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SWOT Analysis McDonald's Strengths

McDonald's has been a thriving business since 1955 and 20 of the top 50 corporate staff employees started as a restaurant level employee. In addition, 67,000 McDonalds restaurant managers and assistant managers were promoted from restaurant staff. Fortune Magazine 2005 listed McDonald's as the "Best Place to Work for Minorities." McDonalds invests more than $1 billion annually in training its staff, and every year more than 250,000 employees graduate from McDonald's training facility, Hamburger University.

The business is ranked number one in Fortune Magazine's 2008 list of most admired food service companies. One of the world's most recognizable logos (the Golden Arches) and spokes character (Ronald McDonald the clown). According to the Packard Children's Hospital's Center for Healthy Weight children age 3 to 5 were given food in the McDonalds packaging and then given the same food without the packaging, and they preferred the food in the McDonald's packaging every single time. McDonalds is a community oriented, socially responsible company. They run Ronald McDonald House facilities, which provide room and board, food and sibling support at a cost of only $10 a day for families with children needing extensive hospital care. Ronald McDonald Houses are located in more than 259 local communities worldwide, and Ronald McDonald Care Mobile programs offers cost effective medical, dental and education services to children. They also sponsor Olympic athletes. They are a global company operating more than 23,500 restaurants in 109 countries. By being spread out in different regions, this gives them the ability to weather economic fluctuations which are localized by country. They can also operate effectively in an economic downturn due to the social need to seek out comfort foods. They successfully and easily adapt their global restaurants to appeal to the cultural differences. For example, they serve lamb burgers in India and in the Middle East, they provide separate entrances for families and single women. Approximately 85% of McDonald's restaurant businesses world-wide are owned and operated by franchisees. All franchisees are independent, full-time operators and McDonald's was named Entrepreneur's number-one franchise in 1997. They have global locations in all major airports, and cities, along the highways, tourist locations, theme parks and inside Wal-Mart. They have an efficient, assembly line style of food preparation. In addition they have a systemization and duplication of all their food prep processes in every restaurant. McDonald's uses only 100% pure USDA inspected beef, no fillers or additives. Additionally the produce is farm fresh. McDonald's serves 100% farm raised chicken no fillers or additives and only grade-A eggs. McDonald's foods are purchased from only certified and inspected suppliers. McDonalds works closely with ranchers, growers and suppliers to ensure food quality and freshness.

Provide optional allergen free food items. beverage and convenience categories. but also mean that restaurants get increasing numbers of customer visits. Nutrition information is printed on all packaging and more recently added to the McDonald's Internet site. Newman's Own Salad Dressings. roasted chicken. Nestle Chocolate. • • Weaknesses • Their test marketing for pizza failed to yield a substantial product. such as gluten free and peanut free. they could provide more upscale restaurant settings. like the one they have in New York City on Broadway. • • • Opportunities • In today's health conscious societies the introduction of a healthy hamburger is a great opportunity. McDonalds are required to run through 72 safety protocols every day to ensure the food is maintained in a clean contaminate free environment. Dasani Water.433 million (2006) and $3. In 2009 McDonald's saw the full benefits of a venture into beverages. McDonald's have problems with fluctuations in operating and net profits which ultimately impact investor relations. McDonalds offers salads. For example. fruit. They would be the first QSR (Quick Service Restaurant) to have FDA approval on marketing a low fat low calorie hamburger with low calorie combo alternatives. $3.602 million (2005). More than 2000 inspections checks are performed at every stage of the food process.984 million (2005) $4. . They have yet to capitalize on the trend towards organic foods. • • • Threats .879 million (2007). In 2008 the business directed efforts at the breakfast. Kraft Cheese. McDonald's was the first restaurant of its type to provide consumers with nutrition information. High employee turnover in their restaurants leads to more money being spent on training. hot specialist coffees not only secure sales. Currently McDonald's and its competition health choice items do not include hamburgers. Formica restaurant settings. Leaving them much less able to compete with fast food pizza chains. McDonald's takes food safety very seriously.• McDonalds only serves name brand processed items such as Dannon Yogurt. They have industrial. Minute Maid Juice. Net profits were $2. to appeal to a more upscale target market.395 million (2007).544 million (2006) and $2. chicken. Heinz Ketchup. Operating profit was $3. bottled water and other low fat and calorie conscious alternatives.

allegedly with addictive additives.00K 8. Starbucks.27 18. • • • McDonald's is the leading global foodservice retailer with more than 31.91B 420.55M 7.32B 2. playgrounds and popular movie character tie-ins.80 PVT1 N/A 38. where he went on an all McDonalds diet for 30 days and wound up getting cirrhosis of the liver.8841 N/A 2. Any contamination of the food supply.71B 30. Due in part to the documentary.20 0. Children grow up eating and enjoying McDonalds and then continue into adulthood. In 2004.89 . They have been criticized by many parent advocate groups for their marketing practices towards children which are seen as marginally ethical.71% 5. Michael Spulock filmed the documentary Super Size Me. More than 75% of McDonald's restaurants worldwide are owned and operated by independent local men and women. contributing to the obesity epidemic in America. Taco Bell.580 15.000 9.62B 15. This documentary was a direct attack on the QSR industry as a whole and blamed them for America's obesity epidemic.46% 2.75% 76. Wendy's. McDonalds no longer pushes the super size option at the dive thru window. McDonald's Corporation Common S (MCD) 99. They entice children as young as one year old into their restaurants with special meals.52M 30.45B 60.06(0. toys.• They are a benchmark for creating "cradle to grave" marketing. especially e-coli. Major competitors.43 20.00% 414.76% 1.01B 39.80M1 N/A N/A PVT2 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A YUM 30.74 24.80% 27.50B 5.40% 12.14 Industry 465. KFC and any midrange sit-down restaurants.63B 26.57% 9.06%) Competitors Direct Competitor Comparison MCD Market Cap: Employees: Qtrly Rev Growth (yoy): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Operating Margin (ttm): Net Income (ttm): EPS (ttm): P/E (ttm): 100. like Burger King.50B1 N/A N/A N/A 186.78% N/A 0.000 local restaurants serving more than 58 million people in 118 countries each day. They have been sued multiple times for having "unhealthy" food.62M 6.

08% -0.41 1. Inc.14 15.View Profile Private . LLC Symbol MCD YUM DRI SBUX EAT Price 99.A.14B P/E 18.19 16.50 2. (privately held) Pvt2 = Doctor's Associates Inc. (privately held) YUM = Yum! Brands.91B 30.View Profile Private .73B 2. Inc.View Profile Private .28 29. Inc..41B 36. Wendy's International.95 Pvt1 = Burger King Holdings..29% Market Cap 100.PEG (5 yr expected): P/S (ttm): 1. Inc. Inc. Amazon lead Fortune's 'most admired' list at bizjournals.80 24. Brinker International Inc. . Darden Restaurants.77 3.24 Change -0.75 27.com Fri 6:55am All Headlines for these symbols. Industry = Restaurants 1 = As of 2010 Restaurant Companies Ranked By Sales Company McDonald's Corp.93 48.View Profile View Restaurants Industry Center News on Direct Competitors • • • • • • YUM China Won't Rival American Wealth For Decades at Forbes Fri 12:00pm YUM Y! Are There So Many Y!s? at The Wall Street Journal Fri 11:57am YUM Early Glance: Restaurant companies AP Fri 10:32am YUM China's Missing Ingredients at Motley Fool Fri 9:59am YUM Impressive Q4 from Wendy's Zacks Fri 8:00am YUM Apple. Starbucks Corporation Autogrill S.18% -0.42% 0.45B 6.17% -0.p.07 66. Currency in USD. Google. Yum! Brands.22 0.View Profile Private .13 49. KFC Corporation Whitbread PLC OSI Restaurant Partners.74 N/A N/A N/A N/A 1.38 Private .

This concentration does leave PepsiCo somewhat vulnerable to the impact of changing economic conditions. This may indicate comparatively low productivity on the part of PepsiCo employees. one of the most recognized brands of the world. juice drinks. Lipton Teas (PepsiCo/Unilever Partnership). Aquafina Bottled Water. PepsiCo’s arsenal also includes ready-to-drink teas. This followed incidents of exploding Diet Pepsi cans in 2007. and Sierra Mist. Pepsi generates more than $15. Cheetos Cheese Flavored Snacks. As a result PepsiCo’s fortunes are influenced by the business strategy of Wal-Mart specifically its emphasis on private-label sales which produce a higher profit margin than national brands.Sales to Wal-Mart represent approximately 12% of PepsiCo’s total net revenue.000 million of annual sales. Such brand dominance insures loyalty and repetitive sales which contributes to over $15 million in annual sales for the company Diversification . Quaker Foods and Snacks. The company has the largest market share in the US beverage at 39%. and snack food market at 25%.000 employees. Wal-Mart’s low price themes put pressure on PepsiCo to hold down prices. which was lower that its competitors.000 million. bottled water. and labor strikes. Overdependence on US Markets . This is part of a three pronged approach which also includes employees making direct store deliveries of snacks and beverages and the use of third party distribution services. Gatorade Mountain Dew. Pepsi is joined in broad recognition by such PepsiCo brands as Diet Pepsi. Wal-Mart is PepsiCo’s largest customer. The strength of these brands is evident in PepsiCo’s presence in over 200 countries. Such occurrences damage company image and reduce consumer confidence in PepsiCo products.439. Tropicana Beverages. As of 2008 it ranked 26th amongst top 100 global brands. Low Productivity . Doritos Tortilla Chips. as well as breakfast cereals. Tostitos Tortilla Chips.This broad product base plus a multi-channel distribution system serve to help insulate PepsiCo from shifting business climates. Fritos Corn.PepsiCo’s diversification is obvious in that the fact that each of its top 18 brands generates annual sales of over $1. Lay’s Potato Chips. Ruffles Potato Chips. ranked according to Interbrand. cakes and cake mixes. Thirst Quencher.The company delivers its products directly from manufacturing plants and warehouses to customer warehouses and retail stores. 52% of its revenues originate in the US. Distribution . • • Weaknesses • • • • Overdependence on Wal-Mart .In 2008 PepsiCo had approximately 198.SWOT Analysis PepsiCo Strengths • • Branding . .Despite its international presence.One of PepsiCo’s top brands is of course Pepsi. Mirinda. Tostitos Tortilla Chips. Its revenue per employee was $219. Image Damage Due to Product Recall . Large US customers could exploit PepsiCo’s lack of bargaining power and negatively impact its revenues.Recently (2008) salmonella contamination forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail shelves.

These recent initiatives will enable PepsiCo to adjust to the changing lifestyles of its consumers.Based upon recent history.000 employees. Groupe Danone and Kraft Foods.PepsiCo is positioned well to capitalize on the growing bottle water market which is projected to be worth over $24 million by 2012. a negative impact may result for PepsiCo. but is likely to feel the impact of the projected decline. Both initiatives are part of its expansion into international markets and a lessening of its dependence on US sales. marketing.7% by 2012. and V Wwater in the United Kingdom. It continues to broaden its product base by introducing TrueNorth Nut Snacks and increasing its Lipton Tea venture with Unilever. Fritos corn chips. Rold Gold pretzels. But others include NestlГ©. • Potential Negative Impact of Government Regulations . For example.Opportunities • • • Broadening of Product Base . Growing Savory Snack and Bottled Water market in US . Doritos tortilla chips. manufacturing. and a $500 million investment in India. Cheetos cheese flavored snacks. Threats Decline in Carbonated Drink Sales . • Potential Disruption Due to Labor Unrest . 000 million investment in China.459 million in value. Preliminary studies on acrylamide seem to suggest that it may cause cancer in laboratory animals when consumed in significant amounts. This disrupted both manufacturing and distribution. Tostitos tortilla chips. and Propel are well established products and in a position to ride the upward crest. and distribution of food products may be altered as a result of state.It is anticipated that government initiatives related to environmental. sales promotion initiatives undertaken by PepsiCo. Sun Chips multigrain snacks.PepsiCo is in the midst of making a $1. If the company has to comply with a related regulation and add warning labels or place warnings in certain locations where its products are sold. federal or local dictates.Soft drink sales are projected to decline by as much as 2. Lebedyansky. down $ 63. health and safety may have the potential to negatively impact PepsiCo.The Coca-Cola Company is PepsiCo’s primary competitors. Ruffles potato chips. PepsiCo is a world leader in convenient snacks. International Expansion . dependency on US markets by acquiring Russia’s leading Juice Company. PepsiCo is in the process of diversification. advertising. • . Resently Coca-Cola passed PepsiCo in Juice sales. Intense competition may influence pricing. • Intense Competition . In 2008 a strike in India shut down production for nearly an entire month.PepsiCo products such as.PepsiCo is seeking to address one of its potential weaknesses. Products such as Aquafina. foods and beverages with revenues of more than $43 billion and over 198. PepsiCo may be vulnerable to strikes and other labor disputes. Take a journey through our past and see the key milestones that define PepsiCo. In addition the company plans on major capital initiatives in Brazil and Mexico. Santitas are also benefiting from a growing savory snack market which is projected to grow as much as 27% by 2013. representing an increase of $28 million.

Pepsico.02K 14.11B 15.57B 3.69 18.90B 57.54B N/A 6.38 DPS 8.58 1.50% 5.55 1.41% 8.99 19.000 3.03 15.24B 17.78 1.01B 19.68 3.66 0.50M 10. Common Stock (PEP) 62.71 2.18%) Competitors Direct Competitor Comparison PEP Market Cap: Employees: Qtrly Rev Growth (yoy): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Operating Margin (ttm): Net Income (ttm): EPS (ttm): P/E (ttm): PEG (5 yr expected): P/S (ttm): 98.56% 13.11(0.89% 12.70M 1.59 1.51 2.49 1.90% 1.30% 1.36B 34.Soft Drinks Nonalcoholic Beverage Makers Ranked by Beverage Sales .25B N/A 5.24 Industry 628.78 17.60% 6.19 1.74 13. KFT = Kraft Foods Inc.13% 173.60% 54.53B 1.35% 606.98% 8.39 KO = The Coca-Cola Company DPS = Dr Pepper Snapple Group.66B 13.37 KFT 67.50B 52.39% N/A 0.85B 23. Industry = Beverages .20% 46.94 1.00M 2.00% 66.44B 4. Inc.29B N/A 11.54B 60. Inc.48 KO 156.29B 41.19% 3.

01B P/E 18. Symbol KO PEP DPS Price 69.54B 30. Inc. Groupe Danone Water Division Nestlé Waters ITO EN.04M 1.51 13.03B 106.54B 7.View Profile Private .57 16.84% 623.69 6.04 62.View Profile Private .33B 196.PK SBMRY.13 66.60 5. Constellation Brands Inc.58 37. Inc.Company The Coca-Cola Company Pepsico.03 2.89 95.PK STZ 6.07% 0. Kraft Foods Inc.PK DEO HINKY.View Profile .View Profile COT BTVCF. Dr Pepper Snapple Group.19 12.50 60. S.29B 8.20 43.92% -0.80% 0.69 19. LTD.50 14.22% 0.B.00% -0.57 Private .01 41.32 26.51 21.71 15.61 22.05% -0.View Profile Private .32 -0.00 24.56% -2.78 Private . de C.View Profile Private .76 Change -0.30 7.00% -0.PK NSRGF.82% Market Cap 156.A.52% -1.PK BUD KFT TAP GPMCF.90 38.65B 67.View Profile Private .59 5.11B 65.25B 98.39 22.46B 16. Red Bull GmbH Cott Corporation Britvic Plc Ocean Spray Cranberries.14B 59.V.36% -1. Nestl Diageo plc Heineken NV SABMiller plc Anheuser-Busch InBev Suntory International Corp. Pernod Ricard SA Molson Coors Brewing Company Grupo Modelo.14B 4. Inc.89B 2.49% -0.30% 0.