Unveiling McDonald's Strategy: A Comprehensive Analysis and Strategic Recommendations for Market Success

McDonald's is a renowned American fast-food chain serving about 69 million customers daily. In recent years, competition in the food and beverages has increased with many established firms entering the market. Subsequently, the focus has shifted from solely on food quality to enhancing customer convenience (Schramade, 2019). An analysis of the firm's external, internal, competitive, and critical factors and competitive advantages can help make strategic recommendations.

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The external factors affecting McDonald's can be classified into opportunities and threats. Some of the prospects include the company's untapped international market in developing countries where it can expand. Besides, the firm can diversify its products to include those that give health propositions to the clients. Conversely, the threats include trends on a healthy lifestyle, aggressive competition from established brands, such as Burger King, and the government's policy to ban some ingredients, for instance, MSG (Germar, 2018). The company must effectively respond to threats and opportunities to sustain its performance.

Several competitive factors impact McDonald's. The rivalry among the industry's current players has intensified and could adversely affect McDonald's long-term profitability. The players have strong brand images and stable financial positions, which heightens rivalry. Customers` bargaining power is also high but moderated by the company's reputation and presence globally (Porter, 2017). The risk of substitutes is high, and chiefly comes from the leading competitors and some local brands. However, the new entrants' threat is moderate since building a brand big as McDonald's would be grim.

The critical success factors in the food industry include food quality, marketing, and customer service standards. To maintain its food standards, McDonald's sources grown materials from small suppliers who produce healthy products. The company also focuses much on marketing and allocates considerable funds to this course. At this food chain, customer service and convenience are prioritized to ensure they have the best experience. By focusing on these vital factors, McDonald's upholds its performance and reputation in the industry.

McDonald's has various strengths and weaknesses that influence its critical success factors. The strengths include a strong brand image and a solid reputation. It also has moderate market diversification as it offers a wide range of products, including burgers and smoothies. Its net income in 2019 increased by $5.92 billion, and the firm made $21.8 billion in total revenue (Schramade, 2019). However, McDonald's has some weaknesses, including limited flexibility in response to market changes. Its product diversification is also low as it primarily offers foods and beverages; hence could be highly susceptible to slumps in the restaurant industry (Germar, 2018). Besides, the brand is vulnerable to declines in western markets, which are evident from the decrease in its market value and sales falling considerably this year. The firm should look to enhance flexibility and widen the product mix to address the weaknesses.

McDonald's competitive advantages include convenience, affordability, quality, and value-added services. These aspects have strengthened the brand and built a strong reputation, which other firms could find challenging to achieve (Germar, 2018). Besides, the company markets to the family market while competitors focus on different generations or the broader base. It would take time for competitors to adopt a unique advertising strategy as McDonald's.

In conclusion, McDonald's should focus on reaching a broader market and improving sales and its overall market position. The company should focus on differentiating its services to create an image of superior service provision among customers. It should also offer additional products to enhance its diversity and customer convenience, leading to better market performance. The firm should also foster solid relationships with farmers to access quality raw materials and maintain its food quality. Such steps will help uphold and enhance its strong reputation.

References

Germar, D. (2018). Critical Analysis of McDonald's Internationalisation Process. Competitors, Challenges, International Markets. GRIN Verlag.

Porter, M. (2017). E.(2008). The five competitive forces that shape strategy, 86-104.

Schramade, W. (2019). McDonald's: a sustainable finance case study. Erasmus Platform for Sustainable Value Creation.