Report McDonald
- 1. Keuka College Bachelor of Science in Management Report McDonald Corporation Group 7: _NguyenThi Que Chi 332951 _NguyenQuoc Phi Khanh 332947 _NguyenThi Quynh Mai 332952 _Le Thi Thu Ha 3329 _TranTrung Hieu 3329 _Cao Son Professor: Vahid Victor Keyhani
- 2. A. Executive Summary I /Identifies and evaluates the organization’s existing mission, vision, objectives, and strategies Mission: "McDonald's brand mission is to be our customers‘ favorite place and way to eat." Vission: "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." Objectives: McDonald focuses on children. They built a “happyland” and “happy meals” with toys for them. Some reasons that cause McDonald chooses this objective: Children is a big customer group and they always want a favorite place to go. A meal for children is really cheap but McDonald can creat more different happy meals for whole families, it means they can build a stable business. Strategy: Long-term business partner with large corporations such as CocaCola and becomethe largest consumption of CocaCola world. Slightly adjust the taste, ingredients in each local processingwill help the company more successful. Along with local changes, a team Commitment Quality (Quality Assurance) of McDonald's were formed to maintain food standards on a global scale. With international regional structure, separate types of products will be placed in each geographical area. As McDonald's did, for example, sandwich File-O-Fish, made by Lou Groen, the store branch in Cincinnati, area concentrated mainly people under the Christian, or as bread hamburgers McDonald's in India degrees, accompanied with fried chicken instead of beef ... Furthermore with productgroups did not differ in a narrow geographic area, the structure of global and regional organizations as appropriate
- 3. II/ Summarizes the products and services soldby the company Products:McDonald’s primarily sells hamburgers, cheeseburgers, chicken, french fries, breakfast items, softdrinks, milkshakes, and desserts. In responseto changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies, fruit, and seasoned fries. III/Competition and market conditions currently facedby the company Competitors: McDonald’s is one of the largest fast-food chain in global fast food market so that it has to compete with many competitors which all seeking a share if the market. Today, Yum and Starbucks are its two big competitors in market share. Starbucks began jumping to fast food market share and quickly become a competitor of McDonald’s.
- 4. Other new competitors are threats.” Once the golden arches of McDonald's was the go-to place for burgers in America.On 30 January 2015 the chain saw its profits fall more than 20% amid fierce competition from high-end competitors. One competitor is Shake Shack which has been increasing its market share and enticing customers with its fresh approach to fast-food burger joints.” BBC news Market Conditions The demand for fast food nowadays not only focus on quick service, easy to eat and cheap. People demand increasingly changed in few years ago today. 1. Healthy problem: People increasingly want to know about the ingredients and their origins in food. By doing that, they will know exactly if the food is good for their health or not. This is also the top priority when people choosing between many different restaurants when they eating out. People today pay more attention to their health and they are willing to pay a premium for better ingredients.
- 5. 2. The flavors: In the past, we only choose to eat at fast food restaurant because of it quick service and we tend to save our time and money; we do not pay much attention to the food quality and its flavors. Today, along with the increased of many fast food brands, customer demand also raised. The quality of each meal and the taste are more interested. The diversity of restaurant menu also increases the success of the restaurant. 3. More vegetable and fruits: Every fast food restaurant has vegetable and fruit in their menu such as salad or French fries, but customers expect more fresh fruits and vegetable than that. Customers tend to choose food which is healthy for them so adding more products from vegetable will support the success of restaurants. 4. Beverage: Any kind of restaurants included fast food restaurants not only about the foods, but also required good quality and innovative beverage. Fast food restaurants in the past only served soda which is the main cause for obesity. Because of that, fruit and vegetable juices are showing strength, fast food restaurants which served smoothies are more welcome than other restaurants. IV/ Proposes specific recommendations After analyzing data of McDonald’s, our team has some specific recommendations for McDonald’s to become a winner of fast food market share all over the world.
- 6. Focusing on quality not only in USA but also in all over the world. Menu has many choices such as: old and new sets, change day by day, healthy food Not focus on kids any more, should be focusing everyone Understanding culture of nation which it want to jump in and sell products Some policy to decrease high employee turnover. Using effective resource Take care about environment No more restaurants are owned by independent franchisees because taste not the same in restaurants. B. Report’s content I/ Identification of the company’s existing vision, mission, objectives, and strategies: Mission: "McDonald's brand mission is to be our customers’ favorite place and way to eat." Vission: "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." Objectives: McDonald focuses on children. They built a “happyland” and “happy meals” with toys for them. Some reasons that cause McDonald chooses this objective: Children is a big customer group and they always want a favorite place to go.
- 7. A meal for children is really cheap but McDonald can creat more different happy meals for whole families, it means they can build a stable business. Strategy: II/ Strengths, Weaknesses,Opportunities, Threats (SWOT)Matrix _As same as other company, McDonald has its strength, weakness, opportunity or threat, even when it’s a big corporation with huge advantages such as good location or high ranking, it still has some weakness and threat (opponents, lawsuit against it) that could affect to its reputation and income Using SWOT Matrix could help McDonald identify more clearly its strength, weakness, opportunity, threat, this’s play an important role in firm, it show firm what could be useful to development or what could be threaten to firm. Moreover, strength opportunity (SO), strength threat (ST), weak opportunity (WO) and weak threat (WO) could
- 8. show company the way to solve problem or how to using opportunity to improve (products, services, etc) and those things have direct relation to successfulor failing of McDonald III/ Competitive Profile Matrix (CPM) According to this table, the total weighted scrore of McDonald's is higher than Yum and Burger which means that McDonald's enjoys the strongest competitive position , on the other hand, Burger has net competitive disadvantage because of its lower total weighted score than McDonald's and Yum
- 9. IV/IFE Matrix _McDonald strengths overweight their weaknesses . Mc Donald also takes advantages of external opportunities to improve their internal weaknesses V/ EFE Matrix _Mc Donald operates well and they are able to deal with external threat by using their internal strength
- 11. VI/SPACE Matrix Aggressive, Conservation, Defensive, Competitive are four strategies belong to four quadrants of the Strategic Position and Action Evaluation Matrix. The SPACEMatrix analysis functions upon two internal and two external strategic dimensions in order to determine the organization's strategic posturein the industry. The SPACE matrix is based on four areas of analysis. Internal strategic dimensions: 1. Financial strength (FS) 2. Competitive advantage (CA) External strategic dimensions: 1. Environmental stability (ES) 2. Industry strength (IS)
- 12. Every business is also affected by the environment in which it operates. SPACE matrix factors related to business external strategic dimension are for example overall economic condition, GDP growth, inflation, price elasticity, technology, barriers to entry, competitive pressures, industry growth potential, and others. McDonald focuses on the change of cash flow and income so that both of them get the highest ranking in financial strength (FP). On the order hand, it got some troubles about inflation rate in few countries (SP). However, its strength in industry (IP) is very good at profit potential and growth potential because fast-food become a trend in modern world. It has to consider about market share in (CP) McDonald should have aggressive strategy for it business Forward integration Product development ( set up more healthier food )
- 13. VII/ GSM and QSPM The Grand StrategyMatrix is a popular tool which is using for formulating strategies. In the Grand Strategy Matrix, McDonald’s was positioned in Quadrant IV because of its high market share of 49.6% in 2011 in the US Burger market
- 14. share but the slowly in the growth of the Fast-food industry itself. Thus, McDonald’s must be create new strategic. For the firms in Quadrant 40 IV market penetration, market expansion and productdevelopment are appropriate strategies. Analysis Grand Matrix Strategy: 1. Forward integration (joint ventures with retailers) 2. Productdevelopment (launch new innovative products suchas healthier ingredients) 3. Market penetration through advertising, healthier products and diverse local taste. Quantitative Strategy Planning Matrix (QSPM) PROBLEMS: The US market share of McDonalds is going down; also their product life cycle is on Decline stage due to many competitors in fast food industry. They cannot growth more market share so they must come up with new strategy for US market. There are two alternative strategies for McDonalds either expanding their brand in Asia market for specifically in China and India or trying to offer healthier menu. The first strategy: Focus on China and India market; those are potential market for fast-food industry with large market share. According to McDonald’s annual report, the revenue in Asia Pacific keeps increase 50% in 4 years compare to other regions such as US, Europe, America. The second strategy: The trend of consuming healthy food is concerned by lots of people, if McDonald’s can create new menu with more nutrition items, they can increase sales significantly. Healthier food should not only come in the form of vegetable, it should also provide differentiate McDonald’s from other competitors. Healthy menu can include fruity iced drinks, different types of desserts, salads. This can enhance the company’s strong position in the market. We use the EFE matrix and IFE matrix to identify key strategic factors for the QSPM matrix. Then, we can formulate the type of strategy we would like to pursue base on others above matrix such as SWOT analysis, CPM matrix, SPACE matrix and BCG matrix.
- 15. We choose 2 main strategies: Expand further in India and China market. Providing diverse menu include nutrition food.
- 16. Attractiveness Score how each factor is important or attractive to each alternative strategy: Scores is 1= not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive. VIII/ Business Strategyrecommendations –both long term objectives and specific strategiesfor the company Long term objective McDonald's main aims are to serve good food in a friendly and fun environment, provide its customers with food of a high standard, quick service and value for money Profit maximation Maximizing sales revenue is one of objective of McDonald since the beginning, they seek out to gain and increase profit by selling for customer. When they sell 2 burgers for the price of one or even with the price that much cheaper than usual, this contracts many people and gains a lot of customers coming and using their products Survival Not only McDonald, this is aim of many firms. At the beginning, as same as other beginning firms, McDonald tried to stay in business by earning enough money from customer to pay for costs ( production, raw materials, transportation, etc ). Beside, as a huge corporation, McDonald also has its franchise as a majority of businesses , so that means McDonald have to aim to making enough money to cover its costs. Compete
- 17. McDonald needs to do some researches on products and how its opponents like Yum or Burger King work and do business to have strategies and better ways to serve customers. Growth This is also one of most important objectives that have concern of most of companies. After many years McDonald now become one of best fast food brand with restaurant in 119 countries, however, McDonald still need to expand to new markets to gain more customers, especially in countries suchas China, Japan and Australia, they also should refresh meals and drink in menu with more salad, fruit and vegetarian food to meet customer’s need. Specific Strategy Change in menu McDonald need to make development in menu with more healthier food and drink. Because most of item in McDonald’s menu are unhealthy food including hamburger, meat, etc or soda, that will make customer may afraid using those product. Now they more likely to choosehealthy food like salad or juice, they also need quality food that make them have enough energy in long time, not just in short time like now. Moreover, they should have more specific menu in each country, or if they can, they should have local menu to meet customer’s taste, they could apply some local recipe and material to make new dish. This kind of “specific menu” was already exist in McDonald system, however, it’s still too general for people, especially in Asia countries Develop new store
- 18. McDonald's has been successfulat building store in locations such as at Wal-Mart, however, they got problem because of Subway and Dunkin' Donuts who have aggressively added mini-locations at gas stations. Thus, they roll out its McCafe concept, this might a good idea to contract customer because McCafe’s productare in different line of beverage with different type of customer, design, product… IX/ Proposedmethods and timetable for the implementation of the long-term objectives and specific strategies For the first strategy: We point 4 for a Globalization (Oversee Mc Donald worldwide), expansion of social media, one of best brand recognition in the world, connect with local partners, cultural diversity in the food that are provided based on location on restaurant these factors will absolutely related to successfulin expansion of the company. Moreover, the expanding in new markets will deeply relevant to introduction of new diverse menu and price of its products. For the secondstrategy: We focus on providing diverse menu. Thus, we give the 4 points for these factors such as: Cultural diversity in the food that are provided based on location on restaurant. Moreover, their new menus should avoid unhealthy food image and target almost children. Because adult also a potential customer target. Analyzing QSPM Matrix result: The strategy 1 has 5.12 scorewhich is higher than strategy 2 and have more opportunity to success. So, we choosethe expansion to Asia market, especially China and India as a main strategy because they have the highest potential market growth and suitable for our company long-term strategy.
- 19. Method For long-term goal: 1. We continue to focusing on our three priorities of optimizing our menu, modernizing the customer experience, and broadening accessibility to Brand McDonald's within the framework for our long-term goal, these priorities align with our customers' evolving needs, and - combined with our competitive advantages such as convenience, menu variety, geographic diversification and system alignment- will drive long-term sustainable goals successful. 2. The business is managed as distinct geographic segments that include: • U.S. • Europe • Asia/Pacific, Middle East and Africa (APMEA) • Other Countries & Corporate(OCC) including Canada, Latin America and Corporate. 3. We view ourselves primarily as a franchisor and believe franchising is important to delivering great customer experiences and gaining profitability. At year-end 2013, more than 80% of McDonald’s restaurants were franchised. Of the total McDonald’s restaurants worldwide: • Over 57% are conventional franchisees • Nearly 24% are licensed to foreign affiliates or developmental licensees • 19% are Company-operated • Innovations have included the Big Mac, Fillet-o-Fish, and Egg McDuffie
- 20. • Operate Hamburger University. For strategyexpansionto Asia market: Continuing to operate franchise restaurants at Asia market. For example, from 2011 to 2013, McDonald's plans to open one restaurant every day in China. Local outlets at foreign markets can be autonomy adapt to local tastes and preferences. So, they have done the productdevelopment and marketing at a local level and develop its own products to address unique tastes that their consumers. They allow some flexibility changes in international restaurants. Each country able to complete the marketing research, develop new menu items and freedom to add to the menu and promote their products howthey wish. However, McDonald’s still keep the consistency of its products and taste around the world and would not allow complete autonomy. In addition, they have to do marketing overseas which must be focus on cultural differences, customer target differences Timetable Expanding in Asia market Activity Plan Star Plan Duration Actual Star Actual Duration Percent Complete Customersurvey 1 10 1 6 0% Analyze data 5 6 7 6 0% Identify market needs, segments 10 8 10 8 0% Determine potential customers 17 6 17 6 0% Align with marketing 22 3 22 4 0%
- 21. department for new products Legal permission in foreign country 1 3 1 3 0% Prepare infrastructures 22 8 22 7 0% Find suppliers for beef and fresh vegetables 3 5 3 5 0% Innovate and cooperate with community 3 4 3 4 0% Sustain the profit level of products then expand to new market 30 10 29 15 0% XI/ Recommendations forannual objectives and policies for the company Aims and objectives of Mc Donald : "It's what I eat and what I do I'm lovin' it". Mc Donald should gain competitive advantages over their competitors domestically and internationally . Unrelated diversification : Mc Donald should develop others field like pizza or beverages in compared to Pizza Hut of their competitors Yum Brands . Productdevelopment : Mc Donald should added more vegetables to their menu and less meat . Diverstitute : Mc Donald needs to close down some branches that bring less profit Consistency : Mc Donald should seek for consistency in fast and modern ways of delivering services to customers .