Strategic planning is important for any business success. Strategic planning defines where an organization needs to go and not necessarily, how it will get there (Dobni 2010, p.40). Different from business plans, there is no other way through which effective strategic planning is created. Envisioning the goals and then defining the strategies that will be used to attain the goals is the true spirit of strategic planning. Strategic thinking in these cases identifies the methods that are used to reach the business goals. Burger King and McDonald's represent one of the most important and iconic business rivalries in American history. According to Carden, Maldonado and Boyd, 2017, p. 56, for the past 60 years, McDonald's has been seen to set the standards through which the other franchises operate. Currently, there are indications that the roles are changing as a revived Burger King is seen to be forcing McDonald's to change its strategies. McDonald's in its strategic planning has mainly focused on globalization in its goals (Crawford, 2015, p. 11). In the operations of the organization, the management of the organization has faced the pressing challenges of strategic marketing on a regular basis. The challenges have been viewed to be able to affect the future of the company for many years. Burger King, on the other hand, has had the right strategies through which it has operated to ensure the main goals of outdoing the rivals regarding consumers and the number of users is reached (Lee 2017, p. 41). In this study, there will be comparing McDonalds and Burger King and looking at how the two companies have differently achieved their strategic goals. In achieving this aim, the SWOT, Stakeholders analysis, BCG matrix analysis, PESTLE, Ansoff Matrix and Porters Five forces analysis will be used.
McDonalds SWOT analysis
Strengths
· It is considered one of the best brand recognition in the world.
The organization has a global operation.
Is ranked very high on the Fortunes Magazine to provide the best food services.
Diversity in the good that is provided based on the location of the restaurants.
Efficient operation guidelines
Food safety guidelines included in the principles of the organization are adhered to.
Weaknesses
Falling pizza market has restricted the capacity to compete with the other fast food pizza outlets.
High rates of turnover that elevates the training costs.
Quality concerns due to their franchised operations.
Focused on burgers and not health conscious options for their consumers.
Large changes in the operating and net profits which impact the investors.
Opportunities
Getting into joint ventures with other different retailers.
More responsive to the social changes to the healthier options available.
Expanding on advertisement
Expanding into developing parts of the world.
Continued investment into more enticing beverage choices.
Threats
Lawsuits for offering unhealthy foods.
Focus on healthier diets by the consumers.
Social changes that focus on a more balanced food.
Downturn in the economy.
Burger King SWOT analysis
Strengths
· The organization has a strong position in the market
It has a strong financial performance
Great franchise mix
Weaknesses
Low market concentration
Scattered marketing campaign
Opportunities
There is a positive outlook for the restaurant industry in the United States regarding healthy products.
New opportunities in the growing economies.
Development of new products.
Threats
Franchise agreements that are may expire after some time.
Intense competition in the product line and industry.
From the analysis, McDonalds is considered a strong brand name with the strategies that it has employed is considered well. However, although the saturation of the brand in the United States, McDonalds have great expansion capabilities that it has not exploited. Market development is a strategy that the organization could implement. Burger King, on the other hand, has a strong market position, and it has used this strength to get into newer markets (Miller, 2016, p.74). With the growing economies, Burger King will be a point of competing well in the economies through its development of new products.
BCG matrix
Stars
Starts are those sections that compete and mainly operate in the high sales growth industry to have a high market share in terms of geographical segments of McDonalds, Europe is the star as it has generated highest revenue for the organization in the past three years. The strategy would make it a cash cow in the long run. Burger King on the other hand has franchised owned business shops and outlets as a star. It has gained revenues from the outlets as compared to McDonalds.
Cash Cow
The segments provide financial stability in the organization. In McDonalds, America is the cash cow as it has reported 31%share of the revenue in the annual sales in the last three years. With the high competition, the segment remains a cash cow. The franchise outlets are the cash cows in Burger King as they have generated most revenues for the organization.
Question Mark
In the operations of McDonalds, APME segment falls in this category. The segment has compared in the high growth industry but has a low market share. The Asian segment has a high growth rate which the organization is not taking advantage. In the operations of Burger King, the leased outlets and the revenues that the organization obtained from the company-owned outlets remain question mark.
Dogs
The operations of the company make none of the segments fall in the dogs’ category. There is no section that is competing in the low sales growth industry with a low market share. Burger King also has no department in its operations that can be categorized as dogs.
PMI analysis
McDonalds PMI
Plus
Minus
Interesting
Positive company image
Increased growth in the consumers and targeted groups
Diversity in operations
Reduction on the main goods market.
Quality concerns
Health concerns in the population.
Competition in the industry
Burger King PMI
Plus
Minus
Interesting
The right financial performance.
Franchise operations enabling efficiency
Reduced market share.
Reduced campaigns
Expansion of activities of the organization to more regions.
From the PMI analysis, both organizations are at the right market position and with the right growth strategies, there can reduce the minuses. Their operations however should be concerned about the competition and the health concern in the growing population. It is interesting that the companies reach the other regions they are currently not operating.
PESTEL analysis of Burger King
Political factors:
Political stability in major markets that the organization is operating or tends to operate.
Government support for e-commerce in most markets.
Globalization as one of the goals is supported by the government.
Economic factors:
There is expansion in international trade agreements
The economic stability of many of the markets such as the United States which the main market is.
High economic growth in the developing countries
Social factors:
There is increased consumer diversity.
The current consumers have had an increased concern for their health.
In the current setting and legislation, there have been an increased concern and support for animal rights.
Technical/technological factors:
There is increased the availability of automation technologies.
There are low R"D activities in the quick service industry in which the organization operates.
The higher popularity of mobile technologies.
Legal factors:
Reduced import and export regulations.
More laws are protecting the environment.
There are currently regulations of GMOs.
Environmental factors:
The climate change affects the consumption of the products.
There is increased emphasis on business sustainability.
Increased emphasis on low-carbon lifestyle.
PESTEL analysis of McDonalds
Political factors:
The operations of the organizations are exposed to increased international trade agreements.
Pending tax reforms that have encouraged business in the United States.
There are increased evolving public health policies.
Economic factors:
There is slow but stable growth in the United States economy.
The European economies are stable but risky.
The Chinese economy is in a slowdown.
Social factors:
There is increased diversity in the targeted consumers.
Widening wealth gap in the targeted consumers.
The increased trend in a healthy lifestyle.
Technical/technological factors:
The business automation has been increased.
Increase in the mobile devices that have in turn increased sales through the mobile devices.
Moderate R " D activities in the food industry
Legal factors:
There is an emphasis on the legal minimum wage level in the United States.
Animal welfare has received increased concerns.
In the local settings, there are increased health regulations in schools and workplaces.
Environmental factors:
There is increased interest in corporate environmental initiatives and programs.
Sustainable business strategies have had an increased emphasis.
Concerns about climate change.
The PESTEL analysis of McDonalds shows that the organization through the right strategies has significant opportunities to increase its operation and business growth. The analysis also shows that the organization has the chance of capitalizing on the technological factors and strategies to enhance the productivity and efficiency. The organization also will need to address the social factors and expanding into higher growth economies. Burger King, on the other hand, has several factors that it should get concerned about in its strategic planning to achieve its goals (Miller, 2016, p.74). The organization should focus on e-commerce and mobile transactions to grow its sales. The organization has also not well expanded in the developing markets. Health consciousness being a concern in the industry, both the organization should consider improving on the issue.
Porter’s forces analysis of McDonalds and Burger King
Competition rivalry
The competitive rivalry between McDonalds and Burger is strong considering the forces that the businesses operate under. The strong competition rivalry force is based on several external forces including the switching cost in the industry being low, a high number of firms in the food industry and the firms in the industry are highly aggressive. These are the main factors in the food industry that have affected the operations of these organizations. The companies have however developed different strategies for dealing with them.
Bargaining Power of Consumers
The bargaining power of the consumers of the organization is a strong force in the food industry, and this has affected both the operations of Burger King and McDonald's. The consumers are hence able to influence the operations of the organization. Some of the external factors that contribute to the strong force include a large number of a substitute to the products, a large number of same product providers and low switching cost for the consumers (Harrington, Ottenbacher, and Fauser, 2017, p. 553). The organizations in these cases have also developed different strategies for dealing with the factors.
Bargaining Power of the Suppliers
McDonald's and Burger King suppliers’ bargaining power is weak (Gayle and Luo 2015, p. 135). The supplier hence less impacts the operations of the businesses. Some of the external factors that contribute to the weak force include the overall supply being high, a high number of suppliers and low forward vertical integration which is a weak force the companies have varied suppliers and this has reduced the impact of the supplies in the growth of the businesses. Despite the weak force by the suppliers, the organizations have had different strategies in managing their suppliers for the right competition in the market.
Threat of Substitutes
The threats of substitute have been a concern in the operations of the organizations as it affects the growth. The threat is strong. Some of the external factors that have led to the threat include the availability of high substitutes, low switching costs to the substitutes by the consumers and a high performance-to-cost ratio. This is a strong force. Both McDonalds and Burger King are exposed to these forces but have different strategies for managing the forces.
Threats of New Entrants
The new entrants impact the market share of McDonalds and Burger King. The threat is a moderate force, and the organization needs to have the right strategy for dealing with the force. Some of the external factors that have led to the moderate force include moderate capital costs in operating in the industry, the switching costs of the brand. The force is strong. The high cost of brand development which is a weak force.
Ansoff matrix
MARKET PENETRATION
Sell more products to those who already consume them
PRODUCT DEVELOPMENT
Sell new products that may have been developed to the already existing customers
MARKET DEVELOPMENT
Sell the burghers to those that have not been consuming them through focusing on areas where there have been no outlets.
DIVERSIFICATION
Involving in other activities such as the sale of products other than burgers.
Since McDonalds and Burger King operates in the same industry, they have similar opportunities of expanding their operations. Both have the strengths to increase their market shares through enabling the current consumers need more of their products. Developments of new products and selling them to the already existing consumers can be effective.
Factors Affecting Strategic Objectives Achievements
In the food industry that both Burger King and McDonalds operate, several factors have affected the achievement of their strategies objectives. With continuous changes in the markets and characteristics of the consumers, both companies have been affected by the changing external factors. Some of the factors that have affected the operations of the corporative include corporate changes, changes in the external and internal factors and the access that the businesses have to information technology.
The corporate culture of McDonalds is that which focuses on doing the right things and providing the right services to the consumers. In the corporate strategy, the organization has focused on serving the community and the employees to ensure their satisfaction (Collett 2013, p. 401). The corporate culture in the company has been supportive of achieving the strategies. In the current operations, some factors have however affected the operations of the organization regarding achieving the corporate strategy. Burger king maintains a culture that supports high performance among its employees. The values and the traditions have aimed at achieving employee satisfaction to ensure they have a high performance in its operations. The strategic plans and objectives of these businesses sometimes are not consistent with the cultures. Lack of consistency between the culture and the strategies developed by the organizations have affected the rate of achieving their goals and objectives.
Internal and external forces such as the economy and the environment that the corporations operate have affected the rate of achieving their strategic objectives. Strategic planning enables monitoring the changes in the external and the internal factors and aligning them to the strategies developed for the organizations. Changes in the external forces, however, affect the operations of the organizations in the food industry
Growth in information technology has also affected the strategic plans of both Burger King and McDonalds. From the PESTEL analysis, it is evident that the organizations are exposed to increased business automation, increased use of mobile sales and an increase in R "D activities. When the strategies of the organizations are not done while considering these factors, their success is limited. The technological force is a strong and the organizations have to include it in their strategies.
Conclusion
From the SWOT, Porters and PESTEL analysis of McDonald's and Burger King, the organizations have used different strategies in achieving their goals and objectives. The organizations have different goals to achieve. In achieving the goals, the businesses have defined their goals with consideration of the internal and external factors. The involvement of the right stakeholders has also been an important aspect of achieving the strategic goals. The stakeholders are made aware of the goals and often referring to them. The difference in the approaches is due to the different external and internal factors that they are exposed. The efforts to achieve the goals have also been different between the organizations.
References
Carden, L.L., Maldonado, T. and Boyd, R.O., 2017. Organizational resilience: A look at McDonald’s in the fast food industry. Organizational Dynamics.
Collett Miles, P., 2013. Competitive strategy: the link between service characteristics and customer satisfaction. International Journal of Quality and Service Sciences, 5(4), pp.395-414.
Crawford, A., 2015. McDonald's: A Case Study in Glocalization. Journal of Global Business Issues, 9(1), p.11.
Dobni, C.B., 2010. Achieving synergy between strategy and innovation: The key to value creation. International journal of business science and applied management, 5(1), pp.48-58.
Gayle, P.G. and Luo, Z., 2015. Choosing between Order‐of‐Entry Assumptions in Empirical Entry Models: Evidence from Competition between Burger King and McDonald's Restaurant Outlets. The Journal of Industrial Economics, 63(1), pp.129-151.
Harrington, R.J., Ottenbacher, M.C. and Fauser, S., 2017. QSR brand value: Marketing mix dimensions among McDonald’s, KFC, Burger King, Subway and Starbucks. International Journal of Contemporary Hospitality Management, 29(1), pp.551-570.
Lee, S.Y., 2017. A study on the growth mechanism of Burger King based on dynamic models of success and failure of businesses. East Asian Journal of Business Economics, 5, pp.39-49.
Miller, C., 2016. An Analysis of the International Expansion of Burger King.
