McDonald's India: Optimizing the French Fries Supply Chain SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of McDonald's India: Optimizing the French Fries Supply Chain
Before opening its first store in India in 1996, McDonald's spent six years building its supply chain. During that time, the company worked to successfully source as many ingredients as possible from India. However, French fries ("MacFries") were a particularly tough product to source locally-and importing fries was undesirable for both cost and availability reasons. Growing potatoes suitable for use as fries was challenging in India. By 2007, 11 years after opening its first restaurant, the MacFry was finally being produced in India. McDonald's main MacFry supplier was the Canadian company McCain, which spent many years working on potato agronomy and with farmers to build up supply in India. From 2007 to 2011, local MacFry production increased from none to 75 percent of sales. Despite the strides made, in 2011 Abhijit Upadhye, McDonald's then senior director of Supply Chain India was still a worried man. Double-digit food inflation in India had been putting cost pressure on the company. McDonald's had aggressive growth plans for the coming years. The company had 240 restaurants, and planned to more than double by 2014. The MacFry was the single largest procurement item, so having a 100 percent local supply was critical to avoiding high import duties. The question that troubled him was: "Will I ever be able to eliminate imported fries from my supply chain?" This case describes McDonald's India and McCain India's efforts to optimize the MacFry supply chain by increasing local supply in a fast-growing emerging market using agronomy, farmer relationship development and value chain innovation.
Swot Analysis of "McDonald's India: Optimizing the French Fries Supply Chain" written by Hau Lee, Sonali Rammohan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Macfry Fries facing as an external strategic factors. Some of the topics covered in McDonald's India: Optimizing the French Fries Supply Chain case study are - Strategic Management Strategies, Manufacturing, Social responsibility, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the McDonald's India: Optimizing the French Fries Supply Chain casestudy better are - – technology disruption, supply chains are disrupted by pandemic , there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%,
wage bills are increasing, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of McDonald's India: Optimizing the French Fries Supply Chain
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in McDonald's India: Optimizing the French Fries Supply Chain case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Macfry Fries, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Macfry Fries operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of McDonald's India: Optimizing the French Fries Supply Chain can be done for the following purposes –
1. Strategic planning using facts provided in McDonald's India: Optimizing the French Fries Supply Chain case study
2. Improving business portfolio management of Macfry Fries
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Macfry Fries
Strengths McDonald's India: Optimizing the French Fries Supply Chain | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Macfry Fries in McDonald's India: Optimizing the French Fries Supply Chain Harvard Business Review case study are -
Training and development
– Macfry Fries has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in McDonald's India: Optimizing the French Fries Supply Chain Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Macfry Fries
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Macfry Fries does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Macfry Fries is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Hau Lee, Sonali Rammohan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Macfry Fries in the sector have low bargaining power. McDonald's India: Optimizing the French Fries Supply Chain has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Macfry Fries to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Macfry Fries has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in McDonald's India: Optimizing the French Fries Supply Chain HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Macfry Fries in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Macfry Fries has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study McDonald's India: Optimizing the French Fries Supply Chain - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Macfry Fries are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Macfry Fries has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Macfry Fries to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Macfry Fries is one of the most innovative firm in sector. Manager in McDonald's India: Optimizing the French Fries Supply Chain Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Macfry Fries digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Macfry Fries has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Strong track record of project management
– Macfry Fries is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses McDonald's India: Optimizing the French Fries Supply Chain | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of McDonald's India: Optimizing the French Fries Supply Chain are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Macfry Fries supply chain. Even after few cautionary changes mentioned in the HBR case study - McDonald's India: Optimizing the French Fries Supply Chain, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Macfry Fries vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Macfry Fries needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study McDonald's India: Optimizing the French Fries Supply Chain, is just above the industry average. Macfry Fries needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Macfry Fries is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study McDonald's India: Optimizing the French Fries Supply Chain can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the McDonald's India: Optimizing the French Fries Supply Chain HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Macfry Fries has relatively successful track record of launching new products.
Lack of clear differentiation of Macfry Fries products
– To increase the profitability and margins on the products, Macfry Fries needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Macfry Fries, firm in the HBR case study McDonald's India: Optimizing the French Fries Supply Chain needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study McDonald's India: Optimizing the French Fries Supply Chain that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case McDonald's India: Optimizing the French Fries Supply Chain can leverage the sales team experience to cultivate customer relationships as Macfry Fries is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Hau Lee, Sonali Rammohan suggests that, Macfry Fries is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High cash cycle compare to competitors
Macfry Fries has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Macfry Fries has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities McDonald's India: Optimizing the French Fries Supply Chain | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study McDonald's India: Optimizing the French Fries Supply Chain are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Macfry Fries can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, McDonald's India: Optimizing the French Fries Supply Chain, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Macfry Fries has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Macfry Fries can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Macfry Fries can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Macfry Fries to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Macfry Fries to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Macfry Fries can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Macfry Fries to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Macfry Fries can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Macfry Fries in the consumer business. Now Macfry Fries can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Macfry Fries has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study McDonald's India: Optimizing the French Fries Supply Chain - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Macfry Fries to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Macfry Fries can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Macfry Fries can use these opportunities to build new business models that can help the communities that Macfry Fries operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Buying journey improvements
– Macfry Fries can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. McDonald's India: Optimizing the French Fries Supply Chain suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats McDonald's India: Optimizing the French Fries Supply Chain External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study McDonald's India: Optimizing the French Fries Supply Chain are -
Consumer confidence and its impact on Macfry Fries demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Macfry Fries in the Leadership & Managing People sector and impact the bottomline of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Macfry Fries will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Macfry Fries
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Macfry Fries.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Macfry Fries needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Macfry Fries high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Macfry Fries business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Macfry Fries has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Macfry Fries needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Macfry Fries needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Macfry Fries with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Macfry Fries can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study McDonald's India: Optimizing the French Fries Supply Chain .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Macfry Fries in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of McDonald's India: Optimizing the French Fries Supply Chain Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study McDonald's India: Optimizing the French Fries Supply Chain needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study McDonald's India: Optimizing the French Fries Supply Chain is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study McDonald's India: Optimizing the French Fries Supply Chain is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of McDonald's India: Optimizing the French Fries Supply Chain is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Macfry Fries needs to make to build a sustainable competitive advantage.