Introduction

Strategic analysis relates to the development of the understanding of the internal and external factors that can affect the business. It also means creating a strategic direction by the use of the internal strength and competencies for overcoming the threats and challenges for the business survival (Papulova and Gazova). Here, the assignment is based on the strategic analysis of Mc Donald’s Corporation which is the fast food company that sells burgers, French fries and other beverages. The assignment will focus on the SWOT and PESTEL analysis and the findings will be indicated to all of the functional areas of the business.

SWOT Analysis

Strength

Strength of Mc Donald is that it is regarded as one of the fastest food chain company that has covered many locations and has gained economies of scale. Apart from the wide recognition, the company has the market power over the suppliers and also has gained profits from implementing best practices (Chia, Kee and Khor).

Weakness

The weakness of the company is that it has less product diversification as it only focuses on the food and beverage products. Also, the company is not that much flexible to respond to the market variations and the firm is vulnerable to the economic decline to the western world.

Opportunity

Mc Donald has the opportunity to make expansion in the developing countries due to the diversified products and has the opportunity to enter into new industries (Boyar and Davis-Friday). This means that the company can have wide reach due to the establishment of the operations in Middle-East countries.  

Threats

Threats that the company can face is in context of the competitive rivalry and change in the socio-cultural trends. For example, when people adopt the healthy lifestyle then it discourages them to eat the fast food which can be threat for the company. Additionally, the food regulations can be threat for the company as it can limit Mc Donald’s products.

PESTEL Analysis

PESTEL analysis is concerned with the impact of political, economic, social, technological, environmental and legal factors which can have impact on the business. The political factors comprise of the increase in the international trade agreements which is an opportunity for the business. Economic factors include the changes in the economies of the local and regional. Particularly, due to the stable growth of developed countries and rapid growth of developing countries, it has provided an opportunity for the company to enhance fast food chain (Quoquab, Sadom and Mohammad). Social factors include the changes in the lifestyle, culture and customs of the society. For example, busy lifestyle in urban environments can increase the tendency of eating outside which can be an opportunity and the people having healthy lifestyle ignore fast food which can be threat.

Further, changes in the technological factors has improved the research and development activities of the business which can improve the effectiveness of the operations. The company has made investment in mobile applications for enhancing the customer reach. Environmental factors include the changes in the regulations related to the operating of the sustainable business (Vu, Chan and Lim). Due to the changes in the climatic conditions, the company’s food supply chain has been affected. Furthermore, legal factors comprise of the laws and legal requirements of the fast food operating business. There are regulations related to animal welfare and also health regulations at workplace that the company has to follow (Khan). This has led to higher cost for the company’s supply chain and has influence on the overall business.

Resources

Resources of a company are referred to as the competitive assets that the company owns such as facilities and the distribution network (Helfat). The following are resources of Mc Donald Corporation:

• The company has effective food production systems which can maintain the quality of the products and uplift the economies of scale (Dugmore and Wang).
• The company has skilled human resources for the execution of the process.
• Company’s expanded supply chains is also a valuable resource for the company.
• The company has expanded international operations and have made the restaurant franchisee network which can be the valuable resource to be used against the competitors.

Capabilities

Capabilities are the facilitation of the distinct products or the services which is better than others and is the capacity to perform internal activities competently. The following are the capabilities of Mc Donald:

• The company’s services are rare capability and inbound logistics by the approved third-party logistics operators,
• The company has outbound logistics for the recycling system integrated to distribution system.
• Also, the company has maintained the moderate uniqueness of the food products and has company specific recipes (Peng).

Core Competency

Core competency is the facilitation of the unique value to the customers which later provides the sustained competitive advantage (Kuiate and Noland). The following are the core competencies of Mc Donald:

• The company provides convenience and customer-oriented policy which is core competency of the business.
• Also, the company also brings innovations into the products of the company such as burgers, desserts, drinks and sandwiches.
• The company has maintained the strong positive image and create the value through the effective food chain operations.
• The products of the company can be strategic capability through the maintaining of the product uniqueness which can create the competitive advantage.

Findings of Facts from Functional Areas

After the analysis of the internal and external factors, it can be noted that this analysis can be helpful in the application into the functional areas of the business.

Management

The management is the art of performing the functions such as organizing, planning, staffing, controlling and direction. The findings from the opportunity in the external analysis can be effectively managed when the managers or leaders have necessary skills to perform the activities that can be utilized for the productivity of the company (Chia, Kee and Khor). For example, the company can expand the business with the management of the activities and make use of the resources of the company which can be helpful in the proper execution of the business activities.

Marketing

Marketing is related with the selling of the products by creating the awareness of the products through targeting on the focused audience for higher customer satisfaction. Also, Mc Donald can make use of this functional area for the utilizing of the capabilities by performing the sales effectively (Dugmore and Wang). The findings from the internal strength of the company suggests that the company can make use of the brand image for making an increase in the awareness of the product and reaching the target audience effectively.

Finance

This functional area refers to the management of money into the business by the proper analysis of the funds invested and the extent to which profits gained from it. The findings from the analysis suggests that the company has to focus on the uniqueness in the products and have to make the investment in the technology (Khan). These activities require finance and is also important for the proper allocation of the resources of the company.

Accounting

Accounting as the important functional area relates to activities which are associated with the account’s preparation, reporting, data analysis and budgeting. Moreover, this functional area can be essential for the company to make the appropriate budgets for the execution of the strategy made for earning competitive advantage (Peng). Also, the findings from the core competency of the business elaborate the analysis of the cash statements for identifying the innovation capability.

Directions

The future directions for the business refer to the potential activities that can provide the sustained competitive advantage. In the future direction, Mc Donald Corporation should invest in the diversification strategy through entering into the new product lines (Bowen, Baker and Powell). This can be possible as the company has already developed market presence and the loyal customers. Further, the company should make the product differentiation by the adding up of the special feature that can differentiate the offering of the company from the competitors.  

Conclusion

In conclusion, it can be said that it is important for every company to determine the internal and the external factors which can affect the business. Strategic analysis identifies the opportunities, threats and internal capability of the company wherein the company makes use of the internal resources for earning competitive. Also, the challenges are overcome by the utilization of the opportunity and overcoming of the threats. The assignment has determined the SWOT analysis, PESTEL analysis and the core competency of the business that can be used for the analysis. Lastly, findings are integrated with each functional area of the busines.

References

Bowen, H.P., H.K. Baker and G.E. Powell. “Globalization and diversification strategy: A managerial perspective.” Scandinavian Journal of Management 31.1 (2015): 25-39.

Boyar, L.B. and P. Davis-Friday. “Assessing a golden opportunity: CEO performance at McDonald’s.” The CASE Journal (2019).

Chia, X.R., et al. “Contributing Factors to Organizational Success: A Case Study of McDonald’s.” International journal of Tourism and hospitality in Asia Pasific 3.2 (2020): 38-47.

Dugmore, P. and Y. Wang. “Product Design in Food Industry-A McDonald’s Case.” International Workshop of Advanced Manufacturing and Automation . Springer, 2018. 448-452.

Helfat, C.V. “Stylized facts regarding the evolution of organizational resources and capabilities.” The SMS Blackwell handbook of organizational capabilities (2017): 1-11.

Khan, Mahmood. Lessons From McDonald’s Global Trademark Battles. 2 February 2019. 30 June 2020. <https://www.forbes.com/sites/mahmoodkhan1/2019/02/02/lessons-from-mcdonalds-global-trademark-battles/#4dc3bb6b1f41>.

Kuiate, C. and T.R. Noland. “Attracting and retaining core competency: a focus on cost stickiness.” Journal of Accounting & Organizational Change (2019).

Papulova, Z. and A. Gazova. “Role of strategic analysis in strategic decision-making.” Procedia Economics and Finance 39.2016 (2016): 571-579.

Peng, C.W. “The role of business strategy and CEO compensation structure in driving corporate social responsibility: Linkage towards a sustainable development perspective.” Corporate Social Responsibility and Environmental Management 27.2 (2020): 1028-1039.

Quoquab, F., N.Z.M. Sadom and J. Mohammad. “Driving customer loyalty in the Malaysian fast food industry.” Journal of Islamic Marketing (2019).

Vu, H.M., et al. “Measuring business sustainability in food service operations: a case study in the fast food industry.” Benchmarking: An International Journal (2017).