McDonalds SWOT Analysis

Strengths

    * It has a strong global presence and is considered as a market leader in both the domestic as well as the international markets.

    * It is a global brand that owns 31,000 restaurants serving in 120 countries. Of these 31,000 restaurants at least14,000 restaurants are situated in the US.

    * It uses economies of scale for reducing the cost, as its huge expansion diversifies the overall risk involved with the economic performance.

    * They own an active children’s charity by the name‘The Ronald McDonald House’.

    * It takes steps in adjusting the Ingredients and product offerings in order to comply with the upgraded health standards deemed necessary by the USDA.

    * It earns revenue by fast food sales as well as a property investor and a franchiser of restaurants.

    * It has a firm real estate portfolio.

    * It has branded menu items i-e Big Mac, Chicken McNuggets, which further promote McDonalds.

    * Its recognized as one of the world’s most recognized logos.

    * It is recognized as a socially responsible and community oriented firm.

    * It adapts to the cultural differences regarding the region where the restaurant is set up.

    * It has located itself in major airports, cities, highways, tourist locations, theme parks.

    * It has an efficient food preparation style that follows the process in a systematic way.

    * It takes food safety extremely cautiously.

    * It was the first to provide the customers about nutrition facts.



Weaknesses

    * It uses advertising that mostly targets children.

    * High employee turn-over.

    * It has yet to accomplish going on the trend of organic food.

    * Price competition with the competitors resulting in low revenue.

    * Lack of innovative products.


Opportunities

    * It can adapt to the needs of the societies and undergo an innovative product line.

    * It can research ways to use ‘green’ energy and packaging which will work as a part of their promotional effort as well as fulfill their social responsibility.

    * It can create new product offerings, use mobile text messaging to offer services that appeal to consumers.

    * It can upscale some of its restaurant settings at luxurious locations to attract more customers.

    * It can provide optional items that are regarded to be the basis of allergy for some.

    * It can slow down the level of expansion in order to increase the profitability of the organization.


Threats

    * The recession negatively impacts the holding position of the firm regarding its revenue streams, even though they are quite diversified.

    * Foreign currency fluctuations are regarded to be a major problem as it uses standard pricing for its food items.

    * More restaurants that are increasing their food offering and declining the price.

    * Health issues regarding the fast food chain.

    * Heavy investments on promotional campaigns which decrease the gaining of market share.

    * Some parents criticize the firm’s ‘cradle to grave’ marketing strategy that focuses on kids, who later on take it as a trend to their adulthood.

    * Sued various times for unhealthy food, usually with addictive additives.

    * Emergence of major fast food competitors: Burger King, Starbucks, Wendy’s, Taco Bell, KFC.

    * The expansion has made the firm vulnerable to the slow economies of the other countries.

How To Write a SWOT ANALYSIS

A Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis allows business management to formulate strategies to increase profits for a company. The SWOT analysis also helps ma company and its employees to adapt to changing factors in the industry.m

The SWOT can be classified into internal and external factors affecting a company. The Strengths and Weaknesses of the SWOT analysis represent the internal factors that influence the viability of the company. The Opportunities and Threats, on the other hand, are the external factors that may affect the company's performances.

What Are Examples of Internal Strengths of a Company?

A strength is essentially a factor from within the company that has resulted in the success of the organisation. For example, a management team with strong calibre denotes that the company is forward looking and is flexible to change. Both factors allow the company to presevere amongst competitors, especially when external threats, such as changes in regulation with respects to the industry, occur.

Another example of a company strength is a hefty financial cash flow. Companies that are liquid in cash are more likely to succeed in the long-run than companies that have invested in illiquid assets (such as heavy equipment / renovations in the office.) This is because working capital (cash) is required to sustain the company's ability to pay employees / suppliers / fund marketing campaigns.

What Are Examples of Weaknesses within a Company?

A weakness of an organisation can be detrimental to the survival of the company. A popular example is poor retention rate of employees. This equates to a high turnover with dissatisfied employees leaving for other job opportunities. The fact that this takes place can be due to a number of reasons. One of them may be poor compensation packages (due to lack of funds). Another example may be a weak organisational culture that inhibits employees from expressing their views and concerns.

What Are Opportunities in the External Environment?

An opportunity allows a company to increase profits by offering a gap in demand, a wider consumer base, or an opportunity to reduce costs. A company's strategic goal is to move forward to achieving opportunities that arise in the market. For example, a coffee house may find an opportunity when new suppliers of coffee beans enter into the market. This increases competition amongst coffee bean suppliers and thus, reduces costs for the coffee house. Opportunities are almost always found in shifts in consumer preferences. For example, with the increase of women penetrating the workforce, more clothing designers nab the opportunity to produce fashionable career attire for working women.

What Are the Threats Inherent in the Environment?

A threat can affect the company negatively, especially if the company is unable to adapt to the threat and mitigate its harmful effects. For example, a threat for small grocery retailers would be the emergence of a hyper-market in the area - Wal-mart - for instance. A common threat in any economy would be an economic recession, which reduces consumers' consumption. This threat generally reduces revenue in companies, regardless of the sector.

At the end of a SWOT analysis, the company's plans to move forward should be centred around the opportunities quadrant. Opportunities translate into opportunities to increase revenue as well as to reduce costs; this, in turn, is transformed into higher profits. To achieve success in the opportunities quadrant, the company should look at capitalising on its strengths, such as an effective marketing strategy. By using their strengths, companies should also be able to strategise against the threats that are inherent in the market. Threats are extinguishable but steps to mitigate them can be taken to protect the operations on the company. Although companies always capitalise on their strengths, they should not ignore their weaknesses. Weaknesses represent loopholes within their organisational structure / operations. A company should resolve to fill in their weaknesses in the long-run to ward off aggressive competition.

SWOT Analysis Example ( Case Study)

Lets to the point, In SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, the analyst first looks into the business unit to identify its strengths and weaknesses. The analyst then reviews the environment in which the business unit operates and identifies opportunities presented by that environment and the threats posed by that environment. The following lists show questions that an analyst would ask in conducting a SWOT analysis.

Strengths

• What does the company do well?
• Is the company strong in its market?
• Does the company have a strong sense of purpose and the culture to support the purpose?

Weaknesses

• What does the company do poorly?
• What problems could be avoided?
• Does the company have serious financial liabilities?
  

Opportunities

• Are industry trends moving upward?
• Do new markets exist for the company‚Äôs products/ services?
• Are there new technologies that the company can exploit?
  

Threats

• What are competitors doing well?
• What obstacles does the company face?
• Are there troubling changes in the company‚Äôs business environment (technologies, laws, and regulations)?
  

The following case study demonstrates how SWOT can be used to create a strong business strategy.



Case Study

In the mid-1990s, Dell Computer used a SWOT analysis to create a strong business strategy that has helped it become a very strong competitor in its industry value chain. Dell identified its strengths in selling directly to customers and in designing its computers and other products to reduce manufacturing costs. It acknowledged the weakness of having no relationships with local computer dealers. Dell faced threats from competitors such as Compaq and IBM, both of which had much stronger brand names and reputations for quality at that time. Dell identified an opportunity by noting that its customers were becoming more knowledgeable about computers and could specify exactly what they wanted without having Dell salespersons answer questions or develop configurations for them. It also saw the internet as potential marketing tool. The results of dell’s SWOT analysis are:



Strengths

• Sell directly to consumers
• Keep costs below competitors
  

Weaknesses

• No strong relationships with computer retailers

Opportunities

• Consumer desire for one-stop shopping
• Consumers know what they want to buy
• Internet could be a powerful marketing tool
  

Threats

• Competitors have stronger brand names
• Competitors have strong relationships with computer retailers
  

The strategy that Dell followed after doing the analysis took all for of the SWOT elements into consideration. Dell decided to offer customized computers built to order and sold over the phone, and eventually, over the internet. Dell’s strategy capitalized on its strengths and avoiding relying on a dealer network. The brand and quality threats posed by Compaq and IBM were lessoned by dell’s ability to deliver higher perceived quality because each computer was custom made for each buyer.