Quezon City University

673 Quirino Highway, San Bartolome, Novaliches, Quezon City

BSEntrep-3G

Presented by:

Bismar, Precious Anne L.

Lolong, Shaina D.

Presented to:

Mrs. Liz Morales

October 13, 2021

 McDonald Philippines

The Journey of George Yang

I. TIME CONTEXT

● In 1976, a team of McDonald's execs from Illinios arrived in the Philippines to explore
business possibilities and assess several candidates for a master franchise. GYang was
relatively a small fry compared to others who represented well-established holding
companies who were well-known in fast-moving consumers goods and had networks of
political connections -the big guys. The McDonald's executives were billeted in an
expensive hotel and were chauffeured around town in a limousine.

II. VIEW POINT

● Known as the McDonald man of the Philippines, George Yang (GYang) starred his
journey after graduation from Wharton School of Finance. University of Pennsylvania in
1964.

● Philippines (2,023 stores):

Overseas (468 stores):

Worldwide: 2,471 Total.

•GYang is now thinking of the strategic moves to make on how he could bring his
business well into the future.

III. STATEMENT OF THE PROBLEM

● They rented a New World Apartment unit along Victoria Harbor in Kowloon. Father
and son would wake up early to be at McDonald's opening at 6:00am. With uniforms
and paper hats, they would join the ranks. As a minor, Kenneth worked for only four
hours, but George worked the whole circuit- mop floors, wipe kitchen counters, flip
burgers, ring up cash registers. Their compensation: for Kenneth a daily Big Mac meal;
for George, learning something new (which would come in handy just in case he gets
the franchise in the Philippines).

● GYang wanted to show them how serious he was about the franchise.

● George was undaunted by the refusal from Mcdonald's. He would send them clippings
of economic news, and sometimes he would just write to say hello. He did this for the
next two years.

IV. STATEMENT OF OBJECTIVES

● When GYang was given the opportunity to talk with the McDonald's execs, he did not
waste the opportunity to make his pitch - his Wharton Schooling, his lecturing at DLSU,
his varied work experiences, the good reputation of his family, and his dogged
determination to win the franchise.

● GYang set up an organization, built a store and had to have further training in
Hongkong.

● GYang, inspired by the success of the jewelry business, thought of something on a

larger scale. He had been reading reports on a growing American fast-food chain called
McDonald's, which was being extorted in business reviews in many other countries. He
wrote the Illinois Headquarters in 1974 and expressed interest in the Philippine
franchise. However, Mcdonald's back then was not yet ready to come on the Philippines

V. AREAS OF CONSIDERATION
Strengths

Strong Global Brand: McDonald’s has one of the most recognizable brands in the world. Most
individuals in the United States, and much of the world, instantly recognize the company’s
“Golden Arches”. The company provides consistency in its food, so that you can get the same
taste whether you’re eating a Big Mac in New York or Moscow. However, it also provides
cultural diversity in the foods it offers based on the location of the restaurant, thereby adding to
supplemental sales in each particular region. The company’s success has allowed it to become
the world’s largest fast food restaurant chain in the world.

Diversified Income: Since the company is so large, with so many locations around the world, its
total sales and earnings in different regions tend to offset one another. It has locations in nearly
120 countries, so if domestic sales are slumping, it’s possible that they could be strong in South
America or Europe. As a result, the company doesn’t rely on one key source of income, unlike
many of its rivals. For example, Burger King relies almost exclusively, roughly 98%, on the
United States for its earnings. This diversification allows McDonald’s to have relatively stable
cash flows, and generate consistent profitability.

Weaknesses

Negative publicity: McDonald’s has always maintained the perception that its food is unhealthy,
loaded with fat, carbs, salt, and sugar. Well, these perceptions are generally on point, as most
items on its standard menu are relatively unhealthy. The chain has been widely criticized for
promoting unhealthy eating habits, leading many of its customers to put on pounds. 2004’s
documentary, “Super-Size Me”, didn’t help the company, as it documented Morgan Spurlock’s
rapidly deteriorating health as he ate only McDonald’s for a 30-day period. As a result, many
health-conscious consumers don’t even consider having a meal at McDonald’s, despite its
efforts to introduce healthier options.

High Employee Turnover: Most jobs at McDonald’s are low skilled and low paying. As a result,
there is a significant amount of employee turnover. Many employees don’t take the job
seriously, or only do it for short periods of time, and this leads to lower performance. Since there
is so much turnover, training costs are high, pressuring the company’s bottom line.

Opportunities

Upgraded Menu: New CEO Steve Easterbrook has big plans to turn the company around. Part
of the plan is to offer premium products at some of its locations. The restaurant recently
introduced artisan chicken and sirloin burgers to its menu in parts of the U.S. The company is
also trying to strengthen its position in the high-margined caffeinated beverages industry,
dominated by Starbucks (SBUX). McCafe has had some success by keeping prices competitive,
and the company has been able to harness its vast store network, marketing muscle, and highly
efficient supply chain. The McCafe menu also now includes fruit smoothies, an appeal to more
health-conscious consumers.

Expansion Plans: McDonald’s is always on the lookout to expand its market share. While the
markets in North America and Europe are fairly saturated, there are opportunities in more
underdeveloped nations. The company also recently announced that it was going to refranchise
3,500 restaurants by the end of 2018, accelerating the pace of refranchising and increasing the
global franchised percentage from the current 81% to 90%. This should allow for a more
streamlined, lower cost, and more stable organization.
Threats

Competition: McDonald’s faces significant competition from national, international, regional, and
local retailers of food products. It competes on the basis of price, convenience, service, menu
variety, and product quality. While it does a good job on most of these metrics, product quality is
something that management is working on, given consumers’ increasing preference for quality
and natural products. In the hamburger fast food category, McDonald’s primarily competes with
Burger King and Wendy’s (WEN). However, it still has the highest market share in the overall
fast-food market, with a 22% share, ahead of competitors Yum! Brands (YUM) and Subway up

VI. ALTERNATIVE COURSE OF ACTION

Pros

 If you are hungover even slightly, it is literally like looking to the face of God and having
him wink at you.
 You get to experiment with all the different sauce combinations, realizing how artistic you
are in your choice to combine sweet and sour and hot mustard.
 There is a chance that you could end up getting a burger that actually looks like it does
in the advertisements, which is the equivalent of winning the fast-food lottery.
 Chicken McNuggets
 You don’t have to worry about getting all dressed up like a functional human being to go
get some food, you can just roll up in your Snuggie and eat like the resentful hermit you
are.
 If you have a car, you can roll up to the drive-thru and get your 4,000-calorie meal
handed to you without even having to put on shoes.
 Limitless straws and napkins, a privilege you are all too ready to abuse.
 A decent chance that you will get scalding hot fries, the most punishingly beautiful
sensation the body can experience.
 You can once again have the great existential conversation with yourself about whether
or not you should get a McFlurry, only to ultimately decide against a McFlurry, except
when you’re super-duper stoned.
 The ability to quench a craving for McDonald’s, a craving that we all know can be cured
by nothing other than extravagant quantities of piping-hot McD’s applied directly to the
mouth.
 A soda the size of your head.
 Being able to, through your choice of dining establishment, fully embody everything that
is real and honest about the phrase “YOLO.”
Cons

 Immediately hating yourself afterward with the fire of a thousand suns.

 Looking at the sprawled-out wrappers and greasy boxes of ravaged burgers and
nuggets with the same deep sense of disgust with which one views a particularly zesty
porn right after orgasm.
 Knowing that you are going to feel generally gross the rest of the day/evening, as your
stomach is now distended to twice its normal dimensions with a screeching food baby.
 Eating way more than you intended to eat, even though you secretly knew you were
going to eat absurd amounts of food.
 Realizing that you are indeed eating a box of chicken nuggets barefoot in your car in the
rain while strangers look in at you through the window and wondering what that implies
about your life.
 Being just another faceless sack of flesh in a Snuggie like all of the other plebes that
frequent your local McD’s.
 A decent chance you will get cold, soggy fries, also known as the most cruelly
disappointing sensation the body can experience.
 Having to lie about where you went to lunch.
 Fluorescent lights.
 The moment where you have to psych yourself up by promising yourself that you’ll never
eat this crap again, even though you know, deep down, that you’ll totally be here the
next time you have a little too much to drink on a Saturday night.

VII. DECISION MATRIX

0 (poor) to 5 (very good)

OPTION IMPACT EFFORT PROFITABILITY

1. Accept the
suggestions of the
other individuals for 4 4 4
the improvement of
the business
2. Evaluate the
prices also the
supply and demand
5 3 5
high inflation rate
3. Make sure that
the products are
worth the price and
it will give the 4 4 4
actual benefit that a
consumer can get
VIII. RECOMMENDATIONS
1. Service Differentiation: McDonald’s needs to focus on service differentiation
strategy in order to position the restaurant as a superior service restaurant in the minds
of the target consumers. The service differentiation strategy implies that McDonald’s
shall offer superior services at each step of the customer touch points right from the
placement of order through the delivery of the products.

2. Personnel Differentiation: The availability of well-trained staff is essential for

delivery of high-quality service to the customers. McDonald's should continue to invest
in the training and development of its employees to ensure high service quality. Well-
structured training programs shall ensure the long-term growth of the organization.

3. Integrated Promotional Mix: McDonald’s can implement an integrated promotion

mix that has a balance of both traditional and modern digital media for brand
promotions. McDonald’s must recognize the importance of digital media in the
promotional mix for organizations, and should devise digital marketing strategies to
engage with the online customer base.

4. Product Augmentation: McDonald’s can offer additional product and service

features such as food on demand and home delivery so as to provide convenience to
customers. Product quality can be further enhanced with fresh ingredients. McDonald’s
should continue to invest in menu customization and menu standardization strategies to
attract and connect with target customers in diverse geographical markets.

IX. ACTION PLAN

At McDonald’s striving to do what is right and being a socially responsible company is

part of our heritage. As a business leader, we have a responsibility to take a leadership
role on the issues that are important to our community. McDonald’s has a reputation for
being a responsible advertiser. We adhere to the global McDonald’s standards for
communicating to young people, which require us to communicate to children balanced
food choices, encourage physical activity, provide nutritional information for our foods
and engage subject matter experts and informed third parties to help guide our efforts
for children and families. Over the past decade we have responded to community
concerns around advertising to children and;
  Have voluntarily reduced our advertising during children’s television programs.
 Introduced Happy Meal Choices which provided a way for us to help families
select food options that can be part of a balanced diet but still ensure children
enjoy their McDonald’s experience.

• VII. DECISION MATRIX

0 (poor) to 5 (very good)

OPTION IMPACT EFFORT PROFITABILITY

1. Accept the

suggestions of the

other individuals for 4 4 5

the improvement of

the business
2. Evaluate the

prices also the

5 3 4
supply and demand

high inflation rate

3. Make sure that

the products are

worth the price and

4 4 4
it will give the

actual benefit that a

consumer can get

 Shifted away from toy focused advertising so that Happy Meal advertisements
now concentrate on the overall experience of the Happy Meal.
 We also used our licensed characters to help promote active lifestyles.
  We support a range of local sporting sponsorships that focus on encouraging
activity, exercise and overall wellbeing for children. More widely, we have;
 Introduced DI% nutrition labelling on packaging wherever possible to allow
customers to make informed food choices as well as putting nutrition information
on our website.
 Introduced kilojoule labelling on our menu boards nationally.
 Introduced a range of healthier choices across the menu for both adults and
children.
 Introduced a vegetable oil blend which is virtually free of trans fatty acids.
 Reduced sodium and sugar of products across the menu.

Recommendation

McDonald’s remains the world’s leading global foodservice retailer, and posts big profits
each year. However, as we mentioned above, there are some concerns. The company
continues to face fierce competition, and faces a challenging subset of the population
that is focused on healthy eating. A new CEO and strategy should help to provide more
stability at the company, but this will likely take some time to materialize. As a result, we
don’t think the stock is a good choice at the moment for short-term investors, but
assuming the success of its global initiatives, there could be some appeal for longer-
term investors.