Strategy analysis Mcdonalds

1. Presented By:
Rafayel Ahmed
Farzana Nazneen
Waliul Islam
MIT-131037
MIT-131016
MIT-131018

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Business Analysis
 History
 Some Interesting Facts
 Mission, Vision
 Competitors
 Financial Facts
 Competitive advantage
 Key success Factors

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History
Raymond Kroc, founder and builder of McDonald's Corporation
was a milkshake machine salesman prior to meeting the two
brothers in 1954
Started in 15th
May,1940 as a
barbeque drive-in
restaurant by two
brothers, Dick and Mac
McDonald, in San
Bernardino, California

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History
 Mr. Ray Kroc took over the rights
from McDonald brothers and
founded The McDonalds
Corporation on 15th April,1955 in
Des Plaines, Illinois.
 By 1958, McDonald’s had sold its
100 millionth hamburger.

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Some Interesting Facts
About McDonalds
 Currently McDonald's serves
around 69 million people
worldwide everyday.
 It currently employs around
4,00,000 employees
worldwide.

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Some Interesting Facts
About McDonalds

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Some Interesting Facts
About McDonalds

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McDonalds-Mission Statement

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Main Rivals
There are many competitors are eating their shares.

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McDonald's – Competitors
 The main things they have to compete with
each other are
1.Minimizing cost
2.Customer satisfaction
3.Healthy ingredients
4.Convenient locations

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Financial Analysis
-
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
2009-12 2010-12 2011-12 2012-12 2013-12 TTM
Revenue
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
2009-12 2010-12 2011-12 2012-12 2013-12 TTM
Net income
Revenue is presently at 28,106 million in 2013 compares to
22,745 million in 2009.
Net income is at 5,586 million compares to 4,551 in 2009.

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Financial Analysis
Profitability 2009-12 2010-12 2011-12 2012-12 2013-12 TTM
Tax Rate % 29.84 29.34 31.32 32.36 31.92 31.92
Net Margin % 20.01 20.55 20.38 19.82 19.87 19.87
Asset Turnover (Average) 0.78 0.77 0.83 0.81 0.78 0.78
Return on Assets % 15.51 15.9 16.94 15.98 15.51 15.51
Financial Leverage (Average) 2.15 2.19 2.29 2.31 2.29 2.34
Return on Equity % 33.2 34.51 37.92 36.82 35.69 35.69
Return on Invested Capital % 17.5 18.24 19.48 18.33 17.71 17.71
Interest Coverage 14.71 16.53 17.26 16.64 16.72 16.72
Return on Equity is at 35.69% which is a 2.5% increase from 2009
Return on invested capital is at the same level as it was in 2009

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McDonalds-Profitability with the
Retailing Industry

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McDonalds In Competitive
advantage(Cost)
Company Rank
Worldwide
Sales ($M)
Domestic
Units
International
Unit Total
McDonald’s 1 89,941 14,098 19,412 33,510
KFC (Yum
Brands) 3 21,300 4,780 12,621 17,401
Burger King 5 14,975 7,500 5,012 12,512
Pizza Hut (Yum
Brands) 6 12,626 7,600 6,147 13,747
Wendy’s 18 6,004 6,772 3,020 9,792
Panera Bread 33 3,421 1,538 3 1,541
Dunkin’ Donuts
(Dunkin Brands) 18 6,004 6,792 3,020 9,792

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McDonald's – Competitive
advantage(Differentiate)
 Mc Café
Modern, relaxing mood
Free Wifi.
Attract new market segments
Variety of drinks
Satisfy hunger

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McDonald's–Key Success Factor
Customer Range
A key factor in the success of McDonald’s
is its ability to appeal to a wide range of
customers. For example, in June 1976
McDonald’s introduced a breakfast menu
to capture more customers
Nutrition
On the organization’s website,
McDonald’s states that part of its success
is due to its commitment to the well-
being of customers. In 2004, McDonald’s
established a global advisory council to
provide expert guidance on nutrition and
well-being.

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McDonald's–Key Success Factor
Availability
Restaurant locations are so prevalent in
suburban towns and cities that you are
never more then a few minutes away by car
or by foot
Affordability
McDonald’s has weathered economic
downturns because of the affordability of its
menu
.

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Environmental Analysis
 Porters Five Forces analysis
 Micro Environmental analysis
 Internal Environment
 Strength
 weakness
 External Environment
 Opportunities
 Theatres
 Macro Environment Analysis
 PESTEL

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McDonald's –Five Forces

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McDonald's –Five Forces
Threat of Competition HIGH
 Very similar products in the Fast Food industry
 High Competitors Advertising Capabilities
 Location of outlets are close
 EX: KFC, Chick-fil-A, Burger King,Sturbacks.
Threat of New Entrance Moderate
 Easy to enter, low setup cost
 Lack of ability to compete with MCD( cost efficiency,
customer awareness)
Threat of Substitutes Moderate
 Substitutable food
 Irreplaceable image

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McDonald's –Five Forces
Power of Suppliers LOW
 Worlds largest restaurant chain in sales
 High bargaining power over its suppliers(volume)
 Most of them owe MCD for their own existence
 Low power of suppliers—Lower the cost of raw
materials and High competitive price
Power of Buyers LOW
 Less chances of switching, high brand image through
differentiation and uniqueness
 Attractive price
 Buyer don’t have bargaining power(Low volume)

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McDonald's –SWOT Analysis
Internal Analysis
Strength
 Brand name
 Adapts to local markets
 Socially responsible with charities
 Safety and quality food
Weakness
 Management's failure to see
trends that do not fit
 High employee turnovers
 Price competition
 Controlling quality with franchised
operations

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McDonald's –SWOT Analysis
External Analysis
Opportunities
 Upscale restaurant
 Organic foods for the health conscious
 Going green
 Expanding to new parts of the globe
Threats
 Sued for unhealthy food many times
 Health concerns
 Competitors
 Contamination risks
 Geopolitical issues affect

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McDonald's –External Factor
Evaluation matrix( EFE )

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McDonald's –Macro environments
PESTEL Analysis
Political (Mild Threat (-1))
• Government regulations over wage
• Government regulation on labeling/packaging
Economic (Moderate Opportunity (+2))
• Inflation, Recession
• Exchange rate
• U.S. housing market crash/EU financial crisis
Social (Moderate Threat (-2))
• Employment opportunities
• Health conscious trends
• Norms , cultural practice

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McDonald's –Macro environments
PESTEL Analysis
Technological (Significant Opportunity (+5))
• Improvement by advanced technology, Social media outlets for
consumer
• Increasing comfort levels with technology
Environmental (Opportunity (+3))
• Forced not to harm the environment
• Lobbying for use of environmentally friendly material
Legal (Major Threat (-4))
• Advertisement regulations
• Health lawsuits

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Strategically Analysis
 Generic Building Block
 Corporate Level Strategies
 Business Level Strategies
 Functional Level Strategies
 Criticism and Recommendation

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McDonalds-The Generic Building
Blocks of Competitive Advantage

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Corporate Level Strategies (Globalization)
McDonald’s currently operates over 32000 stores
worldwide in 120 countries.

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Corporate Level Strategies (Branding)

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Corporate Level Strategies (Branding)

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Business Level Strategies (Target Market)

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App ki jamaneme Baap ki Jamane ki
Daam
$3.05 $3.50
Business Level Strategies (Marketing)

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Efficiency, Innovation and Renovation
Efficiency
New Look
Outdoor Kisds
Zone
Functional Level Strategies

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Norms and Cultural Practice
Functional Level Strategies

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Worker, Employees and Cook
Functional Level Strategies

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Criticism and Recommendation
-Ecological damage
-Selling unhealthy food, McDonalds=junk food?
-Contributing to suffering and exploitation of livestock.
-Speculating Business Practice
-Low Risk Mitigation strategies
-New Innovative menus
-Bigger ranged sectors
-More diversification and Acquisition
-Better service and employment (operational improvement)
-Better Corporate level/management level involvement
-More focus on subcontinent.

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