McDonald’s Internal and External Business Environments
The external environment of the McDonald’s Company faces stiff market competition that prevents it from attaining its business objectives. Whereas the company’s major rivals, such as Wendy’s, Taco Bell, and Burger King, thrive on operational efficiency, quality, and customer value, McDonald’s rates the lowest in the industry. To ensure that it gains a competitive edge over the competitors, McDonald’s should implement an effective pricing strategy that is competitive and sensitive to the capabilities of the overall clientele (Tomczak, Reinecke, and Kuss, 87). The approach will enable the restaurant to its major competitors and attract clients who are keen on product pricing.
Secondly, the company should significantly focus on improving quality and value to the customers. The company can take advantage of its expansive reach to promote quality and value to attract customers to the restaurant. Thirdly, health is an essential focus of customers in a fast food restaurant. To gain a competitive advantage in the industry, MacDonald’s should improve its health campaigns and promote healthy practices within its menus and services, ranging from food storage, preparation models, and services offered by the servers. The initiative will reduce the growing concerns of childhood obesity linked to fast food restaurants.
McDonald’s Company positions itself through operational efficiency and technological advancement, which improves its effectiveness and efficiency within its operations, leading to a competitive advantage against its principal rivals. Mcdonald’s seeks to develop deeper insights into the market while attempting to manage local competition by employing or training local staff within its franchises across the globe. Given that most McDonald’s competitors are fast food restaurants, the company positions itself as a global brand to gain a competitive advantage by applying technological advancement.
The computer-based equipment at McDonald’s gives it a lower cost advantage of maintaining a lean staff without compromising on quality and efficiency. The menu at the company and the food recipe are computer guided, leading to a high value at relatively reduced prices. Due to the technology-enabled systems inside their kitchens, employees can deliver takeaway at home in record time. McDonald’s promotes healthy living through its campaigns featuring advertisements of high-quality foods like salads or white meat chicken. Likewise, remodeling its restaurant meant to provide an improved customer experience is a positioning strategy that gives it a competitive advantage in the local market.
McDonald’s employs a market development strategy that facilitates its strategic expansion to other global destinations. The company also utilizes the differentiation strategy to provide customers with a broader range of services and products. For example, the products of the McCafe division are provided under the generic differentiation strategy to appeal to clients who seek to try out new products. The Development strategy employed by the company gives it a competitive advantage by improving business prospects through a wider market across various countries of the world.
The market development strategy that seeks opportunities for new non-served areas is effective for the company’s growth and development. Accordingly, the company benefits from market awareness through differentiated products as it builds customer allegiance. The growth strategy has enabled the company to penetrate the market as it positions itself as a leading supplier of burgers in the U.S. Consequently, the market development strategy works for the company through improved product awareness and market access.
MacDonald’s employs an international franchise strategy for its global business units. The units are enabled through an effective expansion model led by the company’s former CEO, Ray Kroc. The rapid expansion model enables the company to gain a global presence, with almost over 70% of the restaurant’s operations running on a global franchise arrangement (Hoffman, Munemo, and Watson 4). The effectiveness of the business franchise strategy is that it improves market penetrations across the globe and leads to product development through the provision of traditional company menus and differentiated local cuisines.
The strategy also gives the company a competitive advantage through improved bargaining power over suppliers due to its ability to negotiate on behalf of several global franchises. The McDonald’s Company supports the franchise model with product development initiatives. The strategies support the global franchising arrangements by introducing local foods into the major menus served at traditional McDonald’s. For instance, Chinese and Indian franchises have added traditional dishes to the company’s menus to appreciate local clientele. Through this strategy, the company positions itself as a local and international provider of customized cuisines.
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Hoffman, Richard C., Jonathan Munemo, and Sharon Watson. “International franchise expansion: the role of institutions and transaction costs.” Journal of International Management 22.2 (2016): 101-114.
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Tomczak, Torsten, Sven Reinecke, and Alfred Kuss. “Planning the Marketing Mix Marketing mix Marketing mix planning.” Strategic Marketing. Springer Gabler, Wiesbaden, 2018. 171-221.