Mohammad Ali Jinnah University (Karachi Campus) McDonalds Pakistan Submitted To: Mr. Muddasir Hussain A Report by: Irfan Nizar (FA10-MB-0034) (CEO) Zarfan Nizar (FA10-MB-0037) Nazish Verteji (FA10-MB-0033)
Global ExistenceMcDonalds is the worlds number 1 fast-food companyby sales, with about 32,000 restaurants serving burgersand fries in about 120 countries. The popular chain iswell-known for its Big Macs and Chicken McNuggets.Most of its outlets are free-standing units, butMcDonalds also has many units located in airports andretail areas.
McDonalds HistoryIn the late 1940’s, Dick and Mac McDonald were searching for a way to improve their little drive-inrestaurant business in San Bernardino, California , they invented an entirely new concept based uponspeedy service, low prices, and big volume.The trademark design for the fast food was carefully studied and it came with a happy clown characterknown as Ronald MacDonald (McDonald Corporation 2005).When the new McDonald’s re-opened in December of 1948, business took a while to build. But it soonbecame apparent that they had captured the spirit of post-war America. By the mid-1950s, their littlehamburger factory enjoyed annual revenues of $350,000 – almost double the volume of their previousdrive-in business at the same location.Word of their success spread quickly, and a cover article on their operations in American RestaurantMagazine in 1952 prompted as many as 300 inquiries a month from around the country. Their firstfranchisee was Neil Fox, and the brothers decided that his drive-in in Phoenix, Arizona would be theprototype for the chain they envisioned. The resulting red-and-white tile building with a slanting roofand the “Golden Arches” on the sides became the model for the first wave of McDonald’s restaurants tohit the country, and an enduring symbol of the industry.
McDonalds In Pakistan• McDonald’s Pakistan is part of the Lakson Group of Companies, a leading business house in Pakistan.• McDonald’s first restaurant opened its doors to the people of Pakistan in September 1998 in Lahore.• Karachi opened its first restaurant a week after Lahore.• There are now 22 restaurants in four major cities of Pakistan. • 9 in Karachi • 1 Sialkot • 1 in Hyderabad • 8 in Lahore • 1 in Faisalabad • 1 in Islamabad • 1 in Rawalpindi
Some Facts and Figures• Originated in 1940.• World’s largest fast food chain.• 6th in world’s top brands.• Over 32,000 locations in over 120 countries – 80% franchises – 20% company operated• 2010 3rd Qtr – Revenues $6,304,900,000 (6.3 Bn) – Net Income $1,388,400,000 (1.38 Bn)
Mission Statement of McDonaldsTo be their customers favorite place and way toeat with inspired people who delight eachcustomer with unmatched quality, service,cleanliness and value every time.
Vision of McDonald’s"To be the worlds best quick service restaurantexperience. Being the best means providingoutstanding quality, service, cleanliness, andvalue, so that we make every customer in everyrestaurant smile."
SWOT AnalysisStrengths• Offer various products for each season• Strong Customer Services• Free home and office delivery• Brand name of the Company / Brand Recognition• Socially responsible (Charity)• Peaceful environment of franchise• The Homely Touch of the Highest Quality Standards at McDonald’s• Separate play area for kids• Strong Training Development• Standardized quality products (Halal)• Excellent Location (Airport, Parks)• Provide nutrition information to customers• Offer variety of new products• Large number of loyal customers
SWOT AnalysisWeaknesses:• No good employee retention policies• Few options of eating healthy• Drives-in service is not good• Lack of innovative products• Target group is low• Price competition with the competitor resulting in low revenue• Advertisement not attracting the entire people• High employee turn over
SWOT AnalysisOpportunities:• Introducing the new flavors and taste for health conscious people• Capture market share globally• Developing a Healthy Lifestyle program to attract health conscious customers• It can adapt to the needs of the societies and undergo an innovative product line• Growth of the fast food industry• Market Potential-Growing market for fast food• Peoples need or variety in the food and entertainment sector• Ecommerce and Technology• Opportunity to offered breakfast deal• Peoples attraction towards promotional offers• It can create new product offerings, use mobile text messaging to offer services that appeal to consumers.
SWOT AnalysisThreaths:• Change in the taste of the people• Availability of substitute in the market• Price range of competing product• Health issues regarding the fast food chain• Threat related to any chicken disease• Political problems in the countries• Poor performance in one outlet affects others• Relation between dealer and franchiser• Rising raw material process• Negative advertising by competitors
External Factor Evaluation Matrix (EFE)Key External Factors TOTAL OPPORTUNITIES WEIGHTAGE RATING RATINGIntroducing the new flavors and taste for health conscious people 0.11 4 0.44Capture market share globally 0.06 3 0.18Developing a Healthy Lifestyle program to attract health conscious customers 0.03 2 0.06It can adapt to the needs of the societies and undergo an innovative product line 0.08 1 0.08Growth of the fast food industry 0.10 4 0.4Market Potential-Growing market for fast food 0.04 2 0.08Peoples need or variety in the food and entertainment sector 0.06 3 0.18Ecommerce and Technology 0.04 1 0.04Opportunity to offered breakfast deal 0.02 1 0.02Peoples attraction towards promotional offers 0.09 3 0.27It can create new product offerings, use mobile text messaging to offer services thatappeal to consumers. 0.01 2 0.02 TOTAL THREATHS WEIGHTAGE RATING RATINGChange in the taste of the people 0.01 4 0.04Availability of substitute in the market 0.04 2 0.08Price range of competing product 0.09 2 0.18Health issues regarding the fast food chain 0.02 3 0.06Threat related to any chicken disease 0.01 4 0.04Political problems in the countries 0.06 2 0.12Poor performance in one outlet affects others 0.02 1 0.02Relation between dealer and franchiser 0.06 3 0.18Rising raw material process 0.02 4 0.08Negative advertising by competitors 0.03 2 0.06 1.00 2.63
Conclusion (EFE):Total weighted score of 2.63 shows that,McDonalds is responding above average to itsexternal factors. They are trying to grabmaximum opportunities available there andavoiding threats to their best.
Internal Factor Evaluation Matrix (IFE)Key Internal Factors STRENGTHS WEIGHTAGE RATING TOTAL RATINGOffer various products for each season 0.03 3 0.09Strong Customer Services 0.09 4 0.36Free home and office delivery 0.07 3 0.21Brand name of the Company / Brand Recognition 0.05 4 0.2Socially responsible (Charity) 0.02 4 0.08Peaceful environment of franchise 0.03 3 0.09The Homely Touch of the Highest Quality Standards at McDonald’s 0.09 4 0.36Separate play area for kids 0.04 3 0.12Strong Training Development 0.03 3 0.09Standardized quality products (Halal) 0.05 4 0.2Excellent Location (Airport, Parks) 0.08 3 0.24Provide nutrition information to customers 0.06 3 0.18Offer variety of new products 0.04 3 0.12Large number of loyal customers 0.02 3 0.06 WEAKNESSES WEIGHTAGE RATING TOTAL RATINGNo good employee retention policies 0.05 1 0.05Few options of eating healthy 0.04 2 0.08Drives-in service is not good 0.06 2 0.12Lack of innovative products 0.02 1 0.022Target group is low 0.02 1 0.02Price competition with the competitor resulting in low revenue 0.03 2 0.06Advertisement not attracting the entire people 0.02 1 0.02High employee turn over 0.06 2 0.12 1.00 2.892
Conclusion (IFE):Total weighted score of 2.892 shows that,McDonalds has solid internal position and itsstrengths are overcoming the weaknesses.
Conclusion – BCG Matrix:The analysis of above BCG matrix depicts thatnewly launch McSwirl is in Question Markquadrant because of its high growth but lowmarket share. Mcdonald’s McFlurry ice-creamwill appear as a Star due to their high marketshare and sales growth. Ice-cream, Fries &Different deals are Cash Cows products due totheir high market shares but low sales growth.Tea, coffee and apple pie become Dog due to itslow market share and sales growth.
Conclusion – IE Matrix:The analysis of above IE matrix depicts that thescores of 2.892 for IFE and 2.63 for EFE, positionMcDonalds on 5th quadrant. This placementsuggests the company to hold and maintains itsposition by adopting product development andmarket penetration strategies. The above matrixalso shows that if the company slightly improves it’sIFE and EFE scores then it will place under quadrant1st, 2nd or 4th quadrant that suggest grow andbuild strategy to the company.
Conclusion – Grand Strategy Matrix:McDonalds has strong competitive positionagainst its major competitors but the currentmarket growth is slow hence we may placeMcDonalds in the 4th quadrant of GrandStrategy Matrix. This placement suggests thecompany to adopt diversification strategies likerelated diversification, unrelated diversification& joint ventures.
Quantitative Strategic Planning Matrix (QSPM) Strategic Alternatives Diversificatio Market n DevelopmentSr.# Key Factors Weight AS TAS AS TAS OPPORTUNITIES 1 Introducing the new flavors and taste for health conscious people 0.11 2 0.22 1 0.11 2 Capture market share globally 0.06 - - 1 0.06 3 Developing a Healthy Lifestyle program to attract health conscious customers 0.03 - - - - 4 It can adapt to the needs of the societies and undergo an innovative product line 0.08 - - 2 0.16 5 Growth of the fast food industry 0.10 - - 4 0.4 6 Market Potential-Growing market for fast food 0.04 - - - -7 Peoples need or variety in the food and entertainment sector 0.06 - - 4 0.248 Ecommerce and Technology 0.04 - - - -9 Opportunity to offered breakfast deal 0.02 - - - -10 Peoples attraction towards promotional offers 0.09 - - - - It can create new product offerings, use mobile text messaging to offer services that appeal - -11 to consumers. 0.01 - - THREATHS 1 Change in the taste of the people 0.01 - - - - 2 Availability of substitute in the market 0.04 - - - - 3 Price range of competing product 0.09 - - 2 0.18 4 Health issues regarding the fast food chain 0.02 - - - - 5 Threat related to any chicken disease 0.01 - - - - 6 Political problems in the countries 0.06 - - - - 7 Poor performance in one outlet affects others 0.02 - - - - 8 Relation between dealer and franchiser 0.06 - - - - 9 Rising raw material process 0.02 2 0.01 - -10 Negative advertising by competitors 0.03 - - - -11 Change in the taste of the people 0.01 1 0.01 - - 1.00
STRENGTHS1 Offer various products for each season 0.03 - - 4 0.122 Strong Customer Services 0.09 - - 3 0.273 Free home and office delivery 0.07 - - 1 0.074 Brand name of the Company / Brand Recognition 0.05 1 0.05 - -5 Socially responsible (Charity) 0.02 - - - -6 Peaceful environment of franchise 0.03 - - - - - - -7 The Homely Touch of the Highest Quality Standards at McDonald’s 0.09 -8 Separate play area for kids 0.04 - - - -9 Strong Training Development 0.03 - - - -10 Standardized quality products (Halal) 0.05 - - - -11 Excellent Location (Airport, Parks) 0.08 - - - - WEAKNESS1 No good employee retention policies 0.05 - - - -2 Few options of eating healthy 0.04 - - - -3 Drives-in service is not good 0.06 - - - -4 Lack of innovative products 0.02 - - - -5 Target group is low 0.02 - - - - - -6 Price competition with the competitor resulting in low revenue 0.03 2 0.067 Advertisement not attracting the entire people 0.02 - - - -8 High employee turn over 0.06 - - - - 1.00 0.38 1.61
Conclusion (QSPM):The analyses of QSPM matrix conclude that thestrategy of “Market Development” have moreweight-age i.e. 1.61 than the strategy of“Diversification” have weight-age of 0.38.
ConclusionMcDonald’s represents the homogenization of the world due to its success over the decades in spreading its arches acrossthe globe. McDonald’s has provided millions of jobs throughout the world and participated in programs to improve thecommunity.McDonalds understands that keeping the restaurants clean and well maintained is just as crucial as serving quality food.McDonald’s believes in ensuring that it offers brilliant customer service and a safe, and a fun environment thatMcDonald’s customers expect.McDonald believes in keeping everything super clean and running smoothly. That is why all the employees are made towork in such a way that McDonald’s image as a “Safe, and fun restaurant providing quality food”, is maintained.McDonald takes extra care in the general and detail cleanliness of the restaurant and parking lot. It ensures daily filteringto ensure quality products, along with maintaining offloads, check-in and organizing deliveries. It takes care of minorequipment troubleshooting and repair. It ensures rooftop cleanliness and maintenance.McDonald’s approach to supporting balanced, active lifestyles differs around the world, but its goals remain the same - tocontinue to address the wishes of its customers by offering even more menu choice, providing access to user-friendlynutrition education and information, supporting physical activity and communicating the importance of energy balance.Children and families are valued customers of McDonald’s, and therefore McDonalds will continue to work hard to earnand keep their trust with responsible communications and quality food.As the needs and demands of the customers change, McDonalds will continue to evolve its approach and programs.McDonald believes this will help its customers to continue to make McDonald’s a part of reaching their balanced activelifestyle goals.