McDonald’s BCG Matrix
The McDonald's BCG Matrix will help us determine whether a particular promotion is worth the investment.
1. Introdction
In simple terms, the BCG Matrix helps to organize a business into different business units. Business units, in turn, may be divided into different markets, and each market might be divided into different customer segments. In some businesses, there are just too many different business units. Companies must operate in ways that reflect their values in today's complex environment. They must align their actions with their principles to create value. The BCG Matrix was introduced to reduce this complexity to organize the business into different business units. BCG Matrix allows you to clarify the roles of each business in generating revenue for the company. It also helps to identify where more investment should be made to extract maximum revenue and boost the company's sales. In this article, we will be discussing the McDonald’s BCG Matrix.
Background of McDonald’s
In 1955, the company was started by the McDonald brothers, Richard McDonald and Maurice McDonald. On April 15, 1955, the first branch of McDonald's was founded in California, US.
McDonald's is a multi-billion dollar food chain known for its burgers, fries, and apple pies. It is the biggest restaurant chain in the world, with over 34,000 restaurants in 100 countries. It also has the largest chain of stores outside the United States. Owners also bought out local hamburger chains around the country to keep the prices low. Today, the corporation focuses on cost cuts and innovation to maximize profits and grow. McDonald's annual revenue last year was $23.223B.
2. McDonald’s BCG Matrix
We will discuss the BCG Matrix analysis of McDonald’s in this portion.
Market Growth Rate
The market of McDonald's grew by a massive $23.22 billion last year. That's impressive growth for a fast food chain that began as a single restaurant.
McDonald's posted $23.2 billion in global revenues, 21% more than in 2019 and the most in five years. Net income climbed 59% to $7.5 billion in fiscal 2020, which ended May 31. McDonald's has almost 43.8% of the market share as well.
Relative Market Share
McDonald's relative market share in the year 2021 was 43.8%. McDonald’s posted system-wide sales growth of 21% for the full year, surpassing $112 billion globally. The U.S. comparable sales grew 13.8% for the full year, marking the highest U.S. annual comparable sales ever reported. Digital sales totaled over $18 billion in 2021, or over 25% of total Systemwide sales in our top six markets. McDonald’s delivered operating income growth of 41% for the full year, surpassing $10 billion globally. The company's operating margin was 10.2%, up from 5.7%.
BCG Matrix of McDonald's has four components:
- Cash Cow
- QuestionMark
- Dog
- Star
Cash Cow
McDonald's makes lots of money selling chicken sandwiches, fish sandwiches, and french fries, but those aren't its only products. Its real cash cows are Mc Chicken, Fish-o-Fillet burgers, and Fries. That's because McDonald's customers love its food and are willing to pay reasonable prices. If McDonald's doesn't keep up its quality, it risks losing the loyalty of its loyal customers. So McDonald's must continue to evolve and improve its products to stay ahead of the competition.
Question Marks
The suitable product in the McDonald's Matrix phase is McDonald's Ice Cream, Cone. This product has the lowest market share but the highest market growth rate. Now it is reasonable to believe that this product is worth a lot of money. However, if the company invests too much money in this particular product, it would be better to turn it into a star product. If the company doesn't do this, it would be better for this product to be liquidated because it will negatively impact the whole product's life cycle.
Dogs
The suitable product in the McDonald's Matrix phase is McDonald's Ice Cream, Cone. This product has the lowest market share but the highest market growth rate. Now it is reasonable to believe that this product is worth a lot of money. However, if the company invests too much money in this particular product, it would be better to turn it into a star product. If the company doesn't do this, it would be better for this product to be liquidated because it will negatively impact the whole product's life cycle.
Stars
The Mc Flurry is the company's star product as McDonald's is making a profit from this particular product. This is because it has a high market share and maximum market growth rate. They need to invest more money in the product to grow at the maximum rate. It has the highest market share with the maximum market growth rate in the UK. The US and Germany have very low market shares, and there is no market growth rate.
3. How to Draw McDonald's BCG Matrix Online?
Let's take a quick tour of the five main steps of how to make a BCG Matrix in EdrawMax Online:
The 5-step process for creating a BCG matrix starts with outlining.
Step 1: Preparation (Gather information, open EdrawMax, and login)
Login to your Edrawmax ID, and in case you have not made an ID, sign up and head towards the templates you have in Edrawmax. Illustrate some of the outlines before making the matrix.
Step 2: Select a Template or Create from Scratch
Once you have a blank template open in Edraw Max, choose the bullet point you want to use as a title. Drag it into your template. Add a headline underneath the title. You can either select a blank template or choose an already customized one. You can get the templates from EdrawMax Community.
Step 3: Add Textual Information
Now you can add the text components. It can be about your company or your product. You can also add some bullet points regarding your analysis.
Step 4: Add other components/ Customize Your Work
If you would like to make your work a little more exciting and you would like to add other components/customize your work. There are several options for customization. It's easy to add images, videos etc to your work. In some cases, customizing will be the way to go. Edrawmax allows you to select a company name to change the chart's font, color, and size. You can quickly add data to the chart to provide details on the market analysis.
Step 5: Save and Export
You can easily export or download the matrix diagram you have recently designed. Edraw max also provides a fantastic option to share your projects online by allowing you to edit or read. This can be a huge help if you want to export your BCG matrix diagram to png or Pdf.
Edraw.AI
4. Key Takeaways
The biggest fast food restaurant chain , McDonald’s uses its generic strategy and intensive growth strategies to support its continuing business development and expansion. In doing so, the related strategic objectives dictate the company’s operational activities, particularly in reacting to economic changes and the actions of competing companies. Market variations exert pressure on the business to adapt or reform its strategies. Over time, therefore, McDonald’s BCG Matrix shows generic and intensive growth strategies change in order to ensure long-term business viability.
Nowadays, many designers can use the BCG Matrix to explain and share their market analysis thoughts on user experience design. EdrawMax is a free program to easily create professional diagrams, BCG Matrices, charts, flowcharts, and mind maps. It allows you to design your content, collaborate with others, and export your designs into Word, Excel, PowerPoint, Visio, or Publisher. You can use it to illustrate your ideas, organize content, create presentations, wireframes, and illustrations, and collaborate with others. It is free software and can help users easily design and create beautiful BCG Matrix Diagrams. Just type in the topic you need a matrix diagram for and start working your way through the suggestions.
5. References
Dulay, Mr Sofronio, et al. "Strategic Management Paper for McDonald's Corporation."
Vrontis, Demetris, and Pavlos Pavlou. "The external environment and its effect on strategic marketing planning: a case study for McDonald's." Journal for International Business and Entrepreneurship Development 3.3-4 (2008): 289-307.
