General Summary
McDonald’s is a longstanding staple in the fast food industry, most notably for its decision to streamline its menu early on, convincing the competition that many customers did not in fact want more variety, but instead wanted a few low cost options they could choose from. Over the following fifty years, McDonald’s grew to be an internationally recognized chain that now serves a wide range of items including milkshakes, chicken sandwiches, and customized child meals that come complete with toys. In order to properly understand the company it is necessary to implement a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to recognize potential competitors, issues that may arise, and of course, what the company has been doing right so far. From this analysis it is possible to look more critically at the future decisions this company should make.
SWOT Analysis
There is perhaps no greater strength to the company than its name. All around the world people recognize the name and brand behind McDonald’s and for this reason the company can afford to pass out franchises to inexperienced people interested in buying the name. Similarly, the company can open new shops all over the world, in foreign cities with few if any American chains, and rely upon that same brand awareness to sell hamburgers. This, coupled with McDonald’s willingness to adapt its menu to local palates and culture, has helped the company to grow all over the globe and purchase real estate in prime locations in major cities internationally. Whether one is in New York, Dubai, or Hong Kong, there will be a McDonald’s within walking distance, with a combination of local favorites and McDonald’s staples found at all locations.
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However, some of these strengths can also be viewed as weaknesses, depending in part upon a company’s goals. The changes in the menu can also be viewed as inconsistent. While McDonald’s aims to offer whatever will sell locally, the more they vary from their core menu, the more they risk disappointing loyal customers who arrive at a McDonald’s to discover their favorite item is not for sale there. Another weakness McDonald’s has is a low social status. McDonald’s is essentially synonymous with cheap low quality food. While this image has not stopped the company from literally serving billions of customers, it is an image the company would like to eschew and replace with a more sophisticated look in the future. McDonald’s food is low cost and not of a particularly high quality, which means it will be an uphill battle to replace this image.
The greatest opportunities that the company has are related to improving its public image. While the company currently is viewed as cheap and low quality, these are branding problems that may not be difficult to solve. The first step would be to offer more sophisticated menu items at a higher price. These would not replace the existing staples, but would exist for customers with a more nuanced palate. Offering steak and chicken instead of ground beef is a strong step in this direction. Ensuring that shake machines are reliable would be another way to further cement this image.
Finally, the threats that are immediately visible to McDonald’s include political sanctions, a decrease in demand for fast food, and the rising value of the USD on foreign exchange markets. Political sanctions can only be fought through lobbyists, which McDonald’s can use to gain political traction. The USD fluctuations against foreign currency simply mean the company must be well diversified. Finally, the decrease for demand in fast food means that McDonald’s must use its opportunity to reimagine its brand to create a new style of restaurant that is no longer seen as fast food. Provided the company can offer fair prices and delicious food, it will be able to weather the potential loss of some customers.
