Strategic Management Mcdonalds

MCDONALDS CASE STUDY

Group Members

Hiba Munnawer

Sidra Javed

Maria Mustafa

Zakia Siddiqui

STRATEGY FORMULATION FRAME WORK1. INPUT STAGE EFE IFE CPM

2. MATCHING STAGE TOWS MATRIX SPACE MATRIX BCG MATRIX IE MATRIX GRAND STRATEGY MATRIX

3.DECISION STAGE QSPM

1. INPUT STAGE

Key External Factors Weight Rating Weighted Score

OPPORTUNITIES

Respond to social changes - by innovation within healthier lifestyle foods

0.12 4 0.48

Joint ventures with retailers or acquisitions 0.2 3 0.6

Introducing new food items and products 0.2 4 0.08

THREATS

Consumer focus on nutrition and healthier lifestyles. 0.15 4 0.6

Recession or down turn in economy 0.08 3 0.24

Major competitors, like YUM, Burger King, Wendy's 0.09 3 0.27

New entrants in the industry 0.06 2 0.12

Fluctuation in Exchange Rates 0.1 3 0.3

TOTAL 1.00 2.69

EXTERNAL FACTOR EVALUATION MATRIX (EFE):

ANALYSIS OF EFE MATRIX:

EFE Matrix shows it is managing its opportunities and threats average.

Actions:1. Acquire small food companies to attract heavy

traffic2. Make contracts with major educational

institutions and corporations3. introduce healthier products with low calories

and fats

Key Internal Factors Weight Rating Weighted Score

STRENGTHS

Strong global presence in more than 100 countries 0.1 4 0.4market leader in both the domestic as well as the international markets

0.2 4 0.8

Large number of loyal customer 0.08 3 0.24

Strong R&D 0.08 3 0.24

Standardized quality products 0.05 3 0.15

Convenient and extended hours 0.05 2 0.10

Value based pricing 0.06 3 0.18

Focused on customer’s comfort by making different zones for different customers

0.05 3 0.15

Good CSR 0.05 2 0.10

WEAKNESSESsued multiple times for serving unhealthy food 0.15 4 0.6

weak in analyzing the needs of customers 0.08 4 0.32

Do not disclose proper information to customers 0.04 3 0.12

Attracting kids due to which parents are going against them 0.01 2 0.02

TOTAL 1.00 3.42

INTERNAL FACTOR EVALUATION MATRIX (IFE):

ANALYSIS OF IFE MATRIX:

IFE Matrix shows that McDonalds is managing strength and weaknesses very well

Actions:1. It should maintain its leadership position to

overcome its weaknesses2. Should provide the healthy low calories food3. Should disclose the proper information to

customers to avoid legal actions

McDonalds YUM BURGER KING

Critical SUCCESS FACTORS WEIGHT RATING W.SC RATING W.SC RATING W.SC

Product Quality0.25 3 0.75 4 1 3 0.75

Price Competitiveness

0.2 3 0.6 3 0.6 3 0.6

Market Share0.2 4 0.8 3 0.6 2 0.4

R& D0.05 2 0.1 2 0.1 2 0.1

Financial Position0.1 4 0.4 3 0.3 2 0.2

Consumer Loyalty0.2 3 0.6 3 0.6 2 0.4

Total 1.00 3.25 3.2 2.45

4 = superior, 3 = above average, 2 = average, 1 = poor. CPM

ANALYSIS OF CPM:

•CPM shows that McDonalds is doing well as compare to its competitors•Actions:1. It should emphasize on its product quality as it is

lacking as compare to YUMS2. McDonalds should also focus on R&D to gain

competitive advantage

2. MATCHING STAGE

TOWS STRATEGIES:STRENGTHS (S):Value based pricing Strong R&D Strong global presence in more than 100 countriesStandardized quality products market leader in both the domestic as well as the international markets Large number of loyal customer Good CSR Focused on customer’s comfort by making different zones for different customers Convenient and extended hours

WEAKNESSES (W):sued multiple times for serving unhealthy food weak in analyzing the needs of customers Do not disclose proper information to customers Attracting kids due to which parents are going against them

OPPORTUNITIES (O):Respond to social changes - by innovation within healthier lifestyle foods Joint ventures with retailers or acquisitions Introducing new food items and products

S-O STRATEGIESintroducing new menus with nutritious ingredients (S2,S3,O1,O2,O3)

Entering new market by Acquisition and Mergers(S3,S5,O2)

W-O STARTEGIES:

Providing healthier products to avoid legal actions(W1,O1,O3)

Providing proper information to customers on product ingredients through proper advertisement (W4,O1)

THREATS (T):Consumer focus on nutrition and healthier lifestyles. Recession or down turn in economy Major competitors, like YUM, Burger King, Wendy's New entrants in the industry Fluctuation in Exchange Rates

S-T STRATEGIES

Providing healthier products through R&D (S2,S4,T1)

Reduce threat of competitors by bringing new innovative products through strong R&D and by focusing more on loyal customers (S1,S2,S3,S6,T3)

W-T STRATEGIES

Strongly analyzing the needs of customers in order to reduce the threat of new entrants and of existing competitors (W2,T3,T4)

SPACE MATRIX

FINANCIAL STRENGTH Ratings

Earnings per share liquidity Net income ROI

6355

19INDUSTRY STRENGTH

Growth Potential (increasing demand). Technological knowhow (Requirement high) Ease of entry into the market Financial stability

5253

15

ENVIRONMENTAL STABILITY

Competitive Pressure is High Rate of inflation Price range Demand variability

-1-5-3-1

-10

COMPETITIVE ADVANTAGE

Market share Product quality Technological know how Control over distributers

-1-3-3-3

-10

CONCLUSION

FS Average is 19/4 =4.75 IS Average is 15/4=3.75 ES Average is -10/4=-2.5 CA Average is -10/4=-2.5 Directional Vector Coordinates:

x-axis: -2.5+3.75=1.25y-axis: 4.75+(-2.5)=2.25

-6 Worst -1 Best

-6 Worst -1 Best

+1 Worst +6 Best

+1 Worst +6 Best

SPACE MATRIX

ANALYSIS:SPACE Matrix shows that McDonalds should aggressively go for

Forward integration (joint ventures with retailers)

Product development (launch new innovative products such as sandwiches with more healthier

ingredients)

BCG MATRIX

STRONG3.0 TO 4.0

AVERAGE2.0 TO 2.99

WEAK1.0 TO 1.99

HIGH3.0 TO 4.0

I II III

MEDIUM2.0 TO 2.99

IV

V VI

LOW1.0 TO 1.99

VII VIII IX

IE MATRIX:

THE IFE TOTAL WEIGHTED SCORE

THE EFETOTALWEIGHTED SCORE

McDonalds

ANALYSIS OF IE IE Matrix shows the MacDonald's in IV quadrant

i.e. the BUILD AND GROW ACTIONS:It should go for, Forward integration (joint ventures with

retailers) Product development (launch new innovative

products such as sandwiches with more healthier ingredients)

GRAND MATRIX

MacDonald's

ANALYSIS OF GRAND MATRIXACTIONS:It should go for, Forward integration (joint ventures with retailers) Product development (launch new innovative

products such as sandwiches with more healthier ingredients)

Market penetration by attracting non users of the product through intensive advertising and by providing healthier products

3. DECISION STAGE

  STRATEGIC ALTERNATIVES

provide the healthy low calories food

Entering new markets through acquisitions and

mergers

WEIGHT AS TAS AS TAS

OPPORTUNITIES:

Respond to social changes - by innovation within healthier lifestyle foods

0.12 4 0.48 4 0.48

Joint ventures with retailers or acquisitions 0.2 3 0.6

Introducing new food items and products 0.2 4 0.8 4 0.8

THREATS

Consumer focus on nutrition and healthier lifestyles. 0.15 4 0.6 3 0.45

Recession or down turn in economy 0.08 3 .24

Major competitors, like YUM, Burger King, Wendy's 0.09 4 0.36 3 0.27

New entrants in the industry 0.06 3 0.18 2 0.12

Fluctuation in Exchange Rates 0.1 4 0.4

SUM TOTAL ATTRACTIVENESS OF SCORE 1.00 2.34 3.36

QSPM

WEIGHT AS TAS AS TAS

STRENGTHS Strong global presence in more than 100 countries

0.1 4 0.4market leader in both the domestic as well as the international markets

0.2 3 0.6 4 0.8

Large number of loyal customer 0.08 4 0.32 4 0.32Strong R&D 0.08 4 0.32 2 0.16Standardized quality products 0.05 3 0.15 3 0.15Convenient and extended hours 0.05 2 0.10Value based pricing 0.06 2 0.12 3 0.18Focused on customer’s comfort by making different zones for different customers

0.05

Good CSR 0.05 2 0.10WEAKNESS

sued multiple times for serving unhealthy food

0.15 4 0.20 3 0.45weak in analyzing the needs of customers 0.08 3 0.24 3 0.24Do not disclose proper information to customers

0.04 2 0.08 2 0.08Attracting kids due to which parents are going against them

0.01 3 0.03SUB TOTAL ATTRACTIVENESS OF SCORE

1.00 2.26 2.78

provide the healthy low calories food

Entering new markets through acquisitions and mergers

provide the healthy low calories food

Entering new markets through acquisitions and mergers

Total attractiveness score

4.6 6.14