McDonalds Analysis

McDonald's Case Analysis

Nick Brown

BUSN412 Business Policy

May 14, 2010

CASE ANALYSIS

McDonald's

COMPANY NAME: McDonald's Corporation

INDUSTRY: Food McDonald's Corporation

COMPANY WEBSITE: (www.mcdonalds.com)

COMPANY BACKGROUND:

Ray Kroc found McDonald's corporation, a successful fast food restaurant, in 1955 were his vision was to create McDonalds restaurants all over the U.S, and within 3 year of establishing the franchise the corporation was already selling its 100 millionth burger. The franchise has now became a successful global fast food restaurant that sells a variety of items and has a unique philosophy that Ray Kroc envisioned with building this franchise which was "To Build a restaurant system that would be famous for food of consistently high quality and uniform methods of preparation"(McDonald's Corporation 2009). He wanted, "To serve burgers, buns, fried and beverages that tasted just the same in Alaska as they did in Alabama"(McDonald's Corporation 2009). The case study concentrated on the financial strengths and struggles of the franchise. With the early millennium years 2001, 2002 and 2003 the franchise seen a tremendous dip in total revenue and net profits, it wasn't until 2007 when the company seen a turnaround in total revenue and net profits. Things were starting to look up for franchise. Currently the CEO at McDonald's Corporation is Jim Skinner and he is providing the same vision that Ray Kroc was envisioning when he opened the doors. The company's performance at yahoo.com/finances are up 0.06 that's a 0.09% at 69.65 but from past it's has dropped from 60.59, which is a change of 0.91.

SWOT Analysis:

Strengths: McDonald's Strengths came from day one when Ray Kroc's vision was to create a successful and well-maintained fast-food restaurant. The company's financial information provided at yahoo.com/finances and also the case study, have shown the strengths that the franchise has with its impressive figures. The business is known for its service and its well-loved items that it sells

Weaknesses: McDonald's internal weaknesses would have been finding the right CEO within the company the first time whose philosophies were the same as the founder. This would have been the biggest benefit the company could have done so it could focus on its opportunities.

Opportunities: McDonald's biggest opportunity would have been by solving there weakness stated before so that the business would have a foundation and leader to important events that were rising or have came. The franchise was blinded when it came to the market change and had to play catch up with its competitors to claim the #1 spot.

Threats: McDonald's threats came from the competition because they were a step ahead of McDonald's since the franchise was working with internal issues first. McDonald's was hurting themselves, but we know not intentionally, because as in the core values and foundation of the company the original owner would not have allowed for this to happen. Threats also came from customers demand in healthier foods and simply the change of fast food that came about with grocery stores offering quick meals and convenient stores also offering competitive items.

Porter's Five Forces Model:

Threat of new entrants: McDonald's isn't much threatened by new entrants until recently with the new movement of eating healthier. This change opened the door for many existing companies and also stores to start offering what McDonald's offers.

Bargaining Power of Buyers: Power of buyers have a big impact on McDonald's especially since buyers are not trying to eat healthier and are more conscious about what they eat. McDonalds customers hold a credible threat because they are in demand of certain items and McDonald's was having a hard time getting satisfying items to please the customers.

Bargaining Power of Suppliers: Power of suppliers also has a big impact on McDonald's because suppliers can dominate since there is a competitive market thus suppliers could raise/lower the prices and go to competitors.

Substitute Products/Services: Substituting in the food industry happens all the time and is the biggest part of business lost. Substitution comes into play for McDonald's because customers will settle or substitute their craving for McDonald's for healthier or more exquisite food like sushi, burrito's etc.

Intense Rivalry: Rivalry is big when it comes to the fast