MARKETING AND PR OF MCDONALD’S

INTRODUCTION OF MCDONALD’S

One of the Largest and renowned restaurant in the United States and other different countries is McDonald’s. In 1948, the two brothers, Maurice and Richard started the first McDonald restaurant in California and in 1955, Ray Kroc; the salesman opened the first McDonald’s franchise in Des Plaines and eventually acquires McDonald brothers in 1961. McDonald’s Corporation has it’s headquarter in Oak Brook, Illinois.

The Company has both owned and franchised restaurants. Almost 90% of the restaurants in the world are franchised. The franchisees exercise its own control in employment and management related matters, and on the other side taking advantage of International brand of the franchisor. There are about 37,241 restaurants of McDonald’s serving in 120 countries. McCafe, McExpress and McStop are its subsidiaries. The products that McDonald’s offers include; hamburgers, French fries, Nuggets, Egg Muffin and many more.

McDonald’s has gained the largest market share and its brand is famous all over the world. As per 2017 financial statements McDonald’s earned a profit of $5.192 billion which is 10.8% better as compared to the year 2016.The main competitors of McDonald’s are; Subway, Starbucks, KFC Domino’s , Burger Kings and many other fast food restaurants.

MISSION AND VISION

MC Donald’s vision is to be established as a famous well known Fast Food Brand that would offer the best meal at affordable prices yet with the best quality and services to the customer. Moreover it will want to be providing a variety of meal including side dish, deserts and drink to support the main meals. Also it would want to establish itself as the best provider of fast food so that customer don’t get a better to eat than MC Donald. Furthermore MC Donald would want higher sales and revenue and higher market shares so that it can see itself as a market leader for the fast food industry.

MC Donald mission will also be to use effective marketing and sales strategy to be cost effective so that overall cost savings can make the brand a more cost effective to customer so that it can become the number one choice for the customer.

The vision of MC Donald will be to be a globally recognized brand which operated eventually in all countries of the world so that they can be a force in the Fast Food Industry so that no other brand can stand in its way also this way their Franchisee revenue will increase proportionally and make them the top rated brand. Furthermore the vision will also be a brand that offers the best meal that is tastier, healthier and hygienic and one that is loved by all ages of people.

Mission is where currently the organization is and vision is what the organization wants to achieve in future

MC DONALD INTERNATIONAL MARKETING AND PUBLIC RELATION

MC Donald which is one of the most famous and well established brand, which has multiple locations in over 100 plus countries has to maintain its position and brand name and this requires well planned and implemented International marketing and Public Relation (PR). Both Marketing and Public Relation (PR) are key aspects for brand awareness and for retaining the brand name but both are different in its activities and cost. MC Donald makes use of both the International Marketing and Public Relation (PR) and has been successfully implementing both effectively. Marketing is more connected to advertisement, billboard and paid endorsement. Whereas Public Relation (PR) is a marketing mix that gives the company exposure to the stakeholders interested in the activities of company and it also gives them direct connections to these stakeholders without having to pay for the marketing.

International Marketing is more of linked to the product and the Franchisee of the Brand to boost Sales and revenues for both the Franchisee and Franchisor. International Marketing focuses on Media Planning, Product Pricing, Sales Strategy, Distribution channel, Market Research and Customer Support. For MC Donald the above International Marketing Activities works as discussed below:

MEDIA PLANNING

MC Donald has to carefully plan for Media Planning for their International marketing activities. As most customers for MC Donald are children and youth that mostly spend their time on technology and reading, MC Donald has used TV Advert, Internet Advertisement, Big Billboards and Magazines. These advertisements directly promote the product for the Brand and helps in generating or boosting sales. These advertisements are costly and adds good sum to the marketing budget. Also MC Donald has an in house team for maintaining the internet advertisement like websites that needs to be constantly and dynamically updated on regularly basis. MC Donald currently uses Push and Pull strategy to communicate with its customers. The Push part gives out adverts to obtain more customers and create brand awareness using media such as TV, Internet and Billboards and the Pull part retains existing customer by using website and internet advertisement.

PRODUCT PRICING

Product pricing is also a form of marketing research that helps MC Donald to be up to date on the market competition and it’s pricing. As MC Donald is aware that the shifting cost to customer is very low and as the biggest brand on Fast Food Industry it constantly work on Product pricing for all its Brand Products to ensure they have an edge over their competitors. Also MC Donald Franchisor ensures that all its Franchisee where ever they are adhere to this Product Pricing Marketing Activity and also visits them to ensure adherence.

SALES STRATEGY

This is another Marketing activity that is part of the International Marketing Strategy that MC Donald has adopted. This Marketing aspect deals with the sales part of the business activity on how to boost sales and to increase revenue. This will include introducing new varieties on the product, deals and offers on existing products and new products, discounts on products and freebie give away on some or frequently loved products.

DISTRIBUTION CHANNEL

This aspect of International Marketing focuses on the distribution channel as to how the brand product can reach its customer bases. This mainly includes physical location (Restaurant outlet), home delivery mode, website for menu selection and order taking and mobile app that does the same work as a website but more comforting for the customer. By focusing on this marketing aspect MC Donald achieves the distribution goal of the firm and ensure that its covers all aspect by which the brand can reach its targeted customers and how best they can find more ways to reach wider consumer base.

MARKET RESEARCH

Market Research is an important aspect of marketing and helps in obtaining relevant information about the product for a new market or existing market. MC Donald uses Market Research to study the market for Fast Food market shares, competitors, and customer preferences. MC Donald used this aspect effectively before it launched into the market of Australia and India – in studying the culture, preference and eating habit of the consumer and this made the opening in these two countries successful for MC Donald.

CUSTOMER SUPPORT

MC Donald is very successful as it values its Customer and this in return brings them good revenue. MC Donald has provided two main customer support feature for customer feedback; the online feedback that is part of its website and in the restaurant complain box. These two features provides the customer with opportunity to write back to MC Donald about any flaws or short fall regarding their product and this makes the customer feel special knowing that MC Donald cares for their feedbacks. MC Donald in return has a quick analysis on the complaints and flaws and come up with a favorable response on their queries, ensuring the customer is satisfied and the same thing does not happen again.

PUBLIC RELATION (PR) MARKETING MIX

Public Relation (PR) is a marketing subset that provides or disseminates the company information and the Brand name through a positively managed communication channel with its stakeholder. PR tries to drive and maintain the positive reputation of the brand through effective PR strategies and tools. PR strategy is free or has very low marketing cost associated with it compared to the huge cost associated with direct Marketing and advertisement. The main tools for an effective PR strategy are as follows:

Main PR tools for a successful PR Strategy start with;

1. Media Relation, which includes circulating positive brand name and message through media channel, new and media statement. This includes working closely with reputable and recognized journalists and media representatives to convey the positive message and feedback related to the brand to the audiences.

MC Donald used this tool effectively when it launched a new Salad titled “Rolling Energy” where it visited a press conference of a famous news media spokesmen and endorser who spoke about the salad. This gave MC Donald a boost on the salads popularity and bigger customer base for the same product.

1. Advertorials. This is a section in the international or local newspaper that features a story telling by MC Donald which attract readers and ensure more consumers are linked by the brand through inspiring stories of MC Donald and ensuring they are loyal and true stakeholders of the brand. This will also include a review of the brand in the reviews section of the newspaper and brings in a about a positive brand name and awareness. MC Donald in its earlier days used this to narrate its success stories to its stakeholder and this brought in a lot of fame and name for MC Donald brand. This is free PR marketing as the media love to narrate the stories of success of people whereby they sell more newspaper and brand like MC Donald gets more visibility.
2. Social Media. This PR marketing makes use of famous social media sites like Face book, twitter and integral. The advantage of these platforms is that the Brand owner (Franchisor) bypasses the media and maintains a direct contact with the end user or stakeholder of the brand. MC Donald maintains a high visible presence on Face book and twitter where they interact directly with the customer and this gives them the opportunity to gain insights of the brand including the doubts and queries. MC Donald pushes the latest menus, meal, deals and offers on their Social sites and this gives them a wider customer base and positive brand image.
3. Special Events. This PR Strategy is more of physical contact with the customers, where the company displays the brand straight to the customer and they get a chance to see it and taste it as for MC Donald. For MC Donald this strategy has worked very well, especially when they introduced the “All Day breakfast” they had hosted an Intriguing event which not only showcased their new breakfast meal but also gave away a number of free breakfast to all the customers that attended the event. This was a great strategy adaption by MC Donald as the customer ate the breakfast for free and gained confidence in the product and will now be loyal to the company. Such events also provides the company with an opportunity to speak to its audiences and make sure all doubts are cleared and the confidence of the company gets bigger and the company also gets a leader or innovator appearance in the eyes of its audience.
4. News letter. This PR strategy makes use of Print or emailed newsletter to keep in touch with their customer base. When a company issues such newsletter either by email or print it brings in a trust factor to the customer that the company want s its audiences to be in touch with the company and its latest meal variety, deals offers and discounts in major or loved meals. MC Donald makes use of both print and email newsletter. Their website features the option that allows its customer to register and get weekly newsletter keeping them informed and up-to-date with the company introductions and activities. Also MC Donald participates in famous Magazines providers who write about fast food seller as its their way of selling magazines and MC Donald enjoys free of cost marketing by using its PR marketing mix.
5. Brochures and Catalogues. This PR strategy is linked to very low marketing cost but does the work better than its higher marketing cost counterpart. This can be mailed base or take home based brochures. MC Donald uses this PR strategy tool to keep in touch with its customer base informing or keeping them updated with the company’s activities. This strategic tool will inform or keep the customer base updated with the new product introduction, deals and offers and discount based meals.
6. Sponsorship or partnership. This PR strategic tool is by far the best as its associated with no cost compared to some other PR strategic tools that have low cost. In this strategy tool the level of confidence, popularity and loyalty for the brand is obtained quickly as its linked to not for profit cause and the benefits for the growth of the brand is huge. MC Donald used this tool very effectively from its early days till today. The founder was an ambassador for children well being when the brand was in its early days and this is one of the reasons behind its success. Moreover when it introduced the Rolling energy salad it worked with a Non-profit organization that works hand in hand with healthier living this made the brand and in particular the latest innovation a huge success as all the people associated with the healthier life Organization and its partners spread the word of mount for the product. The partnership PR Strategy aspect is also very crucial in this area as it makes a direct link or contact with the customers and makes them more close to the brand and increases loyalty. MC Donald when introducing a new location in Australia ran an event based campaign where it invited customer for the grand opening and also kept good deals and offers which attracted many customers. During the event it registered client thoroughly with their picture and used the same for a few week as a registration ID when customer came to buy meals. After few weeks they launched a partnership brand meal package where they kept pictures of average clients on the meal packages that were introduced in many other countries. The package along with the picture of the client also included the slogan “I’m Lovin’ It” which made this marketing a great success and saw a rise in their sales revenue and overall customer base. Also the social media sites has a heavy visit numbers which made the brand gain great global awareness, loyalty of customer and loves from all fast food lovers.

To conclude the International Marketing and Public Relations (PR) marketing strategy MC Donald has been successful in both the above strategies but the Public relation (PR) has brought them more success as they have started using it even before the marketing or advertisement strategy had been in place and the first success that it tasted came from the well planned, implement and executed Public Relation (PR) Strategy. More over Public Relation (PR) is successful due to the main reason that It is link directly to the stakeholders that are also the customer and since the main success of a brand comes from the satisfaction of a happy customer, the Public Relations (PR) is what makes the customer a part of the brand as they are directly linked to the brand and feel as their own brand.

Marketing also plays an important role as it’s directly linked to sales and revenue. MC Donald has evenly balanced this strategy as well using both out-door and in house marketing team. Using effective billboards, TV adverts featuring famous endorsers, Internet marketing including in house website that provides a dynamic approach to it answering all the queries of the customers and providing all information regarding the brand such as latest introduction, offers, deals and discounts. Furthermore the focus on children meal is also well targeted on the TV advert and internet advert which makes the parent more interest to the brand and also the interaction the children can have by special fun games introduced on their website made the children meal and famous innovation that is loved by all the children’s.

STRATEGIC POSITION OF MCDONALD’S USING DIFFERENT MODELS

McDonald’s strategic position can be analyzed using SWOT, PORTER FIVE FORCES and PESTEL analysis.

INTERNAL AND EXTERNAL ANALYSIS (SWOT APPROACH)

The acronym SWOT stands for Strengths, Weakness, Threats, Opportunity. This simple analysis is use to identify and analyze the internal factors and external factors that could affect the strategic functioning of the organization. This analysis helps the organization in designing suitable and best strategies that can then be implemented to avail and take advantage of the opportunities by using its strengths and the strategies for minimizing the threats to which the company is exposed to by reducing its weaknesses.

Evaluation and examination of Internal and external factors helps in attainment of prosperity and overall success of the organization

Internal Analysis examines the strengths and weakness of an organization that could provide the company certain benefits and drawbacks in meeting their customer needs.

External Analysis includes examination of all the external factors that are affecting the company that includes analysis of opportunities and threats that can be found in an environment in which the organization operates.

MC DONALD SWOT ANALYSIS

STRENGTHS Globalization Approach Recognizable Brand Highest Market Share Customer Satisfaction Innovation	WEAKNESSESS Lack of Healthiness Limited Flexibility on Market Change Children Focused Menu High Employee Turnover
OPPORTUNITIES New Market Entries Cultural and Nutritional Based Meal Offers and Discounts	THREATS Fit fashionable Population Competition from Similar Brands Brand name maintenance

STRENGTHS

• RECOGNIZABLE BRAND

The global presence of MC Donald is very strong. Due to its strong brand name and brand power MC Donald ranks second in restaurant network in terms of its number of locations in which it operates.MC Donald has its franchisees in over 120 countries thus operating 37,241 restaurants all over the world.

• GLOBALIZATION APPROACH

The globalization approach of MC Donald has boosted its revenue since it has gone global. The Franchisee license fee is collected from each franchisee location in the world thus enabling MC Donald to earn higher and higher revenues. This approach has also boosted its brand awareness amongst the consumers making it more famous and known all over the world giving it an international consumer base.

Another advantage for Globalization approach opens more market shares for MC Donald as more countries will witness the growing brand name and would open new locations of the same Franchise. Furthermore it will also enable in marketing cost cut-down as the same advertisement can be used for other locations with little changes and the centralized website will also feature all the major locations in different countries thus making the marketing cost efficient yet reaching all its consumer bases.

• ECONOMIES OF SCALE

The most major advantages in this approach are reduction in Fixed Cost (marketing cost), Streamlined and cost efficient supply chain and Specialized / standardized operation and training.

By achieving Economy of Scale MC Donald can have Major cost cutting on Marketing and Advertisement as having multiple locations can enable them to run the same advert and cover all the locations and in some adverts have minimal changes on the advert for all locations instead of a complete new advertisement plan or approach. This will also allow them to get more satisfied and loyal customers as the adverts will cover all of all the consumers.

MC Donald also enjoys Streamlined and cost efficient supply chain as the meals for all the locations are cooked in the same way with the same ingredients thus allowing them to buy in bulk and obtain them in low cost but with the same quality as the quantity is bulk. This also makes the supply side standard and ensures it never will run out of the major ingredients.

MC Donald also has the leverage of enjoying Specialized and standardized training and operations as all the locations run in the same manner with the same controls.

• HIGHEST MARKET SHARE

Due to its global and strong presence all over the world MC Donald has $ 97,723 Million worth of Brand value as per the USA statistics. According to the US Fast Food Industry MC Donald has a staggering share of 43%.

• CUSTOMER SATISFACTION

Since a Company like MC Donald is a global Brand it has the widest and best customer satisfaction due mainly to the standards set out by the franchise HQ. These includes tasty and full of variety meals, clean and hygiene environment, fast and professional services, same trusted quality all over the world and affordable prices. These all approaches sum up to make MC Donald enjoy a wide and loyal base of satisfied customers.

• INNOVATION

Having a global presence and a strong brand awareness has made MC Donald to have a very strong, dedicated and intelligent R&D (Research & Development) department which continuously strives for Innovation based on Consumer preferences and creates more varieties of the major meals making them more tasty and craving for meals.

WEAKNESSES

• LACK OF HEALTHINESS

Since MC Donald primarily focuses on Fast Food like Burgers, Fries and Fried Meals Youth Generations of now a days have been seen as avoiding it on regular basis thus having a declining popularity on this numbers due to factors such as Obesity.

• LIMITED FLEXIBILITY ON MARKET CHANGE

MC Donald also may suffer from limited flexibility as the standardized approach is good but sometimes they can’t respond to market changes and the flexibility is limited or else it will make it stand out from other locations. Also the process is time coming as the decision has to be passed and approved by the management of HQ and be implemented in all the locations.

• CHILDREN FOCUSED MENU

MC Donald’s menu majorly consists of Children Oriented Menu making its more lovable to the children instead of Youth and middle aged people. Also all the major deals are also mainly children oriented. This is a weakness as more job going and business people are youth and middle aged and for them MC Donald has limited menu.

• HIGH EMPLOYEE TURNOVER

Since the management of MC Donald is limited to seniors and all the lower level are normal serving staffs this makes it a stopover job for many thus making the turnover high. Also the low level serving staffs are highly terminated and some quit the jobs due to intense workload and minimum wages which makes it difficult for them to continue.

OPPORTUNITIES

• NEWER MARKET ENTRIES

As of the current record MC Donald has a stronger presence in the Western Market there are opportunities of it to enter into Asian Continent such as China, India, Japan and Malaysia. These countries have and are growing in population where by majority are children and youth. This new venture will help MC Donald to boost its sales and revenues and obtain more globalization and also ensure it won’t rely only on one market type.

• CULTURAL AND NUTRITIONAL BASED MEAL

MC Donald has very limited to zero focus on Localized or cultural focus on their meals. In most countries adding a cultural flavor to main meals boosts the sales and revenue and also attracts more consumers as the meal is linked to the local soil of the country. Also MC Donald can add nutritional focused meals to their menu to attract the fit and fashionable youth to boost sales and revenue.

• OFFERS AND DISCOUNTS

MC Donald can have more opportunity in boosting its presence and sales by providing special offers and discounts to its customers. Many customers like offer and discount which gives them a sense of comfort that the company cares for the value of their money. Also offers attracts more customer, for example the BUY ONE GET ONE FREE offer makes many feel that they are getting more for the value of their money.

THREATS

• FIT FASHIONABLE POPULATION

Today’s life style in the Western World is more of fit and fashionable youths who prefer a more healthier life style and thus prefer eating more healthy meals, this can be a threat to MC Donald has it primarily focus on Fast food which is now in declining demand in the fit and fashionable quota of youth. Since MC Donald has a stronger presence in Western Market this is a big threat to the company.

• COMPETITION FROM SIMILAR BRANDS

MC Donald over the years since its start has grown in the Fast Food Industry and maintained its position on the top of the market, but this is now a big threat for them as they have to maintain this position and name that they have set for itself from competitors such as KFC, YUM and Burger King who offer similar brands under different name.

• BRAND NAME MAINTENANCE

MC Donald has a big and famous name in the Western Region which makes it a number 1 choice of Fast food lovers. But this can also be a big threat for the firm as any negative publicity or short fall in service or quality in any of its Franchisee location can lead to a bad reputation for the MC Donald firm as a whole and can lead to decline in its sales and revenue and can give its competitors more edge over them.

STRATEGIES THAT CAN BE USED BY MC DONALD TO BECOME MOR PROSPEROUS

1. Utilizing Strengths to Avail Opportunities. MC Donald has a well established brand name, image, reputation and customer confidence in its product which can be seen by the number that has made it a number one brand. By using this strength MC Donald can avail the Opportunity of investing in more countries that have higher class or standard people that love Fast Food so that it can increase its presence further and gain more revenue. Already MC Donald is much globalized in the Western Section and has high knowledge and experience in the management and operations of the Franchisee they can easily adapt to the new markets which have not been explored with little effort and establish similar brand name and awareness for its products.
2. Utilizing the strength to minimize the threat

Moreover since the Research and development of MC Donald is very experience and up-to-date with the market research they can focus more on healthier and nutritional based meal to remove the threat that it is facing more fashionable and healthier age of people. Furthermore since MC Donald has a very powerful international marketing and Public Relationship along with superior buying power over the supplier they can cut down their cost on the above two sectors with some handsome percentage and use this on the price of meal to ensure that existing competition will not manage to cope with them and a new entrant in the market will need too big a budget and years of hard work to even be able to compete with MC Donald. By using this MC Donald will also ensure that its position will be on the top of the chart and that the sales and revenue will keep on increasing and the dividend to the shareholder will increase which is an issue they had faced some years back but now with the properly thoughtful process this will no longer be a weakness for MC Donald.

1. Reducing weakness to reduce threat

Since MC Donald is children focused and the main deals are all focused on children which is a good innovation but since now the youth population is more increasing than ever before and the competitors are all focusing on youth and middle aged population group, MC Donald needs to have a change in this so that they can do both focus on the children, youth and middle age population group. This will reduced their threat of competition as well as new entrant in the market. Moreover the competitors will try to focus on its strategy but due to lack of experience in the management and operations of a successful Franchisee they will not stand up to the mark and eventually lose out and fall out of competition.

Flexibility and Standardization to reduce threat is also a major concern for MC Donald, since they are very standardized and flexible which is a very good point but they are not able to easily adapt to the market change and this is where the customer preference becomes a big issue. But since their Research and development is strong they can focus on the market and a bit of flexibility will allow them to tackle the market changing needs and allows new product to carter of the changing market environment.

PORTER FIVE (5) FORCES MODEL

Michael Porter, in the year 1979, developed a framework in order to analyze and assess the competitive position of the corporation, named as Porter Five Forces Model. By examining the Porter’s five factors the company can determine and anticipate business profitability, based on the competition in the industry. This analysis can help the organization in doing effective decision making by formulating effective strategies.

APPLICATION OF PORTER’S FIVE FORCES MODEL TO MCDONALD’S

As McDonald’s operates in restaurant industry, the competition, attractiveness and profitability of restaurant industry can be analyzed by the following five forces:

Threat of new Entrants

MODERATE

Competition & Rivalry

HIGH

Buyer’s Power

HIGH

Supplier’s Power

LOW

Threat of Substitute

HIGH

Threat of New Entrant

In today’s life the switching cost for a Customer is low and he can easily switch from MC Donald to another local meal provider that is cheaper. Furthermore a new restaurant can easily start up and bring more focus on local and nutritional oriented meals and customer can move to these restaurants away from MC Donald. Moreover in today’s time opening a well designed and attractive restaurant is not that expensive like other businesses and in a very cost efficient way one can open a restaurant and start to compete with MC Donald.

Since MC Donald is a highly recognized brand with Global presence and outlets in almost all countries offering quality meals which are thoroughly tested meals and also has standard operations it is not easy for any new entrant to establish a brand name like MC Donald. Thus the threat for new entrant is there but for a brand like MC Donald the level is moderate to low.

THREAT OF SUBSTITUTES

Substitute is a similar product to its competitor product which varies in appearance or taste to make it a fighting product in the market. Also substitute product needs to be of similar or lower cost in order to capture the customer of the competitor market share.

MC Donald has market substitute such as KFC, YUM, Burger King, Pizza Hut and Homemade meals and pastries. These competitors offer similar product that are low or similar in price and in some cases are higher in Nutritional value as compare to MC Donald. Thus, making it a selectable option to MC Donald. Hence the threat of Substitute is high and MC Donald should consider this and make better strategic decisions to overcome the threat.

BARGAINING POWER OF SUPPLIERS

Traditionally the Suppliers are the ones that have the most say as without their supplies one can’t run the business effectively. Since MC Donald is a highly reputable, globalized and bulk buying Brand that has immense power in buying items that are available in abundance such as chicken, meat, flour and potatoes and so are its suppliers, MC Donald has manage to lower the Supplier power by setting criteria of bulk buying and standardization of supplier.

Hence the bargaining power of supplier for MC Donald is low as they are the ones with the say due to the power of bulk buy and standardization of supplier. Therefore the suppliers cannot set their terms to increase their prices.

BARGAINING POWER OF CUSTOMERS

In today’s world the Customer is the king of the game they are the ones that MC Donald and other big brands rely on mainly due to the reason of product substitute. For MC Donald there are many substitutes in the market such as KFC, YUM and others. The cost for a customer to move to the substitute is very low or nearly zero as the pricing for the substitute products is also low or similar. If customers are not satisfied with MC Donald they will switch as the switching cost is low or zero.

Moreover customer loyalty is also a big question for MC Donald. MC Donald can’t just decide to increase their prices, lower their quality or degrade their services as the customer will then switch to another brand and MC Donald will no longer enjoy the loyalty of that customer. Furthermore variety of choices can also lead to customers seeking out for substitute products as variety in meals is a fashion now a day for most customers. Therefore the Bargaining Power of Customer is high and MC Donald needs to maintain their price, quality and service and should not compromise on these to ensure customer loyalty.

COMPETITIVE RIVARLY

Meal or Food Industry is a very competitive industry where by one can setup a new classy well designed restaurant at a very affordable cost, can set similar menus or enough better tasty and healthy ones as compared to MC Donald such as KFC, Burger King, YUM and many more. These competitors are continuously striving for capturing more of the market share by using aggressive strategies in management and decision making, having aggressive and spot on marketing and advertisement campaigns. These competitors also introduce great deals and offers to attract more customers and gain more of the market share. MC Donald has a high level of risk from competitive rivalry but can overcome this by ensure competitive price, good quality, service and aggressive yet intelligent marketing.

PESTLE ANALYSIS

In order to analyze the macro- environment of the organization, PESTLE analysis is preferable. The following are the necessary factors of PESTLE Analysis

• Political Analysis
• Economic Analysis
• Social Analysis
• Technological Analysis
• Legal Analysis
• Environmental Analysis

In order to decide the future course of action and for better strategic management, examination and evaluation of the above factors are crucial and play a vital role in designing the future strategies for the organization. McDonald’s macro-environment can be assessed as follows:

POLITICAL ENVIRONMENT

Political Environment such as regulations and safety laws can be a great challenge and can impact a brand image and its smooth operations. There are many regulations and safety laws when it comes to a brand like MC Donald, to name a few, Trading regulation or taxes, Product taxes, Customer and employees safety and place or building safety. Since MC Donald is a reputable brand some countries that don’t encourage foreign Investments can impose high Trading regulations such as taxes to the firm.

Moreover there is Value added tax (VAT) on the product itself imposed by the Government which is a cost to the customer and the company also when they purchase goods. Furthermore there are safety laws and regulation on both the employee and customer part; for the employee is about safe working environment, proper contract, working hours and wages. For the customer its tested product ingredients, safety seating area which is also part of the place or housing regulation for the restaurant. These regulations can affect the company like employee growth and can bring in conflicts between them. Also it can affect the firm in terms of cost shooting and the way it does its operations.

ECONOMIC ENVIRONMENT

Economic environment can also affect big brand and MC Donald can also be affected by such environment. MC Donald can be affected by many Economic Challenges like Inflation, when the prices go high the demand is low in such situation they have to cope for the brand name. This was the case when the Western or European economy was on the merge of recession MC Donald had a big impact on its sales and operations.

Also since MC Donald is an internationally recognizable brand it can be affected with exchange rate that can bring in difference in its financial performance. Two more economic challenges that MC Donald can face is wage rate that can vary and is linked to the standard of living and demand and supply which can bring in big effects on MC Donald.

SOCIAL ENVIRONMENT

In this environment

TECHNOLOGICAL ENVIRONMENT

This environment should also be given considerate attention to achieve competitive edge and higher customer base. In this environment technology plays a main role in reaching a wide audience and at the same time maintaining a positive brand image. Also technology should be used in the operation activities of the company to operate effective and cut down costs. MC Donald is giving a special consideration by actively marketing its product using the latest social media platform such as face book, twitter and integral to create and spread brand awareness and make sure all their innovations and deals and offers are reaching the target audience.

Ecological Environment

This environment requires the firm to adhere to the environment laws and principles and be eco friendly so that the eco conscious customers are also attracted to the brand and be part of their customer base. They environment also requires the firm to pay very close attention to the re-cycle process ensure that they follow the right disposable procedures linked to the recycling nature of waste. This will help the environment as a whole. MC Donald has been doing well in this area of re-cycle procedures as they have won an award for the same in this category. However in the Asian continent particular Japan they have been criticized for introducing the whale burgers as this endangers the species which they have considered and endangered ones. For this MC Donald had taken a step of support the NGO Organization that fights for the endangered species as an ambassador to clear the image that they had with a clean and positive brand image.

LEGAL ENVIRONEMENT

This environment focus on the adherence of the laws set out by the government such as Trade tax, VAT on products, Employee health and safety and hygiene laws associated to Fast Food. By adherence to the laws the brand gains a positive name and image in the Government sector and at the same time the customer confidence is increased as they feel safe when visiting the place. Also employee satisfaction is higher as they know they are part of a firm that follows all the employee related laws such as contract, safety and wage laws. In this environment failure to adherence can bring in about bad reputation for the brand name leading to declining customer base and in worst case can lead to heavy fines from the government and eventually tough business environment and finally closure of business.

FINANCIAL POSITION OF MCDONALD’S FOR THE YEAR 2015 TO 2017

Annual Balance Sheet (values in 000’s)

Period Ending:	Trend	12/31/2017	12/31/2016	12/31/2015	12/31/2014
Current Assets
Cash and Cash Equivalents		$2,463,800	$1,223,400	$7,685,500	$2,077,900
Short-Term Investments		$0	$0	$0	$0
Net Receivables		$1,976,200	$1,474,100	$1,298,700	$1,214,400
Inventory		$58,800	$58,900	$100,100	$110,000
Other Current Assets		$828,400	$2,092,200	$558,700	$783,200
Total Current Assets		$5,327,200	$4,848,600	$9,643,000	$4,185,500
Long-Term Assets
Long-Term Investments		$1,085,700	$725,900	$792,700	$1,004,500
Fixed Assets		$22,448,300	$21,257,600	$23,117,600	$24,557,500
Goodwill		$2,379,700	$2,336,500	$2,516,300	$2,735,300
Intangible Assets		$0	$0	$0	$0
Other Assets		$2,562,800	$1,855,300	$1,869,100	$1,744,600
Deferred Asset Charges		$0	$0	$0	$0
Total Assets		$33,803,700	$31,023,900	$37,938,700	$34,227,400
Current Liabilities
Accounts Payable		$2,890,600	$2,696,300	$2,950,400	$2,747,900
Short-Term Debt / Current Portion of Long-Term Debt		$0	$77,200	$0	$0
Other Current Liabilities		$0	$694,800	$0	$0
Total Current Liabilities		$2,890,600	$3,468,300	$2,950,400	$2,747,900
Long-Term Debt		$29,536,400	$25,878,500	$24,122,100	$14,935,700
Other Liabilities		$3,525,300	$2,064,300	$2,074,000	$2,065,900
Deferred Liability Charges		$1,119,400	$1,817,100	$1,704,300	$1,624,500
Misc. Stocks		$0	$0	$0	$0
Minority Interest		$0	$0	$0	$0
Total Liabilities		$37,071,700	$33,228,200	$30,850,800	$21,374,000
Stock Holders Equity
Common Stocks		$16,600	$16,600	$16,600	$16,600
Capital Surplus		$7,072,400	$6,757,900	$6,533,400	$6,239,100
Retained Earnings		$48,325,800	$46,222,700	$44,594,500	$43,294,500
Treasury Stock		($56,504,400)	($52,108,600)	($41,176,800)	($35,177,100)
Other Equity		($2,178,400)	($3,092,900)	($2,879,800)	($1,519,700)
Total Equity		($3,268,000)	($2,204,300)	$7,087,900	$12,853,400
Total Liabilities & Equity		$33,803,700	$31,023,900	$37,938,700	$34,227,400

ANALYSIS OF FINANCIAL POSITION

The statement of financial position of organizations provide useful information to the creditors and shareholders about the company assets that can be used to generate cash in the future and about the liabilities which company has to meet in order to survive.

The total assets of the McDonald’s has decreased from $37,938,700(2015) to $33,803,700(2015).As the total current assets has decreased from $9,643,000 (2015) to $5,327,200 (2017).This is because of significant decrease in cash and cash equivalent by 67.9% although the accounts receivables increased by 52.1%.Moreover, there is also a slightly decline in Fixed Assets of 2.8%. However the long term investments are increased by 36.9%.

McDonald’s total liabilities has increased from $30,850,800(2015) to $37,071,700 (2017).The reason of this increase is due to increase in short term debt of $77,200 , increase in other current liability of $694,800. The long term debt has also increased by 22.4%.Further other long term liability increased significantly by 69.9%. However there is a reduction in accounts payable from 2015 to 2016 but it then increases in 2017 exceeding 2015 level.

The total equity of McDonald’s has declined from $7,087,900 (2015) to ($2204, 300) (2016) and then decline further in 2017 to ($3,268,000).However, the retained earnings has increased from $44,594,500 (2015) to $48,325,800 (2017).

Current ratio measures the company ability to pay its dues from current assets. McDonald’s current ratio has significantly decreased from 3.27 to 1.84 but still it is high as ratio of 1.5 is acceptable. This means that McDonald’s corporation can pay its debts from its current assets.

Works Cited

David Gadsden “What is the secret to McDonald’s Global Branding Success?” November 05, 2014https://www.maistro.com/blogs/secret-mcdonalds-global-branding-success/

Business Teacher UK “McDonald’s Pestle Analysis” Venture House, Cross Street, Arnold, Nottinghamhttps://businessteacher.org.uk/pestel/mcdonalds.php

Lawrence Gregory “McDonald’s Five Forces Analysis (Porter’s Model)” Feb 05, 2017 http://panmore.com/mcdonalds-five-forces-analysis-porters-model

Russ Krull “McDonald’s: Strengths, Weaknesses, Opportunities, Threats” August 25, 2010https://www.fool.com/investing/general/2010/08/25/mcdonalds-strengths-weaknesses-opportunities-threa.aspx