Competition Analysis of McDonald’s 2013
McDonald’s is the largest fast food restaurant in the world. Even though it is headquartered in the US the company has more than 34,000 restaurants across the world. It has outlets in 119 countries and reports estimate that the food chain serves approximately 69 million people on a daily basis. As at 2013, the company employed 1.8 million people and its profits from 2012 were valued at $5.46 billion. The main companies that consider McDonald’s a competitor include:
- Burger King Worldwide Inc.
- Subway
- Yum! Brand Inc.
- Wendy’s Company
These companies have to constantly conduct a competition analysis of McDonald’s to keep up with its competitive streak. The following paper analyzes the strengths and weaknesses of McDonald’s that these business rivals can use in forming their own strategic plans that will enable them to compete effectively with this fast food giant.
Strengths of McDonald’s fast food chain
As the leading fast food restaurant brand in the world, McDonald’s has a competitive edge over all other fast food chains in the world. The fact that this company has expanded to offer its services in 119 countries across the world has helped it to gain many clients across the world. Reports show that the company takes up 8% of all the sales of fast food restaurant chains in the world.
McDonald’s also has a strong financial record and it makes billions of dollars from its sales. It has also partnered with famous brands such as Coca Cola, Heinz Ketchup and Dannon Yoghurts. This has strengthened its client base because customers are guaranteed of finding their favorite brands at the restaurant.
Advertising is one of McDonald’s strongest points. The company is said to spend $2 billion annually on advertisements and media campaigns. This is the largest advertisement budget amongst all the fast food chains in the world. In fact, McDonald’s advertising budget is worth more than what all its four main competitors spend in marketing and advertising their products. This has definitely given the company an edge and a larger following in the market. McDonald has also invested heavily in children facilities. The McDonald restaurants have toys and playgrounds which appeal to both children and parents.
In its expansion projects, McDonald’s has been quick to adapt local menus and meet the expectations of local clients. This has made the fast food restaurant popular abroad. The company also partners with locals and only uses franchises to expand to foreign markets. This not only reduces costs but also makes it easier to make establishments in the foreign markets.
All the above strengths have made this fast food restaurant a household name across the world with millions of clients daily. Competitors can borrow from these strengths and use these points to rejuvenate their businesses.
Weaknesses of McDonald’s
Despite its strengths, McDonald’s has also had its share of problems. Over the past, McDonald’s has received heavy bashing and criticism for its unhealthy menu. The fact that its advertisements focus on children and it has contributed to obesity amongst young age groups has not gone unnoticed. Rights groups fighting obesity continue to protest against the company. In addition to this, McDonald’s has also faced several lawsuits against its unhealthy meals and its targeted young clients.
Internally, McDonald’s has had high turnover rates because of the low payments it offers its staffs. This has culminated in huge losses in terms of training costs and recruitment drives. The “low Mac” job has been criticized both locally and abroad.
Although McDonald’s started off as a very innovative business, it has slowed down over time and has nothing new to offer to its clients. This is why the company capitalizes on low prices in order to make money for itself. All the competitors in the market have fairly similar products as those sold at McDonald’s. It is thus important for these competitors to take advantage of this and make new innovations in terms of menus and services that will attract more clients as compared to McDonald’s.
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