Mcdonald’s-Case Study
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Mcdonald’s-Case Study

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Vision of Ray Croc for McDonald's. McDonald's current position in international market. SWOT analysis for McDonald's. PESTEL analysis for McDonald's. Porter's Five forces of market. Conclusion. ...

Vision of Ray Croc for McDonald's. McDonald's current position in international market. SWOT analysis for McDonald's. PESTEL analysis for McDonald's. Porter's Five forces of market. Conclusion. McDonald's customer satisfaction approach of business. King of international fast food chain.

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Mcdonald’s-Case Study Mcdonald’s-Case Study Presentation Transcript

  • MCDONALD’S SERVING FAST FOOD AROUND THE WORLD Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 1
  • WHAT IS QSC&V? • “If I had a brick for every time I’ve repeated the phrase Quality, Service, Cleanliness and Value, I think I’d probably be able to bridge the Atlantic Ocean with them.” —Ray Kroc • The secret of McDonald’s success lies in its QSC&V • That is Quality, Service, Cleanliness & Value and limited menu of high quality, moderately priced food served fast in spotless surroundings • Adopting different ways of promoting own products, welcoming people of different culture with people’s choice of food helped McDonald to grow rapidly all over the world. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 2
  • McDONALD’S CORPORATION Name McDonald's Corporation Industries served Restaurants, Food Geographic areas served Worldwide Headquarters Oak Brook, IL, United States of America Current CEO Don Thompson Employees 1,800,000 (2013) Main Competitors Burger King Worldwide, Inc., Yum! Brand Inc., Subway, Wendy’s Company. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 3
  • MISSIONS AND VALUES 1) We place the customer experience at the core of all we do. Our customers are the reason for our existence. We demonstrate our appreciation by providing them with high quality food and superior service in a clean, welcoming environment, at a great value. Our goal is quality, service, cleanliness and value (QSC&V) for each and every customer, each and every time. 2) We are committed to our people. We provide opportunity, nurture talent, develop leaders and reward achievement. We believe that a team of well-trained individuals with diverse backgrounds and experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to our continued success. 3) We believe in the McDonald’s System. McDonald’s business model, depicted by our “three-legged stool” of owner/operators, suppliers, and company employees, is our foundation, and balancing the interests of all three groups is key. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 4
  • MISSIONS AND VALUES We operate our business ethically. Sound ethics is good business. At McDonald’s, we hold ourselves and conduct our business to high standards of fairness, honesty, and integrity. We are individually accountable and collectively responsible. We give back to our communities. We take seriously the responsibilities that come with being a leader. We help our customers build better communities, support Ronald McDonald House Charities, and leverage our size, scope and resources to help make the world a better place. We grow our business profitably. McDonald’s is a publicly traded company. As such, we work to provide sustained profitable growth for our shareholders. This requires a continuous focus on our customers and the health of our system. We strive continually to improve. We are a learning organization that aims to anticipate and respond to changing customer, employee and system needs through constant evolution and innovation. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 5
  • PESTEL ANALYSISPoliticalFactors: The policies of governments affect business of McDonald’s in various ways; in how their products are produced, promoted, and sold. Price margin regulation is the factor that McDonald’s need to focus when launching in international market EconomicFactors: The difference exists in countries in different stages of economic development has an influence on price variations. People in different countries may have different power to spend money. Specially, in India more than half of the population have low purchasing power. The McAloo Tikki (INR 25.00) is one the examples. Socio-CulturalFactors: Sociocultural demographic trends will also affect McDonald’s business, hence, analysis of culture and modification of menu is also important. When McDonald’s entered in India, company decided not to launch its Big Mac Burger as a result of deferring to the Hindu prohibition against beef consumption. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 6
  • PESTEL ANALYSISTechnological Factors: The systematic substitution of equipment for people and the carefully planned use and positioning of technology have helped each franchise to be of the same high standard. As Soviet machinery lagged 15-20 years behind Western technology, new machinery from Holland was used to harvest potatoes. Environmental Factors: It is very important for McDonald’s to consider the physical terrain and climate in the appraisal. The climatic conditions can affect products in foreign market. Being environment friendly is also another important factor. Environmental groups force to reduce use of plastic bags and Styrofoam packing to reduce pollution. LegalFactors: As discussed above, political and legal forces are highly important as they cover the main aspects of the company. Legal issues occurred in many places around the world. A legal issue in Russia for McDonald’s when, in 1993, a law passed in Moscow requiring all stores to have Russian names or at least names translated into the Cyrillic alphabet. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 7
  • SWOT ANLALYSIS Strenghts: 1) Largest fast food market share 2) QSC&V 3) Locally adapted food menus 4) Children targeting Opportunities: 1) Increasing demand for fast food 2) Home meal delivery Weaknesses: 1) New innovations 2) Unhealthy fast food 3) Negative publicity Threats: 1)Trend towards healthy eating 2) Local fast food restaurant chains 3) Currency fluctuations 4) Lawsuits against McDonald’s SWOT Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 8
  • SWOT - STRENGHTS • Largest fast food market share: It is the largest fast food chain in terms of total world’s sales serving more than 70 million people around the world in more than 120 countries. McDonald’s traditional menu has been surprisingly successful. People with diverse dining habits have adopted burger and fries wholeheartedly. The very nicely prepared menus for different people have been McDonald’s biggest strength. • QSC&V: QSC&V also has been its key strength, which it maintains time by time, by training employees through Hamburger University and maintains quality standards by opening quality assurance centres. • Locally adapted food menus: Preparing various menus according to people’s choice in different countries adds to McDonald’s strength. For Example, In India McDonald does not serve beef as Hindu culture does not accept it. Whereas it serves chicken in India. • Children targeting: The business successfully targets very young children through offering playgrounds, toys with its meals and advertisements. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 9
  • SWOT - WEAKNESSES • New innovations: McDonalds has been around for a long time. Customers want new things very frequently and they switch to new products very easily if they are attractive. So McDonalds need to be very innovative to hold their stake of customers. • Unhealthy fast food: Fast food is not even healthy, so it is not accepted everywhere on the earth. So, they also need to practise on this factor to stand in all markets maintaining the regional taste. • Negative publicity: McDonald’s is heavily criticized for offering unhealthy food to its customers, stimulating obesity and strong marketing focus on very young children. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 10
  • SWOT – OPPORTUNITIES • Increasing demand for fast food: In the technological era the life style of people has changed. People are more and more demanding fast food, which is served fast, friendly and good in quality. Demand from people can be McDonald’s opportunity. It can grow its food chains wisely to win the markets. • Home meal delivery: Nowadays, the trend is to order food by telephone to the places where we want. Providing free home delivery service for customers can be a large opportunity for McDonalds. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 11
  • SWOT – THREATS • 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. • Local fast food restaurant chains: Local fast food restaurants can often offer a more local approach to serving food and menu that exactly represents local tastes. 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. • 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. In 2012, McDonald’s profit was largely affected by appreciating dollar. • 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. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 12
  • PORTER’S FIVE FORCE ANALYSIS The entry of new competition to the market. The threat of substitutes or replacement products. The bargaining power of buyers. The bargaining power of suppliers. The rivalry between firms of the same sector. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 13
  • PORTER’S FIVE FORCE ANALYSIS Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 14 The entry of new competition to the market: •The barriers to entry are quite high for new entrants, as the size of McDonald’s means they have achieved economies of scale and have preferential access to raw materials and distribution channels. New entrants may find that a high cost of investment is required in securing plant and machinery. The threat of substitutes or replacement products: •A substitute product is one that can be used as an alternative to a company’s own. It could be argued that the threat of substitutes to McDonald’s comes from pizzas and other domestic kebab and fast food houses. However, most of the above do not have the same level of convenience that McDonald’s offers, in having a number of outlets in big cities and also through the use of multiple drive-through outlets.
  • PORTER’S FIVE FORCE ANALYSIS Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 15 The bargaining power of buyers • This area is perceived to be fairly low risk for McDonald’s as consumers have little control over the variations in the product offerings, price and place of distribution. The company should keep customers satisfied, as switching cost is low and the possibility of switching to another brand in case of dissatisfaction is relatively low. The bargaining power of suppliers • This ranges from the threat of forward integration to the threat of cutting off supplies. As McDonald’s has a great deal of influence over their suppliers, due to the fact that it aids them and trains them, the threats from suppliers are low. Due to the scale of McDonald’s operations, suppliers are keen to retain their contracts with the firm. McDonald’s internationalisation could also mean greater sales potential for suppliers. The rivalry between firms of the same sector • The concentration of firms within the fast food industry is low due to the established presence of McDonald’s, Burger King and KFC. However, in certain markets, McDonalds will face competition from established domestic fast-food outlets.
  • IMPORTANT TO DISCUSS Before McDonalds entered the European market, only few people believed that fast food could be successful in Europe. Why McDonalds succeeded? What strategies it followed? How did it differ strategies in Asia? • Despite global operations, McDonalds stay in close contact with its customers, who want good taste, fast & friendly services clean surroundings, and quality. It is interesting that McDonalds was one of the first restaurants in Europe to welcome families with children. Not only the children are welcomed but in many restaurants they are also entertained with crayons and paper, a playland, and clown Ronald McDonald, who can speak 20 languages. • Whereas in Asia, the trend is different. The people in Asia want food as per their taste, which McDonalds served them. They prepared their menus, which included regional taste of people. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 16
  • IMPORTANT TO DISCUSS Should McDonalds expand its menu? If no, than why not? If yes, what kinds of products should it add? • McDonalds do not need to expand its menu. McDonalds has been famous and liked for its very short and well prepared traditional menu, which people loves to have in their day to day life. Even expanding the menu requires more resources for varieties and more skilled persons. Though it can add some items according to regional taste but it should not change its traditional menu of burgers. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 17
  • IMPORTANT TO DISCUSS Why is McDonalds Successful in many countries around the world? • We can point out following points for McDonald’s success story around the world. • Quality, Service, Cleanliness & Value. • Innovative way of presenting itself among people. • Welcoming all category’s people. • Regional taste and menu. • Various kinds of ventures in market. • Increasing demand of fast food over the world. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 18
  • CONCLUSION • McDonald’s effectiveness and profitability is obviously well supported by their strong competitive position and market share in their primary product market. • Its’ international success is achieved by the company’s strategy and tactics, which complement each other and work in harmony, providing the optimum return bounded by efficiency. • The company is thriving as it is both effective (doing things right) and efficient (doing the right thing). • McDonald’s portfolio of products is well managed and ensures the best fit between the company’s strengths and weaknesses and for offsetting the threats found in its competitive environment. In considering the strong competitive position of the firm in a highly attractive market. Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 19
  • “ ” IF YOU WORK JUST FOR MONEY, YOU'LL NEVER MAKE IT, BUT IF YOU LOVE WHAT YOU'RE DOING AND YOU ALWAYS PUT THE CUSTOMER FIRST, SUCCESS WILL BE YOURS. -Ray Croc Prepared by: Jay H. Shah, Department of Technology Management, CSPIT, CHARUSAT 20