In the world of steep competition, it is very important for an organization to have the competitive advantage in its favour to maximise its business potentials in the competitive marketing world (Barney, 2012). There are a number of ways to maximise and find out the business potentials of the firms against the case study of Mc Donald’s, one of the biggest fast food chain in the global scenario. The purpose of the report is to find out the competitive challenges of Mc Donald’s in terms of the world economy and the country of New Zealand.
Mc Donald’s is one of the major fast food companies of the United States of America that was founded by Richard and Maurice Mc Donald in the year 1940. The company is a 78 year old company which serves the whole global circuit with its range of products including burgers, sandwiches and salads. The company is based in Illinois and has an employee strength of over 235 thousand which is one of the major affirmations of the company. The scope of business for Mc Donald’s is wide which is focussed on the production and selling of the goods in the different countries with their own cultural twist.
Mc Donald’s is heavily influenced by the national and international political factors that are present in the country in which it is operating. According to the website of Mc Donald’s New Zealand, (2018) the political influence of the organization is to be analysed keeping the different kinds of rules and regulations of the government in mind. The political system of New Zealand is strong and stable which makes it one of the potential countries to set up the business organization. The government has an average 95% ranking on the governance indicator symbolising the excellent political conditions of the organization.
The company follows a number of legal implications of the Food Safety bills and rules. The health and social legal implications are being addressed by the company in all possible manners to have their level of legal implications of the same phenomenon (Wagner III & Hollenbeck, 2014). The legal implications of New Zealand plays a vital role in the manufacturing and distribution of the food items which follows the legal code.
There are a number of regulatory rules that are being followed by the managers and owners of the company in terms of the national rules in terms of operating hours and tax regulations (Pomeranz, 2013). The regulations of the environmental concerns as well as the certificates for the safety of the food items are of prime importance.
The organization is highly affected by the amount of operational cost as well as the supply chain of the raw materials which have their own share of the cost. According to Galizzi & Venturini, (2012) the variations in the chain of exchange rate is also affected in the economic policies. The economic condition of New Zealand is fairly stable which accounts for the improvement in the business of the organization. However, during the time of recession, the organization faced a number of hassles as the people reduced to have food resulting in less business.
Mc Donald’s aims at making technological changes in the way of manufacturing the food items and also to make commercial changes to attract a large number of people from various stratus of the society (Aurand, 2013). The technological implications of Mc Donald’s is to analyse the various automated machines that are there in the economy and also to make sure that the company implies a number of technological modifications for the serving of the food and beverages (Jacobes, 2013).
Mc Donald’s is one of the globally distributed organizations which have a number of global factors attached to the working of the organizations (Mak, Lumbers & Eves, 2012). The company operates on a world basis and for which it has to face a number of implications like world economy and the global issues for the same. The methods and means for the globalisation factors is to analysed keeping in mind the global scenes of the place.
The company aims to establish their business among the variety of consumers which makes their social factors a much needed issue. According to Aurand, (2013) the menu is according to the country in which it is operating and has been formatted according to the market research of the social factors. In New Zealand, there are a number of cultures and so the food menu of the country is aimed at making appropriate food choices for them in the designated manner.
The organization has a number of natural implications like the use of water in an unprecedented way. In addition, the wastage issue also plays a major role which has serious implications on the organization ways and means. According to Jacobes, (2013) the environmental codes have to be followed for the easy implications of the environmental means.
|
Factor |
Discussion |
Strategic Implications |
|
Political |
Stable political situation which enables good business development |
95% ranking in governance indicator symbolising good environment to set up business. |
|
Economical |
Fairly stable but with the recession glitches. The operational cost is high though. |
The company has a high economical cost with supply material cost being on the higher side. |
|
Social |
Good opportunity as there are a number of cultures |
Due to the mixed culture, the number of opportunities is high for social factor. |
|
Legal |
Addressing a number of legal implications and food safety bills. |
Food safety bills and the legal process of New Zealand makes the legal laws of Mc Donald’s one of the major to find. |
|
Regulatory |
Following of a number of regulatory rules like tax regulations and operating hours. |
The regulatory measures of Mc Donald’s include the food safety rules and other form of rules. |
|
Technological |
Implying of various automated machines and other technological implications. |
New modification in technology with the amount of automated machines and other factors. |
|
Globalisation |
The facing of issues like economic recession and growth of the sector. Maintaince of world economy is important. |
The distribution to the whole world for the betterment of the company in the span. |
|
Natural |
Use of water and wastage of the products is one of the basic issues |
Following the environmental code is of prime importance. |
Figure – Pestle Table
(Source – As created by the author)
There are a number of key industry organizational and strategic implications that are being analysed by the organization which are as follows –
Industry size and structure – The industry size of the fast food industry is quite big and has a number of factors attached to it. The structure of the industry is organized and serves to encompass a number of sections in it to make the workings in a detailed manner (Liu & Jones, 2014).
Mc Donald’s is one of the premier companies in the food and beverage industry which offers a variety of fast food including burgers and sandwiches, both in the vegetarian and non-vegetarian genre. There are a number of competitors of Mc Donald’s including KFC, Venky’s and Subway. The Industry size and structure table are as follows –
|
Location |
Revenue |
Product |
Number of employees |
Sales |
|
|
Mc Donald’s |
Global |
$2.6 million approx. |
Fast food and beverages |
More than 50thousand |
Better sales as they are the leading in fast food especially burgers |
|
Competitor (All together) |
Global |
$234 million approx. |
Fast food and beverages |
Approximately half a million |
Giving tough competition with innovation and other factors. |
Figure – Competitor table and industry analysis
(Source – As created by the author)
Industry life cycle and growth trends – The industry life cycle is vast as it encompasses a number of factors in it and there are ample amounts of growth in the concerned matter. The industry is prone to growth at a major pace as it is a growth potential industry.
Profitability potential – There is an immense profitability potential in the fast food industry as there are a number of customers who are loyal to the industry and serve to implement the profit at a major rate (Liu & Jones, 2014).
Suppliers – There are a number of supplier in the industry as this requires the supply of a number of raw materials and special ingredients for the manufacturing of the products in the concerned time.
Competition – There is an ample amount of competition in the fast food industry as there are a number of competitors who are there to attract the loyal and potential customers of a concerned industrial base (Nestle, 2013).
Customers – There are a number of loyal customers to the industry as many people are fond of the fast food genre especially the youths and children of the modern world. The customers are immense and there is a major trend of increase in it (Nestle, 2013).
There is a steep competition among the different firms of the fast food genre working in the industry. The positioning of the firm is a marketing concept that has the description of the business for the marketing of the product to the potential customers. The positioning of the firm is done through the means of promotion, price, place and product.
Sustainability in business is defined as the way of conducting the business causing minimum amount of negative impact on the global and the environmental aspect with maximum profit to the business.
There are a number of competitors for Mc Donald’s as a firm namely Starbucks, Venky’s, Subway, Yum Brands and Burger King. The competitors impose a number of strategies and resources for the working of the opportunities and threats of the with the organization. The concept of competition mapping which is defined as the tool for the analysis of the competition threats and potential opportunities of the organization. According to Heyder, Theuvsen & Hollmann-Hespos, (2012) there are a number of tools that can be used for the examination of the competitors strategic tools and position in respect to Mc Donald’s out of which two most important used in this case are Competitors threat and opportunities analysis for assessing the strength and weakness of the company as well as the Positioning map of Mc Donald’s in respect to the competitors.
The major competitors of Mc Donald’s are Starbucks, Subway, Yum brands, Venky’s and Burger king. Subway is included in manufacturing salads and calorie less items which can be a potential threat to Mc Donald’s as they are involved in the manufacturing of fast food including burgers and French fries. Burger King is one of the direct competitors of the brand as it is involved in the manufacturing of the burgers and same genre stuff as Mc Donald’s. The opportunity of the company lies in making healthier options for the customers and also to make sure that their weakness are being reduced in a considerable amount of time (Herschdoerfer, 2012). The competition from the potential strength of Starbucks in being one of the closest competitors makes sure that Mc Donald’s have the least amount of potential benefit when compared to the cases. The competitor opportunity has to do with the weakness and the competitor strength has to be dealt as a strength of the company.
Positioning map is defined as the tool that is used to market the products manufactured by a company with the perception of the product in the certain span. The positioning mapping needs to analyse the perception and needs of the customers and represent it in a diagrammatic way (Herschdoerfer, 2012). The diagram help the marketeer to come up with the solutions of the product and the company and also to analyse the scope of the product in the required time.
The positioning map of Mc Donald’s deals with the three aspects of the market strategy namely segmentation, targeting and positioning. The segmentation of the marketing strategy is defined as the way in which the potential customers are divided into groups that can make sure to have the similar level of characteristics features.
Mc Donald’s divides the products according to the market segments of geographical, demographical, behavioural and psychographic traits. These characteristics features can be used by the company to make sure that their segment of customer is clear and they can expect to have better business from them
According to the views of Rosin, (2013) the targeting of the positioning map implies choosing the appropriate customers group that the company targets to sell their products. The company target groups that can be fruitful to them and also to analyse the ways and means in which the company can get the greater amount of profit. In the case of Mc Donald’s the target group is the youth and the modern people who are into fast food consumption.
Positioning of the marketing structure is defined as the selection of the customers’ base for the selling of the products in the most suitable manner. The 4Ps of the marketing mix are associated with the positioning part of the strategy and help to make sure that the company is engaged with the right amount of people for the conduction (Gamble, Thompson & Peteraf, 2013). Mc Donald’s has an appropriate positioning strategy that helps to make sure that their sell of the product with apt business is there.
Mc Donald’s is one of the major companies that produces a large amount of fast food of both veg and non-veg genre. According to the views of Gamble, Thompson & Peteraf (2013), the company for the huge production needs has to maintain and sustain a number of environmental hazards which can prove really harmful to the ecological balance. Other than the potential environmental threats, there are a number of other threats which are as follows –
|
Potential Threat |
Analysis |
Degree |
Favourable |
|
Rivalry |
There is potential threat for Mc Donald’s in terms of rivalry |
High |
No |
|
Entry |
It is difficult for new companies to mark their presence but entry is possible as the market is expanding |
Medium |
Kind off |
|
Substitutes |
There is a major issue as the customer can shift from one place to another |
High |
No |
|
Buyers |
Major threat as the buyer can choose what to buy |
High |
No |
|
Suppliers |
Supply of raw materials is dependent |
Medium |
Kind off |
Figure – Porter’s Five Force analysis
(Source – As created by the author)
Threat of Rivalry – There is a potential threat for the rivalry as there is a great amount of competition among the firms operating in the market. The threat of rivalry is related to the fact that in the concerned span, there are a number of firms willing to get the same share of market (Tanwar, 2013).
Threat of Entry – There is a potential threat of entry of new firms in the market as the industry is growing making space and interest for the emerging bands to make their presence felt.
Threat of Substitutes – The threat of substitutes is another major problem that is there in the fast food chain. The food of Mc Donald’s can be substituted by the healthier options and even homemade food (Tanwar, 2013).
Threat of powerful buyers – The threat of powerful buyers is also major as the buyers are the major people for whom the products are being made. The buyers make sure to have the greater strength when it comes to fast food or other type of product industries.
Threat of powerful suppliers – The threat of powerful suppliers are there in the major part of the fast food genre which means that with the lack of supply, there will be potential void for the industries stuff which means less production and less profit.
The company is known for the manufacturing of all the junk food items which has its own customer base leading to the popularity of the brand in a major circle (Ibrahim, 2013). However, the company has the potential opportunity to dive into the healthy food genre which is getting popular with more number of people believing in the healthier form of life. The invention of the new food items in the healthier section will attract customers from all over the globe who are into healthy food.
Rivalry – According to Ibrahim (2013), there is a potential opportunity in the rivalry of the company as with the rivalry of the company, it will know how to impress the customers and how the other companies are interested in satisfying the customers.
Entry – The entry of new and innovative firms can help the company to be potentially aware of the new innovations and strategies that it needs to adapt.
Substitutes – The substitutes makes sure that the company has the access to manufacture a number of products for the benefit of the customers in the concerned time span.
Powerful buyers – The potential buyers have the required amount of the opportunity to choose between the companies which also gives the company the required benefit for the analysis the requirements of the customers (Schrempf, 2014).
Powerful suppliers – The powerful suppliers makes sure that the company has the required opportunity for the negotiation and to find the cheapest supply which can result in the reduction in price of the items.
There are a number of future outlooks that are there in the fast food industry operating in Mc Donald’s. According to the opinions of Arneson, Rothwell & Naughton, (2013) the future outlook of the company is quite bright in response to the potential achievements that can be made by the company. According to Schrempf (2014), Mc Donald’s in New Zealand can look for better opportunities for their product and service sector which can make sure to possess great business and financial success to the company with required innovation and strategic functions.
|
Key success factors |
Identification of the company’s competitors |
Implications |
Comments |
|
Technology |
Automated technology which is present in most of the companies |
The technological advancement of the competitor is way better than the Mc Donald’s |
The company needs to focus more on the technological advancement of the way in which the food is being manufactured. |
|
Loyalty |
There is apt brand loyalty among the people of the stores |
The brand loyalty must be increased to maintain the level of business among the regular clients |
The company needs to gear up to give multiple benefits to the company for increasing brand loyalty. |
|
Product |
There is innovative and varied products among the people |
The competitors make better, innovative and healthy food items. |
Mc Donald’s should manufacture food items that are healthy and innovative. |
|
Service |
The service given is of great importance to the people |
The service of the competitor is improving as they are on the production of more sustainable food items. |
The company should improve the service given to the clients. |
Figure – Critical industry success factors
(Source – As created by the author)
There are a number of competitive advantages of Mc Donald’s in the following ways –
Resources – The resources of Mc Donald’s is meant to be both the physical and human resources for the company which can help to analyse the potentiality of the brand (Campbell, Coff & Kryscynski, 2012).
Capabilities – Mc Donald’s is capable to have the best of the both the working as well as financial resources to measure the capabilities.
Core competencies – There are a number of core competencies of Mc Donald’s which is aimed to make sure that the company has the best of the capabilities.
Distinctive competencies – The distinctinctive competencies of Mc Donald’s is to make sure that the company has distinctive marketing skills for making its mark in the company.
The SWOT analysis of Mc Donald’s is as follows –
Strength – One of the major strengths is the brand value and business value of the company with the amount of business. In addition, the organizational culture as well as reputation are strengths (Liu & Jones, 2014).
Weakness – The fast food and the lack of the interesting food items is the major weakness which cannot attract the people who are health conscious or vegan.
Opportunity – The opportunity to make lack of the interesting food items on the food items and to attract new customers is the potential opportunity (Liu & Jones, 2014).
Threats – The lack of the interesting food items in the market with the innovation is the threat of Mc Donald’s in the sector.
|
Factor |
Strengths |
Weakness |
|
brand value and business value |
lack of the interesting food items |
|
|
Opportunities |
Threats |
|
|
lack of the interesting food items |
lack of the interesting food items |
Figure – SWOT analysis
(Source – As created by the author)
Value chain analysis is the tool to measure the internal analysis of the firms as to maintain which is important for the firm in the business sector. The importance of the value chain analysis is done for the inbound logistics in the fact of operations, conventional franchising, developomental licensing and affiliates. In the outbound logistics section, the marketing and sales as well as service of the firm is there in the value chain analysis.
The use of VRIO for Mc Donald’s are as follows –
Value – There are a number of competitive advantage of the company for which the company has value in its sources. There has been cases when the company has achieved higher levels of business value.
Rarity – The Company has been rare as it is of great value and has its branding in the terms. There is a lesser possibility for the other companies to be as great as Mc Donald’s in the fast food chain.
Imitability – Due to the brand reputation of Mc Donald’s, it is difficult for the company to have the desired brand reputation as much as Mc Donald’s which makes the company imitable (Troll et al. 2014).
Organization – There has been a higher level of organizational efficiency including management which makes the brand a valuable thing in Australia. It has been a leader in achieving the goals in the desired cases.
|
Positive |
Negative |
|
|
Value |
Yes |
|
|
Rarity |
Yes |
|
|
Imitability |
No |
|
|
Organization |
Yes |
|
Figure – VRIO analysis
(Source – As created by the author)
There are a number of organizational weakness which are as follows –
Product – The product of Mc Donald’s is limited to only fast food which does not cater all customers making it a weakness of the organization.
Technology – The organization has not upgraded the technological knowhow to a greater level and so this is one of the weakness.
Financial – There are certain financial constraints of the company in New Zealand which is one of the principle reasons for the weakness.
Human – The lack of improved HR management in some of the times accounts for the weakness.
Organizational culture – The organizational culture though strong can be improved for the better working of the enterprise.
Infrastructure – The infrastructure should be improved to a huge amount making the infrastructure a potential weakness.
R&D – For a fast food chain, R&D is really important which is not always followed in Mc Donald’s which is a weakness (Galizzi & Venturini, 2012).
Intellectual – There is a lack of intellectual inputs from the management and lack of involvement from the authorities which is again a weakness.
|
Factor |
Weakness or not |
Why |
|
Product |
Yes |
Product of Mc Donald’s is limited to only fast food which does not cater all customers making it a weakness of the organization. |
|
Technological |
Yes |
The organization has not upgraded the technological knowhow to a greater level and so this is one of the weakness. |
|
Financial |
Yes |
There are certain financial constraints of the company in New Zealand which is one of the principle reasons for the weakness. |
|
Human |
Yes |
The lack of improved HR management in some of the times accounts for the weakness. |
|
Organization |
No |
The organizational culture though strong can be improved for the better working of the enterprise |
|
Infrastructure |
Yes |
The infrastructure should be improved to a huge amount making the infrastructure a potential weakness. |
|
R&D |
Yes |
For a fast food chain, R&D is really important which is not always followed in Mc Donald’s which is a weakness (Galizzi & Venturini, 2012). |
Figure – Organizational weakness
(Source – As created by the author)
There are a number of competitive gaps in the organization like the production of a single type of food item which can make for the loss of customer and deterioration in the innovation process. According to Troell et al., (2014) There are also lack of customer and authorities’ involvement with the lesser involvement in the management. There is a lack of interaction between the sections of the authorities segments in the organization and also the lack of new product innovation in the form of research and development.
The gaps can be improved by the implementation of the following strategies like innovation of new products, to look at the planning and strategies of the firms and also to analyse the competitive strength of the company in the majority of the time.
The strategic choice of Mc Donald’s in the light of weakness are as follows –
Product differentiation – The products that are manufactured by Mc Donald’s should be divergent and different from the regular fast food brands with the inclusion of healthier options as well as the twist of the classical cultural taste.
Cost leadership – The cost leadership of the organization should be analysed based on the amount of cost of operations in the lowest possible manner. The cost of operation of Mc Donald’s should be reduced to a specific amount to maximise profit.
Diversification – The product of the company should be diversified and should adhere to the requirements and needs of the clients and customers in the required span of time (Galizzi & Venturini, 2012).
Backward vertical integration – The backward vertical integration should be done and merged with the supply chain and suppliers which can make the cost of the operations way lesser as well as result in cost savings of the firm.
Forward vertical integration – The forward vertical integration of the company is to analyse the business activities of the firm to include the direct distribution of the firm in the supply of the company products (Rosin, 2013).
Strategic alliance – Accoridng to Hossain and Hossain, (2012) the strategic alliance of Mc Donald’s is the agreement that is being set by the two parties for the objective identification in spite of being the independent institutions. Mc Donald’s has a strategic alliance with a number of company including the Coca Cola and Pepsi co.
Acquisitions – According to Rosin, (2013) there are a number of acquisitions by Mc Donald’s in New Zealand which is one of the basic criteria for the success of any firm. Mc Donald’s in New Zealand has acquired a number of firms.
Mergers – Mergers which are the collaboration of two bodies are there in Mc Donald’s of New Zealand for a number of products.
Joint ventures – There are a number of products that are created by joint ventures in Mc Donald’s of New Zealand.
Financial – Mc Donald’s being one of the biggest companies has a financial advantage over a number of issues and companies which make it one of the financially independent brands.
Customer – There are a number of loyal customers of Mc Donald’s which maintain the level of customer inflow in the eateries. In addition, the newer customers are also welcome (Hossain & Hossain, 2012).
Internal processes – The internal processes of the organization are at part with any other company of the times which make it one of the well-established organization.
Learning and growth – The learning and growth in Mc Donald’s of New Zealand is of great value as there is much to learn and grow in the company.
There are a number of managerial limitations and implications of the brand which accounts to better framework of work organization as well as the better human resource management strategies. The better association of the managerial implications and limitations mount to the better management of the organization with better infrastructure, technology as well as communication within staff.
In conclusion, summarising the above report, it can be stated that there are a number of key marketing structures and plans that are being associated for the working of Mc Donald’s operating in New Zealand. The report summarises and analyses all the key organizational framework of the organization along with certain recommendations whenever needed. The report finds the information about the working of the managerial implications and focusses on the key analysis of the both internal and external findings of the organization. There is the SWOT, Pestle and Porter analytical model that is being analysed in the report which is also one of the chief analytical tools of the working of the organization. Mc Donald’s has competitive strengths and organizational weakness that is there in the other organizations including the steep competitors that are there in the market of the firms. Mc Donald’s has a number of competitive advantage that is being included in the firms for the working and the betterment of the brand in the concerned span of time. The organization has the enabled items for the better organizational management including the strategic means.
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