McDonald's At The Receiving End Case Study


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Case study of McDonald's named "At The Receiving End". Talks about McDonald's venturing into India.

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McDonald's At The Receiving End Case Study

  3. 3. ABOUT McDonald’s FOUNDED: • McDonald’s BAR-B-Q, May 15, 1940 in San Bernardino, California • McDonald's Corporation, April 15, 1955 in Des Plaines, Illinois HEADQUARTERS: Oak Brook, Illinois MASCOT: Ronald McDonald CHAIRMAN: Andrew J. McKenna PRESIDENT & CEO: Don Thompson TOTAL EMPLOYEES: 1,800,000 World's largest chain of hamburger fast food restaurants: 118 countries – 34,000+ locations – 68 million+ customers daily (as in 2013)
  4. 4. ABOUT McDonald’s • McDonald’s is committed to providing the highest quality food and superior service, at a great value, in a clean and welcoming environment. • At the restaurant level, McDonald’s is focused on energy conservation, sustainable packaging, and waste management. • GOAL: Quality, service, cleanliness and value (QSC&V) for each and every customer, each and every time. • BUSINESS MODEL: “Three-legged stool” of owner/operators, suppliers, and company employees.
  5. 5. ABOUT McDonald’s
  6. 6. ABOUT McDonald’s
  7. 7. McDonald’s MENU
  8. 8. McDonald’s MENU
  9. 9. HISTORY OF McDonald’s • Richard & Maurice McDonald built hamburger stands with golden arches in California. • 15¢ hamburgers were very popular. • Ray Kroc, a milkshake machine salesman, bought world franchise rights from them and spread the golden arches around the globe. • Kroc partnered with the brothers, and within a few years turned their small idea into the huge franchise that would become the McDonald's Corporation. • Kroc became frustrated with the brothers' desire to maintain only a small number of restaurants. • In 1961, he purchased the company from the brothers for $2.7 million. Ray Kroc The original staff of the McDonald's brothers hamburger restaurant
  10. 10. HISTORY OF McDonald’s The First McDonald’s
  11. 11. ACROSS THE GLOBE • McDonald’s depends on its overseas restaurants for revenue. • Annual revenues for 2012 – $27.5 billion REVENUE GENERATED US Europe APMEA Other Countries 6% 32% 22% 40% • It is one of the world’s best known brands.
  12. 12. ACROSS THE GLOBE INTERNATIONAL FRANCHISING FINANCIAL REQUIREMENTS/DOWN PAYMENT • Initial down payment  new restaurant – 40% of the total cost  existing restaurant – 25% of the total cost • The down payment must come from non-borrowed personal resources. • A minimum of $750,000 of non-borrowed personal resources. FINANCING • Remaining balance of the purchase price may be financed for a period of no more than 7 years • McDonald’s does not offer financing
  13. 13. ACROSS THE GLOBE INTERNATIONAL FRANCHISING ONGOING FEES • Service fee: a monthly fee based upon the restaurant’s sales performance (currently a service fee of 4.0% of monthly sales). • Rent: a monthly base rent or percentage rent that is a percentage of monthly sales.
  14. 14. ACROSS THE GLOBE • Spread American culture in East Asian countries. • Clean restrooms set new standards in Hong Kong and Taiwan. • Introduced celebration of birthday parties in its restaurants in Hong Kong.
  15. 15. CRITICISM • • • • • Jose Bove, a French sheep farmer, led a campaign against McDonald's. Ransacked McDonald’s restaurant construction site. Part of French delegation to Seattle – protesting against commercialization of food crops by WTO. Was against industrial farming. McDonald’s – symbol of globalization, implying standardization of food through industrial farming. • When US attacked Afghanistan in 2001, Pakistanis damaged McDonald’s restaurants in Islamabad.
  16. 16. McDonald’s IN INDIA FRANCHISING IN INDIA: McDonald’s Corporation has entered into JV’s with two companies to develop, open and operate McDonald's restaurants in India. North & East India: Connaught Plaza Restaurants Private Limited ("CPRPL") South & West India: Hardcastle Restaurants Private Limited ("HRPL")
  17. 17. McDonald’s IN INDIA • Entered India in 1990s. • Majority of Indians did not eat beef. • Muslims did not eat pork. • Food items were segregated into Veg and Non-veg • Introduced Maharaja Mac and McAloo Tikki
  18. 18. McDonald’s IN INDIA • In 2001, an Indian businessman sued McDonald’s for misrepresenting its French fries as vegetarian, when they contained beef broth as “natural flavor”. • McDonald’s admitted to mixing beef extract in the oil. • Settled the suit for $10 million. • Labelled ingredients of all food items. • Special care is taken to ensure that all vegetable products are prepared separately, using dedicated equipment and utensils. • Mayonnaise and soft serves are also 100% vegetarian. • Uses only vegetable oil as a cooking medium in India.
  19. 19. ACCOLADES GOLDEN ARCHES THEORY OF CONFLICT PREVENTION • Thomas L. Friedman said in The Lexus and the Olive Tree that no two countries with McDonald's within their borders have ever been in a war since having a McDonald's. BIG MAC INDEX • It is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries.
  21. 21. What lessons can other MNC’s learn from the experience of McDonald’s? • Globalization is still not accepted by all classes of people. • Actions of one’s own country can affect the business in another country. • One should be completely aware of the culture, society and food habits prevailing in the target market. • One should not mislead customers in any way. • One should be able to create products based on the needs of the customers. • Standardization of quality, service, cleanliness and values – no compromise.
  22. 22. Aware of food habits of Indians, why did McDonald’s err in mixing beef extract in the oil used for fries? • Beef extract is the only natural flavor in McDonald's French fries. • Using ''natural flavor'' as a synonym for beef extract is within federal Food and Drug Administration guidelines. • McDonald’s wanted to maintain the taste of French fries globally.
  23. 23. How far has McDonald’s succeeded in strategizing and meeting local cultures and needs? • Connected local suppliers with international suppliers and encouraged them to form JV’s. • Handshake agreements with suppliers. • Sharing of best practices within suppliers. • Introduced region-specific food items. • Developed products that the local market wants and at disruptive price points. • Innovative practices – dedicated R&D. • Standardization. • Developed user friendly environment for consumers. • Involved in Charity.
  24. 24. THANK YOU