Case Study Description of McDonald's: The Arch Deluxe Launch (Condensed)
In 1995 McDonald's was the largest restaurant chain in the United States with domestic sales of almost $15.9 billion. McDonald's was also the country's fourth-largest advertiser, spending $490 million on measured media in 1995. On May 9, 1996, the company introduced the Arch Deluxe, a quarter-pound hamburger that was the first in a planned series of sandwiches targested to adults. By the end of May, McDonald's had sold or given away 100 million Arch Deluxe burgers. Despite this success, in the second quarter of 1996 some store sales at McDonald's restaurants declined slightly from the same quarter in the previous year. Thus McDonald's faced several key decisions. Should the Arch Deluxe burger be modified? What changes, if any, shoud be made in the marketing campaign? Should McDonald's proceed with plans to introduce fish and chicken line extensions?
Swot Analysis of "McDonald's: The Arch Deluxe Launch (Condensed)" written by Mark Parry, Yoshinobu Sato includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mcdonald's Deluxe facing as an external strategic factors. Some of the topics covered in McDonald's: The Arch Deluxe Launch (Condensed) case study are - Strategic Management Strategies, Product development and Strategy & Execution.
Some of the macro environment factors that can be used to understand the McDonald's: The Arch Deluxe Launch (Condensed) casestudy better are - – increasing energy prices, increasing government debt because of Covid-19 spendings, wage bills are increasing, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion,
increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of McDonald's: The Arch Deluxe Launch (Condensed)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in McDonald's: The Arch Deluxe Launch (Condensed) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mcdonald's Deluxe, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mcdonald's Deluxe 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: The Arch Deluxe Launch (Condensed) can be done for the following purposes –
1. Strategic planning using facts provided in McDonald's: The Arch Deluxe Launch (Condensed) case study
2. Improving business portfolio management of Mcdonald's Deluxe
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Mcdonald's Deluxe
Strengths McDonald's: The Arch Deluxe Launch (Condensed) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mcdonald's Deluxe in McDonald's: The Arch Deluxe Launch (Condensed) Harvard Business Review case study are -
Learning organization
- Mcdonald's Deluxe 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 Mcdonald's Deluxe is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in McDonald's: The Arch Deluxe Launch (Condensed) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Mcdonald's Deluxe 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 Mark Parry, Yoshinobu Sato 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.
Successful track record of launching new products
– Mcdonald's Deluxe has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mcdonald's Deluxe 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.
Sustainable margins compare to other players in Strategy & Execution industry
– McDonald's: The Arch Deluxe Launch (Condensed) firm has clearly differentiated products in the market place. This has enabled Mcdonald's Deluxe to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Mcdonald's Deluxe to invest into research and development (R&D) and innovation.
Organizational Resilience of Mcdonald's Deluxe
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mcdonald's Deluxe does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Mcdonald's Deluxe digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mcdonald's Deluxe 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.
Low bargaining power of suppliers
– Suppliers of Mcdonald's Deluxe in the sector have low bargaining power. McDonald's: The Arch Deluxe Launch (Condensed) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mcdonald's Deluxe to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Mcdonald's Deluxe 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: The Arch Deluxe Launch (Condensed) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Mcdonald's Deluxe in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Mcdonald's Deluxe is present in almost all the verticals within the industry. This has provided firm in McDonald's: The Arch Deluxe Launch (Condensed) 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.
Training and development
– Mcdonald's Deluxe has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in McDonald's: The Arch Deluxe Launch (Condensed) 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.
Ability to recruit top talent
– Mcdonald's Deluxe is one of the leading recruiters in the industry. Managers in the McDonald's: The Arch Deluxe Launch (Condensed) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses McDonald's: The Arch Deluxe Launch (Condensed) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of McDonald's: The Arch Deluxe Launch (Condensed) are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study McDonald's: The Arch Deluxe Launch (Condensed), it seems that the employees of Mcdonald's Deluxe 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.
Slow decision making process
– As mentioned earlier in the report, Mcdonald's Deluxe 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. Mcdonald's Deluxe 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.
Slow to strategic competitive environment developments
– As McDonald's: The Arch Deluxe Launch (Condensed) HBR case study mentions - Mcdonald's Deluxe takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study McDonald's: The Arch Deluxe Launch (Condensed), in the dynamic environment Mcdonald's Deluxe has struggled to respond to the nimble upstart competition. Mcdonald's Deluxe has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Mcdonald's Deluxe 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.
Interest costs
– Compare to the competition, Mcdonald's Deluxe 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.
Increasing silos among functional specialists
– The organizational structure of Mcdonald's Deluxe is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Mcdonald's Deluxe needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Mcdonald's Deluxe to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Mark Parry, Yoshinobu Sato suggests that, Mcdonald's Deluxe 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.
No frontier risks strategy
– After analyzing the HBR case study McDonald's: The Arch Deluxe Launch (Condensed), it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Skills based hiring
– The stress on hiring functional specialists at Mcdonald's Deluxe 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.
Aligning sales with marketing
– It come across in the case study McDonald's: The Arch Deluxe Launch (Condensed) 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: The Arch Deluxe Launch (Condensed) can leverage the sales team experience to cultivate customer relationships as Mcdonald's Deluxe is planning to shift buying processes online.
Opportunities McDonald's: The Arch Deluxe Launch (Condensed) | 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: The Arch Deluxe Launch (Condensed) are -
Developing new processes and practices
– Mcdonald's Deluxe can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Mcdonald's Deluxe can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. McDonald's: The Arch Deluxe Launch (Condensed) 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mcdonald's Deluxe in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mcdonald's Deluxe 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 Mcdonald's Deluxe to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Mcdonald's Deluxe 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. Mcdonald's Deluxe 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mcdonald's Deluxe 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: The Arch Deluxe Launch (Condensed), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Mcdonald's Deluxe can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mcdonald's Deluxe 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. Mcdonald's Deluxe can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Mcdonald's Deluxe has opened avenues for new revenue streams for the organization in the industry. This can help Mcdonald's Deluxe to build a more holistic ecosystem as suggested in the McDonald's: The Arch Deluxe Launch (Condensed) case study. Mcdonald's Deluxe can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Mcdonald's Deluxe can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mcdonald's Deluxe can use these opportunities to build new business models that can help the communities that Mcdonald's Deluxe operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Using analytics as competitive advantage
– Mcdonald's Deluxe 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: The Arch Deluxe Launch (Condensed) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mcdonald's Deluxe to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats McDonald's: The Arch Deluxe Launch (Condensed) 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: The Arch Deluxe Launch (Condensed) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mcdonald's Deluxe 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: The Arch Deluxe Launch (Condensed) .
High dependence on third party suppliers
– Mcdonald's Deluxe 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.
Shortening product life cycle
– it is one of the major threat that Mcdonald's Deluxe is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Mcdonald's Deluxe 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mcdonald's Deluxe with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Mcdonald's Deluxe 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
– Mcdonald's Deluxe 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 Strategy & Execution 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 Mcdonald's Deluxe.
Technology acceleration in Forth Industrial Revolution
– Mcdonald's Deluxe has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Mcdonald's Deluxe needs to keep up with the evolution of technology in the Strategy & Execution 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.
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 Mcdonald's Deluxe business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Mcdonald's Deluxe 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. Mcdonald's Deluxe can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Mcdonald's Deluxe 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 Mcdonald's Deluxe
– 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 Mcdonald's Deluxe.
Weighted SWOT Analysis of McDonald's: The Arch Deluxe Launch (Condensed) 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: The Arch Deluxe Launch (Condensed) 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: The Arch Deluxe Launch (Condensed) 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: The Arch Deluxe Launch (Condensed) 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: The Arch Deluxe Launch (Condensed) 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 Mcdonald's Deluxe needs to make to build a sustainable competitive advantage.
