Strategic Management Choices: McDonalds and Wal-Mart

McDonalds is one of the very popular and well known names when it comes to hamburgers and other related food items. McDonalds symbolizes the American entry inside the lifestyle and culture of previously west-free societies, and McDonalds thrived in non American locations generally because of the quality of food, service, pricing and the solid marketing strategy that the company employs t ensure a stable foothold for the brand.

McDonalds SWOT analysis – To be able to identify the parameters that hold the borderline of McDonalds’ possible avenue for growth strategy and internal development linchpin, it is necessary to identify the factors that comprise McDonalds’ strengths, weaknesses, opportunities and threats and make a SWOT analysis. One of the strengths of McDonalds is the consistency of the quality and taste of its food, an effort which was a result of the use of SOE (Systems of Evaluation) results which management used to know what makes a hamburger joint a successful brand.

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Realizing that the SOE was telling them that one of the keys is consistency in quality and taste regardless of place or branch, McDonalds finally found one of its many different strong points. Costell (2003) wrote, “He (Ray Kroc) forced other burger joints and fast-food restaurants to compete on terms that matched up to his unique strengths. No surprise who won. The competition’s only immediate defense was lowering its prices.

This tactic probably explains why most independent hamburger joints went out of business. You cannot continue to use lower prices as a marketing tool without eventually losing money and diminishing quality (Costell, 2003, p. 80). ” Other strengths that McDonalds can use include the power of the brand recall favoring the company, the extent of consumer support and patronage to the brand, and the level of anticipation that customers have over McDonalds and the upcoming new promos and new food to offer the public.

But while the company has its strengths, it also has its weaknesses, and these weaknesses include the probable saturation of the target consumer owing to the large presence of McDonalds branches around the country; the lack of product innovation on the standard McDonalds products; the absence of convincing promotional efforts in the part of the management to lure more customers; and the impact of legal problems that McDonalds.

Of all of the weaknesses, the last one is the most problematic, since these instances usually drags the name of the company in the mud unnecessarily, even if the legal tussle does not directly involve the quality of food, service or product. The opportunities that McDonalds can take advantage of are hinged in the changes that are happening around the world. Socio-political changes, environmental changes, changes in traditions and beliefs and the breaking down of previous restrictions that prevent individuals from becoming target consumers before contribute to the creation of opportunities for McDonalds.

For example, locations which are not an ideal site for a McDonalds branch maybe an ideal site of a McDonald’s branch now after economic changes that impact the location. But these changes are as much the source of opportunities as it is also the source of threats that can impact McDonalds negatively. Changes caused by unstable political and economic situation, the changes in the set of socially accepted beliefs (i. e. he rise of vegetarianism and the battle against the slaughtering of animals in the name of processed foods) can be serious threats to the stability of McDonalds as a company.

Using McDonalds’ strengths and at the same time improving on the company’s weaknesses can allow McDonalds to pursue its goal for growth by putting the company in a better position to take advantage of the opportunities present to the company and at the same time shield the company from the possible threats that are in position to render critical and substantive damages to McDonalds.

McDonalds and Wal-Mart: Comparing Growth Strategies –McDonalds and Wal-Mart are two of the most prominent names in corporate America, and while the two are not exactly competitors operating in the same field, there are corporate and business growth strategies that the two brands may have been exercising, using similar approach and outlook in the effort to answer growth concerns, just as there are differences in the overall strategies of the two companies.

Similarities and Differences between McDonalds and Wal-Mart in growth strategies – One of the similarities that Wal-Mart and McDonalds have in common when it comes to the discussion of the growth strategies that the two companies are employing is the fact that they have included in their growth strategy the refocusing of the direction that defines ‘growth’ and not be overly affected by the projections and expectations of Wall Street.

Post Stone Consulting president Rick Wolfe, in an interview, explained the predicament that Wal-Mart experienced after it forced itself to grow as a company not because of internal factors or motivations, but because it was motivated by an external factor, and that is Wall Street, which Wolfe believes is not the very best of reason for a company to push for company growth.

To explain his rationale further, Wolfe used the situation that McDonalds found itself in and how it got out of the mess a better company. Pressured by the expectation of Wall Street for McDonalds to be primed for growth, McDonalds succumbed to the ill-effects of pressure and instead had a problematic company growth management action plan. Wolfe explained how James Cantalupo was sent back in from retirement to lead McDonald’s – not towards growth but towards improvement.

Cantalupo, according to Wolfe, made McDonalds ditch the plan of growing and instead focused on the improvement of McDonalds from the inside, which included changing the kitchen and introducing new products (Post Stone, 2006). ” According to Wolfe, Wal-Mart should and would take the same path that McDonalds took, and ignore the pressure for company growth drilled by Wall Street to promising companies. Another similarity in growth strategies that McDonalds and Wal-Mart seemed to be sharing is its stand versus the use of loyalty programs.

A blogger talked about how Wal-Mart and McDonalds are among the eight out of the top ten North American brand which refuses to hold customer hold and consumer loyalty through the use of loyalty programs. The blog pointed at Wal-Mart’s strategy in place of the very common loyalty programs, which is the maintenance of low prices among the goods for sale inside the store (which, in itself, was already a reward for consumers who want to be able to purchase items at the lowest cost possible).

The article also hinted about McDonald’s penchant to do the same, save for the fact that there are other “individual franchisees with loyalty programs which are usually found outside the country, something which the author refers to as the exception not the rule (Aneace Blogspot, 2008). ” While Wal-Mart’s strategy is by maintaining low prices, McDonalds’ style to compensate for the lack of loyalty programs is the presence of extensive promotional efforts.

Will McDonalds succeed to grow as a consequence of their strategic choices? McDonalds spends a huge amount of money for talented analysts and executives who are expected to make the best decision for McDonalds, especially when it comes to decisions that will affect strategic actions which in turn will impact directly on the long term and short term stability of the company. Whatever strategic choices McDonalds will take, there is no 100 percent guarantee of success of failure because there are unexpected factors that come into play that alter the projected course of strategic actions.

The only consolation is the fact that there are always reasonably long opportunities for McDonalds to make adjustments in case their strategic choices prove wrong or detrimental to the company’s future. Like in the past, McDonalds made both correct and incorrect strategic choices; the company was placed in a very bad position as well as in a very good position not because they made good or bad strategic choices, but simply because they opted to take action consistently. The only problem materializes once inaction comes into play.

References

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