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SWOT Analysis

S – Strengths

  • Diversified income

McDonald’s dos not only rely on one source of income. One of the main sources of income is the sales by Company-operated restaurants which were USD 18,874,200 thousands or 67.2% of the total revenue. The other source of income is franchised restaurants which were USD 9,231,500 thousands or 32.8% of the total revenue. Furthermore, 80% of restaurants are franchised. It allows McDonald’s to grow steadily because it is not affected by the change in demand.

 

  • Large advertising budget

McDonald’s has large amount of budget that can put in the advertisement.

 

  • Brand reputation

McDonald’s has a long history in operation of fast food restaurant since 1955.

 

 

  • Food menus adopted to meet the local tastes

McDonald’s provides different food menu to meet different customers’ needs in different countries because they have diverse culture in taste.

 

W – Weaknesses

  • Low wages

McDonald’s offers low wages to its employees. It causes the employees to be not loyal to their jobs because they cannot obtain motivation to work well.

 

  • Higher cost in employment practices

The impact of low wages is high employee turnover which increases training costs.

 

  • Unhealthy foods

Fast food is usually fried or contains a part that is. McDonald’s mainly sells hamburgers and fries that are fattening.

 

O – Opportunities

  • Expand McDelivery services

McDonald’s is expanding McDelivery services in Australia and US to provide a home-delivery service to its customers.

  • Provide “make your own burger” service

Customers can make their unique burger. Customers can choose the type of payment, bun, cheese, sauce, bacon and much more.

 

  • Expand McCafé network

Product diversification is an inevitable trend. McCafé provides healthier soup, sandwich and coffee that can reach out new customers.

 

  • Growing middle class in China

China is the largest market in the world. A grow in middle class can help to increase the demand of various types of food that can increase the customer turnover.

T – Threats

  • Negative publicity

McDonald’s Hong Kong was discovered imported rotten chicken and pork from Shanghai food processing plant in 2014. McDonald’s faced sales decline in Asia after food scandal that had 4% decline in sales for six months.

 

  • Declining demand for fast food

Nowadays, many people focus on healthy life style. They would like to change their dietary habits. Therefore, they attach importance to healthy food rather than fast food.

 

  • Rising labor wages

Many countries increase their statutory minimum wage that may increase McDonald’s operation cost.

 

  • New food safety

Because of the occurrence of the food scandal, McDonald’s to implement new food safety strategy for its restaurants and suppliers in China in order to regain consumer confidence. It would increase audits of its suppliers. The new audits will be unannounced, and the audit teams include third-party auditors and Mc Donald’s management teams. However, the strategy have to spend more cost because McDonald’s have to pay for the third-party auditors and the extra workload of its management teams.

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