STRATEGIC MANAGEMENT

PROJECT ON

Submitted To:

Q1. Carry out a TOWS Analysis for both Burger King and McDonalds.
Answer:

TOWS MATRIX
MCDONALDS
Strengths(S)
1. McDonalds has very extensive presence in both domestic and international markets.
2. Very strong R & D gives a sharp edge over its competitors and It takes steps in adjusting
the ingredients and product offerings in order to comply with the upgraded health
standards so it is recognized as a socially responsible and community oriented firm. It
takes food safety extremely cautiously It was the first to provide the customers about
nutrition facts.
3. A strong global brand that owns 35,000 restaurants serving in 118 countries.
4. The standardize quality products range across every single outlet gives strong strength. It
has an efficient food preparation style that follows the process in a systematic way; it has
loyal staff and strong management team, good innovation and product development. It
continually innovates to retain customers in the business with a variety of choices
5. Market leader in Both domestic and international markets
6. McDonalds have Extensive number of loyal customers in comparison to its competitors.
7. Good CSR helps McDonalds to remain competitive in the market. The The Ronald
McDonald House is active charity range from McDonalds to get edge. It has branded
menu items such as Big Mac, Chicken Mc Nuggets, which further promote McDonalds.
8. Customized menu as per geographic requirement proved a strong strength to McDonalds
to compete with its competitors aggressively.
Weaknesses (W)
1. There is a rise of quality issues across the franchise network. McDonalds has been sued
multiple times for serving unhealthy food quality at its franchisees.
2. Moderate in analyzing the needs of customers.
3. Price competition with the competitors results in low revenue.
4. It uses advertising that mostly targets children, which is a vulnerable and sensitive target.

Opportunities (O)
1. It can adapt to the needs of the societies and undergo an innovative product line by
optional items. It can create new product offerings, use mobile text messaging to offer
services that appeal to consumers. McDonalds also responds to social changes by
innovation within healthier lifestyle foods for example it moves into hot baguettes and
healthier snacks (fruits) have supported its new positioning.
2. It may increase joint ventures with retailers (e.g. supermarkets) and offer better locations
for franchisees.
3. It can implement deeper international expansion into emerging markets of Asia and other
geographic coverage using innovation in its products offerings.
Threats (T)
1. Healthier lifestyle and Nutrition food focused consumers are severe threat to
McDonalds. This threat can be eliminated by offering Healthier and Nutrition products
for that market.
2. Recession or turn down in economy may affect the retailer sales, as household budgets
tighten reducing spend and number of visitors.
3. Majors Competitors like KFC, Pizza Hut, Burger king, and Hardees.
4. New entrants in the market are the major threat to McDonalds like the emerging local
chains in the different geographical regions. The expansion has made the firm vulnerable
to the slow economies of the other countries as more restaurants give a rise to increasing
their food offering and declining the price.
5. Fluctuations in the exchange rates cause severe threat to its cash flows.
SO-Strategies

McDonalds can be very good in competition by introducing new nutritious ingredients in

its products. To get market share from health conscious consumers. (S2,S3,O1,O2,O3)

Emerging market of the different geographic areas can provide significant opportunities
to McDonald growth. Especially the Asian regions. (S2,S5,O2,O3)

WO- Strategies

McDonalds can provide healthy offerings in its product line to avoid legal actions, which
it faced in past times. (W1,O1)

McDonalds can change its strategies in advertising by targeting other customers than
kids through proper channels. (W4, O1)

ST- Strategies

Eliminate the threat of competitors by introducing new innovative offerings in its menu
through developing more strong R & D. At the same time through this R&D more loyal
customers can be focused as well. (S1,S2,S3,S6,T3)

Efficient pricing strategies can be developed to remain profitable in the recession and
financial downturns' affected geographic areas. (S1,S7,S8,T2,T5)

WT- Strategies

Strongly analyzing the demands of its customers in order to minimize the threat of new
entrants as well as of existing competitors. (W2,W3,T4)
TOWS MATRIX
BURGER KING

Strengths(S)
1. Huge popular brand name and high brand loyalty. The brand has high brand awareness in
the fast food industry according to QSR magazine right behind McDonalds and KFC.
2. Very diversified and unique menu than other fast food chains.
3. At the end of September 2012, Burger King reported it had 12,667 restaurants in 73
countries.
4. Growth of burger king is not very capital intensive. The company is able to grow while
minimizing large capital expenditure; meanwhile it collects fees and royalties from each
franchise.
5. Burger King has Strong brand equity in fast food.
Weaknesses (W)
1. Heavily concentrated in the United States: Although the company operates in many
international venues, the majority of restaurants are in the United States. This
concentration of operations in one geographic area companys exposure to local factors.
2. High fat and high calorie food not good for health conscious people. Its always an issue
that fast food with high fat and high calorie is not good for health conscious people.
3. Franchise management system is one of the key weaknesses of Burger King. BK owns
few corporately owned stores itself.
4. Burger King does not advertise their products like their competitors.
5. It has very lesser international appeal.
Opportunities (O)
1.

Rethink the restaurant experience with new design which combine new technologies
devises and redefine a clear mantra of the brand to strengthen the position of the brand
into the audience mind

2.

Possibility to connect their home delivery with an application and improve their clients
database

3.

There is enough room is available for Burger Kings Product improvement, tailoring it as
per tastes of people around the world. Product improvement, tailoring it as per tastes of
people around the world, in order to match with their slogan Have it your way

4.

Increase co-branding with different partners for the condiments as for the desserts (icecream and cakes, Games and toys)

5.

New opportunities in growing economies (India, China, Singapore, and Malaysia)

6.

BK can upgrade the varieties of children menus by making it more appealing using
games and toys in its offerings like McDonalds and KFC is doing.

Threats (T)
Most of its threats are industry threats as it was for McDonalds. Some of the highlighted
threats are given below:
1. Healthier lifestyle and Nutrition food focused consumers are severe threat to Burger
King. These threats can be eliminated by offering Healthier and Nutrition products for
that market.
2. Majors Competitors like KFC, Pizza Hut, and Hardees.
3. Local fast food restaurant chains.
4. Fluctuations in the exchange rates cause severe threat to its cash flows.
SO-Strategies

Using Its High Brand Recognition Burger King can put its steps into emerging new
markets of developing geographic regions like Asian regions. (S1, O3, O5).

Burger king can target children towards its offerings by doing co-branding with other
brands like game and toy companies to add something attractive in its products. (S2, O4,
O6)

WO- Strategies

Burger King does not advertise their products like their competitors. In new markets it
can strengthen its brands by using extensive advertising strategies. (W4, O5)

As it was discussed above that Burger King has very low international appeal. This
weakness can be overcome by attempting new products offering according to the local
tastes and preferences. ( W5, O3, O5)

ST- Strategies

High popularity in the fast food market can help BK to enter in new markets and this is
also going to help BK to compete with the local and international players in the market.
(S1, T2, T3)

Efficient pricing strategies can be developed to remain profitable in the recession and
financial downturns' affected geographic areas. (S4, T4)

WT- Strategies

Its always an issue that fast food with high fat and high calorie is not good for health
conscious people. BK can eliminate these threats by attempting a health conscious
offering in its offerings. (W2, T1)

Q2. Construct a CPM.

Answer:
Competitive Profile Matrix (CPM)

McDonalds & Burger King

Strategic Factors/Critical
Success Factors
Quality of products
Market Share
Advertising
Financial Position
Brand Name
Strategic partnership &
Alliances
Customer
Services/Support
Pricing
Geographic
Coverage/Expansion
Public image
CSR
Management
Consumer Loyalty
Sales and distribution
Innovation
Total

Weight

McDonald
s
Rating

0.09
0.09
0.08
0.1
0.09

4
4
3
4
4

McDonald
s
Weighted
Score
0.36
0.36
0.24
0.4
0.36

0.03

0.09

0.06

0.05

0.15

0.1

0.04

0.12

0.12

0.06

0.24

0.12

0.07
0.04
0.06
0.07
0.09
0.04
1

3
3
3
3
4
3

0.21
0.12
0.18
0.21
0.36
0.12
3.52

2
2
2
2
2
2

0.14
0.08
0.12
0.14
0.18
0.08
2.32

Burger
King
Rating

Burger King
Weighted
Score

3
2
2
3
3

0.27
0.18
0.16
0.3
0.27

Interpretations
McDonalds: It has greater the weighted average score it is very good in encountering its KSFs
efficiently.
Burger King: It has smaller the magnitude of weighted average score in CPM than McDonalds. It
needs to focus more on its KSFs to make it better.

Q3. Develop SPACE Matrix for both organizations

Answer: SPACE MATRIX: McDonalds
+1 Worst
Financial Strength (FS)
Earnings Per share
Liquidity
Net Income
ROI
Ease of exit
FS
Total 20
Industry Strength (IS)
Growth Potential
Technical Knowledge
Ease of Entry (New Markets)

+6 Best
5
4
5
5
1
Avg 4

+1 Worst

+6 Best
4
3
4

Financial Stability

Resource utilization

Profit Potential
IS

Environmental Stability (ES)

Total 23

3.83

-6 Worst

-1 Best

High Competitive pressure

-1

Rate of Inflation

-4

Price range

-2

Demand Variance

-3

Barriers to entry in new markets

ES
Total -13

-3
Avg-2.6

-6 Worst

Competitive Advantage (CA)

-1 Best

Market Share

-1

Product Quality

-2

Technological Awareness

-3

Control Over Distribution channels

-2

Customer Loyalty
CA

-2
Total

ES
FS
+
-2.6
4
CA
IS
+
-2
3.83
Strategic Profile (McDonalds)

Interpretation: It has aggressive profile.

-10
Total
1.4
Total
1.83

Avg -2

SPACE MATRIX: Burger King

Financial Strength (FS)
Earnings Per share
Liquidity
Net Income
ROI
Ease of exit
FS

+1
Worst

+6 Best
3
2
3
3
1

Total 12

Industry Strength (IS)

Avg2.4

+1
Worst

+6 Best

Growth Potential
Technical Knowledge
Ease of Entry (New Markets)
Financial Stability
Resource utilization

4
2
2
3
2

Profit Potential

IS
Total 16
-6
Environmental Stability
Worst
(ES)
High Competitive pressure
Rate of Inflation
Price range

-3
-4
-3

Demand Variance

-4

Barriers to entry in new

markets
ES
Total -18
Competitive Advantage
(CA)
Market Share
Product Quality
Technological Awareness
Control Over Distribution
channels

-1 Best

-4
Avg-3.6

-6
Worst

Customer Loyalty
CA

Avg2.67

-1 Best
-3
-3
-3
-4
-3

Total -16

Avg-3.2

ES
-3.6
CA
-3.2

+
+

FS
2.4
IS
2.67

Total
-1.2
Total
-0.53

Strategic Profile (Burger King)

Interpretation: It has a defensive profile