Title: McDonald
1McDonalds
Chase Mueller Ashley Hoptay Tanner
Gilreath Anna Rendon Olivia Erwin Brandon
Laviage Paige Stone
2Overview
- Analyzed McDonalds and its three competitors,
YUM! Brands, Burger King and Wendys, to assess
the companys standing in the industry. - Focused on the key company characteristics, its
financial situation, each companys
organizational flexibility and culture,
strategies used, and their ability to be able to
compete in todays market and economy.
3Corporate Social Responsibility
- Has become a way of doing business.
- Understand that they must deliver responsible
food to its consumers. - How it serves food.
- Where the food comes from.
- What people want from it.
- Therefore, the company works closely with its
suppliers, franchisees and employees to ensure
products are safely delivered to consumers.
4Corporate Social Responsibility
- McDonalds goes green
- Since 2000, the company has opened up multiple
green restaurants. - Rebuilding restaurants with a more innovative and
efficient design that will reduce the use of
water and energy. - Enhancing its packaging 82 of its packaging is
made from renewable resources - Closed Loop Hierarchy for Packaging and Waste
5Corporate Social Responsibility
- McDonalds ishealthy?
- Three aspects involved provide consumer-friendly
nutrition information, bring consumers
high-quality choices, and communicate responsibly - Offer salads, wraps, smaller portions and
healthier sides. Zero grams of Trans fat in fried
foods. - Can find all of the nutrition information on the
Web. Also implementing a new packaging design
where the nutrition information will be placed on
the wrapper. - Strengthening its Global Childrens
- Marketing Guidelines
6Corporate Social Responsibility
- McDonalds makes its presence known
- Gets involved with its communities in four ways
- Ronald McDonald House
- Sponsorships
- Owner/Operator Involvement
- Disaster Relief
7Corporate Social Responsibility
- Quality every step of the way
- Takes great prudence to ensure that every aspect
of the supply chain positively contributes to the
safety, quality and availability of its products. - Uses a Social Accountability program to uphold
its strict standards for its suppliers. - Not afraid to leverage its size and influence to
raise questions about the suppliers methods and
to encourage improvement in their practices.
8Forecasting and Speed of Response
- McDonalds plays a large part in its communities,
and the company is constantly searching for new
ways to get involved or help the environment. The
company also tries to project future needs to
lessen the impact that its business has on its
communities. - McDonalds is able to quickly respond to its
communities needs and wants - McDonalds was the only quick service restaurant
to make Health Magazines list of Americas Top
10 healthiest meals at limited-service
restaurants
9Entrepreneurial Orientation
- 78 of McDonalds restaurants are operated by
franchisees. - Creates a strong entrepreneurial feel.
- The only competitor with a larger mix of
franchisees is Burger King 90 of restaurants
are operated by franchisees. - Very selective when granting franchises or
licenses. Will not franchise to passive investors
that do not appear capable of matching the goals
and requirements that McDonalds sets for all of
its locations
10Attraction and Retainment
- Make that a McCareer please.
- Supports development from the crew room to the
board room. - Promotes from within.
- Provides training for all levels.
- Service level receive on the job training where
they learn the technology as well as customer
service techniques - Provide college level classes at Hamburger
University for management training - McDonalds Leadership Institute provides almost
200 employees from the McDonalds system to
partake in the accelerated programs and learn how
to be a corporate leader in the company - Ranked as one of the Top 20 Global Companies for
Leaders in 2007 by Fortune
11Super Sizing Value
- Value menu no value cost trade-off
- Dollar Menu, Yen for Great Value in Japan
- Maintain a supply of high quality ingredients
- Ensured by the companys size and strength over
its suppliers - Variety and selection of menu items to satisfy
all tastes - Research and Development is essential to growth
- Have three food studios located in Munich, Hong
Kong and Chicago where chefs test and create
their new concoctions
12Delivering Value
- Convenience and accessibility are important
aspects that bring consumers more value - Located in close proximity to each other
- Found in areas with a high customer concentration
- Expanding the number of 24 hour locations
- Opening drive-thrus in areas such as Russia and
China and adding double drive-thrus in the US - Kiosks in India and Indonesia
- Delivery service in Singapore, Egypt and other
Asian and Middle Eastern countries
13Reimaging Value
- Feel that its restaurants are the best way for
the company to express its brand and create the
ultimate customer experience - Renewed about 10,000 restaurants within the past
five years - Design is contemporary and eco-friendly
- Burger King is also re-investing in the design of
its restaurants
14Marketing and Promotions
- Relevant marketing and promotions strengthen its
connection with its customers and build brand
awareness and loyalty - Im Lovin It campaign
- Promotions such as Monopoly and Uno evoke
customer interaction and get them involved with
the brand - Burger King is advertising more and is utilizing
a more viral campaign
15Financial and Accounting Analysis
- Quantitative accounting disclosures are intended
to effectively communicate the financial
statements numbers - Certain legal manipulations and disclosures could
give a company an unrealistic value as well as
mislead its investors. - Tools
- Financial Ratios
16Ratio Analysis
- It is used to show the resources a firm and its
ability to cover their current assets with
current liabilities. - The higher a firms current ratio is, the more
able a firm is to pay off its liabilities.
17Ratio Analysis
- The quick asset ratio, or acid-test, uses the
firms most liquid assets than can quickly be
turned into cash for their book value amounts to
pay off current debts. - The assets included in this ratio are cash,
marketable securities, and accounts receivable.
18Ratio Analysis
- Working capital turnover is determined by
dividing a companys sales by its working
capital current assets less current liabilities. - It evaluates how efficient a company uses its
working capital balance to create sales.
19Ratio Analysis
- It simply gives profit as a percentage of net
sales. - It shows how much of each dollar of product sold
is profit. - By having a small percentage it shows that the
company is not utilizing their resources well and
their cost to produce the item are too high.
20Ratio Analysis
- The firm uses the previous years assets to
better reflect profitability for the current
year. - This is done because profits with the new assets
will not be recognized until the next fiscal year
and that is how it gives people a better
understanding on how they either helped or hurt
the company.
21Ratio Analysis
- The purpose of the Z-score is to help us make
calculations that help us to understand where a
company stands with their credit risk. - A company is considered to be bankrupt when their
Z-score is below 1.81. When a firms score
exceeds 2.67, the firm is considered to have low
risks in the bankruptcy and credit categories.
22Marketing and Management
- McDonalds once focused on children for their
advertising, but recent law suits and
documentaries resulted in the companys
innovation and major changes to health related
product ranges. Now more teenagers and adults
rule the McDonalds ad world. - McDonalds had begun concentrating so heavily on
expansion and growing big that it missed out on
key factors like quality maintenance and RD. - McDonalds strategic plan is influencing their
marketing efforts by building better brand
transparency. They want their image to be
recognized globally. They are enhancing the
customers experience.
23Marketing and Management
- The change in the top managerial level has
created a new wave in performance and major
changes have been implemented to retain and
sustain the brand quality and innovation. As the
new CEO rightly quotes - The world has changed. Our customers have
changed. We have to change too." - -James R. Cantaloupe,
- Chairman and CEO, McDonalds
- Types of marketing mix that McDonalds use to
achieve their marketing goals are longer
operating hours, everyday value meals, and
optimizing efficiency in the drive-thru.
24Business Life Cycle McDonalds
- 1948 Richard and Maurice McDonald open the first
McDonald's restaurant in San Bernardino,
California. - 1954 Ray Kroc gains the rights to set up
McDonald's restaurants in most of the country. - 1955 Kroc opens his first McDonald's restaurant
in Des Plaines, Illinois he incorporates his
company as McDonald's Corporation. - 1961 Kroc buys out the McDonald brothers for
2.7 million. - 1963 McDonald's goes public.
- 1967 The company opens its first foreign
restaurant in British Columbia, Canada. - 1973 Breakfast items begin to appear on the
menu, with the debut of the Egg McMuffin. - 1974 The first Ronald McDonald House opens in
Philadelphia.
25Business Life Cycle McDonalds
- 1975 The first McDonald's drive-thru window
appears. - 1985 McDonald's becomes one of the 30 companies
that make up the Dow Jones Industrial Average. - 1998 The company takes its first stake in
another fast-food chain, buying a minority
interest in Colorado-based Chipotle Mexican
Grill. - 1999 Donatos Pizza Inc. is acquired.
- 2000 McDonald's buys the bankrupt Boston Market
chain. - 2002 Restructuring charges of 853 million
result in the firm's first quarterly loss since
going public. - 2003 McDonald's sells Donatos in order to
refocus on its core hamburger business.
26Business Life Cycle Wendys
- 1969 Dave Thomas opens the first Wendy's
restaurant in downtown Columbus, Ohio. - 1972 Wendy's franchising begins.
- 1975 First international restaurant opens in
Canada. - 1976 Wendy's International, Inc. goes public.
- 1977 Company begins national television
advertising. - 1978 The 1,000th Wendy's opens in Springfield,
Tennessee. - 1981 Thomas makes his first appearance as
Wendy's advertising spokesperson. - 1984 Famous and award-winning "Where's the
Beef?" ad campaign is run. - 1986 James W. Near becomes president and COO
and launches a major reorganization. - 1995 Wendy's International acquires Tim Hortons,
a Canadian coffee and baked goods chain. - 1997 The 5,000th Wendy's restaurant opens in
Columbus, Ohio. - 2002 Dave Thomas dies Wendy's International
acquires a 45 percent stake in Café Express.
27Business Life Cycle Burger King
- 1954 James McLamore and David Edgerton establish
Burger King Corporation. - 1959 The company begins to expand through
franchising. - 1967 Burger King is sold to Pillsbury.
- 1977 Donald Smith is hired to restructure the
firm's franchise system. - 1989 Grand Metropolitan plc acquires Pillsbury.
- 1997 Grand Metropolitan merges with Guinness to
form Diageo plc. - 2002 A group of investors led by Texas Pacific
Group acquire Burger King.
28Business Life Cycle KFC
- 1952 The Colonel begins actively franchising his
chickenbusiness by traveling from town to town
and cooking batches of chicken for restaurant
owners and employees. The Colonel awards Pete
Harman of Salt Lake City with the first KFC
franchise. A handshake agreement stipulates a
payment of a nickel to Sanders for each chicken
sold. - 1960 The Colonel's hard work on the road begins
to pay off and there are 190 KFC franchisees and
400 franchise units in the U.S. and Canada. - 1964 Kentucky Fried Chicken has more than 600
franchised outlets in the United States, Canada
and the first overseas outlet, in England. - 1966 The Kentucky Fried Chicken Corporation goes
public. - 1969 The Kentucky Fried Chicken Corporation is
listed on the New York Stock Exchange. - 1971 More than 3,500 franchised and
company-owned restaurants are in worldwide
operation when Heublein Inc. acquires KFC
Corporation
29Business Life Cycle KFC
- 1979 KFC cooks up 2.7 billion pieces of chicken.
There are approximately 6,000 KFC restaurants
worldwide with sales of more than 2 billion. - 1982 Kentucky Fried Chicken becomes a subsidiary
of R.J. Reynolds Industries, Inc. (now RJR
Nabisco, Inc.) when Heublein, Inc. is acquired by
Reynolds. - 1986 PepsiCo, Inc. acquires KFC from RJR
Nabisco, Inc. - 1997 PepsiCo, Inc. announces the spin-off of its
quick service restaurants - KFC, Taco Bell and
Pizza Hut - into Tricon Global Restaurants, Inc. - 2002 Tricon Global Restaurants, Inc., the
world's largest restaurant company, changes its
corporate name to YUM! Brands, Inc. In addition
to KFC, the company owns AW All-American Food
Restaurants, Long John Silvers, Pizza Hut and
Taco Bell restaurants
30McDonalds Corporate Structure
- Management gurus often cite McDonalds corporate
structure model. - The company's highly decentralized management
runs its franchises. -
- McDonalds uses a functional structure, with the
Chief Executive overseeing five major areas of
activities. - Franchise candidates must sign an agreement with
the firm, which gives them the right to operate a
specific McDonalds location for a period of 20
years. -
31McDonalds Corporate Structure Chart
32McDonalds Corporate Culture
- McDonalds vision statement is quality, service,
convenience, and value (QSCV).. - No one portrays McDonalds culture more than
Hamburger University, it is a place where
Organizational culture is franchisees, managers,
and assistant managers are indoctrinated into the
culture that is McDonald's. - This structure allows McDonalds to export
successfully not only its management system but a
very distinct culture as well. - Inspectors continually reinforce McDonalds
culture and by contests to determine whom best
reaches the standards McDonald's sets for all its
franchises. - McDonald's manuals emphasize the organization's
motto, QSCV, and they define every task an
employee needs to know. - These manuals ensure that efficiency,
predictability, and control are involved in
production and customer service.
33Yum! Brands Corporate Structure
- Originally an accumulation of restaurant chain
accounts put together for not only the addition
of Pepsi fountain accounts, but for profit from
food sales. - Chains were acquired and managed virtually
independently, essentially skipping the usual
corporate practice of bringing them in line with
the rest of the business units. - Now, the company operates its business through
three geographical reporting segments the US,
the International segment and China segment. - The US segment operates multi-brand restaurants,
where two or more of the concepts, such as KFC,
Pizza Hut, Taco Bell, Long John Silver's and AW,
are operated in a single unit. - Outside the US the company and its franchisees
use decentralized sourcing and distribution
systems involving many different global,
regional, and local suppliers and distributors.
34Yum! Brands Corporate Structure Chart
35Yum! Brands Corporate Culture
- Over the past 12 years, Yum! Brands success has
been driven by their focus on building leading
brands in China in every significant category. - They strive to drive aggressive, international
expansion and build strong brands everywhere. - They try to dramatically improve U.S. brand
positions, consistency and returns, driving
industry-leading, long-term shareholder and
franchisee value, and build a unique, fun culture
led by people who love the restaurant business. - They created the Yum! Dynasty Growth Model.
- How We Win Together Principles are their
corporate values and are built around a "People
Capability First" philosophy.
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37Strengths
- Franchises
- McDonalds operates 31,377 restaurants with
20,505 of those restaurants being operated by
private owners - Brand Recognition
- Branding allows customers to recognize icons,
thus becoming more brand loyal - Product Uniformity
- Offering the same consistent product creates
customer loyalty - Pricing Strategy
- Value Menu
38Weaknesses
- Saturation
- pricing wars against competitors has caused a
decrease in revenue - Public Perception
- unhealthy product offerings has lead to numerous
lawsuits
39Opportunities
- Market share
- countries such as Latin America and the
Caribbeans, Europe, The Middle East and North
America, Sub- Sahara Africa, and Oceana have very
few McDonalds chains, creating a huge untapped
market - Younger Generation
- tend to be on the go, and look for meals that are
quick, cheap, and convenient, thus giving a huge
opportunity to serve an adult crowd
40Opportunities
- Innovativeness
- Continuously using technological factors, perhaps
text message ordering can influence revenue or
joining the going green movement - Product Offering
- Constantly seeking new product offerings allows
new opportunities for growth and expansion of
their brand recognition
41Threats
- Economic Slowdown
- Recessionary period and global economic slowdown
has led to currency losses, inflation or
deflation - Casual Dining Restaurants
- have decreased menu prices
- Cheddars burger 4.99
- Imitation
- new formats and new menu items are being imitated
42Company Assessment Summary
43Competitive Scope
- Global Scale
- Local, regional, national, and international
competitors - Makes up 2.4 of 575,000 total restaurants in U.S.
44Strategic Intent
- Leader in QSR industry
- Uses advertising, marketing, and public relations
to promote brand image and focus on value, food
taste, menu choice and customer experience
45Market Share Objective
- Focus on internal growth through expanding the
number of restaurants as well as capturing new
market share from other industries. - Ex coffee sector
- Plan to Win
- Designed to bring more value to shareholders
- Ex flat screen TVs, internet
46Competitive Position/Situation
- Well-entrenched
- Global leader
- Keep position through expanding the number of
stores, internal operations to new ventures, and
customer experience.
47Strategic Posture
- Defensive Strategies - reactions to competition
and to defend market share - Dollar menu
- Value meals
- Offensive Strategies - proactive approach to keep
and secure its position as market leader - New market ventures
- Customer loyalty
48Competitive Strategy
- Differentiation
- Advertising and marketing
- Recognizable name and logo
- Social responsibility and commitment to community
- Green movement
- Safe and high quality meat
- Technology
- Speedee Service System