McDonalds SWOT 2009

Strengths:

S1: Highly successful and recognized advertising. (I’m loving it)

S2: Strong employee training and promotion mostly from within.

S3: Strong Investor Reputation.

S4: Strongest Brand Image as the number-1 fast-food company by sales, with more than 32,000 restaurants in 118 countries.

S5: Recognized as a community oriented, socially responsible company.

S6: Strong Global Presence and an ability to weather local economic fluctuations.

S7: Use pure ingredients and take food safety very seriously.

S8: Consistently solid financial performance.

·  Gross margins (36.7%) and net profit margins (18.2%) above industry averages.

·  Sales revenue up 3.3% in 2008, global comparable sales up 6.9%.

·  Net income up 80% in 2008.

S9: Strong innovation and product development.

S10: Large real estate portfolio.

S11: Economies of Scale – Nearest competitor in U.S. is half McDonald’s size.

Weaknesses:

W1: Lowest Customer satisfaction rating in the industry (69), even below IRS.

W2: High employee turnover.

W3: Assembly line approach makes it difficult and costly to adapt to changing trends.

W4: Core product line out of sync with trends toward healthier lifestyles for adults and children.

W5: Sales demonstrates seasonal effects.

W6: 80% of restaurants are franchise owned, placing image and reputation in other’s hands.

W7: Over-saturation of real estate in the US.

W8: Struggles with fluctuations in operating and net profits:

·  Operating profits $4,433M (2006), $3,879M (2007), $6443M (2008).

·  Net profits $3,544M (2006), $2,395M (2007), $4,313M (2008).

W9: 70% of operating revenues and 45% of debt are in foreign currency.

Opportunities:

O1: Anticipated 4% growth rate in Quick Service Restaurant industry.

O2: Low fat, low calorie, healthy hamburger – Could be first on market.

O3: Many restaurants (60% in U.S.) have outdated appearance. Remodeling can yield cozier, upscale setting, and upgrade the image.

O4: Respond to social changes by innovation within healthier lifestyle foods.

O5: Increased beverage options (Gourmet coffees) have been shown to increase customer visits in Europe (+7.2%) and takes advantage of faltering Starbuck’s.

O6: Breakfast not available at 25% of locations – can increase return on assets and equity.

O7: Joint ventures with retailers (Walmart, etc.) can place new locations in high traffic areas at lower capital cost.

O8: Continued focus on corporate social responsibility, reducing the impact on the environment and community linkages.

O9: International expansion into emerging markets of China, India, Brazil.

O10: Diversify portfolio (i.e., similar to what it did before divesting Chipotle, Boston Market).

Threats:

T1: More health conscious customers.

T2: Particularly vulnerable in older, established markets (US, EU) to upstarts offering healthier food offerings and more modern, high tech surroundings.

T3: Global economic recession causing consumers to spend less (Global GDP Est.-2.3%).

T4: Markets in US and EU are mature and saturated, but 70% of locations.

T5: Subway and YUM! Brands expanding into developing markets at a higher rate.

T6: Litigation:

T7: Brand equity at risk: 80% of restaurants owned by franchisees.

T8: Contamination of the food supply, especially e-coli, or Mad cow disease, could damage sales, reputation, etc.

T9: Intense price pressure from competitors like Burger King, Taco Bell, Wendy’s, KFC and any mid-range sit-down restaurants.

T10: Negative public opinion campaigns