Arslan Iqbal

MS-Commerce (Advanced Strategic

Management)

12/20/2013

McDonald’s

McDonald’s

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ACKNOWLEDGEMENT

All praise to Almighty Allah, the most merciful and compassionate, who give me

skills and abilities to complete this report successfully.

I take this opportunity to express my profound gratitude and deep regards to my

teacher Dr.Dilshad Zafar for his exemplary guidance, monitoring and constant

encouragement throughout the course of Advanced Strategic Management. The

blessing, help and guidance given by him time to time shall carry me a long way in the

journey of life on which I am about to embark.

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EXECUTIVE SUMMARY

The following assignment deals about the strategic management in context to McDonalds.

Strategic management is one of the critical issues to be studied by a company in order to

understand its SWOT analysis, the causes and solution of the problems and hurdles in the

way of the success of the business and its market growth.

In today’s competitive environment every company has to make effective strategies in order

to survive in market place and tackle the competitor’s moves. Every company has to make

effective strategies and plans in order to tackle the internal and the external problems faced

by the company. Globalization on one hand gives benefits to the company to discover new

markets and increase its customers but it also poses different problems and challenges which

the company has to tackle to continue its success in the new markets. Company has to design

effective strategic plans. This assignment will discuss the various strategic issues of concern

for the McDonalds and plans it has designed to tackle these problems.

McDonald’s Background:

The McDonald's Corporation is the world largest chain of hamburger fast food restaurants

and also a pioneer in fast food chain restaurants, serving approximately 69 million consumers

and customers daily in 119 countries all over the world. The business established in 1940 as a

barbecue restaurant operated by Richard and Maurice known as McDonald Brothers at San

Bernardino, California. In 1948 they reorganized their business as a hamburger stand using

production line principles with the name of "Speedee Service System". But a Speedee name

replaced with Ronald McDonald by 1967 when the company filed a U.S. trademark on a

clown shaped man having puffed out costume legs. Businessman Raymond Albert Kroc

joined the company as a franchise agent in 1954. Later on Ray purchased the chain of

restaurant from the McDonald brothers and take over its worldwide franchises.

Broad Mission Statement:

is to be their customers' favorite place and way to eat and drink

Improve their operation

focus on an exceptional customer experience – People, Products, Place, Price and

Promotion

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Broad Vision Statement:

Is to be the best and leading fast food provider around the globe

To be the world`s best quick service restaurant experience

It is committed to continuously improving their operations and enhancing their

customers' experience.

McDonald's brand mission is to be their customers' favorite place and way to eat and drink.

Their worldwide operations are aligned around a global strategy called the Plan to Win,

which center on an exceptional customer experience – People, Products, Place, Price and

Promotion. They are committed to continuously improving their operations and enhancing

their customers' experience.

McDonald’s Values

They place the customer experience at the core of all they do. Their customers are the reason

for their existence. They depicts their dedication by providing them high quality food and

elite service in a clean, attractive environment, with a great value. Their goal is quality,

service, cleanliness and value (QSC&V) for each and every customer, each and every time.

Commitment to People: They are committed to their people. They provide opportunity, polish talent, develop leaders

and reward achievement. They believe that a team of well-trained individuals with diverse

backgrounds and experiences, working together cause a success of organization.

Business Model: They believe in the McDonald’s System. McDonald’s business model, depicted by their

“three-legged stool” of owner/operators, suppliers, and company employees, is their

foundation, and balancing the interests of all three groups is key factors for success.

Ethical Values: They operate their business ethically. Sound ethics is good business. At McDonald’s, They

hold their selves and conduct their business to high standards of fairness, honesty, and

integrity. They are individually accountable and collectively responsible.

Corporate Social Responsibility Work: They give back to their communities. They take seriously the responsibilities that come with

being a leader. They help customers build better communities, support Ronald McDonald

House Charities and also contribute in CSR activities all across the world where they are

operating their business.

Learning Experience: They are a learning from their decades experiences in organization that aims to anticipate and

respond to changing customer, employee and system needs through constant evolution and

innovation.

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Operation

McDonald’s operating in 119 countries around the globe with 34480 restaurants having

approximately 1.8 million employees serving approximately 69 million customers daily.

The McDonald's business structure is based upon geographic divisions. McDonald's

distribute its operations into five major geographical divisions; United States, Europe, Asia/

Pacific / Middle East / Africa, Latin America and Canada.

McDonald’s earn 75% revenue from its two divisions United States and Europe. These are

McDonald’s star divisions (according to Boston Cognitive Matrix) here its strategic approach

is to maintain the market share.

As the McDonald’s operate around the globe so it has different customers who belong from

different cultures, religions, customs, taste and heritage. So every SBU (Strategic Business

Unit) of McDonald require a different strategic approach according to production, marketing

in that particular region because they have to satisfy local customer.

Sources of Income:

McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself.

Its operating income has two sources:

Sales made by company own restaurant

Rental royalties ‘income from franchised resturantats.

1) Restaurants sales:

McDonald’s retains all of the profit earned by company-owned restaurants. An example

Profit & Loss Statement for a restaurant is shown left and highlights how food and labor

constitute a restaurant’s largest costs. In addition to variable costs, which increase or decrease

depending on the level of sales, McDonald’s also incurs costs that are largely fixed, for

example utilities and advertising, which need to be paid for even before the restaurant makes

any sales. Increasing sales and controlling costs are fundamental to ensuring the profit of

each restaurant is either maintained or increased.

2)Franchise Rental & Royalty Income:

The owner of each franchised restaurant (in all over the world where they used rental and

royalty strategy), known as the franchisee, keeps all of the profit they make through sales

after paying McDonald’s a royalty for trading under the brand name and rent for operating in

a McDonald’s owned property.

In 2012, McDonald's Corporation had annual revenues of $30 billion, and profits of $5.5

billion.

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Competitive Advantage

Sustainable competitive advantage is an advantage that a firm has over its competitors,

allowing it to generate greater sales or margins and/or retains more customers than its

competition.

According to Michael Porter, there are three different way to sustain a competitive

advantage. These three different strategies are cost leadership, differentiation, and focus.

McDonald’s Competitive Advantage

1. Cost Leadership:

Supply chain: McDonald’s buys supplies in bulk and, to get lower price

Real Estate: McDonald’s leases land and property they own to franchises

Marketing: McDonald’s is such a well known brand name and Ronald McDonald

such a well known mascot McDonalds has to do much less advertising than many

other chains to maintain awareness of their brand

2. Differentiation:

The company served to a large customers market with varying tastes and thus can’t afford to

introduce products without familiarizing itself with provincial preferences in food. For this

reason, McDonald’s distributes its products in foreign locations with the help of franchises

who are well aware in of that works in their country. In this way it creates differentiation by

launching products according to the requirement of that country.

Brief:

These two competitive advantages comply directly with the vision of the company which is

as follows: “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”.

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SWOT ANALYSIS

STRENGTH:

1. Largest fast food market share in the world:

McDonald’s is the largest seller of fast food restaurant chain. It is the second largest

outlet operator with more than 34,000 outlets, serving 69 million consumers every

day in 119 countries with 1.8 million human resource force.

2. Brand recognition valued at $40 million:

Company’s brand is the most recognized brand in fast food industry and is valued at

$40 billion

3. $2 billion advertising budget:

Advertising budget of McDonald is the largest budget in the world in the field of

fast food restaurants.

4. Locally adapted food menus:

The fast food chain is operating in many countries has diversified products according

to the culture and local target market of that particular country. Thus ability to adapt

to local tastes is one of McDonald’s strengths.

5. Strategic Alliances with best brands:

McDonald’s offers only most popular brands in its restaurants, such as: Coca Cola,

Pepsi, Nestle Yogurt, Heinz ketchup and others.

6. More than 80% of restaurants are owned by independent franchisees:

Due to this McDonald’s can focus more on perfecting its serving system and

marketing campaigns.

7. Children targeting:

The business successfully targets very young children through offering playgrounds,

toys with its meals and advertisements.

Weaknesses:

1. Negative publicity:

McDonald’s is heavily criticized for offering unhealthy food to its customers and

strong marketing focus on very young children.

2. Unhealthy food menu:

Although McDonald’s tries to introduce healthier choices in its menu, but the menu is

not good to an extent to which customer become satisfied. Hence, decreases

McDonald’s popularity.

3. McDonald Job and high employee turnover:

Mac Job is a low paid and a low skilled job, which is often seen negatively by its

employees. This results in lower performance and high employee turnover, which

increases training costs and add to overall costs of McDonald’s.

4. Low differentiation:

McDonald’s is no longer able to substantially differentiate itself from other fast food

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chains (at least not enough to gain some market share) and opts to compete by price

rather than by additional features.

Opportunities:

1. Increasing demand for healthier food:

While demand for healthier food increases, McDonald’s could introduce more healthy

food to their targeted customers.

2. Home meal delivery:

McDonald’s could exploit an opportunity of delivering food to home and increase its

reach to customers at their door step.

3. Full adaptation of its new practices:

McDonald’s has redesigned its logo and restaurant design in 2006. In addition, it has

introduced some new practices. In a result, remodeled restaurants have seen 8-9%

higher than average market growth.

4. Changing customer habits and new customer groups:

Changing customer habits represent new needs that must be met by businesses. So far,

the company has been successful in introducing its McCafé, McExpress and McStop

restaurants to meet the changing customer habits and the needs of previously

untapped customer groups.

Threats:

1. Stagnant fast food markets in the developed economies:

The fast food market in the developed countries is already overcrowded by so many

fast food restaurant chains and this provide a high competition for McDonald.

2. Trend towards healthy eating:

Due to government and various organizations attempts to fight obesity, people are

becoming more conscious of eating healthy food rather than what McDonald’s has to

offer in its menu.

3. Local fast food restaurant chains: Local fast food restaurants can often become a major threat .i Although McDonald’s

does a great job in adapting its own menu to local tastes, the rising number of local

fast food chains and their lower meal prices is a threat to McDonald’s.

4. Currency fluctuations: The business receives a part of its income from foreign operations. The profits that are

sent back to US have to be converted into dollars and may be affected by the

exchange rates, especially when the dollar is appreciating against other currencies.

This cause a huge translation risk.

5. Lawsuits against McDonald’s:

McDonald’s has already been sued for many times and lost quite a few lawsuits.

Lawsuits are expensive as they require time and money. And as McDonald’s

continues to operate more or less the same way, there is high probability for more

expensive lawsuits to come.

6. Religious and Local Factors: In some countries religious factors highly influenced the menu of McDonald like in

India, Pakistan etc. Some local factors that political and local people condemn also

affect the sale of organization.

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PORTERS FIVE FORCES MODEL

In the prospectus of McDonald’s analysis of Porter five forces are:

1. Power of buyer

2. Power of supplier

3. Threat of new entrants

4. Threat of substitutes

5. Industry competitiveness

Applying porters five forces model to McDonalds-

1. Power of buyer:

In this competitive environment every company is trying to produce products with

better quality and at competitive prices. Bargaining power of customers of

McDonald’s is low because of low customer switching costs which are nearly zero.

fast food industry does not worry about customers’ loyalty. Fast food products

industry is differentiated which are usually or almost always promoted by advertising

– that is because of a vast competition between fast food firms. Product differentiation

quality of the product or service in the fast food industry is very important as

customers have full information of the products they buy and consume.

2. Power of supplier:

The Company may have different suppliers for meat, food, dairy products etc. there

are a number of suppliers available for a same product, it becomes easy for the

companies to switch to different supplier if they are not satisfied with the one they are

dealing with. Since the fast food industry has a lot of options available to decide

which supplier to approach or not, therefore the suppliers have a very little or no

bargaining power.

3. Threat of new entrant:

it’s easy for a new entrant to enter the market and introduce products at competitive

prices. Although quality of the product or service in the fast food industry is very

important as customers have full information of the products they buy and consume

and it will require a huge investment. So, it’s difficult to compete with a strong brand

name like McDonalds. Hence threat of new entrant is low for McDonalds.

4. Threat of substitutes:

McDonald not only faces a tuff completion from the competitors in the fast food

industry but also from the players of other industries providing substitute products to

the customers. Several factors determine if there is a threat of substitute products in an

industry. First, if the consumer’s switching costs are low, which means that there is

little of anything stopping the consumer from purchasing the substitute instead of the

industry’s product, then the threat of substitute products is high. Second, if the

substitute product is cheaper than the industry’s product there is a high risk of threat

of substitutes. Third, if substitute product is having equal or superior quality,

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attributes, functions or performance compared to the industry’s product, threat of

substitutes is very high.

5. Industry competitiveness:

McDonalds face a lot of competition not only from the other competitors in the fast

food industry but also from other industries producing substitute products. Although,

McDonald’s, with more than 32,000 local restaurants serving more than 69 million

people in 117 countries each day, has a number of fast food outlet competitors across

the countries such as Burger King, Taco Bell, KFC, Wendy’s, it is currently the leader

of the industry in market capitalization with a cap of $39.31 billion.

PRODUCT LIFE CYCLE

Due to a lot of competition and presence of substitute in the markets it has become really

difficult for the McDonalds to attract more customers and grow in its business. In these

markets the saturation stage has come and for the McDonald to create new opportunities of

growth and business in these markets it needs to plan a strategy to introduce new and

different products with competitive prices in order to attract the customers and again grow in

these markets. The other option for McDonald is to expand its business in other countries to

explore new markets with a fresh start.

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EXTERNAL ENVIRONMENT ANALYSIS Analysis of McDonald’s macro-environment is as follows:

Political factors:

The international operations of McDonald’s are extreme under influence of a policy of the

separate state put into practice by each government. So, For example, there is a hung legal

dispute in privilege McDonald’s in India where certain infringement of rights and

infringement of the religious laws concerning the maintenance of meal. Meat existence in

their menu in India is obviously offensive to Indian religions in the mentioned market. the

company operates the separate policy and instructions of operations.

Economic factors:

Economic factors like inflation and fluctuation in exchange rate also effect the operation and

income of McDonalds and it create a translation risk. Hence, if the privilege works in the

especially economically weak state, then their products should cost above than other existing

products in the market, these privileges should take certain regulators to support economy at

the expense of manufacture growth.

It will become the weakness of organization.

Socio-Cultural factors:

McDonald’s indulges a special variety of consumers with certain types of persons. In case of

McDonald’s they establish good system in determining of requirements of the market. The

company uses concept of consumer individuality of a product of behavior and decisions on

purchase to its advantage. These strategies to anticipate current people demand wins the heart

of consumers and maintain its market position.

Technological factors:

The key tool of the company for marketing is by means of TV advertisings. To attract a

younger people McDonalds create a game zone and play area also toys in the meal offered by

the company shows their diversification in serving. It also provide a central wifi service in

their privilege. In short, McDonalds’ is adopting technological factors.

Legal factors:

Legal factors also influenced the operating strategies like CSR activities requirement of the

company to generate its corporate reputation to more positive and the more socially

responsible company. For example, operations in predominantly Muslim countries demand,

that their meat corresponded to Halal requirements of the law. Other legal concepts as tax

obligations, employment standards, and requirements to a degree of quality etc these

requirements vary from country to country.

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McDonald's - Competitor Analysis Although McDonald is the largest seller of fast food items around the globe due to

maintaining its sustainable competitive advantages but it still has threats of competitive

environment from may mulit-national, global and local competitors. Other fast food

companies that also serve hamburgers, fries, and drinks. These include, but are not limited to

KFC, Pizza Hut Wendy's, Harvey's, Burger King, and A&W.

Detail of two competitors of McDonalds are as follows:

KFC( Kentucky Fried Chicken):

Operation of McDonald is world wide so its competitors are also world wide. KFC is one of

the major competitors for McDonald in the burger segment is KFC. KFC is the second largest

seller of fast food items around the globe. It is established in 1952 at Kentucky in USA and

operating in about 80 countries of the world with more than 11000 thousand restaurants

founded by “Colonel Sanders”.

Competitive advantage of KFC:

Improving services customizing its menu according to countries.

Expanding into non traditional facilities.

Strong financial background.

Environmental friendliness

Pizza Hut:

Pizza Hut is a global fast food chain restaurant founded in Kansas, USA in 1958. Its

operation in about 91 countries of the world.

Competitive advantage:

Satisfy customers by offering them “the best”

Focus strategy

Cleanliness , hospitality, accuracy, mountainous, product quality and speed

(CHAMPS)

3F (fun, family and friendly)

Quickest quality services

Pizza innovation leader

Just in time delivery service

Local Competitors:

In every country local competitors are biggest local forces who are competition with

McDonald. They competitive advantage of their local cultural traits to handle the customer.

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McDonalds Strategies

Business Model:

McDonalds’ business model known as “ The Three Legged Stool”

These are owner/operator, suppliers and employees. So all three legs of stool are needed to be

providing an equal support the weight. So all three ingredients of business model are equally

important in order to get sustainable competitive advantage.

Investment Strategy of McDonald:

The investment strategy of McDonald’s UK has changed over the last decade. During the

1990s, McDonald’s actively opened a large number of restaurants in order to grow market

presence and increase market share. In recent years, however, McDonald’s has taken a much

more consolidated approach by focusing on fewer restaurant openings and instead investing

in the re-imaging of its current estate. This investment strategy is intended to maintain the

perception of McDonald’s as a modern, progressive company and enable them to upgrade the

customer experience and maintain market share in an ever-increasing competitive

environment.

Profit using Strategy:

It is the responsibility of the finance team of McDonald’s to reinvest the profits made by the

company in order to generate future cash flows and returns for the shareholders. Whether this

is done by building new restaurants, reinvesting in existing restaurants, paying off debt to

reduce financing costs or paying a dividend to shareholders, their decisions will be based on

financial appraisals criteria by focusing all financial tools. McDonald also use a Blue Ocean

strategy(in which companies abounding to compete with current market competitors and

instead inventing a new industry or discovering a new market segments where competitors

are not approach). So, McDonald discovery a new market segments in order to boost the sale

and outcompeting its competitors.

Business Strategy: Per McDonald's CEO, James Skinner, the company's business strategy is Plan to Win. The

organization focuses on the five P's: People, Products, Place, Price, and Promotions. By the

company focusing on these factors the business continues to thrive even in a struggling

economy.

Broad Departmentation:

McDonalds broad departmentation is based on geographic areas. The McDonald's business

structure is based upon a geographic structure. McDonald's divided its operations into five

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geographical divisions; United States, Europe, Asia/ Pacific / Middle East / Africa, Latin

America and Canada...75% of McDonald's revenue are generated in the United States and

Europe. So to McDonald's, USA and Europe its star segment(according to Boston Cognitive

Matrix) the most important strategic approach for maintaining its leading edge is to keep their

major markets at the same time expanding their business into the emerging markets.

However, different customer groups in different countries may have different tastes and/or

requirements. So each functional geographic unit of McDonald' was required to wholly

response for producing and marketing its product in that region. Through this regional

structure, McDonald's could not only satisfy the local consumers' needs in different

geographical areas but also pursuing 'maximum local development'. Actually they produce

and market slightly different types of products in different areas, and they even have different

prices. McDonald's philosophy of quality services cleanliness, quality product and value is

same for everywhere. And McDonald's targets the similar consumer segments that need fast

service, affordable price and good standard hygiene. So their main products are similar in

most countries, where they provide service, including beef, chicken, bread, potatoes and milk.

Country wise operation Strategy:

As the consumers in different countries having different foods requirements, different culture,

religion etc. McDonald's keep launching new products for their regional consumers. China,

India, Pakistan and France are some good examples that will discussed below.

China:

China is a big eater of chicken in Asian region. Therefore, McDonald's business strategy is to

try to adapt more Chinese tastes by adding more chicken meals into their menu to attract

more customers.

India:

In India McDonald does not introduced a beef burger because of cultural and religious factor

of India. So, they first time introduced there a Vege-Burger. By doing that McDonald's have

successfully responded to the preferences of the local area while increasing their sales.

Pakistan: According to Pakistan, here religion is Islam. Islam prohibit the meet of pig so after a survey

before launching their business in Pakistan McDonalds researchers realized that thing and

does not introduced such burger.

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France:

In France, McDonald's has boosted it sales by remodeling restaurants, i.e. hardwood floors,

wood-beam ceilings, comfortable armchairs. Also by adding new menu items such as

espresso, brioche and more upscale sandwiches. In addition, the Tours, France McDonald's

has added self-service kiosk, which allows the customers to either control their kids or

control their orders. By doing that McDonald's have successfully responded to the

preferences of the local area while increasing their sales.

Strategy about Logo:

The McDonalds logo is widely regarded as one of the most popular and instantly

recognizable logos in history. The logo is closely related to American culture and some

times known as “part of Americanization and American cultural imperialism”.

The company’s name, “McDonald’s”, however appeared in the McDonalds logo for the first

time in 1968. This was the first logo of McDonald.

The logo of McDonald changed from time to time according to the need of business

environment and change in vision of the organization.

In 2003, logo of McDonalds introduced when the standard color of the mansard roof for their

restaurants was changed from brown to red and appears on the McDonald's commercials that

aired in2003 with slogan "We love to see you smile" and "We Love to See You Smile".

2003–present

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Value Chain of McDonald’s

(Michael Porter)

Value chain model consists of collection of various activities for “create value for buyers” in

the product and services.

Primary Activities:

Primary activities are basic and foremost activities in the value chain model in creating value

for customers. In McDonalds value chain model following are primary activities.

1. Supply Chain:\ For making an effective supply chain McDonald’s purchases raw vegetables and other raw

materials from its fixed, pre- defined suppliers only, therefore by increasing capital and labor,

their production will increase proportionately. It wills strength its in maintaining competitive

advantage.

McDonald also make a vertical integration for two reasons one to reduce cost and other to

ensure that the quality of raw material should be maintained by himself and mass production

causes economies of scale for organization.

2. Operations: McDonald’s Backgrounds for Operation Management.

The McDonald’s Brothers changed the design of restaurant kitchen. Instead of having lots of

different equipment and stations for preparing a wide of variety food, the Speede kitchen had:

A very large grill where one person could cook lots of burgers simultaneously

A dressing station where people added the same condiments to every burgers

A fryer where one person can made French fries

A soda fountain and milkshake machine for desserts and beverages

A counter where customers placed and received their orders.

3. Distribution: 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. They are dedicated improving their distribution system at

counter sell, restaurants and home delivery. They are modernize the customer experience, and

broaden accessibility to their brand, so that consumers will always enjoy the maximum

McDonald’s experience.

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4. Marketing and Sales:

McDonald’s restaurants are found in 119 countries and territories around the world and serve

58 million customers each day. Now McDonald is spending 2 billion on advertising in order

to boost its sale and

Secondary Activities: These are supporting activities to primary activities. In McDonalds value chain model

following are secondary activities.

1. Human Resource Management : The work offered by McDonald’s may have some positive elements, but workers are often

choosing employment at McDonald’s in the perspective when they have no other attractive

option. Employee’s turnover at operational level is too much high that may become a

weakness of McDonalds. High employee turnover increase the training cost of organization.

The employment relationship at McDonald’s is managed by a complete spectrum of controls,

from simple, direct and bureaucratic style of leadership. In addition, young managers who

may or may not get similar ‘opportunities’ elsewhere in the labour market are attracted by

offers of promotion and career development. HRM depart of McDonalds really provide some

effective training to its team.

2. Technological Development: Even as consumer confidence stagnates domestically and in Europe, McDonald’s will focus

on modernizing restaurants by providing e –services, Wifi services, customer service, just in

time delivery system create a huge value addition in competitive advantage of McDonald.

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e-Commerce Business Model:

The e-commerce that McDonald's use is Business to Consumer (B2C)...for example when a

customer makes a purchase from a business they use cash or credit and they get a product or

service in this case it will be McDonald's fast food products.

The type of Internet business models that are used are:

1. McDonald's systematize their business, which as a result gives consistency for

customer experience across the world via the Internet. With free Wi-Fi at more than

11,500 participating restaurants, customers can access the Internet using their laptops

or PDAs at no charge.

2. Also, by duplicating and documenting the way the business is running can be sold as

an eBook that can help people understand how to successfully run a McDonald's

franchise.

3. McDonald's provides free WI-FI service to their customers so that they can grab a

burger etc...And conduct business all at the same time.

4. The POS (Point-Of-Sale) at all McDonald's stores are touch screen, in addition, in

some restaurants their are self service devices.

5. The Arch Card is a pre-paid card that gives customers a quick and convenient way to

pay at McDonald’s.

BCG Matrix

Boston Cognitive Matrix has four segments. Analysis of McDonald’s position depicts the

McDonalds position are as follows:

1. Stars: (High growth and High market share)

Current situation of McDonalds in an American and European region depicts Star position.

2.Cash Cows: (Low growth and High market share):

Current situation of McDonalds in region depicts Cash Cow position. Like Canadian region

3.Dogs:( Low growth and Low market share)

These are the position has to expand on advertising expenses of withdraw from the industry

or to create a differentiation feature. McDonalds African region and some middle east regions

face this type of difficulty.

4. Question Mark: (High growth and Low market share)

It’s a worst condition where e competitors enjoys a good market share but firm faces a huge

difficulty for survival. In this case firm has to withdraw from the market. In this situation

some Middle East and Indian region fall.

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McDonald’s Pakistan history

Launching in Pakistan:

McDonald’s is the largest and best known global food services retailer, so it also operated in

Pakistan. McDonald’s Pakistan is part of the Lakson Group of Companies, a leading business

house in Pakistan.

McDonald’s first restaurant opened its door to the people of Pakistan in September 1998 in

Lahore. This launch was met with unprecedented enthusiasm from the citizens of Lahore, all

are known that Lahories are famous for their love of food, vigor, enthusiasm for quality food.

Experience in Lahore market is very successful. So, they opened an outlet at Karachi opened

its first restaurant a week after Lahore.

Ever since they opened the doors of our restaurants both in Karachi & Lahore, they have been

proud to provide our customers the same great taste, outstanding value and superior service

that is synonymous with the Golden Arches all over the world.

There are now about 32 restaurants in 8 major cities of Pakistan. (11 in Karachi, 1 in

Hyderabad, 10 in Lahore and 1 in Faisalabad, 1 in Kala Shah Kaku, 1 in Sialkot, 1 in

Islamabad & 1 in Rawalpindi and others)

Trust of Pakistani:

Today millions of Pakistanis place their trust in McDonald’s every day- trusting the company

to provide them with food of a very high standard, quick service and value for money. So

next time you walk into one of our restaurants, please remember, McDonald’s Pakistan is

here now, to put a smile on your face, each and every time you visit us.

McDonald’s is firmly committed to giving back to the community where it operate.

McDonald s also contributes in development of Pakistan through its Corporate Social

Responsibility. Their contributions are discussed later in this report.

Corporate Social Responsibility work :

Green Park in Islamabad green park garden located in the beautiful F-9 Sector in

Islamabad has been designed and maintain by McDonald for public.

McDonald’s has developed and maintains Defence Recreational Park in DHA, Lahore

M Donald’s has taken steps to create awareness about this environment, especially

among kids, with regular visits to the beach where they clean it with their own hands.

On 20th

November, children’s day McDonald collect the charity and submitted it to

Darl-ul-Sukoon.

McDonald’s Pakistan has gifted a 10-seater van to the Rising Sun School for blind

learners.

McDonald’s sponsors the Annual Wheelchair Race for Handicapped Children to mark

the International Handicapped Day

McDonald’s has donated funds to both the Aga Khan Hospital and Al-Shifa Hospital

for financial assistance of Lahore-based patients.

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STRATEGIC ISSUES, PROBLEMS AND CHALLENGES FOR McDonalds

We know that McDonald is one of the largest selling fast food brand and market

leaders in the fast food industry around the world. McDonald has grown day by day

globally which has created some problems and challenges in the path of McDonald's

success and future progress. Since from being a local fast food player of America to a

global company McDonald has grown a lot and so are its responsibilities. With the

time many more fast food companies have made there place and provide Cut-Throat

competition to McDonalds. In this busy world no body has the time to cook and thus

people preference and likeness towards the fast food industry has grown a lot in the

past years. People though prefer to eat fast food but also prefer to eat a healthy diet

with less calories and fat. All of these issues revolve around one major issue of

strategic concern for the McDonalds which is “Diversification”. Since there are a lot

of other players which are providing the similar products like McDonalds thus in

order to compete with them McDonald have to develop more differentiated and

healthy food products keeping in mind the taste and preferences of its customers.

Description for the strategic issues for McDonalds is as follows:

1. COMPETITION:

One of the major issues of strategic concern for the McDonalds is the Cut-Throat

competition by its competitors. The other strong players in the fast food industry are

burger king, Pizza Hut, KFC, Wendy's, Hardees and sonic. These competitors provide

a lot of different options to the people who enjoy fast food thus posing a stiff

competition to McDonald. They provide different unique and healthy products to the

customers.

2. HEALTH FACTOR:

All fast food companies work really hard to cater the changing needs and preferences

of people because Noting is permanent but the change is permanent. People now days

want a healthy diet. Thus it has become an issue of major concern for all the

McDonald to introduce healthy products like salads or sandwiches in their menus in

order to entertain the needs of their customers and hence retain them. It also focus on

not to compromise the items in the original menu.

3. DIVERSIFICATION:

In order to control the above problems like competition or health factor McDonald is

working hard on the diversification of its products in order to develop new

differentiated and healthy food product in order to cater the changing needs and

preferences of its customers.

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Conclusion:

McDonald’s restaurants are found in 119 countries around the world and serve 69 million

customers each day.] McDonald’s operates over 31,000 restaurants worldwide, employing

more than 1.8 million people.

Because McDonald's has taken hard work to maintain its sustainable competitive advantage

stock management, Restaurant Managers are able to spend more time focusing on delivering

McDonald's high standards of Quality, Service and Cleanliness. Customers are happy

because they can be sure the item they want is on the menu that day. Efficient strategic

implementation on management is essential to any business. It enables the business to operate

in a responsible way.

As the market leader and as a pioneer of the Quick Service Restaurant concept, McDonald's

has to respond to a changing business environment. It is well placed to do so. It has listened

to its customers, and anticipates their emerging demands. Based on its research, it has

launched McCafé, McStop and McExpress - new products conceived and designed to

complement and extend what it already offers and to keep the company 'ahead of the game' in

an increasingly competitive market place.