McDonald's: Profile on Its Rise, Descent, and Return SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of McDonald's: Profile on Its Rise, Descent, and Return
This profile chronicles McDonald's rise over 40 years, its sudden descent in the early 1990s, and then its return in the early 2000s. Students are encouraged to think about what happened, why, and the lessons that can be learned. This profile was written for an undergraduate business course. This case is included in Module 2 of the course Business Thought & Action.
Swot Analysis of "McDonald's: Profile on Its Rise, Descent, and Return" written by Scott A. Moore includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Descent Profile facing as an external strategic factors. Some of the topics covered in McDonald's: Profile on Its Rise, Descent, and Return case study are - Strategic Management Strategies, Competition, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the McDonald's: Profile on Its Rise, Descent, and Return casestudy better are - – supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, central banks are concerned over increasing inflation,
increasing energy prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of McDonald's: Profile on Its Rise, Descent, and Return
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in McDonald's: Profile on Its Rise, Descent, and Return case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Descent Profile, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Descent Profile 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: Profile on Its Rise, Descent, and Return can be done for the following purposes –
1. Strategic planning using facts provided in McDonald's: Profile on Its Rise, Descent, and Return case study
2. Improving business portfolio management of Descent Profile
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Descent Profile
Strengths McDonald's: Profile on Its Rise, Descent, and Return | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Descent Profile in McDonald's: Profile on Its Rise, Descent, and Return Harvard Business Review case study are -
Highly skilled collaborators
– Descent Profile 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: Profile on Its Rise, Descent, and Return HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Sales & Marketing industry
– McDonald's: Profile on Its Rise, Descent, and Return firm has clearly differentiated products in the market place. This has enabled Descent Profile to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Descent Profile to invest into research and development (R&D) and innovation.
Analytics focus
– Descent Profile 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 Scott A. Moore 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.
Ability to recruit top talent
– Descent Profile is one of the leading recruiters in the industry. Managers in the McDonald's: Profile on Its Rise, Descent, and Return are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Descent Profile 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: Profile on Its Rise, Descent, and Return - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Descent Profile is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Descent Profile is one of the most innovative firm in sector. Manager in McDonald's: Profile on Its Rise, Descent, and Return Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the McDonald's: Profile on Its Rise, Descent, and Return Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Descent Profile has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to lead change in Sales & Marketing field
– Descent Profile is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Descent Profile in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Descent Profile in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Descent Profile in the sector have low bargaining power. McDonald's: Profile on Its Rise, Descent, and Return has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Descent Profile to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses McDonald's: Profile on Its Rise, Descent, and Return | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of McDonald's: Profile on Its Rise, Descent, and Return are -
Low market penetration in new markets
– Outside its home market of Descent Profile, firm in the HBR case study McDonald's: Profile on Its Rise, Descent, and Return needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Descent Profile has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the McDonald's: Profile on Its Rise, Descent, and Return 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 Descent Profile has relatively successful track record of launching new products.
Lack of clear differentiation of Descent Profile products
– To increase the profitability and margins on the products, Descent Profile needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Scott A. Moore suggests that, Descent Profile 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 operating costs
– Compare to the competitors, firm in the HBR case study McDonald's: Profile on Its Rise, Descent, and Return has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Descent Profile 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Descent Profile has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Descent Profile even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Workers concerns about automation
– As automation is fast increasing in the segment, Descent Profile 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.
Need for greater diversity
– Descent Profile 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study McDonald's: Profile on Its Rise, Descent, and Return, is just above the industry average. Descent Profile 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.
Aligning sales with marketing
– It come across in the case study McDonald's: Profile on Its Rise, Descent, and Return 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: Profile on Its Rise, Descent, and Return can leverage the sales team experience to cultivate customer relationships as Descent Profile is planning to shift buying processes online.
Opportunities McDonald's: Profile on Its Rise, Descent, and Return | 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: Profile on Its Rise, Descent, and Return are -
Building a culture of innovation
– managers at Descent Profile can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
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 Descent Profile in the consumer business. Now Descent Profile can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Descent Profile can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Descent Profile 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.
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 Descent Profile 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Descent Profile 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: Profile on Its Rise, Descent, and Return, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Descent Profile to increase its market reach. Descent Profile will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Descent Profile is facing challenges because of the dominance of functional experts in the organization. McDonald's: Profile on Its Rise, Descent, and Return case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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. Descent Profile can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Descent Profile in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Manufacturing automation
– Descent Profile can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Loyalty marketing
– Descent Profile 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.
Creating value in data economy
– The success of analytics program of Descent Profile has opened avenues for new revenue streams for the organization in the industry. This can help Descent Profile to build a more holistic ecosystem as suggested in the McDonald's: Profile on Its Rise, Descent, and Return case study. Descent Profile can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats McDonald's: Profile on Its Rise, Descent, and Return 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: Profile on Its Rise, Descent, and Return are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study McDonald's: Profile on Its Rise, Descent, and Return, Descent Profile may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Descent Profile 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: Profile on Its Rise, Descent, and Return .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Descent Profile.
Environmental challenges
– Descent Profile needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Descent Profile can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High dependence on third party suppliers
– Descent Profile 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.
Technology acceleration in Forth Industrial Revolution
– Descent Profile has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Descent Profile needs to keep up with the evolution of technology in the Sales & Marketing 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.
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 Descent Profile in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing wage structure of Descent Profile
– 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 Descent Profile.
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. Descent Profile needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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 Descent Profile business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Descent Profile can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Descent Profile is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of McDonald's: Profile on Its Rise, Descent, and Return 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: Profile on Its Rise, Descent, and Return 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: Profile on Its Rise, Descent, and Return 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: Profile on Its Rise, Descent, and Return 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: Profile on Its Rise, Descent, and Return 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 Descent Profile needs to make to build a sustainable competitive advantage.
