Mc Donald Corporation: EFE Matrix

OPPORTUNITIES O1: Anticipated 4% growth rate in QSR industry. O2: Low fat, low calorie, healthy hamburger first on market. O3: Many restaurants have outdated appearance. O4: Respond to social changes by healthy food innovations. O5: Increased beverage options (Gourmet coffees). O6: Breakfast not available at 25% of locations. O7: Joint ventures with retailers can place new locations in high traffic areas at lower capital cost. O8: Continued focus on corporate social responsibility. O9: Intl expansion into emerging markets. O10: Diversify portfolio. THREATS T1: More health conscious customers. T2: Vulnerability in older, established markets to modern upstarts. T3: Global economic recession = reduced consumer spending. T4: Markets in US and EU are mature and saturated. T5: Subway and YUM! Brands expanding into developing markets at a higher rate. T6: Litigation T7: Brand equity at risk: 80% of restaurants owned by franchisees. T8: Contamination of the food supply could damage sales, reputation, etc. T9: Intense price pressure from competitors. T10: Negative public opinion campaigns. TOTAL: Weight 0.06 0.07 0.06 0.04 0.06 0.06 0.03 0.02 0.06 0.03 Weight 0.07 0.04 0.06 0.07 0.06 0.03 0.04 0.04 0.07 0.03 1.00 Weighted Rating Score 3 0.18 1 3 3 3 3 4 2 3 2 0.07 0.18 0.12 0.18 0.18 0.12 0.04 0.18 0.06

Weighted Rating Score 3 0.21 3 4 3 2 3 3 4 4 2 0.12 0.24 0.21 0.12 0.09 0.12 0.16 0.28 0.06 2.92

Mc Donald Corporation: IFE Matrix

Strengths: S1: Highly successful and recognized advertising. (Im loving it) S2: Strong employee training and promotion mostly from within. S3: Strong Investor Reputation. S4: Strongest Brand Image. S5: McDonalds is recognized as a community oriented, socially responsible company. S6: Strong Global Presence S7: Use pure ingredients and take food safety very seriously. S8: Consistently solid financial performance. S9: Strong innovation and product development. S10: Large real estate portfolio. S11: Economies of Scale Nearest competitor in U.S. is half McDonalds size. Weight 0.08 0.02 0.06 0.07 0.01 0.08 0.04 0.05 0.03 0.02 0.05 Rating 4 3 4 3 2 3 3 3 2 3 4 WS 0.32 0.06 0.24 0.21 0.02 0.24 0.12 0.15 0.06 0.06 0.20

Weaknesses: W1: Lowest Customer satisfaction rating in the industry (69), even below IRS. W2: High employee turnover in their restaurants. W3: Assembly line approach makes it difficult and costly to adapt to changing trends, like organic foods and healthier offerings. W4: Core product line out sync with trends toward healthier lifestyles for adults and children. Highly negative health image (Super size me!) W5: Sales demonstrates seasonal effects. W6: 80% of restaurants are franchise owned, placing image and reputation in others hands. W7: Over-saturation of real estate in the US. W8: Struggles with fluctuations in operating and net profits, which has impact on investor relations. W9: 70% of operating revenues and 45% of debt are in foreign currency. TOTAL:

Weight 0.10 0.04

Rating 3 2

WS 0.30 0.08

0.08

0.16

0.07 0.02 0.05 0.04 0.03 0.06 1.00

2 2 2 3 3 3

0.14 0.04 0.10 0.12 0.09 0.18 2.89

Mc Donald Corporation: SWOT Analysis

Strengths S
1. Highly successful and recognized advertising. 2. Strong employee training and promotion mostly from within. 3. Strong Investor Reputation. 4. Strongest Brand Image. 5. Recognized as a community oriented, socially responsible. 6. Strong Global Presence 7. Use pure ingredients and take food safety very seriously. 8. Consistently solid financial performance. 9. Strong innovation and product development. 10. Large real estate portfolio. 11. Economies of Scale

Weaknesses W
1. 2. 3. 4. 5. 6. 7. 8. 9. Lowest Customer satisfaction rating in the industry. High employee turnover in their restaurants. Assembly line approach makes it difficult and costly to adapt Core product line out of sync with healthy lifestyle trends. Sales demonstrate seasonal effects. 80% of restaurants are franchise owned. Over-saturation of real estate in the US. Struggles with fluctuations in operating and net profits. Foreign currency revenue and debt. Remodel restaurants in US and Europe (W1,O3) 2. Roll out McCafe beverage service into greater number of US and EU restaurants (W1,O5) Increase operating hours to include breakfast in more US and EU locations to increase return on assets (W3,O6) Use real estate holdings for joint venture or new restaurant chain (W7,O10)

Opportunities O
1. Growth in Quick Service Restaurant industry. 2. Low fat, low calorie, healthy hamburger 3. Many restaurants have outdated appearance. 4. Healthier lifestyle trends. 5. Increased beverage options. 6. Breakfast not available at 25% of locations. 7. Potential for joint ventures with retailers. 8. Focus on corporate social responsibility, sustainability. 9. International expansion into emerging markets. 10. Diversify portfolio.

SO Strategies
1. Develop and heavily market more environmentally friendly product packaging (S1,S9,O8) 2. Accelerate growth in China, India, Brazil (S4,S6,O9) Develop a healthier hamburger, and be first on the market (S9,O2) Continue to introduce healthier product offerings into the menu (S97O4) Open a new, healthier, more upscale chain (S10,S11,O4,O10)

WO Strategies
1. 2.

2. 3.

3.

4.

4.

5.

Threats T
1. 2. 3. 4. 5. 6. 7. 8. 9. More health conscious customers. Vulnerable in older, established markets to upstarts Global economic recession. Markets in US and EU are mature and saturated. Competitors expanding into developing markets. Litigation: Brand equity at risk. Food contamination could damage sales, reputation, etc. Intense price pressure from competitors.

ST Strategies
1. Increase advertising focus on healthier food offerings and better nutritional info (S1,T1) High focus on purity and quality ingredients (S7,T8) Increase Dollar Menu items to increase customer traffic in down economy (S8,S11,T3) Starve out competitors by leveraging supply chain and economies of scale to lower prices (S8,S11,T9)

WT Strategies
1. Implement a franchise buyback, shape-up, and sell program, financed by selling off some company owned stores (W1,T7) 2. Increase restaurant automation to lower operating costs, employ less labor (W1,W3,T3,T9) 3. Trim operations in the US and Europe and focus on developing areas where health is of less concern (W4,T1,T4)

2. 3.

2.

4.

3.

10. Negative public opinion campaigns

Mc Donald Corporation: SPACE Matrix

Steps in developing a SPACE Matrix: 1. Select a set of variables to define Financial Position, Competitive Position, Stability Position, and Industry Position. 2. Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the variables that make up the FP and IP dimensions. Assign a numerical value ranging from 1 (best) to 6 (worst) to each of the variables that make up the SP and CP dimensions. 3. Compute an average score for FP, CP, IP, and SP by summing the values given to the variables of each dimension and dividing the number of variables included in the respective dimension. 4. Plot the average scores for FP, IP, SP, and CP on the appropriate axis in the SPACE Matrix. 5. Add the two scores on the x-axis and plot the resultant point on X. Add the two scores on the yaxis and plot the resultant point on Y. Plot the intersection of the new xy-point. 6. Draw a directional vector from the origin of the SPACE Matrix through the new intersection point. This vector reveals the type of strategies recommended for the organization: aggressive, competitive, defensive, or conservative. X axis Industry Position Competitive Position Y axis Financial Position Stability Position

+4.00 -1.67

+1 worst to +6 best -1 best to -6 worst

X axis: 4.0 -1.67 = 2.33

+4.83 -2.67

+1 worst to +6 best -1 best to -6 worst

Y axis: 4.83 2.67 = 2.16

Mc Donald Corporation: BCG Matrix

Divisions United States Europe APMEA Rest of the World Total

Revenues $8,078,300 9,922,900 4,230,800 1,290,400 $23,522,400

Profits $3,059,700 2,608,000 818,800 (43,600) $6,442,900

Market Share Position 1 1 1 1 1

% Industry Growth Rate weak weak good good

According to the BCG Matrix, all of McDonalds geographic divisions fall in the stars category.

Relative Market Share

High 1.0 High +20 Medium .50 Low 0.0

Stars
Europe U.S.

Question Marks

Industry Sales Growth Rate

APMEA

Rest of World

Cash Cows
Medium 0

Dogs

Low -20

Mc Donald Corporation: QSPM Matrix

Steps in developing a QSPM: 1. Make a list of the firms key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. 2. Assign weights to each key external and internal factor. 3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing. Record these in the top row of the QSPM. Group the strategies into mutually exclusive sets if possible. 4. Determine the Attractiveness Scores (AS): 1 = not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive. Use a dash to indicate that a key factor does not affect the choice being made. 5. Compute the Total Attractiveness Score by multiplying the weights by the AS in each row. The higher the Total Attractiveness Score, the more attractive the strategic alternative. 6. Compute the Sum Total Attractiveness Score. Note that the weights used for the key factors should be identical to those used in the EFE and IFE matrices for McDonalds. The options will vary from student to student because they must choose their own strategies. In this example, option 1 is to introduce more healthy offerings and option 2 is to focus on health food advertising.
Weight
Introduce More Healthy Offerings AS TAS 3 ``` ``` 2 ``` ``` ``` 1 3 3 2 ``` ``` ``` 0.05 0.09 0.05 0.1 ``` ``` 0.14 ``` ``` ``` 2 1 1 1 0.24 ``` ``` 1 ``` ``` ``` 0.1 0.03 0.02 0.05 Focus on Healthy Advertising AS TAS 4 ``` ``` 0.07 0.32

Strengths S Highly successful and recognized advertising. Strong employee training and promotion. Strong investor reputation. Strongest Brand Image. MCD recognized as a community oriented, socially responsible. Strong Global Presence Use pure ingredients and take food safety very seriously. Consistently solid financial performance. Strong innovation and product development. Large real estate portfolio. Economies of Scale. Weaknesses W Lowest Customer satisfaction rating in the industry (69), even below IRS.

0 .0 8 0 .0 2 0 .0 6 0 .0 7 0 .0 1 0 .0 8 0 .0 4 0 .0 5 0 .0 3 0 .0 2 0 .0 5 0 .1

0.3

0.2

High employee turnover in their restaurants. Assembly line approach makes it difficult and costly to adapt to changing trends. Core product line out of sync with trends toward healthier lifestyles. Sales demonstrate seasonal effects. 80% of restaurants are franchise owned. Over-saturation of real estate in the US. Struggles with fluctuations in operating and net profits. Foreign currency revenue and debt. Opportunities O Anticipated growth in Quick Service Restaurant industry. Low fat, low calorie, healthy hamburger Many restaurants have outdated appearance. Social change - innovation within healthier lifestyle foods. Increased beverage options. Breakfast not available at 25% of locations. Potential for joint ventures with retailers. Continued focus on corporate social responsibility, environmental sustainability. International expansion into emerging markets. Diversify portfolio. Threats T More health conscious customers. Vulnerable in older, established markets to upstarts Global economic recession causing consumers to spend less. Markets in US and EU are mature and saturated. Subway and YUM! Brands expanding into developing markets at a higher rate. Litigation: Brand equity at risk. Contamination of the food supply could damage sales, reputation, etc. Intense price pressure from competitors. Negative public opinion campaigns: Totals:

0 .0 4 0 .0 8 0 .0 7

``` 1 3

``` 0.08 0.21 ``` ``` 3 0.12 ``` ``` ``` 2 0.12 ``` ``` 3 3 0.12 0.18 ``` ``` ``` ``` 3 3 3 0.09 0.21 0.12 ``` 3 0.21 ``` ``` ``` ``` 1 0.07 ``` 1.12

``` 2 1 ``` ``` 1 ``` ``` ``` 1 ``` ``` 1 1 ``` ``` ``` ``` 1 2 2 ``` 2 ``` ``` ``` ``` 3 ```

``` 0.16 0.07 ``` ``` 0.04 ``` ``` ``` 0.06 ``` ``` 0.04 0.06 ``` ``` ``` ``` 0.03 0.14 0.08 ``` 0.14 ``` ``` ``` ``` 0.21 ``` 0.76

0 .0 2 0 .0 5 0 .0 4 0 .0 3 0 .0 6 0 .0 6 0 .0 7 0 .0 6 0 .0 4 0 .0 6 0 .0 6 0 .0 3 0 .0 2 0 .0 6 0 .0 3 0 .0 7 0 .0 4 0 .0 6

``` ``` ``` ``` ``` ``` ```

``` ``` ``` ```

```

0 .0 7 0 .0 6 0 .0 3 0 .0 4 0 .0 4 0 .0 7 0 .0 3 2
``` ``` ``` ``` ```