The US economy presents its own arrangement of chances and dangers for businesses in a group of organizations. There are countless areas seeking to be biggest economy on the planet. As indicated by IBIS World (Empson, Muzio, Broschak and Hinings, 2015), McDonald’s Corporation is perhaps the most beneficial and the quickest developing chain in the fast food industry.
Insights show that the company’s income has been on the rising pattern for as long as five years, and it is anticipated that in the following three years McDonald’s Corporation will be the worldwide pacesetter all things considered. This report is an update to the administration of McDonald’s Corporation examining the basic threats and the opportunities in the industry’s operating environment. The memo presents various variables and the current state of affairs in the industry to help to decide whether to pursue a “Hold” or “Grow” strategy.
One of the major opportunities for a probable higher scale of revenue and growth is the upgraded menu. McDonald’s Corporation has hired a new CEO Steve Easterbrook who has big plans to revolutionize the company. The part of his comprehensive plan is to tender premium foods at some of its outlets. In the recent past, the restaurant has introduced sirloin burgers and artisan chicken to its menu in some states as a piloting project before its launching all over the USA (Kachru, 2015). The project has already recorded the marginal revenue and its prospects as a significant boost to the firm. As well, the company has invested heavily in strengthening its position as far as the high-margined caffeinated beverages are concerned. It has sought to ouster the dominant Starbucks in drinks, and hence primary focus has been on areas where the competition is stiff.
Two major issues are threatening the growth curve of McDonald’s chain. Firstly, the company is facing serious competition from both big and small firms. Its primary competitors are Burger King and Wendy’s (Witcher & Chau, 2010). This has forced McDonald’s to lower the price of some products and use a lot of revenue in advertising.
Secondly, health-conscious awareness groups have categorized most of the foods offered at McDonald’s as junks. As such, people are being discouraged from consuming such products due to lifestyle-related complications.
The GE/McKinsey Matrix Applied to McDonald’s
Since the objective of this memorandum is to help McDonald’s to choose whether to “Hold” or “Grow,” it is thus essential to prepare a McKinsey Matrix tool as shown below:
Competitive strength of the firm
In this case, the industrial effectiveness under consideration is the strength of the brand (low), company loyalty (medium) and profitability (high). On the other hand, the competitive strengths of the firm are the structure of the industry (low), demand (medium) and the labor (high).
The Model of Grand Strategy Clusters Applied to McDonald’s
Similarly, the Grand Strategy Clusters Model applied to McDonald’s was prepared to help develop the strategy for the immediate future of the company.
Diversify for survival
Joint ventures and new market
To conclude, McDonald’s chain has recorded the success due to the lower prices for the same quality offered in other firms, thus slowly obtaining the competitor’s market share. The company should also consider its vast store network. Still, extensive marketing and a highly efficient supply chain present a critical opportunity for the growth.
Lastly, McDonald’s should struggle to increase its market share in the underdeveloped nations. Since North America and Europe markets are saturated, the company has devised strategies to reach the African and Asian market to boost its financial strength. All this presents an opportunity for the business to grow. As such, it is recommended for McDonald’s to proceed with its growth and diversification strategy to capture new markets.
Empson, L., Muzio, D., Broschak, J. P., & Hinings, C. R. (2015). The Oxford handbook of professional service firms. Oxford, United Kingdom: Oxford University Press.
Kachru, U. (2015). Strategic management: Concepts and cases. New Delhi: Excel Books
Witcher, B. J., & Chau, V. S. (2010). Strategic management: Principles and practice. S.l.: Cengage Learning