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McDonald's Mauritius Business Analysis

McDonald’s is one of the largest fast food restaurant chain in the world founded in 1954 and serving consumers in over around 120 countries. It took many decades to come to Mauritius, it was established in the year 2001 in Port-Louis and is known as McDonald’s Mauritius. Afterwards, the Port-Louis McDonald’s was joined by six restaurants which have been opened around the island namely in Phoenix, Riche-Terre, Grand-Baie, Flacq, Trianon and Cascavelle.

Ever since its opening, McDonald’sMauritius has been providing food which are loved by all Mauritians including kids, adults and elderly people and which are at affordable prices.

This outlet offers a variety of food products and beverages, its menu consists of beef, chicken, fish and vegetarian meals catering for the taste of every consumer.

Due to globalisation, McDonald’sMauritius now forms part of the everyday life of Mauritians and has become their favourite fast food as it offers unique and uniform menus throughout all its outlets around the island.

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Nevertheless, the restaurant is faced by competition from several rivals including the Kentucky Fried Chicken, KFC which was established in Mauritius in the 1983 in Curepipe and from others. Therefore, to survive in this competitive environment and to meet and exceed its consumers’ expectations, McDonald’s Mauritius carries out a SWOT analysis, a PESTLE analysis and analyse M.Porter’s five forces model to measure its external environment.

SWOT Analysis

Strengths

For the past 17 years, McDonald’sMauritius has remained amongst the top restaurants in Mauritius due to its strong brand name awareness, strong brand loyalty, perceived quality and strong brand differentiation.

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This restaurant has a strong brand name because it uses good marketing strategies and make advertisements through television, radio and social networking site such as Facebook and it maintains a strong brand loyalty because consumers repeatedly choose its food products over its competitiors and they get discounts with their McDonald’s Loyalty Card.

McDonald’s Mauritius also stands out from its competitors by offering unique and uniform menus to its consumers, it provides good quality food to its consumers and the restaurant is consistent with its menus throughout all of its outlets across the island.

Weaknesses

Despite all its strengths, McDonald’sMauritius has several weaknesses which make consumers hesitant to buy their food products.

Since its opening, the restaurant has been making negative publicity about its products on televisions, radios and now on social networking sites. These advertisements portray its food as unhealthy, high caloric food, food with high content of fat, carbs, salt and sugar. Even though their menus contain salad to make the food healthier, the restaurant does not serve adequate amount of salad and salad menu and hence, consumers have the perception that the restaurant serves unbalanced food and might choose to eat elsewhere.

Opportunities

McDonald’sMauritius takes advantage of the opportunities that present themselves. Nowadays, as more and more Mauritians are working, they do not have the time to cook at home and opt for the fast solution of eating junk food as it is affordable and easily available, this restaurant must make the most of this opportunity to attract consumers.

The restaurant must introduce more salads in its menu, salad menus like its competitor, KFC, a wider variety of food menu for vegetarians instead of only one option available, the McVeggie and of fish menu. In addition, the shakes and coffee available can be served with optional sugar and more variety of juices can be introduced for healthier options.

Besides its seven outlets, McDonald’sMauritius could further expand by opening outlets all around the island and cover untapped areas. By expanding, it can share its fixed costs over these restaurants and hence pricing its menu at cheaper cost. The restaurant can as well introduce home delivery for all of its outlets therefore, consumers can avoid traffic jams while travelling to the restaurant.

Threats

McDonald’sMauritius is also faced by some threats which impact the revenue of the company. Nowadays, consumers are becoming more health conscious, they prefer healthier food compared to unhealthy and unbalanced food. As the number of people having obesity, cholesterol, diabetes and heart problems are increasing in Mauritius, consumes are opting for more healthier food and food having high nutritional value, these people prefer to eat homemade food rather than eating at fast food outlets.

Additionally, McDonald’sMauritius is faced with fierce competition from many rivals across the island such as KFC, SUBWAY, L’Arabica, Caf LUX and vida e caff?. The restaurant competes in terms of price, convenience, service, menu variety and product quality. Its competitor KFC gets a higher number of consumers since KFC has 21 outlets across the island compared to McDonald’sMauritius having only 7 outlets.

PESTLE Analysis

McDonald’sMauritius also performs a PESTLE analysis to identify the external factors that have profound implications on the way this international transaction is conducted. The PESTLE analysis examines factors such as political, economic, social, technological, environmental and legal.

Political factor

Government guidelines in Mauritius for diet and health are both threats and opportunities for McDonald’sMauritius because they pressurise the restaurant for serving products which negatively affect consumers’ health.

The restaurant uses Trans-fat in cooking their food therefore, badly affecting the health of consumers and Trans-fat can cause serious diseases such as some kind of cancer. As a result, a number of consumers stop eating at this restaurant and its revenue declines. Hence, McDonald’sMauritius should minimise their use of Trans-fat or stop using it completely.

Government’s genetically modified organism, GMO regulations and GMO trend in the country are as well a threat for the restaurant as it does not have a policy on GMO ingredients. Consumers are now opting for organic products therefore, McDonald’sMauritius have the opportunity to develop new policies and products regarding GMO ingredients so as to retain its existing consumers and to attract new ones.

Economical factor

The economic condition in Mauritius has a direct impact on McDonald’sMauritius.

During economic recession, consumers have lesser income, they need to save money and prefer to eat homemade food rather than eating at fast food outlets. Consequently, the number of consumers and revenue of McDonald’sMauritius decreases. The restaurant is as well affected by the exchange rate fluctuations as it imports most of its raw materials from other countries.

Besides, McDonald’sMauritius should consider the unemployment rate in each region where their outlets are located. Since the restaurant has a high turnover rate, it fires and hires on a consistent basis, McDonald’sMauritius can seize this opportunity and hire people in locations having high unemployment rates.

Social factor

Social factors are very important for the restaurant as culture, values, norms and lifestyle of consumers affect the operations of McDonald’sMauritius.

Being a multi-racial country, McDonald’sMauritius must ensure that cultural and religious barriers are considered while deciding on its food menu and that it caters for the taste of every consumer. For instance, some Hindu people might prefer eating vegetarian meals compared to chicken, fish or beef menu and therefore, McDonald’sMauritius has introduced its vegetarian meal, the McVeggie.

Another example is for Muslim people, these people will demand for Halal food products therefore, McDonald’sMauritius uses Halal food products to cater for that.

Furthermore, McDonald’sMauritius has the opportunity to grow based on the increasing tendency of consumers to eat and buy fast food instead of eating and cooking at home. Since people now have a busy lifestyle, eating out in restaurants is the fast solution that they choose thereby increasing the revenue of McDonald’sMauritius.

Technological factor

In this technological world, McDonald’sMauritius must adapt its business strategies to technology to get a competitive advantage over its competitors in Mauritius.

The restaurant now makes use of automation. An example is the Kiosk which is set up in its restaurants where consumers can choose their menu at a touch-screen and sit back and wait for their menu to be served at their table and at the same time enjoy Wi-fi services available.

Additionally, it has the opportunity to increase its research and development investments to improve its effectiveness and efficiency and to reach a higher level of R&D activities compared to its competitors.

The franchise can also improve its sales through mobile devices by having mobile applications thereby increasing revenue.

Environmental factor

McDonald’sMauritius can improve its environmental programs and sustainability to strengthen its brand and increase its revenue.

In order to become environmentally friendly, the restaurant can use packaging that can be recycled. It should research green energies and green packaging solution and introduce these findings as part of its marketing strategies and advertisements.

Additionally, McDonald’sMauritius uses hydrochlorofluorocarbon-22, HCFC-22 has a negative impact on the environment as it depletes the stratospheric ozone layer which protects the amount of sunlight penetrating the Earth. Consumers who care about the Earth might stop eating at the restaurant hence, it must find a solution to minimise or avoid using HCFC-22.

Climatic conditions also affect the revenue of the restaurant as they determine the availability and stability of food supply and influence its supply chain. Hence, McDonald’sMauritius needs to diversify its supply chain to address the effects of changes in climatic conditions.

Legal factor

The legal factors are the impact of laws and regulations of Mauritius on the restaurant, changes in legal systems and new laws impose new requirements on the restaurant.

The restaurant’s employees must abide by hygiene regulations while working in any given location of the island. Employment laws must as well be considered as these laws regulate the maximum length of an employee’s daily and weekly working hours, include the requirements for employee breaks and facilities, tax and payroll requirements.

Moreover, animal welfare regulations are classified as a threat as these regulations increase costs of the restaurant supply chain and at the same time it creates an opportunity to improve the business by implementing comprehensive animal welfare policy which can attract more consumers who are interested in animal welfare.

Michael E. Porter’s Five Forces Analysis Model

It is easier to opearte in its home country as McDonald’s is familiar to the market but in Mauritius it is faced by fierce competition and the restaurant has to make huge efforts to survive in this market.

Competitive rivalry

Its threat of competition is high as it has many rivals across the island including KFC, SUBWAY, L’Arabica, Caf? LUX* and vida e caff?. The restaurant competes in terms of price, convenience, service, menu variety and product quality. Its competitor KFC gets a higher number of consumers since KFC has 21 outlets across the island compared to McDonald’sMauritius having only 7 outlets.

Bargaining power of supplier

Suppliers’ power is low since there is a large population of suppliers that weakens the effect of individual suppliers on McDonald’s Corporation. Furthermore, most of McDonald’s suppliers are not vertically integrated, they do not control the distribution network that transports their products to firms like McDonald’s hence, suppliers’ power is low.

Bargaining power of buyer

The power of buyer is high for McDonald’sMauritius because the switching cost is low (that is, choosing to eat at another fast food restaurant) and a high number of substitutes available consequently affecting the company’s external environment.

Threat of new entrants

Threat of new entrants is moderate; the low switching costs allow consumers to easily move from McDonald’s toward new fast food restaurant and this can have a negative impact on McDonald’sMauritius market share and financial performance.

Threat of substitutes

This threat is high since there is a high availability of substitutes products and a low switching cost. There are many substitutes to McDonald’sMauritius products, such as products from local food vendors or choose homemade food.

Cultural Barriers

McDonald’s had to overcome certain cultural barriers for Mauritius as the society has a distinct way of life and buying behaviour which has required a customized approach. These differences have impacted on the company’s location, product, price and promotion. However, there are high adaptation and logistics costs associated that affect the feasibility of international markets.

Moreover, by recruiting qualified employees the restaurant has been able to overcome the distance and lack of information which could problems in identifying and satisfying Mauritians’ needs.

Ethical Considerations

According to Hill (2013), ethics refers to “the accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organisation”. At McDonald’sMauritius, the following ethical considerations are as follows:

Employment practices

Employment laws in the island must as well be considered as these laws regulate the maximum length of an employee’s daily and weekly working hours, include the requirements for employee breaks and facilities, tax and payroll requirements.

Environmental consideration

As analysed in its PESTLE factors, it has made several attempts to go environmentally friendly. Additionally, the restaurant should stop using HCFC-22 for packaging and find alternative methods. It must introduce greener options in its cooking methods, switch from petrol to ethanol for its transportation, use non-HCFC-22 refrigerators to stock its perishable raw materials. McDonald’sMauritius can as well stop using plastic straws and plastic cups and switch to paper ones and introduce recyclable bins so that consumers can sort out their trash according to whether they are paper, plastic, metal, organic or glass trash.

Cite this page

McDonald's Mauritius Business Analysis. (2019, Dec 12). Retrieved from https://studymoose.com/mcdonalds-mauritius-business-analysis-essay

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