McDonalds a Fast Food Restaurant

Kathy Davis

Busi 400-B04

IAOLE ex. 1A (Step4),

1B, 1B (steps 1-2)

1D (step 1-2)

Dr. Paul

Assurance of Learning Exercise 1A, (Step 4)

A SWOT analysis of McDonalds restaurant industry reveals that they have a lot of strengths, weaknesses, opportunities and threats. To start 3 strengths would include brand names, locations and localized menu options. Brand items of McDonalds keep the competition from copying their products, for example, the happy meal, Big Mac, egg McMuffin are all brand name items of McDonalds. McDonalds maintains 42% of the United States hamburger business. Location is always key, McDonalds has 32,478 restaurants in 177 countries ( McDonalds.com). McDonalds' localized menu options adapt to their location, for example, in India and the Middle East they serve lamb burgers.

Weaknesses would include employee turnover, price of raw materials, fluctuating operating expenses and net profits. Employee turnover will cost the industry more in training new employees. McDonalds is a fast food restaurant, they attract the employment of teenagers and young adults. The price of raw materials such as corn and wheat fluctuate with the economy. Rising cost in materials, in turn cost the company more. Fluctuating operating and net profits from 2007-2009 ranged from 3,870,000 in 2007 and 6,841,000 in 2009 for their operating expense. A large increase in expense cut profits (McDonalds.com, p.10). Net income for the same years was 2,395,000 - 4,551,000 in 2009 (McDonalds.com, p. 10).

Next we look at opportunities. Many new products are being added to McDonald's menu every year. [McDonalds continue to execute our four growth platforms of breakfast, convience, core menu and value. Comparable sales rose 3.4% primarily due to the ongoing momentum of our business in Australia where multiple initiatives surrounding menu variety include the launch of the premium angus burger, greater convience and remaining further strengthened our brand relevance](McDonalds.com, p.10). Being able to keep prices down for the customers improved McDonald's profit margin to 30.1% in 2009(McDonalds.com, p.10). Lastly the option of allergen free food items such as, gluten free and peanut free is a great opportunity for McDonald's. It open the opportunity to gain more customers to increase revenue.

Lastly are threats that McDonald's have to contend with. First the awareness of eating habits have cut down on people buying burger and fries. People have become more aware of their eating habits and try to cut the fats out of their diets. The obesity rate in the US grows every day. Second, many new restaurants opening up with low cost, also offering value menu's can threaten revenue. Third, contamination of food such as E Coli would shut down business and as word of mouth traveled, people would have a fear of getting sick. They would have to make sure safety precautions were followed to prevent this from happening.

Assurance of Learning Exercise 1B

1. Buying competitors' garbage - E, L

2. Dissecting competitors' products - U, L

3. Taking competitors' plant tours anonymously - L, U

4. Counting tractor-trailer trucks leaving competitors' loading bays - E, L

5. Studying aerial photographs of competitors' facilities - E, L

6. Analyzing competitors' labor contracts - E, L

7. Analyzing competitors' help-wanted ads - E, L

8. Quizzing customers and buyers about the sales of competitors' products - E, L

9. Infiltrating customers' and competitors' business operations - U, I

10. Quizzing suppliers about competitors' level of manufacturing - E, L

11. Using customers to buy out phony bids - U, I

12. Encouraging key customers to reveal competitive information - U, L

13. Quizzing competitors' former employees - U, L

14. Interviewing consultants who may have worked with competitors - U, L

15. Hiring key managers away from competitors - U, L

16. Conducting phony job interviews to get competitors' employees to reveal information - U, I

17. Sending engineers to trade meetings