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16 November 2012




by
     Jessica Bürger, Lennart Franke, Lia Komescher, Luke Myers & Niklas Reinhold
McDonald’s Restaurants UK Limited

           European Division
           1,200 restaurants
           2.5m people a day
           87,500 employees
           >65% franchised
Jill McDonald   Alistair Macrow

CEO             VP Marketing




                Lauren Cody
Jez Langhorn
                VP Business
VP People
                Strategy
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
Strategic Management Framework
Strategic Management Framework
     Internal
       Values

        Goals

   Resources &
   Capabilities

   Structure &
    Processes

 Strengths & weaknesses
Strategic Management Framework
     Internal              External
       Values

        Goals               General
                          environment
   Resources &
   Capabilities           Competitive
                          environment
   Structure &
    Processes

                          Opportunities &
 Strengths & weaknesses
                             Threats
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
Strategic Management Framework
             External


              General
            environment

            Competitive
            environment



            Opportunities &
               Threats
Strategic Position
                      macro-environment
PESTEL                    industry

Industry Life Cycle

Five Forces
P   E   S   T   E   L
P   E



L           S



    E   T
P   E
                identifying
                   KEY
L           S   DRIVERS
                    for
    E   T         change
Environmental Changes




 SUSTAINABILITY
Cardboard packaging made
  of 72% recycled paper




 first to introduce
 Daily Litter Patrols
Socio-cultural Changes




 HEALTHY LIVING
Obesity rates tripled

                                overweight
   37%
                                   30%
         overweight
            63%           70%




of adults (16 or over)   of children (2-15)
“all junk” perceptions diminish
“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%
“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%
Food
Education
DEMO
     Food
   Education
Nutrition Calculator
Jamie Oliver on Fast Food




    @ TED Long Beach, California 2010
Socio-technological Changes




ONLINE COMMUNITIES
2m customers on Facebook
#McDStories goes wrong
#McDStories goes wrong
#McDStories goes wrong
Trust
Industry Life Cycle
Fast Food market is stagnant

1,100m




                      Maturity
                                 2015
Five Forces Framework
“Traditional” Fast Food
“Traditional” Fast Food   Fast Casual
Does McDonald’s offer a casual dining
          experience?
Retailers offer substitutes
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 me
2. Convenience often plays a part in my purchase decisions
Rivalry




Entry threat                                      Substitute Threat




               Buyer Power             Supplier Power
Rivalry




Entry threat                                      Substitute Threat




               Buyer Power             Supplier Power
Rivalry




Entry threat                                      Substitute Threat




               Buyer Power             Supplier Power
Rivalry




Entry threat                                      Substitute Threat




               Buyer Power             Supplier Power
Rivalry




Entry threat                                      Substitute Threat




               Buyer Power             Supplier Power
Rivalry




Entry threat                                      Substitute Threat




               Buyer Power             Supplier Power
Rivalry




Entry threat                                      Substitute Threat




               Buyer Power             Supplier Power
Strategic Management Framework
             External


              General
            environment

            Competitive
            environment



            Opportunities &
               Threats
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
Strategic Management Framework
               Internal
                 Values

                  Goals

             Resources &
             Capabilities

             Structure &
              Processes

           Strengths & weaknesses
Strategic Capabilities

VRIO Framework

 Resources & Competences

Value Chain & Network
Distinctive Resources and Core Competences
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
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
Fiscal Strengths
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Fiscal Strengths
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Fiscal Strengths
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
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
Rank 7
40,062
Brand Value
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Brand Value
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Brand Value
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Outlets & Exposure



1,200 outlets in UK
2.5m customers per day
Exposure
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Exposure
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Exposure
Valuable                           YES
Rare                               YES
Costly to imitate                  YES
Exploited by Organization          YES
                                 Sustained
Competitive implication
                            competitive advantage
Product Range at McDonald’s UK
Product Range at McDonald’s UK




Beef   Chicken   Deli   Fish   Salads   Sides
 6       22       8      2       7       6
Product Range
Valuable                          Yes
Rare                              No
Costly to imitate

Exploited by Organization

Competitive implication     competitive parity
Product Range
Valuable                          Yes
Rare                              No
Costly to imitate

Exploited by Organization

Competitive implication     competitive parity
Product Range
Valuable                          Yes
Rare                              No
Costly to imitate

Exploited by Organization

Competitive implication     competitive parity
Value Chain Analysis
strengths and weaknesses
                     Firm Infrastructure

                  Human Resource Management

                    Technology Development

                         Procurement




Inbound                   Outbound      Marketing &
            Operations                                Service
Logistics                 Logistics        Sales
It took 5 years for the store redesign
            across the UK




          rigid and inflexible
Value Chain Analysis
                         Firm Infrastructure

                  Human Resource Management

                    Technology Development

                           Procurement




Inbound                      Outbound      Marketing &
            Operations                                   Service
Logistics                    Logistics        Sales
Value Chain Analysis
                         Firm Infrastructure

              Human Resource Management

                    Technology Development

                           Procurement




Inbound                      Outbound          Marketing &
            Operations                                       Service
Logistics                    Logistics            Sales
Value Chain Analysis
                         Firm Infrastructure

                  Human Resource Management

                 Technology Development

                           Procurement




Inbound                      Outbound          Marketing &
            Operations                                       Service
Logistics                    Logistics            Sales
Strategic Management Framework
               Internal
                 Values

                  Goals

             Resources &
             Capabilities

             Structure &
              Processes

           Strengths & weaknesses
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
Strategic Management Framework

                          Strategy

                          1.Analyses
                          2.Formulation
                          3.Implementation
                          4.Evaluation
                                             Opportunities &
 Strengths & weaknesses
                                                Threats
SWOT

 Strengths   Opportunities



Weaknesses     Threats
SWOT

 Strengths   Opportunities



Weaknesses     Threats


  Internal    External
SWOT

           Strengths   Opportunities
  We                                     We
  can                                    can
control   Weaknesses     Threats       impact

            Internal    External
SWOT

           Strengths      Opportunities
  We         Capitalize        Invest       We
  can                                       can
control   Weaknesses        Threats       impact
             Shore up          Identify

            Internal       External
Strengths    Opportunities




Weaknesses   Threats
SWOT Analysis
                 Environmental change (Opportunities and Threats)

                   Healthy Living /     Online      Intense Rivalry &
Sustainability
                       Eating         Communities      Substitutes
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value
- Advertising
- Most Outlets
- Franchise
- Top Down Approach
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value
- Advertising
- Most Outlets
- Franchise
- Top Down Approach
Weaknesses
- High staff turnover
- Inflexible / Rigid
- Dependence on Technology
- PR
- narrow product range
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability                                                           +      -
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value         -                   -               +                +            +2     -2
- Advertising                         +                   +               +                +            +4     -0
- Most Outlets                        -                                   -                +            +1     -2
- Franchise                           +                                                    +            +3     -0
- Top Down Approach                   +                                    -               +            +2     -1
Weaknesses
- High staff turnover                                                                       -           +0     -1
- Inflexible / Rigid                   -                   -               -                 -           +0     -4
- Dependence on Technology            +                                   +                 -           +1     -1
- PR                                                      +               -                             +1     -1
- narrow product range                                    -                                 -                  -2

Environmental impact scores                                                                             + 14   -13
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability                                                           +      -
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value         -                   -               +                +            +2     -2
- Advertising                         +                   +               +                +            +4     -0
- Most Outlets                        -                                   -                +            +1     -2
- Franchise                           +                                                    +            +3     -0
- Top Down Approach                   +                                    -               +            +2     -1
Weaknesses
- High staff turnover                                                                       -           +0     -1
- Inflexible / Rigid                   -                   -               -                 -           +0     -4
- Dependence on Technology            +                                   +                 -           +1     -1
- PR                                                      +               -                             +1     -1
- narrow product range                                    -                                 -                  -2

Environmental impact scores                                                                             + 14   -13
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability                                                           +      -
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value         -                   -               +                +            +2     -2
- Advertising                         +                   +               +                +            +4     -0
- Most Outlets                        -                                   -                +            +1     -2
- Franchise                           +                                                    +            +3     -0
- Top Down Approach                   +                                    -               +            +2     -1
Weaknesses
- High staff turnover                                                                       -           +0     -1
- Inflexible / Rigid                   -                   -               -                 -           +0     -4
- Dependence on Technology            +                                   +                 -           +1     -1
- PR                                                      +               -                             +1     -1
- narrow product range                                    -                                 -                  -2

Environmental impact scores          +1                                                                 + 14   -13
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability                                                           +      -
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value         -                   -               +                +            +2     -2
- Advertising                         +                   +               +                +            +4     -0
- Most Outlets                        -                                   -                +            +1     -2
- Franchise                           +                                                    +            +3     -0
- Top Down Approach                   +                                    -               +            +2     -1
Weaknesses
- High staff turnover                                                                       -           +0     -1
- Inflexible / Rigid                   -                   -               -                 -           +0     -4
- Dependence on Technology            +                                   +                 -           +1     -1
- PR                                                      +               -                             +1     -1
- narrow product range                                    -                                 -                  -2

Environmental impact scores          +1                  -1                                             + 14   -13
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability                                                           +      -
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value         -                   -               +                +            +2     -2
- Advertising                         +                   +               +                +            +4     -0
- Most Outlets                        -                                   -                +            +1     -2
- Franchise                           +                                                    +            +3     -0
- Top Down Approach                   +                                    -               +            +2     -1
Weaknesses
- High staff turnover                                                                       -           +0     -1
- Inflexible / Rigid                   -                   -               -                 -           +0     -4
- Dependence on Technology            +                                   +                 -           +1     -1
- PR                                                      +               -                             +1     -1
- narrow product range                                    -                                 -                  -2

Environmental impact scores          +1                  -1               0                             + 14   -13
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability                                                           +      -
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value         -                   -               +                +            +2     -2
- Advertising                         +                   +               +                +            +4     -0
- Most Outlets                        -                                   -                +            +1     -2
- Franchise                           +                                                    +            +3     -0
- Top Down Approach                   +                                    -               +            +2     -1
Weaknesses
- High staff turnover                                                                       -           +0     -1
- Inflexible / Rigid                   -                   -               -                 -           +0     -4
- Dependence on Technology            +                                   +                 -           +1     -1
- PR                                                      +               -                             +1     -1
- narrow product range                                    -                                 -                  -2

Environmental impact scores          +1                  -1               0                +1           + 14   -13
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online      Intense Rivalry &
                                Sustainability                                                           +      -
                                                       Eating         Communities      Substitutes
Strengths
- Brand Image / Product Value         -                   -               +                +            +2     -2
- Advertising                         +                   +               +                +            +4     -0
- Most Outlets                        -                                   -                +            +1     -2
- Franchise                           +                                                    +            +3     -0
- Top Down Approach                   +                                    -               +            +2     -1
Weaknesses
- High staff turnover                                                                       -           +0     -1
- Inflexible / Rigid                   -                   -               -                 -           +0     -4
- Dependence on Technology            +                                   +                 -           +1     -1
- PR                                                      +               -                             +1     -1
- narrow product range                                    -                                 -                  -2

Environmental impact scores          +1                  -1               0                +1           + 14   -13
Strategy Formulation

       Strategy

       1.Analyses
       2.Formulation
       3.Implementation
       4.Evaluation
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online
                                Sustainability                                      Intense Rivalry    +      -
                                                       Eating         Communities
Strengths
- Brand Image / Product Value         -                   -               +               +           +2     -2
- Advertising                         +                   +               +               +           +4     -0
- Most Outlets                        -                                   -               +           +1     -2
- Franchise                           +                                                   +           +3     -0
- Top Down Approach                   +                                    -              +           +2     -1
Weaknesses
- High staff turnover                                                                      -          +0     -1
- Inflexible / Rigid                   -                   -               -                -          +0     -4
- Dependence on Technology            +                                   +                -          +1     -1
- PR                                                      +               -                           +1     -1
- narrow product range                                    -                                -                 -2

Environmental impact scores          +1                  -1               0               +1          + 14   -13
SWOT Analysis
                                                 Environmental change (Opportunities and Threats)

                                                   Healthy Living /     Online
                                Sustainability                                      Intense Rivalry    +      -
                                                       Eating         Communities


                                     Options that
Strengths
- Brand Image / Product Value         -                   -               +               +           +2     -2
- Advertising                         +                   +               +               +           +4     -0
- Most Outlets
- Franchise
- Top Down Approach
                                minimize weak areas
                                      -
                                      +
                                                                          -               +
                                                                                          +
                                                                                                      +1
                                                                                                      +3
                                                                                                             -2
                                                                                                             -0
                                      +                                    -              +           +2     -1
Weaknesses
- High staff turnover
                                    to avoid threats
                                                                                        -             +0     -1
- Inflexible / Rigid                   -                   -               -             -             +0     -4
- Dependence on Technology            +                                   +           TOWS
                                                                                        -             +1     -1
- PR                                                      +               -                           +1     -1
- narrow product range                                    -                                -                 -2

Environmental impact scores          +1                  -1               0               +1          + 14   -13
Attitudes towards Food Habits
100%




75%




50%
           53%

                                                                                    34%
25%                                               29%
                              14%
 0%                                                                      6%
   eating more healthy food   no time   checking nutritional content   vegetarian   5 a day



                                               2012
Healthy
                                      healthy
                                       dining




                                        casual
Fast Food                  fast
                                                 Non-Fast Food
                          casual
                                        dining


            McDonald’s
            customers




                         Un-healthy
Healthy
                                      healthy
                                       dining




                                        casual
Fast Food                  fast
                                                 Non-Fast Food
                          casual
                                        dining


            McDonald’s
            customers




                         Un-healthy
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