Organizations do not exist in vacuum. They operate within a competitive industrial environment.

Analyzing its competitors not only enables an organization to identify its own strengths and weaknesses but also help to identify opportunities for and threats to the organization from its industrial environment. SWOT analysis is a systematic analysis of these factors and the strategy that reflects the best match between them. Let us analyze these principals in relation to the core competence of McDonalds, one of the largest food chain companies in the world. Let us first start with the strengths and the positive aspects which define the performance of this company. How can we define the company's strengths? Strength is a distinctive competence that gives the firm a comparative advantage in the market place. For instance financial resources, image, market leadership and buyer supplier relations etc McDonalds is the no: 1 fast food chain stores with a 40 million customers visiting it per day. It has over 30,000 branches in 120 countries. It derives 80% of its revenues from eight countries like Canada, Brazil, Germany, France, Japan, UK, Australia and US. The greatest strength was creating an image in the minds of the people and introducing them to the fast food culture. Delivery speed, customer care and cleanliness are the core strengths on which these stores expanded. They created a corporate symbol and their advertisement campaigns were highly successful in establishing the brand image and logo in the minds of the millions. Two main competitors generally identified with McDonalds are the Burger King and the KFC. McDonalds marketing strategy is concerned with the internal resources, external environment and its basic competencies along with its share holders. McDonald's product value is also its greatest strengths. Customers know what to expect when they walk into a McDonalds store. It gives great emphasis to human resources by satisfying both the customer and the employees. Next is the innovation aspect wherein new products line up to catch up with the new trends and tastes of the people. Its diversity into other new business ventures can also be considered as its strengths. How effective are these strengths to the company in the long run? McDonalds today is not that amendable as it was during its inception. What are the driving factors which results in its present decline in terms of sales and services? To analyze this factor we have to look at the weaknesses part of the companies business and marketing strategy. What can generally be termed as a weakness of a company? The same factors which were considered as strengths also become a weakness if it impedes the overall performance of the company. Customer trends change and so does their choices. People are generally tired of the same brands that they had been using over the years, so when they do not see the expected innovation they migrate to new brands. Moreover people see McDonalds every where and this over exposure might

also be a reason for abstinence. Moreover maintaining the standards of such a huge chain becomes feasible and when there is lack of quality service in one store it effects the whole brand. The secret of any marketing strategy is to reach the target audience. And here again the target audience should be chosen carefully. In the case of McDonalds as projected in its ads, the targeted audiences were the kids. Demographics and customer financial and psychological aspects define a business concerns success. Health conscious women and senior citizen comprise the major population but kids soon grow out to become adults. Recent law suits and documentaries resulted in the companies recent innovation and a major change related to health related product ranges and this switch over as per the needs of today's trend and needs has increased the lost popularity of McDonalds a bit. All the above factors point out the external strengths and weaknesses. There are also internal factors which affect the performance and overall benefits the company stands to enjoy. Kids based marketing strategy which was earlier a weakness has changed since 2003. Now more teenagers and adults rule the McDonalds ad world. The research and develop which lacked earlier is also looked into and the brand quality is being defined with various research and development options today. McDonald at one stage started concentrating on expansion and growing big that it missed out on key factors like quality maintenance and R&D. One major threat to any brand is its relationship between the management and the franchise dealers. Organization strength is the back bone of any concern and when that starts shaking the whole system will collapse. But slowing McDonald is recovering from all these weaknesses as its brand managers can easily communicate, compare and improve their services through the latest technological developments wherein they can use the internet to motivate, compare and improve upon other centers performances. The overall analysis of all the external and internal strengths and weaknesses on this company should be linked in order to draft a sustainable plan for the companies' further improvement. For any improvement or expansion the internal resources must be readily available. And thus analyzing this aspect can lead to a modified strategy to suit its vision. Keeping in mind the available resources the planner should think globally. Hence making use of all the core competencies the firm can definitely sustain in the competitive market. The change in the top managerial level has creating a new wave in its performance and major changes have been implemented to retain and sustain the brand quality and innovation. As the new CEO rightly quotes,

"The world has changed. Our customers have changed. We have to change too." James R. Cantaloupe, Chairman and CEO, McDonald's, 2003 Now let us analyze the sustainable competitive advantage of the company. What is sustainable competitive advantage? How can it be related to McDonalds? SCA is the advantage a company has which is difficult or impossible for other companies to possess or break through. It can either be the brand, dynamic customer care, cost structure or its patent. Whatever the advantage in order to be considered as sustainable it should either be proprietary or distinctive. Other than this three different aspects that help in SCA are, o The managerial and organizational process should share a good integration and coordination. The much needed 'value' is created thereby as everyone strives to work for a common goal. The organization should learn and bring about changes according to the need of the hour and should always be flexible to changes in the environment such as customer trends, legal or government restriction and developments in the technology. McDonalds is presently concentrating on this advantage by concentrating on organizational behavior and managerial expertise. Previously this advantage was ignored as the organization was more into expansion of its outlets over the globe than strengthening its core advantage. As the result the revenue did not see much of a change while newer outlets were open. The company suffered a massive loss first time since their inceptions which further lead to the change in the managerial heads. o Technological, structural and financial assets of a company are excellent market position which helps in the SCA. McDonalds no doubt is abundant with such aspects like structure, technology and finance. To identify and implement these assets in the proper direction towards the improvement of the company is all that is needed. After 2003 the company has really started to concentrate on its greatest advantages. o Most of all the greatest advantage is the vision or the dream with which the company was started. Sustaining this dream over the years is any companies' greatest advantage. A brand usually revolves around this vision sustaining this vision and working in lieu with it is a great SCA. McDonalds was started out to help people who had very little time to cook or was too busy to get into a proper restaurant. The vision was to provide quick service, cheap products and quality satisfaction. Keeping this vision in mind the company which slackened a bit because of incompetent franchise holders is being weeded and new and better people are put in this place as the torch bearers of the company sustaining and living the vision.

To sum it all up SCA means implementing the best value based strategy using all the advantages which are unique to the company and that which cannot be copied or replicated by other competitors. The importance of this SCA can be evident by the reply the great investment guru Warren Buffet gave when asked about how he evaluates his investment portfolio. He simply answered 'sustainable competitive advantage'. Hence based on the dynamic integrated and intelligent human resources can always be the only dependable and sustainable SCA. Outsourcing boom or doom in today's business environment Today everything is outsourced from employee appointment to finance and customer care. No organization is best enough to handle all kinds of work. Moreover concentrating on every detail is not possible with a big concern especially like McDonalds. But great care should be taken not to outsource the core competences of the company. General advantages of outsourcing are cheap service, knowledge of markets offshore, flexible resources, speedy operations, expansion in supplier relationship etc. most of all the company can concentrate on its core competencies and outsource rest of its operation. Recently McDonald has tested its drive through order facility. Wherein it makes sure that the order placed with the outlet is accurate. The order taken by the outsourced company is reverted back to the home restaurant. These call center has a digital camera which clicks the vehicle you drive through and the delivery man back home can integrate the order and the person who placed it using the image of the car. Outsourcing thus helps in the increase of the external suppliers and fills up the difficulties faced because of the lack of the latest technologies and other innovations. What started of as a success story with McDonalds had to face a number of risks, competitions and major set backs. What makes it still strong and ranked among the top business concerns is its core competences and the sustainable competitive advantages both internal and external. Of course keeping up with the changing times the company has also set foot in outsourcing but the point to keep in mind here is not to be driven away by this outsourcing mania. This company has started to revert back to its golden glory recently because of large scale revamping of its organizational and structural changes being implemented. Conclusion: No particular competitive strategy is guaranteed to achieve success at all times. Risk attitudes can change and vary by industry volatility and environmental uncertainty and several internal conditions also might be involved. Thus the "four P's" of marketing (product, price, place and promotion) provide a good starting point for consideration of the requirements of strategy implementation in the marketing function. The mix of these marketing elements should be appropriate and the plans for each of the elements should also be appropriate.

The marketing function is consumer oriented and hence marketing decisions are based on the careful identification of consumer needs and on the design of marketing strategies to meet those needs. The distribution system brings the product or service to the place where in can best fill customer needs. Access to distribution can mean all the differences between success and failure for a new product. Because many products require support from distribution channels in the form of prompt service, rapid order processing etc the choice of distributors, wholesalers and jobbers is extremely important. Promotion is more than advertising. The location, size and nature of markets which the business strategy defines will guide promotion mix decisions and should indicate the content of promotional material as well. Pricing is a complex issue because it is related to cost, volume, trade offs etc and because it is frequently used as a competitive weapon. Pricing policy changes are likely to provoke competitor response. Using price to jockey for position can lead to price wars, which usually hurt all participants. Marketing has received increasingly greater attention in the competitive business since the early modern era. The old concept of marketing focused on the firms existing products and considered marketing to consist of selling and promotion to maximize sales at a profit. The new concept however focuses on the firms existing potential customers and seeks to earn profit through customer satisfaction with an integrated marketing program. I am a freelance writer inspirational and hard working. For me work is worship. I love to do deadline oriented jobs as it is a great test to my vitality, skill and my creativity. I have an unending passion to learn more things. I learn from my failures and drive through success equally.

Article Source: http://EzineArticles.com/687438

McDonalds Restaurants
McDonalds is the largest user of beef in Europe. 89000 cattle a week are needed to satisfy their beef requirement in the UK. The first McDonalds UK restaurant was opened in 1974 and they now have over 1200. McDonalds operates in the fiercely competitive burger market and you might imagine that it purchases the lowest price beef from anyone in the world. In fact, all of their European sold beef is supplied from Europe and the great majority of their British sold beef is sourced from Britain. Reduce product variability _ Better manage the problem of carcase balance _

Improve product quality _ Streamline administration _

Reduce handling and movement _

Our philosophy at McDonalds is to develop a collaborative approach with our suppliers. We are committed to sharing best practice with all our suppliers including the beef farmers who benefit from this commitment because it helps improve quality and increase value. David Thomas, Senior Agricultural Assurance Manager, McDonalds
Red Meat
Produced in partnership with

Sept 2003 Case Study

Food Chain Centre at IGD Grange Lane Letchmore Heath Watford Herts WD25 8GD Tel: 01923 857141 Fax: 01923 852531 Email: foodchaincentre@igd.com www.foodchaincentre.com PO Box 44 Winterhill House Snowdon Drive Milton Keynes MK6 1AX Tel: 01908 844701 Fax: 01908 609221 Email: info@rmif.org.uk www.mlc.org.uk/forum/

RMIF 2 Supplier Relationships

Esca Food Solutions Ltd. (formally known as McKey Food Service Ltd) was founded in 1978 and is the exclusive supplier of beef patties to McDonalds UK. Production takes place at two plants located in Milton Keynes and Scunthorpe. As a modern plant, dedicated to the needs of its customer, Esca quickly adopted Lean and efficient principles. It then translated and applied these principles throughout its supply chain, proving that Lean methods can reduce costs and enhance value to the benefit of all in the chain. The BSE crisis of 1996 was a landmark for McDonalds and Esca. Traceability and product integrity became even more important. They introduced a policy of information sharing and transparency, made possible by a sense of teamwork throughout the chain. Re-enforcing the Lean and efficient strategy, Esca Food Solutions reduced their abattoir supply base, helping to develop closer relationships including with beef farmers. Today, 14 abattoirs in the UK and Ireland provide all of McDonalds British Isles beef. Forequarter and flank is used to produce the famous hamburger patty. Each abattoir therefore also needs a good outlet for the hindquarter and this is mainly achieved through long term relationships with multiple retailers. Carcase balance is therefore less of a problem for McDonalds suppliers.

Supplier Alliance programme

Esca Food Solutions has worked with the abattoirs to develop industry leading practices through a Supplier Alliance programme.
Food Chain Centre at IGD Grange Lane Letchmore Heath Watford Herts WD25 8GD Tel: 01923 857141 Fax: 01923 852531 Email: foodchaincentre@igd.com www.foodchaincentre.com PO Box 44 Winterhill House Snowdon Drive Milton Keynes MK6 1AX Tel: 01908 844701 Fax: 01908 609221 Email: info@rmif.org.uk www.mlc.org.uk/forum/

RMIF 3

Our beef patties are only as good as the meat that goes into them and to ensure a consistent supply of quality raw materials we have to have knowledge and control of the supply chain back to its origin. McDonalds and their customers expect nothing less. Peter Mitchell, Esca Food Solutions Ltd.
Esca Food Solutions, as McKey Food Service have always had a close relationship with their suppliers but following the BSE crisis of 1996 it decided that much more was needed. Before 1996, traceability was rudimentary and feed knowledge was basic. The abattoirs and their supplying farmers must comply with the Esca policy on: _ Animal Welfare Guidelines during Transport and Slaughter _ Code of Practice for Slaughterhouses and De-boning Plants _ Beef Raw Material Specification _ Code of Practice for the Supply of Cattle Now, Escas suppliers build close relationships with farmers and hold their details on a computer database. All cattle are sourced direct from the beef farmer rather than an agent or market. There is a genuine partnership feel to the relationship and openness is expected at all levels.
Food Chain Centre at IGD Grange Lane Letchmore Heath Watford Herts WD25 8GD Tel: 01923 857141 Fax: 01923 852531 Email: foodchaincentre@igd.com www.foodchaincentre.com PO Box 44 Winterhill House Snowdon Drive Milton Keynes MK6 1AX Tel: 01908 844701 Fax: 01908 609221 Email: info@rmif.org.uk www.mlc.org.uk/forum/

RMIF 4
Each farmer complies with standards as part of the Code of Practice for the Supply of Cattle: _ Minimum rearing standards _ Complete feed records on the finishing farm _ Traceability back to birth _ National Farm Assurance membership _ No more than 3 movements between birth and abattoir In return, the farmers enjoy long-term security knowing they are a part of an efficient supply chain. We are committed to long-term relationships with our suppliers. Through openness and trust we are developing a beef supply chain that is sustainable and industry leading and most importantly, one from which all parties can achieve a realistic return. Peter Mitchell, Esca Food Solutions Ltd And this is endorsed by Ronnie Vincent, Goulds Farm, Wincanton, Somerset, a beef supplier to Southern Counties Fresh Food - Escas largest single supplying abattoir. The reason I joined the Southern Counties Producer Club is that I receive more information feedback which allows me to improve the quality of cattle finishing. I have a good relationship with Southern Counties and I also benefit from regular feedback from the purchasing team who keep me informed of customer concerns and developments.

Ronnie Vincent The Supplier Alliance programme also benefits abattoirs. For example, it has helped Southern Counties Fresh Foods, the largest supplier to Esca in the UK, increase throughput by 50%.

Improving Performance
A key part of the McDonalds philosophy is continuous improvement, not only in the restaurants but with its primary and secondary suppliers as well.
Food Chain Centre at IGD Grange Lane Letchmore Heath Watford Herts WD25 8GD Tel: 01923 857141 Fax: 01923 852531 Email: foodchaincentre@igd.com www.foodchaincentre.com PO Box 44 Winterhill House Snowdon Drive Milton Keynes MK6 1AX Tel: 01908 844701 Fax: 01908 609221 Email: info@rmif.org.uk www.mlc.org.uk/forum/

RMIF 5
McDonalds has developed a supplier quality index (SQI) by which all suppliers are measured. It allows the company to monitor performance of suppliers across the many agricultural and nonagricultural products and services purchased. There is a philosophy of sharing best practice across all suppliers where common issues are discussed at regular meetings. McDonalds also conducts regular audits of each supplier including the two plants of Esca Food Solutions Ltd. It has also commissioned the European Food Safety Inspection Service (EFSIS) to audit and accredit all meat suppliers. All Esca Food Solutions suppliers in turn are subject to audits: _ One in-depth technical audit per year usually taking 2 full days. _ Traceability audits unannounced three times each year for every supplier including farm visits. _ Animal welfare audits. _ SRM Audits. _ Product integrity audits. _ Third party audits, carried out by EFSIS. As part of the McDonalds continuous improvement philosophy, Esca has introduced a sophisticated system of monitoring performance of its meat suppliers. Based on a number of Key Performance Indicators (KPIs) the system benchmarks quality performance both against other suppliers and past performance. The system operates in real-time, with all suppliers linked to Esca via an Internet platform known as Osi-link (after Escas parent company the OSI Group). It provides access to data showing the performance of each delivery, including: _ Meat intake analysis _ Temperature on arrival _ Chemical Lean Content _ Microbiological Results _ Physical assessment Suppliers receive a monthly summary report of performance with supplier league tables.
Food Chain Centre at IGD Grange Lane Letchmore Heath Watford Herts WD25 8GD Tel: 01923 857141 Fax: 01923 852531 Email: foodchaincentre@igd.com www.foodchaincentre.com PO Box 44 Winterhill House Snowdon Drive Milton Keynes MK6 1AX Tel: 01908 844701 Fax: 01908 609221 Email: info@rmif.org.uk www.mlc.org.uk/forum/

RMIF 6
Performance trends prove the value of this approach. Through time the best scores have not only improved but the range of scores has

narrowed, showing that measurement and sharing of best practice helps everyone to improve. The long term commitment between SCFF and its suppliers has led to a substantial improvement in cattle achieving target specification. Those farmers who supply at least 92% of cattle in specification become part of the Southern Counties Gold Club. All members of their Producer Club receive a regular Newsletter and maintain close contact through Southern Counties fieldsmen who help and advise with cattle selection and more.

Food Animal Initiative

McDonalds with Tesco are also joint founders of the Food Animal Initiative at Oxford. FAIs main objectives are: _ To develop sustainable farm systems that provide benefits to animal welfare, the environment and human health. _ To demonstrate the success of these systems through practical and commercial application. _ To supply knowledge and training to commercial farmers. McDonalds also support the Blade Farming initiative (see separate case study).

Conclusions
McDonalds operates in a famously competitive market and delivers good value for consumers. How does McDonalds achieve this? _ Not by searching on the commodity market for the lowest cost suppliers. It sources only from dedicated suppliers. _ Not at the expense of safety or quality. It operates an extremely strict auditing regime. _ Not by pressurising suppliers. It believes in a policy of paying for performance and long term sustainability for suppliers. The secret is a Lean and efficient chain via rigorous measurement, the spreading of knowledge and a real sense of teamwork.