McDonalds SWOT Analysis

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McDonalds Corporation

Strengths

  • McDonalds has built up huge brand equity. It is the No. 1 fast-food company by sales, with more than 31,000 restaurants serving burgers and fries in almost 120 countries. Sales, 2007 (11,4009 million), 5.6% sales growth[1].
  • Good innovation and product development. It continually innovates to retain customers in the business.
  • The McDonalds brand offers consumers choice, reasonable value and great service
  • Large amounts of investment have gone into supporting its franchise network, 75% of stores are franchises[2].
  • Loyal staff and strong management team.

Weaknesses

  • Core product line out of line with the trend towards healthier lifestyles for adults and children. Product line heavily focused towards hot food and burgers[3].
  • Seasonal
  • Quality issues across the franchise network.

Opportunities

  • Joint ventures with retailers (e.g. supermarkets).
  • Consolidation of retailers likely, so better locations for franchisees.
  • Respond to social changes - by innovation within healthier lifestyle foods. Its move into hot baguettes and healthier snacks (fruit) has supported its new positioning.
  • Use of CRM, database marketing to more accurately market to its consumer target groups. It could identify likely customers (based on modelling and profiles of shoppers) and prevent brand switching[4].
  • Strengthen its value proposition and offering, to encourage customers who visit coffee shops into McDonalds.
  • The new “formats”, McCafe, having Wifi internet links should help in attracting segments. Also installing children’s play-parks and its focus on educating consumers about health, fitness.
  • Continued focus on corporate social responsibility, reducing the impact on the environment and community linkages.
  • International expansion into emerging markets of China and India.

Threats

  • Social changes - Government, consumer groups encouraging balanced meals, 5 a day fruit and vegetables.
  • Focus by consumers on nutrition and healthier lifestyles.
  • Competitive pressures on the high street as new entrants offering value and greater product ranges and healthier lifestyles products. E.g. subway, supermarkets, M&S.
  • Recession or down turn in economy may affect the retailer sales, as household budgets tighten reducing spend and number of visitors.
  • Pressure groups - environmental.

[1] Hoovers (2008), http://www.hoovers.com/mcdonald’s/–ID__10974–/freeuk-co-factsheet.xhtml

[2] McDonalds Annual Report (2008)

[3] http://www.dlea.com.au/?Community/Health_and_Nutrition/Health_and_Nutrition

[4] Jobber, (2006), Principles and Practices of Marketing, 3rd Edition

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