Business Policy and Strategies Unit III Case Study

Business Policy and Strategies Unit III Case Study
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McDonald's is a renowned fast foods corporation in the entire globe. Dick and McDonald founded this organization in 1948. It is notable that through innovation and excellent leadership, the organization grew gradually because it now serves approximately forty-seven million customers every day (McDonald's, 2014). Much of the growth in the organization owes to the fact that it applies effective business strategies. For instance, the organization developed a strong branding strategy to ascertain its success in the global market. This paper analyzes the McDonald's using SWOT and SPACE matrix because it recommends that the organization embraces a competitive strategy based on the space matrix developed.
As aforementioned, a major strength in McDonald's is the use of an effective branding strategy. As an evidence of this, McDonald's brand was valued at $31 billion by business week top 100 global brands. This placed the organization’s brand at the eighth position worldwide. Additionally, McDonald's enjoys a large economies of scale because the organization recorded $28.1 billion of revenue in 2013 while its competitors such as Wendy’s recorded revenues of $629 million in the same year (McDonald's, 2014). As a result, the organization has an advantage over its competitors in the global market. This owes to the reality that McDonald's operates in 100 countries in different regions of the world. The organization is also innovative because it is constantly introducing new products to the market.
The fact that McDonald's has four strengths does not imply the absence of weaknesses. Some of the weaknesses faced by McDonald's include poor image, constant lawsuits, and loss of customers to their competitors. This owes to the reality that McDonald's is branded negatively as an organization that sells unhealthy foods. This always results to lawsuits and loss of customers to their competitors (McDonald's, 2014). The strengths discussed above provide McDonald's with opportunities such as expanding operations to other countries in Asia and Africa. The economies of scale in McDonald's can also allow the organization to diversify its products and acquire competitors. Additional opportunities for McDonald's include producing cheap goods and providing discounts and freebies to their consumers.
Threats faced by McDonald's include accusations from healthcare professionals for producing unhealthy foods and poor relationship between the headquarters and franchise dealers. Moreover, competitors such as Wendy’s and Burger King threaten to steal their customers (McDonald's, 2014). Thus, the strengths and opportunities strategies include improving the relationship between the headquarters and franchise dealers and the provision of new products by embracing innovation. The organizations weaknesses-threats strategy is to reduce the amount of fat content in their products. It is also notable that strength-opportunity strategy for McDonald's is expansion to Asia and Africa while the Weakness-opportunity strategy is to minimize the loss of customers to their competitors by pricing their products cheaply.
The SPACE matrix was also used to analyze McDonald's, which revealed that the organization should employ a competitive strategy. This owes to the truth that McDonald's’ financial position, industry position, competitive position, and stability position were analyzed as shown below. From the analysis, it is clear that McDonald's is thriving in an unstable environment thus can pool financial resources to increase its sales force and marketing strategy (BHANDARI, 2012). Therefore, McDonald's should consider acquiring competitors owing to its financial advantage.
Internal Analysis:

 

 

 

External Analysis:

 

 

 

 

Financial Position (FP)

 

 

Stability Position (SP)

 

 

 

Return on Investment (ROI)

4

Rate of Inflation

 

-3

Leverage

4

Technological Changes

 

-3

Liquidity

6

Price Elasticity of Demand

 

-1

Working Capital

5

Competitive Pressure

 

-3

Cash Flow

4

Barriers to Entry into Market

 

-2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Position (FP) Average

4.6

Stability Position (SP) Average

-2.4































Internal Analysis:

 

 

 

External Analysis:

 

 

 

 

Competitive Position (CP)

 

 

Industry Position (IP)

 

 

 

Market Share

-1

Growth Potential

 

5

Product Quality

-1

Financial Stability

 

5

Customer Loyalty

-1

Ease of Entry into Market

 

4

Technological know-how

-1

Resource Utilization

 

4

Control over Suppliers and Distributors

-1

Profit Potential

 

5

 

 

 

 

 

 

 

 

 

 

Competitive Position (CP) Average

-1.0

Industry Position (IP) Average

 

4.6

 

 

 

 

 

 

 

FP

 

 

 

 

 

 

 

 

 

Conservative

 


 

Aggressive

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6