McDonalds SWOT Analysis

Introduction

McDonald's is an American Company and one of the biggest food restaurant chain around the globe. The company was established in 1940 as a simple restaurant that was operated by Maurice and Richard McDonald in a small town in California. McDonald's has its strengths weaknesses, opportunities threats that are discussed below.

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Strengths

The company deals with products that are constantly on demand in the US such as coffee, smoothies, and burgers. This makes McDonald's have a superior product offering that has immensely contributed to revenue growth over the years. McDonald's managed to perform well during the recession which was an advantage over competitors. The company has managed to open many outlets around the world to expose it to a multi-currency economy. McDonald's also has huge economies of scale and market power.

Weaknesses

McDonald's has saturated the US towns with its restaurants which makes it hard to establish new locations. Despite the tremendous growth, McDonald's has shockingly experienced a slowing rate of dividend growth which threatens to level off. Another notable weakness is the slowed income and revenue growth that has been experienced in recent years. The company has a weak product development as well as disgruntled franchisees.

Opportunities

The company stands a chance to benefit through globalization by expanding its products and services internationally. At the moment, the McDonald's only serves about 1% of the global population which can be expanded. Another strategy that can be adopted is considering joint ventures with other retailers and the consolidation of the retailer. Social changes around different parts of the world have opened up room for creativity and innovation which McDonald's can explore. The company's value proposition can be improved to attract and retain customers. Investing in corporate social responsibility can help improve the image of McDonald's in the market.

Threats

McDonald's faces a serious threat in a situation where governments decide to regulate fast foods. Health-based organizations have also been advocating for lifestyle changes which could seriously affect the fast food sector. This is complicated by the fact that other competitors are out to offer better products and services. The fluctuation of economies and foreign exchanges rates can affect the revenue of a company that targets the global market. In case a recession affects the retail sector, McDonald's also stands a chance to lose.

Growth Strategy

McDonald's intensive growth strategy has always used market penetration as the primary tool for development. The approach ensures that the company reaches out to many potential and actual customers in different parts of the US and the world. The penetration method alongside low costs and low commodity prices makes it easy for McDonald's to perform well in new markets. MacDonald's has also utilized joint ventures and corporate ownership to realize growth. Another important strategy is the market and product development. The company has always responded to market changes and competition by developing new products over time. The new commodities are either variations or improvements of previous versions or entirely new products. McDonald's has also been keen to experiment without cost with Big Mac as a famous example of this technique. Another useful technique that has helped the company is conservation of resources which provides an adequate reserve to invest in new markets. Finally, McDonald's has benefitted from technological growth by integrating this element in its business model.

Importance of Studying Management

Studying management helps a student develop a wide range of skills that can be applied in a business environment. These skills include planning, organizing, directing, controlling and coordinating. The training can help a learner develop planning skills that can be applied in the management of resources within a firm. Knowledge of management helps a business owner or executive to establish efficiency in the allocation and utilization of resources. This can help cut down on avoidable losses and improve on revenue. The knowledge further enlightens a leader on how to coordinate different departments to improve overall performance. Excellent managers have the capacity to handle a multicultural organization, harness talent, and motivate employees.

Studying management can help a business owner enhance the knowledge of collecting relevant data, analysis, and application of the findings to solve business problems. Such approaches improve the process of making decisions by incorporating actual information. Market research can also help in developing new strategies to accommodate market dynamics. The success of the most business is affected by internal and external factors. Trained managers have the capacity to adjust the internal factors and tolerate the external factors that are beyond control.

The knowledge of management helps one understand the relationship between business, society, and authorities. Any discordance among these three bodies can be detrimental to an organization. Therefore, a well-trained individual will ensure that a business serves the best interest of the society without rubbing shoulders with the government and the local authorities. One gets a chance to understand general law and business law and how these two affects organizations. Awareness of management techniques helps a business understand the methodologies of handling legal matters without affecting the prosperity of a business.