Analysis on McDonald's by CUHK students (using SWOT, Porter’s Five Forces, Business Model Canvas, and Blue Ocean Strategy Canvas)

1. Analysis on
McDonald’s Corporation
In Hong Kong
Group Member
GE Minmin (1155129597)
GAO Xin (1155137038)
WANG Xi (1155131773)
Chen Yueying (1155128386)
LI Tong (1155131850)
ZHU Ziyuan (1155129898)

2. CONTENTS
2. Porter’s Five Forces
1. SWOT Analysis
3. Business Model Canvas
4. Blue Ocean Strategy Canvas (ERRC)

3. 1. SWOT Analysis
Strength:
• Has built a solid foundation in the fast-food market and owns a large
market share.
• Convenience: has many stores, easy to access; multiple methods for
payments.
• Price advantage: diverse choices but affordable.
• Delivery service: customers are able to order through phone-call, APP or
takeaway platforms.
• Streamlined production: supported by technology, forming a standardized
flavor and saving cost .
• Strong reputation: international company
S

4. 1. SWOT Analysis
Weakness:
• Health issue: foods causing health problems like obesity, especially the
youth.
• Food safety issue and quality control: some news accusing McDonald’s
for using expired materials or dirty storage rooms
W

5. 1. SWOT Analysis
Opportunity:
• Healthy problem: create healthier food
• Globalization
• Expand customer group: for example, vegetarian group or cooperate with
universities,
• Sales channels: cooperate with more websites or platform
O

6. 1. SWOT Analysis
Threat:
• Competitors from similar fast-foods companies
• Competitors from different fast-food companies
• The rising cost of labor
T

7. 2. Porter's Five Forces
Threat of New Entry: Exists but not strong
• Running traditional western fast food restaurants doesn't require the specialist
knowledge. But running individual traditional Chinese fast food in Hong Kong, like
dumplings, the specialist knowledge may be highly required.
• The company must spare few effort in preparing the supply chain, hiring
employers, choosing the site, managing raw materials and etc.
• Customers may choose the nearest service under certain circumstances. But if
there are several similar fast food restaurants in one area, the price, taste and
service will be considered.
• The fast food market is not managed by the government. But the company should
pass the hygienic inspection.

8. 2. Porter's Five Forces
Threat of Substitution: Strong
• A large number of available substitutes (e.g. takeaway, instant noodles, prepared
food, etc.) with high price-performance ratio.
• Low customer's switching costs.
• Perceived quality of substitutes: similar to McDonald's, not so bad.
• For customers who want to fill the stomach quickly: more likely to try another
product.
• For customers who stick to the brand tightly: less likely to try another product.

9. 2. Porter's Five Forces
Intensity of Rivalry among Established Firms: Intensive
• Many competitors: MX, KFC, CAFE DE CAROL, Yoshinoya and other local Cha
Chaan Tengs. Some may of similar size as McDonald, but most of them are in a
smaller size, both considering the number of stores and the companies' size in a
global scope.
• Some of these competitors are providing similar kinds of products (westernized
fast food), and some are offering different types of product (Japanese/Chinese
style...), the quality of each cannot be mearsured in one single standard, but there
is no large gap in terms of customers' rating. And what to be noted is that they are
competing at a relatively close level of price.
• Despite the intensive rivalry among established firms, McDonald has already
earned a group of royal customers, which may leave influence on customers'
choice or behaviors.

10. 2. Porter's Five Forces
Bargaining Power of Customers: Strong
• According to the statistics of Hong Kong Census and Statistics Department, total
sales and receipts of fast food restaurants are $26.4 billion in 2017, which indicate
the big number of consumers considering the low average transaction value for
fast food.
• For consumers in Hong Kong, there are quite a lot choices. According to data,
there are 953 establishments.
• A single order of fast food is quite small, ranging from $25-50. For example, the
consumption per person of CAFE DE CAROL is $38.5 this year.
• The cost to switch from McDonald's to another is quite low.
• Buyers of McDonald's (HK) have a wide range.

11. 2. Porter's Five Forces
Source: Hong Kong Census and
Statistics Department

12. 2. Porter's Five Forces
Bargaining Power of Suppliers: Weak
• McDonald's is the giant in fast food industry, so quite a few suppliers want to
supply service and products for it.
• There are a large number of potential suppliers that can provide food raw
materials for McDonald's, because Mcdonald's need is not very unique. This huge
and general demand lowers the cost of stock and supplier-changing.
• McDonald's is super competitive with a huge demand for raw material supply.
• Supplier market for McDonald's is competitive, which make it possible for
McDonald's to bargain with its suppliers.

13. 3. Business Model Canvas
- Value Proposition:
constant quality of food, quick service
- Customer Segments:
families, youngsters, the elderly, single people
- Strategic partners/franchise holders:
more than 80% are franchised, together with suppliers, it’s a three legged structure
- Key Activities:
selling food and beverages
- Key Resources:
employees, restaurants

14. 3. Business Model Canvas
- Customer Relationship:
takes places online on the devices
- Distribution:
through restaurants
- Cost Structure:
salaries, facility, raw materials and marketing
- Revenue:
own restaurants and franchise holders

15. 3. Business Model Canvas
Source: Finch &

16. 4. Blue Ocean Strategy Canvas

17. 4. Blue Ocean Strategy Canvas
Order:
McDonald's uses digital
touch screen for consumers
to choose the food they
want and pay. However,
Cafe de Coral still uses
manual ordering method in
most of its restaurants;
McDonald's provides 24-
hour delivery, some stores
are open 24/7.
Food style:
McDonald's offers western
style fast food in the
morning. Cafe de Coral
provides more options of
Chinese breakfast and
attracts more elderly people.
There is also a new market
for McDonald's to provide
healthier food.
Food set:
Cafe de Coral provides
more than 20 food sets for
consumers to choose in the
morning. McDonald's also
provides food sets. Besides,
consumers can add single
food product to the set with
a lower price, which
encourges consumers to
order more.

18. 4. Blue Ocean Strategy Canvas
Cleaning effort:
Since office clerks and
students who prefer take-out
are the main consumers in
the morning, McDonald's
reduces the cleaning effort.
Chinese fast food like Cafe
de Cora is difficult to take-
out.
McDonald's should also try
to convey the idea to people
that they should drop the
food waste by themselves.
Price:
The price of breakfast in
McDonald's is similar to the
one in Cafe de Coral. While
McDonald's still provides
paper coupons for
consumers, the using rate is
low. Nowadays, consumers
prefer ordering food on
applications, so these paper
coupons should be
eliminated.
Brand image:
McDonald's now tries to
convey environment-friendly
brand image. Other fast food
restaurant in Hong Kong do
not present the same image
as McDonald's does.
McDonald's should also
consider expanding the
range of age of consumers
in Hong Kong.

19. 4. Blue Ocean Strategy Canvas
Eliminate Create
paper coupon snack bars without seats
food set for special group (vegetarian meals,
fitness meals and etc.)
pop-up stores collaborating with other brands
Reduce Raise
cleaning effort
plastic packages
digital ordering machines
digital coupons

20. 4. Blue Ocean Strategy Canvas
Food style Price Brand image Order Food set Cleaning effort snack bars food set for special
group
pop-up stores
McDonald's Cafe de Cora Other fast food competitors

21. Thank You!