MCDONALDS CASE STUDY

Group Members Hiba Munnawer Sidra Javed Maria Mustafa Zakia Siddiqui

STRATEGY FORMULATION FRAME WORK

1. INPUT STAGE EFE IFE CPM 2. MATCHING STAGE TOWS MATRIX SPACE MATRIX BCG MATRIX IE MATRIX GRAND STRATEGY MATRIX 3.DECISION STAGE QSPM

1.

INPUT STAGE

EXTERNAL FACTOR EVALUATION MATRIX (EFE):

Key External Factors Weight Rating Weighted Score

OPPORTUNITIES Respond to social changes - by innovation within healthier lifestyle foods Joint ventures with retailers or acquisitions Introducing new food items and products 0.12 0.2 0.2 4 3 4 0.48 0.6 0.08

THREATS 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 0.15 0.08 0.09 0.06 0.1 4 3 3 2 3 0.6 0.24 0.27 0.12 0.3

TOTAL

1.00

2.69

ANALYSIS OF EFE MATRIX:

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

INTERNAL FACTOR EVALUATION MATRIX (IFE):

Key Internal Factors Weight Rating Weighted Score

STRENGTHS Strong global presence in more than 100 countries market leader in both the domestic as well as the international markets Large number of loyal customer Strong R&D Standardized quality products Convenient and extended hours Value based pricing Focused on customers comfort by making different zones for different customers Good CSR WEAKNESSES sued multiple times for serving unhealthy food weak in analyzing the needs of customers Do not disclose proper information to customers

0.1 0.2 0.08 0.08 0.05 0.05 0.06 0.05 0.05

4 4 3 3 3 2 3 3 2

0.4 0.8 0.24 0.24 0.15 0.10 0.18 0.15 0.10

0.15 0.08 0.04

4 4 3

0.6 0.32 0.12

Attracting kids due to which parents are going against them

0.01

0.02

TOTAL

1.00

3.42

ANALYSIS OF IFE MATRIX:

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
McDonalds Critical SUCCESS FACTORS

4 = superior, 3 = above average, 2 = average, 1 = poor. YUM BURGER KING

WEIGHT

RATING

W.SC

RATING

W.SC

RATING

W.SC

0.25 Product Quality Price Competitiveness 0.2

0.75

0.75

0.6

0.6

0.6

0.2 Market Share 0.05 R& D 0.1 Financial Position 0.2 Consumer Loyalty

0.8

0.6

0.4

2 4

0.1 0.4

0.1

0.1

0.3

0.2

0.6

0.6

0.4

Total

1.00

3.25

3.2

2.45

ANALYSIS OF CPM:
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

2.

MATCHING STAGE

TOWS STRATEGIES:
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 customers comfort by making different zones for different customers Convenient and extended hours S-O STRATEGIES introducing new menus with nutritious ingredients (S2,S3,O1,O2,O3) Entering new market by Acquisition and Mergers(S3,S5,O2) 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

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) 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)

OPPORTUNITIES (O): Respond to social changes - by innovation within healthier lifestyle foods Joint ventures with retailers or acquisitions Introducing new food items and products

S-T STRATEGIES 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 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)

FINANCIAL STRENGTH

Ratings

Earnings per share liquidity Net income ROI Growth Potential (increasing demand). Technological knowhow (Requirement high) Ease of entry into the market Financial stability

6 3 5 5 19 5 2 5 3 15 -1 -5 -3 -1 -10

+1 Worst +6 Best

INDUSTRY STRENGTH

+1 Worst +6 Best

ENVIRONMENTAL STABILITY

Competitive Pressure is High Rate of inflation Price range Demand variability

-6 Worst -1 Best

COMPETITIVE ADVANTAGE

Market share Product quality Technological know how Control over distributers

-1 -3 -3 -3 -10

-6 Worst -1 Best

CONCLUSION

FS Average is 19/4 =4.75 IS Average is 15/4=3.75 ES Average is -10/4=-2.5 CA Average is -10/4=-2.5 Directional Vector Coordinates: x-axis: -2.5+3.75=1.25 y-axis: 4.75+(-2.5)=2.25

SPACE MATRIX

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 more healthier ingredients)

BCG MATRIX

IE MATRIX: THE IFE TOTAL WEIGHTED SCORE

STRONG 3.0 TO 4.0

AVERAGE 2.0 TO 2.99

WEAK 1.0 TO 1.99

THE EFE TOTAL WEIGHTED SCORE

HIGH 3.0 TO 4.0

II

III

MEDIUM 2.0 TO 2.99

IV

VI

McDonalds

LOW 1.0 TO 1.99

VII

VIII

IX

ANALYSIS OF IE
IE Matrix shows the MacDonald's in IV quadrant i.e. the BUILD AND GROW ACTIONS: It should go for, Forward integration (joint ventures with retailers) Product development (launch new innovative products such as sandwiches with more healthier ingredients)

GRAND MATRIX

ANALYSIS OF GRAND 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

3.

DECISION STAGE

QSPM

STRATEGIC ALTERNATIVES provide the healthy low calories food Entering new markets through acquisitions and mergers

WEIGHT OPPORTUNITIES: Respond to social changes - by innovation within healthier lifestyle foods Joint ventures with retailers or acquisitions Introducing new food items and products 0.12 0.2 0.2

AS

TAS

AS

TAS

0.48

4 3

0.48 0.6 0.8

0.8

THREATS Consumer focus on nutrition and healthier lifestyles. Recession or down turn in economy 0.15 0.08 4 0.6 3 3 0.45 .24

Major competitors, like YUM, Burger King, Wendy's

New entrants in the industry Fluctuation in Exchange Rates SUM TOTAL ATTRACTIVENESS OF SCORE

0.09
0.06 0.1

4
3

0.36
0.18

3
2 4

0.27
0.12 0.4

1.00

2.34

3.36

provide the healthy low calories food

Entering new markets through acquisitions and mergers

WEIGHT

AS

TAS

AS

TAS

STRENGTHS
Strong global presence in more than 100 countries market leader in both the domestic as well as the international markets Large number of loyal customer

0.1 0.2 0.08

4 3 4 4 3 2 2 0.6 0.32 0.32 0.15 0.10 0.12 3 4 4 2 3

0.4 0.8 0.32 0.16 0.15 0.18

Strong R&D
Standardized quality products Convenient and extended hours Value based pricing

0.08
0.05 0.05 0.06

Focused on customers comfort by making different zones for different customers

Good CSR

0.05
0.05

2 4 3 2

0.10 0.20 0.24 0.08 3 3 2 0.45 0.24 0.08

WEAKNESS
sued multiple times for serving unhealthy food weak in analyzing the needs of customers Do not disclose customers proper information to

0.15 0.08 0.04

provide the healthy low calories food

Entering new markets through acquisitions and mergers 6.14

Total attractiveness score

4.6