Business Context: Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay McDonalds started with the two McDonalds brothers; Maurizio and Riccardo. They had the idea to design an assembly line that maximized space and minimized waste. Their idea would soon be recognized by Ray Kroc. A man who saw the genius in the two brothers' incredibly efficient production line and decided to open stores across America. It opened its first franchise store on April 15, 1955 in Chicago, Illinois. This store's unique selling point was its production line, which, when working properly, could produce more food products than any other restaurant, and in a fraction of the time. Leading to the birth of what we call the “Fast Food” industry. Soon after its opening it would become the most successful fast food franchise ever, no one else would be able to compete on the same level as McDonald's. It is now not only the largest food franchise in the world, but has over 35,000 outlets worldwide in places like Italy, China, Vietnam and South Africa. McDonald's is the most popular fast food franchise in history. INTERNAL FACTORS STRENGTHS (+) WEAKNESSES (-)1. McDonald's is the largest fast food network, operating in over 120 countries.2. Economy of scale, means that McDonald's can share fixed costs across thousands of locations, making McDonald's one of the cheapest places to eat in the world.3. Strong global brand: McDonalds and its “Golden Arches” are instantly recognizable to almost every individual in the world.4. It provides consistency to food, meaning you get the same taste whether you're eating a Big Mac in Los Angeles or Croatia.5. McDonald's also welcomes cultural diversity by adapting its menus based on the ethnicity and cultural background of the country it is located in.6. The franchise also benefits from diversified income. Because it has locations in over 120 countries, if domestic sales are down, it can offset this loss of revenue through Europe or South Africa. Therefore the company does not rely on a single source of income unlike most of its rivals who rely on almost 90% of domestic profits. This allows McDonalds to maintain steady cash flow and sustained profitability.1. Negative publicity: McDonald's is constantly criticized for its unhealthy menu. It had a major impact on the company's reach in the market and caused a huge number of people to not even consider having a meal at McDonald's due to its fatty, salty and carbohydrate-rich ingredients. Films and documentaries have been made demonstrating his health problems, furthering the destruction of his customer market.2. High employee turnover: Because jobs at McDonalds are low-skilled and low-paid, many of its employees do not take the job seriously or only take it for a very short period of time. High turnover causes training costs to skyrocket, impacting the company's bottom line and overall profitability.3. EXTERNAL FACTORS OPPORTUNITIES (+) THREATS (-)1. Menu Update: McDonald's is trying to add premium products to its outlets. Things like artisanal chicken breasts and sirloin burgers are already being added at some restaurants in America. It is also looking to enter competitive markets, such as caffeinated drinks from rivals like StarBucks. Keeping McCafe's prices competitive has had some impact on the market.2. McDonalds has also started producingfruit smoothies that are now available in most stores, broadening its market reach and attracting more health-conscious consumers. This will help repair some of the damage suffered due to his unhealthy menu.1. Competition: Competition from other national, international, regional and local food retailers is the main area of ​​concern for McDonalds franchising. It competes on the basis of price, service, product quality, convenience and menu variety. As time goes by, consumers' preference for natural and quality products is increasing and McDonalds must be able to meet these demands. Its main competition is Burger King and Wendy's.2. Health-Conscious Customers: Consumers around the world are looking to eat a healthier diet. The growing demand for organic produce, fresh fruits and vegetables, and all natural ingredients is a topic of great concern for McDonald's. Although McDonalds has very strict quality requirements, it faces fears that younger, more health-conscious consumers will harm productivity in the long run unless a change in strategy is made. ANALYSIS SUMMARY The fact is that although McDonalds boasts high profits and is currently the world leader in food retailing, it still has many growing threats, such as growing health awareness and competition from similar service outlets of catering. McDonald's is dominating the fast food industry now, however, it needs to start changing and adapting its strategies if it wants to maintain its success in the future. SWOT Analysis: Porter's Six ForcesCompetition: The market in which McDonald's operates has already been saturated easily make competitors the biggest threat to their business. The main competition between competitors is price. Since other fast food businesses like Burger King are largely based on the same business model as McDonalds, they also provide food of the same quality and low prices, making it extremely easy for consumers to change preferences from one store to another. There is also competition unrelated to price, for example on product features, customer service, delivery times and brand image. However, these are not the main threats posed by competitors. Price is the big concern. The large number of companies is a threat. High aggressiveness of companies. Low switching costs – meaning that because competitors often charge the same low prices as McDonald's, it is much easier for customers to move to a new restaurant. Adversaries Advertising Ability – the availability of advertising means that competitors can acquire an audience through capital shearing power. Threat of New Competitors – New competitors are putting pressure on existing organizations within an industry through their penchant for gaining market share. New entrants put a strain on existing industries due to prices, costs and the rate of investment needed to sustain the business. According to Michael Porter, there are various "barriers" that can block the threat of new entrants. These barriers in terms of McDonalds are: Economies of scale of McDonalds: McDonalds spreads the fixed costs over a huge volume of units, reducing the total cost per unit, making their prices almost unmatchable. This in turn prevents small businesses with less capital from penetrating the market. Brand preference plays an important role in fighting new market entrants. A well-established brand like McDonalds already has a huge customer base and people usually get influenced by.