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SWOT Matrix

                              Strengths                            Weaknesses
                              1. Veryeffective and well-           1. Lowest Customer satisfaction
                                 known advertising.                   rating in the industry.
                              2. Robust employee training.         2. Core product line out of sync
                              3. Strongest Brand Image.               with healthy lifestyle trends.
                              4. Recognized as a community         3. High employee turnover in
                                 oriented,socially responsible.       their restaurants.
    Internal Factors          5. Strong Global Presence
                              6. Use pure ingredients and take
                                                                   4. 80% of restaurants are
                                                                      franchise owned.
                                 food safety and hygiene very      5. Assembly line approach makes
                                 seriously.                           it difficult and costly to adapt
                              7. Constantly solid financial        6. Over-saturation of real estate
                                 performance.                         in the US.
                              8. Strong     innovation     and     7. Foreign currency revenue and
                                 product development.                 debt.
                              9. Economies of Scale                8. Struggles with fluctuations in
                                                                      operating and net profits.

                              Opportunities                        Threats
                              1. High Potential Growth in          1. More health conscious
                                 Quick Service Restaurant             customers.
                                 industry.                         2. Food contamination could
                              2. Inclusion of Low fat, low            damage sales, reputation, etc.
                                 calorie, healthy hamburgers.      3. Negative public opinion
                              3. Diversify portfolio                  campaigns
    External Factors          4. Breakfast still not available
                                 at 25% of locations.
                                                                   4. Brand equity at risk.
                                                                   5. Markets in US and EU are
                              5. Emergence of Healthier               mature and saturated.
                                 lifestyle trends.                 6. Global economic recession
                              6. Potential for joint ventures      7. Competitors expanding into
                                 with retailers.                      developing markets.
                              7. International expansion into      8. Intense price pressure from
                                 emerging markets.                    competitors.
                              8. Increased beverage options.
                              9. Focus on corporate social
                                 responsibility, sustainability.




SPACE Matrix:


1. A set of variables is selected to define Financial Strength, Competitive Advantage,
   Environment Stability, and Industry Strength.
2. A numerical value is assigned to each variable ranging from +1 (worst) to +5 (best) that make
   up the FS and IS dimensions. Similarly, a numerical value ranging from –1 (best) to –6
   (worst) is assigned to each of the variables that make up the ES and CA dimensions.

3. Then, average score is computed by summing the values given to the variables of each
   dimension and dividing the number of variables included in the respective dimension.


4. Adding the two scores on the x-axis and plotting the resultant point on X-Axis and similarly
   for the Y-Axis gives thexy-point.

5. A directional vector from the origin of the SPACE Matrix through the new intersection
   point tells the type of strategies recommended for the organization: aggressive,
   competitive, defensive, or conservative.


Financial                 Rating             Environment                    Rating
Strength                                     Stability

Return on Investment      4                  Inflation                      -3
Debt                      4                  Demand                         -3
Net Income                6                  Competitive Pressure           -3
EPS                       5                  Barriers to entry              -3
Cash Flow                 5                  Business Risk                  -2
Average                   4.8                Average                        -2.8
Y-Axis: 4.8-2.8= 2.0

Competitive               Rating            Industry Strength               Rating
Advantage

Market Share              -1                Growth potential                5
Product Quality           -1                Financial Stability             5
Customer Loyalty          -1                Ease of Entry                   4
Control Over Others       -2                Profit Potential                4
                                            Demand Variability              3
Average                   -1.25             Average                         4.2
X-Axis: -1.25+4.2= 2.95




X axis
Industry Strength               +4.20        (+1 worst to +5 best)
Competitive Advantage           -1.25        (-1 best to -5 worst)
X-Axis: -1.25+4.2= 2.95

Y axis
Financial Strength            +4.80          (+1 worst to +5 best)
Environment Stability         -2.80          (-1 best to -5 worst)
Y-Axis: 4.8-2.8= 2.0

                                   F                         (2.95, 2.00)
                                  __ __
            Conservative          __ __        Aggressive
                                  __ __
                                  __ __
                                  __ __
                                  __ __
C                                                                       I
                                  __ __
                                  __ __
                                  __ __
                                  __ __
              Defensive           __ __        Competitive
                                  __ __

                                      S




BCG Matrix


Divisions                  Revenues        Profits(OI)      Market Share       % Industry
                                                             Position         Growth Rate
United States               $8,078,300       $3,059,700          1               weak
Europe                       9,922,900        2,608,000          1               weak
APMEA                        4,230,800          818,800          1               good
Other Countries &            1,290,400         (43,600)          1               good
Corporate

Total                      $23,522,400       $6,442,900           1

Looking at Exhibit 8, Mcdonald’s out powers its rivals in revenues, market cap, number of
employees by a large margin. Hence, in relative market share, it certainly is on the higher
side.
As the industry growth also lies in medium to high range for this category, thus we can
conclude that according to the BCG Matrix, McDonald’s fall in the stars category.
Vipul mc d_swot_space_bcg

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Vipul mc d_swot_space_bcg

  • 1. SWOT Matrix Strengths Weaknesses 1. Veryeffective and well- 1. Lowest Customer satisfaction known advertising. rating in the industry. 2. Robust employee training. 2. Core product line out of sync 3. Strongest Brand Image. with healthy lifestyle trends. 4. Recognized as a community 3. High employee turnover in oriented,socially responsible. their restaurants. Internal Factors 5. Strong Global Presence 6. Use pure ingredients and take 4. 80% of restaurants are franchise owned. food safety and hygiene very 5. Assembly line approach makes seriously. it difficult and costly to adapt 7. Constantly solid financial 6. Over-saturation of real estate performance. in the US. 8. Strong innovation and 7. Foreign currency revenue and product development. debt. 9. Economies of Scale 8. Struggles with fluctuations in operating and net profits. Opportunities Threats 1. High Potential Growth in 1. More health conscious Quick Service Restaurant customers. industry. 2. Food contamination could 2. Inclusion of Low fat, low damage sales, reputation, etc. calorie, healthy hamburgers. 3. Negative public opinion 3. Diversify portfolio campaigns External Factors 4. Breakfast still not available at 25% of locations. 4. Brand equity at risk. 5. Markets in US and EU are 5. Emergence of Healthier mature and saturated. lifestyle trends. 6. Global economic recession 6. Potential for joint ventures 7. Competitors expanding into with retailers. developing markets. 7. International expansion into 8. Intense price pressure from emerging markets. competitors. 8. Increased beverage options. 9. Focus on corporate social responsibility, sustainability. SPACE Matrix: 1. A set of variables is selected to define Financial Strength, Competitive Advantage, Environment Stability, and Industry Strength.
  • 2. 2. A numerical value is assigned to each variable ranging from +1 (worst) to +5 (best) that make up the FS and IS dimensions. Similarly, a numerical value ranging from –1 (best) to –6 (worst) is assigned to each of the variables that make up the ES and CA dimensions. 3. Then, average score is computed by summing the values given to the variables of each dimension and dividing the number of variables included in the respective dimension. 4. Adding the two scores on the x-axis and plotting the resultant point on X-Axis and similarly for the Y-Axis gives thexy-point. 5. A directional vector from the origin of the SPACE Matrix through the new intersection point tells the type of strategies recommended for the organization: aggressive, competitive, defensive, or conservative. Financial Rating Environment Rating Strength Stability Return on Investment 4 Inflation -3 Debt 4 Demand -3 Net Income 6 Competitive Pressure -3 EPS 5 Barriers to entry -3 Cash Flow 5 Business Risk -2 Average 4.8 Average -2.8 Y-Axis: 4.8-2.8= 2.0 Competitive Rating Industry Strength Rating Advantage Market Share -1 Growth potential 5 Product Quality -1 Financial Stability 5 Customer Loyalty -1 Ease of Entry 4 Control Over Others -2 Profit Potential 4 Demand Variability 3 Average -1.25 Average 4.2 X-Axis: -1.25+4.2= 2.95 X axis Industry Strength +4.20 (+1 worst to +5 best) Competitive Advantage -1.25 (-1 best to -5 worst) X-Axis: -1.25+4.2= 2.95 Y axis
  • 3. Financial Strength +4.80 (+1 worst to +5 best) Environment Stability -2.80 (-1 best to -5 worst) Y-Axis: 4.8-2.8= 2.0 F (2.95, 2.00) __ __ Conservative __ __ Aggressive __ __ __ __ __ __ __ __ C I __ __ __ __ __ __ __ __ Defensive __ __ Competitive __ __ S BCG Matrix Divisions Revenues Profits(OI) Market Share % Industry Position Growth Rate United States $8,078,300 $3,059,700 1 weak Europe 9,922,900 2,608,000 1 weak APMEA 4,230,800 818,800 1 good Other Countries & 1,290,400 (43,600) 1 good Corporate Total $23,522,400 $6,442,900 1 Looking at Exhibit 8, Mcdonald’s out powers its rivals in revenues, market cap, number of employees by a large margin. Hence, in relative market share, it certainly is on the higher side. As the industry growth also lies in medium to high range for this category, thus we can conclude that according to the BCG Matrix, McDonald’s fall in the stars category.