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Ansoff Matrix McDonald's
Posted: 2014-09-13
Category: Marketing Plan
In this report we have applied the Ansoff Matrix to the McDonald and the products of McDonald. As McDonald is a company with ever changing products of its types. It needs to innovate its products on continues basis for this purpose; one of the most suitable marketing Models for the company is Ansoff Matrix. Here we present the ansoff matrix analysis or ansoff strategy for the Mc'Donald's Corporation.
BCG Matrix: According to BCG Matrix McDonalds is a star. The reason for this is its high mark et growth and high market share in the Pakistani market. On the other hand KFC a nd Pizza Hut are the cash cows because of their low growth rate and high market share. The BCG Matrix for McDonalds will help McDonalds in implementing the business level strategies for its business units. The analysis will first identify where the strategic business units of McDonalds fall within the BCG Matrix for McDonalds. Jul 30, 2018 BCG Matrix of McDonalds. The BCG Matrix for McDonalds will help McDonalds in implementing the business level strategies for its business units. The analysis will first identify where the strategic business units of McDonalds fall within the BCG Matrix for McDonalds. The financial services strategic business unit is a star in the BCG. The Boston Consulting Group (BCG) matrix was used to classify coconut export market into four groups, namely stars, cash cows, question marks and dogs. Professor Malcolm McDonald has been.
Mcdonald's Ansoff Matrix
Existing Products | New Products | |
Existing Markets | Market Penetration | Product Development Innovation in all products, Introduction of new products (Brands) |
New Markets |
Venezuela Yemen | Diversification Chipotle Mexican Grill |
McDonald Corporation often uses Ansoff Matrix's growth strategies, to focus on the firm's present and potential products and markets & customers by considering ways to grow via existing products and new products, and in existing markets and new markets. There are four possible product-market combinations of Ansoff Matrix of Mcdonald's are given. McDonald is often being involved in applying all Ansoff's Matrix four different growth strategies in the different markets round the globe as under:
McDonald is one of the most famous brands for providing innovations but even in this ever changing and innovative era it keeps its products same in the same market but this happen for a very short span of time (Even maximum a month). The results of firm's existing resources and capabilities remain secure and the firm increases market share if competitors reach capacity limits.
Product DevelopmentStrategy
McDonald's Corporation has always provided new and new innovations to its customers. It always has provided a handsome level of consumer economic surplus to its customers. McDonald's always seeks innovation from one market and provided these innovations and new products to the rest of the world. This strategy does have a minimal level of risk which almost always have provided good results to the organization for keeping the strength in its 47 million customers averaged daily existing customers. The mcdonald's growth strategy is the secret of organization's success.
Market Development
As we all know that McDonald's is a Global organization and it has the franchisee FDI system to reach the new global markets of work in its international business. It has more than 31,000 business outlets (franchisees) in 119 countries round the world and it always pursuit the additional market segments on geographical basis. As the firm is expanding into new markets; the market development strategy typically has more risk than a market penetration strategy for McDonald's but the developments of new markets have been proven significantly successful for McDonald's core competencies of its experience with a specific market segment.
Diversification
Diversification is not the best of the idea for the company because it can't afford to make new products in the new markets. It's actually not possible with the franchisee system that McDonald's adopts. Keeping aside from Franchisee system McDonald has also proved success in this strategy by owning a majority stake in Chipotle Mexican Grill & Pert A Manger and acquiring Donatos Pizza. McDonald's adopted both product and market development strategies which was outside the core competencies of the firm.
Note: This Ansoff Matrix Mcdonald's article was written a few years back. It is not essential that the same products of McDonald's fall in the same Ansoff Categories. For the Latest updates of McDonald's or any other Organization's Ansoff Analysis please Contact Us for the latest and unique content.
BCG Matrix
Mcdonald's Bcg Matrix Chart
The BCG matrix is a strategic management tool that was created by the Boston Consulting Group, which helps in analysing the position of a strategic business unit and the potential it has to offer. The matrix consists of 4 classifications that are based on two dimensions. These first of these dimensions is the industry or market growth. The other of these dimensions is the relative market share of the strategic business unit. Strategic business units are placed in one of these 4 classifications. The BCG matrix for McDonalds will help decide on the strategies that can be implemented for its strategic business units.
Strategic business units with high market growth rate and high relative market share are called stars. Businesses should invest in their stars and can implement vertical integration, market penetration, product development, market development, and horizontal integration strategies. Strategic business units with high market growth rate and low relative market share are called question marks. These strategic business units require close considerations whether the business should continue with them or divest. Strategic business units with low market growth rate but with high relative market share are called cash cows. The business should invest in these to maintain their relative market share. Lastly, the strategic business units with low market growth rate and low relative market share are called dogs. The business should divest these strategic business units.
BCG Matrix of McDonalds
The BCG Matrix for McDonalds will help McDonalds in implementing the business level strategies for its business units. The analysis will first identify where the strategic business units of McDonalds fall within the BCG Matrix for McDonalds.
Stars
- The financial services strategic business unit is a star in the BCG matrix of McDonalds. It operates in a market that shows potential in the future. McDonalds earns a significant amount of its income from this SBU. McDonalds should vertically integrate by acquiring other firms in the supply chain. This will help it in earning more profits as this Strategic business unit has potential.
- The Number 1 brand Strategic business unit is a star in the BCG matrix of McDonalds, and this is also the product that generates the greatest sales amongst its product portfolio. The potential within this market is also high as consumers are demanding this and similar types of products. McDonalds should undergo a product development strategy for this SBU, where it develops innovative features on this product through research and development. This will help McDonalds by attracting more customers and increases its sales.
- The Number 2 brand Strategic business unit is a star in the BCG matrix of McDonalds as McDonalds has a 20% market share in this category. It also the market leader in this category. The overall category is expected to grow at 5% in the next 5 years, which shows that the market growth rate is expected to remain high. McDonalds should use its current products to penetrate the market. This could be done by improving its distributions that will help in reaching out to untapped areas. This will help increase the sales of McDonalds.
Cash Cows
- The supplier management service strategic business unit is a cash cow in the BCG matrix of McDonalds. This has been in operation for over decades and has earned McDonalds a significant amount in revenue. The market share for McDonalds is high, but the overall market is declining as companies manage their supplier themselves rather than outsourcing it. The recommended strategy for McDonalds is to stop further investment in this business and keep operating this strategic business unit as long as its profitable.
- The Number 3 brand strategic business unit is a cash cow in the BCG matrix of McDonalds. This is an innovative product that has a market share of 25% in its category. McDonalds is also the market leader in this category. The overall category has been declining slowly in the past few years. McDonalds has the power to influence the market as well in this category. It should, therefore, invest in research and development so that the brand could be innovated. This will help the category grow and will turn this cash cow into a star. The overall benefit would be an increase in sales of McDonalds.
- The international food strategic business unit is a cash cow in the BCG matrix for McDonalds. This business unit has a high market share of 30% within its category, but people are now inclined less towards international food. This change in trends has led to a decline in the growth rate of the market. The recommended strategy for McDonalds is to invest enough to keep this strategic business unit under operations. If it no longer remains profitable and turns into a dog, then McDonalds should divest this strategic business unit.
Question Marks
- The local foods strategic business unit is a question mark in the BCG matrix for McDonalds. The recent trends within the market show that consumers are focusing more towards local foods. Therefore, this market is showing a high market growth rate. However, McDonalds has a low market share in this segment. The recommended strategy for McDonalds is to invest in research and development to come up with innovative features. This product development strategy will ensure that this strategic business unit turns into a cash cow and brings profits for the company in the future.
- The Number 4 brand strategic business unit is a question mark in the BCG matrix for McDonalds. This strategic business unit is a part of a market that is rapidly growing. However, this strategic business unit has been incurring losses in the past few years. It has also failed in the attempts made at innovation by research and development teams. The recommended strategy for McDonalds is to divest and prevent any future losses from occurring.
- The confectionery strategic business unit is a question mark in the BCG matrix for McDonalds. The confectionery market is an attractive market that is growing over the years. However, McDonalds has a low market share in this attractive market. The low sales are as a result of low reach and poor distribution of McDonalds in this segment. The recommended strategy for McDonalds is to undergo market penetration, where it pushes to make its product present on more outlets. This will ensure increased sales for McDonalds and convert this strategic business unit into a cash cow.
Dogs
- The plastic bags strategic business unit is a dog in the BCG matrix of McDonalds. This strategic business unit has been in the loss for the last 5 years. It also operates in a market that is declining due to greater environmental concerns. The recommended strategy for McDonalds is to divest this strategic business unit and minimise its losses.
- The Number 5 brand strategic business unit is a dog in the BCG matrix for McDonalds. This is operating in a market segment that is declining in the past 5 years. The company also has negative profits for this strategic business unit. However, it is expected that the market will grow in the future with environmental changes that are occurring. The recommended strategy for McDonalds is to invest in the business enough to convert into a cash cow. This will ensure profits for McDonalds if the market starts growing again in the future.
- The synthetic fibre products strategic business unit is a dog in the BCG matrix of McDonalds. The market for such products has been declining, and as a result of this decline, McDonalds has been facing a loss in the past 3 years. The market share for it is also less than 5%. The recommended strategy for McDonalds is to divest this strategic business unit to minimise any further losses.
- The artificially flavoured products strategic business unit is a dog in the BCG matrix for McDonalds. These products were launched recently, with the prediction that this segment would grow. However, with increasing health consciousness, people are now refraining from consumption of artificial flavours. The market is shrinking, and McDonalds has no significant market share. The recommended strategy for McDonalds is to call back this product.
Some of the strategic business units identified in the BCG matrix for McDonalds have the potential of changing from their current classification. For example, a dog changing to a cash cow. These have been identified in the BCG matrix of McDonalds and recommended strategies to ensure such change have also been made.
VRIO Framework
Bcg Matrix Template
The VRIO Framework or VRIO analysis is a strategic management tool that is used to analyse a firm's internal strengths and resources. It helps identify which one of its internal strengths and resources can be a source of sustained competitive advantage. The analysis is based on the idea that a firm's internal resources are a source of sustained competitive advantage if they are valuable, rare, cannot be imitated by competition, and are organised to capture value for the organisation. The VRIO analysis requires looking at a firm's resources based on these 4 factors.
Based on the analysis, each resource can either provide a sustained competitive advantage, has a good competitive advantage, temporary competitive advantage, competitive parity or competitive disadvantage. A sustained competitive advantage exists when a resource is valuable, rare, non-imitable and organised. A good competitive advantage occurs if it is valuable, rare, and non-imitable. A temporary competitive advantage exists if it is valuable and rare. A competitive parity occurs if it is only valuable. Lastly, the resource is a competitive disadvantage if it is neither of the 4. The analysis takes place in this order by first assessing whether a resource is valuable, rare, imitable and organised.
References
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