Keuka College

Bachelor of Science in Management

Report

McDonald Corporation

Group 7:

_Nguyen Thi Que Chi 332951

_Nguyen Quoc Phi Khanh 332947

_Nguyen Thi Quynh Mai 332952

_Le Thi Thu Ha 3329

_Tran Trung Hieu 3329

_Cao Son

Professor: Vahid Victor Keyhani

A. Executive Summary

I /Identifies and evaluates the organization’s existing mission, vision, objectives, and strategies

Mission: "McDonald's brand mission is to be our customers‘ favorite place and way to eat."

Vission: "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."

Objectives: McDonald focuses on children. They built a “happy land” and “happy meals” with toys for them. Some reasons that cause McDonald chooses this objective:

Children is a big customer group and they always want a favorite place to go.

A meal for children is really cheap but McDonald can creat more different happy meals for whole families, it means they can build a stable business.

Strategy: Long-term business partner with large corporations such as Coca Cola

and become the largest consumption of Coca Cola world. Slightly adjust the taste, ingredients in each local processing will help

the company more successful. Along with local changes, a team Commitment Quality (Quality Assurance) of McDonald's were formed to maintain food standards on a global scale. With international regional structure, separate types of products will be placed in each geographical area. As McDonald's did, for example, sandwich File-O-Fish, made by Lou Groen, the store branch in Cincinnati, area concentrated mainly people under the Christian, or as bread hamburgers McDonald's in India degrees, accompanied with fried chicken instead of beef ... Furthermore with product groups did not differ in a narrow geographic area, the structure of global and regional organizations as appropriate

II/ Summarizes the products and services sold by the company

Products: McDonald’s primarily sells hamburgers, cheeseburgers, chicken, french fries, breakfast items, soft drinks, milkshakes, and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies, fruit, and seasoned fries.

III/Competition and market conditions currently faced by the company

Competitors: McDonald’s is one of the largest fast-food chain in global fast

food market so that it has to compete with many competitors which all

seeking a share if the market. Today, Yum and Starbucks are its two big

competitors in market share. Starbucks began jumping to fast food market

share and quickly become a competitor of McDonald’s.

Other new competitors are threats.” Once the golden arches of McDonald's

was the go-to place for burgers in America.On 30 January 2015 the chain saw its

profits fall more than 20% amid fierce competition from high-end competitors.

One competitor is Shake Shack which has been increasing its market share and

enticing customers with its fresh approach to fast-food burger joints.” BBC news

Market Conditions

The demand for fast food nowadays not only focus on quick service, easy to eat

and cheap. People demand increasingly changed in few years ago today.

1. Healthy problem:

People increasingly want to know about the ingredients and their origins in

food. By doing that, they will know exactly if the food is good for their

health or not. This is also the top priority when people choosing between

many different restaurants when they eating out. People today pay more

attention to their health and they are willing to pay a premium for better

ingredients.

2. The flavors:

In the past, we only choose to eat at fast food restaurant because of it quick

service and we tend to save our time and money; we do not pay much

attention to the food quality and its flavors. Today, along with the increased

of many fast food brands, customer demand also raised. The quality of each

meal and the taste are more interested. The diversity of restaurant menu also

increases the success of the restaurant.

3. More vegetable and fruits:

Every fast food restaurant has vegetable and fruit in their menu such as salad

or French fries, but customers expect more fresh fruits and vegetable than

that. Customers tend to choose food which is healthy for them so adding

more products from vegetable will support the success of restaurants.

4. Beverage:

Any kind of restaurants included fast food restaurants not only about the

foods, but also required good quality and innovative beverage. Fast food

restaurants in the past only served soda which is the main cause for obesity.

Because of that, fruit and vegetable juices are showing strength, fast food

restaurants which served smoothies are more welcome than other

restaurants.

IV/ Proposes specific recommendations

After analyzing data of McDonald’s, our team has some specific

recommendations for McDonald’s to become a winner of fast food market

share all over the world.

Focusing on quality not only in USA but also in all over the world.

Menu has many choices such as: old and new sets, change day by day,

healthy food

Not focus on kids any more, should be focusing everyone

Understanding culture of nation which it want to jump in and sell products

Some policy to decrease high employee turnover.

Using effective resource

Take care about environment

No more restaurants are owned by independent franchisees because taste not

the same in restaurants.

B. Report’s content

I/ Identification of the company’s existing vision, mission, objectives, and strategies:

Mission: "McDonald's brand mission is to be our customers’ favorite place and way to eat."

Vission: "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."

Objectives: McDonald focuses on children. They built a “happy land” and “happy meals” with toys for them. Some reasons that cause McDonald chooses this objective:

Children is a big customer group and they always want a favorite place to go.

A meal for children is really cheap but McDonald can creat more different happy meals for whole families, it means they can build a stable business.

Strategy:

II/ Strengths, Weaknesses, Opportunities, Threats (SWOT) Matrix

_As same as other company, McDonald has its strength, weakness,

opportunity or threat, even when it’s a big corporation with huge

advantages such as good location or high ranking, it still has some

weakness and threat (opponents, lawsuit against it) that could affect to

its reputation and income Using SWOT Matrix could help McDonald

identify more clearly its strength, weakness, opportunity, threat, this’s

play an important role in firm, it show firm what could be useful to

development or what could be threaten to firm. Moreover, strength

opportunity (SO), strength threat (ST), weak opportunity (WO) and

weak threat (WO) could

show company the way to solve problem or how to using opportunity to improve (products, services, etc) and those things have direct relation to successful or failing of McDonald

III/ Competitive Profile Matrix (CPM)

According to this table, the total weighted scrore of McDonald's is

higher than Yum and Burger which means that McDonald's enjoys the

strongest competitive position , on the other hand, Burger has net

competitive disadvantage because of its lower total weighted score than

McDonald's and Yum

IV/IFE Matrix

_McDonald strengths overweight their weaknesses . Mc Donald also takes

advantages of external opportunities to improve their internal weaknesses 

V/ EFE Matrix

_Mc Donald operates well and they are able to deal with external threat by using

their internal strength

VI/SPACE Matrix

Aggressive, Conservation, Defensive, Competitive are four strategies belong to

four quadrants of the Strategic Position and Action Evaluation Matrix.

The SPACE Matrix analysis functions upon two internal and two external strategic

dimensions in order to determine the organization's strategic posture in the

industry. The SPACE matrix is based on four areas of analysis.

Internal strategic dimensions:

1. Financial strength (FS)

2. Competitive advantage (CA)

External strategic dimensions:

1. Environmental stability (ES)

2. Industry strength (IS)

Every business is also affected by the environment in which it operates. SPACE

matrix factors related to business external strategic dimension are for example

overall economic condition, GDP growth, inflation, price elasticity, technology,

barriers to entry, competitive pressures, industry growth potential, and others.

McDonald focuses on the change of cash flow and income so that both of them get

the highest ranking in financial strength (FP). On the order hand, it got some

troubles about inflation rate in few countries (SP). However, its strength in

industry (IP) is very good at profit potential and growth potential because fast-food

become a trend in modern world. It has to consider about market share in (CP)

McDonald should have aggressive strategy for it business

Forward integration

Product development ( set up more healthier food )

VII/ GSM and QSPM

The Grand Strategy Matrix is a popular tool which is using for formulating

strategies. In the Grand Strategy Matrix, McDonald’s was positioned in Quadrant

IV because of its high market share of 49.6% in 2011 in the US Burger market

share but the slowly in the growth of the Fast-food industry itself. Thus,

McDonald’s must be create new strategic. For the firms in Quadrant 40 IV market

penetration, market expansion and product development are appropriate strategies.

Analysis Grand Matrix Strategy:

1. Forward integration (joint ventures with retailers)

2. Product development (launch new innovative products such as healthier

ingredients)

3. Market penetration through advertising, healthier products and diverse local

taste.

Quantitative Strategy Planning Matrix (QSPM)

PROBLEMS: The US market share of McDonalds is going down; also their product life cycle is on Decline stage due to many competitors in fast food industry. They cannot growth more market share so they must come up with new strategy for US market. There are two alternative strategies for McDonalds either expanding their brand in Asia market for specifically in China and India or trying to offer healthier menu.

The first strategy: Focus on China and India market; those are potential market for fast-food industry with large market share. According to McDonald’s annual report, the revenue in Asia Pacific keeps increase 50% in 4 years compare to other regions such as US, Europe, America.

The second strategy: The trend of consuming healthy food is concerned by lots of people, if McDonald’s can create new menu with more nutrition items, they can increase sales significantly. Healthier food should not only come in the form of vegetable, it should also provide differentiate McDonald’s from other competitors. Healthy menu can include fruity iced drinks, different types of desserts, salads. This can enhance the company’s strong position in the market.

We use the EFE matrix and IFE matrix to identify key strategic factors for the QSPM matrix. Then, we can formulate the type of strategy we would like to pursue base on others above matrix such as SWOT analysis, CPM matrix, SPACE matrix and BCG matrix.

We choose 2 main strategies: Expand further in India and China market. Providing diverse menu include nutrition food.

Attractiveness Score how each factor is important or attractive to each alternative

strategy: Scores is 1= not attractive, 2 = somewhat attractive, 3 = reasonably

attractive, and 4 = highly attractive.

VIII/ Business Strategy recommendations –both long term objectives and specific strategies for the company

Long term objective

McDonald's main aims are to serve good food in a friendly and fun environment,

provide its customers with food of a high standard, quick service and value for

money

Profit maximation

Maximizing sales revenue is one of objective of McDonald since the beginning,

they seek out to gain and increase profit by selling for customer. When they sell 2

burgers for the price of one or even with the price that much cheaper than usual,

this contracts many people and gains a lot of customers coming and using their

products

Survival

Not only McDonald, this is aim of many firms. At the beginning, as same as other

beginning firms, McDonald tried to stay in business by earning enough money

from customer to pay for costs ( production, raw materials, transportation, etc ).

Beside, as a huge corporation, McDonald also has its franchise as a majority of

businesses , so that means McDonald have to aim to making enough money to

cover its costs.

Compete

McDonald needs to do some researches on products and how its opponents like

Yum or Burger King work and do business to have strategies and better ways to

serve customers.

Growth

This is also one of most important objectives that have concern of most of

companies. After many years McDonald now become one of best fast food brand

with restaurant in 119 countries, however, McDonald still need to expand to new

markets to gain more customers, especially in countries such as China, Japan and

Australia, they also should refresh meals and drink in menu with more salad, fruit

and vegetarian food to meet customer’s need.

Specific Strategy

Change in menu

McDonald need to make development in menu with more healthier food and drink.

Because most of item in McDonald’s menu are unhealthy food including

hamburger, meat, etc or soda, that will make customer may afraid using those

product. Now they more likely to choose healthy food like salad or juice, they also

need quality food that make them have enough energy in long time, not just in

short time like now. Moreover, they should have more specific menu in each

country, or if they can, they should have local menu to meet customer’s taste, they

could apply some local recipe and material to make new dish. This kind of

“specific menu” was already exist in McDonald system, however, it’s still too

general for people, especially in Asia countries

Develop new store

McDonald's has been successful at building store in locations such as at Wal-Mart,

however, they got problem because of Subway and Dunkin' Donuts who have

aggressively added mini-locations at gas stations. Thus, they roll out its McCafe

concept, this might a good idea to contract customer because McCafe’s product are

in different line of beverage with different type of customer, design, product…

IX/ Proposed methods and timetable for the implementation of the long-term

objectives and specific strategies

For the first strategy:

We point 4 for a Globalization (Oversee Mc Donald worldwide), expansion of

social media, one of best brand recognition in the world, connect with local

partners, cultural diversity in the food that are provided based on location on

restaurant these factors will absolutely related to successful in expansion of the

company. Moreover, the expanding in new markets will deeply relevant to

introduction of new diverse menu and price of its products.

For the second strategy:

We focus on providing diverse menu. Thus, we give the 4 points for these factors

such as: Cultural diversity in the food that are provided based on location on

restaurant. Moreover, their new menus should avoid unhealthy food image and

target almost children. Because adult also a potential customer target.

Analyzing QSPM Matrix result:

The strategy 1 has 5.12 score which is higher than strategy 2 and have more

opportunity to success. So, we choose the expansion to Asia market, especially

China and India as a main strategy because they have the highest potential market

growth and suitable for our company long-term strategy.

Method

For long-term goal:

1. We continue to focusing on our three priorities of optimizing our menu,

modernizing the customer experience, and broadening accessibility to Brand

McDonald's within the framework for our long-term goal, these priorities align

with our customers' evolving needs, and - combined with our competitive

advantages such as convenience, menu variety, geographic diversification and

system alignment- will drive long-term sustainable goals successful.

2. The business is managed as distinct geographic segments that include:

• U.S.

• Europe

• Asia/Pacific, Middle East and Africa (APMEA)

• Other Countries & Corporate (OCC) including Canada, Latin America and

Corporate.

3. We view ourselves primarily as a franchisor and believe franchising is important

to delivering great customer experiences and gaining profitability. At year-end

2013, more than 80% of McDonald’s restaurants were franchised. Of the total

McDonald’s restaurants worldwide:

• Over 57% are conventional franchisees

• Nearly 24% are licensed to foreign affiliates or developmental licensees

• 19% are Company-operated

• Innovations have included the Big Mac, Fillet-o-Fish, and Egg McDuffie

• Operate Hamburger University.

For strategy expansion to Asia market:

Continuing to operate franchise restaurants at Asia market. For example,

from 2011 to 2013, McDonald's plans to open one restaurant every day in

China.

Local outlets at foreign markets can be autonomy adapt to local tastes and

preferences. So, they have done the product development and marketing at a

local level and develop its own products to address unique tastes that their

consumers.

They allow some flexibility changes in international restaurants. Each

country able to complete the marketing research, develop new menu items

and freedom to add to the menu and promote their products how they wish.

However, McDonald’s still keep the consistency of its products and taste

around the world and would not allow complete autonomy.

In addition, they have to do marketing overseas which must be focus on

cultural differences, customer target differences

Timetable

Expanding in Asia market

Activity Plan Star Plan Duration

Actual Star Actual Duration

Percent Complete

Customer survey 1 10 1 6 0%Analyze data 5 6 7 6 0%Identify market needs, segments 10 8 10 8 0%

Determine potential customers

17 6 17 6 0%

Align with marketing

22 3 22 4 0%

department for new productsLegal permission in foreign country 1 3 1 3 0%

Prepare infrastructures 22 8 22 7 0%

Find suppliers for beef and fresh vegetables

3 5 3 5 0%

Innovate and cooperate with community

3 4 3 4 0%

Sustain the profit level of products then expand to new market

30 10 29 15 0%

XI/ Recommendations for annual objectives and policies for the company

Aims and objectives of Mc Donald : "It's what I eat and what I do I'm lovin' it".

Mc Donald should gain competitive advantages over their competitors

domestically and internationally .

Unrelated diversification : Mc Donald should develop others field like pizza or

beverages in compared to Pizza Hut of their competitors Yum Brands .

Product development :  Mc Donald should added more vegetables to their menu

and less meat . 

Diverstitute : Mc Donald needs to close down some branches that bring less profit

Consistency : Mc Donald should seek for consistency in fast and modern ways of

delivering  services to customers . 

References

http://www.slideshare.net/caglatrk/mcdonalds-16299950

http://text.123doc.org/document/2421433-phan-tich-chien-luoc-kinh-doanh-quoc-

te-cua-mc-donald.htm

http://www.slideshare.net/quanlaem/mc-donald-s-study-case-tran-huu-minh-quan-

11bsm4