McDonald’s SWOT Analysis (2021) - In-depth Analysis
McDonald’s is one of the pioneers of the modern fast-food industry that has successfully established a brand that is familiar to people across the world. The company is currently operating in 118 countries with more than 34,000 outlets selling affordable and tasty meals to millions of people worldwide.
This American fast-food restaurant had very humble beginnings. Brothers Richard and Maurice started McDonald’s - a regular barbeque joint in California in 1940. Later in 1955, the company was acquired by the Multi-Mixer salesman Ray Kroc, beginning the onset of turning a small barbeque joint into one of the giants of the fast-food industry.
Over the years McDonald’s has grown to become one of the top brands in the world but the customer experience that they offer even after 75 years has remained the same - comfortable and affordable.
Today, a regular McDonald’s outlet sells fun old burgers and fries but with flavors and ingredients inspired by the local cuisine. This has helped the fast-food joint to seamlessly integrate into different countries worldwide, as locals have accepted this American joint as their own.
This tremendous success wouldn’t have been possible without McDonald’s core values and their mission statement, along with some clever decisions taken along the way.
To help you understand the secret behind McDonald’s growth from a holistic perspective, in this article, we provide McDonald’s SWOT analysis. This analysis explores the main strengths and weaknesses of this company. We also talk about the opportunities McDonald’s managed to successfully leverage along with the major threats it faces in the present and future.
TABLE OF CONTENTS
- McDonald’s - Company Overview
- McDonald’s SWOT Analysis
- What is SWOT Analysis?
- Complete McDonald’s SWOT Analysis
McDonald’s - Company Overview
|
Company Name |
McDonald’s Corporation |
|
Founders |
Richard and Maurice McDonald’s |
|
CEO |
Chris Kempczinski (4 Nov 2019 - ) |
|
Year Founded |
1940 |
|
Headquarter |
Chicago, Illinois, United States |
|
Company Type |
Public |
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Industry |
Restaurants |
|
Number of Employees |
200,000 (2020) |
|
Annual Revenue |
US$21.076 billion (2019) |
|
Operating Income |
US$9.070 billion (2019) |
|
Area of Service |
Operating in 120 countries |
|
Website |
McDonald’s SWOT Analysis
What is SWOT Analysis?
SWOT analysis is a report that gives you a holistic overview of the current situation of your company. SWOT essentially stands for Strength, Weakness, Opportunities, and Threats. Assessing these four aspects of a business helps understand their current standing in the industry and is a good benchmark to further build new strategies for future success.
The aim of SWOT analysis is to lay down these four pillars and then design strategies that leverage a company's strengths, improve on its weaknesses, grab new opportunities and protect against threats.
Better still, it is a great framework to craft a strategy that distinguishes a company from its competitors and create a strategic model that guarantees success.
Complete McDonald’s SWOT Analysis
Strengths
The Strength section analysis the Unique selling point of any organization - which for the sake of this article is McDonald’s. This section will cover all the points that McDonald’s does particularly well and can work in its favor in the long term.
1. Brand Value
The key strength of McDonald’s is its strong brand image that successfully taps into the customer demographic of all generations. The company is recognized as the Ninth Most Valuable Brand in the whole world, quashing fierce competitors in the fast-food industry.
Mcdonald’s has very high brand equity (the social value of any brand), which enables the company to generate more revenue in sales and also attract more investment.
2. McDonald’s Marketing Mix Strategy
The marketing strategy implemented by McDonald’s is a combination of localization and standardization which makes for the perfect Marketing Mix strategy. It is one of the reasons for McDonald’s global positioning.
This has helped McDonald’s carry its past success and also cater to local preferences while maintaining a standard menu.
3. Tasty Fast Food
McDonald’s food has raised a generation with its comfortable homey fries and burgers. People can enjoy a good tasting menu without breaking a bank which has always been a huge selling point of McDonald’s.
McDonald’s food still stands up to other fast food joints owing to the companies efforts to keep the flavors consistent even after years of operation. Some people simply eat at McDonald’s for nostalgic reasons which point to the strength of the McDonald's brand.
4. McDonald’s Real Estate Company
Another way the company generates revenue is through its multi-billion dollar real estate business. The McDonald’s franchise model operates a little differently. The company saw value in owning the land of its thousands of franchises across the world.
So they not only provide their brand name, menu, and operational goods to franchises but they also operate as landlords. This is a clever idea as it generates rent payments.
5. Consistent Quality Control and Health Protocols
McDonald’s from its inception has very strong quality control and health protocols which makes it one of the reliable fast food joints out there. The company guarantees complete quality control from the start to the end of its product life cycle.
The quality checks on ingredients from third-party vendors, on-premises food safety protocols, and regular quality checks all ensure a safe to consume end product.
All-in-all McDonald’s has quite a lot of unique selling points that firmly distinguish it from other players in the industry.
Weaknesses
Next, we outline the companies major weaknesses and shortcomings that can be a possible damper in its upward growth trajectory.
1. International Franchise Model
McDonald’s Franchise Model makes it possible for the company to operate in so many different locations. But it also has its own downsides. Firstly, there is a high risk of mismanagement leaving customers unsatisfied as there is no central rule that governs these franchises.
The franchises more or less independently operate so maintaining a common worldwide brand that guarantees the same quality of service everywhere is a challenge.
2. Employee Pay and Lack of Satisfaction
Employees rights activists have resounded a call for a minimum wage for McDonald’s workers. As this is one of the most talked-about issues that come up every now and then, it can really reflect negatively on McDonald’s brand name.
Occasional strikes and protests for this cause can harm the companies reputation and increase dissatisfaction among employees and customers alike.
3. Supply Chain Disruption
The key to the smooth operation of any organization is a strong supply chain management team that constantly assesses the productivity of processes and the overall value cycle.
The franchises at times face disruptions in the supply chain which affects all outputs like the revenue and profile along with a deterioration in customer service.
4. Imitable Menu Items
McDonald’s menu items are mostly simple burgers and fries with most of their recipes available online. So most of the menu items can be easily imitated by other sellers. This is a huge disadvantage as McDonald’s food is one of the key selling points of the company.
5. High-dependence on Suppliers
Going back to the franchise model, most franchisees don’t independently own the raw materials needed to create the end product for McDonald’s. So all the individual McDonald’s outlets are dependent on suppliers to provide their end product. Any disruption at the supplier’s end affects the whole supply chain cycle, which clearly is a disadvantage.
Opportunities
This section outlines the major opportunities in the present that McDonald’s can tap into to grow even further.
1. Online Food Delivery Industry
The recent surge of the online food delivery industry is one of the promising avenues McDonald’s can leverage. Although the company relies on food delivery companies to deliver its food to customers. Recent initiatives of a partnership with UberEats and DoorDash is a promising move that can yield fabulous results.
2. Cheap Value Meals
The popularity of fast-food restaurants lies in the affordability of their products. In early 2018. McDonald’s had launched its “$1, $2, $3” menu that takes the affordability aspect into account as well as provides a good branding opportunity.
3. Innovative Offers and Products
Previously, products like the Happy Meal served well as both a product to attract customers as well as an opportunity to establish a brand. Introducing such unique menu items every now or then locally can be a great selling point that helps keep things fresh and also continuously expand the brand name.
4. Changing Brand Image
McDonald’s has a good opportunity to rebrand itself to reflect the principles of the current woke generation. The fast-food chain is often considered as somewhat unhealthy which is opposite to the current trend as more and more people are looking to make healthier choices and stop visiting fast-food chains.
This trend in the future can cause a huge dent in McDonald’s revenue so rebranding its image is imperative.
Threats
This section outlines the major threats that the company is facing at present.
1. Fast Growing Competition
In recent times, McDonald’s has seen more and more competitors emerge in the fast-food industry. Competitors like Burger King, Dominos, KFC, Chick-Fil-A are doing quite well which has lowered the competitive advantage of McDonald’s over these brands.
2. Cultural Disarray while establishing in a new country
It is always challenging to maintain a brand image that is consistent with and supports the idealogy and cultural ethos of different countries. This is one of the challenges that McDonald’s constantly faces.
Incorporating local ingredients into the menu is one way to bridge the gap but from a marketing and branding perspective, it’s always challenging to manage this disarray.
3. Environmental Concerns
The growing ecological concerns about the sourcing and production of food items can disrupt the present supply chain cycle of McDonald’s. It is important the company takes initiative to address these concerns and correct its processes to meet ecological demands.
Key Points from the McDonald’s SWOT Analysis
All in all, in this analysis we encounter that McDonald’s brand image is one of its main strengths so continuously improving, building, and protecting its brand image is important. Apart from this, making sure that supply chain management of franchises runs smoothly is also important.
This fast-food giant is a powerhouse and considering the current trends, it will definitely continue to expand and do better in the future.