Strengths
High global availability
With 31 000 shops set up in 119 countries around the world, McDonald’s is not only the largest fast food chain but also the fast food chain represented in the most countries. This eliminates the thread of being depending on one or a few markets, and creates a large incentive for economies of scale. The global size of the company out scales the nearest competitor YUM! Brands Inc. 2 to 1 when it comes to revenues. The number of shops around the world makes it possible to both benefit from future emerging markets and being settled in matured markets. The emerging markets provides possibilities for high growth and act like a rising star or dog, and the matured markets have a function as a cash cow financing the entries in the new markets.
Strong real estate portfolio
The locations of the different shops and franchises are usually owned or leased by McDonald themselves. Very early on in the company’s history McDonalds found the importance of real-estate. They have developed a strong real-estate portfolio (Thompson, Strickland & Gamble 2005, p. C-225, C-227) putting them in a unique position to remain in control over the shops even though they are franchised. They are constantly developing their real-estate portfolio and know their knowledge is important to secure themselves in future markets as China (McDonald’s Financial report 2005, p. 25).
Exceptional brand recognition
McDonald’s is a powerful global brand. According to BusinessWeek it ranks 8th in the world, only being outperformed by brands like Coca Cola, Intel, Disney and IBM. This is a unique position, and only !YUM Brands, Inc brands like KFC and Pizza Hut makes in on the top 100 list at place 61 and 63, not even close to McDonalds.
Their brand have been build through intense advertising and through other brands and pop idols, like Disney, Fox Kids, Justin Timberlake and Tony Hawk and is known world wide, often preceding the first shops in a new country, creating a frenzy over the first opening (Dobrow 2005).
Currently McDonalds is branding themselves through the “im loving it” campaign where a lot of both local and international role models and icons have been used.
Well placed to exploit foreign opportunities
Their international coverage and brand awareness around McDonald’s gives great opportunities for establishing shops in new markets. They have the advantage of having immediately brand recognition, which will minimize the necessary marketing effort to enter a new market, and furthermore it will give a quicker turnaround for the company, since market shares are cheaper to get than for its competitors.
Economic wealth
McDonald’s has through the last couple of years shown significant improvement, not only in revenues and net income, but also in the proportions between revenues and expenses. Gross margins shows a positive development in the margins to cover both operating expenses and yield a profit for investors and future investments in new markets and other areas.
The net profit margins show how much McDonald’s earns pr. Dollar sold for in the company. It also shows a positive development of the money earned after taxes compared to the total revenues.
The stock price of the McDonald’s stocks has in the last three years been positively influenced by the company’s positive development.
Furthermore the company has been paying dividends on its common stocks for 30 consecutive years, increasing the dividend each year, and from year 2002 till 2005 it have risen 185%.
Furthermore and most important it have had a steady growth in both revenues and operating incomes the last four years, almost doubling its income from just 2002 to 2005.