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STRATEGIC MANAGEMENT

PRESENTATION
FAST FOOD INDUSTRY

Market Size and Growth Rates


•  Earning trillion-dollar per year. 
•  In the United States, it is sharing 10% of the GDP. Canada- 
13%, 13% - Mexico, 11% -European Union, 12% - Latin America 
and 14%- Asia (2007). 

 Scope of rivalry
Local to international  

Stage in Industry Life Cycle


 
Curve is flatter- the stage of expansion. 
Forces driving Industry Competition

Potential
Entrants
Relative
Power of  Threat
Unions, of New  Relatively weak
Governments, Entrants 
etc.
Other Industry
Stakeholders Competitors Bargaining 
Power of  Moderate to strong
Buyers 
Buyers

Weak Rivalry Among


Suppliers Existing Firms
Bargaining 
Power of  Very strong
Suppliers  Threat
of Substitute 
Products or  Very strong
Services 

Substitutes
Threat of Substitutes
Supplier Power • Readily available 
• Willingness of supplier • Attractively priced 
• Supplier-seller collaboration • Satisfactory in terms of quality
• Supplies are mostly commodities
• Customers- industry leaders
Buyers power
•A large number of small operators 
•High fixed costs, 
• Barriers to Entry
•Undifferentiated and replaced
• Economies of scale •Switching cost low
• Unattractive market growth  •Consumer-price-sensitive, 
• Competitors strong offensive  •Produce the product
moves •Purchases in small volumes 
• Competitors expertise in  marketing  •Well-informed about sellers’ products, 
and efficiency  prices, and costs 

Degree of Rivalry
•   Several competing companies. 
•   Product and service differentiation inadequacy. 
•   Aggressive in making fresh moves 
-           Domestic demand is growing slowly
-           Competitors often rely on price cuts to boost volume
-           Low switching costs for consumers
INDUSTRY ANALYSIS

Offensive strategies and defensive approach

Competitive pressure from substitute products, quick, convenient service
 
Threat of new entrants and power of suppliers is not significant- 
capital to invest in real estate

Driving force
McDonald’s Competitive analysis matrix

The competitive profile matrix defines the firm major competitor 
and their  particular strengths and weakness & position
Competitive profile matrix
Mc Donald’s Burger Kings Yum Brands Wendy’s

Critical Success Factor Weight Rating  Weighted score Rating  Weighted score` Rating  Weighted score Rating  Weighted score

Price 0.15 4 0.60 3 0.45 3 0.45 3 0.45

Financial Position 0.08 4 0.32 3 0.32 3 0.24 2 0.16

Customer loyalty 0.10 4 0.40 3 0.40 3 0.30 2 0.20

Advertising 0.10 3 0.30 3 0.30 4 0.40 2 0.20

Product Quality 0.10 4 0.40 3 0.40 4 0.40 2 0.20

Innovation 0.15 3 0.45 3 0.45 3 0.45 2 0.30

Market share 0.10 4 0.40 2 0.20 3 0.30 2 0.20

Management 0.07 4 0.28 3 0.21 3 0.21 3 0.21

Global Expansion 0.15 4 0.60 2 0.30 3 0.45 1 0.15

Grand Total 1 3.75 3.03 3.20 2.07

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MCDONALD’S CORPORATION
• Largest Chain of Restaurants serving nearly 47 Million customer daily  
with 31,000 outlet in 119 countries, employing 1.5million people.
• 15% owned and operated directly
• Franchisee and JV - revenues come from the rent, royalties and fees 
paid by the franchisees & sales in company-operated restaurants.
• Profit Grew Over 30% over three years ending to $52.8 billion.
• 9% Growth In Operating income to $5.9 billion. 
• Main characteristic- local deviation from the standard menu
• Key success factors- Company Expansion Strategy
McDonald’s Vision, Mission and Value
MACDONALD OVERVIEW

1960’s: introducing Hamburger University., big idea- Big Mac
1970’s: introduced happy meal, thru drive.
1990’s: acquired stakes, web- McDonald’s.com- macdonalization
2003: revitalizing plan - Plan to Win strategy, with its strategic focus
on
‘being better, not just bigger’.
Till 2008: 30496 outlets.
ranked 5 most admired company in CRS .
named as marketer of year by advertising age
“ when and where you want it” & "Forever Young”
For mobile population:  offering more drive thrus- China and US
double drive thrus- in Canada and Russia 
delivery services – Singapore, Egypt, India
top 8 most powerful brand

 2009: Plan to win strategy, focus on being 
one brand, one system and one plan.
SWOT ANALYSIS
Internal Audit
Strength
Weakness

• Strong Brand name, image & reputation
• Unhealthy food image
• Large market share
• High staff turnover including top 
• Strong global presence management
• Specialized training for managers known  • Customer losses due to fierce 
as hamburger university competition
• Plan to win focuses on  4 p’s • Legal actions related to health issues : 
• Strong financial performance& position use of trans fat & beef oil
• Proven production methods  & countless  • Uses HCFC – 22 to make polystyrene 
new innovation ( breakfast, café etc) that is contributing to ozone depletion
• Customer focus • lack of product offerings to meet varied 
• The company has favorable access to  customer tastes and preferences 
distribution networks  • Many restaurants are outdated 
• Strong MCD performance in the global 
market place

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External Audit

Threats
Opportunities • Health professional& Consumer activist 
• Growing health trends among the  accuse MCD of contributing of high 
customer cholesterol, heart attacks, diabetes & obesity
• Falling global trade barriers in attractive  • Relationship B/W MCD Corporate & Its 
markets  franchisee
• Globalization , expansion in other  • Anti- American Sentiments
countries • Global recession & Fluctuating foreign 
• Diversification & Acquisition of other  currencies
quick- service restaurants • Industry to struggle to meet the customers 
• Growth of fast food industry towards health & environmental issues.
• Rivals copy McDonald’s innovations fairly 
• Worldwide deregulation
quickly, eliminating first-mover advantages 
• Low Cost menu that will attract the 
• The company has the propensity to induce 
customers.
shifts in consumer tastes away from the 
• Expansion of menu to meet healthier  firm's products 
consumer preferences 
• Freebies & discounts
PEST ANALYSIS

Political and legal


•Highly influenced by the individual  state policies
•Recurrent bellowing in opposition to the fast food industry. 
Economic
•Exchange rate fluctuations
•The rate at which the economy grows ; hit by inflation

Social
•With definite types of personalities. 
•Below the age bracket of thirty-five
•Working within many social groups 

Technological
•Inventory system and the management of the value chain
•Quality standards

Environment
•Accusations of environmental damage.
THE BCG MATRIX

Mc Donald’s USA Mc Donald’s EUROPE

Mc Donald’s ASIA Mc Donald’s AMERICAS


ANSOFF MATRIX

Market penetration
loyal consumer base and existing products
 Product development
new foods and new burgers in their menu
Market development
established globally

McDonalds new cafe style shops


As it is something new McDonalds has introduced 
but still related to their food market : fast food 
company diversifying into selling coffee. can be a 
part of Related diversification strategy
(McDonalds are already selling coffee so it could 
also be a product development strategy..??)
The McDonald’s Supply Chain

Import
Breath of
supply
process
control
equipment Supplier performance index

No direct control over issues, positive influence by raising questions, 
bringing people to the table and encouraging improvement
PORTER VALUE CHAIN ANALYSIS  OF  MCDONALD’S

 The goal of these activities is to offer the customer a level of 
value that exceeds the cost of the activities, thereby resulting 
in a profit margin for McDonald's.
Inbound 
logistics •Organizing the 
supply of food and 
materials to 
restaurants through 
approved third party 
logistics operators.

•Production in huge 
plants denoted 
exclusive to 
McDonald’s  control 
food distribution and 
packaging system
Logistics
Inbound
Operations 
•R&D in field research 
needs of end users.
• quality development in 
collaboration with good 
Relatively Few
Firm Infrastructure
Management Layers to
suppliers
Reduce Overhead

Effective Training Programs


Human Resource Management •Forward integration: 
to Improve Worker
through franchisees with 
Efficiency and Effectiveness

control over store 
Investments in Technology in order
Technological Development to Reduce Costs Associated with
presentation, menu 
Manufacturing Processes
items etc. and enhance 
Procurement Frequent Evaluation Processes to
participation in process 
Monitor Suppliers’ Performances
improvement
Efficient Plant Delivery Schedule Small, Highly

Service
Scale to Minimize that Reduces Trained Sales
Operations

Manufacturing
Outbound
Costs Force
Logistics
Inbound

Costs
Logistics
Selection of Low Products Priced to
Timing of Asset Cost Transport Generate Sales
Purchases Carriers Volume

Policy Choice of Efficient Order


Plant Technology Sizes

Organizational
Learning
Outbound 
logistics
•Is the concern of 
the franchisee.
Firm Infrastructure
•Outbound logistics 
Human Resource Management are growing as a 
part of McDonald’s 
recycling system 
Technological Development integrating in the 
logistics of 
Procurement
Frequent Evaluation Processes to
distribution center
Monitor Suppliers’ Performances

Delivery Schedule Small, Highly Effective Product

Service
that Reduces
Outbound
Outbound Trained Sales Installations to
Costs Force Reduce Frequency

Marketing
Logistics and Severity

& Sales
Logistics
Selection of Low Products Priced to of Recalls
Cost Transport Generate Sales
Carriers Volume

Efficient Order National Scale


Sizes Advertising

Interrelationships
with Sister Units
Marketing  •Long term marketing 
objectives are broken 
down into shorter term 
measurable targets, 
Firm Infrastructure which McDonald uses 
as milestones.
Human Resource Management M
A
•Country teams are 
RG
given autonomy in 
Technological Development IN
marketing mix decision.

Procurement •Advertising & PR is 
outsourced 

Service
(Mudra agency
Operations

 in India)
Outbound

Marketing

Marketing
Logistics

& Sales
Logistics
Inbound

& Sales
Service 

Services 
Firm Infrastructure provided by the 
companies 
Human Resource Management
enrollment 
standards
Technological Development
Procurement

Service
Service
Operations

Outbound

Marketing
Logistics
Inbound

& Sales
Logistics
Procurement 

Firm Infrastructure
Human Resource Management
Technological Development
Procurement
Procurement

Service
Operations

Outbound

Marketing
Logistics
Inbound

& Sales
Logistics
Sought  partners  with expertise  on down trade distribution
R & D

Firm Infrastructure
Human Resource Management
Technological Development
Procurement

Service
Operations

Outbound
Technology and development research  in quality assurance, and 

Marketing
Logistics

Logistics
Inbound

& Sales
packing readdressed at lower cost, faster delivery chain system and 
process control equipments, recycling system.
HRM 

Firm Infrastructure
Human Resource Management
Technological Development
Procurement
HRM specialists in R&D and expertise in food formulation, 
education to raise awareness of issues and raise demand. The 

Service
addressing environmental issues and CRS.
Operations

Outbound

Marketing
Logistics

Logistics
Inbound

& Sales
Firm Infrastructure
Activities
Support

Human Resource Management


Technological Development
Strong real estate portfolio.
International organization  more than 50000 employees works in 
more than 50 countries,  

Service
Operations

Marketing
Outbound
Logistics

& Sales
Logistics
Inbound
Grand Strategy Matrix

Rapid market growth

Excellent strategic Quadrant I


position
Quadrant II Concentration on current markets &
products
Take risk aggressively when necessary
Week  Strong 
competitive  competitiv
position e position

Quadrant IV Quadrant III
Slow market growth
RECOMMENDATIONS
Recommended Strategy/possible strategies

Grand strategy matrix-


alternative strategies
Stay-on-the-offensive strategy
Market development
Fortify-and-defend strategy Market penetration
Product development
Adaption strategy Forward integration
Backward integration
Horizontal integration
Concentric diversification

Focus on CSR .The 2009.Global Best of Green highlights - local innovations 
that can be shared and applied in other markets across McDonald System.  
SWOT
Strength Matrix
1.Strong Brand name, image & reputation
Weakness
1.Unhealthy food image
2.Large market share
2.High staff turnover including top management
3.Strong global presence
3.Customer losses due to fierce competition
4.Specialized training for managers known as hamburger university
4.Legal actions related to health issues : use of trans fat & beef oil
5.Plan to win focuses on  4 p’s
5.Uses HCFC – 22 to make polystyrene that is contributing to ozone 
6.Strong financial performance& position
depletion
7.Introduction of new product
6.Ignoring breakfast from the menu
8.Customer focus
9.Strong MCD performance in the global market place

S-O Strategies W-O Strategies


1. Opportunities Focus on the plan to win to  Minimize customers losses 
2. Growing health trends among the customer
3. Globalization , expansion in other countries attract customers & expansion  by providing low cost menu & 
Diversification & Acquisition of other quick- 
in other countries(S5, O2,O6) discounts.(W3, O6,O7)
4.
service restaurants
5. Growth of fast food industry
6. Worldwide deregulation Expansion  in the market 
7. Low Cost menu that will attract the customers
8. Freebies & discounts share by more investments in 
Asia (S2,O2)

S-T Strategies W-T Strategies


Threats More control on franchise  Applying ) grams trans fat in 
1.Health professional& Consumer activist accuse MCD 
of contributing of high cholesterol, heart attacks, 
diabetes & obesity
dealers to maintain MCD’s  all world wide MCD’s. ( W1, 
2.Relationship B/W MCD Corporate & Its franchisee
3.Anti- American Sentiments
reputation & quality.(S1, T2) W4, O1)
4.Global recession & Fluctuating foreign currencies
Provide new product & keep  Transfer from HCFC-22 to 
5.Industry to struggle to meet the customers towards 
health & environmental issues
innovation. ( S7, T3) HFC – free.( W5, T6)
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PEST ANALYSIS

McDonald’s deemed as demigod in the fast food business in the international scene, what it 
preserves as revealed in its processes is the need for flexibility. Any business in spite of the 
muscle of the brand name or the size of its reserves could not afford any failures in their 
individual markets.

•To deal directly with the proper authorities 
•Acquainted with the law
•Carry out a well conducted market research. 
•Obtain the relevant information from the target market. 
•Find out the shifts in areas
•The cost-effectiveness, interactivity and real-time effects of the communications  
•Find out the environmental regime 
•Minimise the use of Styrofoam materials and plastic cups. 
•Hire local counsels
CONCEPTUAL STORMING
Mr. Akshat Jain

 ‘Think global, act local’

PRESENTATION
&
Spade Work By 
Preeti Chaudhary 
IDEAS FLOOD
ANNUAL REPORT 2007,2008
http:/ivy thesis. typepad.com
www.ccfplus.com
www.about mcdonalds.com
www.crmcdonalds.com
McDonald's Environmental Report
Crafting and Executing Strategy by
Thompson, Strickland, Gamble