SWOT Analysis of McDonalds

Summary of McDonalds SWOT Analysis

McDonald’s is the world’s largest fast food chain and a highly valuable global brand. The company operates over 36,000 restaurants in 120 countries, giving it significant market share and financial strength. Its global sponsorships, such as the football World Cup and Olympics, boost brand recognition. McDonald’s maintains high product and service standards worldwide through strict staff training, supporting consistency across both company-owned and franchised outlets.

However, McDonald’s faces several weaknesses. Its complex menu includes many high-fat, high-calorie items, drawing criticism despite healthier options. Service quality can vary between franchises, potentially harming the brand. Older restaurants also suffer from equipment issues, slowing service. Additionally, McDonald’s lags behind rivals by not offering a national delivery service.

Opportunities exist for McDonald’s to leverage technology to improve customer experience and service delivery. Expanding recycling facilities and sustainability initiatives could strengthen its reputation as a responsible business. These moves would appeal to both customers and stakeholders, including governments.

Threats to McDonald’s include rising concerns about obesity, which could lead to higher fast food taxes and reduced profit margins. Economic slowdowns may also hinder the company’s goal to increase franchised outlets from 85% to 95%. In some countries, unfavourable franchise regulations further challenge expansion. Nevertheless, franchising in markets like China could generate significant revenue.

In summary, this SWOT analysis of McDonald’s highlights its strong global presence, consistent standards, and brand power, while noting challenges in menu health, service consistency, and regulatory threats.

Introduction to SWOT Analysis of McDonalds

McDonalds is the world’s largest fast food restaurant chain. In 2017, it ranks ninth on the world’s most valuable brands (as at May 2017) (Forbes 2017). McDonalds is currently undergoing a comeback after a decline in sales (McDonalds 2017a). McDonald’s currently operates both company owned and franchised stores with the strategic goal to increase its franchised outlets to 95% from the current rate of 85% (McDonalds 2017a). Take a look at our McDonalds SWOT analysis below:

Strengths

McDonalds is the second largest restaurant chain in the world with 36,899 restaurants in 120 countries giving it a strong market share and financial strength. It is a worldwide brand and is a sponsor of international sporting events, such as the football World Cup and the Olympics, which has made its brand highly recognisable and valuable in terms of its coverage (McDonalds 2017a).

Whilst there are some national and regional differences in its menu, McDonalds has high levels of standardisation which seek to ensure that the product and service are of the same levels wherever a customer is in the world. This is assisted by strict standards for food preparation which is part of the staff training and development for both company owned and franchised stores (McDonalds 2017a; BBC News 2016).

Weaknesses

McDonald’s menu is quite complex and covers a wide range of products, including some with a very high fat content. Despite introducing a lower fat range, McDonalds have been criticised for continuing to serve high fat, high calorie products and enabling customers to increase the size of a meal (McDonalds 2017b). The franchise scheme can also mean that there are differing levels of service at McDonalds’ outlets, which may impact on the brand. In addition to this, the equipment maintenance at the older restaurants have impacted on operations, which has slowed down service. McDonalds is also lagging behind other fast food restaurants by not providing a national delivery service (McDonalds 2017c).

Opportunities

McDonalds needs to make better use of technology to improve its service delivery and connections with customers, particularly in the face of growing demand for greater convenience in terms of the food-to-go market (McDonalds 2017a). There are also opportunities for McDonalds to increase its sustainability through providing appropriate recycling facilities which may assist with its attempts to become a more responsible business. This would also help demonstrate its commitment to sustainability to stakeholders, such as the government and its customers.

Threats

The continued concerns regarding obesity levels may lead to higher levels of taxation on fast food which would squeeze profit margins.

This would impact on consumers as this tax may be passed on to them through price increases if McDonalds is unable or slow to change the fat content in its food. Economic threats to the organisation also need to consider the risk of slowing growth in the world economy which may also be seen in the fast food sector (IBIS World 2017). This may mean that the ability to convert the remaining McDonalds’ owned stores to franchises may be difficult in certain contexts if growth is slow.

In addition to this, the lack of a franchise friendly framework in certain national contexts will also prevent this strategic objective from happening. However, the ability to franchise McDonalds stores which are currently owned in markets such as China could raise as much as $3bn (BBC News 2016).

References for SWOT Analysis of McDonalds

• Angwin, D, Cummings, S and Smith, C (2011) The Strategy Pathfinder: Core Concepts and Live Cases, (2nd ed), Chichester: John Wiley and Sons Ltd, Chichester
• BBC News (2016) ‘First bid for McDonald’s China franchises confirmed’ BBC News, June 23 [online] Available from http://www.bbc.co.uk/news/business-36603779
• Forbes (2017) ‘The World’s Most Valuable Brands #9 McDonalds’ [online] Available from https://www.forbes.com/companies/mcdonalds/
• IBIS World (2017) ‘Takeaway and fast food restaurant in the UK: market research report’ [online] Available from https://www.ibisworld.co.uk/market-research/takeaway-fast-food-restaurants.html/
• Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regnér, P. (2014) Exploring Strategy, Text and Cases (10th ed.) Harlow: Pearson Education Ltd
• McDonalds Corporation (2017a) ‘Annual Report 2016’ [online] Available from  http://corporate.mcdonalds.com/content/dam/AboutMcDonalds/Investors/2016%20Annual%20Report.pdf
• McDonalds (2017b) ‘Our company’ [online] Available from http://corporate.mcdonalds.com/mcd/our_company/our-ambition.html
• McDonalds (2017c) ‘Click and Collect’ [online] Available from https://www.mcdonalds.com/gb/en-gb.html
• Ruddick, G. (2016) ‘McDonald’s offer staff the chance to get off zero-hours contracts’ Guardian, April 15 [online] Available from https://www.theguardian.com/business/2016/apr/15/mcdonalds-offer-staff-the-chance-to-get-off-zero-hours-contracts