The store of Wal-Mart
One of the strength that McDonalds should be proud of is their world wide brand equity. This only means that McDonalds successfully gain the trust of their target customer locally and internationally. McDonalds also start providing 24/7 services to their customers especially to those busy cities (Arndt, 2007). With this strategy, McDonalds could increase their target customers and so with their profit and sales volume. In terms of size, in US alone, 42 percent of the total number of fast-food hamburger business belongs to McDonalds. This only shows that McDonalds has the position to dominate the market and impose threat to its competitors.
Moreover, managers of McDonalds are very competent and attained their position through internal promotion. The internal promotion policy of McDonalds enables them to have well-rounded employees since they already know every detail of the operation of the company. Currently, McDonalds is making an effort to provide their customers with new store features like comfortable armchair and artistic lights and other things that improves the atmosphere every time customers enter into the stores of McDonalds (Gogoi, Arndt & Moiduddin, 2006). Weaknesses
One of the major weaknesses of McDonalds is its slowed income and revenue growth for the past years. Maybe this is the result of the increasing competition in the market and economic instability of the country from the previous period. McDonalds is also suffering from weak product development just like its competitors in the market. One of the possible reasons for this issue is the fast-paced growth of McDonalds during the early 1990’s up to the extent that the management could no longer handle the expansion and caused managerial inefficiencies internally and externally.
Another weakness of McDonalds would be the deterioration of the taste and quality of their product. Recently, McDonalds Company concentrated much on the external improvement of the company like massive franchising transaction in the market to stabilize the profit and sales of the company and paid less attention on securing the quality and conformance of their product to standards set by the company. Declining market share due to tight competition in the market also become the problem and weakness of McDonalds. This issue is somehow related to the declining profitability and sales of the company for the past years.
Opportunities One of the major opportunities that McDonalds has would be their international expansion. With this said strategy of the company, they could now serve and cater for more customers than before. This is also a great opportunity for them to increase their profit and sales volume due to increasing demand for their brand. Another opportunity would be that, currently, McDonalds is only serving 1 percent of the total population of the world. Meaning, there is still a huge number of customers that the company could target in the near future to increase the company’s market dominance and influence.
Aside from the given two opportunities above, another would be the improvement of the US economy from the previous period. it has been identified that disposable income of the consumers increased during the last period and the company might expect for an increased from the demand of the customers for the succeeding period. This is the good time for McDonalds to increase their prices if they have any plan of doing so while still the market is overwhelmed by the increase of their income. Threats As usual, tight market competition is one of existing threat to McDonalds Corporation.
One of their tight competitors would be Burger King and Wendy’s which are both having competitiveness on their own field. Currently, in terms of revenue, McDonalds ranked second next to Wendy’s but the company ranked third after Wendy’s and Burger King. With this, McDonalds Corporation must really do something about their profit inflow and expansion as what have said a while ago is one way of improving the inflow of income of McDonalds. Another threat is the rapid fluctuation of exchange rate due to the economic performance of the economy.
The said currency fluctuation might deplete the income generated by the company on its international operation or might impose certain risk to their stock holders. If this happens, McDonald’s stock investors might get panic and withdraw their capitals to the company, leaving McDonalds with limited money to finance its operation. Strategic Choices of McDonalds Let us first discuss the international expansion of McDonalds during the 1990’s. Based from the data researched, ii was clear that the said expansion of McDonalds did brought them benefits and its can be seen from the sustainable operation of their international branches.
Venturing into the international market could really make or break any company since the company would now be exposed to a bigger competition and more market forces that would hinder the success of the company, but as what we could see in McDonalds, it’s worth it. The least thing the McDonalds could do now to sustain their growth and success in the international market. Next would be the redesigning of the interiors of McDonalds to go along with the style of living of their target customers. This is a good way of establishing brand loyalty to their customers and makes them feel valued every time they enter the stores of McDonalds.
Moreover, the said strategy is one way of satisfying the “appetite” of their customers. Customers always want innovation and by giving them what they want would be an effective way of keeping them on the side of the company. The last but not the least would be the 24 hour operation of McDonalds. This is a good way of increasing the customers that are being serviced by the company. The only problem with this strategy would be, this can be only implemented in the urban areas or those places that a lot of people are still awake or working at night.
This could also serves as another transformation of the side of the company for they are now starting to explore other ways of marketing their products from the conventional way of doing it. Wal-Mart vs. McDonalds Wal-Mart is currently the largest retail store locally and globally as well as the number one among the retail firms in the US market in terms of revenue and sales volume. Just like an ordinary corporation being exposed to market forces, Wal-Mart also experiences/experienced company problems like declining growth and lower profit inflow (Bianco, Der Hovanesian, Young, & Gogo, 2007).
In one way or another, Wal-Mart and McDonalds has one thing in common in making strategies for their operational growth and that would be establishing more stores internationally. Wal-Mart, in order to increase the volume of their goods being sold to attain economies of scale, has been aggressively putting new stores to various countries for the past years just like McDonalds. Another one thing in common to both companies would be the redesigning of store interiors to cope up with the style of living of their target customers.
The store makeover of Wal-Mart started on 2000 by the time they established new stores in rural areas (ICSC. org, 2005). Store signage, flooring and even the shelves of the goods were changed according to the tastes and preferences of their target customers. Given the similarities in both companies, there is a big possibility that McDonalds might experience the impressive growth that is being experienced by Wal-Mart for the past years after their expansion plans and redesigning of their stores start to bring them gains slowly but surely.
Arndt, M. (2007). McDonalds 24/7; By focusing on the hours between traditional mealtimes, the fast-food giant is sizzling. Business Week. New York: February 05, 2007. , Issue 4020; page 64. Bianco, A. , B. , Der Hovanesian, M. , Young, L. , & Gogoi, P. (2007). Wal-Marts Midlife Crisis; Declining growth, increasing competition, and not an easy fix in site. Business Week. New York, April 30, 2007, Issue 4032, page 46. Gogoi, P. , Arndt, M. , & Moiduddin, A. (2006). MICKEY DS MAKEOVER. Business Week. New York: may 15, 2006. , Issue 3984; page 42. ICSC. org. (2005). Wal-Mart launches new merchandising strategy. Retrieved December 3, 2007, from http://www.icsc.org/