McDonald's, Inc. Case

CASE ANALYSIS

McDonald's, Inc.

COMPANY NAME: McDonald's, Inc.

INDUSTRY: Food Service

COMPANY WEBSITE: www.mcdonalds.com

COMPANY BACKGROUND:

As a company, McDonald's was first introduced in Des Plaines, Illinois in 1955. This was the very first McDonald's restaurant, which all started in San Bernardino, California in 1954 when Ray Kroc approached the McDonald brothers with a business proposition to start a new company. In 1965 McDonald's went public and was later, in 1985 added to the Dow Jones Industrial Average. (www.mcdonalds.com) The company has gone through quite a few changes with its changing CEO's over the years, but the company seems to be on track with CEO Jim Skinner, named in 2004. Skinner was named the new CEO just in time to clean up after McDonald's first ever quarterly loss. He succeeded by showing that McDonald's revenue had climbed 11% during 2006 and net profits had climbed 36%. (Dess, Case 40 Pg. 1)

SWOT ANALYSIS:

STRENGTHS: Jim Skinner had to clean up a big mess after the 2003 slump, and did so by coming up with a strategy to turn everything around. His strategy had to consist of staying competitive with the numerous other fast-food restaurants popping up all over the world. In order to maintain this, they had to reorganize the way they presented themselves to the community. Jim Skinner did so by cleaning up the customer service, cleaning up and modernizing the physical buildings, and changing the menu to the changing tastes of their customers. McDonald's also introduced their slogan "I'm Loving It" to reach out to the younger customers. The advertising is very much targeted toward teens and young adults. (Dess, Case 40)

WEAKNESSES: The first weakness was the changing of three different CEOs in only one year. These were unexpected changes, but all had to be dealt with by the newest CEO Jim Skinner, and directly after McDonald's first ever quarterly loss in 2003. The second weakness is an issue with trying to find new and exciting things to put on the menu to bring in new customers. Many of today's fast-food customers are making different kinds of foods, like Chinese and Mexican food, normal to the everyday menu.

OPPORTUNITIES: McDonalds has many opportunities to change its look, menu, and customer service. McDonald's started building newer building incorporating the arch, along with more modern furnishings. The menu has changed by adding more breakfast items and introducing the McCafe in certain areas. It has also added more health concerned items such as the Asian salad and Premium white chicken. (Dess, Case 40)

THREATS: McDonald's biggest threat is competition. Wherever there is a McDonald's, there are at least 3 other fast-food restaurants near it. It constantly has to advertise what makes them unique to other fast-food places, which means there always has to be something different about them than anybody else. Just the fact that McDonald's was the first company to go big with their burgers does not necessarily help them today. Every customer is looking for a new experience and new products to keep them excited with what they are eating and where they are going to eat, and with so many choices, it is hard for McDonald's to compete with. (McDonald's 2007)

ANALYSIS VIA PORTER'S FIVE FORCES MODEL:

THREAT OF NEW ENTRANTS: The threat of new entrants for McDonald's and the fast-food industry is low. With so many different kinds of fast-food restaurants already in the industry, entering at this point would cause struggle for the new entrant. (McDonald's 2007)

BARGAINING POWER OF SUPPLIERS: According to Siehoyono (2005), there are 3,700 new outlets being built each year in the U.S., meaning the power of suppliers is not an issue for McDonald's.

BARGAINING POWER OF BUYERS: Consumers have more power over buying McDonald's products because they can demand what type of products they want to see from them. Today, consumers are demanding healthier food and beverage choices from fast-food restaurants such as McDonald's. After the documentary film "Supersize Me" by Morgan Spurlock came out in 2004, McDonald's had to reclaim its name by showing America that their company cares about the health of their customers and cut out their "supersize"