The situational analysis of an organization is extremely necessary for the purpose of having an idea about the risks and prospects of it which can affect both the long term and the short term interests. It is on the basis of this that the necessary decisions are taken for the benefit of the organization. In this particular report the situational analysis of the multunational chain or restaurants, McDonalds shall be provided.
Overview of the company
The chosen company for this particular report is McDonalds. It is fast food Company of America and was established in the year 1940 by Richard and Maurice in California. The main business of the company was to sell hamburgers, French fries and cheeseburgers. They were also popular for their breakfast menu, wraps, deserts, milkshakes and various unique chicken products. Later with their increasing popularity and revenue, they added fish, fruits, smoothies and salads to their menu. The mission and the values cherished by the company are to provide a unique dining experience at restaurants with a touch of cosmopolitan feel, in the hospitality industry.
The opportunity that the company wants to capitalize upon is to retain the existing clients, regain more customers, digitalization of the operations and also providing the facility of food delivery to wherever the customers find it convenient.
The current valuation of McDonalds is 177.13 billion US Dollars, and today the company has its franchise outlets in 118 nations of the world in all the continents of the world, with almost 35,000 restaurants functioning with its license. The journey had begun as a single restaurant in the 1940s selling hamburgers and french fries in the United States of America and today it is a leading chain of fast of joint functioning as s multi national corporation. This is the success story of McDonalds (Company Overview | McDonald's, 2020).
The uniqueness about the products of McDonalds is that they tend to exhibit a sense of respect for the local culture of a nation where it functions and it is also striving constantly to upgrade its quality of food as per the preferences of the people, and the business trends (Company Overview | McDonald's, 2020).
The problem that McDonalds seems to have faced is widespread criticism about the food product it sells as they are contributing to a lot of obesity and other health problems (Company Overview | McDonald's, 2020).
Macro environment and industry attractiveness
Through the PESTLE analysis the various factors affecting the functioning of an organization are provided.
Political – Politically speaking, the entry of McDonalds have been widely encouraged by the governments of several nations which was however a part of the development plan by means of encouraging foreign direct investments and thereby open the nation up to the global market ("Global Franchising | McDonald's", 2020).
Economic – The McDonalds had indeed proven itself to be a great way of boosting the entrepreneurialmotives of the local business organizations of a particular nation. The McDonalds outlets functioning outside the United States of America provides the lease to the local entrepreneurs to function as an owner of McDonalds restaurant and that has encouraged private businesses which in turn had contributed to the GDP of the nation ("Global Franchising | McDonald's", 2020).
Social – The McDonalds restaurants offer products ranging across a wide spectrum of price and that has made its products available to all sections of the society. Moreover McDonalds has through its products always tried to show respect to the social customs of the host nations that it is functioning by means of offering a taste of the local flavors and also the religiously motivated dietary practices of the people (Our Values | McDonald's, 2020).
Technological – The McDonalds outlets apart from sourcing the best quality food products which adhere to the safety guidelines also tends to provide for the modern machineries meant for cooking such as electric fryers, baking machines, refrigerators and ice cream vending machines. The food products undergo consumption security tests and checks and the machines are designed to consume less power, which overall contributes to the sustainable production process ("Our Approach | McDonald's", 2020).
Legal – The government of several nations have either encouraged the entry of McDonalds to remove poverty and invite more job opportunities or have done that to ensure that the policy of free trade be upheld in a globalized world. This shows that legally McDonalds faces no issues in conducting its businesses in the several nations ("Global Franchising | McDonald's", 2020).
Environmental –McDonalds is also quite concerned about its role in the saving of environment and it thus encourages the use of minimal plastics and also promoting the spirit of reducing wastage and recycling more (Our Values | McDonald's, 2020).
Thus these are the various factors that affect the business of the organization. The company is pertaining to hygiene and health keeping in mind the health safety of the customers. They also buy the raw materials from the local dealers and try and maintain the quality of the food. They encourage foreign investments in order to grow their business. They have increased the job opportunities for many in the country. The company is playing a major role in protecting the environment and is thus taking preventive measures. They also use the modern equipments and techniques for preparing the food items which in turn consumes less power and is also cost effective.
Porter’s Five Forces
Through the Five Forces of Porter, the various risk factors are enumerated and the severity of their's is explained.
Threat of new market players for McDonalds is there as several restaurants providing a taste of the local cuisine could draw the crowd from the snack item selling restaurant with the lure of providing hearty meal options.
Threat of substitutes for McDonalds is also there as firms like KFC, Dominos, Pizza Hut and even Starbucks could act as potential threats but given the fact that there is a variation in the products offered so substitution is not really possible.
Industry rivals for McDonalds are as such not there as the rival firms tend to offer different products so as to lure customers.
Bargaining power of consumers for McDonalds is more since there are several other options that are fast food joints to choose for them if they do not find the products of McDonalds satisfactory.
Bargaining power of suppliers for McDonalds is less as McDonalds tend to buy products in bulk and they are a high price paying firm so suppliers have loyal customers whom they would not lose.
These are the five factors as far as Porter's Five Forces are concerned. The company comes up with newer strategies every other week in order to survive in this competitive market. There is always a chance of getting replaced as there are similar other restaurants that are providing similar food items. If the company do not upgrade or customize the products and the price of the food items according to the customer needs, customers will switch from McDonalds to other restaurant that are providing similar food items at a much cheaper rate.
Through the SWOT Analysis, the Strengths, Weaknesses, Opportunities and Threats of an organization are coherently provided.
Strength – McDonalds has a base of loyal customers which ensures that its source of revenue is intact. Though the offering of a wide variety of menus having both vegetarian and non vegetarian options, it attracts a lot of crowd from all sections of the society, having diverse religious and social background. The essence of local flavour of the nation in which it does its business shows that the food is made palatable to attract the local crowd who prefer a distinct taste, shows that it has a huge base of local customers. The huge number of outlets which are expanding itself is another strength which ensures a steady growth in the revenues ("Our Approach | McDonald's", 2020).
Weakness – The food which McDonalds serve is alleged to be promoting obesity, heart problems and other health issues which alienate healthy eaters. McDonalds does not have any internationally recognized menu and its products tend to differ from one nation to the other and that is hampering the brand image building ("Our Approach | McDonald's", 2020).
Opportunity – McDonalds has the most sophisticated technological equipments which are quite helpful to the firm to ensure a sustainable production method. McDonalds through the fulfillment of its corporate social responsibilities can also show some gratitude to the host nation it functions, and it does so, for example the Breakfast for all ucampaign, in which it distributes free food to the people ("Our Approach | McDonald's", 2020).
Threat –McDonalds faces threats from its rival firms in terms of the fact that it needs to ensure that the products are free from harmful elements. The health activists lobbying for healthy eating habits and the local businessmen of the host nations along with the anti globalization lobby can cause the business prospects of McDonalds to be jeopardized ("Our Approach | McDonald's", 2020).
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