This study summarizes strategic management for the business organization (including McDonald’s). The Porter Five Forces Model reveals that McDonald’s is facing different problems which are come from competitors or substitutes (including Burger Kind). Then, it is achieving sustainable competitive advantages with the new entrants and suppliers. After that, McKinsey’s 7’S model reveals that McDonald’s has a great position in each factor of its system, structure, skills, strategies, styles, shared value, and employees of the business. Therefore, these factors help McDonald’s to achieve sustainable competitive advantages in the marketplace.
After that, McDonald’s SWOT analysis shows that McDonald’s has a well brand image as well as brand value than its other competitors (including Burger King) but it has some limitations in the prices or ranges of the products. In addition, McDonald’s has several opportunities to develop its strategies or activities of the business to reach its international marketplace. Furthermore, McDonald’s may face different problems from its competitors. Thus, McDonald’s should be careful and take different initiatives to sustainable competitive advantages in the marketplace.
Table of Contents
2.0 Application Strategic Models for McDonald Inc.
3.0 Strategic models for McDonald’s decision making.
5.0 Recommendations for McDonald’s.
McDonald’s is one of the largest food industries in the UK which has been facing many challenges in order to gain market competitive advantages. According to Johnson et al., (2014), this is very important for the McDonald’s business to manage the effectual both external and internal business environment analysis and the business competitive situation. This assignment describes the critical analysis of the business environment of McDonald’s and its business competitive advantages. McDonald’s has been operating its business across the whole world. The major competitors of McDonald’s are Starbuck, Burger King, Subways, Morrison, ASDA, Tesco, Subways Pret A Manger, etc. Though McDonald’s is the well-known food industry nowadays, it has been facing many challenges in order to gain market competitive advantages in competing with its key competitors.
This assignment describes various theories and models to examine and assess the McDonald’s environment of business and McDonald’s competitive position. The first section of this paper applies different models to analyze the business situation of McDonald’s. The key strategic models that are used in this paper are the SWOT technique, McKenney’s 7S model, Porter Five Forces model, Force Field analysis, BCG matrix, and stakeholder analysis. In the second part of this paper, strategic decision-making models have been applied to McDonald’s business. In this section, Ansoff’s growth matrix and Marketing Mix model are applied. In the third section, the finding of the paper is outlined. Finally, suggestions and recommendations are provided for Mcdonald’s.
2.0 Application Strategic Models for McDonald Inc
The major three exacting strategic models are used to evaluate McDonald’s competitive position and business environment. These models are SWOT analysis, McKenney’s 7’s Model, Porter’s five forces model. These are described below according to the McDonald’s business.
2.1 Porter’s Five Forces Model
Porter’s five forces are competitive rivalry, threats of new entrants, supplier bargaining power, customer bargaining power, and threats of substitutes. The significance of competition in the organization is the competitors’ numbers and their capability to threaten an organization (Palmer, 2013). The big competitor’s numbers, with the number of equal services and products they suggest, the lesser the company’s competitive advantage power. Buyers and suppliers look for an organization’s competition if they are not able to obtain an appropriate contract. An organization has big power to do what it requires to perform to gain higher profits and sales when competitive rivalry is low (Kotler et al., 2014).
An organization’s power is influenced by new entrants force into its business. The less money and time it expenses for the competitor in entering to the organizational business and be an effectual challenger, the more an organization’s situation can be extensively undermined. An organization with powerful entry barriers is a good aspect for organizations that may choose to work with fewer competitors. The power of suppliers explains how simple suppliers may increase the goods and services prices. It has influenced by the supplier’s number of major features of a service or good, how exclusive these features are, and how much it could expense an organization to switch from one supplier to another supplier (Johson et al., 2015).
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Porter’s Five Force’s Analysis for McDonald
|The competitive rivalry of an organizational market can be low or high. Competitors can have great power to compete with the challenges in the business. Though McDonald’s is a well-known and popular food chain industry in the UK, the forceful competitors are pressurized on McDonald’s business. The major key competitors of McDonald’s are Burger King, Starbuck, and Subway. This means competitive rivalry is very high (CGMA, 2017)|
|Customer Bargaining Power
|Buyers can have high or low power to bargain about quality, integrity, prices, and any other features of the products. Though most of the customers are pleased with McDonald’s product ranges and product quality, many of the consumers require cheaper products at low prices from McDonald’s business. This means customer buying power is high (CGMA, 2017).|
|Supplier Bargaining Power
|When organizations rely on suppliers for different raw materials and products, the suppliers keep force on the market business. McDonald’s produces its food items by themselves. As McDonald’s depends on a variety of suppliers for its raw materials, the supplier bargaining power is high.
|The threat of new entrant
|A similar and new challenger can introduce in the marketing place in the future that may keep force on the performance of the business. McDonald’s and its competitors are well-known and popular brands in the international market. Therefore, this will be complicated for new entrants to get the achievement. This means threats of new entrants are moderate in the fast-food industry.
|Threat of substitutes
|McDonald’s challengers mainly Star Bug and Burger King may establish the same products in the future providing pressure to McDonald’s business. As different competitors are offering nearly similar products with the same value, threats of substitutes are high (CGMA, 2017).
2.2 McKinsey 7’S Model Analysis
This model is an effective model that analyses a business’s internal situation focusing on seven factors that are the structure, strategy, systems, skills, staff, style, and shared values (Palmer, 2013). The main benefits of this model are it supports businesses to make a suitable decision by analyzing the internal factors. However, this model does not focus on external factors that are why businesses need to depend on other theories for analyzing external issues (Johnson et al., 2015).
According to McDonald’s Annual Report (2017), McDonald’s practices an effective flat organizational structure that is supportive to make quicker business decisions. In addition, it reduces gaps between staff and management people. Then, the styles of management and leadership are supportive and participative that motivates its staff in workplaces………..