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ST401E – Dirk SCHNECKENBERG

McDonald’s
AN David PADILLA Alejandra ROBIN Damien SOTO Thalia Von Manteuffel Nicolas

Summary
1.

Analyse of the situation The strategic challenge

2.

3.

Alternatives analyse
Implementation plan

4.

1–2–3–4

Analyse of the situation

1

1–2–3–4

McDonald’s : Success story

1937 : Brothers Mac Donald opened a drive-in in Passadena. After opening a much larger restaurant in San Bernardino, the created the « Speedy Service System » in 1948. 1952 : first Mac Donald franchise in Phoenix. 1955 : Ray Kroc fund McDonald's System, Inc.

1–2–3–4      1961 : Kroc & Sonneborne change the franchise concept in real estate operation. 1965 : the firm became a public company. 1971 : the company opened its first restaurants in Japan. . In the same year the Hamburger University was established : a key element for the McDonald's Business Model. 1963 : McDonald sells 1 million hamburgers a day. and had its first national meeting. Germany and Australia.

the situation was complicated due to competition between fast-food giants. . increasing health consciousness and competition.  In 1999. the firm had to cope with a number of challenges : the microwave oven.1–2–3–4  In the 90's. as Jack Greenberg took over the reins of the firm. So McDonald's focus on international expansion and adaptation.

1–2–3–4 Organization and human resources management  Culture: offering the best  Philosophy: giving back to the communities  Restaurant-one manager -autocratic management  Corporation-hierarchical structure  McDonalds develop new products to satisfy customers .

1–2–3–4 SWOT ANALYSIS Strenghts Weaknesses McDonalds Opportunities Threats .

000 restaurants in 109 countries.  Cultural Adaptation.1–2–3–4 Strengths…  Most recognizable logos. .  Based on Franchise Business Model. Golden Archer. More than 30.  Global Company.  Leader in Quick Service Sandwich Industry.

 The use only high quality standards. They invest more than 1 billion dollar annually of all its food preparation . ranked by Fortune Magazine .the best place to work for minorities.1–2–3–4 Strengths…  Systematization process.  2005 .

 Hard manage of company’s principle: Quality. Service.  High employee turnover. .1–2–3–4 Weaknesses…  Food Service Market is really saturated. Value and Cleanliness  Lack of product innovation.

. nonMcDonalds branded (Chipotle Grill).1–2–3–4 Opportunities…  The need to penetrate in some countries.  New and premium products: good salads and better hamburgers.  Implementation of a low-fat and healthy menu. First with FDA approval.  Acquisition of some restaurants. Asia and South America.

 Huge competitive pressure-Price War.  Fast food market has a very slow growth. Losses in exchange rate .  The current economic recession.1–2–3–4 Threats…  Health conscious consumer trend.

act local” Price .1–2–3–4 Marketing Mix Place Product Promotion “Think global.

.  McDonalds began in 1937 serving a menu with 25 products. potatoes chips.  80% of total sales were hamburgers. therefore in 1948 they began selling only 15 cent hamburgers. pie and 5 different beverages. cheeseburger.1–2–3–4 Product.  In 1968 McDonalds introduced the famous Big Mac in their menu. ..

. even when company’s aim is to create a set of standardized products (Big Mac) Adaptation is required for its international success.   Nowadays.1–2–3–4 Product. McDonalds changed some products of its menu in order to fit with the culture.. McDonalds has huge product diversity.. religious and politic patterns of each country. And in order to please needs and wants of consumers.

.1–2–3–4 Promotion…  Its Golden Arches as the company’s recognition point.  Promotion Strategy: “Brand globally. advertise locally”  “I’m loving’ it” was implement and translate  The clown Ronald McDonalds needs to be modifying for some countries.

83 USD Norway is $7.02 USD . At the beginning 15cents hamburger and in 2002 Big Mac for 99cents.  Pricing Strategic: “Focus in localization not in globalization.”  Big Mac in USA is $3.1–2–3–4 Price…  McDonalds uses price as a competitive weapon.58 USD China is $1.

in where each restaurant is operated by the own company. California.1–2–3–4 Place…  The first tiny restaurant was opened in Pasadena. Currently McDonalds has more than 30.000 restaurants operating in 119 countries. franchises or a joint venture. .  The company manages a strategic expansion.

. gender. is a B2C company  The company had based its segmentation on demographic variables (age. lifestyle stage)  Primary markets are teenagers and young adults. but its heaviest target market are children and their parents.1–2–3–4 Consumer Analysis  McDonalds sells its products directly to their final users.

products that worth the money and healthy. For teenagers and young adults the company has: price sensitivity.1–2–3–4 Consumer Analysis    McDonalds creates products like the happy meal and playland places in order to please its main consumer and has an agreement with Barbie and Hot Wheels. Finland or Norway teenagers is the market that most visit McDonalds. right ambience. varieties offered. .

Five of them are:  Brand Equity.  Adaptation System.  Special menu for its main target market (Happy Meal).  Image: Brand image and logo in the mind of millions.1–2–3–4 Core and Distinctive Competences  McDonalds has core competences in production. .  Production and Delivery speed. image and products.

. straying from its core competency.  Its core competences are a source of competitive advantage and by using them in the right way the firm can definitely be sustain in the competitive market.1–2–3–4 Core and Distinctive Competences  Adaptation System and its Lack of Innovation. They are diminishing its brand equity and image. can be unfavorable.

1–2–3–4 Porter´s 5 forces analysis The intensity of competitive rivalry The threat of the entry of new competitors The threat of substitute products or services The bargaining power of suppliers The bargaining power of customers (buyers) .

Hardee´s.  Many small & big fast food businesses  Burger King.1–2–3–4 The intensity of competitive rivalry  Highly competitive industry. . etc. Jack in the Box. Wendy´s. Sonic.

 Hard to establish a big franchise.  High costs  war of prices .1–2–3–4 The threat of the entry of new competitors  Not hard to enter the restaurant business.

1–2–3–4 The threat of substitute products or services  variety of products .

1–2–3–4 The bargaining power of suppliers  Many producers of bread. meat and milk .

1–2–3–4 The bargaining power of customers (buyers) Product with discount. Promotions Somewhere else .

offering innovation and comfort.1–2–3–4 PEST analysis  Political & Legalinternational  Economic-purchasing power of the consumers  Social-many social groups.  Technological. .

57 0.1–2–3–4 Financial Analysis 2002 Current Ratio (Liquidity) Debt Ratio (Leverage) Net income in millions of $ (Profitability) 0.14 0.53 893 1471 4551 .71 2003 0.53 0.76 2009 1.

1–2 –3–4 Stategic challenge 2 .

1–2 –3–4 The strategic challenge .

1–2 –3–4 The strategic challenge .

1–2 –3–4 The strategic challenge .

1–2 –3–4 Alternatives Analysis 3 .

expensive .1–2 –3–4 Alternatives ALTERNATIVES (1) Open more company-owned restaurants PROS .corporate identity .no big effort between Franchise Stores (3) Motivation of employees .performance .expensive .risk of cannibalization .cheap (2) Create competition . strategy .vs.unlimited control .no lack of information CONS .work environment .

8 7 = 2.0 Total Score 2.4 Cost Alternative 1 Alternative 2 Alternative 3 2 = 0.2 6 = 2.6 6.6 7 = 1.6 0.8 4 = 1.0 0.2 Time 3 = 0.8 .1–2 –3–4 Decision Grid Weight in decison 0.4 6 = 1.4 Risk 3 = 1.4 10 = 4.6 6.2 TOTAL = 1.

1–2 –3–4 Winner Alternative 3 Motivation of employees .

1–2 –3–4 Implementation plan 4 .

water. protection) Physiological needs (food.1–2 –3–4 How to motivate McDonald’s employees? Selfactualization (self-development and realization) Esteem needs (self-esteem. shelter. pay. working conditions) . recognition) Social needs (work groups. healthy atmosphere) Safety needs (job security.

1–2 –3–4 First need  « If you treat well your employee. they will treat well your customers »   Respect Ethic charter to be sign  Infrastructures innovation : comfort  Computers in the staff room with a Wi-Fi connexion  Salary that goes with the job you do .

1–2 –3–4 Second need  Propose to employees some training courses to improve their skills in different fields of the restaurant    Become General-purpose Security job Not always the same task – avoid the boredom .

1–2 –3–4 Third need  Establish  restaurant a good atmosphere in the on different Create teams working schedule “team spirit” .

1–2 –3–4 Fifth need  Encourage McDonald’s multiply training courses employee to  System of level courses with at the top level : Manager in a McDonald’s restaurant the possibility to work abroad  Let .

1–2 –3–4 Fourth need  Reward system – « Speed seller »   The best drive-in seller The best in store seller  The employee of the week  The employee of the month .

Thank you for your attention Enjoy your meal ! .