Analysis of McDonalds Corporation (Essay Sample)

Analysis of McDonald’s Corporation
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Introduction
McDonalds’s Corporation is the largest hamburger fast food retailer in the world. The company serves about sixty-eight million clients on a daily basis in about one hundred and nineteen countries where it operates. The company has its headquarters in the United States. It began its operations in the year 1940. Richard McDonald and Maurice McDonald were the main managers. There was a reorganization of the business in which it became a hamburger stand. They applied production line principles in this reorganization. In 1955, Kroc joined the company as a franchise agent and later bought it. The move oversaw the global expansion of the business. The modes of operation of the business are as an affiliate, a corporation or franchise. By 2002, the annual revenue of the company was seven billion USD from rents, sales and fees from the franchise.
This paper seeks to look into the mission and the vision of the corporation. It will review the effect that these and the primary stakeholders have o the overall performance of the company. Secondly, the paper will analyze at least five sources of competition and the effects it has on the enterprise. Thirdly, this document will conduct a SWOT analysis of the business and outline various strategies that can be employed to maximize its strength and minimize its threats and weaknesses. Fourthly, it will discuss the types and levels of the strategies that the company can use to create awareness among the stakeholders. This paper will evaluate the governance mechanism used by McDonald’s Corporation. It will also assess the effectiveness of the leadership of the company. Lastly, it will evaluate the efforts that have been made by McDonald’s Corporation to stay ethically responsible.
Impact of vision, mission, and stakeholders on the success of McDonald’s Corporation
McDonald’s Corporation has the mission of being the favorite place (a place where they can eat and drink) for its clients. The company has a global strategy to which its global operations are aligned. This procedure is known as Plan and Win. The plan is focused on extraordinary customer experience. The exceptional experience comes in the form of Price, Place, Promotion, Products and People. This is called the 5Ps. The business has a commitment to improving its operations continuously and to change the experience of its customers. McDonald’s Corporation has a vision of being the best fast food retailer in the world. In being the best retailer, the company is geared towards providing quality services, value and cleanliness to its clients. Looking at its mission and vision, the can is capable of recording success. It provides everyone with a choice of its goods and services regardless of the background and culture. This is because it provides meat to those who love meat and vegetables to the vegetarians. Its mission of being the best employee is almost achieved as currently it the second largest employer after Walmart. It employs about nineteen million people. The business has also made its mission of being delivering exceptional customer experience by rolling out a global strategy dubbed Plan to Win. The company’s vision of providing quality services and cleanliness has propelled it to success as its product are of high quality. This has contributed to high sales volume thereby increasing the profits of the company. The increased sales volume of the company has made it successful CITATION Har11 \l 1033 (Hartnell, 2011).
A stakeholder refers any person who has an interest in the business or a company. The primary stakeholders at McDonald’s are the employees and the management. They affect the processes and the outcomes of the company. Customers can also be considered as the stakeholders since without them there will be nobody to buy the goods. The management has played a significant role in ensuring the success of the business. For example, after McDonald’s had acquired Boston and found it non-profitable and made a decision to sell it out. This is after the company’s image was dented. The employees at McDonald’s Corporation also play a crucial role in the realization of the success of the business. The employees have dedicated themselves towards the achievement of the enterprise’s mission and vision thereby ensuring the success of the enterprise.
McDonald’s Corporation Sources of competition and impacts
McDonald’s has been facing a lot of competition from different sources in the restaurant business. The completion has had an impact on the company. The primary competitors are Burger King, Wendy’s, Jack-in-the-Box, Subway, and Yum! However, Subway does not pose a significant threat to McDonald’s Corporation. KFC is also another competitor. The table below shows a comparison between McDonald’s and it four major competitors.
Source: Wall Street Analyst and company filings.
By the end of 2013 finacial year, the Year-over-Year (YoY) sales for McDonald’s was increased by 1.95% in comparison to its competitors who experienced a general decline the sales. Averagely, the five companies had a fall in the sales of about 9.18%. Wendy’s posted the highest upsurge in the same store sales that was about 1.8%. For the five companies, the average was 0.30%. McDonald’s had the highest EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin with a margin of about 36% while the average was 28.2%. By that time, McDonald’s posted a Price Earnings (PE) of 18.2x while Wendy’s and King Burger had 34x. The PEG (Price-Earnings to Growth) for McDonald’s was at 1.87x. On the other hand, the average was 1.59x that is lower than what McDonald’s posted. This has the implication that its projected growth is more moderate in comparison to its competitors. McDonald’s had both return on assets (15.66%) and returned on equity (35.19%) which are both above the averages of 8.04% and 25.1% respectively. Therefore, McDonald’s seems a better performer as compared to its competitors. In terms of profitability, the company has outshined its competitors by posting revenue growth of 12.18% in the year 2011.
With all these competitors in the market, McDonald’s has a change in the way it conducts its business. Nonetheless, McDonald’s enjoys a competitive advantage over its other competitors. The company has been capable of maintaining a competitive edge over its competitors by employing different strategies. The three primary strategies used are focus, cost leadership and differentiation. McDonald’s Corporation maintains low prices for its products as compared to its competitors. The focus that gives the company competitive advantages over its competitors is the quick delivery of its food. Every customer will be contented with the company that can deliver its food in quick manner. In differentiation, the company provides superior quality of goods and services as compared to what its competitors offer to the client. This gives it a competitive edge over them CITATION Uni131 \l 1033 (United States Securities and Exchange Commission, 2013).
McDonald’s SWOT analysis
SWOT analysis is used in the evaluation of the strengths, opportunities, threats and weaknesses of a business venture. McDonald’s has one of the favorite burgers across the globe hence its brand can scarcely be neglected by anyone. SWOT analysis of McDonald’s deliberates the details of the firm’s achievement of fame and what it can do to remain in the business.
Strengths
The following are the powers of McDonald’s Corporation.
* Brand Equity- the company, has a worldwide brand equity.
* It takes about forty-two percent of the hamburger fast food in the US.
* Uniformity of the food of it offers- there is consistency in the food sold by McDonald’s
* The successful goods and services are Promotions Egg McMuffin, Happy Meal, Fries, and Big Mac among others.
* International market the company has penetrated the international market where it enough
* The position of the balance sheet- the company has more assets as compared to the liabilities.
Weaknesses
McDonald’s Corporation has the following shortcomings:
* Weakening market share
* Weak development of the products
* Dissatisfied franchisees
* Slackened growth of income and revenue
Opportunities
McDonald’s Corporation can explore the following opportunities.
* Global expansion in other countries especially in the incipient market such as India and China as it currently only serves one percent of the Worlds’ population.
* Developing the dining-out market
* Joint undertakings with other retailers such as supermarkets
* Association with vendors
* Response to changes in the social needs of the clients
* Using CRM and database marketing to identify the target groups
* Strengthening its proposition, value offering
* Fitting kids’ play-parks
* Giving focus to corporate social responsibility in the countries where it operates,
* Decreasing the impact on the environs
Threats
McDonald’s Corporation faces the following risks in its working environment
* Overstored/established/ industry
* Stiff competition from it competitors
* Consumers are becoming more health-conscious
* Shifting demographics
* The changeability of foreign exchange rates and the economies of different countries.
* The Economic recession in most countries may...