McDonald’s SWOT Analysis
McDonald’s was established in 1955 and has since been a prospering business. The business was ranked at sixth position in list of most admired food service companies of Fortune Magazine’s 2008. McDonalds has built up large brand equity. It is the known as the best fast-food company by sales, with a strong network; over 31,000 restaurants serving burgers and fries in more than 120 countries.
The company has known to have very loyal employees and management. The twenty of its fifty top employees started as low level restaurant employees at McDonald’s. The caring attitude of the company towards its employees is also shown by the fact that around its 67,000 managers were initially hired as restaurant staff. For this reason, the McDonald’s was listed in the Fortune Magazine 2005 as the “Best Place to Work for Minorities.”McDonalds invests over $1 billion every year in training its staff, and every year over 250,000 employees graduate from McDonald’s training facility, Hamburger University. All this shows the employee strength of the company.
By being spread out in different regions, the company is able to contest the economic fluctuations which are localized by country. McDonald’s has an advantage as it can operate effectively even in an economic downturn as at such times people seek out comfort food more.
McDonald’s continually innovates to retain customers in the business. McDonalds as a brand offers reasonable value, consumer’s choice and great service. Around seventy five percent of stores of McDonald’s are franchises and it invests heavily to support its franchise network.
One of the weaknesses of McDonald’s is that its core product; hamburgers and fries are slowly getting out of line and being avoided by the people because of the awareness of healthier living and eating habits for children and adults. The company focused and derived a large number of profits and revenues from its burgers and hot food items but the trend is more towards organic foods these days.
Quality management is getting difficult for the company as the network is huge and the quality cannot be checked across its franchise network.
McDonald’s conducted a test service for pizza to enter a potential market but was not able to be as good and competitive as compared to other known pizza chains.
The company invest a lot in the training of its staff and employees but due to high turnover the investment does not pay off.
McDonald’s is known as a corporate responsible company as its responds to any social change taking place in its environment. The company introduced healthier food with growing awareness that added to its revenues.
McDonald’s is also the first Quick service and fast food restaurant that got approved by FDA for its very low calorie and fat hamburger that was introduced in different calorie combinations.
Competitive pressures are a threat for the company as new entrants offer greater product ranges, value and healthier food products. The major competitors, the company faces threats from include Burger King, Taco Bell, Starbucks, KFC, Wendy’s, Sonic Drive, Pizza hut and local small and fast food restaurants etc.
The current Recession in economy is another threat that may affect sales of the retailers. As household budgets tighten their consumption of fast food as well as spending and restaurant visits have decreased.
The company has been sued many times because of offering “unhealthy” food, and even charged for using addictive additives.