Strategic Management_ Individual Report with McDonald (GC0384)

Executive Summary

The aims of this report are to critically analyse McDonald’s business situation in terms of a strategic issue for making a recommendation on how McDonald can gain sustainable competitive advantages. For analysing the business environment and competitive position of McDonald, this report focuses on two particular theories or models. These are: 1) Porter’s Five Forces Model; and 2) SWOT Analysis tool. Then, the report uses two particular models or theories to recommend McDonald on how it can improve its strategy to sustainable competitive advantages. These are 1) Porter Generic Model, and 2) Marketing Mix (7’Ps) technique.

The finding of this paper comes from various sources including academic books, journals and different company websites. Most importantly the researcher uses a book on strategic management named “Exploring Strategy” authored by Johnson and others, and the McDonald’s website and its annual reports.

Porter Five Forces Model analysis shows that McDonald has a very strong competitive position. SWOT analysis discloses that McDonald’s has strengths in many cases but has some weaknesses. In addition, McDonald has huge opportunities but might face a number of challenges in a competitive market. Therefore, McDonald must keep in mind the weaknesses and the potential threats, when it makes any decisions and strategies to gain sustainable competitive advantages.

The study recommends that a) McDonald should cut a few its product prices to put pressure on the competitors and attract consumers; b)McDonald can introduce more unique products to keep continue its differentiation from competitors c) McDonald can focus on the lower-income level of customers to offers cheaper products; and d) McDonald should introduce products for a potential customer segment. For example, Halal foods for Muslim customers.

The researcher has learnt a lot from this assignment. This coursework has extended researcher knowledge on different theories and models and how to apply these theories and modal in terms of particular business situations named McDonald. Then, this coursework has developed the researcher’s interpersonal skills including communication skills, decision making and problem-solving skills, time management skills, management and leadership skills, and technological skills.

Finally, the researcher has contributed a lot to the Group discussion as part of this coursework. The researcher has helped in team/group building, defining team member activities, implementing the activities, monitoring the progress, evaluating the overall performance, and advising from the lesson learnt for the future.

Contents

Executive Summary.

1.0 Introduction.

2.0 Critical analysis of strategic models in terms of McDonald’s situation.

2.1 Strategic Models for the business environment and competitive situation analysis.

Porter’s Five Forces Model

SWOT Analysis.

2.2 Decision Making Strategic Models for McDonald.

Porter Generic Model

Marketing Mix Model

3.0 Conclusion and findings from theories and models application in terms of McDonald’s situation.

3.1 Findings and Conclusion.

3.2 Recommendations for McDonald.

4.0 What the researcher has learnt from this assignment

4.1 Theoretical knowledge gained.

4.2 Practical knowledge gained.

4.3 Interpersonal skills developed.

5.0 How the researcher has contributed to the Group Discussion.

6.0 Conclusion.

7.0 References.

1.0 Introduction

This paper is to critically analyse McDonald’s business situation in terms of a strategic issue for making a recommendation on how McDonald can gain sustainable competitive advantages. For analysing the business environment and competitive position of McDonald, this report focuses on two particular theories or models. These are: 1) Porter’s Five Forces Model; and 2) SWOT Analysis tool. Porter’s Five Forces Model is applied here to analyse McDonald’s external business environment focusing on five particular factors including threats of substitute, customer bargaining power, suppliers bargaining power, new entrant, rivalry. SWOT technique is used here to analyse McDonald’s internal business environment which focuses on business strengths, weaknesses, opportunities, and threats.

Then, the report uses two particular models or theories to recommend McDonald on how it can improve its strategy to sustainable competitive advantages. These are 1) Porter Generic Model, and 2) Marketing Mix (7’P) technique. Application of Porter Generic Model recommends McDonald on how it can develop low-cost strategies and can be cost leaders in the market. The marketing mix (7’P) technique suggests McDonald on how it can develop these particular seven factors including products, prices, promotions, place, people, physical appurtenance, process. In the next section, the report outlines what the researcher has learnt from this assignment/coursework. Finally, the report discusses how the researcher contributes to the Group Discussion as part of the coursework.

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2.0 Critical analysis of strategic models in terms of McDonald’s situation

Strategic models and theories used to analyze McDonald’s business environment and competitive position, two particular theories or models are used which are: 1) Porter’s Five Forces Model; and 2) SWOT Analysis tool.

2.1 Strategic Models for the business environment and competitive situation analysis

Porter’s Five Forces Model

Porter’s Five Forces Model is applied here to analyse McDonald’s external business environment focusing on five particular factors including threats of substitute, customer bargaining power, suppliers bargaining power, new entrant, rivalry (Johnson et al., 2014). The strengths of Porter’s Five Forces Model are a) it supports organisations to analyse five key forces come from the external environment, and b) it provides foundations for further research to develop business’s future strategy. However, this model has some limitations: a) this model face difficulties to integrate business complexities in competitive marketplaces; b) this model only focuses on market forces but the organisations have to respond to others issues including government issue, social and cultural issues, economic, legal, technological and environmental issues (Johnson et al., 2012).

Porter’s Five Force’s Analysis in terms of McDonald’s business situation

Theory	Description	Analysis of McDonald
Rivalry	Organisations must put pressure on competitors and have to gain competitive advantages over their competitors.	McDonald’s products prices are comparably higher than many of its competitors, which create extreme intensity from competitors including KFC, Burger King, Greggs, Subway etc.
Customer buying power	Customers influence the prices of the products determined by the companies which create pressure on the business to reduce prices.	The majority number of customers are happy with McDonald’s products prices but in most of the cases, they claim to reduce the price a bit.
Supplier buying power	Suppliers can put pressures on the business’s supply chain when they see that there are fewer substitutes in the market.	McDonald buys most of its ingredients from suppliers. Consequently, they have the power to put pressure on the McDonald and effects its brand image.
The threat of new entrants	New entrants might exist in the marketplace with their full capability as well as resources.	As McDonald has very strong brand appeal, it is less likely to be forced by any potential new entrants.
The threat of potential substitutes	Similar products might come in the market from the competitors and can influence business performance.	McDonald might face challenges from substitutes introduced by its key competitors (Burger King, Subway, Greggs, etc.) in the near future.

SWOT Analysis

SWOT technique is used in this paper to analyse McDonald’s internal business environment which focuses on business strengths, weaknesses, opportunities, and threats (Kotler et al., 2012). The key strengths of SWOT technique are a) it is a simple technique to address the complex situation within short time and costs; b) it supports decision-makers to understand the business better, addresses weaknesses, detects threats, defines opportunities, takes advantages from strengths and develops business strategies and goals (Kotler et al., 2012). The key limitations of SWOT analysis are a) it is a one-side business planning process. Organisations must conduct more in research and analysing in terms of complex situations; b) this technique cannot priorities issues, cannot provide solutions, can generate confusing ideas, and can produce unnecessary information (Kotler et al., 2012)…………..