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McDonald's Strategy Presentation

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A presentation about future strategy recommendations of McDonald's Restaurants UK Limited in the UK Fast Food Industry.

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McDonald's Strategy Presentation

  1. 1. 16 November 2012by Jessica Bürger, Lennart Franke, Lia Komescher, Luke Myers & Niklas Reinhold
  2. 2. McDonald’s Restaurants UK Limited European Division 1,200 restaurants 2.5m people a day 87,500 employees >65% franchised
  3. 3. Jill McDonald Alistair MacrowCEO VP Marketing Lauren CodyJez Langhorn VP BusinessVP People Strategy
  4. 4. Consumer Foodservice Industry Full Service Restaurants 30% Characteristics standardized & restricted menu Fast Food Café Bars 26% food for immediate consumption 26% Self Service Cafeterias young unskilled labour force Kiosks 100% Home Delivery counter service sector shares
  5. 5. Strategic Management Framework
  6. 6. Strategic Management Framework Internal Values Goals Resources & Capabilities Structure & Processes Strengths & weaknesses
  7. 7. Strategic Management Framework Internal External Values Goals General environment Resources & Capabilities Competitive environment Structure & Processes Opportunities & Strengths & weaknesses Threats
  8. 8. Strategic Management Framework Internal External Values Goals Strategy General environment Resources & Capabilities 1.Analyses Competitive 2.Formulation environment Structure & 3.Implementation Processes 4.Evaluation Opportunities & Strengths & weaknesses Threats
  9. 9. Strategic Management Framework External General environment Competitive environment Opportunities & Threats
  10. 10. Strategic Position macro-environmentPESTEL industryIndustry Life CycleFive Forces
  11. 11. P E S T E L
  12. 12. P EL S E T
  13. 13. P E identifying KEYL S DRIVERS for E T change
  14. 14. Environmental Changes SUSTAINABILITY
  15. 15. Cardboard packaging made of 72% recycled paper first to introduce Daily Litter Patrols
  16. 16. Socio-cultural Changes HEALTHY LIVING
  17. 17. Obesity rates tripled overweight 37% 30% overweight 63% 70%of adults (16 or over) of children (2-15)
  18. 18. “all junk” perceptions diminish
  19. 19. “all junk” perceptions diminish I think fast food is all junk 50%37.5% 37.8% 34.7% 33% 32.9% 31.5% 25%12.5% 2008 2012 0%
  20. 20. “all junk” perceptions diminish I think fast food I wouldn’t let my is all junk child eat junk food 50% 50%37.5% 37.5% 37.8% 34.7% 33% 32.9% 31.5% 25% 25% 28.4% 26.7% 25.2% 24.1% 22.5%12.5% 12.5% 2008 2012 2008 2012 0% 0%
  21. 21. FoodEducation
  22. 22. DEMO Food EducationNutrition Calculator
  23. 23. Jamie Oliver on Fast Food @ TED Long Beach, California 2010
  24. 24. Socio-technological ChangesONLINE COMMUNITIES
  25. 25. 2m customers on Facebook
  26. 26. #McDStories goes wrong
  27. 27. #McDStories goes wrong
  28. 28. #McDStories goes wrong
  29. 29. Trust
  30. 30. Industry Life Cycle
  31. 31. Fast Food market is stagnant1,100m Maturity 2015
  32. 32. Five Forces Framework
  33. 33. “Traditional” Fast Food
  34. 34. “Traditional” Fast Food Fast Casual
  35. 35. Does McDonald’s offer a casual dining experience?
  36. 36. Retailers offer substitutes
  37. 37. Convenience impacts purchase decisions 1. 56.2% 2. 42.2% 0% 25% 50% 75% 100%1. I will often switch shop if it proves to be quicker and more convenient to me2. Convenience often plays a part in my purchase decisions
  38. 38. RivalryEntry threat Substitute Threat Buyer Power Supplier Power
  39. 39. RivalryEntry threat Substitute Threat Buyer Power Supplier Power
  40. 40. RivalryEntry threat Substitute Threat Buyer Power Supplier Power
  41. 41. RivalryEntry threat Substitute Threat Buyer Power Supplier Power
  42. 42. RivalryEntry threat Substitute Threat Buyer Power Supplier Power
  43. 43. RivalryEntry threat Substitute Threat Buyer Power Supplier Power
  44. 44. RivalryEntry threat Substitute Threat Buyer Power Supplier Power
  45. 45. Strategic Management Framework External General environment Competitive environment Opportunities & Threats
  46. 46. Strategic Management Framework Internal External Values Goals Strategy General environment Resources & Capabilities 1.Analyses Competitive 2.Formulation environment Structure & 3.Implementation Processes 4.Evaluation Opportunities & Strengths & weaknesses Threats
  47. 47. Strategic Management Framework Internal Values Goals Resources & Capabilities Structure & Processes Strengths & weaknesses
  48. 48. Strategic CapabilitiesVRIO Framework Resources & CompetencesValue Chain & Network
  49. 49. Distinctive Resources and Core Competences
  50. 50. Enormous Fiscal Strengths Revenue 2010 (£m) 1,184.5 59 371.2 0 300 600 900 1200 McDonalds Restaurants Limited Burger King Ltd Kentucky Fried Chicken (Great Britain) Limited
  51. 51. Enormous Fiscal Strengths Profit 2010 (£m) 157.2 42 41.2 0 50 100 150 200 McDonalds Restaurants Limited Burger King Ltd Kentucky Fried Chicken (Great Britain) Limited
  52. 52. Fiscal StrengthsValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  53. 53. Fiscal StrengthsValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  54. 54. Fiscal StrengthsValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  55. 55. Operating Margin 2010 (%) 13.3% 71.1% 11.1% 0 0.25 0.5 0.75 1 McDonalds Restaurants Limited Burger King Ltd Kentucky Fried Chicken (Great Britain) Limited
  56. 56. Rank 740,062
  57. 57. Brand ValueValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  58. 58. Brand ValueValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  59. 59. Brand ValueValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  60. 60. Outlets & Exposure1,200 outlets in UK2.5m customers per day
  61. 61. ExposureValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  62. 62. ExposureValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  63. 63. ExposureValuable YESRare YESCostly to imitate YESExploited by Organization YES SustainedCompetitive implication competitive advantage
  64. 64. Product Range at McDonald’s UK
  65. 65. Product Range at McDonald’s UKBeef Chicken Deli Fish Salads Sides 6 22 8 2 7 6
  66. 66. Product RangeValuable YesRare NoCostly to imitateExploited by OrganizationCompetitive implication competitive parity
  67. 67. Product RangeValuable YesRare NoCostly to imitateExploited by OrganizationCompetitive implication competitive parity
  68. 68. Product RangeValuable YesRare NoCostly to imitateExploited by OrganizationCompetitive implication competitive parity
  69. 69. Value Chain Analysis
  70. 70. strengths and weaknesses Firm Infrastructure Human Resource Management Technology Development ProcurementInbound Outbound Marketing & Operations ServiceLogistics Logistics Sales
  71. 71. It took 5 years for the store redesign across the UK rigid and inflexible
  72. 72. Value Chain Analysis Firm Infrastructure Human Resource Management Technology Development ProcurementInbound Outbound Marketing & Operations ServiceLogistics Logistics Sales
  73. 73. Value Chain Analysis Firm Infrastructure Human Resource Management Technology Development ProcurementInbound Outbound Marketing & Operations ServiceLogistics Logistics Sales
  74. 74. Value Chain Analysis Firm Infrastructure Human Resource Management Technology Development ProcurementInbound Outbound Marketing & Operations ServiceLogistics Logistics Sales
  75. 75. Strategic Management Framework Internal Values Goals Resources & Capabilities Structure & Processes Strengths & weaknesses
  76. 76. Strategic Management Framework Internal External Values Goals Strategy General environment Resources & Capabilities 1.Analyses Competitive 2.Formulation environment Structure & 3.Implementation Processes 4.Evaluation Opportunities & Strengths & weaknesses Threats
  77. 77. Strategic Management Framework Strategy 1.Analyses 2.Formulation 3.Implementation 4.Evaluation Opportunities & Strengths & weaknesses Threats
  78. 78. SWOT Strengths OpportunitiesWeaknesses Threats
  79. 79. SWOT Strengths OpportunitiesWeaknesses Threats Internal External
  80. 80. SWOT Strengths Opportunities We We can cancontrol Weaknesses Threats impact Internal External
  81. 81. SWOT Strengths Opportunities We Capitalize Invest We can cancontrol Weaknesses Threats impact Shore up Identify Internal External
  82. 82. Strengths OpportunitiesWeaknesses Threats
  83. 83. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry &Sustainability Eating Communities Substitutes
  84. 84. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability Eating Communities SubstitutesStrengths- Brand Image / Product Value- Advertising- Most Outlets- Franchise- Top Down Approach
  85. 85. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability Eating Communities SubstitutesStrengths- Brand Image / Product Value- Advertising- Most Outlets- Franchise- Top Down ApproachWeaknesses- High staff turnover- Inflexible / Rigid- Dependence on Technology- PR- narrow product range
  86. 86. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability + - Eating Communities SubstitutesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores + 14 -13
  87. 87. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability + - Eating Communities SubstitutesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores + 14 -13
  88. 88. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability + - Eating Communities SubstitutesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores +1 + 14 -13
  89. 89. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability + - Eating Communities SubstitutesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores +1 -1 + 14 -13
  90. 90. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability + - Eating Communities SubstitutesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores +1 -1 0 + 14 -13
  91. 91. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability + - Eating Communities SubstitutesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores +1 -1 0 +1 + 14 -13
  92. 92. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Intense Rivalry & Sustainability + - Eating Communities SubstitutesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores +1 -1 0 +1 + 14 -13
  93. 93. Strategy Formulation Strategy 1.Analyses 2.Formulation 3.Implementation 4.Evaluation
  94. 94. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Sustainability Intense Rivalry + - Eating CommunitiesStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets - - + +1 -2- Franchise + + +3 -0- Top Down Approach + - + +2 -1Weaknesses- High staff turnover - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores +1 -1 0 +1 + 14 -13
  95. 95. SWOT Analysis Environmental change (Opportunities and Threats) Healthy Living / Online Sustainability Intense Rivalry + - Eating Communities Options thatStrengths- Brand Image / Product Value - - + + +2 -2- Advertising + + + + +4 -0- Most Outlets- Franchise- Top Down Approach minimize weak areas - + - + + +1 +3 -2 -0 + - + +2 -1Weaknesses- High staff turnover to avoid threats - +0 -1- Inflexible / Rigid - - - - +0 -4- Dependence on Technology + + TOWS - +1 -1- PR + - +1 -1- narrow product range - - -2Environmental impact scores +1 -1 0 +1 + 14 -13
  96. 96. Attitudes towards Food Habits100%75%50% 53% 34%25% 29% 14% 0% 6% eating more healthy food no time checking nutritional content vegetarian 5 a day 2012
  97. 97. Healthy healthy dining casualFast Food fast Non-Fast Food casual dining McDonald’s customers Un-healthy
  98. 98. Healthy healthy dining casualFast Food fast Non-Fast Food casual dining McDonald’s customers Un-healthy
  99. 99. Time of the day to visit fast food restaurants 2012 60% 45% 48.2% 37.6% Regular ? 30% Occasional 19.8% 15% 14.1% 5.9% 6.1% 0% 3.3% 0.5% Evening/ Morning Lunch Afternoon Night
  100. 100. Current Market Development1,100m Maturity 2015
  101. 101. Diversify the Fast Food market and productrange through internal development
  102. 102. Market Penetration Product DevelopmentMarket Development Diversification
  103. 103. Vegetarian Burgers
  104. 104. Breakfast Menu
  105. 105. brand IntegrityPositioning Differentiation 3i VALUE-DRIVEN i tybra nt Ide Marketing nd Brand Im nd age bra
  106. 106. Strategy Evaluation Strategy 1.Analyses 2.Formulation 3.Implementation 4.Evaluation
  107. 107. Is this strategic direction suitable?
  108. 108. Is this strategic direction suitable? YES invest in opportunity long term profits first mover advantages expertise in test marketing
  109. 109. Is this strategic direction suitable? YES NOinvest in opportunity hold strong position long term profits uncertainty in innovationfirst mover advantages short termexpertise in test marketing first mover disadvantages
  110. 110. Is this strategic direction acceptable?
  111. 111. Is this strategic direction acceptable?
  112. 112. Is this strategic direction acceptable? test marketing investment new suppliers marketing campaign
  113. 113. Is this strategic direction acceptable? keep seasonal campaignsReal Options educate further focus on sustainability ...
  114. 114. Level of Interest High Low High Parent Company ShareholdersPower Suppliers Low Employees
  115. 115. Level of Interest High Low High Parent Company ShareholdersPower Suppliers Low Employees
  116. 116. Level of Interest High Low HighPo Mediaw Activists Regulare Customersr Low Occasional Customers
  117. 117. Level of Interest High Low High Health conscious customersPo Mediaw Activists Regulare Customersr Low Occasional Customers
  118. 118. Level of Interest High Low High Health conscious customersPo Mediaw Activists Regulare Customersr Low Occasional Customers
  119. 119. Is this strategic direction feasible?
  120. 120. Conclusionindustry cycle demands innovationstrategic positionprospects of long-term profitsfirst-mover advantagessustained competitive advantageBe proactive. Internal development.
  121. 121. Thank you for your attention

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