McDonalds Casestudy with voiceover by Kartheek

MCDONALDS

MCDONALDSServing Fast Food Around The WorldA Strategic Management Case Study

Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.1

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Brief History of McDonalds

The first McDonald's was built in 1940 by the McDonald brothers (Dick and Mac) .

Started off as a hot dog stand in CA [1937]

The McDonald brothers realized that hamburgers were their most profitable menu item, and changed their business to serve a limited menu.


McDONALDS CORPORATIONNameMcDonald's CorporationIndustries servedRestaurants, FoodGeographic areas servedWorldwideHeadquartersOak Brook, IL, United States of AmericaCurrent CEODon ThompsonEmployees1,800,000 (2013)Main CompetitorsBurger King Worldwide, Inc., Yum! Brand Inc., Subway, Wendys Company.


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Missions and valuesPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.4

Missions and valuesPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.5

Pestel analysisPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.6

Pestel analysisPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.7

SWOT AnlalysisPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.8

SWOT - StrenghtsBrand Awareness Broad geographic locationsMcDonalds standard and conformed changes in large areas efficientlyLargest fast food market share Locally adapted food menusThe business successfully targets very young children through offering playgrounds, toys with its meals and advertisements.


SWOT - WeaknessesThere is lower operating income in Europe and Canada In Canada the operating income fell 12.6%, likewise the European restaurants operating income also fell at 1.5%.There is a relatively small revenue growth - In the last 5 years McDonalds revenues have grown at a rate of 7.5% compared to industry growth at 13.6%McDonalds has been around for a long time. Customers want new things very frequently and they switch to new products very easily if they are attractiveFast food is not even healthy, so it is not accepted everywhere on the earth. So, they also need to practise on this factor to stand in all markets maintaining the regional taste.McDonalds is heavily criticized for offering unhealthy food to its customers, stimulating obesity and strong marketing focus on very young children.Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.10

SWOT OpportunitiesNewer productsMore franchises - less riskHigh Growth in China and RussiaIn the technological era the life style of people has changed. People are more and more demanding fast food, which is served fast, friendly and good in quality. Demand from people can be McDonalds opportunity. It can grow its food chains wisely to win the markets.Nowadays, the trend is to order food by telephone to the places where we want. Providing free home delivery service for customers can be a large opportunity for McDonalds.Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.11

SWOT ThreatsCompetition - global, national, regional, and local. CommodityGrowing health conscious populationFood safety bacteria, e. coli, 41 -150Trend towards healthy eatingLocal fast food restaurant chainsCurrency fluctuationsLawsuits against McDonalds:McDonalds has already been sued for many times and lost quite a few lawsuits.Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.12

Porters Five Force Analysis

The entry of new competition to the market.The threat of substitutes or replacement products.The bargaining power of buyers.The bargaining power of suppliers.The rivalry between firms of the same sector.


Porters Five Force AnalysisPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.14Threat of competition HIGHVery competitive Fast Food industryCompetitors Advertising CapabilitiesLocation of outletsMajor competitors- Burger King and YumBrand INC.Threat of New Entrance HIGHRegulation of LimitEasy Access Market and Low start up costExample of SubWays market penetrationThreat of Substitutes Low-ModerateAvailability of the MCD productsChoose MCD for Easting and EntertainmentNarrows Threat of Substitutes due to introduction of local taste products.

Porters Five Force AnalysisPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.15Power of Suppliers LOWWorlds largest restaurant chain in salesHigh bargaining power over its suppliersMost of them owe MCD for their own existenceLOW the power of suppliers- LOWer the cost of raw materials and HIGH competitive price. Power of Buyers LOWIndustry limitationsLow quantity purchasesLess chances of switching, high brand image thru differentiation and uniquenessBuyers dont have bargaining power

Case study questions

Before McDonalds entered the European market, only few people believed that fast food could be successful in Europe. Why McDonalds succeeded? What strategies it followed? How did it differ strategies in Asia?Despite global operations, McDonalds stay in close contact with its customers, who want good taste, fast & friendly services clean surroundings, and quality. It is interesting that McDonalds was one of the first restaurants in Europe to welcome families with children. Not only the children are welcomed but in many restaurants they are also entertained with crayons and paper, a playland, and clown Ronald McDonald, who can speak 20 languages. Whereas in Asia, the trend is different. The people in Asia want food as per their taste, which McDonalds served them. They prepared their menus, which included regional taste of people.Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.16

Case study questionShould McDonalds expand its menu? If no, than why not? If yes, what kinds of products should it add?McDonalds do not need to expand its menu. McDonalds has been famous and liked for its very short and well prepared traditional menu, which people loves to have in their day to day life. Even expanding the menu requires more resources for varieties and more skilled persons. Though it can add some items according to regional taste but it should not change its traditional menu of burgers. Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.17

Case study questionWhy is McDonalds Successful in many countries around the world?We can point out following points for McDonalds success story around the world.Quality, Service, Cleanliness & Value.Innovative way of presenting itself among people.Welcoming all categorys people.Regional taste and menu.Various kinds of ventures in market.Increasing demand of fast food over the world.Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.18

ConclusionMcDonalds effectiveness and profitability is obviously well supported by their strong competitive position and market share in their primary product market.Its international success is achieved by the companys strategy and tactics, which complement each other and work in harmony,providing the optimum return bounded by efficiency.The companyis thriving asit is both effective (doing things right) and efficient (doing the right thing).McDonalds portfolio of products is wellmanaged and ensures the best fit between the companys strengths and weaknesses and for offsetting the threats found inits competitive environment. In considering the strong competitive position of the firm in a highly attractive market.Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.19

If you work just for money, you'll never make it, but if you love what you're doing and you always put the customer first, success will be yours.-Ray CrocPrepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.Prepared by: Kartheek Golla, Department of Aeronautics, MIT, Manipal.20

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McDonalds Casestudy with voiceover by Kartheek