McDonalds Case study

By:

Yadira McCullough Balakrishna Velineni Norberto Roman Sudaramurthy Vallinayagam Sanjay Kalingu

Agenda Executive summary Environmental factors Porters Five Forces Case Questions

Executive Summary
One of the key ongoing issues is the nutritional values of fast food it offers its consumers. McDonalds also faces the issues of:
Providing consumers good quality food at Good prices with profitable growth in a competitive fast food industry.

Porters Five Forces

Threat of Suppliers: McDonalds and its suppliers are dependent on each other McDonalds took the initiative to create a sustainable supply and develop quality and food safety standards. For Example when McDonalds decided to introduce healthy food items it:
It chose Peterson Farmers to supply its apples, blue berries and cherries. McDonalds chicken supplier, Tyson began using better quality chicken to supply the ingredients for its chicken nuggets.

Threat of Buyers: Due to low switching cost of buyers McDonaldss developed a framework that allows them to adapt locally McDonalds also focus in specific products for each market segment depending on the current trends, health, prices and innovation

Porters Five Forces Contd

Threat of Rivalry
Intensity of rivalry is high Main competitors are Burger King, KFC & Wendys Introduced Mccafe coffee beverages to compete with Starbucks coffee Zero switching costs lead to heavy competition Introduced breakfast menu to compete with breakfast chain restaurants Introduced healthy foods in the menu to compete with Subway and improve the brand image

Threat of new Entrants

Threat of new entrants is low to moderate Its difficult to compete with McDonalds with their product differentiation, low cost products and better customer service It is one stop food chain for breakfast, coffee and regular menu and at the same time provide healthy snacks Large capital investment needed in marketing, advertising and locations to compete with McDonalds Extremely Efficient supply chains It is difficult to compete with McDonalds global brand image

Porters Five Forces Contd

Threat of Substitutes
Threat of substitutes is high Zero switching cost can lead to switching to other convenience fast food restaurants such as In-N-Out burger, Five Guys, etc. People have started looking for low cost healthier options

Key Environmental Factors

Social-cultural Factors: * Setting the Right values * Health issues * Adapting to Culture Economic Factors: * Exchange rates * Inflation and change in interest rate * Purchasing power of the customer Political & legal Factors: * Government policies on the regulations of fast food operations * Different political infrastructures * Employment and tax

Key Environmental Factors contd Demographics

U.S

Global

Key Environmental Factors contd

Automated beverage dispenser Preconfigured equipment's Mobilization
Experiments

Innovation

Free Wi-Fi LCDs Toys Children play area

Entertainment

Technology factors

3D toys printing Gamification Interactive tables /tablets

Eco-system

Digital Ecosystem P.O.S Kiosks Inventory management

What sustained competitive advantages does the company have?

Strong brand Cost leader
Buys supplies in bulk to get lower prices Leases lands and property they own to franchises. Pays less in advertising by using their well-positioned mascot.

Knowledge of the local culture and tastes Expertise in test marketing around the world International presence

What internal resources can be considered as valuable, unique, difficult or expensive to imitate?
McDonalds practices a backward vertical integration.
Produces beef and milk in many countries Warehousing, distribution, and management of chain are automated, and centralized. Infrastructure. Nice restaurants Mobile coupon applications Advanced training programs. Hamburger University

Well-established and knowledgeable corporate architectural structure.

Resp ect

Commit ment enhance ment

Talent Manage ment

Conclusion

Largest fast food market share in the world Brand recognition valued at $40 billion $2 billion advertising budget Locally adapted food menus Partnerships with best brands More than 80% of restaurants are owned by independent franchisees Children, families, young adults, healthy style customers targeting

Negative publicity Unhealthy food menu Mac Job and high employee turnover Low differentiation

Increasing demand for healthier food Home meal delivery Full adaptation of its new practices Changing customer habits and new customer groups

Saturated fast food markets in the developed economies Trend towards healthy eating Local fast food restaurant chains Currency fluctuations Lawsuits against McDonalds

http://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-analysis.html

Questions ???