1. Keuka College
Bachelor of Science in Management
Report
McDonald Corporation
Group 7:
_NguyenThi Que Chi 332951
_NguyenQuoc Phi Khanh 332947
_NguyenThi Quynh Mai 332952
_Le Thi Thu Ha 3329
_TranTrung Hieu 3329
_Cao Son
Professor: Vahid Victor Keyhani
2. A. Executive Summary
I /Identifies and evaluates the organization’s existing mission, vision,
objectives, and strategies
Mission: "McDonald's brand mission is to be our customers‘ favorite place
and way to eat."
Vission: "McDonald's vision is to be the world's best quick service
restaurant experience. Being the best means providing outstanding quality,
service, cleanliness, and value, so that we make every customer in every
restaurant smile."
Objectives: McDonald focuses on children. They built a “happyland” and
“happy meals” with toys for them. Some reasons that cause McDonald
chooses this objective:
Children is a big customer group and they always want a favorite
place to go.
A meal for children is really cheap but McDonald can creat more
different happy meals for whole families, it means they can build a
stable business.
Strategy:
Long-term business partner with large corporations such as CocaCola
and becomethe largest consumption of CocaCola world.
Slightly adjust the taste, ingredients in each local processingwill help
the company more successful. Along with local changes, a team
Commitment Quality (Quality Assurance) of McDonald's were
formed to maintain food standards on a global scale. With
international regional structure, separate types of products will be
placed in each geographical area. As McDonald's did, for example,
sandwich File-O-Fish, made by Lou Groen, the store branch in
Cincinnati, area concentrated mainly people under the Christian, or as
bread hamburgers McDonald's in India degrees, accompanied with
fried chicken instead of beef ... Furthermore with productgroups did
not differ in a narrow geographic area, the structure of global and
regional organizations as appropriate
3. II/ Summarizes the products and services soldby the company
Products:McDonald’s primarily sells hamburgers, cheeseburgers, chicken,
french fries, breakfast items, softdrinks, milkshakes, and desserts. In
responseto changing consumer tastes, the company has expanded its menu
to include salads, fish, wraps, smoothies, fruit, and seasoned fries.
III/Competition and market conditions currently facedby the company
Competitors: McDonald’s is one of the largest fast-food chain in global fast
food market so that it has to compete with many competitors which all
seeking a share if the market. Today, Yum and Starbucks are its two big
competitors in market share. Starbucks began jumping to fast food market
share and quickly become a competitor of McDonald’s.
4. Other new competitors are threats.” Once the golden arches of McDonald's
was the go-to place for burgers in America.On 30 January 2015 the chain saw its
profits fall more than 20% amid fierce competition from high-end competitors.
One competitor is Shake Shack which has been increasing its market share and
enticing customers with its fresh approach to fast-food burger joints.” BBC news
Market Conditions
The demand for fast food nowadays not only focus on quick service, easy to eat
and cheap. People demand increasingly changed in few years ago today.
1. Healthy problem:
People increasingly want to know about the ingredients and their origins in
food. By doing that, they will know exactly if the food is good for their
health or not. This is also the top priority when people choosing between
many different restaurants when they eating out. People today pay more
attention to their health and they are willing to pay a premium for better
ingredients.
5. 2. The flavors:
In the past, we only choose to eat at fast food restaurant because of it quick
service and we tend to save our time and money; we do not pay much
attention to the food quality and its flavors. Today, along with the increased
of many fast food brands, customer demand also raised. The quality of each
meal and the taste are more interested. The diversity of restaurant menu also
increases the success of the restaurant.
3. More vegetable and fruits:
Every fast food restaurant has vegetable and fruit in their menu such as salad
or French fries, but customers expect more fresh fruits and vegetable than
that. Customers tend to choose food which is healthy for them so adding
more products from vegetable will support the success of restaurants.
4. Beverage:
Any kind of restaurants included fast food restaurants not only about the
foods, but also required good quality and innovative beverage. Fast food
restaurants in the past only served soda which is the main cause for obesity.
Because of that, fruit and vegetable juices are showing strength, fast food
restaurants which served smoothies are more welcome than other
restaurants.
IV/ Proposes specific recommendations
After analyzing data of McDonald’s, our team has some specific
recommendations for McDonald’s to become a winner of fast food market
share all over the world.
6. Focusing on quality not only in USA but also in all over the world.
Menu has many choices such as: old and new sets, change day by day,
healthy food
Not focus on kids any more, should be focusing everyone
Understanding culture of nation which it want to jump in and sell products
Some policy to decrease high employee turnover.
Using effective resource
Take care about environment
No more restaurants are owned by independent franchisees because taste not
the same in restaurants.
B. Report’s content
I/ Identification of the company’s existing vision, mission, objectives, and
strategies:
Mission: "McDonald's brand mission is to be our customers’ favorite place
and way to eat."
Vission: "McDonald's vision is to be the world's best quick service
restaurant experience. Being the best means providing outstanding quality,
service, cleanliness, and value, so that we make every customer in every
restaurant smile."
Objectives: McDonald focuses on children. They built a “happyland” and
“happy meals” with toys for them. Some reasons that cause McDonald
chooses this objective:
Children is a big customer group and they always want a favorite
place to go.
7. A meal for children is really cheap but McDonald can creat more
different happy meals for whole families, it means they can build a
stable business.
Strategy:
II/ Strengths, Weaknesses,Opportunities, Threats (SWOT)Matrix
_As same as other company, McDonald has its strength, weakness,
opportunity or threat, even when it’s a big corporation with huge
advantages such as good location or high ranking, it still has some
weakness and threat (opponents, lawsuit against it) that could affect to
its reputation and income Using SWOT Matrix could help McDonald
identify more clearly its strength, weakness, opportunity, threat, this’s
play an important role in firm, it show firm what could be useful to
development or what could be threaten to firm. Moreover, strength
opportunity (SO), strength threat (ST), weak opportunity (WO) and
weak threat (WO) could
8. show company the way to solve problem or how to using opportunity to improve
(products, services, etc) and those things have direct relation to successfulor
failing of McDonald
III/ Competitive Profile Matrix (CPM)
According to this table, the total weighted scrore of McDonald's is
higher than Yum and Burger which means that McDonald's enjoys the
strongest competitive position , on the other hand, Burger has net
competitive disadvantage because of its lower total weighted score than
McDonald's and Yum
9. IV/IFE Matrix
_McDonald strengths overweight their weaknesses . Mc Donald also takes
advantages of external opportunities to improve their internal weaknesses
V/ EFE Matrix
_Mc Donald operates well and they are able to deal with external threat by using
their internal strength
10.
11. VI/SPACE Matrix
Aggressive, Conservation, Defensive, Competitive are four strategies belong to
four quadrants of the Strategic Position and Action Evaluation Matrix.
The SPACEMatrix analysis functions upon two internal and two external strategic
dimensions in order to determine the organization's strategic posturein the
industry. The SPACE matrix is based on four areas of analysis.
Internal strategic dimensions:
1. Financial strength (FS)
2. Competitive advantage (CA)
External strategic dimensions:
1. Environmental stability (ES)
2. Industry strength (IS)
12. Every business is also affected by the environment in which it operates. SPACE
matrix factors related to business external strategic dimension are for example
overall economic condition, GDP growth, inflation, price elasticity, technology,
barriers to entry, competitive pressures, industry growth potential, and others.
McDonald focuses on the change of cash flow and income so that both of them get
the highest ranking in financial strength (FP). On the order hand, it got some
troubles about inflation rate in few countries (SP). However, its strength in
industry (IP) is very good at profit potential and growth potential because fast-food
become a trend in modern world. It has to consider about market share in (CP)
McDonald should have aggressive strategy for it business
Forward integration
Product development ( set up more healthier food )
13. VII/ GSM and QSPM
The Grand StrategyMatrix is a popular tool which is using for formulating
strategies. In the Grand Strategy Matrix, McDonald’s was positioned in Quadrant
IV because of its high market share of 49.6% in 2011 in the US Burger market
14. share but the slowly in the growth of the Fast-food industry itself. Thus,
McDonald’s must be create new strategic. For the firms in Quadrant 40 IV market
penetration, market expansion and productdevelopment are appropriate strategies.
Analysis Grand Matrix Strategy:
1. Forward integration (joint ventures with retailers)
2. Productdevelopment (launch new innovative products suchas healthier
ingredients)
3. Market penetration through advertising, healthier products and diverse local
taste.
Quantitative Strategy Planning Matrix (QSPM)
PROBLEMS: The US market share of McDonalds is going down; also their product life cycle is
on Decline stage due to many competitors in fast food industry. They cannot growth more
market share so they must come up with new strategy for US market. There are two alternative
strategies for McDonalds either expanding their brand in Asia market for specifically in China
and India or trying to offer healthier menu.
The first strategy: Focus on China and India market; those are potential market for fast-food
industry with large market share. According to McDonald’s annual report, the revenue in Asia
Pacific keeps increase 50% in 4 years compare to other regions such as US, Europe, America.
The second strategy: The trend of consuming healthy food is concerned by lots of people, if
McDonald’s can create new menu with more nutrition items, they can increase sales
significantly. Healthier food should not only come in the form of vegetable, it should also
provide differentiate McDonald’s from other competitors. Healthy menu can include fruity iced
drinks, different types of desserts, salads. This can enhance the company’s strong position in the
market.
We use the EFE matrix and IFE matrix to identify key strategic factors for the QSPM matrix.
Then, we can formulate the type of strategy we would like to pursue base on others above matrix
such as SWOT analysis, CPM matrix, SPACE matrix and BCG matrix.
15. We choose 2 main strategies: Expand further in India and China market. Providing diverse menu
include nutrition food.
16. Attractiveness Score how each factor is important or attractive to each alternative
strategy: Scores is 1= not attractive, 2 = somewhat attractive, 3 = reasonably
attractive, and 4 = highly attractive.
VIII/ Business Strategyrecommendations –both long term objectives and
specific strategiesfor the company
Long term objective
McDonald's main aims are to serve good food in a friendly and fun environment,
provide its customers with food of a high standard, quick service and value for
money
Profit maximation
Maximizing sales revenue is one of objective of McDonald since the beginning,
they seek out to gain and increase profit by selling for customer. When they sell 2
burgers for the price of one or even with the price that much cheaper than usual,
this contracts many people and gains a lot of customers coming and using their
products
Survival
Not only McDonald, this is aim of many firms. At the beginning, as same as other
beginning firms, McDonald tried to stay in business by earning enough money
from customer to pay for costs ( production, raw materials, transportation, etc ).
Beside, as a huge corporation, McDonald also has its franchise as a majority of
businesses , so that means McDonald have to aim to making enough money to
cover its costs.
Compete
17. McDonald needs to do some researches on products and how its opponents like
Yum or Burger King work and do business to have strategies and better ways to
serve customers.
Growth
This is also one of most important objectives that have concern of most of
companies. After many years McDonald now become one of best fast food brand
with restaurant in 119 countries, however, McDonald still need to expand to new
markets to gain more customers, especially in countries suchas China, Japan and
Australia, they also should refresh meals and drink in menu with more salad, fruit
and vegetarian food to meet customer’s need.
Specific Strategy
Change in menu
McDonald need to make development in menu with more healthier food and drink.
Because most of item in McDonald’s menu are unhealthy food including
hamburger, meat, etc or soda, that will make customer may afraid using those
product. Now they more likely to choosehealthy food like salad or juice, they also
need quality food that make them have enough energy in long time, not just in
short time like now. Moreover, they should have more specific menu in each
country, or if they can, they should have local menu to meet customer’s taste, they
could apply some local recipe and material to make new dish. This kind of
“specific menu” was already exist in McDonald system, however, it’s still too
general for people, especially in Asia countries
Develop new store
18. McDonald's has been successfulat building store in locations such as at Wal-Mart,
however, they got problem because of Subway and Dunkin' Donuts who have
aggressively added mini-locations at gas stations. Thus, they roll out its McCafe
concept, this might a good idea to contract customer because McCafe’s productare
in different line of beverage with different type of customer, design, product…
IX/ Proposedmethods and timetable for the implementation of the long-term
objectives and specific strategies
For the first strategy:
We point 4 for a Globalization (Oversee Mc Donald worldwide), expansion of
social media, one of best brand recognition in the world, connect with local
partners, cultural diversity in the food that are provided based on location on
restaurant these factors will absolutely related to successfulin expansion of the
company. Moreover, the expanding in new markets will deeply relevant to
introduction of new diverse menu and price of its products.
For the secondstrategy:
We focus on providing diverse menu. Thus, we give the 4 points for these factors
such as: Cultural diversity in the food that are provided based on location on
restaurant. Moreover, their new menus should avoid unhealthy food image and
target almost children. Because adult also a potential customer target.
Analyzing QSPM Matrix result:
The strategy 1 has 5.12 scorewhich is higher than strategy 2 and have more
opportunity to success. So, we choosethe expansion to Asia market, especially
China and India as a main strategy because they have the highest potential market
growth and suitable for our company long-term strategy.
19. Method
For long-term goal:
1. We continue to focusing on our three priorities of optimizing our menu,
modernizing the customer experience, and broadening accessibility to Brand
McDonald's within the framework for our long-term goal, these priorities align
with our customers' evolving needs, and - combined with our competitive
advantages such as convenience, menu variety, geographic diversification and
system alignment- will drive long-term sustainable goals successful.
2. The business is managed as distinct geographic segments that include:
• U.S.
• Europe
• Asia/Pacific, Middle East and Africa (APMEA)
• Other Countries & Corporate(OCC) including Canada, Latin America and
Corporate.
3. We view ourselves primarily as a franchisor and believe franchising is important
to delivering great customer experiences and gaining profitability. At year-end
2013, more than 80% of McDonald’s restaurants were franchised. Of the total
McDonald’s restaurants worldwide:
• Over 57% are conventional franchisees
• Nearly 24% are licensed to foreign affiliates or developmental licensees
• 19% are Company-operated
• Innovations have included the Big Mac, Fillet-o-Fish, and Egg McDuffie
20. • Operate Hamburger University.
For strategyexpansionto Asia market:
Continuing to operate franchise restaurants at Asia market. For example,
from 2011 to 2013, McDonald's plans to open one restaurant every day in
China.
Local outlets at foreign markets can be autonomy adapt to local tastes and
preferences. So, they have done the productdevelopment and marketing at a
local level and develop its own products to address unique tastes that their
consumers.
They allow some flexibility changes in international restaurants. Each
country able to complete the marketing research, develop new menu items
and freedom to add to the menu and promote their products howthey wish.
However, McDonald’s still keep the consistency of its products and taste
around the world and would not allow complete autonomy.
In addition, they have to do marketing overseas which must be focus on
cultural differences, customer target differences
Timetable
Expanding in Asia market
Activity Plan Star Plan
Duration
Actual Star Actual
Duration
Percent
Complete
Customersurvey 1 10 1 6 0%
Analyze data 5 6 7 6 0%
Identify market
needs, segments
10 8 10 8 0%
Determine
potential
customers
17 6 17 6 0%
Align with
marketing
22 3 22 4 0%
21. department for
new products
Legal permission in
foreign country
1 3 1 3 0%
Prepare
infrastructures
22 8 22 7 0%
Find suppliers for
beef and fresh
vegetables
3 5 3 5 0%
Innovate and
cooperate with
community
3 4 3 4 0%
Sustain the profit
level of products
then expand to
new market
30 10 29 15 0%
XI/ Recommendations forannual objectives and policies for the company
Aims and objectives of Mc Donald : "It's what I eat and what I do I'm lovin' it".
Mc Donald should gain competitive advantages over their competitors
domestically and internationally .
Unrelated diversification : Mc Donald should develop others field like pizza or
beverages in compared to Pizza Hut of their competitors Yum Brands .
Productdevelopment : Mc Donald should added more vegetables to their menu
and less meat .
Diverstitute : Mc Donald needs to close down some branches that bring less profit
Consistency : Mc Donald should seek for consistency in fast and modern ways of
delivering services to customers .
