External and Internal Environments Term Paper

Pages: 8 (2531 words)  ·  Bibliography Sources: 6  ·  Level: College Senior  ·  Topic: Business

SAMPLE EXCERPT:

[. . .] are present in all the target markets where McDonald's operates. These top-notch competitors serve the same consumers around the Globe and offer similar products and provide highly efficient customer services. In the presence of this threat, it is harder for McDonald's to attract all the potential consumers towards its products. Some competitors also offer these products at comparatively lower price than McDonald's which makes it easier for them to attract consumers with low and middle level income groups.

The second major threat for McDonald's is the uncertain business environments of target countries. The economic conditions, governmental behavior, political instability, consumer preferences, technological environment, and environmental protection policies of these countries need to be considered while formulating all business and functional level strategies. McDonald's has to keep an eye on these threats in order to move forward in its industry in the most competitive and profitable way (Blythe & Megicks, 2010).

ii. Opportunities:

The most attractive opportunity for McDonald's is to strengthen its market position by opening self-owned restaurants and fast food outlets in potential markets of the world. It will give greater control and rapid growth to its operational setup (Hitt, Ireland, & Hoskisson, 2011). Making strategic alliances and joint ventures with reliable supply chain members and business partners can also help it in strengthening its market position. It can introduce new products with different tastes and flavor variations in order to attract more and more consumers. Another big opportunity for McDonald's is to extend its product lines to related and complementary products in order to boost up their sales and earn more attractive return on its investments (About McDonald's, 2011).

Internal Environment of McDonald's Corporation

Converse to the external environment, the internal environment of McDonald's consists of strengths and weaknesses which are present in the company's own internal processes and procedures. In order to operate and compete in an effective and profitable way, McDonald's need to carefully analyze its internal environment so that it can utilize its strengths to avail the potential opportunities and encounter possible threats which can impact its business operations.

i. Strengths:

McDonald's is the market leader in the Global fast food industry. It has an extensive business network and a large customer base of more than 69 million servings per day. This huge scale of operations is the biggest strength of McDonald's. It has sound financial strength and strong supply chain relations with the world's largest raw material suppliers, marketing firms, and distribution agencies (Kotler, 2010). McDonald's also has a large array of fast food products which are not offered by small fast food chains. Thus, it has a competitive edge over all these competitors. McDonald's makes huge expenditures on Research and Development section which keeps it aware of the changing market trends, consumer preferences, life styles, and competitors' strategies. This R&D section serves as a big strength for the company in the world market (Pride & Ferrell, 2012).

ii. Weaknesses:

Despite having a large number of strengths, McDonald's also has certain weaknesses in its business operations and procedures. First of all, not all the restaurants of the company are self-owned. It means it has a limited control over its Global operations (Hitt, Ireland, & Hoskisson, 2011). Secondly, all fast food products do not have an equal level of acceptability and popularity among the general consumers. McDonald's is far behind in its Chicken McNuggets and chicken sandwiches category. The chicken segment is completely dominated by KFC which is a specialized producer of chicken products. Another big weakness of McDonald's is its decreasing sales volume in different markets of the world. This decrease is due to the entry of low price fast food and substitute product manufacturers.

The Resources, Capabilities, and Core Competencies of McDonald's and the Analysis of its Value Chain

The biggest resource for McDonald's is its financial capital. It has business operations all over the world which give it attractive return on its investments in the form of sales commission (from franchised restaurants) and pure revenues (from self-owned restaurants and outlets). The company has large set up with expensive plants, machineries, production units, and offices in all the major target markets. With its highly efficient manufacturing capabilities and extensive research and development in all the functional areas, McDonald's is able to beat its competition in the Global market and maintain its market leadership as the most successful, the largest, and the most profitable fast food restaurant chain (About McDonald's, 2011).

McDonald's has an efficient supply chain network which is composed of large scale suppliers, distributors, business development firms, marketing agencies, etc. The suppliers provide it the highest quality of raw material to produce tasty and delicious products of different types (Kotler, 2010). Similarly, the business development and marketing firms help it in promoting its business in new potential markets. All these firms act as the primary stakeholders of McDonald's. Therefore, they play an important role in providing the value which McDonald's wants to deliver to its consumers (Hitt, Ireland, & Hoskisson, 2011).

Moreover, McDonald's keeps an eye on the consumers' choices and preferences through surveys and feedback after sales. These surveys and feedback help it in finding the better ways to serve its customers and boosting its sales volume in both low demand and high demand categories. Finally, the company gives a special focus on the quality and efficient delivery of its products at the consumers' doorsteps. The core competencies and strengths of the company are largely helpful in delivering the real value for the consumers' money (About McDonald's, 2011).

References

About McDonald's, (2011). Sustainability Scorecard. Retrieved on May 6th, 2013, from

Blythe, J., & Megicks, P. (2010). Marketing Planning: Strategy, Environment and Context, 3rd Edition. U.K: Prentice Hall

Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2011). Strategic Management: Competitiveness & Globalization - Concepts, 9th Edition. Mason, OH: South-Western Cengage Learning

Jenny, M., & Scammon, D.L. (2010). Principle-Based Stakeholder Marketing: Insights from Private Triple-Bottom-Line Firms, Journal of Public Policy & Marketing, 29 (1): 12-26

Kotler, P. (2010). Principles of Marketing: A South Asian Perspective, 13th Edition. India: Pearson Education

Lamb, C., Hair, J., & McDaniel, C. (2012). Essentials of Marketing, 7th Edition. Ohio: South-Western Cengage Learning.

McDonald's, (2013). Our Story. Retrieved on… [END OF PREVIEW]

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