consider. Every stakeholder has an indefinite relationship with the organization for example the customers are one of the main stakeholders as the business sales depend upon the customers. All the products and promotions of an organization are done for the customers as more customers mean more sales and more profit. Thus, customers make the organization. The employees are important because they are the ones because of whom the organization is able to function, make products, and promote them and so on. The shareholders are the ones who financially support the organization’s functions through investments. The government is important as it provides the license and regulations under which the organization is permitted to function. Knowing the stakeholders and their relations with the organization will make the job of the management easier to create a new strategy for the business. Interaction and consultation with the stakeholders is very important for the business future planning. Stakeholder analysis requires a regular updating as they are the team members who are directly affected by the business problems and solutions (Harrison, Wicks, 2010, p. 179). Conclusion: However, in order to formulate a new strategy, it is important for the business to choose the right planning techniques. These techniques include the SWOT analysis, PESTLE analysis and stakeholders’ analysis. None of these three can be ignored as they directly show the position of the business according to the internal and external influential factors. The SWOT analysis presents the business with an overview of the internal factors and the future opportunities and threats whereas the PESTLE analysis completely shows the external factors which are equally important for the internal decisions of a business. The stakeholder analysis is relatively the most important as it makes the business able to operate and function. References Bangs D. 2002. Market Planning Guide USA: Kaplan Publishing Betz F. 2002. Executive Strategy: Strategic Management and Information Technology. NY: John Wiley & Sons Daft R., Lane P. 2009. Management [With Access Code] USA: Cengage Learning Doole I., Lowe R. 2005. Strategic Marketing: Decisions in Global Markets Italy: Cengage Learning EMEA Harrison J., Wicks A. 2010. Stakeholder Theory: The State of the Art NY: Cambridge University Press McDaniel C. 2008. Essentials of Marketing USA: Cengage Learning Mohapatra S.,  Singh R. 2012. Information Strategy Design and Practices India: Springer Thomson N., Fuller C. 2010. Basic Strategy in Context: European text and cases UK: John Wiley & Sons Ungson G.,  Wong Y. 2008. Global Strategic Management NY: M.E. Sharpe Yuece I. 2012. SWOT Analysis of McDonald’s and Derivation of Appropriate Strategies USA: GRIN Verlag Read More