McDonald’s SWOT Analysis & Recommendations

McDonald’s SWOT analysis, strengths, weaknesses, opportunities, threats, internal and external strategic factors case study and analysis
A McDonald’s in Helsinki, Finland. McDonald’s SWOT analysis highlights global expansion and diversification to ensure business growth. (Photo: Public Domain)

McDonald’s maintains its position as the top player in the global fast food restaurant industry through strategies that address the internal and external factors in this SWOT analysis. The SWOT analysis framework identifies the most relevant internal and external business factors that determine the firm’s success. McDonald’s uses a variety of strategies to deal with these factors. However, the company faces considerable issues based on emerging conditions in the global market. This SWOT analysis points out the most pressing concerns that McDonald’s must address to keep its leadership in the industry.

This SWOT analysis of McDonald’s Corporation shows that the company must address diversification and process flexibility, as well as expansion and innovation.

McDonald’s Strengths (Internal Strategic Factors)

McDonald’s strengths make it a leading contender in the fast food restaurant market. This aspect of the SWOT analysis shows the internal strategic factors that contribute to organizational viability. McDonald’s main strengths are as follows:

  1. Strong brand image
  2. Moderate market diversification
  3. Standardized processes

McDonald’s has a brand image that makes the business competitively strong. Another major strength is market diversification based on the firm’s presence in most regions around the world. This factor reduces market-based risks. In addition, McDonald’s has a comprehensive system of standardized processes, which is a strength that contributes to business efficiency and product consistency. This aspect of McDonald’s SWOT analysis shows that the company has the capability to maintain effective operations.

McDonald’s Weaknesses (Internal Strategic Factors)

McDonald’s weaknesses are linked to the company’s market focus, products and processes. This aspect of the SWOT analysis indicates the internal strategic factors that limit firm performance. McDonald’s main weaknesses are as follows:

  1. Limited process flexibility
  2. Low product diversification
  3. Vulnerability to Western market decline

McDonald’s standardization ensures consistency but also reduces the company’s flexibility in responding to market variations. Low product diversification corresponds to the firm’s focus on food and beverage products, which is a weakness that makes the business highly vulnerable to slowdowns in the restaurant industry. In addition, majority of McDonald’s revenues are from the U.S. and other Western economies. This is a weakness because it makes the firm easily vulnerable to economic decline in the Western world. This aspect of McDonald’s SWOT analysis shows that the company needs to globally expand, improve flexibility, and widen its product mix.

Opportunities for McDonald’s (External Strategic Factors)

McDonald’s opportunities are linked to its product mix and global growth. This aspect of the SWOT analysis points to the external strategic factors that support business growth. McDonald’s main opportunities are as follows:

  1. Expansion in developing countries
  2. Market development in the Middle East
  3. Product diversification

Considering its dependence on Western markets, McDonald’s has the opportunity to grow and expand in developing countries, such as Asian economies. The company can also use a market development strategy to establish operations in Middle Eastern countries that it has not yet entered. In addition, to address market-based risks, McDonald’s has the opportunity to develop new products or enter new industries. This aspect of McDonald’s SWOT analysis shows that the business has significant opportunities for global growth and expansion.

Threats Facing McDonald’s (External Strategic Factors)

The threats to McDonald’s are based on competitive rivalry and sociocultural trends. This aspect of the SWOT analysis deals with the external strategic factors that limit business development. The main threats to McDonald’s business are as follows:

  1. Aggressive competition
  2. Healthy lifestyles trend
  3. GMO trend and regulations

The restaurant industry is highly competitive. Aggressive competitors threaten McDonald’s status as the market leader. Also, the healthy lifestyles trend is a threat because it discourages consumers from eating at McDonald’s, which is often criticized for unhealthful products. In addition, GMO regulations are a threat because they have the potential to limit McDonald’s products. The firm currently does not have a comprehensive policy on GMO ingredients. This aspect of the SWOT analysis shows that McDonald’s needs to develop new policies regarding GMO ingredients, as well as new products to attract health-conscious consumers.

McDonald’s SWOT Analysis – Recommendations

This SWOT analysis shows that McDonald’s can improve its business viability through continued global expansion, especially in high-growth markets. Also, the company can reduce risks by developing new products or entering new industries related to the fast food restaurant industry. These are the most relevant actions McDonald’s can take based on its SWOT analysis.

References
  • Hill, T., & Westbrook, R. (1997). SWOT analysis: it’s time for a product recall. Long Range Planning30(1), 46-52.
  • McDonald’s Corporation (2015). Are genetically modified organisms (GMO) ingredients in your food?
  • McDonald’s Corporation (2015). Company Profile.
  • McDonald’s Corporation Form 10-K 2014.
  • Pickton, D. W., & Wright, S. (1998). What’s SWOT in strategic analysis? Strategic Change7(2), 101-109.
  • Piercy, N., & Giles, W. (1989). Making SWOT analysis work. Marketing Intelligence & Planning7(5/6), 5-7.
  • Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of Marketing Theory and Practice, 54-69.
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