McDonald’s

Isabel SoboszekMeghan Dilawari

Matt SalisburyFarhan Latif

Tammy Huynh

Company Background

The first McDonald’s was built in 1940.

Ray Kroc was the first franchisee appointed by the original McDonald brothers, Dick and Mac.

He opened his first restaurant in Des Plaines, Illinois.

The company motto became “Quality, Service, Cleanliness and Value” (Q.S.C.& V)

History of the company

infancy stage

growth stage

maturity stage

Significant challenges faced in the company’s history

$250,000 donation from McDonald’s becamesubject for investigation during Watergate scandal

Law suits faced

Current status of McDonald’s

Sales and revenues; share of market

Current company locations

Number of employees

Customers

Competitors

Company’s use of IT and IS

McDonald's is the world's #1 fast-food company by sales

Serving burgers and fries, it operates more than 30,000 flagship restaurants

It serves in more than 119 countries on six continents

On a day-to-day basis, more than 47 million customers world-wide are served

Employs more than 1.5 million people

The Boston Market and Chipotle Mexican Grill fast-casual chains are also owned by McDonald's

The most recent promotion was the Monopoly Best Chance Game 2004 which lasted from October 12 to November 15

Current Status Of Company

Competitors

A competitor for McDonald’s can be anywhere from an upscale restaurant to a measly hot dog stand at a football game.

McDonald’s major competitors: Burger King ,Subway, Yum, Wendy’s,

In & Out, Taco Bell, Sonic Jack in the Box, Carl’s Jr, Togo’s, Quiznos,

KFC, Popeye’s, Pizza Hut, Round Table Pizza, Domino’s, Wenerschnitzel

Of those, Burger King, Subway, and Yum are listed as the top three competitors [McDonalds Corporation Fact sheet]

Suppliers

McDonald’s believes the only way to serve a wide, diverse group of customers is through a wide, diverse group of suppliers. Therefore, McDonald’s greatly relies on its suppliers.

“McDonald's suppliers in the U.S. operate over 40 distribution centers, strategically located to be accessible to more than 12,000 restaurants in the country. They provide a diverse range of products and services for our restaurants. It is crucial that the suppliers reflect the diversity of our customers around the world.”

McDonald's Corporation (NYSE: MCD) McDonald's Plaza, Oak Brook, IL 60523 (Map) Phone: 630-623-3000 Fax: 630-623-5004

Key Numbers: Company Type: Public Fiscal Year-End: December 2003 Sales: $17,140.5M 1-Year Sales Growth: 11.3% 2003 Net Income: $1,471.4M 1-Year Net Income Growth: 64.7% 2003 Employees: 418,000

Executives: Chairman: Andrew J. McKenna, Sr.  President, CEO, & Director : Charles H. (Charlie) Bell  SEVP & CFO: Matthew H. (Matt) Paul

Company’s Financial/ Profitability Past Performance

Porter’s Five Competitive Forces (1)

Rivalry within industry: Burger King, Wendy’s, In & Out etc. Brands - Big Mac, Filet o’ Fish, Ronald McDonald House Innovation - McGriddle, celebrity endorsements, monopoly

Online presence - company info, links to charity works

Threat of new entrants: McDonald’s has market dominance (over 30,000

restaurants world-wide) constant growth -Franchising

Threat of substitutes: Any other food industry – high-class restaurants to hot dog

stands Healthier alternatives (Newman’s Own), unique products

Bargaining power of buyers: Pay attention to customer demands and trends Offer specialty products for certain segments First mover- removal of super size option, salads, cooking oil

Bargaining power of suppliers: McDonald’s relies on strong supplier and distributor

relationships Help suppliers lower costs Develop new supplier base to reflect customer diversity Suppliers include: Coca-Cola, Heinz, Newman’s Own

Porter’s Five Competitive Forces (2)

Company’s Competitive Strategy

Differentiation strategy - Gold Standard

Signature Favorites - Big Mac and McNuggets

Cost Leadership Strategy - Items are very competitively priced

Strengths & Weaknesses

Strengths: Company can offer a meal with low prices Ronald McDonald Charity Program

Weaknesses: Low Market Share in Chicken Products

Challenges/Opportunities

Challenges From Competitors:The company has to compete with other restaurant and food industry since there are so many selections and choices to choose from.

Union:The company regard union as third parties and they refuse the legitimacy of a union as an expression of the interests of the employees that they’re dealing with.

IT/IS Systems

The company uses IT and IS in a number of ways. In fact, without the technology, McDonald’s would not be able to operate as it does today.

From taking orders to completing the orders, everything involves a computer. A network system is used to take an order which is then sent to the back through the system in order for the food to be cooked.

The following are a few systems used by McDonald’s: POS (Point of sale) – allows orders to be placed, check the

amount of inventory on hand, see the number of transactions that have occurred in the last few days or even years, see the labor percentage, total cost of waste, check the drive thru time [TTL].

KVS (Kitchen valiance system) – allows the orders taken up front and in the drive thru to be displayed and transferred to the monitors in the grill area.

Conclusion

Thank you for your time.

Does anyone have any questions?