The McDonalds, one of the largest and the most successful fast food chain of today, operating globally from 119 countries and different terrain across the globe, serving almost 47 million customers in their everyday operation, McDonalds restaurants serves and operate in more than 31,000 restaurants worldwide. As one of the most patronized fast food shop, McDonald’s provides job opportunity and employs more than 1.5 million people in their restaurants world wide. Without a doubt, McDonalds is one of the most successful fast food restaurants, operating and serving its global customers across the globe. (McDonald’s 2006)
The history of McDonalds and its business can be traced during the year 1940, when the two American siblings Dick and Mac McDonald opened a unique restaurant in San Bernardino, California, which they named after their surname “McDonald”. In a sense, Dick and Mac‘s foundation of McDonalds restaurant in 1945, had been the catalyst of change and carry up the brilliant idea of “fast food chain”. With their introduction of the “Speedy Service System”, the principle of contemporary “fast food restaurant” had been established. (BBC Home)
Exactly, 15 years after its foundation, a clever American business entered the history of McDonalds, when he ask the founders Dick and Mac, to venture for another stage of business and open franchise store or outlet of McDonalds, as an answer for the increasing demand of their services and products. Officially, in the year 1955, the American entrepreneur “Rey Kroc” opened the ninth McDonald’s outlet in Des Plaines, Illinois. Several Years later, Rey Kroc had bought the share of the McDonalds, which is the start of McDonalds corporation and leads the whole company to global success. (BBC Home)
With the amazing success of McDonalds to dominate global market world wide, Dick and Mac McDonald’s concept of a “Speedy Service System” restaurant in the year 1948, McDonald’s had been an icon of “globalization” and increase of “American way of living”. Nevertheless, McDonald’s success is as well the accomplishment of the whole American nation, as it carries the culture and the history of the United States, spreading from almost all the countries around the globe.
At present time, McDonald still remains on top of the competition in its industry, as the company continuous to effect changes in their services and products. Apart from being the most patronized fast-food restaurant today, McDonald’s is as well one of the largest and the biggest fast-food restaurant franchisee, with more than 30,000 franchised outlets or stores in over six continents across the globe. Since the early 20th century, McDonalds and its management are on active campaign of updating and improving their business by effecting innovations in their outlets. Recently, the company had added a coffee shop in most of their branches, which they named as the “McCafe”. Apart from drive-through services, McDonald’s is on a busy task of adding. (McDonald’s 2006)
Moreover, McDonalds revenue continuous to increase, for the early 2008 the sales of the company had amazingly increases by 5%. The company had recorded $22.79 billion USD, for their initial review of revenue for the year 2008. For the last two years, McDonald’s corporation had received $14.45 billion USD for their operating income for the year 2006. In addition to this, the McDonald’s corporation had added $3.544 billion USD in their net income for the same year. Who would have ever thought that the once a small scale fast food restaurant in California will improve to be as one of the major fast-food chain giants. (McDonald’s 2006)
However, aside from these financial success and positive growth of McDonalds, over the years, the company had been hit of various criticisms and issues, which affects the company and threatens its future growth as one of the leading fast-food chain in its industry.
Over the years, the McDonald’s had been through different tale of criticisms and issues on their corporations, on which at some point had been the guide of the company to improve and innovate in their service as well as in their operations.
The “McJob” is one of the long been issue McDonald’s had been battling even up on the present time. Over the years, McDonald’s and its higher officials gad been through battle to amend the dictionary definition of the word “McJob”, as the Merriam dictionary defines “McJob” as low reputation job, requires only minor skill to be qualified and offers little financial opportunity. Nevertheless, McDonald’s believes that McJob’s definition disrespect thousands and millions of people working in McDonald’s restaurants across the globe. (Mail ; Guardian)
In addition to this, the subject of obesity in the United States is one of the major issues, on which McDonald’s corporation had faced. Various columnist and writers had blamed McDonalds as one of the major offenders in the statistics increase of obesity among the Americans. Fast-food critics directly charge McDonald’s guilty for the issue of obesity in the movie documentary Super Size Me by Morgan Spurlock, which straightforwardly point their super-size meal on their menu. Due to this, McDonald’s had changed their super size meal to adult size meal and offer green healthy choices in their menu, which include various type of leafy salads. In some instance, these issues and criticisms of McDonald’s had helped the company to become stronger and firm to survived major dilemmas in able to continue serve their customers world-wide. (IGN Entertainment, Inc.)
Fast-food chain industry, one of the most booming business industries of contemporary food services, which offers large amount of opportunities for the people world-wide. Moreover, fast-food industry is considered as one of the major economic engine, which helps the financial needs of a specific country, in providing jobs and works for the people as well as for the students for additional part time income. Fast-food industry, however, is as well one of the industries that has stiff competition its stakeholders.
To identify the McDonald’s competitiveness in its industry, the porter’s five forces analysis is definitely reliable to come up with appropriate competitive position of McDonalds.
1. Intensity of rivalry amongst existing competitors
Definitely, McDonald’s edge over its competitors is significant, on which the company must consistently research and improved their company to sustain power amongst their competitors. McDonald’s edge over its competitor is their products or foods and service.
2. Threat of entry by new competitors
The threat of McDonald’s for the new comers in the industry can be cite in the aspect sales. New competitors will definitely affect the sales of the company, due to the fact that it will have a share in the market. To prevent this, McDonalds must be consistent to their advertising campaign and continuous to innovate on their products.
3. Pressure from substitute products
As one of the leading fast-food chain, McDonald’s must be consistent in their substitute products. The company must have proper use of their substitute products, to offer keep a steady pace in their product competitors.
4. Bargaining power of buyers (customers)
In food service industry, customer’s power is always the major concern. In able to maintain and garner profit, the company must use properly the power the buyers, in which McDonalds should more in the spending capacity of their customer and the price of their product.
5. Bargaining power of suppliers
Suppliers, on the other hand, are as well a significant factor in fast-food industry. McDonald’s must protect and maintain a good relation on its suppliers, to beneficially use its power and continuous to effect smooth sailing operation. (Frat Files)
The Strength of McDonald’ Corporation can be cited in different aspects. On e of its major strength is its global competitiveness, in which McDonalds can be seen in almost every country in the world. Having franchised outlets spread in different country is definitely an advantage for the company. Another one is that McDonalds Corporation is one of the pioneers in its industry, which is well known across the globe. Nevertheless, the popularity of McDonald’s is one of their strength.
Although, McDonalds is one of the most successful fast-food company today the company still has its weaknesses. One of it is the lack of product innovation, over the years McDonald’s has the same the line up of food choices on its menu. Another one is that McDonald’s has old outlets, which most of their early outlets are aging, meaning the structure and design as well as it equipment not accurate to the present time.
As huge and successful fast-food chain globally, McDonalds has a bunch of opportunities, which is definitely helpful for the whole company. First, there are still countries where McDonalds is yet to be established, the company can definitely take advantage of this opportunity and expand their food services in this countries. Second, McDonalds has bigger opportunities to contribute to the nation, which McDonalds can use some of their revenue to help the society.
Threats, on the other hand, are always consistent as far as corporate stability is concern. One of the major threat McDonalds has is their competitors, no doubt competitors. Second, is the economy is as well a threat to McDonalds, which McDonalds must be ready and firm to handle the ups and downs of the economy.
Nevertheless, McDonald’s must continue to explore and expand to countries and places, which they are yet to establish. The constant business expansion is definitely beneficial for the entire McDonalds Company to survive the ever changing competition of its industry. Product innovation is as well recommend for McDonalds, on which the company must continue to improve, develop and think of something new to offer in their menu to serve the constant changes of customer’s taste. In addition to this, redesigning McDonald’s outlet is another alternative McDonalds can do in able to be updated of the changes in the society. In the end, constant introduction of new concepts is definitely a beneficial alternative for the entire McDonalds, to keep a steady pace on the ever changing industry competition and broaden its popularity world-wide.
McDonald’s (2006), FAQs: Retrieved May 15, 2008 from http://www.mcdonalds.ca/en/aboutus/faq.aspx
Mail & Guradian (2007), McDonald’s takes issue with ‘McJob’ definition: Retrieved May 15, 2008 http://www.mg.co.za/articlepage.aspx?area=/breaking_news/other_news/;articleid=302511
BBC Home (2005), A Brief History of McDonald’s: Retrieved May 15, 2008 from http://www.bbc.co.uk/dna/h2g2/A3816740
IGN Entertainment, Inc. (2008), Super Size Me (2004): Retrieved May 15, 2008
Frat Files (2008), Porter’s Five Forces Analysis: Retrieved May 15, 2008 http://www.fratfiles.com/essays/139022.html