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 - – geopolitical disruptions, wage bills are increasing, there is backlash against globalization, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing government debt because of Covid-19 spendings, technology disruption, 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 -
High brand equity
– Descent Profile has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Descent Profile to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Diverse revenue streams
– Descent Profile is present in almost all the verticals within the industry. This has provided firm in McDonald's: Profile on Its Rise, Descent, and Return case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
Cross disciplinary teams
– Horizontal connected teams at the Descent Profile 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.
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.
Training and development
– Descent Profile has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in McDonald's: Profile on Its Rise, Descent, and Return 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.
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.
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.
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.
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.
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 -
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.
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.
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 Descent Profile supply chain. Even after few cautionary changes mentioned in the HBR case study - McDonald's: Profile on Its Rise, Descent, and Return, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Descent Profile vulnerable to further global disruptions in South East Asia.
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.
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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study McDonald's: Profile on Its Rise, Descent, and Return, it seems that the employees of Descent Profile don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Descent Profile 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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Descent Profile in the Sales & Marketing industry. The Sales & Marketing 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.
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.
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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Descent Profile with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 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.
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.
Consumer confidence and its impact on Descent Profile 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.
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.
