CASE STUDY - McDONALD’s McDonald’s: Opportunities and Challenges in the Global Market McDonald’s is one of the most successful global brands today. This highly recognized brand started with just a burger stall in 1948 and slowly made its way to becoming one of the more successful fast-food restaurants in the world. One of the strengths of McDonald’s is brand recognition and its leadership in the fast-food chain in many parts of the world. Another notable strength is its strong organizational culture which emanates from its employees’ openness for innovation and change. Its continued growth in the global scene is attributed to its variety of products tailored to the country’s consumption patterns and culture. Take for example its Chicken McNuggets. When it was introduced in the United States, consumers never imagined eating chicken with their hands. To entice customers further, the barbecue dip was introduced. Today, Chicken McNuggets is one of the more popular products of McDonald’s in many countries around the world. However, one of the weaknesses of McDonald’s is its delivery system and drive-through service. Many customers complain about the sloe delivery time and the long line of customers in their drivethroughs. Since July of 1914, McDonald’s has experienced a steady decline in its sales. This is primarily attributed to failures in operations particularly in Asia, where McDonald’s gets one-fourth of its sales revenues. In China for example, sales fell after one of its suppliers used expired chicken and beef. In Japan, a complaint was filed by a customer after discovering a tooth and plastic in their food. Sales revenue was also affected by increased competition from other brands in the United States. Sales revenues in a January 2015 report revealed that Burger King is slowly but surely eating up the market share of McDonald’s in the US. At the same time, other American fast-food restaurants such as Snack Shack and Chipotle Mexican Grill continue to attract young customers with better quality food and an option to customize their orders by choosing the ingredients for their burritos or burgers. McDonald’s also faces stiff competition from other international and local brands in other countries. In the Philippines, McDonald’s seems to be unable to adequately analyze the local market, leading to observations that it has failed to capture the unique “Filipino taste.” This resulted in McDonald’s falling behind local brands like Jollibee. McDonald’s compensated by offering value meals, which targeted budget-conscious Filipinos, to compete with Jollibee’s budget meals. However, Jollibee still continues to dominate the Philippine fast-food market. In China, KFC poses a big threat to McDonald’s as many Chinese prefer to eat chicken than beef. Despite its efforts to please Chinese customers through renovations of its restaurants to make tables, counters, and chairs fir the body height and weight of the Chinese, KFC still remains the preferred brand in the Chinese market. On the other hand, McDonald’s is more successful in France. It responds to the call of customers to add espresso and more expensive sandwiches that cater to French taste in their menu. It also offers traditional products like tea and macaroons. The French response to McDonald’s is positive, and this results in increased profits in the French market. McDonald’s tries to replicate its success by establishing McCafes in other countries like the Philippines. This move helps in strengthening McDonald’s market base in these countries. One of the opportunities for McDonald’s is its continuous international growth. There is a wide market for people who love eating burgers all over the world. On the other hand, McDonald’s continues to innovate in response to the clamor of consumers for healthier food. The growing call for healthy food is a threat since burgers and fries are known to contain large number of calories and fat. Edison C. Ibarlin BSA 4 CASE STUDY No. 2 1. What are the most important strengths of McDonald’s and how do they contribute to its successful operations? The strong brand recognition, leadership and large network of business locations. Another notable strength is its strong organizational culture which emanates from its employees’ openness for innovation and change. Because of the company's wide range of high-quality products and significant global brand recognition, consumers are loyal to McDonald's. Additionally, different variety of products like burgers, fries, drinks, and desserts are just a few of the numerous items available at McDonald's. 2. What developments can be considered threats to McDonald’s? Why do you think so? The biggest problem that McDonald's faces is the increasingly crowded and competitive fast-food in the market. The risks of financial loss, mismanagement, customer dissatisfaction, and low revenue generation. The company heavily depends on the franchises in different part of the world which works independently and hence they have no control over their day-to-day performance, but it affects the brand directly also their reputation and image to the industry of food business. 3. Which among the threats should McDonald’s prioritize? Why do you think so? McDonald’s should prioritize the competition which they have locally and internationally with the other popular brands. The strategy of their competitor becomes more effective than them. McDonald’s has continued to lose its customers to the competitors during the last several years. If the brand has to reverse this trend, it will need to focus upon quality, and customers' taste. They need to change their technique or strategy which people can patronage them again. 4. Why is it important for McDonald’s to consider the local taste and preferences of its customers in every country? It is important for McDonald’s to consider the preferences of its customers in every country simply for it to be able to gain more revenue. Customization or unique is a necessity to meet the consumers' standards and taste. When you give the customers what they want, you will be guaranteed that they'll come back. Many people says that it is just a food, but for the sake of the image and reputation of the McDonald’s they will need to recognize on what the needs and wants of the people when it comes to food and services. 5. Describe how McDonald’s addressed a perceived threat to its market. Was this strategy effective? McDonald’s addressed a perceived threat to its market with their innovation to marketing and consumption patterns through value-added menu improvements like what happened on France. McDonald’s aims to significantly improve market share in key markets through continually improving customer satisfaction and attracting new customers through cost savings, operational efficiencies and improving brand awareness. It was being effective even still now and they improve their advertisement through showing commercials about they new menu and promo which it can be more approachable to people. 6. Personally, which fast-food restaurant do you prefer? Cite your reasons. Personally, my fast-food restaurant that I prefer is McDonald’s. I always order their double cheese burger and French fries because it has a good combination when you eat it. I am not a fan of fried chicken but their chicken fillet is one of the best foods that I tasted especially when you dip it to its sauce. 7. Conduct a SWOT analysis of McDonald’s using the table below. STRENGTH Brands Recognition Leadership and services Strong organizational culture Innovation and changes Quality and Global Connections OPPORTUNITY WEAKNESS Failures in Operations Local taste and Preferences Strategy and Techniques when it comes in approaching customers Organizing labels on food International growth Wide Market Franchise Innovative Products THREAT Local and International Competition Healthiness of the Food Services New age of fast food trends
