7/27/2019 McDonald's Case Outline

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Tim Foster MKTG 485.001

Problem: Eliminate waste altogether, but continue the use of paper and plastic products tomaintain the company tradition of QSCV.

“While country managers were allowed some leeway in adapting the new standards to the

specific market requirements, it was expected that they would abide by the directive fromheadquarters unless circumstances were so market specific as to warrant a differentapproach” (p 29). 

Germany Specific Issues

  Justify switch from plastic to paper to German public

  “80% of German consumer willing to pay more for environmentally soundgoods” 

  German’s spend highest amount of GDP on environmental protection policies 

  200 German cities ban disposable packaging

  Landfill costs are going to double

  Material going to landfills cannot be recycled  Cities wont allow McDonalds to open unless they are convinced that the company

can handle its waste problem

Oehl’s Aspirations for McDonald’s Germany 

  100% of material will be recyclable or converted into energy

  Recycled products used by other industries

  To do this:1.  Packing has to become standardized2.  Unnecessary packing has to be reduced3.  Separation of materials

4.  Plastics broken down and organics processed into compost/bio gas5.   New raw materials would be used internally within the restaurant or for 

external purposes

BTA and Belland

  BTAo  Process to separate plastics, paper, and organic wasteso  Convert paper and organic wastes to compost creates alternative energy

 bio gas

  Bellando  Developed and produced a group of water soluble plastic polymers

  Allows for easy chemical separation from other materialso  McDonalds has already invested $1.7 million

  BTA plants with Belland recycling unitso  Transform LIQUID organic waste into bio gas source of energy

  1/3 of energy would be reused for the process itself   2/3 sold

o  Transform SOLID organic waste into compost  Used for landscaping and gardening

7/27/2019 McDonald's Case Outline

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Tim Foster MKTG 485.001

Costs

  Total cost for 15 plants = $150 million

  Each plant needs 20,000 metric tonnes of waste annuallyo  McDonalds only produces 15,000 metric tonnes annually

  Processing costs for new system approx $150/tonne  Average hauling cost $77/tonne

  Total cost per tonne approx $227 with new systemo  Hauling costs will decrease as number of plants increase

  Old systemo  Landfill approx $207o  Incinerator approx $227

Implement McDonalds/Belland/BTA Plants by Evaluating Marketing Mix

Price  One of McDonald’s main principles is low price. Implementing the new plants

will cause the price per unit to increase in the short run, but if an economy of scale is generated, price will return.

Place

  McDonalds Germany is treating their International industry and their Domesticindustry the same. The Germans have much stronger feelings aboutenvironmental protection policies. Germany would be the best market toimplement this new system

Promotion  Promotion Mix

o  Advertising  Generate awareness of 100% sustainability  Inform customers of what can and cannot be recycled

  If successful this will reduce cost of separating materialso  P.R.

  Oehl on various news networks to describe sustainability process

  Example –  Oehl on O’Reilly with Ralph Nader    Donation of excess recycled/reusable materials and bio gas to

noncompeting businesses

  Goal is to convert those businesses to Green  McDonald’s implements one of their oldest principles of 

employees picking up litter in a one block radius of the restaurant