McDonald’s Company Japan (2702) SWOT Analysis / TOWS Matrix / MBA Resources
Restaurants
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for McDonald’s Company Japan (Japan)
Based on various researches at Oak Spring University , McDonald’s Company Japan is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, increasing energy prices, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China,
technology disruption, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of McDonald’s Company Japan
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that McDonald’s Company Japan can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the McDonald’s Company Japan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which McDonald’s Company Japan 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 Company Japan can be done for the following purposes –
1. Strategic planning of McDonald’s Company Japan
2. Improving business portfolio management of McDonald’s Company Japan
3. Assessing feasibility of the new initiative in Japan
4. Making a Restaurants sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of McDonald’s Company Japan
Strengths of McDonald’s Company Japan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of McDonald’s Company Japan are -
Low bargaining power of suppliers
– Suppliers of McDonald’s Company Japan in the Services sector have low bargaining power. McDonald’s Company Japan has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps McDonald’s Company Japan to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- McDonald’s Company Japan 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 Company Japan is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at McDonald’s Company Japan emphasize – knowledge, initiative, and innovation.
Training and development
– McDonald’s Company Japan has one of the best training and development program in Services industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– McDonald’s Company Japan is present in almost all the verticals within the Restaurants industry. This has provided McDonald’s Company Japan 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.
Strong track record of project management in the Restaurants industry
– McDonald’s Company Japan is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– McDonald’s Company Japan has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Restaurants industry. Secondly the value chain collaborators of McDonald’s Company Japan have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– McDonald’s Company Japan is one of the leading players in the Restaurants industry in Japan. It is in a position to attract the best talent available in Japan. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Restaurants industry
- digital transformation varies from industry to industry. For McDonald’s Company Japan digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. McDonald’s Company Japan 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.
Innovation driven organization
– McDonald’s Company Japan is one of the most innovative firm in Restaurants sector.
Sustainable margins compare to other players in Restaurants industry
– McDonald’s Company Japan has clearly differentiated products in the market place. This has enabled McDonald’s Company Japan to fetch slight price premium compare to the competitors in the Restaurants industry. The sustainable margins have also helped McDonald’s Company Japan to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the McDonald’s Company Japan 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.
Successful track record of launching new products
– McDonald’s Company Japan has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. McDonald’s Company Japan 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.
Weaknesses of McDonald’s Company Japan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of McDonald’s Company Japan are -
Products dominated business model
– Even though McDonald’s Company Japan has some of the most successful models in the Restaurants industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. McDonald’s Company Japan should strive to include more intangible value offerings along with its core products and services.
High dependence on McDonald’s Company Japan ‘s star products
– The top 2 products and services of McDonald’s Company Japan still accounts for major business revenue. This dependence on star products in Restaurants industry has resulted into insufficient focus on developing new products, even though McDonald’s Company Japan has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative at McDonald’s Company Japan, in the dynamic environment of Restaurants industry it has struggled to respond to the nimble upstart competition. McDonald’s Company Japan 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 Restaurants industry, McDonald’s Company Japan 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, McDonald’s Company Japan is slow explore the new channels of communication. These new channels of communication can help McDonald’s Company Japan to provide better information regarding Restaurants products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners in Restaurants industry
– because of the regulatory requirements in Japan, McDonald’s Company Japan 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 Restaurants industry.
Skills based hiring in Restaurants industry
– The stress on hiring functional specialists at McDonald’s Company Japan 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.
Slow decision making process
– As mentioned earlier in the report, McDonald’s Company Japan has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Restaurants industry over the last five years. McDonald’s Company Japan 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 Company Japan is one of the leading players in the Restaurants industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Restaurants industry in last five years.
Low market penetration in new markets
– Outside its home market of Japan, McDonald’s Company Japan needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, McDonald’s Company Japan 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.
McDonald’s Company Japan Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of McDonald’s Company Japan are -
Leveraging digital technologies
– McDonald’s Company Japan 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects McDonald’s Company Japan can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– McDonald’s Company Japan can use the latest technology developments to improve its manufacturing and designing process in Restaurants sector. 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.
Use of Bitcoin and other crypto currencies for transactions in Restaurants industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for McDonald’s Company Japan in the Restaurants industry. Now McDonald’s Company Japan can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, McDonald’s Company Japan 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 McDonald’s Company Japan to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– McDonald’s Company Japan 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
– McDonald’s Company Japan can develop new processes and procedures in Restaurants 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Restaurants industry, but it has also influenced the consumer preferences. McDonald’s Company Japan can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, McDonald’s Company Japan is facing challenges because of the dominance of functional experts in the organization. McDonald’s Company Japan can utilize new technology in the field of Restaurants industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Restaurants industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. McDonald’s Company Japan 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 Company Japan 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.
Using analytics as competitive advantage
– McDonald’s Company Japan has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Restaurants sector. This continuous investment in analytics has enabled McDonald’s Company Japan to build a competitive advantage using analytics. The analytics driven competitive advantage can help McDonald’s Company Japan to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of McDonald’s Company Japan has opened avenues for new revenue streams for the organization in Restaurants industry. This can help McDonald’s Company Japan to build a more holistic ecosystem for McDonald’s Company Japan products in the Restaurants industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help McDonald’s Company Japan 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.
Threats McDonald’s Company Japan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of McDonald’s Company Japan are -
Stagnating economy with rate increase
– McDonald’s Company Japan 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 Restaurants industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Restaurants industry are lowering. It can presents McDonald’s Company Japan with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Restaurants sector.
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.
High dependence on third party suppliers
– McDonald’s Company Japan 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.
Regulatory challenges
– McDonald’s Company Japan 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 Restaurants industry regulations.
Environmental challenges
– McDonald’s Company Japan 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 Company Japan can take advantage of this fund but it will also bring new competitors in the Restaurants industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for McDonald’s Company Japan in Restaurants industry. The Restaurants 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, McDonald’s Company Japan 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 McDonald’s Company Japan prominent markets.
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 McDonald’s Company Japan in the Restaurants sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– McDonald’s Company Japan has witnessed rapid integration of technology during Covid-19 in the Restaurants industry. As one of the leading players in the industry, McDonald’s Company Japan needs to keep up with the evolution of technology in the Restaurants 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.
Easy access to finance
– Easy access to finance in Restaurants industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. McDonald’s Company Japan can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Company Japan.
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. McDonald’s Company Japan needs to understand the core reasons impacting the Restaurants industry. This will help it in building a better workplace.
Weighted SWOT Analysis of McDonald’s Company Japan Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at McDonald’s Company Japan 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 McDonald’s Company Japan 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 McDonald’s Company Japan 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 Company Japan 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 Company Japan needs to make to build a sustainable competitive advantage.