Analysis

for

MacDonald's Egypt

Present By:
Sheyam Samir Soha Mohamed

Athar El hadad Huda Awad

Rania Kamal Eldin

Presented To:
Dr. Hesham Abdelhamid
MacDonald's Egypt
MacDonald's History:
In 1954 Ray Kroc, a salesman of Multi mixer milkshake machines, learned that brothers Richard
(Dick) and Maurice (Mac) McDonald were using eight of his high-tech Multi mixers in their San
Bernardino, California, restaurant. He was curious so he went to San Bernardino to take a look at the
McDonalds' restaurant.

Abut MacDonald's:
McDonald's® reputation for Quality is internationally known. It is especially unique because of our
highest quality standards. We use the finest available products and carefully developed formulae

Macdonald's Vision:
McDonald's® Brand vision is "To be the best quick service restaurant experience". Being the
best means providing outstanding quality, service, cleanliness, and value, so that we make every
customer in every restaurant smile.

Macdonald's Mission:
And our brand mission "Is to be our customer's first choice, when it comes to, top quality
products, outstanding service / cleanness and great value for money ".
Vision Statement Components:
A vision statement should be what we return to whenever we get confused about our business goal
or its subordinate business objectives.

A vision statement should contain a summary statement that is memorable and enhances the
effectiveness of our vision statement by acting as a trigger to the rest of the vision in the minds of
those people who read it.

A summary statement is not THE vision statement. A vision statement should say something about
us, our organization, our operating environment, our dream. When we read it, it should tell us where
we are going. We should not be able to substitute our vision statement for other organizations inside
and outside our industry

Vision statement should be:

Answer the basic question, “What do we want to become?”
A clear vision provides the foundation for developing a comprehensive mission statement. Many
organizations have t should be Short, preferably one sentence, and as many managers as possible
should have input into developing the statement .
It should be challenging for in the same field

Mission Statement Components:

Mission statements can and do vary in length, content, format, and specificity. Most
Practitioners and academicians of strategic management feel that an effective statement should
include nine components. Because a mission statement is often the most visible and public part of the
strategic-management process, it is important that it includes the nine characteristics as summarized
in Table 2-4, as well as the following nine components:

1. Customers—who are the firm’s customers?

2. Products or services—what are the firm’s major products or services?
3. Markets—geographically, where does the firm compete?
4. Technology—Is the firm technologically current?
5. Concern for survival, growth, and profitability—Is the firm committed to growth and financial
soundness?
6. Philosophy—what are the basic beliefs, values, aspirations, and ethical priorities of the firm?
7. Self-concept—what is the firm’s distinctive competence or major competitive advantage?
8. Concern for public image—Is the firm responsive to social, community, and environmental
concerns?
9. Concern for employees—Are employees a valuable asset of the firm?
 McDonald’s Mission & Vision Statements – Recommendations

Vision: (no change)

"To be the best quick service restaurant experience"

Proposed new Mission statement:

"Is to be our customer's first choice in Egyptian fast food, when it comes to, top quality
products, updated safe food preparing equipment, outstanding service / cleanness, top

performance staff, and great value for money in a friendly environment ".
 McDonalds Egypt PESTEL analysis

A PESTEL analysis is an acronym for a tool used to identify the forces facing an organization. The letters
stand for Political, Economic, Social, Technological, Environmental and Legal. Depending on the
organization, it can be reduced to PEST or some areas can be added i.e. International.

In marketing, before any kind of strategy or tactical plan can be implemented, it is fundamental to conduct a
situational analysis. And the PESTEL forms part of that and should be repeated at regular stages (6 monthly
minimum) to identify changes in the macro environment. Organizations that successfully monitor and
respond to changes in the macro-environment are able to differentiate from the competition and create a
competitive advantage.
McDonald is a U.S. based company which was founded by Richard and Maurice s McDonald in 1940. It i
the largest chain of hamburger fast food restaurants. Currently McDonald is present in 119 countries and
serves more than 68 million customers every day. The number of locations where McDonald is present is
more than 34000 worldwide. It is a public
ny listed
compa
on NYSE as MCD. Main products of McDonald
are hamburger, chicken, soft drink, French fries, coffee, salads, milkshakes, breakfasts and desserts.. In this
report further there would be PEST analysis of McDonald in Egypt to understand
vironmentthe market en
affecting
MacDonald's.
MacDonald'sin Egypt with branches exceeding 60 with fastest delivery
and service
nutritional facts
addressed on its products. Food Safety, quality assurance and environmental friendly
production are integral to the company

INTRODUCTION
 PESTEL analysis:

Political:
More political stability and country control was gained since 2013. This encourages MacDonald’s among
others to increase investments in the Egyptian Market.
Government in the new era highly encourage and support investments as this would be a point of strength
that help the recovering economy , this allow McDonalds to invest more and be assured for securing the
investments. Taxes before 2005 were 40%, after 2005 and until now it is reduced to 20% this encouraged
McDonalds to expand into what it is now 60 Branches and rising. Foreign trade and labor law are unlikely to
adversely affect McDonald’s expansion.
Health policies of the government too have an impact on the performance of fast food brands. It is not just
the finance related regulations but also the food and health related regulations that affect McDonalds’ sales
and profits. Even with political changes, Considering the McDonald business we can say that it handles
different political situations in its business operations as it is present in more than 119 countries. At many
locations the company faces problems like changing rules and regulations because of health implications of
the fast food e.g. obesity or cholesterol. Handling political situation is not difficult for McDonald as it is
required to follow the rules and regulations of the country which it is doing very well.
Economic:
Economy of Egypt goes to stability but still with foreign Debt rate that will continue for years . High
Inflation rates adversely effects McDonalds Egypt as the prices are increasing while most of the people
have low income this leads them to spend money on cheaper products, McDonalds may also need to
increase its prices because it's supplies are becoming more expensive. People trying to save even less
amounts are likely to seek cheaper products.

Yet, despite this there are still categories in big cities of Egypt that can still considers McDonalds a very
affordable product. Egypt is a tourist place and that is why there is a scope of establishing food business for
different kind of people. So when tourism is regained fully, chances of McDonald’s expansion will increase.

SOCIAL:
McDonald is an expert in dealing with the different socio – cultural environment of different countries. The
quality of life in Egypt is very variable and great social variability exists. But considering the population
number, still MacDonald’s can increasingly grow. People from different cultural and social background live
here tourism and foreigners working in the country as expats also need MacDonald’s products off course
considering different places, taste and preferences.

People who live in Egypt or come to visit the country are basically from countries where McDonald has
already established so it does not have to face much difficulty in dealing with the social preferences in
Egypt.

Teen agers are growing group and in face of recent modern lifestyle attitude would encourage MacDonald’s
expansion .It introduces new products besides the standard menu that suits every culture for e.g. in the
Middle East MC Arabia

Technological:
The growing importance of technology for the business world is well known. Technology is virtually
everywhere. It is at the counter; it is inside people’s pockets. Technology enables everything in the modern
world from sales to customer service. Technology can amplify the power of any brand. It can increase its
brand power.

Technology helps McDonald in its production, distribution and marketing. McDonald mainly uses television
commercials for its marketing but with continuously growing internet facilities and subscribers have helped
the company in establishing its business. Company invests in its branding activities with the help of social
networking websites like Facebook and twitter.

Technological improvement in inventory management, vendor management and supply chain management is
highly beneficial for the company. With the help of computer technology pricing and billing has become
very easier.

McDonalds also uses new technology in cooking and preparing some low fat items that suit some people

Environmental:
For McDonalds Egypt they order nearly 92% of their supplies from Egyptian producers whom produce the
supplies in Egyptian land because Egypt is considered to be a good agriculture region for its good climate
and having the Nile River.
Environmental changes and climate changes being a worldwide phenomenon are unlikely to affect
Macdonald’s considering the lesser magnitude and less impact on the country. There are also no NGO
activities that target MacDonald’s considering political, police and military stability that protect assets.
McDonalds are focusing on having environment friendly and sustainable supply chains. The environment
friendly brands also have a larger customer base
McDonald's address they recognize our responsibilities to protect and preserve the environment for future
generations to come.

Legal:
The legal environment of a nation has a deep effect on how well the businesses do there. If the legal
environment is relaxed, the companies do better. The burden is less in such environments. Compliance is an
important factor. Bureaucracy can play a role in the country but still is not so limiting to MacDonald’s to
operate profitably.

Labor law, health laws regulations can be applies with compliance. Taxes are affordable In Such an
environment will make it easier for brands like McDonalds to earn their profits and deliver their services.

Conclusion
In conclusion, McDonald’s faces a number of challenges from its external environment, including the
threat of further government health regulation in the US, social concerns about the unhealthiness of their
products, adverse publicity from hoaxes or failed marketing campaigns on the internet, and additional
protests regarding the environmental impact of the business.
Through understanding these challenges, McDonald’s marketing and strategy managers can use the business’
strengths, such as its commitment to food quality and safety, its successful marketing campaigns, and the
overall strengths of its brand, to turn these challenges into potential business opportunities. In order to do so,
they can use the information provided by this PESTEL analysis as the groundwork for a comprehensive
SWOT analysis, to enable the intelligent setting of future strategy for McDonalds. In this way, they can help
to ensure McDonald’s remains a market leader in the fast food industry.
Porter’s five forces model of completion
 1- Bargaining Power of McDonald’s(Weak Force
)
Suppliers

Working with MacDonald’s is a privilege considering the multinational nature of the company. This element of the
Five Forces analysis shows
the impact of suppliers on firms. In McDonald’s case, the weak bargaining power of
suppliers is based on the following external
factors:
Large number of suppliers (weak force)
Low forward vertical integration (weak force)
High overall supply (weak force)

The large population of suppliers weakens the effect of individual suppliers on McDonald’s. In relation, most of
McDonald’s suppliers are not vertically integrated. This means that they do not control the distribution network linked
to McDonald’s faciliti
es. Also, the relative abundance of materials like flour and meat reduces suppliers’ influence on
McDonald’s. Thus, this element of the Five Forces analysis shows that supplier power is a minimal issue for
McDonald’s.





2- Bargaining Power of McDonald’s Customers/Buyers (Strong Force)

McDonald’s must address the significant power of customers. This element of the Five Forces analysis deals with the
influence and demands of consumers. In McDonald’s case, the following are the external factors that contribute to the
strong bargaining power of buyers:

• Low switching costs (strong force)

• Large number of providers (strong force)
• High availability of substitutes (strong force)

Because of the ease of changing from one restaurant to another (low switching costs), customers can easily impose
their demands on McDonald’s. In relation, because of market saturation, consumers can choose from many fast food
restaurants other than McDonald’s. Also, there are many substitutes to firms like McDonald’s. These substitutes
include other fast food providers and foods that one could cook at home. Based on this element of the Five Forces
analysis, McDonald’s must develop strategies to increase customer loyalty.
 3- Threat of Substitutes or Substitution (Strong Force)
Substitutes are a significant concern for McDonald’s. This element of the Five Forces analysis deals with the potential
effects of substitutes on firm growth. In McDonald’s case, the following external factors make the threat of
substitution a strong force:

• High substitute availability (strong force)

• Low switching costs (strong force)
• High performance-to-cost ratio (strong force)

There are many substitutes to McDonald’s products, Consumers can also cook their food at home. It is also easy to
shift from McDonald’s to these substitutes (low switching costs). In addition, these substitutes are competitive in terms
of quality and consumer satisfaction. In this element of the Five Forces analysis of McDonald’s, substitutes are a
major issue that the company must address through approaches like product quality improvement.

4- Threat of New Entrants or New Entry (Moderate Force)

New entrants can impact McDonald’s market share. This element of the Five Forces analysis refers to the effects of
new players on existing firms. In McDonald’s case, the moderate threat of new entry is based on the following
external factors:

• Low switching costs (strong force)

• Moderate capital cost (moderate force)
• High cost of brand development (weak force)

Because of the low switching costs, consumers can easily move from McDonald’s toward new fast food restaurant
companies. Also, the moderate capital costs of establishing a new restaurant makes it moderately easy for small or
medium-sized firms to affect McDonald’s. However, it is expensive to build a strong brand that could match the
McDonald’s brand.

5- Competitive Rivalry or Competition with McDonald’s (Strong Force)

McDonald’s faces tough competition because the fast food restaurant market is already saturated. This element of the
Five Forces analysis tackles the effect of competing firms in the industry environment. In McDonald’s case, the strong
force of competitive rivalry is based on the following external factors:

• High number of firms (strong force)

• High aggressiveness of firms (strong force)
• Low switching costs (strong force)

The fast food restaurant industry has many firms of various sizes, such as global chains like McDonald’s and fast food
restaurants. Also, most medium and large firms aggressively market their products. In addition, McDonald’s customers
experience low switching costs, Thus, this element of the Five Forces analysis of McDonald’s shows that competition
is among the most significant external forces on the business.
Conclusion
:
As we can see from the previous analysis regarding porter's 5 model we can summaries it as following
regarding the important from
factors
therong
st force to the weak force :

•Bargaining Power of McDonald’s Customers/Buyers

•Threat of Substitutes or Substitution
Strong
Forces •Competitive Rivalry or Competition with McDonald’s

•Threat of New Entrants or New Entry (Moderate Force)

Moderate

•Bargaining Power of McDonald’s Suppliers

Weak

References
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