8/4/2019 Sm401 - Final Pwp

1/47

McDonalds

ST401EDirk SCHNECKENBERG

AN David

PADILLA AlejandraROBIN DamienSOTO ThaliaVon Manteuffel Nicolas

8/4/2019 Sm401 - Final Pwp

2/47

Summary1. Analyse of the situation

2. The strategic challenge

3. Alternatives analyse

4. Implementation plan

8/4/2019 Sm401 - Final Pwp

3/47

Analyse of the

situation

1

1234

8/4/2019 Sm401 - Final Pwp

4/47

McDonalds : Success story

1234

1937 : Brothers Mac Donald opened adrive-in in Passadena.

After opening a much larger restaurant inSan Bernardino, the created the Speedy Service System in 1948.

1952 : first Mac Donald franchise inPhoenix.

1955 : Ray Kroc fund McDonald's System,Inc.

8/4/2019 Sm401 - Final Pwp

5/47

1961 : Kroc & Sonneborne change thefranchise concept in real estate operation.

In the same year the Hamburger Universitywas established : a key element for the

McDonald's Business Model. 1963 : McDonald sells 1 million hamburgers a

day, and had its first national meeting.

1965 : the firm became a public company.

1971 : the company opened its firstrestaurants in Japan, Germany and Australia.

1234

8/4/2019 Sm401 - Final Pwp

6/47

In the 90's, the firm had to cope with a

number of challenges : the microwaveoven, increasing health consciousnessand competition. So McDonald's focuson international expansion and

adaptation.

In 1999, as Jack Greenberg took over the

reins of the firm, the situation wascomplicated due to competitionbetween fast-food giants.

1234

8/4/2019 Sm401 - Final Pwp

7/47

Organization and humanresources management

Culture: offering the best

Philosophy: giving back to thecommunities

Restaurant-one manager

-autocratic management

Corporation-hierarchical structureMcDonalds develop new products to

satisfy customers

1234

8/4/2019 Sm401 - Final Pwp

8/47

SWOT ANALYSIS

Strenghts Weaknesses

Opportunities Threats

McDonalds

1234

8/4/2019 Sm401 - Final Pwp

9/47

Strengths

Most recognizable logos. Golden Archer.

Global Company. More than 30,000

restaurants in 109 countries.Cultural Adaptation.

Leader in Quick Service Sandwich Industry.

Based on Franchise Business Model.

1234

8/4/2019 Sm401 - Final Pwp

10/47

Strengths

Systematization of all its food preparationprocess.

The use only high quality standards. 2005 - the best place to work for

minorities, ranked by Fortune Magazine .They invest more than 1 billion dollarannually

1234

8/4/2019 Sm401 - Final Pwp

11/47

Weaknesses Food Service Market is really saturated.

High employee turnover.

Hard manage of companys principle:Quality, Service, Value and Cleanliness

Lack of product innovation.

1234

8/4/2019 Sm401 - Final Pwp

12/47

Opportunities

The need to penetrate in some countries.Asia and South America.

Acquisition of some restaurants, non-McDonalds branded (Chipotle Grill).

New and premium products: good saladsand better hamburgers.

Implementation of a low-fat and healthymenu. First with FDA approval.

1234

8/4/2019 Sm401 - Final Pwp

13/47

Threats

Health conscious consumer trend.

Fast food market has a very slow growth.

Huge competitive pressure-Price War.

The current economic recession. Losses inexchange rate

1234

8/4/2019 Sm401 - Final Pwp

14/47

8/4/2019 Sm401 - Final Pwp

15/47

Product...McDonalds began in 1937 serving a menu

with 25 products.

80% of total sales were hamburgers,therefore in 1948 they began selling only15 cent hamburgers, cheeseburger,potatoes chips, pie and 5 differentbeverages.

In 1968 McDonalds introduced thefamous Big Mac in their menu.

1234

8/4/2019 Sm401 - Final Pwp

16/47

Product... Nowadays, McDonalds has huge product

diversity, even when companys aim is to

create a set of standardized products (BigMac)

Adaptation is required for its internationalsuccess; McDonalds changed some productsof its menu in order to fit with the culture,

religious and politic patterns of each country.And in order to please needs and wants ofconsumers.

1234

8/4/2019 Sm401 - Final Pwp

17/47

Promotion

Its Golden Arches as the companysrecognition point.

Promotion Strategy: Brand globally,advertise locally

Im loving it was implement andtranslate

The clown Ronald McDonalds needs tobe modifying for some countries.

1234

8/4/2019 Sm401 - Final Pwp

18/47

Price

McDonalds uses price as a competitiveweapon. At the beginning 15cents

hamburger and in 2002 Big Mac for 99cents. Pricing Strategic: Focus in localization not

in globalization.

Big Mac in USA is $3.58 USD

China is $1.83 USD

Norway is $7.02 USD

1234

8/4/2019 Sm401 - Final Pwp

19/47

Place The first tiny restaurant was opened in

Pasadena, California. Currently

McDonalds has more than 30,000restaurants operating in 119 countries.

The company manages a strategicexpansion, in where each restaurant is

operated by the own company,franchises or a joint venture.

1234

8/4/2019 Sm401 - Final Pwp

20/47

Consumer AnalysisMcDonalds sells its products directly to

their final users; is a B2C company

The company had based itssegmentation on demographic variables(age, gender, lifestyle stage)

Primary markets are teenagers and young

adults, but its heaviest target market arechildren and their parents.

1234

1

8/4/2019 Sm401 - Final Pwp

21/47

McDonalds creates products like the happymeal and playland places in order to please

its main consumer and has an agreementwith Barbie and Hot Wheels.

For teenagers and young adults the companyhas: price sensitivity, varieties offered, rightambience, products that worth the moneyand healthy.

Finland or Norway teenagers is the marketthat most visit McDonalds.

Consumer Analysis

1234

1

8/4/2019 Sm401 - Final Pwp

22/47

Core and Distinctive

Competences

McDonalds has core competences inproduction, image and products. Five of

them are: Brand Equity.

Production and Delivery speed.

Special menu for its main target market(Happy Meal).

Image: Brand image and logo in the mind ofmillions.

Adaptation System.

1234

1

8/4/2019 Sm401 - Final Pwp

23/47

Core and Distinctive

Competences

Adaptation System and its Lack ofInnovation, can be unfavorable. They are

diminishing its brand equity and image,straying from its core competency.

Its core competences are a source ofcompetitive advantage and by using

them in the right way the firm candefinitely be sustain in the competitivemarket.

1234

1

8/4/2019 Sm401 - Final Pwp

24/47

Porters5

forcesanalysis

The intensity ofcompetitiverivalry

The threat of theentry of newcompetitors

The threat ofsubstitute

products orservices

The bargainingpower ofsuppliers

The bargainingpower of

customers(buyers)

1234

1

8/4/2019 Sm401 - Final Pwp

25/47

The intensity of

competitive rivalry Highly competitive industry.

Many small & big fast food businesses

Burger King, Wendys, Hardees, Jack inthe Box, Sonic, etc.

1234

1

8/4/2019 Sm401 - Final Pwp

26/47

The threat of the entry of

new competitorsNot hard to enter the restaurant business.

Hard to establish a big franchise.

High costs

war of prices

1234

1

8/4/2019 Sm401 - Final Pwp

27/47

The threat of substitute

products or services variety of products

1234

1

8/4/2019 Sm401 - Final Pwp

28/47

The bargaining power of

suppliersMany producers of bread, meat and milk

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

29/47

The bargaining power of

customers (buyers)

Product with discount.

PromotionsSomewhere else

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

30/47

PEST analysis Political & Legal-

international

Economic-purchasingpower of the consumers

Social-many socialgroups.

Technological- offeringinnovation andcomfort.

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

31/47

Financial Analysis2002 2003 2009

Current Ratio(Liquidity) 0.71 0.76 1.14

Debt Ratio(Leverage) 0.57 0.53 0.53

Net incomein millions of $(Profitability)

893 1471 4551

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

32/47

Stategic challenge

2

12 34

1 2 3 4

8/4/2019 Sm401 - Final Pwp

33/47

The strategic challenge

12 34

1 2 3 4

8/4/2019 Sm401 - Final Pwp

34/47

The strategic challenge

12 34

1 2 3 4

8/4/2019 Sm401 - Final Pwp

35/47

The strategic challenge

12 34

1 2 3 4

8/4/2019 Sm401 - Final Pwp

36/47

AlternativesAnalysis

3

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

37/47

AlternativesALTERNATIVES PROS CONS

(1) Open morecompany-ownedrestaurants

- unlimited control- no lack ofinformation

- vs. strategy- expensive

(2) Create competitionbetween Franchise Stores

- cheap- no big effort

- risk ofcannibalization

(3) Motivation ofemployees

- performance- corporate identity- work environment

- expensive

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

38/47

Decision GridWeight indecison

0.4 0.4 0.2 TOTAL = 1.0

Cost Risk Time Total Score

Alternative 1 2 = 0.8 3 = 1.2 3 = 0.6 2.6

Alternative 2 7 = 2.8 6 = 2.4 7 = 1.4 6.6

Alternative 3 4 = 1.6 10 = 4.0 6 = 1.2 6.8

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

39/47

Winner

Alternative 3

Motivation of employees

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

40/47

Implementation

plan

4

1234

1

2 3 4

8/4/2019 Sm401 - Final Pwp

41/47

How to motivate

McDonalds employees?

1234

Physiological needs(food, water, shelter; pay, working conditions)

Safety needs(job security, protection)

Social needs(work groups, healthy atmosphere)

Esteem needs(self-esteem, recognition)

Self-actualization

(self-development

and realization)

1 2 3 4

8/4/2019 Sm401 - Final Pwp

42/47

First need If you treat well your employee,

they will treat well your customers

Respect Ethic charter to be sign

Infrastructures innovation : comfort

Computers in the staff room with a

Wi-Fi connexion

Salary that goes with the job you do

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

43/47

Second need

Propose to employees some trainingcourses to improve their skills indifferent fields of the restaurant

Become General-purpose

Security job

Not always the same taskavoid theboredom

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

44/47

Third need

Establish a good atmosphere in therestaurant

Create teams working on differentschedule teamspirit

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

45/47

Fifth need Encourage McDonalds employee to

multiply training courses

System of level courses with at the toplevel : Manager in a McDonaldsrestaurant

Let the possibility to work abroad

1234

1 2 3 4

8/4/2019 Sm401 - Final Pwp

46/47

Fourth need

Reward system Speed seller

The best drive-in seller

The best in store seller

The employee of the week

The employee of the month

1234

8/4/2019 Sm401 - Final Pwp

47/47

Thank you foryour attention

Enjoy your meal !