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Market and environmental analysis of McDonalds Corp – 2003.

Market and environmental analysis is an essential part of an organization’s External Analysis.

The main objectives of a market analysis are;
a) To determine how attractive a market is.
b) To understand the dynamics of the market and amend strategies accordingly.

Here we apply the dimensions of a Market Analysis to McDonalds corp.

1) Emerging submarkets;
McDonalds failed to recognize the changing trend in customer’s preferences to better tasting, fresher food. This trend led to new sub markets emerging for tastier, fresher and fast food perceived as healthier. A few of the smaller/privately owned competitors (Cosi and Quizno’s) were able to operate in niche markets …show more content…

With the rising immigrant population customers now had a choice of items. McDonalds realize this too late and try to counter this effect by introducing new burgers. However, the testing of the new menu does not gauge strongly enough the changing customer preferences and this poor planning led to its failure.
Internally changing trends were also blindsided. Franchisees who were the closest to customers were not included in decision making and were thus disgruntled. Here was the need to change the management style from top-down to bottom-up. This would have solved some of the issues plaguing McDonalds, by providing data on what customers want and what products would have a greater chance of success.

7) Key success Factors
McDonalds did have some strengths or key success factors;
a) Large number of franchises that led to economies of scale. This however contrasted to the ‘small is beautiful’ concept of the niche markets.
b) Complete training for franchisees to begin and run their own McDonalds proved to be a good team building exercise.
c) Cost of food was low due to economies of scale and economies of size. Moreover, McDonalds was able to negotiate a reasonable price for high quality food products.

McDonalds failed to realize the changing trends in the casual fast food markets, as a result of which, a large part of the market share was taken over by existing brands like Wendy’s and new players

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