SWOT analysis of McDonalds

By Ovidijus Jurevicius | 16.02.2013 | 1 Comment

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Company Background
Name

McDonald's Corporation

Logo

Industries served
Geographic areas
served
Headquarters
Current CEO
Revenue
Profit
Employees
Main Competitors

Restaurants, Fast Food

Worldwide
U.S.
Don Thompson
$ 27.56 billion (2012)
$ 5.46 billion (2012)
1,800,000 (2013)
Burger King Worldwide,Inc., Yum! Brand Inc., Subway, Wendys
Company and many others.

McDonalds is the worlds leading fast food restaurant chain with more than 34,000 local
restaurants serving approximately 69 million people in 119 countries each day. More than 80%
of McDonalds restaurants worldwide are owned and operated by independent local franchisees.
You can find more information about the business in its official website or Wikipedias article.

SWOT
McDonalds SWOT analysis 2013
Strengths
Weaknesses
1. Largest fast food market share in the world

1. Negative publicity

2.
3.
4.
5.
6.

Brand recognition valued at $40 billion

$2 billion advertising budget
Locally adapted food menus
Partnerships with best brands
More than 80% of restaurants are owned by
independent franchisees
7. Children targeting

1.
2.
3.
4.

2. Unhealthy food menu

3. Mac Job and high employee
turnover
4. Low differentiation

Opportunities

Threats

Increasing demand for healthier food

Home meal delivery
Full adaptation of its new practices
Changing customer habits and new
customer groups

1. Saturated fast food markets in the

developed economies
2. Trend towards healthy eating
3. Local fast food restaurant chains
4. Currency fluctuations
5. Lawsuits against McDonalds

Strengths
1. Largest fast food market share in the world. McDonalds is the largest fast food
restaurant chain in terms of total world sales (8%). It is the second largest outlet operator
with more than 34,000 outlets, serving 69 million consumers every day in 119 countries.
2. Brand recognition valued at $40 million. Companys brand is the most recognized
brand in fast food industry and is valued at $40 billion. McDonalds is also famous by the
Ronald McDonald clown.
3. $2 billion advertising budget. McDonalds spends on advertising more than the next 4
fast food restaurant chains combined.
4. Locally adapted food menus. The fast food chain is operating in many diverse cultures
where tastes in food are extremely different than those of US or European consumers.
Thus ability to adapt to local tastes is one of McDonalds strengths.
5. Partnership with best brands. McDonalds offers only most popular brands in its
restaurants, such as: Coca Cola, Dannon Yogurt, Heinz ketchup and others.
6. More than 80% of restaurants are owned by independent franchisees. Therefore,
McDonalds can focus more on perfecting its serving system and marketing campaigns.
7. Children targeting. The business successfully targets very young children through
offering playgrounds, toys with its meals and advertisements.

Weaknesses
1. Negative publicity. McDonalds is heavily criticized for offering unhealthy food to its
customers, stimulating obesity and strong marketing focus on very young children.
2. Unhealthy food menu. Although McDonalds tries to introduce healthier choices in its
menu, the menu is largely formed of unhealthy meals and drinks. Such menu offering
prompts protests by organizations that fight obesity and hence, decreases McDonalds
popularity.

3. Mac Job and high employee turnover. Mac Job is a low paid and a low skilled job,
which is often seen negatively by its employees. This results in lower performance and
high employee turnover, which increases training costs and add to overall costs of
McDonalds.
4. Low differentiation. McDonalds is no longer able to substantially differentiate itself
from other fast food chains (at least not enough to gain some market share) and opts to
compete by price rather than by additional features.

Opportunities
1. Increasing demand for healthier food. While demand for healthier food increases,
McDonalds could introduce more healthy food choices in its menu and reverse its
weakness into strength. McDonalds is trying to seize such an opportunity and soon plans
to open only vegetarian restaurant in India.
2. Home meal delivery. McDonalds could exploit an opportunity of delivering food to
home and increase its reach to customers.
3. Full adaptation of its new practices. McDonalds has redesigned its logo and restaurant
design in 2006. In addition, it has introduced some new practices. In a result, remodeled
restaurants have seen 8-9% higher than average market growth. McDonalds should
finish remodeling all of the restaurants and adapt the best practices in them as soon as
possible.
4. Changing customer habits and new customer groups. Changing customer habits
represent new needs that must be met by businesses. So far, the company has been
successful in introducing its McCaf, McExpress and McStop restaurants to meet the
changing customer habits and the needs of previously untapped customer groups.

Threats
1. Saturated fast food markets in the developed economies. The fast food market in the
developed countries is already overcrowded by so many fast food restaurant chains and
this already proves to be a threat to McDonalds as it barely grew through 2012.
2. Trend towards healthy eating. Due to government and various organizations attempts
to fight obesity, people are becoming more conscious of eating healthy food rather than
what McDonalds has to offer in its menu.
3. Local fast food restaurant chains. Local fast food restaurants can often offer a more
local approach to serving food and menu that exactly represents local tastes. Although
McDonalds does a great job in adapting its own menu to local tastes, the rising number
of local fast food chains and their lower meal prices is a threat to McDonalds.
4. Currency fluctuations. The business receives a part of its income from foreign
operations. The profits that are sent back to US have to be converted into dollars and may
be affected by the exchange rates, especially when the dollar is appreciating against other
currencies. In 2012, McDonalds profit was largely affected by appreciating dollar.
5. Lawsuits against McDonalds. McDonalds has already been sued for many times and
lost quite a few lawsuits. Lawsuits are expensive as they require time and money. And as
McDonalds continues to operate more or less the same way, there is high probability for
more expensive lawsuits to come.

Sources
1. The New York Times (2012). How McDonalds Came Back Bigger Than Ever.
Available at: http://www.nytimes.com/2012/05/06/magazine/how-mcdonalds-came-backbigger-than-ever.html?pagewanted=2&_r=0&ref=mcdonaldscorporation
2. McDonalds Investors (2013). Company profile. Available at:
http://www.aboutmcdonalds.com/mcd/investors/company_profile.html
3. Wikipedia (2013). McDonalds. Available at: http://en.wikipedia.org/wiki/McDonald's
4. United States Securities and Exchange Commission (2012). 10-K Form McDonalds
Corporation. Available at:
http://sec.gov/Archives/edgar/data/63908/000119312511046701/d10k.htm
5. Interbrand (2013). Best Global Brands 2012. Available at:
http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx

McDonald's SWOT analysis and

recommendations
McDonald's SWOT analysis and recommendations
SWOT Analysis:
1. Strengths:
- Strong brand name, image and reputation
McDonalds has built up huge brand equity. It is the no 1 fast food company by sales, with more
than 31,000 restaurants serving burgers and fries in almost 120 countries. The image of
McDonalds is recognized everywhere. This brand is in top ten of the most powerful brand names
in the world with Coca-Cola, Nokia or GM.

- Large market share

McDonalds is considered as the largest player in size and global reach. When Wendys or
Burgers King are losing market share in 2006, McDonalds still increases its market share.
Market share of McDonalds in the recent time is about 19% while Yum!Brands is 9% and both
Wendys and Burger King is 2%.
- Specialized training for managers
McDonalds is very serious on training managers. This company has its own program to train
managers the most professionally, which is called Hamburger University. As a result,
McDonalds has many good managers who can help company development well.
- McDonalds Plan to Win
McDonalds customer focused Plan to Win provide a common framework for its global
business yet allows for local adaptation. Through the execution of initiatives surrounding the five
elements of its Plan to Win People, Products, Place, Price and Promotion McDonalds has
enhanced the restaurant experience for customers worldwide and grown comparable sales and
customer visits in each of the last eight years. This Plan, combined with financial discipline, has
delivered strong results for companys shareholders.
- Introduction of new production
McDonalds is considered the first one enter to fast food industry. It initiates to other brand to
enter this industry. As a result, when think about fast food, customers always remember
McDonalds first. In fact, in some big countries, especially in US, McDonalds is the first choice
of a large number of customers.
- Technology Innovative:
McDonalds is keeping at the forefront of technology around the globe. For example, In Brazil
McDonalds is currently studying the installation of Internet access terminals in some outlets as
well as enabling customers to order online. This will create a more efficient process that will
reduce the amount of lag time between a customers orders and pick up of the order.
- Good marketing strategies:
No matter the continent, children and adults know the face of Ronald McDonald is synonymous
with the colossus restaurant chain. This results in wonderful marketing strategies among
management which conducts a very thorough market analysis, resulting in much success around
the globe.
2. Weaknesses:
- Unhealthy food image

McDonald's has been impacted by negative press like the documentary "Supersize Me" by
Morgan Spurlock in which he contributed our societys obesity to McDonald's and other fast
food chains. In fact, each McDonalds dishes provides large amount of calories but not too much
nutrition.
- Customer looses due to fierce competition
McDonalds has to compete with many strong brand name in fast food industry such as Wendys,
Burger King or Yum!Brands. This fierce competition makes McDonalds loose a large number of
customers who prefer favor of other brands.
- Problem related to health issue
McDonalds use Trans - fat and beef oil in their food. Although it is not illegal, it affects badly on
customers health because Trans fat is causes of some kind of cancer. Consequently, a number
of customers who care about their health stop eating at McDonalds restaurants. It makes revenue
of company decrease.
- Legal action:
McDonalds has been involved in a number of lawsuits and other legal cases in the course. For
example, there are many case which involved with trademark issue. McDonalds force many
others restaurant, company of just a coffee shop to change their brand name because of keeping
Mc letters.
- Unbalance meals:
Although McDonalds tries to update its menu by healthy criteria, McDonalds meals are still
unbalance. For example, there are many dishes with chicken (both grilled and fried), bacon, beef,
rib or egg. Besides, just several dishes are salad with vegetable and fruit. Moreover, amount of
fruit or vegetable is not much.
- High employee turnover rate
Although McDonalds has many good managers as well as skillful employees, the turnover rate is
still high. Every year many of their employees are fired out of the restaurants. Moreover, many
others quit their jobs, especially part time employees because of low salary as well as too high
working pressure.
- Action related to environmental issue
McDonalds uses HCFC 22 to make polystyrene that is contributing to ozone depletion. The
company has to repair this weakness if doesnt want to be criticized.
- Dissatisfied Franchisees:

Franchisees are beginning to become very dissatisfied with the fees that McDonalds are forcing
them to pay. As the company continues to expand, they are also increasing the amount of fees
franchisees have to pay for the use of the notorious fast-food brand. Many people are not very
happy about this and as a result many franchisees are selling their businesses.
3. Opportunities:
- Growth of the fast food industry
Fast food industry now is developing significantly. The change of lifestyle leads to the change in
people eating habit. In the past, if just workers, drivers or someone who had to work busily and
didnt have enough time for a home meal choose fast food; nowadays, almost people eat fast
food and a major of them like fast food very much. It is a huge chance for fast food brand to
increase their revenues, especially McDonalds.
- Conservation:
McDonald should research green energies and green packaging solutions and incorporate these
finding as a part of their marketing strategies and advertisements.
- Globalization, expansion in other countries
McDonalds has more than 31,000 restaurants serving in almost 120 countries. Of the 31,000
restaurants, at least 14,000 are in US. However, now, because the care of McDonalds about
favors and cultures in each countries it enters, McDonalds can open more restaurant in new areas
such as China or India the countries which culture influences on people lifestyle deeply. They
are very potential markets. The expansion of these areas is big opportunities For McDonalds.
- Low cost menu is preferred by large number of customers
With low cost menu, McDonalds can attract customers who just have low income. This segment
makes up a fairly remarkable part, especially in the recent time, when global economic is
struggling. It is not difficult for McDonalds to apply low cost menu on all restaurants.
- Appearance of freebies and discounts
Discounts given on every food item may help them gain more customers. Moreover, a new trend
is rising among customers that they like freebies and discounts, even when they dont need it or
dont use these freebies after.
- Diverse tastes and needs of customers
Customers tastes now become more diverse. As a result, they require new format of service in
order to satisfy them. McDonalds, with new format of business such as McCafe, it can attract
new segment of customer; for instance civil service, who prefer coffee as well as want to use WiFi to work when drink coffee.

- Growing health trend among the customers:

Although people concern about how McDonalds influence badly on their health, it is also a
chance for McDonalds. This company can develop new products, specifically fresh burger or
healthy dessert.
4. Threats:
- Intensity competitors
Along with the development of fast food industry, there are many new fast food brand enter to
the market. It is nothing to say if there is no strong brand which can compete with McDonalds.
However, in fact, there are some and they are stronger gradually, for example Yum!Brands,
Wendys or Burger King. Although market share of these brand are lower than McDonalds, they
try to gain more customers from McDonalds. Moreover, more casual dining restaurants increase
their burger offering and decrease the price. If we are not really hurry, we may choose this kind
of restaurant instead of fast food restaurants. They also become the competitors of McDonalds.
- Public health crisis
With a growing number of obesity cases among Americans, fast food chains like McDonalds
will continued to be overshadowed by their previous products offerings, for example Supersized
Meal, no fruit or yogurt, slim salad selection. Besides, people nowadays are facing heart problem
more seriously. As a result, they require nutritious and healthy food as well as lifestyle.
- Economic recession
The company's revenue streams are diversified, but depending on the length of this "recession",
they will inevitably be negatively impacted by the trickledown effect. Recession or down turn in
economy may affect the retailer sales, as household budgets tighten reducing spend and number
of visitors.
- Serious environmental issue:
Environment is one of the hottest topics all over the world. Any action which influence on the
earth and human life is criticized strongly. Consequently, if McDonalds keep using HCFC -22, it
may lose customers, especially who really care about the earth.
Recommendation:
McDonalds is a powerful brand name. Thus, its strategies seem so good. However, in my
opinion, I still have several recommendations for this company. Besides, looking at the grand
matrix and SWOT matrix, there is something McDonalds should do with its strategies:
The first, although saturated in the United States, McDonalds has great expansion capabilities
abroad. According to the grand matrix, market development is one strategy that McDonalds

should implement. Company should prepare an international strategy which focus on big cities
along with high populated areas, especially in Asia. There are not many McDonald restaurants in
this potential market. Japan is the only Asian country which has a lot of McDonalds fast food
restaurants. In contrast, China is considered as one of the biggest market in the world because of
this countrys population. Nevertheless, according to the recent figures, China is just in ninth
position among the countries which have McDonalds restaurants with about 1000 restaurant
while this number in US is about 14000. If McDonalds can develop more and more in Asia, it is
a huge advantage for company to gain market share.
The second is about the name recognition. Everywhere, millions of people are familiar with the
Golden Arches that are on top of every McDonalds restaurants. McDonalds should use this
advantage to gain more attraction from customers. It does not mean that this company should
become involved into many areas of the food industry. In fact, soft drink and fast food bring
large profit for McDonalds. However, if keep involving in other areas, it would increase the
potential for liability to the company because of many intensity competitors. McDonalds has
built the McDonald Hotel in Zurich, Switzerland. Needless to say it is a very unique hotel. A lot
of customers in other countries want McDonald open the same hotel in their countries. As a
result, McDonalds should care about this chance more than developing new kind of food
business which the company is not sure about this success. In addition, aside from exploiting
brand name, company can exploit its sources of food and drink in McDonalds fast-food
restaurants for the hotel, as well as service skills of employees.
In addition, McDonalds strength as I told above is that introduction to new production.
Company should focus on this strength to develop stronger. However, the company seems not
diversify its products regularly while competitors are stronger and have new products gradually.
Because of this reason, McDonalds should spend more money on Research and Development to
create new products and services as well as increase the efficiency of operations. First, one thing
McDonald should focus on is that the play place for kids. McDonalds has play place but not in
every restaurants. If you eat in McDonalds restaurant, you can be free to party while your
children play at the place for kids. Customers love this service. Thus, if it is popularized in all
restaurant of company, customers will be more satisfy and of course they want to comeback
regularly. Moreover, toys have to be cared much more with many new interesting toys as well as
safety. Jolly Bee is one brand which applies this strategy very successful. McDonalds can learn
from Jolly Bee developing this service to improve its market position. Next, even if the
companys menu is still relatively inexpensive compare to that of its competitors, it is not totally
enough. Because apart from price, customers also make decision rely on menu. After bring a
fresh menu with tuna sandwich and salad in some restaurants, especially in Britain and get
support from a lot of customers, there is no new one like that. McDonalds focus too much on
cheese,beef or chicken menu, more than vegetable. For instance, McDonalds has fruit slice in
menu. However, it is served once a week. In the recent time, with the change in eating habit of a
large part of customers, McDonalds also should change. Company should bring new vegetarian
products to restaurants menu. An organic menu is very necessary. This would give customers an
alternative while allowing McDonalds to maintain its market share globally.
The last one is also about customer service. Managers of McDonalds are trained professionally.
As a result, they can train employees well. McDonalds employees are evaluated high by

customers because of their behaviors as well as attitude. However, customers are not pleased at
the idea of waiting in long lines and insufficient employees to handle the volume of customers.
Just the minority, but sometimes the employees are rude forcing the customers to go to a
competitors restaurant next time. At the market which has high market share and very huge
number of customers such as USA, Canada or United Kingdom, this issue occurs more
frequently. McDonalds should find a way to solve it. For example, the company has to rent more
employees and increase their salary in order to keep them working for a long time. This time is
just enough for them to get skills to service customers well. Besides, it is necessary to increase
the number of employees at the weekend or in the lunch time. More employees means that
pressures are shared and avoid the bad attitudes.
Conclusion:
McDonalds has undergone several changes since its inception in San Bernardino, California. The
fast food chain has conquered the US and it now focusing on the rest of the world. McDonalds,
along with this trend, continues to strive toward customer satisfaction while still enhancing its
international market position. The company is doing very well and keeps trying in Africa, China,
and the Middle East, which will be continued source of revenue for many coming years. If
McDonalds can overcome all of its challenges, makes use of advantages and has right strategies,
it will win the market again and hold fast to first position in fast food industry.

McDonalds SWOT Strength

Ranks very high on the Fortune Magazine's food service companies that are most
admired list.
One of the best brand recognition in the world, the golden arches and Ronald McDonald.
Community oriented business models.
Very socially responsible.
Global operations all over the world.
Cultural diversity in the foods that are provided based on location of the restaurant.
A large part of the restaurants are franchised out.

Excellent locations in theme parks, airports, Wal-Mart stores, and along most well
traveled roads.
Efficient operating guidelines in the assembly line fashion.
Use of top quality beef and chicken products.
Use of brand name processed items like Kraft cheese, Dannon Yogurt, and Dasani Water.
Food safety guidelines are strictly adhered to.
Provide nutritional information to the consumers.

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McDonalds SWOT Weaknesses

Failing pizza test market thus limiting their ability to complete with fast food pizza
providers.
Training costs are elevated due to high turnover.
Very minimal concentration on providing organic foods.
Large fluctuations in their net and operating profits making impacts on the investors.
Not much variation in seasonal products that are offered.
Quality concerns due to franchised operations.
Focus on burgers and grease fried foods and not on healthier options for their customers.

McDonalds SWOT Analysis Opportunities

Opening more joint ventures with several different retailers.

Being more responsive to the social changes to healthier options.
Advertising the capabilities of Wifi internet services in the branches.
Creating more play places for the children in more of the restaurants.
Expanding on the advertising in regards to being more socially responsible in the
environment.
Expansions of business into newly developed parts of the world.
Creating a more upscale appearance to attract a more upscale clientele.
Open products up to allergen free options such as peanut free and gluten free foods.
Continue to venture into more enticing beverage choices.

McDonalds SWOT Analysis Threats

Their marketing strategies that entice people from small children all the way to adults and
the criticism that they take because of it.
Lawsuits for offering unhealthy foods that have alleged addictive additives.
Contamination risks that include the threat of e-coli containments.
The vast amount of eat in fast food restaurants that are open as competition.
Social changes to a more balanced meal including fruits and vegetables in servings of
five per day.
Focus on healthier dieting by consumers.
Down turn in economy affecting the ability to eat out as much.

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