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McDonald's Company Analysis
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Quick Facts
Started in 1940 as a barbeque drive-in restaurant
by two brothers, Dick and Mac McDonald, in San
Bernardino, California
Raymond Kroc, founder and builder of McDonald's
Corporation was a milkshake machine salesman
prior to meeting the two brothers in 1954
By 1958, McDonald’s had sold its 100 millionth
hamburger.
McDonald’s restaurants is operated by either a
franchisee, an affiliate, or the corporation itself
Revenues come from the rent, royalties and fees
paid by the franchisees, as well as sales in
company-operated restaurants.
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Vision & Mission
To be the best and leading fast
food provider around the world
Summarized in Q.S.C.V - Quality,
Service, Cleanliness and Value -
this is the guiding force behind it’s
service to customers.
The value of food products makes
every customer smile.
Being the best company for all
employees in every community
around the world
Deliver services with superior
operational systems for each
customer in every branch of
McDonald’s restaurants
Keep progressing in a favorable
direction as
a brand, while continuing to
develop operational systems
through innovation and technology
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Value Chain Analysis
Primary Activities
Inbound Logistics - Organizing the supply of food and materials to restaurants
through approved 3rd party logistics operators
Production in huge plants exclusive to control food distribution and packaging
systems
Operations- Ensure specific guidelines are followed in food preparation
Computerized order tracking technology that ensures consistency in service
and food production
Outbound Logistics - Growing as a part of McDonald’s recycling system
integrating in the logistics of distribution centers
Efficient crew who store and distribute goods from the warehouse at the right
time
Marketing - Long term objectives are broken down into short term measurable
targets which as used as milestone accomplishments
Franchises are given autonomy in marketing mix decisions
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General Administration - Strategic planning to ensure their competitive
strategy of customer service that sustains their growth and capitalization is met
They conduct surveys and have a hot-line where customers can call to file
complaints or offer suggestions about their experience so as to strengthen the
company
Technological Development - R&D in field research needs for end user
Quality development in collaboration with good suppliers
Forward integration through franchisees with control over store presentation
and menu items
HRM - Consistently provide sufficient training to employees on how to perform
work processes and how to treat customers
Each time their product is redesigned, they conduct training sessions for all
employees to enhance their development
Procurement - Flexibility to choose the best suppliers in the market who can
increase or decrease the amount supplied without being held to a benchmark
Sought partners with expertise on down trade distribution
Value Chain Analysis
Supporting Activities
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McDonald's –Five Forces
Threat of Competition HIGH
Very similar products in the Fast Food industry
High Competitors Advertising Capabilities
Location of outlets are close
EX: KFC, Chick-fil-A
Threat of New Entrance Moderate
Easy to enter, low setup cost
Lack of ability to compete with MCD( cost efficiency,
customer awareness)
Threat of Substitutes Moderate
Substitutable food
Irreplaceable image
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McDonald's –Five Forces
Power of Suppliers LOW
Worlds largest restaurant chain in sales
High bargaining power over its suppliers(volume)
Most of them owe MCD for their own existence
Low power of suppliers—Lower the cost of raw
materials and High competitive price
Power of Buyers LOW
Less chances of switching, high brand image through
differentiation and uniqueness
Attractive price
Buyer don’t have bargaining power(Low volume)
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McDonald's –Macro environments
Economic
• Inflation
• Exchange rate
Social
• Employment
Technological
• Improvement by advanced technology
Environmental
• Forced not to harm the environment
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McDonald's – Competitors
There are many competitors are eating their shares.
The main things they have to compete with each other
are
1.Minimizing cost
2.Customer satisfaction
3.Healthy ingredients
4.Convenient locations
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McDonald's – Diversification
Mc Café
Modern, relaxing mood
Free Wifi
Attract new market segments
Variety of drinks
Satisfy hunger
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McDonald's –VRIO Analysis
Value: McDonald’s hold a high value in accordance to its brand
image and exploitation of the available resources which had helped it
evolved successfully for more than five decades.
Rarity: The utility of the resource may be franchise oriented and
spread through its breadth but the main control still remains in the
hands of the top 50 management authorities. The franchisee has to
follow the company rules strictly to run a franchise of McDonald’s.
Imitability: McDonald’s may not be difficult to imitate in aspect of
the product but its functionality is very difficult to achieve.
Organization support: McDonald’s is always ready to exploit
new resource and the organization structure is well organized. It
provides a good support to its franchise operations.
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McDonald's –Generic Strategies
Broad Differentiation
drive through, lobby, restroom, Breakfast menu, Lunch menu , and
someone who is capable of speaking Spanish
today in over 14,000 restaurants provide free WiFi service for the
customers
McDonald’s has successfully used a differentiated market
segmentation strategy by targeting the family unit and particularly
children with their “Happy Meal” and price
Leading Cost
It offers basic fast-food meals at low prices.
They are able to keep prices low through a division of labor that
allows it to hire and train inexperienced employees rather than
trained cooks.
It also relies on few managers who typically earn higher wages.
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McDonald's –SWOT Analysis
Strength
Brand name
Adapts to local markets
Socially responsible with charities
Safety and quality food
Weakness
Management's failure to see trends that do not fit
High employee turnovers
Price competition
Controlling quality with franchised operations
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McDonald's –SWOT Analysis
Opportunities
Upscale restaurant
Organic foods for the health conscious
Going green
Expanding to new parts of the globe
Threats
Sued for unhealthy food many times
Health concerns
Competitors
Contamination risks
Geopolitical issues affect
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McDonald's – Recommendation
Develop new offerings
Buy local popular chains such as Haidilao in China
or Panera Bread.
Form a JV with companies like Nestle to sell
branded and packaged ice cream and exploit the
brand name.