GROUP 4- BSHM 3 C

CASE STUDY
(McDonald's Corporation)
 Members:
CACHO, JOSEPH C.
GRADO, ELOISA KIRSTEN
MORALES, MARIBEL
SUAREZ, IVYLYNN
Today's
Discussion
PRESENT SITUATION OF
MCDONALD'S IN THE RECENT YEARS

GLOBAL POSITION OF MCDONALD'S

ANALYSIS FROM THE FISCAL YEARS

2018-2020
 "If you believe in it, and
you believe in it hard, it is
imposssible to fail."

RAY KROC
TABLE OF CONTENTS
Executive Summary - JOSEPH C. CACHO
Introduction - JOSEPH C. CACHO
Current Situation - MARIBEL MORALES
Policy - ELOISA KIRSTEN GRADO
Current Vision and Mission Statement - IVYLYNN SUAREZ
Current Objectives - JOSEPH C. CACHO
Current Strategies - JOSEPH C. CACHO
New Mission and Vision Statement - JOSEPH C. CACHO
Opportunities and Threats - MARIBEL MORALES
Direct Competitor Comparison - JOSEPH C. CACHO
Competitive Profile Matrix - JOSEPH C. CACHO
External Factor Evaluation (EFE) Matrix - MARIBEL MORALES
Strengths and Weaknesses - ELOISA KIRSTEN GRADO
Internal Factor Evaluation (IFE) Matrix - ELOISA KIRSTEN GRADO
STRENGTH-WEAKNESS-OPPORTUNITY-THREAT
MATRIX - MARIBEL MORALES and ELOISA KIRSTEN GRADO
TABLE OF CONTENTS

(SPACE) Matrix - IVYLYNN SUAREZ

Grand Strategy Matrix - IVYLYNN SUAREZ
Boston Consulting Group Matrix - JOSEPH C. CACHO
Internal-External Matrix - MARIBEL MORALES
Quality Strategic Planning Matrix - MARIBEL MORALES and
ELOISA KIRSTEN GRADO
Recommended and Long-Term Objectives - IVYLYNN SUAREZ
Recommendation - JOSEPH C. CACHO
Implementation - MARIBEL MORALES
Time Table - ELOISA KIRSTEN GRADO
Annual Objectives - JOSEPH C. CACHO
Recommended Procedures for Strategic Review and Evaluation -
JOSEPH C. CACHO
Conclusion - MARIBEL MORALES
Executive Summary
Richard and Maurice McDonald in 1940.
Ray Kroc, who acquired equity from the
McDonald brothers and took the firm public
in 1965.

In this case study, we will look into the

challenges and decision-making procedures
faced by McDonald's.
SWOT analysis
SPACE Matrix
BCG Matrix
As a result, it gives a framework within
which the company may seek to improve in
all parts of their operations (operations,
financial situation, customers relations, etc.)
INTRODUCTION

In recent years, McDonald's has had to deal with a variety of possible

growth roadblocks, including harsh criticism and a less-than-favorable

global economic situation, which has seen consumers cut back on

discretionary spending. McDonald's, on the other hand, has utilized

measures to combat these issues, and the company's initiatives have

allowed it to sustain a solid level of development. The company's move

toward a healthier menu, which was achieved by making changes to

existing items and introducing new offerings, has satiated some of its

critics and attracted those who are perhaps more health-conscious than

the "traditional" McDonald's customer, while new items are attracting new

customers.
McDonald’s Corporation headquarters in Chicago, Illinois, U.S

Type Public
Industry Restaurant
Founded May 15, 1940; 81 years ago in San Bernardino,
California
Founder Richard and Maurice McDonald (1st restaurant)
Ray Kroc (Founder of the McDonald's Corporation)
Headquarters Chicago, Illinois, U.S
Number of locations 38,695 restaurants (2019)
Area served Worldwide
Products Hamburgers, Chicken, French fries, Soft drinks,

Milkshakes, Salads, Desserts, Pancake, Coffee,

Breakfast wraps
Number of employees approx. 210,000 (2018) (1.9 million if
franchised is included in 2015)
 POLICY - LEGAL/ ETHICAL AND SOCIAL/ ENVIRONMENTAL ISSUES

McDonald's was recently chastised in China for underpaying student

employees, but the authorities cleared the company.

September 28, 2006, a group of California doctors sued the corporation and six
other restaurant chains. The complaint was based on MCD's September 2002
announcement that it would voluntarily reduce the trans fat content of their
cooking oil by February 2003. The oil, on the other hand, had not been
changed.

McDonald’s became embroiled in controversy in June 2004 when it provided

meal coupons, balloons, and gifts to sickly children in the United Kingdom. This
would have been unremarkable if it hadn't coincided with a local government
study on the high rates of obesity in the United Kingdom.
CURRENT VISION AND MISSION STATEMENT

Mission
Our mission is to make delicious feel-good moments easy for everyone. This is how we
uniquely feed and foster communities. We serve delicious food people feel good about
eating, with convenient locations and hours and affordable prices, and by working hard to
offer the speed, choice and personalization our customers expect. At our best, we don’t
just serve food, we serve moments of feel-good, all with the lighthearted, unpretentious,
welcoming, dependable personality consumers know and love.

Vision
Our reinvigorated strategy is underpinned by our focus on running great restaurants and
empowering our people. Meeting customers’ basic needs is core to what we do, and we do
that by using our execution strength. We will elevate our people practices to ensure our
people feel welcomed, valued, and part of the McDonald’s community; we live by our
values every day and are committed to fostering a safe, respectful and inclusive
workplace, providing quality jobs, and making opportunity open to all.
CURRENT OBJECTIVES
The Company believes that it is our people, all around the world, who set us apart and bring these
values to life on a daily basis. In addition, the Company’s people strategies aim to create an
environment grounded in diversity, equity and inclusion; continually evaluate and evolve
compensation and benefits programs, while offering quality training and learning opportunities; and
uphold a high standard of health and safety for employees and customers alike.

CURRENT STRATEGIES
In 2020, the Company announced a new growth strategy, Accelerating the Arches (the “Strategy”).
The Strategy encompasses all aspects of McDonald’s business as the leading global omni-channel
restaurant brand, and includes a refreshed purpose, updated values, and new growth pillars that
build on the Company’s competitive advantages.
Maximize our Marketing by investing in new, culturally relevant approaches to effectively
communicate the story of our brand, food and purpose.
Commit to the Core by tapping into customer demand for the familiar and focusing on serving
delicious burgers, chicken and coffee.
Double Down on the 3D's: Digital, Delivery and Drive Thru by leveraging competitive strengths
and building a powerful digital experience growth engine that provides a fast, easy experience
for our customers.
NEW MISSION AND VISION STATEMENT
Mission Statement:
Our mission is to make McDonald’s the happiest place in the world. We are committed to continuously
improving our operations and enhancing our customer’s experience. Aligned with our McDonald's Values,
which reflects the experience that customers can expect when walking into a McDonald's fast food
restaurant no matter where it is located
Continuing to develop new menu offerings that give customers a variety of options that meet their
requirements and tastes while still fitting within a healthy diet
Continually evaluating, listening, learning, and improving policy, marketing, and communication
practices
Increasing our involvement with specialists to guarantee that they are informed by the most up-to-
date scientific data and knowledge.

Vision Statement:
Our vision is to expand more our market by continued expansion of branches and by 2030, we would
reach our 40,000 restaurant branch. Also to be known as the world’s best quick service restaurant. To be
the best, you must provide exceptional quality, service, cleanliness, and value to every customer in every
restaurant.
OPPORTUNITIES AND THREATS
OPPORTUNITIES:
1. Global Expansion
McDonald's has over 31,000 restaurants in almost 120 countries. At least 14,000
of the 31,000 are in the United States. However, because of McDonalds concern for
the interests and cultures of the people in each country it enters, McDonalds can build
more restaurants in new locations such as China or India—countries where culture
has a significant impact on people's lifestyles.

2. McDelivery and mobile ordering

McDonald's has formed an alliance with a food delivery service. These mobile
order and delivery initiatives help McDonald’s to reach and meet the ever-changing
demands of its customers.

3. Diverse tastes and needs of customers

Customers' tastes are becoming more diverse. As a result, they require a new
service format in order to be satisfied. McDonald's can attract a new group of
customer with new business formats such as McCafe; for instance, civil servants who
like coffee and want to utilize Wi-Fi to work while drinking coffee. According to
various reports, McCafe-branded stores produce 15% higher revenue than a standard
McDonald's.
OPPORTUNITIES AND THREATS
OPPORTUNITIES:
4. Introduce healthier items to the menu to attract new customer
McDonald's currently offers a variety of salads and sliced apples in its Happy
Meal, as well as some "healthier" options on its side menu, such as yogurt. Healthy
options should be expanded beyond salads so that health-conscious customers can
purchase a complete meal at McDonald's, thus transforming the company's current
image. Moreover, to anticipate the trending vegetarian/vegan diet, McDonald’s should
include meat-alternative burgers and vegan-friendly fries on its menu.

5. Low cost menu

McDonald's can attract clients with limited income by offering a low-cost
menu. This component plays a significant role, particularly in recent years when the
world economy has been struggling. McDonald's can easily implement a low-cost
menu in all of its restaurants.

6. Innovative Products
In 2018, the company started to serve an exclusive beverage – MIX by Sprite
Tropic Berry in their New York outlets. It became an instant hit and is likely to be
served in all of the US. McDonald’s must put efforts to introduce new, innovative items
on their menu to make customers choose them instead of the new fast food outlets.
OPPORTUNITIES AND THREATS
Threats:
1. Fierce Competition from Competitors
With the growth of the fast food sector, numerous new fast food brands have entered the market. It's not as if
there aren't any strong brands that can compete with McDonald's. However, some do exist, and they are becoming
stronger with time, such as Yum!Brands, Wendy's, and Burger King. Furthermore, more casual eating establishments are
expanding their burger menus while lowering prices. We may choose this type of restaurant to fast food restaurants if
we are not in a rush. They also become McDonalds' competitors.

2. Technology Initiatives: High-Risk Investments

Although McDonald's' innovative initiatives have a bright outlook, investing in technology is still risky. The
public's rapid adoption of new technology may slow the return on investment, and the benefits of improving customer
experience may not produce the intended outcomes.

3. Consumer demand for fast food is influenced by new health and fitness trends.
As a result of this tendency, McDonald's revenue has decreased during the last year. If McDonald's plays its cards
right, the threat might become a chance to gain a whole new set of customers.
 OPPORTUNITIES AND THREATS
Threats:
4. Cultural Threat While operating in Various Countries
McDonald's, as a global fast-food company, has been subjected to a variety of cultural hazards in various regions
of the world, harming the brand's reputation. It's also difficult to adjust and function differently depending on the
franchise's location. McDonald's, for example, was embroiled in a major issue a few years ago for utilizing products that
were not considered 'halaal' in Muslim countries. Such controversies make it harder for McDonald's to match customer
expectations in the foreign operating environment due to inherited risks, resulting in a deterioration of the brand's
image.
5. Public health crisis
Restaurants, particularly fast-food chains, are required by the US government to identify their menu items along
with calorie counts. With an increase in obesity cases among Americans, fast food restaurants such as McDonald's will
continue to be overshadowed by their past product offers, such as Supersized Meals, no fruit or yogurt, and a limited
salad option. Furthermore, individuals are more concerned about heart disease. As a result, they demand nutritious food
as well as healthy lifestyle.
6. Constant Environmental Concerns
McDonald's, like every other food conglomerate, is under intense pressure to improve its waste management policies
in order to reduce pollution. Growing environmental concerns require McDonald's to take action and set an example for
other fast food restaurants, but it is not that straightforward. Due to an increase in plastic pollution, environmental
groups requested to McDonald's' board of directors in March 2018 that the company's over 37,000 outlets globally stop
using plastic straws.
EXTERNAL FACTOR EVALUATION ANALYSIS

McDonald's has a total weighted score of 2.66, indicating that it is responding well to the
industry's current opportunities and threats. In other words, the firm's strategies
efficiently take advantage of existing opportunities while minimizing the negative
consequences of possible external threats.
STRENGTHS AND WEAKNESSESS

Strengths:
1. Strong brand name, image and reputation
McDonald’s has built up huge brand equity. It is the no 1 fast food company by sales,
with more than 31,000 restaurants serving burgers and fries in almost 120 countries.
The image of McDonalds is recognized everywhere. This brand is in top ten of the
most powerful brand names in the world with Coca-Cola, Nokia or GM.

2. Large market share

McDonald’s is considered as the largest player in size and global reach. When Wendy’s
or Burgers King are losing market share in 2006, McDonalds still increases its market
share. Market share of McDonalds in the recent time is about 19% while Yum!Brands is
9% and both Wendy’s and Burger King is 2%.

3. Specialized training for managers

McDonald’s is very serious on training managers. This company has its own program
to train managers the most professionally, which is called Hamburger University. As a
result, McDonalds has many good managers who can help company development well.
STRENGTHS AND WEAKNESSESS

Strengths:
4. Technology innovative
McDonald’s is keeping at the forefront of technology around the globe. For example, In
Brazil McDonald’s is currently studying the installation of Internet access terminals in
some outlets as well as enabling customers to order online. This will create a more
efficient process that will reduce the amount of lag time between a customer’s orders
and pick up of the order.

5. Good marketing strategies

No matter the continent, children and adults know the face of Ronald McDonald is
synonymous with the colossus restaurant chain. This results in wonderful marketing
strategies among management which conducts a very thorough market analysis,
resulting in much success around the globe
STRENGTHS AND WEAKNESSESS

Weaknesses:
1. Unhealthy food image
McDonald's has been impacted by negative press like the documentary "Supersize Me"
by Morgan Spurlock in which he contributed our society’s obesity to McDonald's and
other fast-food chains. In fact, each McDonalds dishes provides large amounts of
calories but not too much nutrition.

2. Customer loses due to fierce competition

McDonalds has to compete with many strong brand name in fast food industry such as
Wendy’s, Burger King or Yum!Brands. This fierce competition makes McDonalds lose a
large number of customers who prefer favor of other brands.

3. Dissatisfied Franchisees
Franchisees are beginning to become very dissatisfied with the fees that McDonald’s
are forcing them to pay. As the company continues to expand, they are also increasing
the amount of fees franchisees have to pay for the use of the notorious fast-food
brand. Many people are not very happy about this and as a result many franchisees are
selling their businesses.
STRENGTHS AND WEAKNESSESS

Weaknesses:

4. Unbalance meals
Although McDonalds tries to update its menu by healthy criteria, McDonald’s meals
are still unbalance. For example, there are many dishes with chicken (both grilled and
fried), bacon, beef, rib or egg. Besides, just several dishes are salad with vegetable and
fruit. Moreover, amount of fruit or vegetable is not much.

5. High employee turnover rate

Although McDonalds has many good managers as well as skillful employees, the
turnover rate is still high. Every year many of their employees are fired out of the
restaurants. Moreover, many others quit their jobs, especially part time employees
because of low salary as well as too high working pressure.
6. Action related to environmental issue
McDonalds uses HCFC – 22 to make polystyrene that is contributing to ozone
depletion. The company has to repair this weakness if doesn’t want to be criticized.
INTERNAL FACTOR EVALUATION ANALYSIS

The IFE Matrix provides important information for strategy formulation. Total
weighted score of 2.58 which is significantly above 2.5 indicates that McDonald’s
Corporation has a strong internal position.
X-axis: -1.4 + 5 = 3.6
Y-axis: 4.83 + -2.83 = 2.0

STRTATEGIC POSITION AND ACTION EVALUATION ANALYSIS

The SPACE Matrix represents that the management of McDonald’s Corporation uses aggressive
strategy, which is identified on analyzing the key external and internal factors. The financial
strength of the company have competitive advantage in the market place and the industry is
attractive and stable even if threats of new entrants are present. In accordance with the
competitive profile matrix, McDonald’s is attaining competitive lead in the product quality,
customer loyalty, and market share.
GRAND STRATEGY MATRIX ANALYSIS
Grand Strategy Matrix is a tool for formulating alternative actions/strategies on the basis of the
two important factors which are competitive position in the market and market growth rate.
The McDonald’s company lies in the first quadrant of the Grand Strategy Matrix. It can be
interpreted that the company is in a rapid market growth with high market potential and is
representing strong competitive position. Therefore, it requires vertical and horizontal integration
that will also assist the organization in leading the premium market with strong competitive
position.
The McDonald's Corporation is in the stars position of the BCG matrix, based on its financial
situation and industry growth in the current worldwide market. The corporation's current market
structure is secure, and it is a global economic powerhouse. As a result, the company must adhere a
market development and market penetration strategy in order to turn the segment into a cash cow
and ensure long-term financial viability.
According to this IE matrix, McDonald's should hold and maintain its
position. McDonald's should pursue strategies focused on increasing
market penetration and product development.
Based on the analysis of key internal factors, the Market Penetration strategy is more
helpful for the McDonald’s Corporation. Based on a study of key external factors, the
Market Penetration strategy is more beneficial for the McDonald’s Company. In each
set of options, the Sum Total Attractiveness Score reveals which strategy is the most
appealing. Extend the research and development function, as well as strategic insights
and operational innovation has the highest score of 5.67. The highest ratings suggest
more appealing strategies considering all relevant external and internal factors
influencing strategic decisions. The strategy to promote a healthier menu comes next,
with a score of 4.21.
RECOMMENDED AND LONG-TERM OBJECTIVES
1.DEVELOP MORE MENUS
McDonald's offered a diverse range of goods. However, this does not preclude them from developing new items. Product
development refers to the introduction of new items in McDonald's existing markets. McDonald's must spend a lot of time
trying to figure out what customers want and then developing new goods to meet their demands.

2. MARKET PENETRATION
McDonald's must use a variety of tactics to advertise its current products in existing markets.

3. MARKET DEVELOPMENT
McDonald's must expands their market by offering new goods in existing markets. McDonald's must primarily strategize to
grow into new geographic markets.

RECOMMENDATION

Product Development - Create new products

-$25,000,000
Advertisement- Market Penetration

-$37,000,000
Set-up new branches- Market Development
-$156,000,000
Total : $218,000,000
IMPLEMENTATION
Overall, McDonald’s must need to stand by their strategy of developing
new markets ,product development and market penetration to sustain
viability.
TIME TABLE

2003
McDonald’s first global ad campaign, “i’m lovin’ it” is launched in Munich, Germany on September 2.

2015
McDonald’s USA launched All Day Breakfast.

2017
Global McDelivery Day is celebrated on July 26 to support the global launch of McDelivery with UberEATS.

2020
McDonald’s opens its first net zero-designed restaurant at Walt Disney World Resort, which creates
enough renewable energy on-site to cover 100% of its energy needs on a net annual basis.
ANNUAL OBJECTIVES

Based on current conditions, the following information is provided to assist in forecasting the
Company's future results for 2021.
• The Company expects 2021 System wide sales growth, in constant currencies, in the low double digits,
and expects net restaurant unit expansion to contribute about 1% to 2021 System wide sales growth.
• The Company expects operating margin percent to be in the low-to-mid 40% range.
• The Company expects full year 2021 selling, general and administrative expenses of approximately 2.3%
of System wide sales,reflecting a decrease of about 2% to 4% in constant currencies.
• Based on current interest and foreign currency exchange rates, the Company expects interest expense
for the full year 2021 to decrease about 1% to 3% due primarily to lower average debt balances as the
Company expects to pay down current debt levels to return to pre-COVID-19 leverage ratios.
• The Company expects the effective income tax rate for the full year 2021 to be in the 21% to 23% range.
Some volatility may result in a quarterly tax rate outside of the annual range.
• The Company expects 2021 capital expenditures to be approximately $2.3 billion, about half of which
will be directed towards new unit expansion across the U.S. and International Operated Markets.
ANNUAL OBJECTIVES

• In 2021, about $1.1 billion will be dedicated to our U.S. business, about $500 million of which will be
allocated to approximately 1,200 restaurant modernization projects. Globally, the Company expects to
open over 1,300 restaurants. We will open nearly 500 restaurants in the U.S. and International Operated
Markets segments, and our developmental licensee and affiliates will contribute capital towards over
800 restaurant openings in their respective markets. Additionally, the U.S. expects to close roughly 325
restaurants in 2021; a majority of which are lower sales volume McDonald's in Walmart locations. The
Company expects about 650 net restaurant additions in 2021.
• The Company expects to achieve a free cash flow conversion rate greater than 90%.
RECOMMENDED
PROCEDURES FOR
STRATEGY REVIEW AND
EVALUATION

Richard Rumelt Strategy

Evaluation
I. Consistency
II. Consonance
III. Advantage
IV. Feasibility
Financial
I. Annual Reports
II. Quarterly Reports
From the above discussion, it can be
interpreted that McDonald’s Corporation is
a top player in the restaurant industry and a
powerhouse in the global economy.
McDonald’s must implement the strategies,
‘Market Penetration’, ‘Market Development’
and ‘Product Development’ to sustain its
long-term viability.

CONCLUSION