Case Study of McDonaldss

Presented by:Raquedan, Arlene F.Abrigo, Glenn JoyBautista, Elizabeth D.Abacan, Neil D.Udaundo, Edrei Y.

Pamantasan ng Lungsod ng Maynila(University of the City of Manila)Intramuros, ManilaGRADUATE SCHOOL OF MANAGEMENTMaster in Business Administration

Point Of viewNewly appointed CEO of McDonalds, Charles Bell Time FrameApril 15, 2004, after the death of James R. CantalupoExecutive SummarySince it was founded more than 50 years ago, McDonalds has been defining the fast food business. However, the company had been stumbling over the past decade due to its rapid expansion in the 1990s and the lack of adequate employee training. McDonalds was headed into serious trouble until the arrival of James Cantalupo, who turned around the company by introducing new additions in its menu and cutting back on its expansion plans. During his brief tenure, McDonalds recorded strong growth in sales over the last three quarters.

Statement of the ProblemWith the unexpected death of its present CEO, James Cantalupo, what is the best strategic move Charles Bell, the newly appointed CEO, should take to sustain its sales and profits growth? Statement of the ObjectiveFor McDonalds to achieve positive growth in sales and profits though another three quarters by achieving the following objectives:Upgrade operationsAttract new customers and encourage existing customers to visit more oftenImprove quality of service

Areas of ConsiderationStrengths:Worldwide recognition (largest chain of outlets spread around the globe)

Prior to James Cantalupos death, his brief tenure has improved the companys lackluster performance as reflected in strong growth sales over the last three quarters.

Big success of the McGriddles breakfast sandwich which has been bringing in about one million new customers every day.

New CEO Bell shared Cantalupos focus on customer experience

The Up and Out grading system will ensure all branches/franchisees will have the high-level service and quality

Focused on what it is known for which is the Burger Business, and improving its franchisees and while putting off expansion plans

Energy and fresh ideas brought by younger executives

Weaknesses:the quality of service has not made any progress compared to its rivals

the steady decline in profit margins of McDonalds franchisees

the failure of the non-burger chains acquired by Cantalupos predecessor

Dependence on cutting prices in order to drive up sales, which its franchisees are frustrated about

Consistent failures with its new product introductions

Public perception. McDonalds contributed to American societies obesity.Opportunities:Opportunity to continue to build on sales by introducing another new set of product/s after success of the McGriddles sandwich

Opportunity to redesign its brand similar to what its other franchisees have done

Opportunity to develop fresher and healthier products in its menu

Opportunity to take advantage changing customer habitsThreats:Competition has been coming from quick meals of all sorts that can be found in supermarkets, convenience stores and even vending machines.

Increased competition with same burger brands like In-N-Out chain and YUM!

Public health crisis. With a growing of obesity cases among Americans, McdDonalds will continue to be overshadowed by its products offerings (supersized meal)

Growing demand for healthier chains like Cosi and Zuizino

The risks involved in moving into the line of childrens clothing and toy

Alternative Courses of Action

ACA#1: Product development. To satisfy the preferences of consumers, McDonalds will introduce new and healthier products in its menuACA#2: Improvement of fast food operations/processes. Invest in the training of its workforce and necessary equipment upgrades to provide faster service/ better quality products ACA#3: Product diversification. Product lines would include childrens clothing, toys, interactive videos and books

ACA#1: Product development. To satisfy the preferences of consumers, McDonalds will introduce new and healthier products in its menu

AdvantagesDisadvantagesAddresses the trend toward healthy eatingNew customer experienceNew products may mean new customersMay lose revenue from its other existing productsNew R & DUncertainty of success depending on the customers response

ACA#2: Improvement of fast food operations/processes. Invest in the training of its workforce and necessary equipment upgrades to provide faster service/ better quality products

AdvantagesDisadvantagesCustomer satisfaction in the long-runWill create brand loyalty due to efficient service experienceSatisfied customers will eventually drive up sales/revenuesWill have the chance to compete with its rivals, in terms of quality of serviceWill improve financial performance for the company and its existing franchisesRebuilding, renovation and reimaging requires capital costTemporary shutdown of operations due to restructuring and training Time-consumingDilemma for franchisees whether to undergo such costly upgrades

ACA#3: Product diversification. Product lines would include childrens clothing, toys, interactive videos and books

AdvantagesDisadvantagesMay create bigger appeal for kidsWill make the brand more prominent May increase sales if successfulRequires royalty cost in making deals with partners relative to product lines.Uncertainty of customer response

Legend:3-Highly Favorable2-Moderately Favorable1-Least FavorableConclusion

ObjectivesACA# 1ACA# 2ACA# 3Increase in Sales/Profits231CostsCustomer Satisfaction321321Long-term benefits231 Total9105

Based from the comparative analysis of all the alternative courses of action, ACA# 2 is the best alternative.

Plan of Action

ActivityPerson-In-ChargeTime FrameIdentify areas where improvements in processes and employee skills can be made Interview with managersSurvey with customersReverse engineer competitors processesCharles Bell and Store Managers6 months2. Engage employees in various training activities / Purchase new equipment and install to storesHR Head / Operations Head5-7 months

3. Identify pilot locations to set-up new practices / equipment upgradesOperational Heads and Managers of Stores1-2 months4.Pilot run new practices / equipment UpgradesOperational Heads and Managers of identified Pilot Stores6 months5.Evaluate its contribution to quality of service and customer satisfaction Store Managers3 months6.Set corrective actions for identified issues.Store Managers3 months

Thank You