MacDonald’s Market Analysis

Introduction

McDonald’s is one of the largest food stores and it serves more than 58 million customers every day. The company was founded in 1940 by Richard and Maurice, McDonald brothers. The company expanded its operations by opening of new restaurants in different countries including Costa Rica, Canada, Japan, Panama, Germany, France, EI Salvador and Sweden. The first store was opened in 1974 in Woolwich, London.

By then, the company had established 31, 000 restaurants in 119 countries across the world. The company has provided employment to more than 1.5 million people. Previously, the company operated specifically on traditional foodstuff such as burgers, soda and fries; however, there has been an advancement to include healthier foodstuff such as wraps and hamburger in their menu (McDonald’s 2010).

The company has also ventured into a new environmental policy that states that “we believe that being the world’s best family restaurant involves protecting the environment at the local and global level. We strive to ensure that our operations today do not have a negative impact on the lives of future generations” (Brown 1999, p. 56).

Other products that the company has introduced recently include eggs and free-range chickens, in addition to local sourcing of produce from different countries that the company has based its operations (McDonald’s 2010).

Review and analysis of the strategic analysis

Following many decades of operations, the company is invigorating its products and using several initiatives to push its innovation ahead. MacDonald’s Company, which operates more than 30000 restaurants, serves approximately 50 million customers each day.

Its success has been attributable to its decades of expansion, profits and sales growth. For the first time, the company recorded a losing quarter in 2002. Following demands to get back McDonald on track, fresh strategies had to be devised. By use of its own 5Ps, MacDonald’s is refining and developing fresh policies to offer a variety of products, build value, and come up with modernized and contemporary stores.

This would result to delivery and balancing of value pricing with more valuable items and using innovative and bold promotions to market its products. Implementation of most of the company’s policies involves customer surveys and ranking of restaurants so as to achieve the company objectives.

New menu products are some of the unique strategies that are likely to ensure customer satisfaction. Additionally, restaurant operation time can has been increased, in addition to acceptance of debit cards and credit cards as modes of payment. The company also collects important data from the suppliers and franchisees, which can help in product development. Smarter and cleaner restaurants are benchmarked from other renowned retailers.

There has been a remarkable reduction in the trouble experienced during the beginning of the millennium. The company has registered growth especially in terms revenue, and the core business will remain the focus. A 7 years ownership rights in Chipotle Mexican Grill is an example of the commitment to expand its operations or focus on its McDonald brand whose key aim is to attract more customers.

Another key market strategy which is very critical is leveraging of the menu improvement. Enhanced local coverage and ensuring the best experience of the customers is a central focus in Europe. Africa and Middle East markets have concentrated their efforts on building sales by extending the working hours. The top management is betting on the core brand and hopes that fruits will be borne.

McDonald’s mission statement

McDonald’s vision is to become a world leader in quick service restaurant services. Being a leader in this case means providing excellent quality, service, value, and cleanliness such that every customer in every restaurant is satisfied. In addition, McDonald’s has a brand mission, which states that they want to be their customers preferred place and eating manner.

The company’s worldwide activities are aligned along the global strategy referred to as Plan-to-Win, focusing on five distinctive customer experience which includes products, people, place and promotion. The company is particularly committed to enhancing its customer experience, which is evident in the chairman’s message to the shareholders, when he states that:

As always, running better restaurants is our number one priority. We will improve operations excellence around the world through new technology, better training, and service enhancements that will make it easier for our managers and crew to quickly and accurately serve the customer (Brown 1999, p. 23).

Positioning strategy

Product positioning enables the customer to identify with the unique nature of the products. The customer uses particular attributes to define the product relative to the competitors’ products. For example, a particular brand can be positioned as healthy, all-purpose. The customers should be provided with a lot of information regarding the product so they can identify with its unique characteristics.

Although the consumers can position the products in their minds without the help of the marketers, the marketers may not wish to leave the position of their products to chance. Instead, they find it important to plan the positions of their products in a manner that will yield the best possible outcome.

MacDonald’s takes the position of an affordable place to eat without negating the quality of foodstuff, hygiene and service. The peaceful surroundings and calm back ground music signifies the comfort that the company stands for in slogans such as “you deserve a break today….feed your inner child” (Brown 1999, p. 25).

MacDonald’s has maintained a cordial relationship with its customers. It is this kind of pledge on quality food and service in a hygienic, clean and calming environment that enhances positive customer relationships (McDonald’s 2010).

SWOT analysis

Strengths

McDonald’s has successfully been doing business since 1955, with a couple of its top corporate employees garnering vast experience in this field.
The company is very popular among the media polls, and it is ranked very high
The company is focused on community and social responsibility activities hence its popularity.

Weaknesses

The company’s market testing of pizza generated insignificant results, hence placing them at a disadvantaged position in the midst of the fast food pizza chains.
Training of new employees consumes a lot of money for the company.
Capitalization of organic food trends is yet to be achieved.

Opportunities

Hamburger which is believed to lead to good health is provided by the company hence a potential for attracting new customer who are health conscious.
The surroundings of the eating place are industrial and Formica and it is probable to provide fashionable and classy environment such as the one in the New York City on Broadway. This attracts more customers who are fashionable and of high class.
The company can offer discretionary allergen free foodstuffs.

Threats

There are yardstick for making grave from cradle kind of marketing. Children who are merely one year can be entertained in the restaurants for special meals, playgrounds, toys and movies tie-ins. Children enter into adult hood while feeding on the company’s products. As such, the company is criticized by parent advocate groups for marketing its products on small children which is perceived as somewhat unethical.
Any form of contamination of the foodstuff, particularly e-coli, can lead to a very bad publicity.
The company is under threat from its competitors such as Taco Bell, Burger King, KFC, and Wendy’s together with other mid-range restaurants.

How McDonald’s spend its time and money?

The company spends its time and resource purchasing inputs, and providing outputs to its customers. This includes but not limited to the following activities:

preparing foods stuff for the customers
offering its services to its customers
marketing its products and bloods name
engaging in social corporate roles such as environment conservation
paying salaries on its employees
conducting research and development activities with the intention of innovating new products and improving the existing ones

Have the activities of the past year aligned with the company’s vision or mission?

The activities of the past one year were determined to maintaining the progress and efforts of the company’s brand across the world. Although the environment of doing business was full of challenges, the chairman claimed that the company pushed its way ahead.

There was particular focus on acquiring customer insights, strategy alignment, and buttressing of the pillars of business, from the company’s value and convenience and its value to its menu. All these activities were in tandem with the company’s mission and vision (Kotler, Jain & Maesincee 2002).

Formulate two (2) x short and two (2) x long term objectives for McDonalds to assist them to continue to do business in this ‘new environment’.

Short-term objectives

McDonald’s aim’s at offering efficient and quick products which are suitable for customer’s health
McDonald’s struggles to create awareness of nutritious menu products. For instance, McDonald’s aims at popularizing foodstuffs which contains fruit and vegetables, as well as daily options suitable for children. Their meals are prepared in a manner to avoid customer dissatisfaction.

Long-term objectives

The company will undertake innovations to come up with new technology, invest in better training and focus on improving service delivery, all with the aim serving customers satisfactorily and to improve the health status of the menu items.
The company will center on the appropriate priorities to maintain relevance of its brand and meet the upcoming needs of the customers.

Key Performance Indicators

Short-term KPI: comparable guest count

Long-term KPI: comparable sales

The reasons why these objectives are legal and ethical

These objectives are centered on ensuring good health for the customers. Some entail improvement in the company’s operations so as to ensure that the menu items that are sold by MacDonald’s promote the health status of its customers, an act which is very ethical. Besides that, some objectives may be primarily for improving the brand of the company or products through advertisement.

Ideally, such kind of advertisement does not fall under any category of advertisements which are evidently illegal, such as advertisement of harmful drugs. Furthermore, it can be argued that such an activity is ethical because it educates people on good feeding styles. For example, McDonald’s promotes their foods as nutritious, yet there is no clear evidence that it is unhealthy (Kotler, Jain & Maesincee 2002).

Resources and financial capability to achieve these objectives

McDonald’s has successfully been doing business since 1955, with a couple of its top corporate employees garnering vast experience in this field and hence available to steer the company towards achievements of its objectives. The company’s cash flows are health as evident from the annual reports, and hence able to adequately finance its expenditure so as to achieve these objectives.

In the past, the company has managed to achieve its objectives by application of ‘Plan to Win’ framework, which allows execution of activities that surrounds five components including people, place, products, and promotion. This plan has been coupled with its financial strength and discipline to enhance customer experience (McDonald’s 2010).

Risk assessment

To manage its risk which mainly results from health campaigns that target on its fast food, McDonald’s has introduced healthy hamburger which is widely acceptable in the current health-conscious society. The company can capitalize on this product to sell its self (through brand promotion) as one that promotes better and healthy eating habits.

By doing so, the company’s brand will become more popular among the target group. Basically, such a promotion is both legal and ethical because, as discussed earlier, it does not lead to the kind of promotions that can be categorized as either unethical or illegal. After all, the intention is to promote the health status of the society which is absolutely positive.

Nonetheless, the health status of hamburger is not known to many people, or despite its healthy nature, it is not acceptable in some societies. In the event that the product is not acceptable in some societies, the company may want to undertake educative campaigns to promote it.

References

Brown, E 1999, Food Distributors, Forbes, New York.

Kotler, P, Jain, D & Maesincee, S 2002, Marketing moves: a new approach to profits, growth, and renewal, McGraw-Hill Education, New York.

McDonald’s 2010, Annual reports (2010) (Online). Available from: < http://www.aboutmcdonalds.com/content/dam/ .> [Accessed 30 January 2012]