SWOT Analysis
Discuss about the McDonald Business Operations and its Strategies.
Mcdonald’s or McD as it is fondly known happens to be one of the largest are most renowned fast food restaurant chain having presence throughout the world. One of the chief reasons behind the success of the brand is its strong supply chain network and its ability to adapt to changes as it aims to establish itself in an emerging market. McDonald’s success primarily lies in its ability to develop strategies to stay ahead in the market of fast food (Mcdonaldsindia.com 2016).
It closely monitors all its activities in its supply chain to ensure timely delivery of its products and services to the final consumers. It ability to make innovative products has been a key to its success in many emerging economies like Teriyaki burger in Japan, rice dishes in Indonesia, McAloo Tikki and Maharaja Mac in India. This report primarily deals with the analysis of operations of McDonald’s in India (Mcdonaldsindia.com 2016).
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Strengths – McDonald’s have the ability to adapt to the changes. – Its high brand recognition has been a key in its success throughout its operations. – Its strong supply chain management ensures timely delivery of raw and materials and enhances its operational ability. – It is the leading market player in the fast food chain industry. – Its ability to innovate new products to meet the changing consumer needs. |
Weaknesses – It has a very limited range of products. – Its inefficiency in home delivery services has hampered its sales growth. – Its packaging materials have been a serious concern towards global warming. |
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Opportunities – McDonald’s have immense opportunity to expand its business in the Tier II cities of India. – It can take necessary measures to strengthen its home delivery services to boost its sales. – It can adopt environment-friendly packaging materials in order to avoid any penalties from any government agencies. |
Threats – Imitation of its products and business model has been a constant threat to its operations. – The increasing health consciousness among the consumers further hinders its growth. – Many issues related to the religion such as usage of beef or pork in its products, when gets politicized may have a negative impact on its sales and will ultimately affect its market share. – It faces stiff competition from some of its closest rivals like KFC, Subway, and Pizza Hut. |
Figure: SWOT Analysis
(Source: wsj.com 2016)
India’s fast food market has been one of the fast emerging markets and is expected to grow two-fold in its size during 2013-16 to $1.12 billion. Various industry and market experts suggest that it could become the mega-market for global fast food chains. As compared to China which witnessed a drop in the fast food sales previous year, Indian fast food grew consistently due to the changing preferences of the consumers and large youth population in the country (cnbc.com 2016).
Global fast food chains like McDonald’s and Yum! Brands’ KFC have been the major player in India. While McDonald’s modified its menu which means to stay away from beef and pork which they generally use in the western countries, therefore it introduced spicy food variants like Chicken Maharaja and McSpicy Paneer. On the contrary, the chicken oriented menu of KFC has been instrumental in attracting the youth towards it (wsj.com 2016).
The newest entrant in the Indian fast food chain industry is Burger King, the second largest burger franchise in the world behind McDonald’s entered India in late 2014. Similar to the idea of McDonald’s, Burger King also eliminated beef and pork form its recipe as India is dominated by Hindu and Muslim population, therefore it introduced a sandwich stuffed with cottage cheese and named Paneer King Melt (Forbes.com 2016).
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Key Factors |
McDonald’s |
KFC |
Pizza Hut |
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Products |
Burgers and Wraps, Drinks, Desserts, Family Meals, Value Meals |
Burgers, Toasted Wraps, Krushers, Rice Bowls, Snacks, Box Meals |
Pizza, Pasta, Garlic Breads, Soft Drinks, Desserts |
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Pricing |
McDonald’s uses penetrating pricing strategy. |
KFC uses skimming price strategy. |
Pizza Hut uses skimming price strategy. |
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Marketing Strategy |
McDonald’s uses social marketing as well as in-house marketing. |
KFC uses social marketing and niche marketing as its strategy to expand rapidly. |
Pizza Hut also uses niche marketing. |
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Marketing Media |
McDonalds invests heavily in social media marketing to promote its products. |
KFC uses both social media as well as traditional media such as billboards and fliers. |
Pizza Hut uses social media marketing, advertising to promote its products. |
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Strengths |
Strong brand image, strong supply chain network |
Strong trademark recipes, wide range of product variants. |
Great online and offline presence with remarkable home delivery service. |
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Market Share |
McDonald’s covers almost 30% of Indian fast food chain industry. |
KFC has around 25 per cent market share in the industry. |
Pizza Hut covers almost 20% of the industry. |
Figure: Competitors Analysis
(Source: As created by author)
Indian Fast Food Chain Industry
The Indian fast food chain or quick service restaurants have been growing rapidly since the early 2000. In the past 5 years, the market has expanded exponentially. The global fast food chains like McDonald’s, KFC, Pizza Hut, Domino’s Pizza and many others have been growing rapidly, providing either international cuisines or modified their products according to the requirements of Indian customers. According to CRISIL, in 2012-13 the market expanded to around Rs 34 billion and its further stated that it would grow up to Rs 70 billion by 2015-16.
Further, the agency stated that the growth of the fast food chain will be higher in the Tier II cities. The opening of new outlets would largely assist in the growth of these chains in the market (timesofindia.indiatimes.com 2016).
McDonald’s owes its success to its ability to deliver high quality products at very reasonable price quite conveniently. McDonald’s innovative business model which allows its franchisees, management and its investors to share the rewards and risks from the exploitation of new business opportunities has been the key to its success in many countries (Forbes.com 2016).
Further its ability of adapt and innovate products according to the needs of the country in which they operate gives them a competitive advantage over its rivals and keeps them ahead in the competition. Its strategy of developing business relation through trust and collaboration added to its value (gscouncil.org 2016).
The recent strategy of McDonald’s has been the introduction of breakfast menu for the students and the people who goes to work. This strategy has become a winning strategy for the company in India where people used to prefer carrying home-made food while going to their office, but their perception has changed over time and the youth is getting attracted towards the brand. The product bundling strategy used by McDonald’s have been a win-win plan for the company. It recent strategy of table delivery and food ordering through their website or mobile application over the internet has hit the right chord amongst the youth (fortune.com. (2016).
Conclusion
The success of McDonald’s lies in its innovative business model which it has adopted. Its ability to adapt to new environment and innovation of new products and services to meet the requirements of the customers in the country which they operate have been competitive advantage of the company . To meet the demand of the Indian consumers, McDonald’s had made some modifications in its basic materials that they used. They began to use chicken instead of beef and pork as it might hurt the sentiments of population of India which largely comprises of Hindus and Muslims (bbc.com 2016).
References
bbc.com. (2016). How McDonald’s conquered India – BBC News. [online] Available at: https://www.bbc.com/news/business-30115555 [Accessed 21 Nov. 2016].
cnbc.com. (2016). This is fast food’s next mega-market. [online] Available at: https://www.cnbc.com/2015/04/02/indias-fast-food-industry.html [Accessed 20 Nov. 2016].
Forbes.com. (2016). /in-indias-crowded-fast-food-market-newest-entrant-burger-king-pre-sells-burgers-online/#2e92eb051ade. [online] Available at: https://www.forbes.com/sites/saritharai/2014/11/06/in-indias-crowded-fast-food-market-newest-entrant-burger-king-pre-sells-burgers-online/#2e92eb051ade [Accessed 20 Nov. 2016].
Forbes.com. (2016). Forbes Welcome. [online] Available at: https://www.forbes.com/sites/greatspeculations/2015/12/16/is-mcdonalds-all-day-breakfast-strategy-working/#498935b017f7 [Accessed 21 Nov. 2016].
Forbes.com. (2016). mcdonalds-winning-strategy-at-home-and-abroad/#418b52ae70da. [online] Available at: https://www.forbes.com/sites/panosmourdoukoutas/2012/04/20/mcdonalds-winning-strategy-at-home-and-abroad/#418b52ae70da [Accessed 21 Nov. 2016].
fortune.com. (2016). Why Eating at McDonald’s Is about to Undergo A Massive Makeover. [online] Available at: https://fortune.com/2016/11/18/mcdonalds-kiosks-table-service/ [Accessed 21 Nov. 2016].
gscouncil.org. (2016). Trust and Collaboration: McDonald’s Supply Chain Strategy – Global Sourcing Council. [online] Available at: https://gscouncil.org/trust-and-collaboration-mcdonalds-supply-chain-strategy/ [Accessed 21 Nov. 2016].
Mcdonaldsindia.com. (2016). McDonald’s. [online] Available at: https://www.mcdonaldsindia.com/ [Accessed 20 Nov. 2016].
timesofindia.indiatimes.com. (2016). business/india-business/Small-cities-to-drive-fast-food-mart-to-Rs-7000-crore-by-FY16-Crisil/articleshow/22888879.cms. [online] Available at: https://timesofindia.indiatimes.com/business/india-business/Small-cities-to-drive-fast-food-mart-to-Rs-7000-crore-by-FY16-Crisil/articleshow/22888879.cms [Accessed 21 Nov. 2016].
wsj.com. (2016). India’s Fast-Food Market Set to Bulge. [online] Available at: https://blogs.wsj.com/indiarealtime/2013/09/19/indias-fast-food-market-set-to-bulge/ [Accessed 20 Nov. 2016].
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