FUNCTIONAL MANAGEMENT PROJECT REPORT ON

"A study on Supply Chain Management of McDonald’s"

Submitted in Partial Fulfillment for the Award of the Degree of

Master of Management Studies (MMS)

(Under University of Mumbai)

BATCH 2021-23

SUBMITTED BY

Mayur Suraj Jadiyar

ROLL NO: 211142

SPECIALISATION

Operation Management

UNDER THE GUIDANCE OF

Prof. Priti Nakhwa

PILLAI INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,

NEW PANVEL – 410206

1
 FUNCTIONAL MANAGEMENT PROJECT REPORT ON

"A study on Supply Chain Management of McDonald’s"

Submitted in Partial Fulfillment for the Award of the Degree of

Master of Management Studies (MMS)

(Under University of Mumbai)

BATCH 2021-23

SUBMITTED BY

Mayur Suraj Jadiyar

ROLL NO: 211142

SPECIALISATION

Operation Management

UNDER THE GUIDANCE OF

Prof. Priti Nakhwa

PILLAI INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,

NEW PANVEL – 410206

2
 DECLARATION

I hereby declare that this Project Report titled "A study on Supply Chain
Management of McDonald’s", submitted by me to PILLAI INSTITUTE OF
MANAGEMENT STUDIES AND RESEARCH, NEW PANVEL – 410206 is
a bonafide work undertaken by me and it is not submitted to any other University
or Institution for the award of any degree diploma or certificate or published any
time before.

Name: Mayur Suraj Jadiyar

Roll No.: 211142

Signature of the Student

3
 PILLAI INSTITUTE OF MANAGEMENT STUDIES AND
RESEARCH, NEW PANVEL - 410206

CERTIFICATE
This is to certify that project titled "A study on Supply Chain Management of
McDonald’s" is successfully completed by Mr. Mayur Suraj Jadiyar during the
IV Semester, in partial fulfillment of the Master's Degree in Management Studies
recognized by the University of Mumbai for the academic year 2021–23 through
PILLAI INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,
NEW PANVEL – 410206. This project work is original and not submitted earlier
for the award of any degree / diploma or associate ship of any other University /
Institution.

Name of Guide: Prof. Priti Nakhwa

Date: ______________________

(Signature of the Guide)

4
 ACKNOWLEDGEMENT
We take this opportunity to share our gratitude to everyone who has made our
internship experience an extremely rewarding and fulfilling one. This exposure
has strengthened our knowledge and given us a chance to use our skills in
observing and solving the challenges faced during this period.
I am grateful to my project guide Prof. Priti Nakhwa, for giving her valuable
guidance in design and the changes that were required to be made for the proper
implementation of the project. Without those efforts this project would not have
been successful.
I would also like to thank my college , Pillai Institute of Management Studies and
Research , New Panel, where I have gained plenty of knowledge which helped
me in turning this project a success. I would also extend my thanks to our
Director, Dr. R. Chandran, for his support and facilities provided to me for the
same.
Lastly, I would like to thank all those who directly and indirectly helped me in
completion of this project.

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 EXECUTIVE SUMMARY

This report is about analysis of McDonald’s which focusing primarily on the

supply chain and logistics management, segment of the market. Identify target
markets and compare and contrast the marketing strategies to attract customers.
The marketing environment has affected the company in managements and
decision making. They have to make changes due to the environment which
change frequently in order to ensure success.
McDonald's Corporation is the world largest fast-food company by sales volume
and retail outlets. McDonald's operates in over 116 countries with its outlets and
franchises. The company is successful and still growing fast. The company uses
its marketing plan carefully when implementing its marketing strategies across
its global outlets and franchises. McDonald's uses the strategy of Plan to Win for
driving its worldwide expansion. This strategy has 5Ps that consist off-price,
promotion. product, place, and people. The company relies on strong strategic
thrust and competitive advantage that mainly focus on its resources for
implementing its marketing objectives.
McDonald ‘serves a variety of fast-food cuisines such as hamburger, chicken
products, French fries, cream deserts and coffee, just to name but a few. The
company is today viewed as a symbol of globalization, as well as the American
way of life.

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SR. NO. TABLE OF CONTENTS PAGE NO.
1. Chapter 1 8-10
• Introduction 8-9
• Objectives 11
• Scope 11
• Limitations 11
2. Chapter 2 12-13
• Literature Review 12-13
3 Chapter 3 14
• Research Methodology 14
4. Chapter 4 15-18
• Brief information of Industry 15
• Pestel Analysis 16-17
• Porter Five Force Model 17-18
• Summary of Industry Analysis 18
5. Chapter 5 19
• Company History 19
• SWOT Analysis 20-21
• 7-S Framework 22-23
• Vision & Mission 25
• BCG Matrix 25-26
• Ansoff Matrix 26-27
28
• Summary of Company Analysis
29-37
• McDonald’s Supply Chain
6 Chapter 6
• Data Representation and Analysis 38-42
7 Recommendations 43
9 Conclusion 44
10 Reference 45
Annexure 46-47

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 Chapter I
Introduction
Supply chain management is that the management of the flow of products and
services and includes al processes that transform raw materials into final
products. it's the broad range of activities required to plan, control and execute a
product be due materials to production to distribution within the most economical
way possible. SCM encompasses the integrated planning and execution of
processes required to optimize the flow of materials, information and capital in
functions that broadly include demand planning, sourcing, production, inventory
management and logistics - or storage and transportation.
Supply chain management is an expansive and sophisticated undertaking that
relies on each partner - from suppliers to manufacturers and beyond- to run well.
due to this, effective supply chain management also requires change management,
collaboration and risk management to make alignment and communication
between all the participants. The organizations that structure the availability chain
are "linked" together through physical flows and Information flows
Physical Flows
Physical flows involve the transformation, movement, and storage of products
and materials. they're the foremost visible piece of the availability chain. But even
as important are information flows.
Information Flows
Information flows allow the varied supply chain partners to coordinate their long-
term
plans, and to regulate the day-to-day flow of products and materials up and down
the availability chain.
A McDonald's burger isn’t just a burger but an outcome of dedicated efforts by
farmers, its suppliers, distribution centre and affirm promise by McDonald's.

8
McDonald's contributes an excellent rear process which enables you to enjoy your
favourite burger fresh & hot, and for that, the availability chain truly acts as a
backbone of the business. the availability chain begins at the grass root level, with
the suppliers receiving the crop from the farmers. The crop is then processed and
dispatched to the Distribution centres in special temperature-controlled tricks,
which ensures that the standard of the things isn't compromised, these things are
stored in rooms with different temperature zones and are finally dispatched to the
McDonalds' restaurants no the idea of their requirements. McDonalds'
expectation of Cold, Clean, and On-Time Delivery' plays really vital role in
maintaining the integrity of the products throughout the whole 'cold chain'
An excellent supply chain encompasses the entire process of logistics and brand
management, maintaining control of every single aspect of such and delivering a
great product always on time, to the right place and at the best possible price with
the lowest cost. A company must strive to harness a great supply chain that has
many links, such as, suppliers, transportation, distribution, customers and public
relations amongst others. Those links must be successful by their own
accord.
SCM is predicated on the thought that almost every product that involves market
results from the efforts of varied organizations that structure a supply chain.
Although supply chains have existed for ages, most companies have only recently
paid attention to them as a value-add to their operations. SCM oversees each
touchpoint of a company’s product or service, from initial creation to the ultimate
sale. With numerous places along the availability chain which will ad value
through efficiencies or lose value through increased expenses, proper SCM can
increase revenues, decrease costs, and impact a company's bottom line.

In SCM, the manager coordinates the logistics of all aspects of supply chain
which consists of 5 parts:

9
• The plan or strategy
• The source (of raw materials or services)
• Manufacturing (focused on productivity and efficiency)
• Delivery and logistics
• The return system (for defective or unwanted products)

10
 Objectives of the study

This study was undertaken to examine in details the role of supply chain
management in the proper functioning of large fast-food outlets

• To know about the company’s distribution centres.

• To analyse various methods used for the transportation of the goods and
services,
• To study about the technologies used by McDonald’s.

Scope

The scope of the study is to know about the complete process of McDonald's. To
understand the supply chain management (SCM) of McDonald's. The scope of
this research project is to know about the operational work conducted by
McDonald's. This project will cover all the aspects that how the raw materials are
finally converted to finished products with the help of distribution centres (DC),
warehouse, transportation vehicles and many other things.

Limitation

This project report is limited to the supply chain management of McDonald's

within India.
Research Methodology
The study was based partly on secondary research, through collation of data
available on the internet, published papers dealing on the subject, and lay
publications viz. newspapers and
magazines.
The research philosophy was to study how successful fast foods outlets run their
supply chains.

Utility of the study

The research would contribute to knowledge base in the area of supply chain
management. Management students would understand the role of supply chain
management in the enhancement of customer satisfaction levels. Practitioners
would also benefit from the findings, to use resources and budgets for successful
implementation of supply chain management initiatives, in the fast foods
industry. The research would also open up scope for further research in related
issues, like amending supply chain processes to improve customer experiences in
the fast-food category.

11
 CHAPTER 2
Literature Review

Transportation and Logistics International (Tim O' Connor):

According to the report, the article emphasises some of the major difficulties
that the transport and logistics sector faces and offers a number of solutions that
businesses may use to overcome these difficulties. The competitiveness and
profitability of transportation and logistics companies can be increased by
utilising technology, streamlining supply chain processes, and funding driver
training programmes.

McDonalds and challenges of modern supply chain (Steve new ,2015):

The study found that the article highlights the significant challenges faced by
McDonald's in managing its global supply chain. The company must balance
the need for product quality and consistency with food safety and sustainability,
while also dealing with the complexity of managing a vast network of suppliers
and stakeholders.

Impact of sustainability practices on the company's supply chain

management (Wu et al. (2020).
The study found that McDonald's has made significant progress in improving
the sustainability of its supply chain by implementing various initiatives, such
as responsible sourcing and packaging reduction.

12
The role of technology in McDonald's supply chain management.
(Chen et al. (2018)
The study found that the company has implemented various technologies, such
as mobile apps and digital ordering systems, to improve supply chain efficiency
and reduce costs.

The challenges faced by McDonald's in managing its supply chain in China.

(Gereffi and Lee (2016)
The study found that the company faced several challenges in sourcing high-
quality ingredients and ensuring food safety due to the complex and fragmented
nature of the Chinese supply chain.

13
 Chapter 3
Research Methodology

The research was based partly on secondary research as well as primary, through
collection of data available on internet, published papers dealing on the subject,
and lay publications viz. newspapers and magazines and through questionnaire.
The research philosophy was to study how successful fast foods outlets run their
supply chains.

14
 Chapter 4
Industry Analysis

The Indian fast-food market has been witnessing rapid climb on the rear of
positive development and presence of massive investments. Currently, market
growth is essentially fuelled by the rising young population, working women,
hectic schedules, and increasing income of the middle-class households. a
number of the unique properties of fast food like quick served, cost advantage, et
are making it highly popular among the mases. Thus, India offers enormous
opportunities for both domestic also as international players.
Indian fast-food industry is expected to grow at a compound annual growth rate
of 81 per cent by 2020 due to changing consumer behaviour and demography.
This indicates that India is sailing in the same boat as US when it comes to fast
food consumption.
However. there has been a rise in levels of calcium and iron, especially in desserts,
consistent with the study that checked out fast food brands like, McDonald's,
Dairy Queen and KFC. on the average per decade, the daily value of calcium
increased by 39. per cent in desserts and therefore the daily value of iron increased
14. per cent.

15
 PESTEL Analysis
Pestel analysis is a strategic tool used to analyse the macro-environmental factors
that can impact a company's operations and profitability. Here is a Pestel analysis
of McDonald's:

Political: Regulations and policies related to food safety, packaging, and

labelling can affect McDonald's operations and profitability. Government policies
related to minimum wages, labour laws, and immigration can also impact the
company's bottom line.

Economic: Economic fluctuations, including recessions and inflation, can impact

consumer spending on fast food and McDonald's profitability. Exchange rate
fluctuations can also affect the company's earnings in international markets.

Social: Changing consumer preferences and health concerns related to fast food
can impact McDonald's sales and reputation. Demographic changes, such as
aging populations and shifting ethnicities, can also affect the company's target
market.

Technological: Technological advancements, including mobile ordering, digital

payments, and artificial intelligence, can impact McDonald's operations and
customer experience. Cybersecurity threats can also affect the company's digital
infrastructure and data privacy.

Environmental: Environmental concerns related to packaging waste,

greenhouse gas emissions, and animal welfare can impact McDonald's
reputation and operations. Regulations related to environmental sustainability
can also increase the company's costs and affect profitability.

16
Legal: Legal disputes related to intellectual property, labour practices, and
product liability can affect McDonald's reputation and financial performance.
Changes in regulations related to advertising, marketing, and antitrust can also
impact the company's profitability.
Overall, McDonald's operates in a dynamic and challenging macro-environment
that requires ongoing monitoring and adaptation to remain competitive and
profitable.

Porter’s Framework:
Porter's Five Forces framework is a useful tool for analysing the competitive
environment of a company. Here's an application of this framework for
McDonald's:

Threat of new entrants: McDonald's operates in a highly competitive industry,

with low barriers to entry. It is relatively easy for new competitors to enter the
market and offer similar products. However, McDonald's has a well-established
brand and a large network of suppliers and franchisees that make it difficult for
new entrants to compete.

Bargaining power of suppliers: McDonald's purchases a large volume of raw

materials, such as beef, potatoes, and packaging materials, giving it significant
bargaining power with its suppliers. However, some suppliers may have more
bargaining power over McDonald's, particularly those with unique or proprietary
products.

Bargaining power of buyers: McDonald's serves a wide range of customers,

from individuals to families, and from budget-conscious to health-conscious
customers. The bargaining power of buyers is relatively low, as there are few
substitutes for fast food.

17
Threat of substitutes: The fast-food industry is facing increasing competition
from healthier and more diverse food options, such as salads and smoothies. This
represents a threat of substitutes for McDonald's products. However, McDonald's
has responded to this threat by introducing healthier options on its menu.

Rivalry among existing competitors: McDonald's competes with other fast-

food chains such as Burger King, Wendy's, and KFC. The level of competition
is high, with competitors offering similar products and targeting similar
customers. However, McDonald's has a competitive advantage through its brand
recognition and extensive global network of franchisees.

Overall, McDonald’s faces intense competition in the fast-food industry, but its
well-established brand, global network of suppliers and franchisees, and strategic
responses to changing consumer preferences have helped it maintain its position
as one of the leading fast-food chains in the world

Summary of Industry Analysis

Globally, fast food generates revenue of over $570 billion -that is bigger than the
economic value of most countries. nI the United States revenue was a whopping
$200 billion in 2015 - quite a lot of growth since the 1970 revenue of $6 billion.
The industry is expected to have an annual growth of 25.% for the next several
years- below the long-term average but coming back from a several year slump.
Indian fast-food market is expected to grow at a compound annual growth rate
(CAGR) of 18 per cent by 2020 due to changing consumer behaviour and
demography. This indicates that India is sailing in the same boat as US when it
comes to fast food consumption. The latest findings should be taken as a
benchmark and, we should work towards cutting down the fast-food consumption
in order to lead a healthy life.
Consumers of fast-food focus on taste, price and quality - in that order. While the
food is often highly processed and prepared in an assembly line, these restaurants
focus on consistency of experience, affordability, and you guessed it - speed.

18
 Chapter 5:

Company Analysis

Organisation history:
The first McDonald’s restaurant was started nil 1948 by brothers Maurice
("Mac") and Richard McDonald in San Bernardino, California. They bought
appliances for his or her small hamburger restaurant from salesman Ray Kroc,
who was intrigued by their ned for eight malt and shake mixers. When Kroc
visited the brothers in 1954 to ascertain how a little shop could sell numerous
milk shakes, he discovered an easy, efficient format that permitted the brothers to
supply huge quantities of food ta low prices. A basic hamburger cost 15 cents,
about half the worth charged by competing restaurants. The self- service counter
eliminated the necessity for waiters and waitresses; customers received their food
quickly because hamburgers were cooked before time, wrapped, and warmed
under heat lamps.
Seeing great promise in their restaurant concept, Kroc offered to start a franchise
program for the McDonald brothers. On April 15, 1955, he opened the primary
McDonald's franchise in Des Plaines, Illinois, and within the same year launched
the McDonald’s Corporation, eventuality buying out the McDonald brothers in
1961. the amount of McDonald's outlets would top 1,000 before the top of the
last decade. Boosted by steady growth, the company’s stock began trading
publicly in 1965.
McDonald's could also be a limited menu restaurant is characterised by speed of
operations. McDonald’s is that the world leading retailer with quite 33,000
restaurants in 118 countries serving quite 67 million customers a day. In India,
the first outlets of the chain threw open their doors to the general public in Delhi
and Mumbai in 1996 within one month of

19
each other. McDonald’s is present in 40 Indian cities with 250 restaurants and
serves 650.000 customers daily.

SWOT analysis of McDonald’s

Strengths:
1. Brand recognition: McDonald's is one of the most recognizable brands in the
world.
2. Global presence: McDonald's has a strong global presence with over 38,000
restaurants in over 100 countries.
3. Franchise model: McDonald's operates using a successful franchise model,
allowing it to expand rapidly while reducing costs and risks.
4. Menu diversification: McDonald's has diversified its menu to include healthier
options and has also introduced breakfast items that have become popular with
customers.
5. Operational efficiency: McDonald's has streamlined its operations to achieve
high levels of efficiency, which has helped it to reduce costs and improve
profits.

Weaknesses:
1. Dependence on few products: McDonald's is known for its burgers and fries,
and this dependence on a few products may make it vulnerable to changes in
consumer preferences. Negative perception: McDonald's has faced criticism
for its food quality, health impact, and environmental impact, which has led to
negative perception among some consumers.
2. Employee turnover: McDonald's has a high employee turnover rate, which
may impact customer service and employee morale.

20
Opportunities:
1. Expansion in emerging markets: McDonald's can expand in emerging markets
where there is a growing middle class and demand for fast food.
Diversification:
2. McDonald's can continue to diversify its menu to include healthier options and
appeal to changing consumer preferences.
3. Technology: McDonald's can leverage technology to improve its customer
experience, such as through mobile ordering and payment, digital menus, and
delivery services.
4. Sustainability: McDonald's can focus on sustainability efforts to improve its
environmental impact and appeal to environmentally conscious consumers.

Threats:
1. Intense competition: McDonald's faces intense competition from other fast-
food chains, as well as from other types of restaurants and food retailers.
Health concerns:
2. McDonald's faces increasing scrutiny over the health impact of its products,
which may impact consumer demand.
3. Economic conditions: Economic downturns can impact consumer spending on
fast food, which can impact McDonald's sales and profits.
4. Legal and regulatory environment: McDonald's faces increasing regulation
related to health, labour, and environmental concerns, which can increase
costs and impact operations.

Overall, McDonald's has a strong brand, global presence, and efficient operations.
However, it faces challenges related to changing consumer preferences and
increasing competition, as well as negative perceptions around health and

21
environmental impact. To address these challenges, McDonald's can focus on
diversification, technology, and sustainability efforts.

7S framework model of McDonald’s

The 7S framework is a management tool that can be used to assess the alignment
of different elements of an organization. Here's an application of the 7S
framework for McDonald's:

Strategy: McDonald's strategy is to be the leading fast-food chain in the world

by offering consistent quality, convenience, and value to customers. It also
focuses on diversifying its menu and expanding its global presence.

Structure: McDonald's has a hierarchical structure with a CEO at the top,

followed by senior executives, regional managers, and franchisees. This structure
allows for efficient decision-making and implementation of strategies.

Systems: McDonald's has well-established systems for ordering, food

preparation, and delivery, which allow for consistency and efficiency across its
restaurants. It also has systems for training and development of employees.

Style: McDonald's has a customer-centric style, focusing on providing a

consistent and convenient experience for customers. It also values innovation and
continuous improvement.

Staff: McDonald's employs a large number of staff across its global network of
restaurants, with a focus on hiring and training people who are customer-focused
and can deliver on the company's brand promise.

22
Skills: McDonald's places a strong emphasis on operational efficiency and has
developed expertise in areas such as supply chain management, real estate, and
marketing.

Shared values: McDonald's shared values include a focus on quality,

convenience, and value for customers, as well as a commitment to diversity and
sustainability.

Overall, McDonald's has a strong alignment of its strategy, structure, systems,

style, staff, skills, and shared values, which has helped it to achieve its goal of
being the leading fast-food chain in the world. It has developed expertise in
operational efficiency and has a customer-centric approach that is supported by
its well-established systems and processes

Size of the Organisation:

McDonalds’ is a limited -service fast food restaurant with more than 36,000
restaurants in over 100 countries. It employs more than 2 million people
worldwide, including employees ta company-owned stores and corporate office
employees.
Revenue
Due to the global crisis caused by the COVID-19 pandemic has significantly
disrupted their business, and they continue to operate in a very challenging and
unpredictable environment, said McDonalds President and Chief Executive
Officer Chris Kempczinski.
McDonalds said its first-quarter earnings fell 17% as the coronavirus pandemic
led to restaurant closures and plunging sales. Shares of the company fell 2.6%
in pre-market trading. The global fast-food chain reported fiscal first-quarter net
income of $1.11 billion, or $1.47 per share, down from $1.33 billion, or $1.72

23
per share, a year earlier. Net sales dropped 6% to $4.71 billion as the company
observed “dramatic changes in consumer behaviour” stemming from the
pandemic.

Geographical spread :-

McDonalds has locations in over 10 countries. More than 38.000 restaurants

around the world serve 96 million people every day. McDonalds’ is able to adapt
its menu and business plans to each culture. It shows that it respects the
differences between cultures and adheres to the country’s’ policy when they
develop additional items for their menu. The company does product tests and
experimentation through the addition or removal of food items based on local
trends and popularity among consumers.
McDonalds’ Corporation has a global hierarchy to cover al its operations
worldwide. This feature of the organizational structure emphasizes corporate
control in the context of managerial
control and direction.
McDonald’s has a modest presence in India today, with approximately 30
restaurants in 5 different cities. 95% of the ingredients served in the restaurants
are sourced locally. The chain opened its first restaurant in India in 1996.
However, this was no small undertaking. Due to cultural dietary differences
between India and the US, the entire menu had to be reworked from the ground
up. Vegetarian items had to remain completely separated from meat items. Beef
and pork were excluded due to Hindu and Muslim religious beliefs. Even sauces
had to remain completely vegetarian . The company spent approximately 6 years
prior to opening its first Indian store developing the resources, connections,
government approvals, and capacities it would need to adequately conduct its
business in the new market.

24
McDonald’s Mission Statement
McDonalds' brand mission is to provide a fun and safe environment where our
customers can enjoy good food made with quality ingredients at affordable prices.
Our worldwide operations ear aligned around a global strategy called the Plan to
Win, which centre no an exceptional customer experience - People. Products,
Place, Price and Promotion. We are committed to continuously improving our
operations and enhancing our customers' experience.

McDonald's Vision Statement

To move with velocity to drive profitable growth and become an even better
McDonald serving more customers delicious food each day around the world.

BCG Matrix

The BCG matrix, also known as the Boston Consulting Group matrix, is a tool
used for portfolio analysis of a company's products or services. Here's an
application of the BCG matrix for McDonald's:

Stars: McDonald's star products are those that have high market share and high
growth potential. These products include the Big Mac and the Quarter Pounder,
which are some of the most popular menu items at McDonald's. These products
generate significant revenue for the company and have the potential for further
growth through marketing and product development.

Cash Cows: McDonald's cash cow products are those that have a high market
share but low growth potential. These products generate significant revenue for
the company, but their growth potential is limited. Examples of cash cow products
for McDonald's include the French fries and the Chicken McNuggets.

25
Question Marks: McDonald's question mark products are those that have low
market share but high growth potential. These products may not be generating
significant revenue for the company yet, but they have the potential for growth
through marketing and product development. Examples of question mark
products for McDonald's include the healthier menu options, such as salads and
grilled chicken sandwiches.

Dogs: McDonald's dog products are those that have low market share and low
growth potential. These products may not be generating significant revenue for
the company and may not have much potential for growth. Examples of dog
products for McDonald's include the McCafé line of coffee products.

Overall, McDonald's has a mix of products in each category of the BCG matrix.
The company has a strong portfolio of star and cash cow products that generate
significant revenue and contribute to its profitability. However, McDonald's also
has question mark and dog products that may require further investment or may
need to be phased out to optimize the company's portfolio

Ansoff Matrix of McDonald’s

The Ansoff Matrix is a strategic planning tool that helps companies determine
their product and market growth strategy. It consists of four categories: Market
Penetration, Market Development, Product Development, and Diversification.
Here's how McDonald's could be mapped onto the Ansoff Matrix:

Market Penetration: This strategy involves increasing sales of existing

products in existing markets. McDonald's has been employing this strategy for
many years, by expanding their menu, offering promotions, and improving their
customer experience. For example, they have introduced new products such as

26
the McRib and the McWrap, and have invested in revamping their restaurants to
improve customer experience.

Market Development: This strategy involves introducing existing products

to new markets. McDonald's has been using this strategy to expand globally.
They have opened restaurants in new countries, adapted their menu to suit local
tastes, and have implemented marketing campaigns to attract new customers.

Product Development: This strategy involves developing new products for

existing markets. McDonald's has been using this strategy to introduce new
menu items, such as the all-day breakfast menu and the Signature Crafted
sandwiches. They have also been experimenting with plant-based menu items to
cater to the growing demand for vegetarian and vegan options.

Diversification: This strategy involves developing new products for new

markets. McDonald's has not focused on this strategy to a significant extent,
although they have experimented with new concepts such as the McCafé,
which offers coffee and pastries, and the Archburger, a premium burger concept.

In summary, McDonald's has primarily focused on Market Penetration and

Market Development strategies, with some Product Development efforts, and
limited diversification into new product categories and markets

27
SUMMARY OF COMPANY ANALYSIS
McDonald's Corporation is a multinational fast-food restaurant chain that
operates in over 100 countries. The company's main focus is on selling fast food
such as hamburgers, chicken, French fries, soft drinks, and desserts. It was
founded in 1940 and is headquartered in Chicago, Illinois. Financially,
McDonald's is a large and profitable company with a market capitalization of
over $180 billion as of September 2021. The company has consistently
generated strong revenue and earnings growth over the years, with revenue of
$21.1 billion and net income of $4.8 billion in 2020. The company's growth
strategy focuses on four key areas: optimizing its menu and value offerings,
modernizing the customer experience, expanding its presence in high-growth
markets, and leveraging technology to improve operations. In terms of
sustainability, McDonald's has made significant progress in recent years. The
company has set ambitious goals to reduce greenhouse gas emissions, source
sustainable ingredients, and promote responsible sourcing practices throughout
its supply chain. One of the company's biggest challenges has been the shift in
consumer preferences towards healthier and more sustainable food options.
McDonald's has responded to this by introducing healthier menu options, such
as salads and wraps, and by partnering with suppliers to improve the quality of
its ingredients. Overall, McDonald's is a financially strong and well-managed
company with a clear growth strategy and a commitment to sustainability.
However, it faces challenges in adapting to changing consumer preferences and
competing with other fast-food chains in an increasingly crowded market.

28
Supply Chain Management of McDonald’s

McDonalds opened its doors in India in October 1996. McDonald’s in India is a

50-50 joint venture partnership between McDonald’s' Corporation (USA| and
two Indian businessmen. Amit Jatia's company Hardcastle Restaurants Pvt Ltd,
owns and operates McDonald’s restaurants in Wester India. While Connaught
Plaza Restaurants Pvt Ltd headed by Vikram Bakshi owns and operates the
Northern operations.
The company has a 100 percent outsourced supply chain. But McDonald’s has
complete control
over its functioning. The performances of outsourced companies are monitored
on Ke) Performance Indicators(KPIs).

E-Procurement System:
McDonalds uses an e-procurement system under the name of Emac Digital
Company which is owned by McDonalds and Accel-KKR Internet Co. E-
Procurement is a website that allows McDonald's franchises to buy everything
needed to run their restaurants. The complete supply chain of the McDonalds is
operated over the Emac e-procurement model.

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McDonald’s E-Procurement Model

Supply Chain of McDonald's

The company is enjoying growth of 30-40 percent every year in India. The
credit goes to the proper research work done before launching McDonald’s' in
India. The experts set together and coordinated groundwork was done to ensure
the successful functioning of its demand and supply system. tI was from 190
onwards, expert teams happened to be in India to check the strength of India's
logistics industry, the reliability of its transport sector, and resource availability.
The result was extremely effective supply-chain at optimal level in place despite
of India “weak infrastructure.
In context to Indian market special menus with religious and cultural sentiments
were designed and in six years’ time the company was ready with its entire
supply chain. McDonald’s which is known for its beef burgers free of beef and
pork in Indian subcontinent.

Outsourced Businesses

The essence of the effective supply-chain model is undoubtedly attributed to its

unique concept of outsourcing. The company has a 100 percent outsourced

30
supply chain, which is a rare case in industry giants. But McDonald’s has
complete control over its functioning. The performances of outsourced
companies are monitored on Key Performance Indicators(KPIs).
There are only two products, buns and Cokes. which are sent directly to the
restaurants. Buns have a limited shelf life; hence they are sent directly to the
outlets. Coca Cola has its own distribution system which ensures quick dispatch
of its products.

MULTI-LAYERED SUPPLY-CHAIN

The McDonald’s supply chain is both critical and multi-layered. There are two
categories in food ingredients supply;

➢ Tier-1 suppliers
➢ Tier-2 suppliers

In Tier-1 there are 14 core suppliers-provide processed products e.g., Vegetable

and chicken patties comes from Vista Processed foods Pvt Ltd. French Fries,
Potato wedged and hashbrowns by McCain Foods India Pvt Ltd. And so, on
In Tier-2 suppliers there are growers and processors who provide lettuce and
potato, poultry items and coating systems that are used for coating the chicken
and vegetable patties. The ingredients are supplied to Tier-1 suppliers who
process item, or instance, into vegetable and chicken patties. This is done by
Vista Processed Foods Pvt. Ltd, or potato products like French fries, potato
wedges and hashbrowns which are expertly churned out by McCain Foods India
Pvt. Ltd. The products are then transported in a dedicated fleet of refrigerated
trucks to the company’s Distribution Centres.

Tier-2 suppliers are relying on local players, most of the suppliers are local.
Some internationally famous foreign players like McCain Foods India are also

31
the part of supply team. McCain set up its Indian business when McDonald's
ventured into the fast-food business in the country.

For supplier to remain in the main stream, the terms of work are very rigorous.
It's a whole lot of responsibility with qualitative assurance lies no suppliers.
McDonald’s' expects its suppliers to personally ensure the quality of their
products to skirt the risk factor

Core Suppliers:

Amrit Foods: Amrit Foods, a division of Amrit Banaspati, has ben associated
with McDonald's India as a supplier of Dairy Mixes, Soft Serve Mxi and Milk
Shake Mix for over a decade now.

Cremica Industries: Cremica Industries was started in 1980 as small icc cream
unit run by Mrs Bector out of her backyard in Ludhiana. However, after its
initial success Cremica added buns and biscuits to its product line and in 1996
McDonald’s selected Cremica to be its supplier for buns, liquid condiments,
batter and breading in collaboration with its international partners.

Dynamix Dairies: McDonald's India has approved Dynamix Dairies, Baramati

(Maharashtra) for the supply of cheese to its restaurants. Dynamix has a modern
automated plant that is fully computer controlled.

Trikaya Agriculture: Trikaya Agriculture is McDonald's supplier of fresh

iceberg lettuce. The farms at Talegaon, Maharashtra produce the crop
throughout the year.

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Vista Processed Foods: Supplier of Chicken and vegetable products from its
Hi-tech refrigeration plants for the manufacture of frozen foods at a temperature
as low as -35C.

Distribution Centres (DC)

The products are transported in a dedicated fleet of refrigerated trucks to the

company’s' Disruption Centre’s. Multi-temperature and single temperature
trucks then transport the fast food swiftly to the 217 McDonald’s restaurants
across the country. The company owns DCs in Noida and Mumbai which are
primary Distribution Centres. The other two Distribution Centre’s are in
Bengaluru and Kolkata and are housed in leased properties. The supply-chain of
the fast-food chain is in effect a hub-and-spoke model because the DCs act as
hubs. The transportation of McDonalds has been completely outsourced and
since 80 percent is refrigerated truck movement, the company has a dedicated
fleet which transports their goods.
Distribution centres (DC) are dry and cold storage facility to store and transport
perishable products at temperatures up to - 22 Degrees Celsius. Value-added
services like shredding of lettuce, re-packing of promotional items continued
since then at the centres playing a vital role in maintaining the integrity of the
products throughout the entire 'cold chain'.
McDonald’s has no legally documented Service Level Agreements (SLAs) with
RKFL. For distribution partner also McDonald’s has set KPIs(Key Performance
Indicators). The distribution
centres are assessed on several factors like:
• administration efficiency
• the total number of cases managed per man hour,
• warehouse efficiency,
• overtime as a percentage of the total number of hours worked and in the case
of transportation,

33
• the number of cases handled per trip,
• truck utilization, etc.

Suppliers:

McDonalds India works with 38 different suppliers on a long term basis and
several other stand-alone restaurants for its various other requirements.
McDonald’s entered its first distribution partnership agreement with Radha
Krishna Foodland, a part of the Radha Krishna Group engaged in food-related
service businesses. Radha Krishna Foodland serves distribution centres to
McDonalds across the country. It handles the entire distribution in the country
with four Distribution Centres (DCs). As distribution centres, the company is
responsible for:
• procurement,
• quality inspection programme,
• storage,
• Inventory management,
• deliveries to the restaurants and

34
• data collection,
• recording and reporting.

Other suppliers for McDonald’s' are Sesame seeds Ghaziabad, UP Iceberg

Lettuce Ferrocoa Farms, Dehradun Buns Shah & Sons Khopoli MH & Cremica
Industries, Noida Vegetable Patty, Kiltran Foods, Taloja, Maharashtra Batter &
Breading Industries, Ludhiana, Punjab ingredients from across the country

Transportation:
The items are stored in rooms with different temperature zones and are finally
dispatched to the McDonalds restaurants on the basis of their requirements. The
company has delivery trucks to transport products at temperatures ranging from
room temperature to frozen state. The specially designed trucks maintained the
temperature in the storage chamber throughout tie journey.

Refrigerated vans for McDonald's

• National inbound - Supplier to DC: 20 vehicles +2 for Kolkata
• Outbound north- DC to restaurant: 13 vehicles
• Outbound western -DC to restaurant: 11 vehicles
• Outbound south - DC to restaurant: 1 vehicle
• Proposed Kolkata - DC to restaurant: 1vehicle

Cold Chain

The Cold Chain is necessary to maintain the integrity of foods and sustain their
freshness and nutritional value. The Cold String is an essential area of the
Supply Chain setting the Cold String has involved the transfer of state-of-the art
food control technology by McDonald’s' and its own international suppliers to
pioneering Indian enterprisers, who have non become an integral part of the
Cold Chain.

35
The term Freezing Chain explains the network for the procurement,
warehousing, traveling and retailing of food products under controlled
temperatures. McDonald’s restaurants store products on daily basis, within a
heat range of -18C to 4C. About 52% in our food products have to be stored
under these conditions before they are really used.

Inbound Logistics

1) To reduce costs, and

2) To ensure that its products are of top quality
Inbound logistics refers to the network that brings goods or materials to your
business. Your inbound logistics network includes everything needed to
transport, store, and deliver goods to your business from other suppliers. The
actual products being brought into your business depend on what you do.
Inbound logistics can cover things like raw materials if you are a manufacturer,
or finished products if you deal with assembly. Essentially, inbound logistics
refers to everything that you need to bring into your operations to create the
finished product you eventually sell.
McDonald's purchases raw vegetables and other raw materials from its fixed,
pre- defined suppliers only, therefore by increasing capital and labor, their
production increase proportionately.
McDonald's has practiced a backward vertical integration, by replacing most of
its suppliers. It has done so for two reasons.

Outbound Logistics

Outbound logistics refers to the transportation, storage, and delivery systems that
bring your products to your customers. Outbound logistics is the way you bring
your finished products to their destination. Your outbound logistics networks will
generally work with different partners than your inbound network. While some
entities in the transportation industry specialize in product distribution and
36
delivery. The process for outbound logistics reflects these differences. While
inbound logistics will bring raw materials into your business, outbound logistics
will move your finished products to their destinations.
McDonald’s is committed to providing the highest quality food and superior
service, at a great value in a clean and welcoming environment. That’s why we
work with our nutrition information needed for customers to make sound
decisions

Return Logistics:
The supply-chain of McDonald’s' has also been expertly devised to include the
significant aspect of return logistics. They have a large component of return
logistics. The buns are packed in plastic crates to ensure their quality. These
crates have to go back to the logistics facility, that’s' where return logistics
comes in. From there they are sent to the bakeries. Supply of Ingredients
Special vegetarian sauce Quaker, Cremica, Phillaur, Punjab.
The reverse logistics executive council defines reverse logistics as the process
of planning, implementing, and controlling the efficient, cost-effective flow of
raw materials, in-process inventory, finished goods and related information from
the point of consumption to the point of origin for the purpose of recapturing
value or proper disposal. More precisely, reverse logistics is the process of
moving goods from their typical final destination, for the purpose of capturing
value or proper disposal. Reverse logistics is more than reusing containers and
recycling packaging materials.

37
 Data Analysis and Representation
1.What is your age?

2. What is your Gender?

3.How long have you worked for McDonald's?

38
4.What is the primary objective of McDonald's supply chain management?

• From the above analysis it is stated that primary objective of supply chain is
to maximize profit and improve customer satisfaction.

5.What is the role of supply chain management in McDonald's?

• The role of supply chain management is to ensure timely delivery of raw

material, managing inventory levels and coordinating with suppliers.

39
6. Which of the following technologies is used by McDonald's for supply chain
management?

• Technologies used by McDonald for supply chain management are RFID,

GPS tracking and cloud computing.

7.How has the COVID-19 pandemic impacted McDonald's supply chain

management?

• COVID-19 pandemic impacted McDonald's supply chain management by

requiring additional safety measure to be implemented in restaurants, by
increasing the demand for delivery and pick up orders and by disrupting global
supply chain and causing shortage of certain ingredients.

40
• 8.How does McDonald's manage its relationships with suppliers?

• McDonald's manage its relationships with suppliers by performing regular

audits and inspections, enforcement of strict contractual agreements and
collaborative partnership and open communication.

9.How does McDonald's ensure the safety of its ingredients?

• McDonald's ensure the safety of its ingredients by conducting regular

inspection of supplier facilities, by using advanced technology to monitor
ingredients quality and by testing ingredients for contamination.

41
10. What is the role of the distribution centre in McDonald's supply chain?

• The role of distribution centres in McDonald’s is the manage inventory and

stock levels.

11.What is the role of technology in McDonald's supply chain management?

• The role of technology in McDonald’s is to automate ordering and inventory

management processes and to monitor and analyse supply chain performance
data.

42
Recommendation:

The food retail giant can make numerous changes that can potentially enhance
operations management at the organization. The company can apply and
implement six sigma in their operations management can be effective in
enhancing and improving the quality of their products. The concept of sigma is
designed to mitigate the defects of the operation systems. It is thus important to
identify the deficiencies in the company’s' food products as a crucial aspect of
het framework. The six-sigma mode has five functions which include defining,
measuring, analysing, improving and controlling. The management at
McDonald’s can apply and implement these aspects and use them to analyse
how they can simplify their operations management so as to accomplish
maximum efficacy.
There Is need for McDonald’s to increase their efforts in reducing the negative
impact towards the environment. The company should increasingly invest in
research which is aimed at minimizing the greenhouse emissions from the
organization. McDonald’s should also ensure that their suppliers to adopt safe
practices in reducing the impact of their livestock to the environment.
Greenhouse emissions from agriculture and livestock can be mitigated in the
long run through carbon sequestration. Lastly. McDonalds needs to curb the
amount of waste they generate through packaging. They need to adopt
packaging materials which are reusable; they can also reward customers who
use their own plastic bags by giving them incentives. Some of the big players in
the food industry have started the use of renewable eco-friendly packaging
materials in the US and McDonald’s should follow suit

43
Conclusion :

McDonald’s is a global fast-food chain known for its quality food and great
customer experience. Through strict and clear policies and under the charismatic
leadership of Skinner, McDonald’s have been able to build a reputable image in
the minds of its consumers. Actively responding to the changing needs of its
customers, it has been able to maintain its brand essence along with sing profits.
A perfect blend of the four management functions namely, planning, organizing.
lading and controlling has been the key driver behind McDonald’s success
McDonald’s Supply Chain is quite uniquely handled with the least number of
employees on McDonald’s payroll. The control over outsourced entities is
commendable. With an ever-growing business of fast-food McDonald's has laid
down its systems efficiently and expanding at enormous speed. The model can
be replicated in other sectors as well.

44
 References

www.mcdonalds.com
www.google.com
http://www.aboutmcdonalds.com/mcd/our_company.html
http://www.mcdonalds.com/us/en/our_story.html
Tim O' Connor Transportation and Logistics International.
Steve new (2015) McDonalds and challenges of modern supply chain.
Wu et al. (2020) Impact of sustainability practices on the company's supply
chain management.
Chen et al. (2018) The role of technology in McDonald's supply chain
management.
Gereffi and Lee (2016) The challenges faced by McDonald's in managing its
supply chain in China.

45
 Annexure
1.What is your age?
• 18-25
• 26-35
• 36-44
• 45 and above

2. What is your Gender?

• Male
• Female
• Other

3.How long have you worked for McDonald's?

• Less than 6 months
• Less than 12 months
• Less than 3 years
• More than 3 years

4.What is the primary objective of McDonald's supply chain management?

• Reducing costs
• Maximizing profits
• Improve customer satisfaction
• All of the above

5.What is the role of supply chain management in McDonald's?

• Ensuring timely delivery of raw materials
• Managing inventory levels
• Coordinating with suppliers
• All of the above

5. Which of the following technologies is used by McDonald's for supply chain

management?
• RFID
• GPS tracking
46
 • Cloud computing
• All of the above

7. How has the COVID-19 pandemic impacted McDonald's supply chain

management?
• By disrupting global supply chains and causing shortages of certain
ingredients
• By increasing the demand for delivery and pickup orders
• By requiring additional safety measures to be implemented in
restaurants and supply
• All of the above

8. How does McDonald's manage its relationships with suppliers?

• Regular audits and inspections
• Collaborative partnerships and open communication
• Enforcement of strict contractual agreements
• All of the above

9. How does McDonald's ensure the safety of its ingredients?

• By conducting regular inspections of supplier facilities
• By testing ingredients for contaminants
• By using advanced technology to monitor ingredient quality
• All of the above

10. What is the role of the distribution center in McDonald's supply chain?
• To receive raw materials and ingredients from suppliers
• To manufacture and process food products
• To deliver finished products to McDonald's restaurants
• To manage inventory and stock levels

11.What is the role of technology in McDonald's supply chain management?

• To automate ordering and inventory management processes
• To track the location and delivery status of products
• To monitor and analyze supply chain performance data
• All of the above

47