McDonalds SM

8/3/2019 McDonalds SM

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McDonalds


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Introduction

The corporation was founded by businessman RayKroc in 1955.

McDonald's Corporation is the world's largest chain ofhamburger fast food restaurants, serving around 64million customers daily.

McDonald's is the leading global foodservice retailerwith more than 33,000 local restaurants serving morethan 64 million people in 118 countries each day.

More than 80% of McDonald's restaurants worldwideare owned and operated by independent local men andwomen.


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Mission & Vision

Vision: McDonald's vision is to be the world's best quickservice restaurant experience. Being the best meansproviding outstanding quality, service, cleanliness, andvalue, so that we make every customer in every restaurantsmile."

Mission:

Be the best employer for our people in each communityaround the world

Deliver operational excellence to our customers in each of

our restaurants; and Achieve enduring profitable growth by expanding the brand

and leveraging the strengths of the McDonald's systemthrough innovation and technology.


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Values

McDonald's, worldwide, stands for QSC&V, where "V" stands forvalue and therefore the value proposition assumes specialsignificance.

At McDonald's, costs are kept low by increasing efficiency andcutting wastage at all levels.

Customers, who walk into a McDonald's restaurant, expect to beserved food that is hot and fresh, made from the highest qualityingredients, served within minutes of placing their order and at aprice, which is affordable.

Attention is given to minute details and things are done the rightway.

Continually review and improve menu offerings to make sure thatnot only customers' expectations are met, but also exceed them.


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Industry

Competitors

Rivalryamong

existingFirms

PotentialEntrants

Suppliers

Substitutes

Buyers

Moderate to Strong

Relatively Weak

Very Strong

Weak


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Supplier Power:

Willingness of Supplier

Supplier-seller collaboration

Supplies are mostly commodities

Customers- industry leaders

Barriers to Entry:

Economies of scale

Unattractive market growth

Competitors strong offensive movesCompetitors expertise in marketing

and efficiency

Threat of Substitutes:

Readily available

Attractively priced

Satisfactory in terms of quality

Buyers power

A large number of small operators

High fixed costs

Undifferentiated and replaced

Switching cost low

Consumer-price-sensitive

Produce the product

Purchases in small volumes

Well-informed about sellers

products,prices, and costs

Degree of Rivalry

Several competing companies.

Product and service differentiation inadequacy.

Aggressive in making fresh moves

-Domestic demand is growing slowly

-- Competitors often rely on price cuts to boost volume

-- Low switching costs for consumers


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SWOT Analysis

Strengths Weakness

Strong Brand name, image & reputation

Large market share

Strong global presence

Specialized training for managersknown as hamburger university

Plan to win focuses on 4ps

Strong financial performance& position

Proven production methods & countless

new innovation ( breakfast, caf etc)

Customer focusThe company has favorable access to

distribution networks

Strong MCD performance in the global

market place

Unhealthy food image

High staff turnover including top

management

Customer losses due to fiercecompetition

Legal actions related to health issues

:use of trans fat & beef oil

Uses HCFC22 to make polystyrene

that is contributing to ozone depletion

Lack of product offerings to meetvaried customer tastes and preferences

Many restaurants are outdated


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Opportunities Weakness

Growing health trends among the

customer

Falling global trade barriers in

attractive markets

Globalization , expansion in other

countries

Diversification & Acquisition of other

quickservice restaurants

Growth of fast food industry

Worldwide deregulation

Low Cost menu that will attract the

customers

Expansion of menu to meet healthier

consumer preferences

Freebies & discounts

Health professional& Consumer

activist accuse MCD of contributing of

high cholesterol, heart attacks, diabetes

& obesity

Relationship B/W MCD Corporate &

Its franchisee

Anti- American Sentiments

Global recession & Fluctuating

foreign currencies

Industry to struggle to meet the

customers towards health &

environmental issues

Rivals copy McDonalds innovations

fairly quickly, eliminating first-mover

advantages

The company has the propensity to

induces shifts in consumer tastes away

from the firm's products


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core competency

Able to produce and sell quick and cheap food toa large number of customers.

McDonalds is well-known for its consistency in

the production. With this concept, they have been able to expand

into other countries, and they currently are thelargest global fast-food chain in the world.

Since they already hold this lucrative position,they should continue expansion in an effort todrive out competition.


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Porter generic strategies

Cost Leadership Strategy.

This generic strategy calls for being the low costproducer in an industry for a given level of quality.

A leading cost strategy for McDonalds is the ability to

purchase the land and buildings of its restaurants McDonalds also developed a strong division of labor

for its production processes, tight management controland product development strategy. Creating a strong

top-down style of management is another leading coststrategy for McDonalds

Using fewer in-store managers allows the company tohire lower-wage workers to complete tasks.


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PORTER VALUE CHAIN ANALYSIS OF

McDONALDS

The goal of these activities is to offer the

customer a level of value that exceeds the cost

of the activities, thereby resulting in a profit

margin for McDonald's.


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Inbound

Logist

ics

Organizing the supply

of food and materials to

restaurants through

approved third partylogistics operators.

Production in huge

plants denoted

exclusive to McDonalds

control fooddistribution and

packaging system

Inbound

logistics


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Technological Development

Human Resource Management

Firm Infrastructure

Procurement

Inboun

d

Logistics

Operations

Outbou

nd

Logistics

Service

Relatively Few

Management Layers toReduce Overhead

Effective Training Programs

to Improve Worker

Efficiency and Effectiveness

Timing of Asset

Purchases

Efficient Plant

Scale to Minimize

Manufacturing

CostsSelection of Low

Cost Transport

Carriers

Delivery Schedule

that Reduces

Costs

Products Priced to

Generate Sales

Volume

Small, Highly

Trained Sales

Force

Investments in Technology in order

to Reduce Costs Associated with

Manufacturing Processes

Frequent Evaluation Processes to

Monitor Suppliers Performances

Policy Choice of

Plant Technology

Organizational

Learning

Efficient Order

Sizes

Operations

R&D in field research

needs of end users.

quality development in

collaboration with good

suppliers

Forward integration:

through franchisees with

control over store

presentation, menu items

etc. and enhance

participation in process

improvement

Operations


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Firm Infrastructure

Procurement

Outbou

nd

Logistics

Marketing

&Sales

Se

rvice

Selection of Low

Cost Transport

Carriers

Delivery Schedule

that Reduces

Costs

National Scale

Advertising

Products Priced to

Generate Sales

Volume

Small, Highly

Trained Sales

Force

Effective Product

Installations to

Reduce Frequency

and Severity

of Recalls

Frequent Evaluation Processes to

Monitor Suppliers Performances

Efficient Order

Sizes

Interrelationships

with Sister Units

Outbound

Logisti

cs

Is the concern of the

franchisee.

Outbound logistics

are growing as a part

of McDonalds

recycling system

integrating in the

logistics ofdistribution center

Outbound

logistics


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Firm Infrastructure

Procurement

Inboun

d

Logisti

cs

Operations

Outbou

nd

Logistics

Marketing

&Sales

Se

rvice

Marketing

&Sales

Long term marketing

objectives are broken

down into shorter term

measurable targets, which

McDonald uses asmilestones.

Country teams are given

autonomy in marketing

mix decision.

Advertising & PR is

outsourced

(Mudra agency

in India)

Marketing


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Firm Infrastructure

Procurement

Inboun

d

Logistics

Operations

Outbou

nd

Logistics

Marketing

&Sales

Se

rvice

Service

Services

provided by thecompanies

enrollment

standards

Service


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Firm Infrastructure

Procurement

Inboun

d

Logistics

Operations

Outbou

nd

Logistics

Marketing

&Sales

Se

rvice

Procurement

Sought partners with expertise on down trade distribution

Procurement


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Firm Infrastructure

Procurement

Inboun

d

Logisti

cs

Operations

Outbou

nd

Logistics

Marketing

&Sale

s

Se

rvice


Technology and development research in quality assurance, and packing

readdressed at lower cost, faster delivery chain system and process control

equipments, recycling system.

R & D


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Firm Infrastructure

Procurement

Inboun

d

Logisti

cs

Operations

Outbou

nd

Logistics

Marketing

&Sale

s

Se

rvice


HRM specialists in R&D and expertise in food formulation, education to

raise awareness of issues and raise demand. The addressing

environmental issues and CRS.

HRM


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Support

Activities



Firm Infrastructure

Inboun

d

Logisti

cs

Operations

Outbou

nd

Logistics

Marketing

&Sales

Se

rvice

Firm Infrastructure

Strong real estate portfolio.International organization more than 50000 employees works in more

than 50 countries,


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BCG Matrix

APMEA

Others

Europe

USA

Relative Position (Market Share)

BusinessGrowthRate

4 High 0 Low 0.2

High

5%

Low


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STAR- APMEA,OTHER COUNTRIES.

The growth rate of this SBUs is 17% for APMEA region and

12% for other countries.

The Relative market share is 2 and 1.7 respectivelyconsidering the revenue earned in year 2010.

CASH COW-USA ,EUROPE.

The growth rate of this SBUs is 2% for USA region and 3%

for Europe.

The Relative market share is 1.79 and 2.5 respectively


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Structure

McDonalds Corporation franchises and operatesMcDonalds restaurants in the global restaurant industry.

All restaurants are operated either by it or by franchisees,including conventional franchisees under franchisearrangements, and foreign affiliated markets anddevelopmental licensees under license agreements.

The Company and its franchisees purchase food, packaging,equipment and other goods from various independentsuppliers.

Independently owned and operated distribution centers,approved by it, distribute products and supplies toMcDonalds restaurants. s


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Key Ratios


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Management Efficency


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Financial condition


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RECOMMENDATIONS

Maintain alignment among the Company, itsfranchisees and suppliers (collectively referred toas the System) has been key to McDonaldssuccess.

locally-relevant restaurant experiences tocustomers

Focus on the plan to win to attract customers &

expansion in other countries Expansion in the market share by more

investments in Asia


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Provide new product & keep innovation.

Minimize customers losses by providing low

cost menu & discounts.

Reinforce the affordability of menu to

consumers


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McDonalds SM

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