McDonalds Global Strategy

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McDonalds Global Strategy

• Group One
• Nov. 2, 2009

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Benny M987Z219
Nadia M987Z250
Sonny M987Z261
Christina M987Z237
Rachel M987Z226
Febby M987Z248
Huy
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McDonalds Global Strategy

• Brief History of McDonalds

The first McDonald's was built in 1940 by the
McDonald brothers (Dick and Mac) . Started off
as a hot dog stand in CA 1937 The McDonald
brothers realized that hamburgers were their most
profitable menu item, and changed their business
to serve a limited menu. Employing car hops
the McDonald brothers became the first restaurant
to offer speedy service to people while they
stayed in their cars.
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McDonalds Global Strategy
Ray Kroc discovers McDonalds 1954 Kroc became
the first franchisee appointed by Mac and Dick
McDonald in San Bernardino , California.
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McDonalds Global Strategy
In 1955 , Ray Kroc opened his first restaurant in
Des Plaines , Illinois (near Chicago) , and the
McDonald's Corporation was created .
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McDonalds Global Strategy
McDonalds has over 30,000 local restaurants in
more than 120 countries 70 percent of our
restaurants worldwide are owned and operated by
independent, local businessmen and
businesswomenMcDonalds serves nearly 50
million customers each day McDonalds has its
own Hamburger University in Illinois, and the
first batch graduated in 1961 12 classes offered
at Hamburger University are college
accredited In 1963, McDonalds sold its one
billionth hamburgerMcDonalds is listed on the
New York, Frankfurt, Munich, Paris and Tokyo
stock exchanges
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McDonalds Global Strategy
The first McDonalds Drive-Thru opened in Sierra
Vista, Arizona in 1975Happy Meals were added to
McDonalds menu in 1979 McDonalds launched the
new worldwide Balanced Active Lifestyles public
awareness campaign in 2005 McDonalds celebrated
its 50th Anniversary on April 15, 2005
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McDonalds Global Strategy

• 1971 McDonalds really starts going global
• Asian Tokyo Ginza District, Japan
• European Netherland, Munich, Germany
• 1967 - Canada Puerto Rico (first restaurants
  outside the U.S.)
• 1971 - Tokyo, Japan, Amsterdam, Netherlands
  Sydney, Australia
• 1979 - Rio de Janeiro, Brazil
• 1990 - Moscow, Russia China

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McDonalds Global Strategy
McDonalds, still the dominant player in the fast
food restaurant business, is being challenged by
Subway, a smaller company that has been rapidly
expanding since 1965.
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McDonalds Global Strategy
Founded by Fred DeLuca in 1965. Subway is one of
the fastest growing franchises in the world with
approximately 31,949 restaurants in 91 countries
as of November.
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McDonalds Global Strategy
Many restaurant analysts attribute Subway's fast
growth to the growing health concerns by
restaurant customers, a trend that Subway has
taken advantage of in its marketing.
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McDonalds Global Strategy
Subway, riding high on the marketing message of
healthy fast food, will overtake McDonalds in
American store locations by the end of 2009, with
a shocking total of more than 32,300 outlets.
That's something few consumers could imagine
before the sandwich chain piggybacked on huge
weight loss of Jared Fogle -- who lost 245 pounds
by exercising and eating only its sandwiches, in
contrast to Super Size Me's Morgan Spurlock, who
got fat and sick eating McDonald's food. In the
process, Subway has managed to expand its
business and profits. Now, Subway has emerged as
a healthy alternative in the market place,
partially because its modest business model
allows it to open businesses in smaller locations
that cannot sustain stand-alone restaurants like
McDonald's, which depend heavily on drive-through
business for its earnings.
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McDonalds Global Strategy
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PEST Analysis

• To analyze the current status of McDonalds
  corporation, we chose to use the PEST method to
  evaluate the following categories
• P Political
• E Economic
• S Social
• T Technological

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Political Challenges

• Health and Safety Guidelines
• The director of the obesity program for the
  Children's Hospital Boston, David Ludwig, claims
  that "fast food consumption has been shown to
  increase calorie intake, promote weight gain, and
  elevate risk for diabetes"
• Center for Science in the Public Interest, a
  long-time fast food critic over issues such as
  caloric content, trans fats and portion sizes

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Political Challenges

• Ecological/environmental issue
• Fast food industry giants such as Wendy's, Pizza
  Hut, and McDonalds are some of the largest
  consumers of paper products in the US. "Every
  year millions of pounds of food packaging waste
  litter our roadways, clog our landfills and spoil
  our quality of life.
• Home market pressure-groups
• International pressure-groups
• Pushing for increased regulations to make
  companies more responsible

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Political Challenges

• Wars and conflicts   
• war between countries where the company operates.
• They have also become a symbol of capitalism and
  Americanism meaning that they have now become the
  target of terrorist group and attack.

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Economic Challenges

• McDonalds must consider economic challenges when
  expanding internationally.
• Low set up costs rapid expansion
• One of the challenge for fast food industry is
  that to keep the price is low for the customer.
• Franchising facilitates set ups
• McDonalds corporation provides financing
  assistance and training for new franchise owners
  to manage cash flow and keep businesses
  profitable.

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Social Challenges

• From the research plan McDonalds profits dropped
  from 1.977 million dollars 2000 to 893 million
  dollars in 2002.
• The main reason is the consumers worries had
  greatly increased with health fears of
  increasing obesity
• so customers now opted for more healthier options
  like subway which offered more of a variety for
  health conscious customers.

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Social Considerations

• To ease customers concern about health issues,
  McDonalds has made changes to the following

• McDonalds changed its image vastly by evaluating
  the current menu and making changes to it from
  using organic products to revising the whole menu
  entirely by offering salads and vegetarian
  burgers.
• McDonalds serves a range of high-quality foods
  that can fit into a balanced diet. The accurate
  and accessible nutrition information help guests
  make informed menu choices.

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Social Considerations

• Emphasis on food safety

Mcdonalds suppliers have food safety management
systems in place, including Good Manufacturing
Practices (GMP), a verified Hazard Analysis
Critical Control Point (HACCP) plan and crisis
management, food security and other applicable
programs
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Technological Advantages

• McDonalds has taken advantage of technology to
  streamline their processes and improve efficiency.

Through technology enhancements such as FPI's
Help Desk Service, network and application
consolidation, and other technology
implementations, operations of the company are
greatly improved.
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Technological Advantages

• Touch Order Allows You To Place Order At
  McDonalds Via Handset

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Technological Advantages

• The customers can place their order directly from
  their tables, dubbed as Touch Order. Its the
  first self-ordering system in the world to use
  RFID

Technology Spotlight McDonald's tests Speedpass
cashless payment system
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Technological Advantages

• McDonalds has also implemented technology to
  improve supply chain management, and allows
  customers to access this information to make more
  informed decisions about what they eat.

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Strategy recommendations
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Recommendations for McDonalds

• More Healthy Choices
• McDonalds should develop menu choices that are
  healthy and socially acceptable.
• It is possible to develop a menu that people will
  enjoy and that also fits into the original
  Speedy Service model the company introduced in
  the 1950s.
• Use local food sources where possible.
• Using local sources decreases the time to market,
  and also decreases the use of fuel to transport
  goods.

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Recommendations

• Locally focused menu choices
• McDonalds in India has specific menu items
• For the vegetarian market

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Recommendations

• Increase presence in Asian countries

• McDonald's has most certainly had a profound
  effect on China.
• When the first McDonald's opened in Beijing more
  than a dozen years ago, 40,000 people lined up to
  observe a Big Mac and get their picture taken
  with the infamous Ronald McDonald.
• McDonald's is growing faster in China than in the
  United States.
• McDonalds owns operates more than 600 stores
  across 105 cities in China.
• More than 100 more McDonald's stores will be
  added annually to Chinese cities within the
  coming years.

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Recommendations

• While offering the basic burger and fries,
  McDonalds in China also offers
• Szechuan-style spicy chicken wings
• Seafood Soup
• Rice
• Oriental Sauces
• Taro and Red Bean Dessert

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Discussion Questions

• What do you consider to be the definition of
  globalization? What forces are driving its
  development?

An ongoing process by which regional economies,
societies, and cultures have become integrated
through a globe-spanning network of communication
and exchange. The forces driving it are
Economic, Technological, Socio-cultural,
Political, and Biological
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Discussion Questions

• Identify the reasons why global strategies
  sometimes fail in their objective to achieve a
  global marketing advantage.

• Lack of understanding about local cultures
• Unaware of current issues
• Cannot compete with global competitors

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Discussion Questions

• Companies that has failed doing global strategies

Coca-cola has been banned by Venezuela, because
the company didnt declare the use of harmful
sweetener. www.reuters.com Imports of beef from
Brazil has banned by several countries, due to
the outbreak of a foot-and-mouth disease.
www.reuters.com French, Denmark and Norway have
banned Red Bull because of its high levels
caffeine and other stimulants. www.medicalnewstoda
y.com
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Discussion Questions

• What is the rationale behind mega mergers and
  major acquisitions? How will they lead to global
  competitive advantage?

Mega mergers have the effect of reducing cost and
complexity of doing business in other countries.
To try and establish a business from the ground
up in another country, you can face many
challenges political, social, and economic.
Often, the best choice is to simply buy a similar
company and reduce overlap where possible.
Competitive advantage can be realized when
merging with a successful company in a similar
business.
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Discussion Questions

• What are the critical success factors in
  developing a global brand? What additional
  factors would you consider to be necessary in
  developing a successful global e-business brand?

A global brand must be universal in that it
appeals to basic human wants and needs without
being specific to a country or culture. Some
exceptions exist, but in our opinion, a
successful global brand needs to be identifiable
without identifying where it originated from.
For an e-business, a company must display value
to all consumers. Example E-bay
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Discussion Questions

• What are the main challenges that are faced by
  international managers in managing and
  controlling a global marketing strategy? What
  advice would you give to a manager with this
  responsibility?

Global marketing strategies require in-depth
knowledge of the communities they are trying to
reach. The better the understanding of the
demographics of the market, the better chance you
have of understanding their specific wants and
needs. Advice Get local help! You cannot
expect to do this from a distance using Google.
Find people you can trust in the area and utilize
their knowledge and connections.
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Conclusion

• McDonalds should continue to expand
  internationally, but be mindful of the local
  dietary needs and desire of people to eat a
  healthy balanced diet.

The competition from Subway is important to
consider, but there is still a large gap between
store earnings. McDonalds stores earn around 2
Million each, while Subway stores earn around
445,000. As people begin to understand that the
healthy alternative offered at Subway can be
had at McDonalds, there are few reasons to go
elsewhere.
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Questions for the Class

• Do you feel that McDonalds food is unhealthy and
  toxic, or is it more like a treat to be enjoyed
  on occasion?

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Questions for the Class

• Is there anything specific you would like to see
  added to the McDonalds menu in your countries to
  appeal to your specific tastes?

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Questions for the Class

• With the current Mad Cow scare, are you more
  afraid of eating beef?

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Thank You!