NICK CALHOUN

DARIUS DOUGLAS

BRITTANY DOUGLAS

Three Year Strategic Plan for 2013-

2015

PRESENTATION OUTLINE I. Introduction of McDonald’s

i. Company Overview

ii. Mission Statement a) McDonald’s

b) Burger King

iii. Vision Statement

II. Internal Assessment

I. Company Values

II. Financial Ratios

III. Organizational Chart I. Current Chart

II. Revised Chart

IV. Marketing Strategy I. Current

II. Revised

V. Strengths/Weakness

VI. IFE

III. External Assessment

I. Competitor Analysis

I. CPM

IV. Strategic Formulation

I. SWOT Matrix

II. Space

III. BCG

IV. Grand Strategy Matrix

V. QSPM

VI. Recommendations

V. Strategy Implementation

I. Strategy Timeline

II. EPS

III. Predicted Financial Statements

IV. Financial Ratios

VI. Conclusion

VISION STATEMENT

Our goal is becoming customers favorite way

and place to eat and drink by serving core

favorites such as the world famous French

Fries, Big Mac, Quarter Pounder and Chicken

McNuggets.

COMPANY OVERVIEW

• McDonald’s began it’s operation in 1948

In 1963 the 500th restaurant was opened

Currently 33,000 locations world wide

• By 1965 the stock offering was $22.50 per share

Current stock price is $87.97

McDonald’s now operates in 119 countries Current Chief Executive Officer is Don Thompson

MCDONALD’S

MISSION STATEMENT

McDonald's brand mission is to be our customers' favorite

place and way to eat. Our worldwide operations are aligned

around a global strategy called the Plan to Win, which

center on an exceptional customer experience – People,

Products, Place, Price and Promotion. We are committed to

continuously improving our operations and enhancing our

customers' experience

MCDONALD’S

MISSION STATEMENT ANALYSIS

Mission Statement only includes the following components:

Market

Concern for survival, growth, and profitability

Philosophies

Mission statement are missing the following components:

Specific Customers

Specific products or services

Technologies

Self-Concept

Concern for public image

Concern for employees

Statement endorses the concept of the four p’s Product

Place

Price

Promotion

BURGER KING MISSION STATEMENT

Every day, more than 11 million guests visit BURGER

KING® restaurants around the world. And they do so

because our restaurants are known for serving high-

quality, great-tasting, and affordable food. Founded in

1954, BURGER KING® is the second largest fast food

hamburger chain in the world. The original HOME OF

THE WHOPPER®, our commitment to premium

ingredients, signature recipes, and family-friendly

dining experiences is what has defined our brand for

more than 50 successful years.

BURGER KING

MISSION STATEMENT ANALYSIS

Does not show any type of technological advances

which could appeal to a younger generation

No self concept and social responsibility to go that

extra mile

Although they are the 2nd largest hamburger fast-food

chain in the world, this should not be indicated

because it shows they are not the best

COMPANY VALUES

We place the customer experience at the core

of all we do.

We are committed to our people

We believe in the McDonald’s System

We operate our business ethically

We grow our business profitably.

We strive continually to improve

FINANCIAL RATIO ANALYSIS

Ratios McDonalds Industry

Price/Earnings 16.45 21.20

Quick Ratio 1.00 0.70

Current Ratio 1.2 1.00

Long Term debt/ Equity 0.48 0.95

Total Debt/ Equity 0.97 1.03

Net Profit Margin 18.1% 8.20%

Return on Assets 16.5% 10.70%

Gross Margin 44.8% 36.70%

Return on Equity 30.3% 25.69%

Return on Capital 20.5% 15.10%

Receivable Turnover 21.6 34.20

Inventory Turnover 133.6 47.00

Asset Turnover 0.8 1.20

ORGANIZATIONAL CHART (CURRENT)

President and Ceo

CBO

Social Media

Executive VP and CFO

VP Controller

Executive VP HRM

VP CDO

COO

President Central Division

President East Division

President USA

VP COO

McDonald’s USA

President West Division

President Asia,

Pacific, Middle East, Africa

President Europe

Executive Vice President, General

Counsel and Secretary

Corporate Vice President Supply

Chain and Franchising

PROBLEMS WITH ORGANIZATIONAL CHART

Double titles of Top executives; such as CEO and President

Some of the titles are obscure, such as “President USA” and “Executive Vice

President HRM”

President title of Asia, Pacific, Africa, and Middle East should be broken up

into two presidential positions for more effective leadership and region

concentration

No research and development business unit

Unnecessary positions such as “CDO (Chief Diversity Officer)” and “Social

Media”.

Chart shows two COO’s, one for the overall company and one for

McDonald’s USA

REVISED ORGANIZATIONAL CHART

TOP LEVEL MANAGEMENT TITLES

CEO- Chief Executive Officer

COO- Chief Operating Officer

CBO- Chief Brand Officer

CFO- Chief Financial Officer

General Counsel and Secretary

CROO- Chief Restaurant Operations Officer

HRM- Human Resource Manager

Supply Chain Development and Franchising

Research and Development

ORGANIZATIONAL CHART IMPROVEMENTS

Eliminates double titles

Addition of a Research and Development Function

Shows all divisional presidents reporting to the COO

Eliminates the extra COO for McDonald's USA and other unnecessary

positions

President over Asia, Pacific, Middle East, and Africa is broken up into two

positions:

President Asia and Pacific

President Middle East and Africa

PRESENT MARKETING

A restaurant that offers a consistent value menu.

Using a worldwide market and adapt to the needs of their many locations.

President figures in USA, Asia, Europe, Pacific, Middle East, Africa, and even Latin America

Advertising Channels: Internet

Radio

Television

Direct mail

Billboards

-Current Target Market- Families in all cultures

MARKETING POSITIONING MAP

MARKETING POSITIONING MAP

NEW MARKETING STRATEGIES

-Advertise more on social media sites such as Instagram and also on mobile apps such as Pandora.

-Offer more weekly giveaways such as $1000 for one lucky contestant or a $100 McDonald’s gift card.

-Correlate McDonald’s with both basketball AND football.

-Offer different side items for individuals who do not have a desire for french fries. Wendy’s for example offers a variety of side items which can cater to everyone’s needs.

-Invest more in African countries such as Guana. It is one of the more profitable countries in the continent

UPDATED MARKETING SLOGAN

PROGRESSION PLAN

An official progression plan is needed in order to maintain the

success of McDonald’s as the #1 fast-food restaurant in the

world and stay current with an ever-growing world population.

We suggest that each top level manager meet with one another

four times out of the year due to some of them being fairly new

to their positions.

CEO Don Thompson should use an experienced advisor for his

first 2 years in order to ensure accurate running of the

company and command of subordinates.

MAP OF STORE LOCATION

MCDONALD’S BURGER KING

Counties with Burger King

Countries without Burger King

HOW MUCH IS MCDONALD’S WORTH? Method 1: Stock Holders' Equity (in millions) (2011)

Common Stock 16.6

Additional Paid-In Capital 5487

Retained Earnings 36710

Goodwill & Intangibles -2653

Net Worth 39560.6

Method 2: Net Profits

2007 7905

2008 8639

2009 8792

2010 9637

2011 10690

5-Year AVG 9132.6

Method 3: Price-Earnings Ratio

PE Ratio 16.09

AVG Net Inc 5-Years 9132.6M

Worth 146943.5

Method 4: Outstanding Shares

# of Outstanding Shares 157M

MKT Price per Share $93.20 14632.4

AVG of 4 Methods 52567.28

~52 Billion

WEBSITE

WEBSITE

MCDONALD’S WEBSITE ANALYSIS

Homepage shows current promotion o “Monopoly Game”

Categories are clearly listed on the left side of the website

The topic food is at the top showing that it is their main priority o The food section of the website list all of the various items McDonalds

has to offer

o It provides nutritional information

The website is clear and concise with only the important pieces of

information

Website is more interactive in comparison to competitor

The background of the website does not possess much detail that

may attract a customer

Not a clear link to McDonald’s Company website

BURGER KING HOMEPAGE

BURGER KING WEBSITE ANALYSIS

Menu options are listed at the top of the website

Offer social network options Twitter

Facebook

Offers an option to help find customers the closest restaurant

Company Information is accessible from main page

Option for careers is not easily found on the website

Offers a mobile website and application

STRENGTHS

Operates in 33,000 locations

Has reduced sodium by 10% in various chicken items on the menu

Restaurants have increased the amount of cardboard recycled by 20%

On average 15.8 menu items per market share include a 1/2 serving of fruit

Created a new division line of product such as McCafe

Serves over 47 million customers daily

Created a partnership with the Olympics

Sales have increased by 2.94 billion dollars in 2012

WEAKNESS

Turnover rate for employees is 44%

Quality control throughout the different franchise

Top level management is new to the company

Only operates in three countries in the continent of Africa

Difficult to become a franchisee

Very little training is offered to employees

Website only shows top level management but not the organizational chart

STRENGTHS (IFEM)

WEAKNESSES (IFEM)

COMPETITIVE PROFILE MATRIX

McDonalds Burger King Wendy's

Cri teria Weight Rating Weighted Score Wieght Rating

Weighted Score Weight Rating

Weighted Score

Brand Name 0.25 4 1 0.2 3 0.75 0.18 2 0.5

Product Quality 0.2 2 0.4 0.19 3 0.6 0.21 4 0.8

Price 0.08 4 0.32 0.09 3 0.24 0.11 2 0.16

Advertising 0.05 4 0.2 0.06 3 0.15 0.09 2 0.1

Customer Service 0.2 2 0.4 0.25 4 0.8 0.23 3 0.6

# of Locations 0.15 4 0.6 0.06 2 0.3 0.1 3 0.45

Variety of Menu i tems 0.07 2 0.14 0.15 4 0.6 0.08 3 0.24

Total 1 2.92 1 2.84 1 2.61

OPPORTUNITIES

3% in worldwide population

Fast food industry growth by 5%

25% of consumers eat fast food everyday

Not as many grocery stores in urban areas

Release of new Disney movies

Unemployment rates falls to 6%

THREATS

Multiple stores in a geographic area

Society views on fast food

Fast Food restaurants are required to show

nutritional information.

Imitated by competitors

Sales at local grocery stores

Unemployment rate rises to 9.9%

EFE MATRIX

Opportunities Wieght Rating

Wieghted

Score

3% increase in worldwide population 0.09 3 0.27

Fast-food industry growth by 5% 0.05 4 0.2

Increase in the number of franchisees 0.09 3 0.27

Release of new Disney movies could create

new marketing opportunities 0.05 3 0.15

25% of consumers eat fast-food everyday 0.09 2 0.18

Urban areas struggle to get grocery stores 0.02 3 0.06

Economic growth of 5% in Guana, Kenya, and Angola 0.01 1 0.01

Invest more in northwest areas that lack a restaurant 0.02 3 0.06

Calorie count on menu allows more nutritional info 0.06 4 0.24

The multitasking of Generation Y allows for

more

fast food sales. 0.01 2 0.02

Threats

11. Multiple stores in one geogrphic area 0.04 2 0.08

12. Society's view on fast food 0.06 3 0.18

13. Being imitated by compettitors 0.07 1 0.07

14. Displaying Nutritional data 0.07 4 0.28

15. Competitors have more side items for meals 0.03 2 0.06

16. Gas prices up 14% 0.06 1 0.06

17. Society's perception of fast food 0.05 4 0.2

18.Competitors offer online ordering 0.05 3 0.15

19. Family sized meals 0.02 1 0.02

20. Sales at local grocery stores 0.06 4 0.24

Total 1 2.07

STRATEGIC DIRECTION

The strength of the alignment among the Company, its franchisees and suppliers (collectively referred to as the System) has been key to McDonald’s success. This business model enables McDonald’s to deliver consistent, locally-

relevant restaurant experiences to customers and be an integral part of the communities we serve. In addition, it facilitates our ability to identify, implement and scale innovative ideas that meet customers’ changing needs and

preferences.

McDonald’s customer-focused Plan to Win provides a common framework for our global business yet allows for local adaptation. Through the execution of initiatives surrounding the five elements of our Plan to Win – People, Products,

Place, Price and Promotion – we have enhanced the restaurant experience for customers worldwide and grown comparable sales and customer visits in each of the last eight years. This Plan, combined with financial discipline, has

delivered strong results for our shareholders.

SWOT MATRIX

SO Strategies ST Strategies

Offer more franchises in states with the

least number

Offer family sized meal that have four

servinngs

Provide healthier meal combinations Create an iPhone app that shows

store with shortest lines

Increase dividends by 5% Ceate more side items and desserts

Offer jobs to teenagers Aquire smaller fast food chains

Increase advertising spending by 15% Offer table service to customers that

dine-in

SWOT MATRIX (CONTINUED)

WO Strategies WT StrategiesIncrease MCD stock trade volume Build more stores in African Countries

Incrase treasury stock Offer servings that are beloew 400

calories

Create a new and imroved organiztional

chart

Create more McCafe products

Hire more experienced leaders for top

management

Buy fruits and vegetables locally if

they are availabe

Make the company's website more

interactive

Offer catering at major events

SPACE MATRIX

6

5

4

3

2

1

-6 -5 -4 -3 -2 -1 1 2 3 4 5 6

-1

-2

X Plot

2.8 -3

-4

-5

Y Plot

2.2 -6

FSConservative Aggressive

CA IS

DefensiveES

Competitive

SPACE MATRIX DATA

Financial Position (FP) Environmental Position (EP)

Return on Investments 6 Technological Changes -2

Brand Name 7 Demand Variability -1

Earnings Per Share 4 Competitive Pressure -3

Net Income 6 Barriers of entry into market -6

Working Capital 3 Rate of Inflation -3

Financial Position Avg. 5.2 Environmental Position Avg. -3

Competitive Position (CP) Industry Potential (GP)

Product Quality -4 Profit Potential 7

Customer Loyalty -1 Financial Stability 7

Technology know-how -3 Resource Utilization 4

Product Life Cycles -2 Extent Leveraged 5

Market Share -2 Ease of entry 3

Competitive Position Avg. -2.4 Growth Potential Avg. 5.2

BCG DATA TABLE

BCG MATRIX

GRAND STRATEGY MATRIX

Rapid Market Growth

Weak Strong

Competitive Competitive

Advantage Position

Slow Market GrowthSaturated Market

Moderate Integration

Stronger than Competitors

Slow Company Growth

QSPM (CONTINUED)

QSPM (CONTINUED)

QSPM (CONTINUED)

RECOMMENDATIONS

STRATEGICAL TIMELINE

EPIS/EPS ANALYSIS

Common Stock Financing Debt Financing

Recession Normal Boom Recession Normal Boom

$EBIT 900,000,000 450,000,000 900,000,000 900,000,000 450,000,000 900,000,000

$Interest 0 0 0 65,000,000 65,000,000 65,000,000

$EBT 900,000,000 450,000,000 900,000,000 965,000,000 385,000,000 835,000,000

$Taxes 360,000,000 180,000,000 360,000,000 289,500,000 115,500,000 250,500,000

$EAT 540,000,000 270,000,000 540,000,000 675,500,000 269,500,000 584,500,000

#Shares 1044.9 1044.9 1044.9 1008.63 1008.63 1008.63

$ EPS 5.17 2.58 5.17 6.7 2.63 5.8

70% Stock - 30% Debt 70% Debt - 30% Stock

Recession Normal Boom Recession Normal Boom

$EBIT 900,000,000 450,000,000 900,000,000 900,000,000 450,000,000 900,000,000

$Interest 19,500,000 19,500,000 19,500,000 45,500,000 45,500,000 45,500,000

$EBT 919,500,000 430,500,000 880,500,000 945,500,000 404,500,000 854,500,000

$Taxes 275,850,000 129,150,000 264,150,000 283,650,000 121,350,000 256,350,000

$EAT 643,650,000 301,350,000 616,350,000 661,850,000 283,150,000 598,150,000

#Shares 929.4 929.4 929.4 971.58 971.58 971.58

$ EPS 6.92 3.24 6.63 6.81 2.91 6.16

BALANCE SHEET

Assets 2013 2014 2015

Cash/Short Term Investments 2,532.10 2,943.00 3,398.80

Accounts Receivables/Net 1,576.70 1,689.90 1,912.20

Inventory 125.4 144.2 151.9

Prepaid Expenses 634.5 693.1 621.4

Total Current Assets 4,868.70 5,470.20 6,084.30

Prop., Plant, Equip. 23,153.70 24,599.80 25,971.30

Good Will 2,898.20 2,767.30 2,690.50

Long Term Investments 1,795.80 1,612.10 1,749.20

Other Assets 1,783.40 1,751.90 1,789.20

Total Assets 34,499.80 36,201.30 38,284.50

Liability and Shareholders' Equity

Accounts Payable 987.1 1,097.60 1,235.40

Accrued Expenses 2,165.70 1,930.10 2,276.50

Debt/Capital Leases 122.6 287.4 398.1

Other Liabilities 299.3 347.9 287.2

Total Current Liabilities 3574.7 3,663.00 4,197.20

Total Long Term Debt 12,961.30 14111.7 15165.9

Deferred Income Tax 1,387.20 1,412.80 1,469.10

Other Liabilities 1,745.10 1,805.90 1,937.70

Total Liabilities 19668.3 20,993.40 22,769.90

Equity

Preferred Stock 0 0 0

Common Stock 16.6 16.6 16.6

Additional Paid-in Capital 6,711.50 7,054.10 8,248.80

Retained Earnings 37,224.80 39,791.60 42,862.70

Treasury Stock-Common -29,843 -32643.9 -35780.7

Other Equity 519.5 743 613.8

Total Equity 14629.9 14,961.40 15,961.20

Total Liabilities and Equity 34298.2 35,954.80 38,731.10

INCOME

STATEMENT

Revenue 23,788.0 26,589.6 27,173.7

Other Revenue, Total 0.0 0.0 0.0

Total Revenue 23,788.0 26,589.6 27,173.7

Cost of Revenue, Total 14,549.1 14,068.3 12,745.9

Gross Profit 9,238.9 12,521.3 14,427.8

Selling/General/Administrative Expenses, Total 2,182.7 2,054.3 1,995.2

Research & Development 0.0 0.0 0.0

Depreciation/Amortization 0.0 0.0 0.0

Interest Expense (Income), Net Operating 0.0 0.0 0.0

Unusual Expense (Income) -10.8

77.4

-101.6

Other Operating Expenses, Total 0.0 0.0 0.0

Operating Income

7,056.2

10,467.0 12,432.6

Interest Income (Expense), Net Non-Operating 0.0 0.0 0.0

Gain (Loss) on Sale of Assets 0.0 0.0 0.0

Other, Net -32.5 -41.2 -17.6

Income Before Tax 6,761.2 10,085.3 11,987.0

Income Tax - Total 1,978.1 2,122.0 2,343.0

Income After Tax 5,783.1 7,963.3 9,644.0

Minority Interest 0.0 0.0 0.0

Equity In Affiliates 0.0 0.0 0.0

U.S. GAAP Adjustment 0.0 0.0 0.0

Net Income Before Extra. Items 5,783.1 7,963.3 9,644.0

Total Extraordinary Items 0.0 0.0 0.0

Net Income 5,783.1 7,963.3 9,644.0

2013 2014 2015

PROJECTED FINANCIAL RATIOS