McDonald’s is a famous leading name across the globe in fast food industry. It becomes a global brand because of its presence in almost every part of the world. Primarily, McDonalds is a franchisor with franchises operating and owning over 90% of the restaurants. the fast-food chain serves locally good quality beverages and food at different price points. McDonalds is known to be the biggest fast-food chain across the globe in terms of revenue. Its menu and quality of food is up to the mark (McDonalds, 2020).
VRIO analysis is an internal analysis framework which helps the company in identifying the core competencies and competitive advantages in terms of resources and capabilities. The VRIO analysis is an acronym of Value, Rarity, Imitability, and Organization. Here is the detailed VRIO analysis of McDonalds.
Value
The first component of the VRIO analysis deals with the Value of the resources which helps the company in exploiting the environmental opportunities. It is necessary for the McDonalds to possess some sources of competitive advantage for attaining the value. The infrastructure with organization is one of a valuable source for McDonalds as it belongs to the fast-food industry. This is an effective resource company has in achieving higher value in business processes. Moreover, the human resource adds value in the efficiency of the fast-food chain. Employees prepare food and menu that attracts consumers. This clearly indicates that talented and skilled staff and sound infrastructure helps the McDonalds in achieving high value for the company (Lopez, 2019).
Rarity
The rarity component assesses the resource or capability company possess is whether rare or easily available in the market or in rivals. The rarity of the resources helps the company in achieving competitive advantage. McDonald has worked hard for years and successfully developed the brand reputation which is quite rare as no other competitor can enter in the market and develop such brand image in short span of time. McDonalds presence is almost in every country across the globe. This is rare and adds the efficiency in the competitiveness as other fast-food chains like burger king, etc. still not present in every part of the world. This enhances the overall effectiveness of the competitive advantage for McDonalds (Jiang, 2014).
Imitability
The question of the imitability determines the core competent of the company that whether it is imitable or not. The more difficult to imitate the resources will be for the rivals, the more efficient and advantageous it will be for the company. The brand image of McDonalds is very difficult to imitate for the rivals as it has developed it over a period of time and very strongly. The taste, menu, and recipes are difficult to imitate. McDonalds hamburgers and has browns are very famous across the globe. It is difficult for the new entrant to build that image and presence in the fast-food industry. Thus, it is difficult to imitate the core offerings of the McDonalds (Pratap, 2019).
Organization
This is the last question of the VRIO analysis which deals with the organized policies and procedures of the company for keeping the resources valuable, rare and difficult to imitate. McDonalds make sure to organization system and working structure efficient enough to achieve the maximum level of competitive advantage and growth opportunities. It maintains the high level of managerial efficiency and effectiveness to achieve the leading position. Its organizational structure and culture are well managed and maintained which becomes the primary contributing factor un accomplishing the overall success for the company.
Conclusion
Overall, VRIO analysis reveals the core competencies and competitive advantages of McDonalds, which are very crucial. This allows the fast-food chain in sustaining the leading position in the industry. McDonalds will be able to handle it technically to enjoy the benefits in the long run.
| V | R | I | O | ||
| Global Presence | ✓ | ✓ | Temporary advantage | ||
| Supply chain | ✓ | ✓ | ✓ | ✓ | Competitive advantage |
| Inventory management | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Brand Equity | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Marketing | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Product quality | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Product range | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Talented HR | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
References
- Jiang, X. 2014. McDonald’s company analysis. [Online], Available at: https://www.slideshare.net/YanxinJiang/mcdonalds-company-analysis-33306069, [Accessed on: 17th March, 2020].
- Lopez, L. 2019. McDonald’s VRIO/VRIN Analysis & Value Chain Analysis (Resource-Based View). [Online], Available at: https://www.rancord.org/mcdonalds-vrio-analysis-core-competencies-competitive-advantages, [Accessed on: 17th March, 2020].
- McDonalds, 2020. About us. [Online], Available at: https://www.mcdonalds.com/us/en-us/about-us.html, [Accessed on: 17th March, 2020].
- Pratap, A. 2019. McDonald’s strategic analysis. [Online], Available at: https://notesmatic.com/mcdonalds-strategic-analysis/, [Accessed on: 17th March, 2020].
- Singh, V and Kaur, R. 2016. Strategic Analysis McDonalds in China. [Online], Available at: https://www.academia.edu/32379197/Strategic_Analysis-_McDonalds_in_China_W_o_r_d_C_o_u_n_t_-6095_4_2_5_2_0_1_6_SUBMITTED_BY_SUBMITTED_TO_Strategic_Analysis-McDonalds_in_China_MBA-General_Management_TABLE_OF_CONTENTS, [Accessed on: 17th March, 2020].