3. ABOUT McDonald’s
FOUNDED:
• McDonald’s BAR-B-Q, May 15, 1940
in San Bernardino, California
• McDonald's Corporation, April 15, 1955
in Des Plaines, Illinois
HEADQUARTERS:
Oak Brook, Illinois
MASCOT:
Ronald McDonald
CHAIRMAN: Andrew J. McKenna
PRESIDENT & CEO: Don Thompson
TOTAL EMPLOYEES: 1,800,000
World's largest chain of hamburger fast food restaurants:
118 countries – 34,000+ locations – 68 million+ customers daily
(as in 2013)
4. ABOUT McDonald’s
• McDonald’s is committed to providing the highest quality food and superior service, at a great
value, in a clean and welcoming environment.
• At the restaurant level, McDonald’s is focused on energy conservation, sustainable packaging, and
waste management.
• GOAL:
Quality, service, cleanliness and value (QSC&V) for
each and every customer, each and every time.
• BUSINESS MODEL:
“Three-legged stool” of owner/operators, suppliers,
and company employees.
9. HISTORY OF McDonald’s
• Richard & Maurice McDonald built hamburger stands
with golden arches in California.
• 15¢ hamburgers were very popular.
• Ray Kroc, a milkshake machine salesman, bought
world franchise rights from them and spread the
golden arches around the globe.
• Kroc partnered with the brothers, and within a few
years turned their small idea into the huge franchise
that would become the McDonald's Corporation.
• Kroc became frustrated with the brothers' desire to
maintain only a small number of restaurants.
• In 1961, he purchased the company from the
brothers for $2.7 million.
Ray Kroc
The original staff of the
McDonald's brothers hamburger restaurant
11. ACROSS THE GLOBE
• McDonald’s depends on its overseas restaurants for
revenue.
• Annual revenues for 2012 – $27.5 billion
REVENUE GENERATED
US
Europe
APMEA
Other Countries
6%
32%
22%
40%
• It is one of the world’s best known brands.
12. ACROSS THE GLOBE
INTERNATIONAL FRANCHISING
FINANCIAL REQUIREMENTS/DOWN PAYMENT
• Initial down payment
new restaurant – 40% of the total cost
existing restaurant – 25% of the total cost
• The down payment must come from non-borrowed
personal resources.
• A minimum of $750,000 of non-borrowed personal
resources.
FINANCING
• Remaining balance of the purchase price may be
financed for a period of no more than 7 years
• McDonald’s does not offer financing
13. ACROSS THE GLOBE
INTERNATIONAL FRANCHISING
ONGOING FEES
• Service fee: a monthly fee based upon the restaurant’s sales performance (currently a service
fee of 4.0% of monthly sales).
• Rent: a monthly base rent or percentage rent that is a percentage of monthly sales.
14. ACROSS THE GLOBE
• Spread American culture in East Asian countries.
• Clean restrooms set new standards in Hong Kong and Taiwan.
• Introduced celebration of birthday parties in its restaurants in Hong Kong.
15. CRITICISM
•
•
•
•
•
Jose Bove, a French sheep farmer, led a campaign against McDonald's.
Ransacked McDonald’s restaurant construction site.
Part of French delegation to Seattle – protesting against commercialization of food crops by WTO.
Was against industrial farming.
McDonald’s – symbol of globalization, implying standardization of food through industrial farming.
• When US attacked Afghanistan in 2001, Pakistanis damaged McDonald’s restaurants in Islamabad.
16. McDonald’s IN INDIA
FRANCHISING IN INDIA:
McDonald’s Corporation has entered into JV’s with
two companies to develop, open and operate
McDonald's restaurants in India.
North & East India:
Connaught Plaza Restaurants Private Limited
("CPRPL")
South & West India:
Hardcastle Restaurants Private Limited
("HRPL")
17. McDonald’s IN INDIA
• Entered India in 1990s.
• Majority of Indians did not eat beef.
• Muslims did not eat pork.
• Food items were segregated into
Veg and Non-veg
• Introduced Maharaja Mac and
McAloo Tikki
18. McDonald’s IN INDIA
• In 2001, an Indian businessman sued McDonald’s for misrepresenting its French fries as vegetarian,
when they contained beef broth as “natural flavor”.
• McDonald’s admitted to mixing beef extract in the oil.
• Settled the suit for $10 million.
• Labelled ingredients of all food items.
• Special care is taken to ensure that all
vegetable products are prepared separately,
using dedicated equipment and utensils.
• Mayonnaise and soft serves are also 100%
vegetarian.
• Uses only vegetable oil as a cooking medium in
India.
19. ACCOLADES
GOLDEN ARCHES THEORY OF CONFLICT PREVENTION
• Thomas L. Friedman said in The Lexus and the Olive Tree that no two countries with McDonald's
within their borders have ever been in a war since having a McDonald's.
BIG MAC INDEX
• It is published by The Economist as an informal way of measuring the purchasing power parity (PPP)
between two currencies and provides a test of the extent to which market exchange rates result in
goods costing the same in different countries.
21. What lessons can other MNC’s learn from the experience of
McDonald’s?
• Globalization is still not accepted by all classes of people.
• Actions of one’s own country can affect the business in another country.
• One should be completely aware of the culture, society and food habits prevailing
in the target market.
• One should not mislead customers in any way.
• One should be able to create products based on the needs of the customers.
• Standardization of quality, service, cleanliness and values – no compromise.
22. Aware of food habits of Indians, why did McDonald’s err in
mixing beef extract in the oil used for fries?
• Beef extract is the only natural flavor in McDonald's French fries.
• Using ''natural flavor'' as a synonym for beef extract is within federal Food and Drug
Administration guidelines.
• McDonald’s wanted to maintain the taste of French fries globally.
23. How far has McDonald’s succeeded in strategizing and
meeting local cultures and needs?
• Connected local suppliers with international suppliers and encouraged them to
form JV’s.
• Handshake agreements with suppliers.
• Sharing of best practices within suppliers.
• Introduced region-specific food items.
• Developed products that the local market wants and at disruptive price points.
• Innovative practices – dedicated R&D.
• Standardization.
• Developed user friendly environment for consumers.
• Involved in Charity.