Strategic analysis is the process through which the management researches the environment in which an organization operates both internally and externally to come up with the best strategy (Hill & Jones, 2012). Strategic analysis requires a theoretical understanding of the surrounding in which the organization operates in and the organization's interaction with the environment to improve its efficiency and effectiveness through increasing organization's ability to utilize its resources profitability.
For a firm to undertake a strategic analysis, there are some essential tools to help focus on the analysis and ensure a balanced approach. These analytical tools rely on the organization's history, present, and the future. These tools include SWOT analysis. SWOT analysis helps understand the strengths, weaknesses, opportunities, and threats involved in a business. It defines the strengths and weaknesses which are internal factors, and opportunities and threats which are external factors which are essential to achieving the company's set goals and objectives (Yuece, 2012). Another tool used is PESTEL, it mainly deals with the external factors, and it involves analyzing and understanding the political, economic socio-economic and technological environment in which a business operates. It can also help in assessing the market regarding position and potential.
Besides, Four corners analysis is a useful tool because it analysis the competitor and the organization's competitive advantage analysis to generate an insight into the future. Four corner analysis helps the company to develop a profile that allows it to know the strategy which the competitor may choose to use and how successful it will be. Helps to determine the response of any strategic move of the competitor. Four corners analysis also helps a firm know the competitor's reactions to environmental changes. Porter's five forces help to assess and evaluate the competitive strength and the business position. This tool works on the concept that five forces determine the effectiveness and attractiveness of the market. These forces that help assess the firm's competitive advantage are a competitive rivalry, supplier power, buyer power, substitution threat, and the threat of new entry.
As in other food businesses McDonald's has also faced challenges which affected their business income because they lead to loss of customers. One of the major problems affecting the company is food safety. This was a case reported in China after an undercover television investigation brought to the attention of the public that McDonald's were relabeling expired meat and taking it back for consumption by its customers. The report went viral and brought down the number of customers by a significant percentage in the areas where McDonald's had a more substantial share of customers compared to its competitors. McDonald's among the leading foreign fast foods brand, it has a bad reputation due to some food-related scandals has faced recently. These food scandals include the scandal, which killed babies, and several became sick.
In its home market, McDonald's is left behind by changes in dining habits. McDonald's is unable to cope with fundamental changes in the food industry in the recent years. Their main competitors have heavily invested in their consumer's demand for healthier foods made from fresh, natural ingredients. This challenge can cause a downfall to McDonald's if they fail to work on these demining factors making their consumers be at a better place in the market. McDonald's have come up with a strategic solution to which will cause them to have a better competitive advantage in the market. McDonald's have a strategy to expand their customized burger pilot program to about 2000 US outlets, or one in every seven stores to observe how their customers will take it.
Another major challenge that McDonald's is facing and affecting its market penetration is the pricing challenge. This challenge has been so since for a firm to maintain its customers, it is essential they strategically change their prices, which will help them sustain their customers. It is hard for a firm to raise its prices and maintain its customers, and the consumers will always want to source the same products and services from other producers offering it at a lower price (Gbadamosi, 2013). Similarly, if McDonald's can decide to lower their prices and still operate at the same cost of production, this will mean that their product will be substandard and the consumers will shift to other restaurants with similar service and items, which are of the set standard. Consequently, if an organization lacks a good pricing strategy, it will not survive the competition in the market
With these challenges, McDonald's management has come up with strategic ways to handle the issues and be at par with the changing food industry and to maintain a competitive advantage. Among the strategies the management has come up with is politically sensitive strategy. The approach will help them develop ways of doing business that will avoid confrontation with the government. Another plan is environmental friendliness, McDonald's introduced environmental friendly services to achieve a positive reputation and keep up with local and international policies (Jackson et al.2012). McDonald's also emphasizes on local management. The approach helps them hire local employee especially the administration; they base their emphasis on "think global, act local" theme. They have also come up with a pricing strategy to help McDonald's achieve its market target since currencies vary worldwide.
Hill, C. W. L., & Jones, G. R. (2012). Essentials of strategic management. Australia: South-Western/Cengage Learning.
Jackson, S. E., Ones, D. S., & Dilchert, S. (2012). Managing human resources for environmental sustainability. San Francisco: Jossey-Bass
Yuece, I. (2012). SWOT analysis of McDonald's and derivation of appropriate strategies. Munchen: GRIN Verlag GmbH
Gbadamosi, A. (2013). Principles of marketing. Palgrave Macmillan
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