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McDonalds External and Internal Environments
Summary
McDonalds Corporation is one of the main players in the fast food industry. Richard and Maurice McDonald founded this company in California in 1940. Globalization and competition affect the development of McDonalds business environment. External factors focus on political, economic, and technological changes, while internal factors include culture, performance, resources, and capabilities. This paper evaluates McDonalds general environment and its competition sources to identify threats and opportunities and develop improvement strategies.
General Environment
Understanding the general environment is a crucial element of market research and analysis. This environment consists of multiple dimensions that may affect the industry and a particular organization (Hitt, 1). The socio-cultural and technological aspects should be identified among the existing variety of dimensions. The business environment of McDonalds is not simple, and learning its external factors is an opportunity to identify and predict challenges and failures.
Socio-Cultural Segment
In todays constantly developing business world, people need to pay much attention to a societys attitudes and values within the existing culture. According to Hitt, the socio-cultural segment plays an important role in the general environment because organizations have to recognize stable cultural and social orientations and follow public expectations (1). McDonalds is known for promoting a strong brand for people who work there and use offered services (2). The company concentrates on workforce diversity, the representation of womens employment, and the development of work-life quality.
Technological Segment
Evident digitalization progress cannot be ignored in the fast food business. The technological segment involves creating new knowledge and opportunities through innovative outputs and processes (Hitt, 1). In McDonalds, employees constantly improve their digital image by promoting digital self-order boxes and facilitating delivery processes. The company develops several reinvigorated strategies to empower people and meet customers needs (McDonalds, 2). Mobile applications are frequently used to speed up services and learn options distantly.
Five Forces of Competition
Achieving competitive advantage is one of the factors of business success. The five forces model should be applied to analyze the industrys profitability and the quality of interactions (Hitt, 1). Fast food restaurants like Burger King or Dominos Pizza introduce serious competition to McDonalds (Scott, 3). Thus, the threat of substitutes and the intensity of rivalry among competitors are the two most significant forces for McDonalds.
The threat of Substitute Products
McDonalds customers have a tremendous effect on its success and failures, and the company needs to meet all basic needs, not make people consider some alternatives. Today, it does not take much time to evaluate the fast food industry and find new companies, except McDonalds, to buy famous fries or eat a tasty burger. More than 80 million adults prefer fast food globally, and the brand of McDonalds is challenged by substitution at different levels (Scott, 3). Veganism, healthy lifestyles, and supermarket shopping increase the threat of substitutes, and McDonalds continues addressing this force to stabilize its business. Therefore, its feel good marketing strategy remains an effective means to achieve a competitive advantage.
Rivalry Among Competitive Firms
Rivalry is a core aspect of the fast food industry, and McDonalds does everything possible to identify its strengths and weaknesses in relation to other food giants. The first restaurants of that type emerged at the beginning of the 1900s, but McDonalds amazed everyone with its convenience, affordability, quality, and hygiene. All organizations within the same industry have many things in common and depend on each others success (Hitt, 1). McDonalds rivalry among competitors is explained by strong marketing campaigns and adding value to all products and services.
Future Improvements
To address the impact of rivalry and substitute forces, McDonalds has to continue working hard and examine internal and external factors that affect the customers choice and loyalty. Competitors access the same theories, strategic management tactics, and leadership techniques (Hitt, 1). Thus, it is recommended that McDonalds focus on employees and cooperation with customers. Additional training for the staff should include the basics of psychological assessments and predictions. When a person enters a restaurant, an employee must analyze the general look, mood, tone, and other characteristics to offer the expected service and attention. Some people are eager to communicate or spend more time choosing products, and some individuals are in a hurry or have no desire to be disturbed. When the McDonalds manager recognizes the main issues and understands customers, people would be eager to come back and combine tasty food with professional treatment.
Greatest External Threat
Regarding the existing intensity of competitors and the necessity to be located at large shopping malls, McDonalds has to co-exist with Burger King, KFC, Pizza Hut, and Taco Bell. These companies cannot affect each others growth and development, and the only thing to be done is to concentrate on personal resources, regular improvements, and interesting innovations for customers. The fast food business is large and complex, and McDonalds is able to resist its greatest external threat of competitors in the industry.
Greatest Opportunity
Performance improvement is one of the greatest opportunities for McDonalds Corporation today. Many people prefer to raise concerns about the quality of food and the impact of McDonalds on health and obesity. The company has a good chance to prove that its food is not dangerous and underline the reasons for choosing its products. Individuals like attractive advertisements and mottos to stay motivated and inspired, and the way how McDonalds performs must be constantly enhanced.
Strengths and Weaknesses
The internal environment includes various strengths and weaknesses that may be used by the company to achieve the desired goals. At this moment, the greatest strengths of McDonalds are effective leadership and management, technological enhancement, and the development of new services and options for customers. This organization has a powerful brand that is widely used across the globe. There are also several aspects that need additional improvement and elaboration. For example, McDonalds spends finances to educate employees and develop their best managerial skills. Still, most workers admit that their voices are not properly heard and considered. Besides, the company faces public concerns about health problems related to fast-food products.
Strategy or Tactic
McDonalds corporation should be ready to use its strength and minimize its weaknesses through the prism of an improved performance strategy. Relying on the already made achievements, the brand impact, and the customer base, the organization should focus on professional training for employees. They need to know how to support customers, give necessary explanations, and never demonstrate their emotions and attitudes toward human behaviors. It does not take much time for a person to change their mind and address another restaurant, and the goal of McDonalds employees is to retain their clients and offer the best services.
Resources, Capabilities, and Core Competencies
It is not an easy task for a modern company to stay competitive for a long period. Identifying resources allows the creation of organizational capabilities and encourages core competencies (Hitt, 1). McDonalds is a large corporation with multiple resources and capabilities, including a worldwide brand, an increased employee base, and high-quality performance. The Internet is a resource for customers to learn about McDonalds products and sales and for the team to share information. Equity and global presence are the capabilities that promote success. Brand image, quick customer service, and food variety are core competencies that help the company to earn high profits and grow.
Sources
Michael A. Hitt. 2020. Strategic Management: Concepts and Cases: Competitiveness and Globalization 13th ed. Cengage Learning.
McDonalds. No date. Our Mission and Values. Web.
Mike Scott. 2019. Fast Food Giants Need to Face Up to Climate and Water Risks, Investors Warn. Web.
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