HISTORY
McDonald’s Corporation is one of the largest American’s fast-food chains in the world, known for its hamburgers, and whose headquarters are in Oak Brook, Illinois. In 1948, the first McDonald’s restaurant as started by Maurice and Richard McDonald in San Bernardino, California. The two brothers bought appliances for their small hamburger restaurant from a salesman Ray Kroc. In 1954, Kroc discovered a simple, efficient format that permitted the brothers to produce vast quantities of food at low prices when he visited them.
Kroc offered to begin a franchise program for the McDonald brothers when he saw a great promise in their restaurant, which he first did on April 15, 1955, in Des Plaines, Illinois. It was in this same year that Kroc launched the McDonald’s Corporation and finally bought out the McDonald brothers in 1961. Before the end of the decade, McDonald’s outlets would top 10,000, and in 1965, the company’s stock began trading publicly, boosted by steady growth.
In 1962, a double-arch “m” symbol became McDonald’s most enduring logo, lasting much longer than the tall yellow arches that once dominated the earlier restaurant rooftops. In 1963, McDonald’s public face s created with the introduction of a clown known as Ronald McDonald.
In 1967, the chain extended to Canada as it expanded domestically and internationally. By 1988, there were 10,000 restaurants, operated in the early 21st century. There was a swift growth in the 1990s, and it effectively became the most popular family restaurant.
However, the McDonald’s success brought increased criticism, concerning its perceived association with a global increase in obesity.
- Competitive rivalry or competition with McDonald’s
Due tothe saturationf the fafast-foodestaurant market, McDonald’s faces rough competition. The strong force of competitive rivalry is based on the fact that fast food restaurant industry has many firms of various sizes, which in turn strengthens the force of rivalry in the industry. Also, most medium and large firms aggressively market their products, thus increasing the intensity of competitive rivalry that McDonald’s Corporation experiences.
- Bargaining power of McDonald’s suppliers
The weak bargaining power of suppliers is based on various external factors. Partly based on the lack of strong regional and global alliances among suppliers, the large number weakens the effect of individual suppliers on McDonald’s Corporation. Furthermore, most of McDonald’s suppliers are not vertically integrated, which means they do not control the distribution network that transports their products to firms like McDonald’s.
- Bargaining power of McDonald’s customers.
The ease of changing from one restaurant to another enables consumers to easily impose their demands on McDonald’s, strengthening the bargaining power of customers. Also, due to market saturation, customers can sort to choose from many other fast food restaurants.
- Threat of substitutes or substitution
High availability of substitutes contributes to the strength of substitution in the fast food service industry. For example, shifting from McDonald’s to substitutes involves slightly higher cost per meal in some cases.
- Threats of New Entry
Variable capital costs of establishing new restaurant empowers new businesses to enter the global fast food restaurant industry. This external factor leads to the moderate threat of new entry against McDonald’s. Many small businesses lack resources to create strong brand to match McDonald’s brand.
McDonald’s Strengths
Strong image branding is one of McDonald’s strength that makes the business competitively strong. Moderate market diversification is another major strength based on the firm’s presence in most regions around the world, which in turn reduces the market based risk. McDonald’s also has, in addition, a comprehensive system of standardized processes, which is strength contributing to business efficiency and product consistency. These show that McDonald’s is capable of maintaining effective operations.
McDonald’s Weaknesses
Its standardization ensures consistency, yet reduces the company’s flexibility in responding to market variations. Also, low product diversification links to the firm’s focus on food and beverage products, which is a weakness that makes the business highly vulnerable to slowdowns in the restaurant industry. Most of McDonald’s revenues, in addition, are from the U.S and other western economies. This makes it weak because it is easily vulnerable to economic decline in the Western world. All these shows that the company needs to globally expand, improve flexibility, and widen its product mix.
Opportunities for McDonald’s
McDonald’s depends on the Western Markets, making it have the opportunity to grow and expand in developing countries, such as Asian economies. Furthermore, to address market-based risks, McDonald’s has the opportunity to develop new products or enter new industries. This analysis shows that the business has significant opportunities to globally grow and expand.
Threats faced by McDonald’s
Due to his status as the market leader, McDonald’s is threatened by aggressive competitors. GMO is also a threat because they have the potential to limit McDonald’s products since it has no comprehensive policy on GMO ingredients. McDonald’s, therefore needs to develop new policies regarding GMO ingredients to attract health-conscious consumers.
McDonald’s Value Chain Analysis
Inbound Logisitics.
It is important to develop strong relationships with suppliers as their support is necessary to receive, store and distribute the product. This will enable the company to focus on every aspect of transformation from raw materials to finished products.
Operations
Operational activities such as machining, packing assembling and testing raises when materials arrive, and McDonald’s would be ready to process the raw material into end product and launch it in the market.
Outbound Logistics
These include activities that would deliver McDonald’s products to the consumers by passing through the intermediaries. Such activities would be warehousing, scheduling, order processing, transporting and delivering to the destination. McDonald’s should therefore pay specific importance to its outbound value chain activities when its offered products are perishable and require quick delivery to the end consumer.
Marketing and Sales
At this point, McDonald’s will highlight the benefits and differentiation points of offered products to persuade the customers that its offering is better than competitors. The company can use the marketing funnel approach to structure its marketing and sales activities. The marketing strategies can either be push or pull in nature, depending on the McDonalds’s business objectives, brand image, competitive dynamics and current standing in the market.
Services
The pre-sale and post-sale services offered by the McDonalds will play an important role in developing customer loyalty. The company must analyze its support activities to avoid damaging brand reputation, and instead use it as a tool to spread positive word of mouth due to quick, timely and efficient support services
Firm Infrastructure
Effective infrastructure management can allow McDonalds to optimise the value of the whole value chain.