Strategic Analysis Report on McDonald’s. Business & Marketing Essay
2000 words excluding reference list, figures, tables and appendices
The purpose of this assignment is to develop a better understanding of the strategic context of the above Project Plan by analysing an organisation (using internal analysis techniques) and its external environment (using external analysis techniques). The best starting point is to select an organisation relevant to your Project Plan topic and then identify which sector or industry the organisation is located within. Note that selecting a particular organisation to analyse for the Strategic Analysis Report does not mean that this organisation will necessarily be the focus of your Project Plan. However, it should have some relevance to your topic area.
In the Strategic Analysis Report you must:
1 Undertake strategic analysis by applying strategic analysis techniques appropriate to your research topic – you should use both internal analysis techniques (to analyse your selected organisation) and external analysis techniques (to analyse its sector / industry)
2 Identify the key strategic issues emerging from your analysis
For example, your Project Plan may explore student perceptions of different High Street Banks. For such a study, your strategic analysis report might (1) select a specific bank (e.g. Lloyds) and conduct an internal analysis of its resources and capabilities using tools such as VRIO and /or Value Chain Analysis, (2) explore the external environment within which the bank is operating, using tools such as PESTLE, Porter’s 5 Forces or strategic group analysis, and (3) draw out the key strategic issues that emerge from the analysis you have undertaken.
A full reference list should be included.
The key is to identify the organisational, industry or sector context of your topic. For most studies, this will be straightforward. For others, more thought may be needed. Guidance is available via surgeries to help you to identify the focus of your report.
Strategic Analysis Report Marking Criteria:
• evidence of research
• ability to undertake strategic analysis
• ability to identify key strategic issues
• ability to present a coherent, well-structured and referenced report
Remember that using lots of analysis tools won’t necessarily result in a higher mark – we will be assessing the quality of your analysis, not the quantity of techniques used. We recommend that you use a maximum of 4 analysis tools.
Please note that no more than 10% of submissions should be directly quoted from sources. We allow no more than 10% leeway on the word limit of each assignment.
Please also work on the following: Work on assignment 2 of the attachment. 2. If there are no resources required you could use other resources 3. font size 12 arial 4. Add Harvard Reference.
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Strategic Management Report
Supplier Relationship Management (SRM) plays a central role in helping to reduce the costs, and also it helps in optimizing the performance of an industrial enterprise. In the case of MacDonald's, SRM has contributed a lot to the manner in which its internal and external environment affects the organization. This paper will use the porters five forces framework, PESTLE, value chain analysis and VRIO to evaluate the internal and the external environment of MacDonald's.
Porters five forces framework
MacDonald's is facing a lot of external impacts in the hotel industry due to the competition in the industry. This can be best explained by the porters five forces framework as seen below.
Competitive rivalry or competition – Strong Force
There are plenty of fast food joints selling similar food products like those sold by MacDonald's. Therefore, this gives the customers a wide range of variety of the joints that they can eat from. The restaurant faces a strong force of competition due to the high number of firms in the same industry, the aggressiveness of the firms and their ability to switch products at a low cost (Coker and Porter, 2017).
Bargaining power of buyers or customers – Strong Force
McDonald's has a strong bargaining power due to the existence of many substitutes and providers. Therefore, this requires the company to bargain strongly to ensure that they maintain the existing customers as well as attracting new ones. For instance, the availability of food kiosks provides consumers with similar products sold by McDonald's at a low price. This requires the company to focus on its marketing strategies to ensure that they effectively convince their customers to purchase their products. The market saturation has made it easy for the consumers to choose from the available joints.
Bargaining power of suppliers – Weak Force
The suppliers have a huge impact on the productivity of McDonald's because they determine the number of raw materials available to the restaurant. The bargaining power of suppliers does not have much impact on the strategic planning of an organization. Also, the large number of suppliers has a weakening effect on individual suppliers. As a result, McDonald's does not suffer from insufficient raw products, and this explains the low bargaining power of suppliers. The integration of suppliers is low with high overall supply.
The threat of substitutes – Strong Force
The substitutes of a firm have an impact on its growth. The high performance to cost ration, the high substitute availability and the low switching costs play a substantial role in the creation of a strong force regarding the threat of substitutes (Li and Robertson, 2018). For instance, McDonald's faces many substitutes because consumers can prepare similar foods at home or even eat from other joints that make the same food. As well, the low switching costs make it easy for consumers to switch from McDonald's to other foods. The performance to cost ratio is affected by the manner in which substitutes present different qualities and customer satisfaction abilities. The restaurant industry provides consumers with many choices that they can switch at any given time and hence, the threat of substitutes of any business in this industry is strong (Bertozzi, Ali and Gul, 2017).
The threat of new entrants or new entry – Moderate Force
The availability of new entrants in the hotel industry has an impact on the restaurant's financial performance and its market share. The moderate force of new entrants has been brought about by the high cost of brand development. McDonald's has been in operation for plenty of years and, therefore, they have already built a strong brand. This has made it easy for them to maintain the large customer base as compared to other companies in the hotel industry that have not developed a strong brand. Most of the new McDonalds customers learn about it from the existing customers. Also, each of the existing businesses is focusing on brand development as one of their marketing strategies (Dess, Lumpkin and Eisner, 2014). Hence, for a new brand to build its name to the extent that it can be well known as McDonald's, it would take a lot of effort and time. The development of large enterprises such as McDonald's would require a lot of variable costs as compared to the small entities. Thus, this explains the reason as to why it is facing a moderate force regarding new entrants because a few people can afford to develop large corporations that would, in turn, be on the same competitive level with McDonald's. However important it is for an organization to consider its competitors, the threat from new entrants is not a major issue in strategic relationship management.
PESTEL
Political
The government intervention in the hotel industry has a great impact on its growth. Among the various governmental policies on the food industry is an increase in the international trade agreements which acts as an opportunity. McDonald's has taken advantage of this policy to open many branches across the unites states of America. An expansion of a business is an indication that it is doing well financially. Also, the governmental guide on how to live a healthy lifestyle by watching what a person eats acts as both an opportunity and a threat to McDonald's. The recent complaints about the health problems that the food poses on the body of the users has created a community awareness of the restaurant as they try to improve the quality of their products. Besides, current health policies encourage people to eat healthy foods. McDonald's is known for the production of food substances that have much cholesterol. Eating healthy prevents an individual from consuming the foods made in McDonald's and hence, this acts as a threat because they might end up losing some of the customers. Therefore, the government creates both opportunities and threats to the food industry. Every organization should have plans in their strategic relationship management on how to deal with such issues.
Economic
The economic changes have both indirect and direct impacts on the businesses in the food industry. Economic factors such as growing economies in developing countries provide an opportunity for McDonald's to grow by opening other branches. As well, the slowdown of the Chinese is a threat to McDonald's because they are major contributors to the restaurants' market share. The stable economic growth in the European countries plays a substantial role in f...