McDonald's Japan (A): The Shanghai Husi Debacle SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of McDonald's Japan (A): The Shanghai Husi Debacle
In July 2014, the expatriate CEO of McDonald's Japan (MDJ) faced a crisis after a video was broadcast accusing one of the company's China-based food suppliers of serious health and sanitation violations. Although MDJ was the biggest brand in Japan's fast food industry, the company's sales had been falling since 2008, and its profitability had deteriorated dramatically since 2012. The CEO, who had recently taken over at MDJ, urgently needed to turn around the company's situation and deal with the crisis at hand. How could she reassure Japanese consumers and put the company back on the road to growth? Derek Lehmberg is affiliated with North Dakota State University.
Swot Analysis of "McDonald's Japan (A): The Shanghai Husi Debacle" written by Derek Lehmberg includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mdj Mcdonald's facing as an external strategic factors. Some of the topics covered in McDonald's Japan (A): The Shanghai Husi Debacle case study are - Strategic Management Strategies, Risk management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the McDonald's Japan (A): The Shanghai Husi Debacle casestudy better are - – increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices,
increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of McDonald's Japan (A): The Shanghai Husi Debacle
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in McDonald's Japan (A): The Shanghai Husi Debacle case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mdj Mcdonald's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mdj Mcdonald's 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 Japan (A): The Shanghai Husi Debacle can be done for the following purposes –
1. Strategic planning using facts provided in McDonald's Japan (A): The Shanghai Husi Debacle case study
2. Improving business portfolio management of Mdj Mcdonald's
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Mdj Mcdonald's
Strengths McDonald's Japan (A): The Shanghai Husi Debacle | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mdj Mcdonald's in McDonald's Japan (A): The Shanghai Husi Debacle Harvard Business Review case study are -
Innovation driven organization
– Mdj Mcdonald's is one of the most innovative firm in sector. Manager in McDonald's Japan (A): The Shanghai Husi Debacle Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Mdj Mcdonald's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mdj Mcdonald's 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 Leadership & Managing People industry
– McDonald's Japan (A): The Shanghai Husi Debacle firm has clearly differentiated products in the market place. This has enabled Mdj Mcdonald's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Mdj Mcdonald's to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Mdj Mcdonald's 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 recruit top talent
– Mdj Mcdonald's is one of the leading recruiters in the industry. Managers in the McDonald's Japan (A): The Shanghai Husi Debacle are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Mdj Mcdonald's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in McDonald's Japan (A): The Shanghai Husi Debacle 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Mdj Mcdonald's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mdj Mcdonald's 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.
Diverse revenue streams
– Mdj Mcdonald's is present in almost all the verticals within the industry. This has provided firm in McDonald's Japan (A): The Shanghai Husi Debacle 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.
Analytics focus
– Mdj Mcdonald's 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 Derek Lehmberg can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Mdj Mcdonald's in the sector have low bargaining power. McDonald's Japan (A): The Shanghai Husi Debacle has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mdj Mcdonald's to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Mdj Mcdonald's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mdj Mcdonald's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Mdj Mcdonald's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mdj Mcdonald's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses McDonald's Japan (A): The Shanghai Husi Debacle | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of McDonald's Japan (A): The Shanghai Husi Debacle are -
No frontier risks strategy
– After analyzing the HBR case study McDonald's Japan (A): The Shanghai Husi Debacle, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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 Mdj Mcdonald's 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Mdj Mcdonald's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Mdj Mcdonald's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study McDonald's Japan (A): The Shanghai Husi Debacle can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study McDonald's Japan (A): The Shanghai Husi Debacle 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 Mdj Mcdonald's 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Mdj Mcdonald's, firm in the HBR case study McDonald's Japan (A): The Shanghai Husi Debacle needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study McDonald's Japan (A): The Shanghai Husi Debacle, it seems that the employees of Mdj Mcdonald's 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 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 Mdj Mcdonald's supply chain. Even after few cautionary changes mentioned in the HBR case study - McDonald's Japan (A): The Shanghai Husi Debacle, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mdj Mcdonald's vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study McDonald's Japan (A): The Shanghai Husi Debacle, in the dynamic environment Mdj Mcdonald's has struggled to respond to the nimble upstart competition. Mdj Mcdonald's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Mdj Mcdonald's 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. Mdj Mcdonald's 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Derek Lehmberg suggests that, Mdj Mcdonald's 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.
Opportunities McDonald's Japan (A): The Shanghai Husi Debacle | 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 Japan (A): The Shanghai Husi Debacle are -
Loyalty marketing
– Mdj Mcdonald's 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.
Developing new processes and practices
– Mdj Mcdonald's can develop new processes and procedures in Leadership & Managing People 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.
Manufacturing automation
– Mdj Mcdonald's can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Mdj Mcdonald's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. McDonald's Japan (A): The Shanghai Husi Debacle 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.
Better consumer reach
– The expansion of the 5G network will help Mdj Mcdonald's to increase its market reach. Mdj Mcdonald's 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mdj Mcdonald's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Mdj Mcdonald's 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.
Using analytics as competitive advantage
– Mdj Mcdonald's 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 Japan (A): The Shanghai Husi Debacle - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mdj Mcdonald's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Mdj Mcdonald's in the consumer business. Now Mdj Mcdonald's can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mdj Mcdonald's 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 Mdj Mcdonald's 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.
Creating value in data economy
– The success of analytics program of Mdj Mcdonald's has opened avenues for new revenue streams for the organization in the industry. This can help Mdj Mcdonald's to build a more holistic ecosystem as suggested in the McDonald's Japan (A): The Shanghai Husi Debacle case study. Mdj Mcdonald's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Mdj Mcdonald's 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 Leadership & Managing People segment.
Threats McDonald's Japan (A): The Shanghai Husi Debacle 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 Japan (A): The Shanghai Husi Debacle are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mdj Mcdonald's in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High dependence on third party suppliers
– Mdj Mcdonald's 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.
Increasing wage structure of Mdj Mcdonald's
– 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 Mdj Mcdonald's.
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 Japan (A): The Shanghai Husi Debacle, Mdj Mcdonald's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Mdj Mcdonald's.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mdj Mcdonald's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Mdj Mcdonald's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
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
– Mdj Mcdonald's 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. Mdj Mcdonald's can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People 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. Mdj Mcdonald's 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.
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 Mdj Mcdonald's in the Leadership & Managing People sector and impact the bottomline of the organization.
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. Mdj Mcdonald's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Mdj Mcdonald's has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Mdj Mcdonald's needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of McDonald's Japan (A): The Shanghai Husi Debacle 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 Japan (A): The Shanghai Husi Debacle 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 Japan (A): The Shanghai Husi Debacle 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 Japan (A): The Shanghai Husi Debacle 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 Japan (A): The Shanghai Husi Debacle 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 Mdj Mcdonald's needs to make to build a sustainable competitive advantage.