McDonalds Corporation that was officially incorporated in 1940 is reputed to be the largest food chain in the world, selling hamburgers and fast foods, in almost 120 countries. Presently headquartered in US, the company has around 31000 food retailing stores worldwide with over 14000 in US itself. The nature of the business is not just selling food, but is a franchising enterprise. The revenue generated by McDonalds is largely obtained from the rent, fees or royalties paid by the franchisees and sales from the company-operated retailing outlets. A January 2010 survey shows that around 400,000 people are employed by the company. The average annual revenue was recorded to be $24.075 Billion for the year 2010. The business is continuously growing with the dynamic increase in demand for its products.
It has very strong brand equity. According to the 2011 fortune 500, McDonalds was rated to be the top food service company in America. It is widely established on geographical scale. It has operations in more than half of the world, and is situated on preferable locations, for examples, big markets, malls, or most visited roads. This has increased its recognition to the local population. McDonalds is reputed to have maintained quality since decades. The chicken and meat is well processed and hygienic, besides being good in taste. The employees and management team are the most precious assets of McDonalds. With a highly specialized staff and strong management strategies, the customers find McDonalds as an ideal place. Consequently, they are offered a wide range of products to choose from. A very strong point of McDonalds is an absence of competitors. A major threat to any company would be from its competitors and in McDonald’s case; it has no cut throat competition. It alone is the market leader.
Although McDonalds is very strong in some areas, it lacks strengths in others. The most major weak point is quality controlling across franchises. McDonalds have delegated its retailing outlets in the hands of franchisees. A slight defect in the services or product quality from the franchisee may lead to a bad reputation for the whole company. Since McDonalds is established on a very large scale, it is nearly impossible to check each and every outlet. Secondly, the world population is increasingly focusing on healthy organic food, rather than fast food. Since McDonalds is highly specialized in just fast food, a shift to organic food may decrease its sales and dominant position.
Since McDonalds is well spread across the whole world, the only opportunity for it is to diversify into other types of foods. It can introduce Chinese, Italian or Indian foods in its menu. This would possibly earn it a dominant position in the emerging markets of India and China.
Most of the people tend to spend their left over incomes to buy luxurious food, like that of McDonalds. With the worsening economic situation of the world, it might face a decline in public investment and may possibly collapse. Everyday, many new restaurants come into being, that offer much cheaper and tastier food than McDonald does. This may attract the people too much towards those restaurants, rather than McDonalds. The change in the nutritious diet by the people is also a die hard threat for the company. Any how, a slight improvement will lead to further development of the already well established company.
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