Mcd SWOT SWOT

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The company only does one thing, so aggressive implies that it should expand geographically, and aggressively fill in good growth opportunities where it currently operates. These strategies are market penetration and market growth, the latter being especially important for McDonalds, since the company operates in a number of major countries in which it has a low market share.

In both the short and long-run, McDonalds should therefore focus on an aggressive growth strategy. Such an approach will leverage its advantages in order to capture a greater share of these markets. The result should be that McDonalds establishes a strong financial position for itself, and does so before many competitors can really even enter these markets. Indeed, if we look at the major Asian markets, McDonalds is only competing with Yum and Starbucks, so there is a lot of opportunity.

The SPACE matrix is applied to the entire business, which unfortunately leaves the breakfast question unanswered. McDonalds is essentially working with a defensive approach, but perhaps the aggressive approach is better. McDonalds has a lot of brand credit with consumers, and is an efficient operator.

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The problem is that before lunch, Starbucks is just as strong. McDonalds can only win back share by being competitive, which is not the strategy that the matrix recommends but might be better for making short-run gains.

Appendix A: McDonalds SWOT analysis

Strengths

Weaknesses

Opportunities

Threats

Highly profitable (20% net margin

Sluggish brand growth (51st overall)

APMEA growth (17.5% in FY08)

Competition from SBUX in breakfast ($10bn, mostly in a.m.)

Sound financial condition (1.14 current ratio)

Translation losses ($642m in Q1FY09)

Europe growth (11.1% in FY08)

Bad publicity (multiple activists, films)

Powerful brand ($33 billion value, 1st in industry)

Losses in Canada/Latin America for 3 years ($43.6m in FY08)

Cost savings measures enhance net income (up 80% last year

Struggles in China (40% price cut to increase sales)

Appendix B: SPACE Matrix

Competitive Advantage

Perceived Quality

-2

Market Share

-2

Brand & Image

-1

Product Life Cycle

-3

Average

-2

Industry Strength

Barriers to entry

3

Growth potential

3

Access to financing

6

Consolidation

2

3.5

Total x-axis

1.5

Financial Strength

ROA

5

Leverage

3

Liquidity

3

Cash Flow

5

4.....

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