Introduction of McDonald’s

1.1 History of McDonald’s

McDonald is one of the top leading fast-food restaurants internationally. In 1940 The Dick and Mac McDonald Started up their first McDonald outlet in San Bernardino California. When they first started off with only just a hotdog stand which was then expanded to about 25 items which were mostly roasted. Dick and Mac shut down In 1948, and reopen the restaurant to deal with only with hamburgers, milkshakes and fries. Currently, there are more than 110 McDonald’s outlets in Singapore, attending to approximately 1.2 million customers weekly and there are about 30,000 McDonald outlets internationally.

1.2Nature of McDonald’s

The McDonald’s operates in these food service lines as one of the world’s fastest service restaurant chains. McDonald’s only has one objective in mind, to maximize profits earned. Like any other fast food restaurants. McDonald’s worked towards this goal and reach out at its very best to achieve it.

1.3 Company’s Goal

McDonald’s very main objectives are to bring good food in a sociable and fun environment, to be a responsible company and cater well better returns to their shareholders. McDonald’s provide its customers with food of better quality, faster service and affordable price. They also hope to be more eco-friendly and to bring in healthier food.

PESTEL analysis

2.1 Political

McDonald industry deal with different kinds of political problems as they have outlets over 119 countries. Certain location the company deals with problems like overwriting rules and regulations due to health implications of fast food. Political situations in Singapore are not problematic for McDonald as it requires to monitor the rules and regulations which is handling fine.

In general, McDonalds are affected due to regulations of fast food industries set by the government policy for example health consciousness and cleanliness policy. Health problem have been a main concern for most people. people are having diseases such as high cholesterol because they are consuming too much oily food and not doing any cardio activities. They are also facing a backlash from parents as a result of the rising in obesity and eating habits.
The restaurants are bringing in healthier choices to cater to customer’s needs. For example, McDonald’s recently brought in grilled chicken wraps and Salad Chicken McGrill which are a better and cleaner choice compared to the rest of the items available.

2.2 Economic

Singapore has a rising turnover for Food and beverage sector estimated to be S3.6 billion annually. Even though a small part which only contributes about 1% to GDP; it is a important aspect to the tourism industry. According to a latest survey done by Sydney-based Research Company, BIS shrapnel, an average Singaporean paid about $1900 eating out. Eating out is a common habit among Singaporeans. Singapore has also been rank as one of the three top eating capitals in the Asia pacific region.

2.3 Social

McDonald’s aims the younger crowd. Many teenagers and kids are attracted by their interesting promotion like the Monopoly game which attracted many youths to visit their store more regularly as they get a chance to win attractive prizes. it also launched two successful promotions such as the Hello Kitty and Despicable Me toy, in 2013. Both Both promotions resulted in long queues. McDonald also regularly announced seasonal menus to capture consumers for repeating visits promotions.

Teenagers also find the trills hanging out, studying at night or watch football at these 24hours restaurants.

2.4 Technology

Technology acts a very major part in the development of a country and also in business industry. Singapore’ advanced technology which assists as an aid to McDonald industry, distribution and marketing. With the advantage of technology advancement, McDonald not only uses commercials for marketing, they also use social media platform. In addition, McDonald’s also has connection with Visa for cashless delivery. customers are able to use their pre-registered Visa account to pay without having trouble of entering account details .
There is also an increasing growth of food outlets who engage with online platforms such as Groupon which introduces promotions to get customers attention.

2.5 Environmental

McDonald’s have recognise that waste controlling is one of the environmental problems that are facing and therefore execute the reduction of packing material’s McDonald’s in Singapore cultivate a habit of paper-based packaging that allow better waste management. McDonald’s developed Singapore’sone of the largest user of recycled paper in 1991 and had saved an average of 17,500 trees and 56 Olympic-size pools of water.

McDonald’s had also cultivate responsible purchases by setting up environmental guidelines on every supplier.Ingredients like  beef, fish,eggs and vegetables etc. In addition, McDonald’s contributed to the social responsibility commitments by making sure that  animals’basic requirements are met.

2.6Legal

There has been recurringhollering in opposition to the fast food line. This similarity made McDonald’s apply anextra consideration on their corporatesocial responsibilities. On the whole, this addressed the need of the company to form its corporate status to a more positive and a more socially accountable company. The reputation of McDonald’s is apparently a significant major issue.

As Seen on the website of the company, it seems that they have attained strides to take in hand the key social censures that they have been criticizing in the past decades. The company has delivered their customers the important data that they need with reference to the nutritional facts of their products. This is to attend thequarrels of obesity charged against the products of the company. In the same way, the customers provide freedom of choices whether or not they want to purchase their meals. This is tied up with the socio-cultural aspects of the market on which they had been operating. For instance, operations in mainly Muslim countries require their meat to confirm to theHalalnecessities of the law. In the same regard, those that operate in countries in theEuropean Union should confirm to the existing laws banning usage of genetically modified meat ingredients in their food. This was main reason which forced McDonalds to annihilate

Beef, pork and Mutton out of India’s

Menu. Other legal concepts like for example tax obligations, employment standards, and quality criteria are only a few of the majorconcerning on the company should take into consideration if not smooth operations will be hard to attain.

Porter’s 5 Forces

3.1 Threat of New Entrants

McDonald’s faces low level of threat in terms of entrance of new competitors.  With the current strong players such as –Texas chicken, KFC , subway and Four fingers  in the industry currently, it will definitely cause issues  for new entrants at this point in time.  Several possible obstacles faced when starting up a new fast food restaurant includes labour workers, hiring in Singapore can be quite a nightmare as the locals are demanding for higher pay with shorter working hours whereas the foreign hiring quota is always being restricted and these days despite the old or young adults they don’t work for long they hop around wanting a better enjoinment finding that their location is either hot, dirty or oily.Achieving a  licenses can also be quite a trouble  as all food handlers in Singapore have to attend and pass a Food Hygiene Course. Due tothe lack of space and land in Singapore, to enter the fast food industry will also require a very high capital as rental rates will be extremelycostly and atrocious resulting in new entrants not being able to breakeven.

3.2 Threat of Substitutes

Substitutions products and services acts as a threat if it gets constant. There are lots of substitutions for fast food restaurants that caters burgers for example, Burger King, Mos Burger, Wendy’s and etc. There are also fast food restaurants that cater other preferences such as Kentucky Fried Chicken, Long John Silver and etc. These substitute products are always available in the market whether if it’s similar in nature or totally different; all are categorized under fast food and serve as a strong substitute to McDonald’s.

3.3 Bargaining Power of Suppliers

Suppliers have strong bargaining command when it is comes to a certain contract that McDonald’s have with powerful brand names for example  Coca-Cola which are used to attract loyal consumers. These suppliers have more power as McDonald’s it will either be forced to lose profit or to change their marketing strategies.

3.4 Bargaining Power of customers / Buyers

There is no switching cost for consumers to walk out of McDonald’s and have their meal at another location. Customers also have strong bargaining power as there are close substitutions and different alternatives. McDonald’s then have to come up with strategy that can keep their regular customers coming back by being consistent. Keeping their reasonable prices and having value meal is one of the steps taken in by McDonald’s to be leading ahead of their rivals. These procedures taken can attract customer that makes decisions based on prices and consistency. Above all, McDonald’s have also made numerous changes to their menu by adding in healthier choices for example, salads and grilled chicken burger and chicken wraps.

3.5 Intensity of Rivalry

The intensity level among rivals is highly powerful. The close competitors of McDonald’s are Kentucky Fried Chicken and Burger King. When McDonald’s started its first branch at Liat towers on 20 October 1979, a world record was set for serving the world’s highest numbers of hamburgers in a single day. To forward itself of its rivals, McDonald’s have implemented marketing strategies such as “the monopoly game”, “Hello Kitty toys collection” and etc. All of these campaigns have attracted alarge crowd to McDonald’s till date which had placed them in a better position as compared to other fast food restaurants.

Conclusion / Recommendations

In conclusion, McDonald’s faces numerous of challenges from its external environment, such as  the intimidation of further government health regulation, social concerns about the unhealthy products/ingredients, adverse publicity from hoaxes or unsuccessful marketing campaigns on the internet, and additional disapprovals regarding the environmental impact of the industry. McDonald’s is considered to be the King of the fast food chain restaurant .To achieve this far McDonald’s has put in effortlessly hard work and sweat for ages to prove its existence  in the competitive environment of Fast food.

Through understanding of these challenges, McDonald’s marketing and strategy managements can use the business’ strengths, such as its assurance to food quality and safety, its effective marketing campaigns, and the overall strengths of its branding, to make changes in these challenges into a more potential business openings. In order for this to happen, they can use the information given by PESTEL analysis as the foundation for a broad analysis, to enable the intellectual setting of future stratagem for McDonalds. In this way, they can help to make sure  McDonald’s remains a market leading in the fast food industry/line.

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