The Corporate Environment and Future Strategies of McDonald's Corporation
McDonald's Corporation is a leader in the fast-food industry. This business report includes an in-depth analysis of the present marketing environment of McDonald's Corporation including a LePEST, SWOT, Stake Holder, and Five Forces Analysis in addition the second section will consist of a proposal for possible future strategy for the organization.
The political environment within the 120 countries in which the McDonlad's corporation has established restaurants is a constantly changing dynamic yet, for the most part the political climate in the respective countries is stable as it applies to the ability of the McDonald's corporation to run effectively. The distribution network of the organization does pose some challenges in some countries as the food and packaging of each restaurant must be obtained through approved and specific channels that attempt to and succeed in making the McDonalds experience a universal one, e.g. The big mac that is served in Detroit will look and the taste the same as the one served in Beijing (Hoover's online McDonald's Corporation Capsule). Each individual political environment and how it effects McDonalds needs to be analyzed for corporate success. Largely the corporation is effective in doing so through communication and cooperation with government entities prior to the company investing in a particular country for the first time.
The political climate in the United States is relatively static, effecting current operations. Yet, to some degree future expansion can be hampered by local governments, in circumstances where public use permits must be obtained and public opinion is in conflict with a corporate or private entities wish to increase operations through additional locations. Public and sometimes private citizens have a certain degree of influence over the acceptance of a new location in some communities. Opposition can be associated with current or future traffic issues, public opposition to business type based on regional culture and composition, and/or regional market saturation. The local government has the ultimate deciding force on these situations of opposition.
The current interest rates in the United States are in favor of real estate expansion as they have recently met record lows due to the international and local economic situations. The current high levels of unemployment favor the type of employment that the McDonald's corporation offers, as they are also historically high. McDonalds offers entry level and low-level management positions that can be filled by people who would possibly be employed by other markets if the economy were better. The market for the type of product that McDonald's Corporation offers tends not to decrease to any extreme degree during times of economic strife, as the offering is low cost and convenient and may be chosen over other restaurant offerings because the cost is lower in perception and reality.
Long-term economic development seems to be on the upswing as the two-year slump associated with the 2001 terrorist attacks and their aftermath seems to be coming to an end. Market trends are expected to enter into a growth phase by the end of 2003. The GDP of $36,300, in 2002 is expected to increase moderately through 2004 (rising to 2.5% and increasing by 0.3%). Level of inflation is 2.8% (2001). Unemployment rate for 2002 was 5% but is greater or lesser in some regions throughout the country. (CIA World fact book 2002)
The dominant religion within the largest McDonald's Corporation market, the U.S. is Christian, yet the government is secular in nature and most people do not practice religious dietary restrictions. The attitude toward foreign market products and services in the United States is open. The market expresses free trade interests and consumers tend to purchase based on price rather than origin of product. The issue of foreign products acceptation is a much greater issue in the other 120 countries where McDonald's offers services. For the most part McDonalds has been embraced by the international community as a welcome American export. In those countries and regions where the predominant religion does not embrace the eating of red meat McDonalds has had a more limited influence.
Language and weights and measures have had some influence upon international marketing of McDonald's services. Some products require renaming as the dominant system of language and/or weights and measures does not translate into the same product meaning which is traditionally associated with a certain product. Yet, to a large degree the services provided are streamlined and the packaging and products are universalized through distribution practices of the corporation.
A decrease in leisure time in the U.S. has influenced the growth of the McDonald's market as the less time an individual or family possesses the more often they will partake in convenience offerings like fast food. McDonald's niche has clearly focused on trying to serve an economical, desirable and appetizing product to people in a hurry. Consumers therefore increase their utilization of services that McDonald's is clearly a trendsetter for, like drive thru restaurants with timed delivery. As the industrial and market influence of the 24-7 economy of the industry of the United States spreads to other countries, through corporate investment and international employment from companies like McDonalds this trend will also increase the growth of the corporate interests of McDonald's corporation internationally. The population with in the United States is living longer and the elderly population often has a greater degree of expendable wealth and occasionally a lower degree of functioning associated with aging increases the reliance upon convenience and prepared or packaged food.
The technology of delivery and communications was crucial to the historical growth of the McDonald's corporation and is integral to its future growth. The ability for a McDonald's restaurant in a distant nation to receive products that allow it to operate, much the same as one that is just a few miles from a distribution house is foundational to the consistent reputation of the company. Also the technology of rapid and mechanized food preparation, much of it pioneered by the McDonald's Corporation is integral to the functioning of a McDonald's restaurant. The continued increase technology that allows fewer employees to more rapidly produce a consistent product will continue to increase the competitive edge of the McDonald's corporation. The benchmark development of the drive through restaurant service has increased the number of customers one location can serve tenfold and the rapidity continues to increase.
The restaurant lobby can be smaller and the employee base can serve both the lobby customer and the drive through customer. Payment technology has also increased the rapidity that customers can be served as the use of in-store ATMs and rapid access Credit and Debit systems decrease the time that transactions take to be completed. Additionally, the computerized ordering systems also increase the time it takes for an order to reach the preparation areas.
Marketing of both new and old standard products continues to draw customers, with cost incentives and also promotional products, such as happy meal toys that are current with the desires of children. The international expansion of McDonalds, both corporate owned franchises constituting 30% of the total restaurants and private owned franchises is in a constant growth pattern. (Hoover's Online) The leading edge system for the constant trial of new products and services also lends greatly to the companies successes.
Though new technology is integral to the success of the corporation, individual independent franchise owners are often at a disadvantage for obtaining and implementing new technology and services. Though McDonald's Corporate attempts not to challenge the business of the independent owners it is a constant struggle to maintain the structure without private and corporate services being each other's largest competitors in some markets.
McDonald's Corporation is internationally recognized for it consistent service and quality product. It is on the leading edge for the type of service it provides and the market it serves. The image of the golden arches is a recognized symbol that ensures a customer the ability to receive quality at a fair price and in a rapid manner. Continued international growth is inevitable and is not completely determined by the economy of one or another nation but by the broader, global economy.
McDonald's Corporation has been under constant competition from other competitive market providers. The maintenance of quality and ingenuity is integral to future success and continued market leadership. Without the technology that allows the rapid distribution and product service to happen each McDonald's restaurant would operate as a completely separate entity and might not satisfy the corporate ideal. Clearly the largest threat to the organization is from without and maintaining a constant eye on internal weaknesses is crucial to continued growth and success.
Stake Holder Analysis:
The corporate stock rating for MCD is set at hold, which delineates expected continued steady growth. Quarterly financial report follows:
All amounts in millions of U.S. Dollars except per share amounts.