McDonald’s Environmental Analysis

'In the 1990s managers will be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible - indeed, they'll have to rethink the concept of the corporation it self.'

C K Prahalad and G Hamel 1990

Organizations do not exist in vacuum. They operate within a competitive industrial environment. Analyzing its competitors not only enables an organization to identify its own strengths and weaknesses but also help to identify opportunities for and threats to the organization from its industrial environment. SWOT analysis is a systematic analysis of these factors and the strategy that reflects the best match between them.

Let us analyze these principals in relation to the core competence of McDonalds, one of the largest food chain companies in the world. Let us first start with the strengths and the positive aspects which define the performance of this company. How can we define the company's strengths? Strength is a distinctive competence that gives the firm a comparative advantage in the market place. For instance financial resources, image, market leadership and buyer supplier relations etc McDonalds is the no: 1 fast food chain stores with a 40 million customers visiting it per day. It has over 30,000 branches in 120 countries. It derives 80% of its revenues from eight countries like Canada, Brazil, Germany, France, Japan, UK, Australia and US. The greatest strength was creating an image in the minds of the people and introducing them to the fast food culture. Delivery speed, customer care and cleanliness are the core strengths on which these stores expanded. They created a corporate symbol and their advertisement campaigns were highly successful in establishing the brand image and logo in the minds of the millions. Two main competitors generally identified with McDonalds are the Burger King and the KFC. McDonalds marketing strategy is concerned with the internal resources, external environment and its basic competencies along with its share holders.

McDonald's product value is also its greatest strengths. Customers know what to expect when they walk into a McDonalds store. It gives great emphasis to human resources by satisfying both the customer and the employees. Next is the innovation aspect wherein new products line up to catch up with the new trends and tastes of the people. Its diversity into other new business ventures can also be considered as its strengths.

How effective are these strengths to the company in the long run? McDonalds today is not that amendable as it was during its inception. What are the driving factors which results in its present decline in terms of sales and services? To analyze this factor we have to look at the weaknesses part of the companies business and marketing strategy. What can generally be termed as a weakness of a company? The same factors which were considered as strengths also become a weakness if it impedes the overall performance of the company.

Customer trends change and so does their choices. People are generally tired of the same brands that they had been using over the years, so when they do not see the expected innovation they migrate to new brands. Moreover people see McDonalds every where and this over exposure might also be a reason for abstinence. Moreover maintaining the standards of such a huge chain becomes feasible and when there is lack of quality service in one store it effects the whole brand.

The secret of any marketing strategy is to reach the target audience. And here again the target audience should be chosen carefully. In the case of McDonalds as projected in its ads, the targeted audiences were the kids. Demographics and customer financial and psychological aspects define a business concerns success. Health conscious women and senior citizen comprise the major population but kids soon grow out to become adults. Recent law suits and documentaries resulted in the companies recent innovation and a major change related to health related product ranges and