McDonald s Rebirth Through a Low Growth Strategy Essay

For several(prenominal) decades McDonalds experienced uninterrupted ingathering in gross sales, profits, and reduce of stores opened. When the attach to seemed to reach maturity in life cycle, mavin chief executive officers decision for a low-spirited- result schema started the rebirth of McDonalds. In its early years, McDonalds success was founded on principles of high school quality standards and service. However, as time passed, their standards and controls slipped and very(prenominal) store sales began a downward trend. Some insisted that the dip in same store sales was evidence of market saturation. However, McDonalds executives disagreed. With well-set support, oneness McDonalds CEO went on a revolutionary-store binge.As McDonalds go along its unprecedented expansion, relations with franchisees deteriorated because corporate owned outlets were stoolnibalizing franchisees profits. An new(prenominal) CEO began to acquire other fast- aliment restaurants, but that m odel failed as it proved a drain on profits. McDonalds was struggling to keep its growth mode. indeed crowd together Cantalupo took the reigns and began a low-growth strategy that turned the companys fortunes slightly as he slashed capital expenditures by 40% by closing poorer performing restaurants and adding fewer new restaurants. Eighteen months into Cantalupos stretchability as CEO, McDonalds stock price rose from eighteen dollars per make do to just over twenty-four dollars per share. Just as McDonalds fortunes seemed to turn, James Cantalupo died suddenly of a heart attack.SWOT AnalysisInternal Strengths & WeaknessesAmong McDonalds greatest strengths are its brand recognition, stiff advertising, and market share. It was the most worth(predicate) fast food brand worldwide in 2013 with an estimated brand treasure of eighty-five billion dollars, ternary times its closest competitor, Starbucks see appendix 1.1. McDonalds strength of brand recognition merchantman primaril y be attributed to its strong advertising and market share. This is evidenced by a 1970s stack which revealed that ninety-six percentage of children identified with Ronald McDonald, ranking him second only to Santa Clause. Furthermore, McDonalds uses high-profile sponsorships and major advertising campaigns to maintain awareness and promote new launches (e.g. 2014 FIFA military personnel Cup and 2014 WinterOlympics). In 2013, its advertising expenditure in the united States alone was 1.43 billion dollars for details see appendix 1.2.McDonalds has won its market share via strong merchandising/advertising efforts and providing convenience for its customers. When McDonalds accelerated growth period ended, it had approximately 13,000 domestic restaurants. The belief was virtual(a) the more stores in a city, the more per-capita transactions would moderate. As of 2013, McDonalds had 35,429 restaurants worldwide- 14,276 of which are domestic (Statista, 2015). McDonalds other innate strengths include partnerships with large(p) brands (e.g. Disney), international presence, localize food menus, and taxation. Now that we have examined McDonalds knowledgeable strengths, lets examine the companys internal weaknesses.Among McDonalds greatest internal weaknesses are its negative publicity, low presence of corporate social responsibility, high employee turnover, and low strategy differentiation. McDonalds is heavily bumpd for crack unhealthy foods to its customers, gain ground exacerbating the obesity problem in America. The documentary film superintendent Size Me, which explores the health consequences of a diet based solely of McDonalds, is one example of the negative publicity surrounding McDonalds. Environmental groups often criticize McDonalds for a lack of sustainable sourcing of beef products (USA Today, 2014). This reflects poorly on McDonalds for having a weak presence of corporate social responsibility. Furthermore, McDonalds has a high employee turnov er as it volunteers low paying and low skilled jobs.These jobs are often seen negatively by employees and usually result in high employee turnover. This is an internal weakness because it increases training costs and adds to McDonalds overall costs. Lastly, McDonalds has low strategy differentiation. It has become incredibly serious for McDonalds to differentiate itself from other fast food restaurants thus, forcing McDonalds to vie on price rather than features. This is an internal weakness because price wars fasten a companys gross margin, which results in deteriorating profits. McDonalds other internal weaknesses include Declining market share, disgruntled franchisees, quality and taste of products, slowed revenue and income growth.External Opportunities & ThreatsMcDonalds is in the unique position to rebrand itself by offering healthier menu options and increasing its corporate social responsibility. In 2006, McDonalds newly redesigned logo and restaurant layout are being cr edited for 8-9% sales growth. Furthermore, McDonalds has the unique opportunity to be the first fast food restaurant to source 100% of its ingredients from sustainable production. Younger generations are very conscientious of the impact their purchasing habits have on the environment.The aforementioned opportunities can be done still pursuing a low growth strategy. But, McDonalds still has opportunities for growth. Economic research suggest that Chinas middle class is on pace to grow from six percent of its population to fifty percent of its population by 2020 (Business Insider, 2014). McDonalds has historically targeted middle class families, so there is plenty of opportunity for growth in China. If McDonalds is able to make a more localized menu and provide an atmosphere that can strike the right parcel out with the Chinese culture then McDonalds has the opportunity to flourish in China.Among McDonalds greatest threats are the growing segment of health sense of right and wrong c onsumers and the strength of competition. The health moral sense consumer, a growing segment of society, poses both a threat and opportunity for McDonalds. The change in customers habits represents new reads that must be met by McDonalds. In an final cause of attack to cater to this market, McDonalds has added salads, fruit, and oatmeal to their menu. Additionally, they have eliminated trans-fat oil- a product damn for the nations obesity. Other areas of concern are the threat posed by Starbucks, which plans to offer a breakfast and lunch menu. McDonalds strongest competitor remains Yum Brands- owner of popular fast food chains Taco Bell, Pizza Hut, KFC, and annexe Street see appendix 1.1. Other external threats include saturated market, macroeconomic factors.RecommendationsThe central strategic decision that needs to be addressed is whether McDonalds will commit to rebranding itself so that it is seen not only as an efficient food destination, but as an appealing high qualit y one aswell. The societal shift to a more health conscience consumer provides McDonalds such an opportunity. Alternatives to Strategic Decision MakingMcDonalds has three viable options for continued success. The first two, get out McDonalds to continue its low growth strategy. First, McDonalds can create and promote an pleasant menu that that will grab the attention of health conscience consumers. Second, it can focus on the stronghold its gained in the coffee space, as this could be an interesting new endeavor to follow (i.e. a new SBU). The third option would be to pursue a growth strategy for Asia, especially China. However, it must be noted that the growth strategy may burden the company with debt to pay for capital-intensive expenditures, but should it be successful McDonalds revenues and profits could reach new ceilings.It would behoove McDonalds to fill the need of the health conscience consumer by adopting and promoting a healthier menu. This can be done without abandoni ng their staples (e.g. Fries, Big Mac, Happy Meal, and Egg McMuffin). If McDonalds is able to support the changes in customers needs and habits, there is no movement why they shouldnt continue to experience growth in sales. I believe that this is the best option because it is not capital intensive, yet it could allow McDonalds access to a new segment of the market. Furthermore, McDonalds number of locations provides the health conscience consumer with convenience.Implementation Evaluation and ControlThe following locomote are keys to a successful implementation of a strategic marketing plan 1. Who are we? Who are our customers? What do our customers want? 2. Set strategic marketing goals Assess internal strengths and weaknesses then compare your vision/ boot to the reality of your external environment. Once you have identified the areas of need, choose particularized goals to address those areas. 3. Establish strategic marketing activities/plan of actions Once proper(postnomina l) goals have been set, identify various activities to utilize resources and choose the best kind of action to implement.4. Establish timeline to execute goals and plan of actions By having a uninfected understanding of your strategic marketing goals then youcan establish habitual understanding of when such action plans can be reasonably accomplished. 5. analyze and re-evaluate progress By consistently reviewing and re-evaluating progress in implementing or instituting plan of actions, you can take a proactive approach in reservation adjustments due to changing business climate, environment, external threats and opportunities that may arise in everyday business decisions.ReferencesBrumley, James. (April 23, 2014). McDonalds Is About To Tap Into A spacious Growth Opportunity. Retrieved from http//www.businessinsider.com/mcdonalds-expanding-international-2014-4Horovitz, Bruce. (April 30, 2014). McDonalds sets 2020 sustainable goals. Retrieved from http//www.usatoday.com/story/mo ney/business/2014/04/30/mcdonalds-sustainability-fast-food-social-responsibility-restaurants/8513245/Statista. (February, 2015). 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