Changing lifestyle of the people is creating huge opportunity for the first food industry. People are looking ready-made food rather than home-made cooking food for the hectic lifestyle. In UK, hospitality is growing at rapid rate and it is expected it will grow at rapid rate in the future. According to the market report, the worth of fast food industry was £96.1bn in 2014. Though, there are huge numbers of fast food restaurants in UK, but they are not able to the meet the all customers.
McDonald is a reputed restaurant in UK as well as in the world. The company is success to build the high profile brand image to the customers and it provides high quality food and services to the customers. The company is also reputed for providing delivery in time. McDonald is actually US based company. It started its business in 1948 in US. The company opened its first restaurant store in 1974. According to the website of the company, it has found that currently it is operating in more than 100 countries. The total number restaurants are more than 36,000 and it serves more than 69 million in a day (Mcdonalds.co.uk 2015). But the company is facing certain challenges with the business operation. The purpose of current is to evaluate the new strategies of McDonald.
Analysis and Evaluation of New Strategy of McDonald
The analysis current business situation of McDonald includes the analysis of both internal and external circumstances of the organization. There are different kinds of analytical techniques available for analyzing the internal and external business environment of the McDonald. The analysis of current business of the company can be done as follows:
SWOT Analysis of McDonald’s
Strength: McDonald is in the industry for long time and it has obtained lots of market experience on the fast food business. The maximum employees in managerial position are promoted from the assistant level (Moutinho 2011). So, the company has experienced management who can face the difficult position easily. The locations of stores are in suitable area such as air ports, shopping mall and beside high street. The market of share of the company is also high in the global market.
The franchise policy of the company helps to establish new store easily. On the sign, the logo of the company also attracts the customer and sign denotes as loyal and trustable company to them. The supply chain and communication of the company is also very strong. It has also strong point such as good packaging system and varieties of foods.
Weakness: Though the sales value of company is increasing day by day but profits are fluctuating over the period of time. It does not able to target all the customers. It gives special importance to the child. The same types of products are offered by the company for long time. The innovation level for new product development is very low for the company. Sometimes of the foods of McDonald is criticized by the customers as junk food (Capacci and Mazzocchi, 2011).
Opportunities: The company can have the option for attracting more customers through innovating new types of food. The company can take also take advantage by offering foods at affordable price during the situation of economic slowdown. Upgrading of technology in the operational process can also provide better opportunity for attracting more customers. Such, implementation of more entertaining elements in the store can attract the customer to spend time.
Threats: The company has potential threats of the competitors such as Pizza Hut, KFC, Subway and Burger King (Dumanovsky, 2011). They are also operating the business in the same segment. Any kind of health issue can create pressure for selling the foods. Currency rate volatility has also affect the profitability of the business. Other companies can provide new type of foods with low price.
Political: The political sector of UK has huge impact on the business sector. It is very much important to maintain policy of the country for operating the business smoothly. McDonald faces health and safety issues sometimes. So, political environment create huge impact on the business for health and safety issues.
Environmental: The company maintains all the environmental for avoiding the issues. In UK, there are strong environmental issues related to disposal of wastage (Manzini and Accorsi, 2013). The company tries to reduce the wastage and recycle the materials. Wastage is transferred to regional refineries for recycling purposes and that are used for animal and other by products.
Socio-cultural: Social aspect has also greater impact on the business of McDonald. In the present world, people are more health conscious and they look for healthy food. So, the company tries to maintain the nutrition through maintaining the standards. The company has also good relationship with the suppliers which help to produce the goods maintaining good quality. But the food habit of the people is different in different locations. But the company offers same type of food in all locations. So, it is not able to satisfy the customers properly.
Technological: The company has developed advance technologies for providing smooth service to the customers such as intranets, wireless system, KIOSK and digital display system. But technology is not fixed. The company also needs to develop advance system for continuing operational activities smoothly such developing of automation system in the production process (Grunert and Traill 2012).
Economical: The economic condition of UK is very strong and it suitable for business growth (Capacci and Mazzocchi, 2011). But, few years ago, the company faced several challenges for economic slowdown. The company has tried to improve the business over the period of time. But the company is not able to earn that amount of profit comparing to the economy.
Legal: The legal framework of UK provides the regulation for not transporting commodities that are hazardous for life and property. The company tries to maintain the safety and quality for the products and services. It provides 100% beef, 100% chicken and Grade A eggs. The company purchases the raw-material from the selected suppliers.
Porter’s Five Force Model
Threats of New Entrants: There are huge opportunities for entering of new firms in the segments. The can come with wide range of products (Scott, Craig and Geddes 2012). If the new players can success to build high brand value, the current market share and profitability of the company can be affected. Such as, opening of new stores of KFC in each and every place can create huge pressure for McDonald.
Power of Suppliers: Only few suppliers provide quality products to the company. The company also selects the suppliers who provide best quality of products. But the company tries to maintain the good relationship with the customers. But, suppliers have strong purchasing power because few suppliers provide good quality of products.
Buyers’ Power: The focus of the company is to satisfy the customer with better products and services. Customers play vital role for the success of a business. Customers’ expectation is to get good quality of foods with cheap price and standard service (Bunnefeld, Hoshino and Milner-Gulland 2011). The company certain challenges for identifying the expectation of the customers and they are fail fulfill their requirement.
Threats of Substitutes: The company is offering same type of food for long time. So, there are threats for coming substitute products in the market. So, it can create impact on the business and the company can lose its customers.
Threats of Rivalries: There are so many rivalry companies already in the market such as KFC, Subway and Pizza Hut, etc. (Grunert and Traill 2012). So, market is very competitive for the company.
The company needs to take several strategies for the improvement of the business. The strategies are product development strategy, market development strategy and diversification strategy. The SAF model can help to analyze whether the strategies are profitable for the company or not (Mensah and Julien 2011).
Suitability: The new strategy can help to overcome the situations which are faced by the company. The company is not able to meet the requirement of the customer. New product development strategy can help to attract more customers.
Acceptability: The objective of the shareholders is to grow the business and more amount of business. Net strategies can fulfill the expectation of shareholders by growing and improving the business (Manzini and Accors 2013). The risk is also associated with the implementation of strategies is minimum because the company has already strong in the market.
Feasibility: the strategies will work in the reality and it will improve the business of the company. The company need not bear huge amount of cost for the implementation of strategy (Rollin, Kennedy and Wills 2011). It has already experienced employees and strong suppliers which can help to implement the strategies successfully.
Conclusion and Recommendation
On the basis of overall analysis, it has found that the company needs to develop the new strategies for the improvement of the business. The company can overcome the current challenges and can sustain in the business in the future. The implementation cost of the new strategies is not high and the company can generate more amount of profit through developing new strategies.
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