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 - – increasing household debt because of falling income levels, technology disruption, there is backlash against globalization, central banks are concerned over increasing inflation, wage bills are increasing, increasing energy prices, talent flight as more people leaving formal jobs,
competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, 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 -
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.
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.
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.
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.
Learning organization
- Descent Profile is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Descent Profile is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in McDonald's: Profile on Its Rise, Descent, and Return Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Descent Profile digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Descent Profile 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.
Successful track record of launching new products
– Descent Profile has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Descent Profile has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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.
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.
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.
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 -
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Descent Profile has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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.
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Descent Profile is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Descent Profile needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Descent Profile to focus more on services rather than just following the product oriented approach.
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.
No frontier risks strategy
– After analyzing the HBR case study McDonald's: Profile on Its Rise, Descent, and Return, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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 -
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.
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.
Using analytics as competitive advantage
– Descent Profile 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: Profile on Its Rise, Descent, and Return - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Descent Profile to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Descent Profile can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Descent Profile can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Descent Profile can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. McDonald's: Profile on Its Rise, Descent, and Return 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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Descent Profile can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Descent Profile to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Descent Profile 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 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Descent Profile 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 Descent Profile to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Descent Profile can use these opportunities to build new business models that can help the communities that Descent Profile operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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 -
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.
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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Descent Profile can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Regulatory challenges
– Descent Profile 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 Sales & Marketing industry regulations.
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.
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.
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.
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.
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.
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 .
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.
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.