Business Strategy

Business Strategy

The business Strategy McDonald’s currently use is a differentiation strategy and low cost. By creating unique brand products such as the Big Mac, McFlurry and chicken McNuggets, McDonald’s is setting itself apart from Wendy’s, Burger king and many other fast food industries. Another strategy McDonald’s is low cost Strategy, McDonald’s offer their products at a very low price and they also offer a dollar menu to customer who can’t afford main menu products. 

Porter's Five Forces Model Analysis
The Threat of New Entrants is the ability for new companies to enter the Fast Food chain. If new fast food chains are created, it will result in a low profit grain for all companies. For McDonald's’ the treat of new entrants is Low.  Even though there are limited regulations in the Fast Food chain, it’s an easy access market and the cost to start a market is very low. It will be difficult for a new chain to complete with a well-established leader as McDonald’s. 

The threat of a substitute is the level of risk that a company faces from replacement by its substitute company. For McDonald's threat of a substitute is High.  There are many different well established fast chain customers can go. From classy restaurants, to hotdog stands, to grocery stores. McDonald’s can respond to the competitor by offering healthier alternatives. Most people are trying to be health in term of what they eat so if McDonald’s doesn’t have health options, customers will go to substitute where they can get that. Expanding the dollar menu is another way to lower threat of a substitute; customers want the most of their money so they’ll go here they could get that. McDonald’s can create an app where customers can place their order before entering our store.

Bargaining power of customers is the ability of customers to put companies under pressure to get high quality products at a low price. The bargaining power of McDonald's customers is LOW. McDonald’s already offer their customers high quality products at a low price with their dollar menu.

Bargaining power of suppliers is powerful suppliers reducing the profit potential companies may get. Suppliers increase competition within companies by threatening to raise prices or reduce the quality of goods and services. The bargaining power of McDonald’s suppliers is LOW. McDonald’s is number one in the fast food industry; so there are many substitute suppliers out there that can replace current suppliers if they raise their prices.

Intensity of competitive rivalry refers to the extent to which companies within an industry put pressure on one another and limit each other’s profit potential. For McDonald’s the Intensity of competitive rivalry is High. There are many different fast food chains McDonald’s compete with. From Burger king, Wendy’s, Wing stop, Chick-fil-A, Taco Bell too many more. On top of that also compete with restaurant and food stands. McDonald’s can respond by improve on the product offer and customer service. Make their specialized products much better. McDonald’s also has the new touchscreen system for orders that none of it competitor have yet.  

Value Chain

Inbound Logistics

McDonalds purchase raw materials and raw vegetables from vendors. McDonald's also purchase other materials from local grocery shop and supermarkets. McDonald's soft drinks are supplied from coca cola.

Operations

Instead of McDonalds having lots of equipment, they use a large grill for one person to cook burgers, a dressing station where they condiments are added, a fryer where are french fries are cook, a soft drink and milkshake machine where they created desserts and beverages and a counter where customers place they orders.

Outbound Logistics

McDonalds provide high quality service at a great value, and dedicated to have a clean and friendly environment for customers. All McDonald’s food and product are made in McDonald’s store.

Marketing and Sales

McDonald's operates in 120 countries and serve over 50 million customers a day. McDonald’s offer different option for all customers. Customers can mix and market want they want and can afford. If customers can’t afford main menu items, they can go for the McValue Dollar Menu.
Services

As an employee there can be many benefits to work for McDonald’s. If you do not speak English or did not receive a high school diploma, McDonald’s has classes you can attend to learn the English language and also receive your diploma. For customers, they offer free Wi-Fi for customers who stay in store to enjoy their meal. McDonald also have their Ronald McDonald House Charities. It a charity that create and find way to improve health and works for the wellbeing of kid.