ST401E Dirk SCHNECKENBERG

McDonalds
AN David PADILLA Alejandra ROBIN Damien SOTO Thalia Von Manteuffel Nicolas

Summary
1.

Analyse of the situation The strategic challenge

2.

3.

Alternatives analyse
Implementation plan

4.

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Analyse of the situation

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McDonalds : Success story

1937 : Brothers Mac Donald opened a drive-in in Passadena. After opening a much larger restaurant in San Bernardino, the created the Speedy Service System in 1948. 1952 : first Mac Donald franchise in Phoenix. 1955 : Ray Kroc fund McDonald's System, Inc.

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1961 : Kroc & Sonneborne change the franchise concept in real estate operation. In the same year the Hamburger University was established : a key element for the McDonald's Business Model. 1963 : McDonald sells 1 million hamburgers a day, and had its first national meeting. 1965 : the firm became a public company. 1971 : the company opened its first restaurants in Japan, Germany and Australia.

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In the 90's, the firm had to cope with a number of challenges : the microwave oven, increasing health consciousness and competition. So McDonald's focus on international expansion and adaptation.

In 1999, as Jack Greenberg took over the reins of the firm, the situation was complicated due to competition between fast-food giants.

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Organization and human resources management

Culture:

offering the best Philosophy: giving back to the communities Restaurant-one manager -autocratic management Corporation-hierarchical structure McDonalds develop new products to satisfy customers

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SWOT ANALYSIS
Strenghts Weaknesses McDonalds Opportunities Threats

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Strengths
Most

recognizable logos. Golden Archer. Global Company. More than 30,000 restaurants in 109 countries. Cultural Adaptation. Leader in Quick Service Sandwich Industry. Based on Franchise Business Model.

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Strengths
Systematization

process. The use only high quality standards. 2005 - the best place to work for minorities, ranked by Fortune Magazine . They invest more than 1 billion dollar annually

of all its food preparation

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Weaknesses
Food

Service Market is really saturated. High employee turnover. Hard manage of companys principle: Quality, Service, Value and Cleanliness Lack of product innovation.

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Opportunities
The

need to penetrate in some countries. Asia and South America. Acquisition of some restaurants, nonMcDonalds branded (Chipotle Grill). New and premium products: good salads and better hamburgers. Implementation of a low-fat and healthy menu. First with FDA approval.

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Threats
Health

conscious consumer trend. Fast food market has a very slow growth. Huge competitive pressure-Price War. The current economic recession. Losses in exchange rate

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Marketing Mix
Place Product

Promotion

Think global, act local

Price

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Product...
McDonalds

began in 1937 serving a menu with 25 products. 80% of total sales were hamburgers, therefore in 1948 they began selling only 15 cent hamburgers, cheeseburger, potatoes chips, pie and 5 different beverages. In 1968 McDonalds introduced the famous Big Mac in their menu.

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Product...

Nowadays, McDonalds has huge product diversity, even when companys aim is to create a set of standardized products (Big Mac) Adaptation is required for its international success; McDonalds changed some products of its menu in order to fit with the culture, religious and politic patterns of each country. And in order to please needs and wants of consumers.

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Promotion
Its

Golden Arches as the companys recognition point. Promotion Strategy: Brand globally, advertise locally Im loving it was implement and translate The clown Ronald McDonalds needs to be modifying for some countries.

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Price
McDonalds

uses price as a competitive weapon. At the beginning 15cents hamburger and in 2002 Big Mac for 99cents. Pricing Strategic: Focus in localization not in globalization. Big Mac in USA is $3.58 USD China is $1.83 USD Norway is $7.02 USD

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Place
The

first tiny restaurant was opened in Pasadena, California. Currently McDonalds has more than 30,000 restaurants operating in 119 countries. The company manages a strategic expansion, in where each restaurant is operated by the own company, franchises or a joint venture.

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Consumer Analysis
McDonalds

sells its products directly to their final users; is a B2C company The company had based its segmentation on demographic variables (age, gender, lifestyle stage) Primary markets are teenagers and young adults, but its heaviest target market are children and their parents.

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Consumer Analysis

McDonalds creates products like the happy meal and playland places in order to please its main consumer and has an agreement with Barbie and Hot Wheels. For teenagers and young adults the company has: price sensitivity, varieties offered, right ambience, products that worth the money and healthy. Finland or Norway teenagers is the market that most visit McDonalds.

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Core and Distinctive Competences

McDonalds

has core competences in production, image and products. Five of them are:
Brand

Equity. Production and Delivery speed. Special menu for its main target market (Happy Meal). Image: Brand image and logo in the mind of millions. Adaptation System.

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Core and Distinctive Competences

Adaptation

System and its Lack of Innovation, can be unfavorable. They are diminishing its brand equity and image, straying from its core competency. Its core competences are a source of competitive advantage and by using them in the right way the firm can definitely be sustain in the competitive market.

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Porters 5 forces analysis

The intensity of competitive rivalry

The threat of the entry of new competitors

The threat of substitute products or services

The bargaining power of suppliers

The bargaining power of customers (buyers)

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The intensity of competitive rivalry

Highly

competitive industry. Many small & big fast food businesses Burger King, Wendys, Hardees, Jack in the Box, Sonic, etc.

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The threat of the entry of new competitors

Not

hard to enter the restaurant business. Hard to establish a big franchise. High costs war of prices

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The threat of substitute products or services

variety

of products

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The bargaining power of suppliers

Many

producers of bread, meat and milk

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The bargaining power of customers (buyers)

Product

with discount. Promotions Somewhere else

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PEST analysis
Political

& Legalinternational Economic-purchasing power of the consumers Social-many social groups. Technological- offering innovation and comfort.

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Financial Analysis
2002 Current Ratio (Liquidity) Debt Ratio (Leverage) Net income in millions of $ (Profitability) 0.71 2003 0.76 2009 1.14

0.57

0.53

0.53

893

1471

4551

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Stategic challenge

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The strategic challenge

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The strategic challenge

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The strategic challenge

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Alternatives Analysis

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Alternatives
ALTERNATIVES (1) Open more company-owned restaurants PROS - unlimited control - no lack of information CONS

- vs. strategy - expensive - risk of cannibalization

- cheap (2) Create competition - no big effort between Franchise Stores (3) Motivation of employees - performance - corporate identity - work environment

- expensive

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Decision Grid
Weight in decison 0.4 Cost Alternative 1 Alternative 2 Alternative 3 2 = 0.8 7 = 2.8 4 = 1.6 0.4 Risk 3 = 1.2 6 = 2.4 10 = 4.0 0.2 Time 3 = 0.6 7 = 1.4 6 = 1.2 TOTAL = 1.0 Total Score 2.6 6.6

6.8

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Winner
Alternative 3
Motivation of employees

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Implementation plan

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How to motivate McDonalds employees?

Selfactualization (self-development and realization)

Esteem needs (self-esteem, recognition) Social needs (work groups, healthy atmosphere)

Safety needs (job security, protection)

Physiological needs (food, water, shelter; pay, working conditions)

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First need

If you treat well your employee, they will treat well your customers

Respect Ethic charter to be sign

Infrastructures innovation : comfort

Computers in the staff room with a Wi-Fi connexion

Salary that goes with the job you do

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Second need
Propose

to employees some training courses to improve their skills in different fields of the restaurant

Become General-purpose Security job Not always the same task avoid the boredom

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Third need
Establish

restaurant

a good atmosphere in the

on different

Create teams working schedule team spirit

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Fifth need
Encourage

McDonalds multiply training courses

employee

to

System

of level courses with at the top level : Manager in a McDonalds restaurant the possibility to work abroad

Let

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Fourth need

Reward system Speed seller

The best drive-in seller The best in store seller

The employee of the week

The employee of the month

Thank you for your attention

Enjoy your meal !