Team 10

Angela Adala Yi Li Yanxin Jiang Xi Chen

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Quick Facts Started in 1940 as a barbeque drive-in restaurant

by two brothers, Dick and Mac McDonald, in San Bernardino, California

Raymond Kroc, founder and builder of McDonald's Corporation was a milkshake machine salesman prior to meeting the two brothers in 1954

By 1958, McDonald’s had sold its 100 millionth hamburger.

McDonald’s restaurants is operated by either a franchisee, an affiliate, or the corporation itself

Revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants.

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Vision & Mission

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

Summarized in Q.S.C.V - Quality, Service, Cleanliness and Value - this is the guiding force behind it’s service to customers.

The value of food products makes every customer smile.

Being the best company for all employees in every community around the world

Deliver services with superior operational systems for each customer in every branch of McDonald’s restaurants

Keep progressing in a favorable direction asa brand, while continuing to develop operational systems through innovation and technology

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Value Chain AnalysisPrimary Activities

Inbound Logistics - Organizing the supply of food and materials to restaurants through approved 3rd party logistics operators

Production in huge plants exclusive to control food distribution and packaging systems

Operations- Ensure specific guidelines are followed in food preparation Computerized order tracking technology that ensures consistency in service

and food production Outbound Logistics - Growing as a part of McDonald’s recycling system

integrating in the logistics of distribution centers Efficient crew who store and distribute goods from the warehouse at the right

time Marketing - Long term objectives are broken down into short term measurable

targets which as used as milestone accomplishments Franchises are given autonomy in marketing mix decisions

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General Administration - Strategic planning to ensure their competitive strategy of customer service that sustains their growth and capitalization is met

They conduct surveys and have a hot-line where customers can call to file complaints or offer suggestions about their experience so as to strengthen the company

Technological Development - R&D in field research needs for end user Quality development in collaboration with good suppliers Forward integration through franchisees with control over store presentation

and menu items HRM - Consistently provide sufficient training to employees on how to perform

work processes and how to treat customers Each time their product is redesigned, they conduct training sessions for all

employees to enhance their development Procurement - Flexibility to choose the best suppliers in the market who can

increase or decrease the amount supplied without being held to a benchmark Sought partners with expertise on down trade distribution

Value Chain AnalysisSupporting Activities

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Financial Analysis

2009-12 2010-12 2011-12 2012-12 2013-12 TTM -

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

Revenue

2009-12 2010-12 2011-12 2012-12 2013-12 TTM -

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

Net income

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Financial Analysis

Key Efficiency RatiosEfficiency 2009-12 2010-12 2011-12 2012-12 2013-12 TTMDays Sales Outstanding 15.98 16.98 16.99 17.94 17.5 17.5Days Inventory 2.85 2.73 2.54 2.6 2.6 2.6Payables Period 16.43 19.97 21.31 22.91 23.63 23.63Cash Conversion Cycle 2.39 -0.26 -1.78 -2.38 -3.53 -3.53Receivables Turnover 22.84 21.5 21.49 20.34 20.86 20.86Inventory Turnover 128.18 133.62 143.97 140.47 140.2 140.2Fixed Assets Turnover 1.09 1.1 1.2 1.16 1.11 1.11Asset Turnover 0.78 0.77 0.83 0.81 0.78 0.78

Profitability 2009-12 2010-12 2011-12 2012-12 2013-12 TTMTax Rate % 29.84 29.34 31.32 32.36 31.92 31.92Net Margin % 20.01 20.55 20.38 19.82 19.87 19.87Asset Turnover (Average) 0.78 0.77 0.83 0.81 0.78 0.78Return on Assets % 15.51 15.9 16.94 15.98 15.51 15.51Financial Leverage (Average) 2.15 2.19 2.29 2.31 2.29 2.34Return on Equity % 33.2 34.51 37.92 36.82 35.69 35.69Return on Invested Capital % 17.5 18.24 19.48 18.33 17.71 17.71Interest Coverage 14.71 16.53 17.26 16.64 16.72 16.72

Copyright 2014 Morningstar, Inc.

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McDonald's –Five Forces

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McDonald's –Five Forces

Threat of Competition HIGH Very similar products in the Fast Food industry High Competitors Advertising Capabilities Location of outlets are close EX: KFC, Chick-fil-A

Threat of New Entrance Moderate Easy to enter, low setup cost Lack of ability to compete with MCD( cost efficiency,

customer awareness)

Threat of Substitutes Moderate Substitutable food Irreplaceable image

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McDonald's –Five Forces

Power of Suppliers LOW Worlds largest restaurant chain in sales High bargaining power over its suppliers(volume) Most of them owe MCD for their own existence Low power of suppliers—Lower the cost of raw materials

and High competitive price

Power of Buyers LOW Less chances of switching, high brand image through

differentiation and uniqueness Attractive price Buyer don’t have bargaining power(Low volume)

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McDonald's –Industry Life Cycle

Embryonic Stage Growth Stage Maturity Stage Decline Stage

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McDonald's –Macro environments

Economic • Inflation• Exchange rate

Social• Employment

Technological• Improvement by advanced technology

Environmental• Forced not to harm the environment

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McDonald's – Competitors There are many competitors are eating their shares. The main things they have to compete with each other

are1.Minimizing cost

2.Customer satisfaction

3.Healthy ingredients

4.Convenient locations

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McDonald's – Diversification Mc Café

Modern, relaxing mood

Free Wifi

Attract new market segments

Variety of drinks

Satisfy hunger

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McDonald's –VRIO Analysis Value: McDonald’s hold a high value in accordance to its brand

image and exploitation of the available resources which had helped it evolved successfully for more than five decades.

Rarity: The utility of the resource may be franchise oriented and spread through its breadth but the main control still remains in the hands of the top 50 management authorities. The franchisee has to follow the company rules strictly to run a franchise of McDonald’s.

Imitability: McDonald’s may not be difficult to imitate in aspect of the product but its functionality is very difficult to achieve.

Organization support: McDonald’s is always ready to exploit new resource and the organization structure is well organized. It provides a good support to its franchise operations.

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McDonald's –Generic Strategies Broad Differentiation

drive through, lobby, restroom, Breakfast menu, Lunch menu , and someone who is capable of speaking Spanish

today in over 14,000 restaurants provide free WiFi service for the customers

McDonald’s has successfully used a differentiated market segmentation strategy by targeting the family unit and particularly children with their “Happy Meal” and price

Leading Cost It offers basic fast-food meals at low prices. They are able to keep prices low through a division of labor that

allows it to hire and train inexperienced employees rather than trained cooks.

It also relies on few managers who typically earn higher wages.

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McDonald's –SWOT Analysis Strength Brand name Adapts to local markets Socially responsible with charities Safety and quality food

Weakness Management's failure to see trends that do not fit High employee turnovers Price competition Controlling quality with franchised operations

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McDonald's –SWOT Analysis Opportunities Upscale restaurant Organic foods for the health conscious Going green Expanding to new parts of the globe

Threats Sued for unhealthy food many times Health concerns Competitors Contamination risks Geopolitical issues affect

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McDonald's – BCG Matrix

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McDonald's – Recommendation

Develop new offerings

Buy local popular chains such as Haidilao in China or Panera Bread.

Form a JV with companies like Nestle to sell branded and packaged ice cream and exploit the brand name.  

company nameYou wanna a bite!

THANK YOU.