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Swot Analysis Of Mcdonald’s

McDonalds: SWOT analysis

To understand a company’s position in the market, an analysis of its strengths, weaknesses, opportunities and threats is done. SWOT analysis is the analysis of company’s position as compared to its competitors in the industry. One of McDonald’s strengths is that of wide spread presence coupled with its easy access through drive through windows as well as recognition through visible colors and design. The thousands of stores have also helped the company to achieve economies of scale in its operations hence reduced costs. Brand loyalty is strength for McDonald.

The company has been able to maintain and retain customers through wide variety products offerings at cheaper prices resulting in from new products introductions. It has not been all rosy for McDonalds as shown by its weaknesses. One of this is that of disgruntled franchisees as shown by opposition to store refurbishment/makeovers which are costly. Health concerns about McDonalds food is also another weakness that it faces. There have been some negative publicity campaigns about the company associating it with poor health and obesity. A good company can turn its weaknesses into potential opportunities for exploitation.

Some of the opportunities arising out of McDonald’s weakness are that of health concerns which can lead

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the company to come up with innovative food that is in line with the ever changing consumer trends. Threats in this industry are abound. Some of the threats that McDonald can face is that of declining revenues due to shrinking markets (saturated market) unless the company comes up with other revenue channels that can boost its bottom line (Gogoi Pallavi, 2006) Health conscious customers also portend another challenge to the company.

Consumers nowadays are concerned about their wellbeing and thus consuming fast food may decline unless cleverly packaged. Wal-Mart Wal-Mart is the world’s largest retailer with annual sales of just about $400 billion with presence in the USA, Europe, and Mexico. The company’s mantra is always sold at low prices hence realize large volumes which in turn leads to more revenue and profits. The company’s strategy of expanding its operations by opening more stores has led to large amounts of resources in real estate due to the high cost of putting up new buildings.

The company is aiming to reduce the footage on its USA stores yet at the same time open up more super stores. There have been calls by analysts to Wal-Mart to scale back on its expansion plans and squeeze in profits/revenues more from its existing just as McDonald did (Bianco Anthony, 2007) The company’s pricing policy is also a way of targeting the main market i. e. the low income earners by providing discounts in most of its low end products. The company has been able to achieve this through developing an efficient distribution system that resulted in cost savings hence low prices.

In its effort to repair its damaged reputation, the company hired public relations team that tried to clean the company’s bad image. Wal-Mart has had to counter claims of overworking and underpaying its workers as well as accusations of racial discrimination (Bianco Anthony, 2007) The company has also tried to endear itself with the society by working with environmental groups that it once hated. This has in turn boosted its public image in the eyes of environmentally conscious consumer.

Wal-Mart has also reorganized its management supervisory structure by moving the regional supervisors away from the company’s Bentonville headquarters to the regions that they actually monitor. This is a change in strategy from the old structure where everything was run from the headquarters. Store refurbishment by replacing carpets with wood-like vinyl, resulted into a new appealing look at the stores. The vinyl is also cheap to clean given that 25% of the stores did not meet the cleanliness standards. Vinyl is also less costly as compared to carpets (Gogoi Pallavi, 2006)

In order to increase the investor’s return, the company increased its dividend payout by 31% in an effort to revamp the share price.

References Arndt, M. (2007, February 5th). Business Week. Mc Donalds 24/7;By Focusing on the hours between traditional Mealtime, the fast food giant is sizzling , p. 64. Bianco Anthony, D. H. (2007, April 30th). Business Week. Wal-Mart Midlife Crisis; Declining growth, increasing compettition, and not an easy fix in site , p. 46. Gogoi Pallavi, A. M. (2006, May 15th). Business Week. Mickey DS Mc Makeover , p. 42.

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