McDonald’s Strategic Evaluation

Wajahat Hussain

Roll No. 20

MBA-BBA (marketing)

19/03/12

McDonald's Corporation (NYSE: MCD) is the world's largest

chain of hamburger fast food restaurants, serving around 68 million

customers daily in 119 countries. Headquartered in the United

States, the company began in 1940 as a barbecue restaurant

operated by the eponymous Richard and Maurice McDonald; in

1948 they reorganized their business as a hamburger stand

using production line principles. Businessman Ray Kroc joined the

company as a franchise agent in 1955. He subsequently purchased

the chain from the McDonald brothers and oversaw its worldwide

growth.

A McDonald's restaurant is operated by either a franchisee,

an affiliate, or the corporation itself. The corporation's revenues

come from the rent, royalties and fees paid by the franchisees, as

well as sales in company-operated restaurants. McDonald's

revenues grew 27 percent over the three years ending in 2007 to

$22.8 billion, and 9 percent growth in operating income to $3.9

billion.

McDonald Primarily sells;

hamburgers, cheeseburgers, chicken, fries, breakfast items, soft

drinks, shakes, desserts, salads, wraps, smoothies and fruit.

History of McDonald

The business began in 1940, with a restaurant opened by brothers Richard and Maurice

McDonald in San Bernardino, California. Their introduction of the "Speedee Service

System" in 1948 furthered the principles of the modern fast-food restaurant that

the White Castle hamburger chain had already put into practice more than two decades

earlier. The original mascot of McDonald's was a man with a chef's hat on top of a

hamburger shaped head whose name was "Speedee." Speedee was eventually

replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark

on a clown shaped man having puffed out costume legs.

McDonald's first filed for a U.S. trademark on the name "McDonald's" on May 4, 1961,

with the description "Drive-In Restaurant Services," which continues to be renewed

through the end of December 2009. In the same year, on September 13, 1961, the

company filed a logo trademark on an overlapping, double arched "M" symbol. The

overlapping double arched "M" symbol logo was temporarily disfavored by September

6, 1962, when a trademark was filed for a single arch, shaped over many of the early

McDonald's restaurants in the early years. Although the "Golden Arches" appeared in

various forms, the present form as a letter "M" did not appear until November 18, 1968,

when the company applied for a U.S. trademark.

McDonald's corporate logo used from 1968 to 2006. It still exists at some restaurants.

The present corporation dates its founding to the opening of a franchised restaurant

by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant

overall. Kroc later purchased the McDonald brothers' equity in the company and led its

worldwide expansion, and the company became listed on the public stock markets in

1965. Kroc was also noted for aggressive business practices, compelling the McDonald

brothers to leave the fast food industry. The McDonald brothers and Kroc feuded over

control of the business, as documented in both Kroc's autobiography and in the

McDonald brothers' autobiography. The site of the McDonald brothers' original

restaurant is now a monument. With the expansion of McDonald's into many

international markets, the company has become a symbol of globalization and the

spread of the American way of life. Its prominence has also made it a frequent topic of

public debates about obesity, corporate ethics and consumer responsibility.

Vision

To be the best and leading fast food provider around the globe

Mission

McDonald's brand mission is to be our customers' favorite place and way to eat, and

improve our operations to provide the most delicious fast food that meet our customers'

expectations.

Objectives of McDonald

Profitability

Quality Service

Customer Satisfaction

Reputable Image

Community Outreach

Vision Proposed

To be the best and leading fast food provider around the globe

Mission Proposed

McDonald’s brand mission is to be our customer’s favorite place and way to eat, and

improve our operations to provide the most delicious fast food that meet our customer’s

expectation.

External Audit

EFE Matrix (External Factor Evaluation)

Internal Audit

Strength Weakness 1. Strong brand name, image and

reputation.

2. Large market share.

3. Strong global presence.

4. Specialized training for

managers known as the

Hamburger University. 5. McDonalds Plan to win focuses

on people, products, place,

price and promotion.

6. Strong financial performance

and position.

7. Introduction of new products

8. Customer focus (centric)

9. Strong Performance on the

global marketplace

1. Unhealthy food image.

2. High Staff Turnover including

Top management

3. Customer losses due to fierce

competition.

4. Legal actions related to health

issues; use of trans fat & beef

oil.

5. Uses HCFC-22 to make

polystyrene that is contributing

to ozone depletion.

6. Ignoring breakfast from the

menu.

IFE Matrix (Internal Factor Evaluation)

Analysis of EFE

EFE Matrix shows it is managing its opportunities and threats average.

Actions:

1. Acquire small food companies to attract heavy traffic

2. Make contracts with major educational institutions and corporations

3. introduce healthier products with low calories and fats

Analysis of IFE

IFE Matrix shows that McDonalds is managing strength and weaknesses very well

Actions:

1. It should maintain its leadership position to overcome its weaknesses

2. Should provide the healthy low calories food

3. Should disclose the proper information to customers to avoid legal actions

CPM (Competitive profile Matrix)

McDonalds YUM BURGER

KING

Critical

SUCCESS

FACTORS

WEIGHT RATING W.SC RATING W.SC RATING W.SC

Product Quality 0.25 3 0.75 4 1 3 0.75 Price

Competitiveness 0.2 3 0.6 3 0.6 3 0.6

Market Share 0.2 4 0.8 3 0.6 2 0.4 R& D 0.05 2 0.1 2 0.1 2 0.1 Financial

Position 0.1 4 0.4 3 0.3 2 0.2

Consumer

Loyalty 0.2 3 0.6 3 0.6 2 0.4

Total 1.00 3.25 3.2 2.45

CPM shows that McDonalds is doing well as compare to its competitors

Actions:

1. It should emphasize on its product quality as it is lacking as compare to YUMS

2. McDonalds should also focus on R&D to gain competitive advantage

SWOT Matrix

STRENGTHS (S):

Value based pricing

Strong R&D

Strong global presence in more

than 100 countries

Standardized quality products

market leader in both the

domestic as well as the

international markets

Large number of loyal customer

Good CSR

Focused on customer’s comfort

by making different zones for

different customers

Convenient and extended hours

WEAKNESSES (W):

sued multiple times for

serving unhealthy food

weak in analyzing the needs of

customers

Do not disclose proper

information to customers

Attracting kids due to which

parents are going against

them

OPPORTUNITIES (O):

Respond to social changes - by

innovation within healthier

lifestyle foods

Joint ventures with retailers

or acquisitions

Introducing new food items

S-O STRATEGIES

introducing new menus with

nutritious ingredients

(S2,S3,O1,O2,O3)

Entering new market by

Acquisition and

Mergers(S3,S5,O2)

W-O STARTEGIES:

Providing healthier products

to avoid legal

actions(W1,O1,O3)

Providing proper information

to customers on product

ingredients through proper

advertisement (W4,O1)

and products

THREATS (T):

Consumer focus on nutrition

and healthier lifestyles.

Recession or down turn in

economy

Major competitors, like

YUM, Burger King, Wendy's

New entrants in the industry

Fluctuation in Exchange Rates

S-T STRATEGIES

Providing healthier products

through R&D (S2,S4,T1)

Reduce threat of competitors

by bringing new innovative

products through strong R&D

and by focusing more on loyal

customers (S1,S2,S3,S6,T3)

W-T STRATEGIES

Strongly analyzing the needs

of customers in order to

reduce the threat of new

entrants and of existing

competitors (W2,T3,T4)

Grand Strategy Matrix

ACTIONS:

It should go for,

Forward integration (joint ventures with retailers)

Product development (launch new innovative products such as sandwiches

with more healthier ingredients)

Market penetration by attracting non users of the product through intensive

advertising and by providing healthier products

Financial Analysis

SPACE Matrix

ANALYSIS:

SPACE Matrix shows that McDonalds should aggressively go for

Forward integration (joint ventures with retailers)

Product development (launch new innovative products such as sandwiches with healthier

ingredients)

BCG Matrix

Company is having high market shares and high growth rate in the industry.

QSPM

STRATEGIC ALTERNATIVES

provide the healthy

low calories food

Entering new

markets through

acquisitions and

mergers

WEIGHT AS TAS AS TAS

OPPORTUNITIES:

Respond to social changes - by innovation

within healthier lifestyle foods

0.12 4 0.48 4 0.48

Joint ventures with retailers or acquisitions 0.2 3 0.6

Introducing new food items and products 0.2 4 0.8 4 0.8

THREATS

Consumer focus on nutrition and healthier

lifestyles.

0.15 4 0.6 3 0.45

Recession or down turn in economy 0.08 3 .24

Major competitors, like YUM, Burger King,

Wendy's

0.09 4 0.36 3 0.27

New entrants in the industry 0.06 3 0.18 2 0.12

Fluctuation in Exchange Rates 0.1 4 0.4

SUM TOTAL ATTRACTIVENESS OF

SCORE

1.00 2.34 3.36

WEIGHT AS TAS AS TAS

STRENGTHS

Strong global presence in more than 100 countries

0.1 4 0.4

market leader in both the domestic as well as the international markets

0.2 3 0.6 4 0.8

Large number of loyal customer 0.08 4 0.32 4 0.32

Strong R&D 0.08 4 0.32 2 0.16

Standardized quality products 0.05 3 0.15 3 0.15

Convenient and extended hours 0.05 2 0.10

Value based pricing 0.06 2 0.12 3 0.18

Focused on customer’s comfort by

making different zones for different

customers

0.05

Good CSR 0.05 2 0.10

WEAKNESS

sued multiple times for serving

unhealthy food 0.15 4 0.20 3 0.45

weak in analyzing the needs of

customers 0.08 3 0.24 3 0.24

Do not disclose proper information

to customers 0.04 2 0.08 2 0.08

Attracting kids due to which parents

are going against them 0.01 3 0.03

SUB TOTAL ATTRACTIVENESS OF

SCORE 1.00 2.26 2.78

Goals for 2011-2013