mdc's final ppt

8/7/2019 MDC'S FINAL PPT

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FOOD PRODUCTION

The McDonald's Story

BY: PRACHI SHARMAANKITA JOHRIMEHAK ARORASURBHI SINGHDEEPIKA SAGAR

INTERNATIONAL BUSINESS

ENVIRONMENT


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WELCOME TO THE WORLD OFMcDonalds

One world, One Burger- McDonalds


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MCDONALDS CORPORATION


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EXECUTIVE SUMMARY

One of the world's largest chain of hamburger

fast food restaurants.

McDonalds currently operates in over 119 countriesaround the world with over 32,000 stores.

Daily serving nearly 47 Million customers.

hamburgers, cheeseburgers, chicken products,

French-fries, breakfast items, soft drinks, shakes,

and desserts main products of McDonalds.

McDonald's revenues grew 27% over the threeyears ending in 2008 to $22.8 billion, and 9%

growth in operating income to $3.9 billion.


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BUSINESS OF MCDONALDS- About 9,000 of the restaurants are companyowned and operated; the remainder is runeither by franchisees or through joint ventures

with local business people.

- 75% of overall sales from 9 Major areas.

- McDonalds Business Model is slightly differentfrom others like as ordinary Franchise fees ,

marketing fees &Rent.

- McDonald's trains its franchisees and othersat Hamburger University in Oak Brook, Illinois.


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HISTORY OF MCDONALDS

1952 Attempts atfranchising

1954 Milk Shake Machine 1955 prototype opens in

Des Plaines, IL 1961 McDonald brothers sellrights

1965 McDonalds go public 1968 Introduction of Big Mac

and shift to Network Television 1970 1600 restaurants 1980 6000 McDonalds

Restaurants 1990 record sales 1994 Kuwait City, Kuwait 2002 Forty seven years after:

30,000 locations 2000 new

restaurants World Wide Web McDonalds a

recognized Brand

Name


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QUICK FACTS

ABOUT MCDONALDS McDonald's was started as a drive-in restaurantby two brothers, Richard and Maurice McDonald inCalifornia, US in the year 1937.

By mid-1950s, the restaurant's revenues hadreached $350,000. Ray Kroc, distributor for milkshake machines,expressed interest in the business, and he finalizeda deal for franchising with the McDonald brothersin 1954. He established a franchising company, theMcDonald System Inc. and appointed franchisees. In 1961, he bought out the McDonald brothers'share for $2.7 million and changed the name of thecompany to McDonald's Corporation. In 1965,McDonald's went public


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The McDonald's headquarters

complex: McDonald's Plaza, is locatedin Oak Brook, Illinois.(It sits on the site of the former headquarters and

stabling area of Paul Butler, the founder of Oak

Brook.)

McDonalds


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Industry and CompetitiveAnalysis

First question is:

WHAT ARE THE INDUSTRYS DOMINENT ECONOMIC FEATURES?

McDonalds competes with other businesses from these other categories as

substitute product competitors but primarily competes in the quick-servicesandwich market

Second question is:

WHAT KINDS OF COMPETITIVE FORCES

ARE INDUSTRY MEMBERS FACING?

1. Rivalry Among Firms2. Threat of New Entrants

3. Threat of Substitute Products

4. Bargaining Power of Customers

5. Bargaining Power of Suppliers


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Third question is:

WHAT FACTORSARE DRIVING INDUSTRY CHANGE AND

WHAT IMPACTS WILL THEY HAVE?

The Fast-Food Industry has begun to focus on the needs of the customer

thats why needs to improve the quality of customer service and the

cleanliness of the restaurant locations in order to please their customers in

hopes that they will become a repeat customer.

Fourth question is:

WHAT MARKET POSITIONS DO RIVALS

OCCUPY-WHO IS STRINGLY POSITIONED

AND WHO IS NOT?


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Fifth question is:

WHAT STRATEGIC MOVES ARE RIVALS LIKELY TO MAKE

NEXT?

Identifying the competitors strategies, resources strengths & weakness.

Sixth question is:

WHAT ARE THE KEY FACTORS FOR FUTURE

COMPETITIVE SUCCESS?

McDonalds Key Success Factors(KSFs) are cost efficiency, product

development, marketing, and

promotions for future competitive

success.


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Seventh question is:

DOES THE OUTLOOK FOR THE INDUSTRY

PRESENTAN ATTRACTIVE OPPORTUNITY?

McDonald will continue to drive success in

2009 and beyond by remaining focused on

being better, not just bigger. McDonald

will do so by further enhancing our

understanding of consumers needs and

wants; facilitating greater sharing and

adoption of best practices and new ideas

worldwide; and leveraging a strategic

approach to implementing initiatives to

drive the best bottom-line impact. Despite

challenging economic conditions, theMcDonalds System is energized by our

current worldwide momentum.

McDonald will continue to build on their

strength in five key areas.


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Company Situation Analysis

First question is:

HOW McDonald IS THE COMPANYS PRESENT

STRATEGY WORKING?

In 2008, McDonald continued to

focus on our key global success

factors of branded affordability,menu variety and beverage choice,

convenience and depart expansion,

ongoing restaurant reinvestment and

operations excellence.

As a result, every area of the world

contributed to 2008 globalcomparable sales and guest counts

increasing 6.9% and 3.1%,

respectively, despite a challenging

economic environment in many

countries.


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Second question is:WHAT ARE THE COMPANYS RESOURCE

STRENGTHS AND WEAKNESS, AND ITS EXTERNAL

OPPORTUNITIES AND THREATS? (SWOT ANALYSIS)

Strengths

y Owns one of the worlds best known brand

namesy Real estate operations bring in large

revenues and allow McDonalds to open morestores

y Countless new innovations- breakfast,playpens, etc.

y Specialized training for managers-y Reinstitute the restaurant review operation

(QSC)y Large market sharey Strongest international presence among fast-

food chainsy Strong leader in Jim Cantalupoy McDonalds does not need to act as finance

corporation to franchisesy McDonalds Plan to Win- focuses on people,

products, place, price and promotion

Weakness

y Customer service ranking is the lo west

among fast-food chainsy Many stores beginning to look out datedy Quality becoming inconsistenty Order accuracy is low compared to other

chains

Opportunities

y Diversification and acquisition of other quick-service restaurants

y Low-cost menu to attract different customersy Initial public offerings in other countries could

raise revenuesy Retail merchandise potentially used to raise

revenues

Threats

y Increased competition among rival sellers,including price wars, product innovation, andgrowth

y Health conscious consumers demandingbetter quality, healthier menu items

y All fast-food chains expected to struggle tomeet new consumer health expectations

y Overall McDonaldaker economy


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Third question is:

ARE THE COMPANYS PRICES AND COSTS

COMPETITIVE?

The value chain at McDonalds is very

competitive in the global fast-food industry. The

following table shows the costs and markups

associated with McDonalds signature

hamburger, the Big Mac, bought at a

McDonalds.

Value Chain Analysis

McDonald's Production Costs $ 0.65

McDonald's Overhead Costs $ 0.70

Royalties

4% Service Fee $ 0.13

Total Costs$$1.48

Retail Markup $1.32

Average price to Consumer $ 2.80


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Strategic Task Analysis

Vision

To be the best & leading fast foodproviders around the globe

Mission

To be the world's best quick servicerestaurant experience. Being the bestmeans providing outstanding quality,service, cleanliness, and value, so that wemake every customer in every restaurant

smile."Values

Our values summarized in Q.S.C & V.Provide good quality, services to customer .Have cleanliness environment whencustomer enjoys their meal .The value offood product makes every customer issmiling.


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Industry Demand Drivers

McDonalds is Well Positioned

Margin Expansion

Healthy FinancialsValuation

Looking Good on other Criteria

Risks


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Ratio Analysis and Forecasting

Marketing Performance of McDonalds

The 4Ps:

i. Product

ii. Price

iii. Promotions

iv. Place


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Globalization & McDonalds

McDonalds in Tokyo, Japan

McDonalds has become emblematic of globalization.The Economistmagazine uses the "Big Mac index" (the price of a Big Mac) as

an informal measure of purchasing power parity among world currencies.

Thomas Friedman suggested that no countries with McDonald's would go to

war with each other, a "rule" broken by the American bombing of Serbia. It

remains a target of anti-globalization protesters worldwide.


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Problem Analysis

Major Problems:

Poor Customer

Service

OpposingViewpoints

Health Factor

Increasing

Competitor


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Problem Analysis

Minor Problems:

Lacking in Management &

Marketing

Quick Service Make Customer Dissatisfaction

Employee Dissatisfaction


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Alternate Strategies

Stay-on-the-offensive

strategy Quick Fortify-

and-defend strategy Global strategy

Diversification


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Recommendations

Stay-on-the-offensive strategy

The main goal of the stay-on-

the-offensive strategy is to be aproactive market leader. The

principle of this strategy is to

continually stay one step aheadof your competitors and force

them to play catch up.


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Implementation Plan

The Plan to Win strategy is important in the offensive

strategy because it is about being innovative and challenging

to the competitors.

Therefore, it needs to continue onward with its successes

while being a head every time with new product innovation,marketing schemes, technology development, customer

service, employee training.


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