The document provides an overview of McDonald's operations and business strategies. It discusses: - McDonald's was founded in 1940 in California and sold over 100 million burgers by 1958. - It has a global presence operating through corporate-owned and franchised locations aiming for quality, service, cleanliness and value. - McDonald's focuses on low costs through efficient supply chain and production processes while also pursuing differentiation through marketing and new menu items. - It faces competition from other fast food chains but maintains strong brand recognition and bargaining power over suppliers due to its large size.

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Quick Facts
 Started in 1940 as a barbeque drive-in restaurant
by two brothers, Dick and Mac McDonald, in San
Bernardino, California
 Raymond Kroc, founder and builder of McDonald's
Corporation was a milkshake machine salesman
prior to meeting the two brothers in 1954
 By 1958, McDonald’s had sold its 100 millionth
hamburger.
 McDonald’s restaurants is operated by either a
franchisee, an affiliate, or the corporation itself
 Revenues come from the rent, royalties and fees
paid by the franchisees, as well as sales in
company-operated restaurants.

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Vision & Mission
 To be the best and leading fast
food provider around the world
 Summarized in Q.S.C.V -
Quality, Service, Cleanliness and
Value - this is the guiding force
behind it’s service to customers.
 The value of food products makes
every customer smile.
 Being the best company for all
employees in every community
around the world
 Deliver services with superior
operational systems for each
customer in every branch of
McDonald’s restaurants
 Keep progressing in a favorable
direction as
a brand, while continuing to
develop operational systems
through innovation and technology

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Value Chain Analysis
Primary Activities
 Inbound Logistics - Organizing the supply of food and materials to restaurants
through approved 3rd party logistics operators
 Production in huge plants exclusive to control food distribution and packaging
systems
 Operations- Ensure specific guidelines are followed in food preparation
 Computerized order tracking technology that ensures consistency in service
and food production
 Outbound Logistics - Growing as a part of McDonald’s recycling system
integrating in the logistics of distribution centers
 Efficient crew who store and distribute goods from the warehouse at the right
time
 Marketing - Long term objectives are broken down into short term measurable
targets which as used as milestone accomplishments
 Franchises are given autonomy in marketing mix decisions

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 General Administration - Strategic planning to ensure their competitive
strategy of customer service that sustains their growth and capitalization is met
 They conduct surveys and have a hot-line where customers can call to file
complaints or offer suggestions about their experience so as to strengthen the
company
 Technological Development - R&D in field research needs for end user
 Quality development in collaboration with good suppliers
 Forward integration through franchisees with control over store presentation
and menu items
 HRM - Consistently provide sufficient training to employees on how to perform
work processes and how to treat customers
 Each time their product is redesigned, they conduct training sessions for all
employees to enhance their development
 Procurement - Flexibility to choose the best suppliers in the market who can
increase or decrease the amount supplied without being held to a benchmark
 Sought partners with expertise on down trade distribution
Value Chain Analysis
Supporting Activities

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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

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Financial Analysis
Key Efficiency Ratios
Efficiency 2009-12 2010-12 2011-12 2012-12 2013-12 TTM
Days Sales Outstanding 15.98 16.98 16.99 17.94 17.5 17.5
Days Inventory 2.85 2.73 2.54 2.6 2.6 2.6
Payables Period 16.43 19.97 21.31 22.91 23.63 23.63
Cash Conversion Cycle 2.39 -0.26 -1.78 -2.38 -3.53 -3.53
Receivables Turnover 22.84 21.5 21.49 20.34 20.86 20.86
Inventory Turnover 128.18 133.62 143.97 140.47 140.2 140.2
Fixed Assets Turnover 1.09 1.1 1.2 1.16 1.11 1.11
Asset Turnover 0.78 0.77 0.83 0.81 0.78 0.78
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
Copyright 2014 Morningstar, Inc.

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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
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 –Industry Life Cycle
 Embryonic Stage
 Growth Stage
 Maturity Stage
 Decline Stage

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McDonald's –Macro environments
Economic
• Inflation
• Exchange rate
Social
• Employment
Technological
• Improvement by advanced technology
Environmental
• Forced not to harm the environment

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McDonald's – Competitors
 There are many competitors are eating their shares.
 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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McDonald's – Diversification
 Mc Café
Modern, relaxing mood
Free Wifi
Attract new market segments
Variety of drinks
Satisfy hunger

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McDonald's –VRIO Analysis
 Value: McDonald’s hold a high value in accordance to its brand
image and exploitation of the available resources which had helped it
evolved successfully for more than five decades.
 Rarity: The utility of the resource may be franchise oriented and
spread through its breadth but the main control still remains in the
hands of the top 50 management authorities. The franchisee has to
follow the company rules strictly to run a franchise of McDonald’s.
 Imitability: McDonald’s may not be difficult to imitate in aspect of
the product but its functionality is very difficult to achieve.
 Organization support: McDonald’s is always ready to exploit
new resource and the organization structure is well organized. It
provides a good support to its franchise operations.

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McDonald's –Generic Strategies
 Broad Differentiation
 drive through, lobby, restroom, Breakfast menu, Lunch menu , and
someone who is capable of speaking Spanish
 today in over 14,000 restaurants provide free WiFi service for the
customers
 McDonald’s has successfully used a differentiated market
segmentation strategy by targeting the family unit and particularly
children with their “Happy Meal” and price
 Leading Cost
 It offers basic fast-food meals at low prices.
 They are able to keep prices low through a division of labor that
allows it to hire and train inexperienced employees rather than
trained cooks.
 It also relies on few managers who typically earn higher wages.

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McDonald's –SWOT 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
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 – BCG Matrix

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McDonald's – Recommendation
 Develop new offerings
 Buy local popular chains such as Haidilao in China
or Panera Bread.
 Form a JV with companies like Nestle to sell
branded and packaged ice cream and exploit the
brand name.

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You wanna a bite!
THANK YOU.