Vision is “to move with velocity to drive profitable growth and become an even better McDonald’s serving more customers delicious food each day around the world”

1. Case Study
MCDONALD’S CORPORATION
Amit : 80118180006
Aravind : 80118180007
Nidhi : 80118180032
Presented By : Group-1

2. General information: founded in 1940 at California

3. Agenda of Discussion
•
• Case Brief
• Product Strategy
• Process Strategy
• Recommendations to improve long term/medium
• term/short term.

4. McDonald’s had distinguished itself in the quick-service industry through its
remarkable consistency across all units. (+ve)
McDonald’s every restaurant – symbolized pleasant, fast service and tasty,
inexpensive food. (+ve)
Very big numbers of outlets can be a troubling question for management. (??)
Saturation point : how could it possibly attract more business? External pressures
reinforced the dilemma. (??)
Demographic trends were reshaping American eating habits while competitors were
attacking the quick-service giant from all sides. (??)
Threats from chains featured deeply discounted menus, McDonald’s faced
competition. (??)
Case Brief

5. Sales per unit had slowed between 1990 and 1991, causing management to
wonder whether the company’s operating system, as suited to the new
circumstances the company faced. (??)
To what extent should McDonald’s change its operations strategy to accommodate
the growing need for flexibility and variety in products. (??)

6. Portfolio of
products
Product
structure
Sub assembly
structure
Components
Sub
components
Optimization
Modularization
Standardization
Standardization
Standardization

7. Product Portfolio
Burgers &
sandwiches
Hamburger
Cheesburger
Quarter
ponder with
cheese
Big Mac
McLean
deluxe(3
SKU)
McChicken
Sandwich
McNuggets
(3 SKU)
Major Product Categories and subcategories:
Happy Meals
Hamburger
Cheeseburger
McNuggets
Salads
Chunky Chicken
Chef
Garden
side
Drinks
Milk shake
Milk (4 SKU)
Orange Juice
coffee
Iced tea (4 sku)
Coke

8. Breakfast Menu
Egg McMuffin
Sausage Mcmuffin
Big Bfreakfast
Hot cake
Sausage Buiscuits
Bacon/Eggs
Breakfast Burrito
Apple Bran Muffin
Cereal
Deserts
Apple pie
Chocolate
cookies
McDonaldland
cookies
Sundaes
Cones
French Fries
Small Fries
Medium
Fries
Large fries

9. Product Strategy
Marketing Mix: Think Local Act Global

10. Main Product Strategies
1. Permanent Product Strategy :
• McDonald's features several products on their menu that are permanent
and do not change.
• For Ex- Basic hamburger and cheeseburger, the Big Mac and the Quarter
Pounder.
• After the initial development, these items remain on the menu for
extended periods of time without undergoing significant changes.
• This strategy ensures that there is always something familiar for
consumers on the menu.

11. 2. Temporary Product Strategy :
• In addition to its permanent product offerings, McDonald's regularly
develops temporary products.
• The McRib, for example, is a product that is offered only seasonally.
• The purpose of this product development strategy is to give customers
something new to experience on each visit and to experiment with new
items that may become permanent.
3. Local Product Development Strategy
• Created several products to meet consumer demand in the local markets.
• In the Netherlands, for example, they have developed the McKroket, a
burger featuring a typically Dutch kroket, a deep-fried, ragout-filled patty.
• This strategy ensures that local customers have foods to fit their tastes.

12. 4. Local Adaptation Strategy :
• McDonald's also use an adaptation strategy whereby they take a product
and modify it to fit local tastes.
• In India, for instance, the Big Mac has been modified into the Maharaja
Mac which contains no beef, in keeping with local diets.
• In Greece, the Big Mac has been adapted to use a pita bread instead of a
bun.
• Even the McLobster has been adapted to the McCrab in some U.S.
markets where crab is a common food.

13. Examples of adaption
Core menu items standardized :
Big Mac, Cheesburger, Hamburger, Chicken McNuggets and fries.
China India Norway Germany
Respecting the local culture:
Every country has its own policy of developing menu items.

14. McDonalds USP
1. Quality:
• Serve the best quality food- extensive cold chain distribution to ensure freshness.
• Product supplies used as first in first out manner.
• Using latest state of equipment's.
2.Services:
• Provide fast and quality service
• Friendly and attentive service.
• Accuracy in order taking.
3. Cleanliness:
• Provide clean, comfortable environment suitable for families.
• Walk around the restaurant to observe cleanliness around.
4. Value:
• Provide value to customer: menu is priced at a value that large customers can afford.
• Focus on economics of scale to reduce the cost rather than compromising the quality.

15. 1. Low cost Leadership with best quality product.
For Example: Hamburger ( Low cost Leadership)
2. Differentiation :
For Example : French fries
• McDonald’s had made French fries standard fare for a meal
• French fries became the restaurant chain’s most distinctive item.
• Its length and way of cooking also exclusive.
• Best potato quality.
Product Competitive Advantage

16. Fast moving product are taken up as MTS structure while slow moving are
taken as MTO or ATO structure.
For Example:
i)Standard Bun toasting . If demand is high it be MTS otherwise its move to
MTO.
ii) Standard Hamburger Assembly: MTS for high demand. ATO for low
demand
iii) Special Burger assembly: MTO or ATO.
Product structure observation
McDonald product mix is varied and different from the other competitor.
McDonalds have good product portfolio.

17. Process Strategy

18. Planning Process
Sourcing Process
Making Process
Legal Process
Cash Control Process
Process Structure Analysis Flow
S
Supply
Market
Demand
Market
Conversion
Process
C

20. Production Process at McDonalds

22. Speedee service system (standardization in preparation
method):
• Exact product specification
• customized equipments
Consistency & uniformity across all outlets.
• Same quality & service in each visit.
• Same test across the world.
• Same packaging
• Globally (USA, Tokyo, India, Australia and the like)
Concentrated on 4 areas
• Improving product
• Developing outstanding supplier relations.
• Improving equipment
• Training & monitoring franchisees.

23. Focus on innovation
• Innovative Potato growing method;
• Alternating potato processing method
• Efficient cooking equipment – w.r.t restaurant’s needs
• Restricted Menu items - Operational Excellence
• Precision on input quantity
• Example: Precise quarter ounce of onion in hamburger
Suppliers
• Excellent relation with supplier.
• Created new set of major institutional vendors.
• Suppliers knew McD’s need very efficiently
• McD checked on Suppliers and Franchisees regularly

24. Franchise
• Generate 39 % revenue from franchises.
• Allow franchise to make money initially through their success
• Corporate management & suppliers - franchises infused with entrepreneurial spirit.
Cooking up Products
• Distinguished menu offerings - rigorous operating system
• Focus on uniformity.
• Restaurant’s process summarised in 3 categories:
• Quality
• Service
• Cleanliness
• Value
• For Customers having Lunch and Breakfast – Speed and Convenience
• For Customers having Dinner – Full meals, More Complete Service
• Outdo competitors through service and consistency

29. Process Strategy
• Process and Capacity Design - efficiency for cost-minimization
• Operating System - Uniformity
• Simple Formula:
o Limited Menu
o Low Price
o Fast Service

30. Process Strategy
• McDonald's Success, Rapid Growth & Market Dominance DUE TO
o Focus on Customer Satisfaction
o Ways to Make Customers More Satisfied:
• with Fast Service
• by Creating a Clean Environment
• with Higher Quality Products
• with Affordable Prices
o McDonald's Success is their Relationship with Suppliers –
• Promises Loyalty in Business in Exchange for Innovation

32. Challenges & recommendations

33. Main Competitors

34. Challenges
• Customers' new habit.
• Competitors lower and discounted price.
• Variety constraints.
• Service benchmarking.
• Environment protection.

35. 1. Non nutrients

36. 2. Obesity

37. 3. Working Conditions :

38. 5. Mis representations :

39. 6. Environmental hazards:

40. • Must try to create an eco friendly image E.g: can come up green
logo or building structure.
• To save environmental hazards , it can use solar panels, electric
car charging points, LED lighting etc.
• Improvement in customer service through free wifi, 24 hrs
service, drive thru.
• Product can be more customized i.e. customer can create own
test through mobile app.
General Recommendations

41. • Children play area and party area can be enhanced.
• Commitment to an improved nutrition.
• Campaign like “Feedback or questions about Food”. Opportunity
to customers to ask questions about the quality and origin of the
food. This will increase the transparency and patronage.

42. • Addressing the advertisement misrepresentation.
For ex. Burger size in ads seems bigger than the real one. This
clarification will enhance the trust of customers.
• Commitment to employees. Proper career path for the
employees, good wages, etc.
•

43. Focus on convenience and technology in an attempt to win
customers from competing quick-service restaurants.
Going digital is McDonald’s’ most recent push to lure
customers back to its stores.
Digital engagement is an increasingly important aspect of the
modern foodservice experience and it enhances the level of
convenience that consumers want and expect from a quick-
service chain.
Digital channels, whether through self-service kiosks, mobile
ordering, or even delivery, help make the chain more
accessible, and should be a positive driver of traffic.
Long Term Recommendations

44. kiosk ordering and table service, increasing
functionality with the mobile app, and a “more
modern, more exciting restaurant environment.”
Through the mobile order and pay feature,
McDonald’s says its customers will also be able to
skip the drive thru and choose curbside delivery.
If customers choose the drive thru, they will read
the already placed order code from the app and the
order will be ready for pickup at the window.
“Experience of the Future” restaurant:

45. McDonald's, for the most part, relies on
traditional marketing means to attract its
diners.
It is not using the medium by which the
adolescent/tween/teen demographics are
in contact with.
The company has to develop a social
networking strategy and implement it
pronto.
Social Networking

46. Thanks