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[Type the company name]

McDonalds
company analysis
Team Project





Prepared by: Students Name and Surname: Edita Ivanova,

Group: 3
11/8/2011

CONTENTS

INTRODUCTION
1. COMPANY ANALYSIS
1.1 Description of the firm (history, managers, mission, vision, values, main products and markets)
1.1.1. History
1.1.2. Managers
1.1.3. Mission. Vision. Values
1.1.4. Main Products and the markets
1.2 Financial analysis of McDonalds
1.3 Current strategy of McDonalds
1.4 Identification of strengths & weaknesses
1.5 Issues facing McDonalds
2. EXTERNAL ENVIRONMENT ANALYSIS
2.1 Analysis of McDonalds macro-environment
2.2 Analysis of industry (five forces framework)
2.3 Key strategic factors in the industry (strategic groups, market segments, critical success factors)
2.3.1 Strategic groups
2. 3.2. Market segments
2.4. Future scenarios
2.3.3 Critical success factors
2.5 Identification of opportunities and threats

3. DEVELOPMENT and RECOMMENDATIONS FOR IMPLEMENTATION OF STRATEGIC OPTIONS

CONCLUSIONS
I NTRODUCTI ON

The goal of this paper work is to analyze McDonalds Incorporated company. During studies of
International Marketing we have acquainted with the theoretical part of International Marketing what
is the most important stage in the beginning every time confronting with the new subject. However, only
accomplishing the practical tasks we can better understand the matter of discipline analyzing strategic
audit of a concrete operating company.
Our tasks of this paper work were to gather into equally divided groups of students and to work
on a common goal in showing the degree to which we can collaborate together in analyzing the chosen
company and building our general management competence.
So, the broader tasks to reach the aim are:
to overview and analyze the literature concerning the subject of International Marketing;
to describe the chosen company and the market it is operating in;
to analyze principles of a selected company and existing strategies in it.
The object of our team project is McDonalds Incorporated recognized as a premier franchising
business around the world, leading global food service retailer having over 32,000 local restaurants which
serve its favourite foods World Famous Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg
McMuffin to more than 64 million people in 117 countries each day.



1. COMPANY ANALYSI S
1.1 Description of the firm (history, managers, mission, vision, values, main products and
markets)
1.1.1. History

Everything has started when Patrick McDonald opened The Airdrome in 1937. This restaurant
was located at the Monrovia Airport in Monrovia, California. At that time prices were much lower than it
is today. Back to then the hamburgers were sold only for 10cents, and all-you-can-drink orange juice cost
only 5cents. After 3years, in 1940 his two sons Mac and Dick (Maurice and Richard), relocate the whole
building and open the restaurant with new name McDonalds Bar-B-Que Restaurant in San Bernardino,
California. It was a typical drive-in featuring a large menu and car hop service.
In 1948 McDonald brothers closed their restaurant temporarily. After 3months, in December the
new, with a self-service drive-in, restaurant was opened. The menu was minimized and it consisted only
from nine items (hamburger, cheeseburger, soft drinks, milk, coffee, potato chips and a slice of pie. After
several years, in 1954, a multimixer salesman Ray Kroc enters into a McDonalds developing stage. He
realized that taking an opportunity to become a franchising agent for a whole new concept of restaurant is
an appropriate decision for his future.
On April 15th 1955 the first McDonalds restaurant in Des Plaines, Illinois is opened. A one year
later Fred Turner (future McDonalds Chairman) is hired as a counter man. After a while he became the
head of McDonalds Operations which were responsible for the quality, service and cleanliness.
The biggest event at that time in 1960 was the statement that McDonalds has sold 100 Million
of hamburgers in more than 100 restaurants in America. A few years later in 1961 Hamburger University
is opened. After this university students get a Bachelor degree of Hamburgerology.
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The Business started to expand and in 1963 there were 5times more restaurant than in 1958.
McDonalds reaches 500 restaurants. At the 10
th
Anniversary (1965) of McDonalds it issues the first
public stock selling for $22.50 per share. In 1967 McDonalds starts the business internationally. Firstly,
it goes to close neighbours, in Canada and Puerto Rico first restaurants are opened. Therefore, nowadays
we can see McDonalds restaurants in 119 countries around the world.
Another big change in McDonalds history was the first Drive-thru. It was opened in Sierra Vista,
Arizona. As long as there were soldiers near Fort Huachuca who were not allowed to leave the car in
army fatigues, the McDonalds has solved this problem introducing a new service drive-thru. It became
one of most successful implementation in services field.
Later on McDonalds started to expand its business really quickly. The restaurants are opened in
Japan then in Spain, Denmark, and Philippines. At the end of 1983, McDonalds has 7,778 restaurants
located in 32 countries all around the world. At the year of 1996 the Internet site McDonalds is created.
In 2009 the break event was that McCafe goes National and later on internationally.
Nowadays McDonalds is considered to be the leading global food service retailer. It owns more
than 32,000 local restaurants in 119 countries worldwide. The principle of this expansion is quite simple
to serve high quality, standardized products to all customers. The restaurants are operating independent
and they run by local businessman or businesswoman.

1.1.2. Managers
McDonalds name is well known for franchising which was the key to nowadays success in the
worldwide food industry market. There are 119 countries where the McDonalds is operating and more
than 75%of it is set by franchising. The managers of McDonalds are considered to be those people who
are highly qualified business people joining their System as Owners/Operators. McDonalds are seeking
businessman/businesswoman with a business experience. It is important that those people have some
knowledge from owning or managing business/business units or having led multiple departments as their
previous job. Another factor which is being considered is financial resources.
In McDonalds case the top executive officers are working as managers who direct restaurants
staff indirectly. They use several levels of supervisors who then direct the workers. There is a high need
to be familiar with the work which now they are managing. So, there is no wonder why they all climbed
the carrier from the bottom to the top. In such company as a McDonalds managers may only provide
some recommendation to the next level of management whether to hire or to fire employees.

1.1.3. Mission. Vision. Values
McDonald's brand mission statement is to "be our customers' favorite place and way to eat." Our
worldwide operations have been aligned around a global strategy called the Plan to win cantering on the
five basics of an exceptional customer experience - People, Products, Place, Price and Promotion. We are
committed to improving our operations and enhancing our customers' experience.
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This mission includes becoming the best employer for people in each local community
independently in location. To provide the excellent service to all customers and of course achieve growth
with a profit through strengths such as McDonalds system innovation and technology.
The vision of McDonalds is to be the best quick service restaurant in the whole world. It refers to
outstanding quality, cleanliness, high quality service and high value food in order to make every customer
smile.
McDonalds company states that their values in practice are the corporate responsibility of the
company. They show values in everyday activities, when they are achieving some goals and most
importantly open lines of communication is the main value between customer and other stakeholders.
They work together with suppliers and independent franchisees to achieve a sustainable future not only
for the company but for the communities in which they operate as well. Their strong values helped them
to become who they are, what they do and how they operate nowadays.
The one of the McDonalds values is customer satisfaction. It is said that the reason for
McDonalds existence are customers. They are trying to show the appreciation by serving a high quality
food and superior service. They also strive to achieve a welcoming environment. Another value is to be
committed to people who are working to them. They believe that working in a well-trained team with
intercultural experiences and backgrounds are the core of success.
The other value is that they believe in the McDonalds System. The business model which is
contained of three-legged stool (suppliers, operator and employees) is the essential key for developing
the business globally. The most important is to keep the balance between those stools legs.
Ethic in business is also one of the values. They are trying to conduct their business with fairness,
honesty and integrity. They state that: We are individually accountable and collectively responsible.
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McDonalds obliged to grow business profitably as long as it is publicly traded company. This
requires not only focus on gaining more money but also on customers and the health of the whole system.
The changing environment, customer, employee and systems need lead to the McDonalds evolution and
innovation as well.

1.1.4. Main Products and the markets
The products produces by McDonalds can be divided in several groups: Hamburgers, Chicken,
fish and pork products, French fries, Soft drinks, healthy items such as salads and Desserts.
There is no doubt that McDonalds main products are hamburgers. There is a high variety of this
type of food. To begin with, the simplest one and the most common is Cheeseburger (in some countries
they are involved in 1Eur/1$menus), then Double Cheeseburger (which has two ground beef patties and
two slices of cheese), McDouble, Big NTasty, McNifica, etc. The names and consistent varies according
to the countries.
Chicken, fish and pork products such as McChicken, Premium chicken sandwiches, Snack wrap,
Chicken McNuggets, etc. are another products in McDonalds restaurants.
French fries are considered to be one of the most sellable items. The main reason for this is that
no matter what other product the consumer is willing to buy, but in every set French fries are included
automatically.
Other products such as salads are relatively new in this restaurant. The first salads were added to
its menu in 1985. Nowadays more and more people are concerned about their health so, McDonalds puts
its all efforts to achieve more and not lose any of the potential customers.
The biggest soft drink supplier is the Coca-Cola Company. Hot and iced tea is delivered by S&D
Coffee in the US), hot chocolate, various juice and other regional beverages such as milkshakes are
available in various markets all around the globe.
Desserts are considered to be the last big group of products in McDonalds restaurants. It includes
such items as ice-cream (McFlurry), McDonaldland cookies, Freshly Baked cookies, Pies, Cinnamon
melts, the fruit and yougurt parfait, smoothies and other items which depending on the region and
country.

Markets
The recovery of McDonalds after the global crises seems to be surprisingly fast and the sales
growth rate continues to increase. The one of the biggest fast food restaurant in the world declared that it
is still gaining market shares its rivals. The high rate of unemployment does not influence the convincing
people to spend money and eat at McDonalds. It has suggested improved breakfast menu with the new
frappe drinks. It was the key success factor in recovering after the huge losses.
McDonalds surprised everyone when it reported growth of 6.0%worldwide while the same store
sales growth was approximately 3.8%. The company is forecasting the further growth of 5-6%
worldwide. The chart below shows the slowdown experience in 2008.

Chart 1 The McDonalds slowdown experience in 2008
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In different companys regions there are different trends. For example, the Europes growth rate
is 4.1%, the Asia Pacific, Middle East and Africa region growth rate is 8.1%. The European region holds
about 40% if total sales, so this region is most important to McDonalds.
The Asia Pacific region includes China where number of consumers is growing rapidly.
McDonalds is planning to reach 2,000restaurants till the 2013. In this market the biggest competitor is
Yum Brands which has 3,700 restaurants.
In the US, the introducing new menus for the breakfast and new frappe were very successfully in
gaining more customers. The following chart emphasizes the McDonalds market share growth in
comparison with selected competitors:

Chart 2 U.S. Fast food market share
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The rising of commodity prices influenced the food industry as well. This impact is the best seen
in the coffee sector. One of the McDonalds competitors is Starbucks. It was not able (for Starbucks) to
resist the price increase for 9% which led that McDonalds prices particularly for the coffee was bellow
than Starbucks. This is also the reason for the future market share gains.
If McDonalds wants to recover faster and if it wants to be a leader in all fast food sectors it has
to improve customer metrics by which it can follow and decide what are the changes in the customers
needs and wants, how they can satisfy these issues. The most important thing is to think globally but act
locally. McDonalds has to take into account different cultures, tastes, incomes, etc. and they have to
serve slightly different food but the high service should remain the same.
1.2 Financial analysis of McDonalds
Available financial data is used to evaluate the performance of the organization. In this case,
McDonalds restaurants chain will be analyzed. The most useful tools are those which show the cause-
and-effect relationships. One of the most important documents is the companys annual reports while it is
required by law to be filled with some financial data.
This part of paperwork will include the McDonalds 3-years data summary which is analyzed and
converted into ratios and percentages. Those ratios will be compared to show the relationships and trends
with standards of performance.

Table 2 Balance sheet
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Period Ending Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Assets
Current Assets
Cash And Cash Equivalents 2,387,000 1,796,000 2,063,400
Short Term Investments - - -
Net Receivables 1,179,100 1,060,400 931,200
Inventory 109,900 106,200 111,500
Other Current Assets 692,500 453,700 411,500
Total Current Assets 4,368,500 3,416,300 3,517,600
Long Term Investments 1,335,300 1,212,700 1,222,300
Property Plant and Equipment 22,060,600 21,531,500 20,254,500
Goodwill 2,586,100 2,425,200 2,237,400
Intangible Assets - - -
Accumulated Amortization - - -
Other Assets 1,624,700 1,639,200 1,229,700
Deferred Long Term Asset Charges - - -
Total Assets 31,975,200 30,224,900 28,461,500
Liabilities
Current Liabilities
Accounts Payable 2,916,400 2,970,600 2,506,100
Short/Current Long Term Debt 8,300 18,100 31,800
Other Current Liabilities - - -
Total Current Liabilities 2,924,700 2,988,700 2,537,900
Long Term Debt 11,497,000 10,560,300 10,186,000
Other Liabilities 1,586,900 1,363,100 1,410,100
Deferred Long Term Liability Charges 1,332,400 1,278,900 944,900
Minority Interest - - -
Negative Goodwill - - -
Total Liabilities 17,341,000 16,191,000 15,078,900
Stockholders' Equity
Misc Stocks Options Warrants - - -
Redeemable Preferred Stock - - -
Preferred Stock - - -
Common Stock 16,600 16,600 16,600
Retained Earnings 33,811,700 31,270,800 28,953,900
Treasury Stock (25,143,400) (22,854,800) (20,289,400)
Capital Surplus 5,196,400 4,853,900 4,600,200
Other Stockholder Equity 752,900 747,400 101,300
Total Stockholder Equity 14,634,200 14,033,900 13,382,600
Net Tangible Assets 12,048,100 11,608,700 11,145,200
Currency in USD

1.3 Current strategy of McDonalds
In McDonalds there is a strategy named Plan to Win since 2003. This plan to win in the
industry exist till now and it forced McDonalds to have 32 months of global comparative positive sales
which is the longest strip for the last 25 years. To say more, company has had a growth which in general
lies above the industry average growth.
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To get better understanding about the current strategy of the company, let take a look what is the
Plan to Win? It is nothing else except 5Ps that are behind the Plan to Win, it includes: People,
Place, Product, Price, and Promotion.
The 5Ps are trying to perceive every thinkable angle of the company, and have ways to improve
everything, from refurbishing old shops, to maintenance wi-fi for customers, setting the right mood with
music and creating deli menus to cope with the bad publicity.
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Promotion Products
- Im loving it worldwide campaign
- Billboards, internet, TV, all advertising in
general
- Broaden the selections
- McDonalds Food Studios
- Superior supplier practices
- High product standards
- McCafe
- Examples: Rice burger, fruit and walnut
salad
Price
- High quality food at a reasonable price
- Value menus
- Premium selections
Place People
- Refurbishing stores
- New music
- Wi-fi
- Developed training and hospitality programs to
teach our people the skills they need to deliver
great service
- Computer based training
- Flatscreens -Restaurant Operations Improvement Process
(ROIP)

Their main efforts are in a direction of maintenance of their unique firm power, and creation of
the additional added cost through experience to keep and develop their shares in the American market.
Companys newest leading addition of industrial line is the McCafe. The McCafe have a target
audience of those who would like something else than regular soft drinks, or probably only wants some
coffee.
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Using this new strategy and an industrial line McDonalds tries to seize shares of the market in
the industry of coffee industry, which mainly operates Starbucks. It is courageous strategy, where they
have an experience minimum, but however it is strategy which is supported by a considerable quantity of
their forces. They already have global network of suppliers and one of the most influential brands in the
world.

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Their marketing has focused on two separate things: first, coping with the effects of the obesity
through marketing and a new healthier product category and second, increasing brand awareness to
maintain and develop market shares.
While supervising the result (outcome) of McDonalds has carried out strategy the last years, then
the financial data speaks in own language. Development of the incomes which are above development of
the market means that they increase the shares in the market. When supervising of their edges of total
profit, then since performance of Plan to Win has increased edge more than forty percent. It shows that
McDonalds till now have correct forces and strategy to outmanoeuvre any problems of fatness.
McDonalds should study their basic products in the future. As changing requirements and
instructions from clients and the governments appear, then at McDonald's there would be a big advantage
of being preventive on these questions. Now they were some of the slowest in the industry to get rid of
their trans-fat to make French fries which sends a bad signal on not caring about their clients. On all
questions of public health services they, apparently, have very jet manner, still precisely knowing what to
make with a problem. If they have to change and expand the research of these areas, the pure size and
resources could give easily to them the big push up in CSR competencies and the general image in
comparison with their competitors. But as it now, their research - some kind of weakness as they
concentrate more on research in decorating than in full healthy meal. It isn't intended these that they
should change the basic products as a cheeseburger, big Mac and French fries, but rather placing some
resources in creation of the basic of more healthy products. Thus, they also would deal with some of their
weaknesses and would construct protection against future threats.
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1.4 Identification of strengths & weaknesses
The resource strength, behavior, weakness, synergy and distinctive competences are major
components of the internal environment of an organization.
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It is all about how the company manages to
use its resources and into what outcome it brings: does the use of the resources is optimal and brings to an
advantage or it is not well managed and brings into disadvantage? There come also companies strengths
or weaknesses.

Strengths of McDonalds
Taking into consideration that McDonalds is a global company, working its capital in many
countries worldwide and known for almost all people in the world, we can point out such strengths of this
franchise:
McDonalds is a strong competitor for all sit-down restaurants because of its size, worldwide
extent and famousness.
McDonalds is the market leader in both the domestic and international markets
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The size of McDonalds, as it was mentioned before, is enormous and it has an advantage of
economies of scale, which is crucial for every business.
Diversifying business worldwide in various countries let to reduce or at least to verify the risk of
business and find best advantages of different countries economies.
McDonalds also takes an advantage of a long-term economic growth as an international
company.
It is also known that McDonalds has a strong real estate portfolio, which is also considered as
strength of a company.
The companys outlets are located in areas that are highly known for visibility, traffic volume
and ease of access.
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The brand of McDonalds is easy recognised among competitors and is very strong.
Through aggressive market planning, MacDonalds has been able to recapture its youth market
once again.
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Viewing the strengths of McDonalds form consumer eyes, the strengths can be more focused on
brand, famousness, quick supply of a food, good taste of food, which more often lead even to an addiction
of McDonalds foods, also mostly well perceived personnel as a polite and performing their job well.

Weaknesses of McDonalds
Even though McDonalds has a huge extent in the world, has a strong strategy, well known brand
and feels comfortable in a market, however, as all business it faces some difficulties or some threats and
as all business has some internal weaknesses, which actually cannot be always visual for individual eyes,
but can be identified only by professional economists. The summary of McDonalds weaknesses might
be:
Looming market saturation
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, which can lead to difficulties in advertising new products.
Fast growing and competitive market. That makes company to face income problems.
Income problems and huge competition do not let the range of production rise into value ones but
makes to diversify a range of cheap and quickly made ones.
McDonalds is also a low innovative company.

In more simple view the McDonalds might have weaknesses because of huge competition in fast
food industry. Nevertheless, fast food industry is not a respected industry in most of nowadays point of
view because of rising number of various diseases caused by fast, unhealthy food. Moreover, McDonalds
food might seem more unhealthy and fatty food, rather then delicious. And there the price seemed as low
doesnt help in case of quality of food.

1.5 Issues facing McDonalds
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There are a lot of issues, which McDonalds is facing. Here you can find some of it:

ADVERTISING
McDonald's spend over two billion dollars each year on advertising: the Golden Arches are now
more recognized than the Christian Cross. Using collectable toys, television adverts, promotional schemes
in schools and figures such as Ronald McDonald the company bombards their main target group:
children. Many parents object strongly to the influence this has over their own children. McDonald's
argue that their advertising is no worse than anyone else's and that they adhere to all the advertising codes
in each country. But others argue it still amounts to cynical exploitation of children - some consumer
organizations are calling for a ban on advertising to children.

ANIMALS
Vegetarians and animal welfare campaigners aren't too keen on McDonald's - for obvious
reasons. As the world's largest user of beef they are responsible for the slaughter of hundreds of thousands
of cows per year. In Europe alone they use half a million chickens every week, all from windowless
factory farms. All such animals suffer great cruelty during their unnatural, painful and short lives, many
being kept inside with no access to fresh air and sunshine, and no freedom of movement. Again,
McDonald's argue that they stick to the letter of the law and if there are any problems it is a matter for
government. They also claim to be concerned with animal welfare.

CAPITALISM
Nobody is arguing that the huge and growing global environmental and social crisis is entirely the
fault of one high-profile burger chain, or even just the whole food industry. McDonald's are of course
simply a particularly arrogant, shiny and self-important example of a system which values profits at the
expense of anything else. Even if McDonald's were to close down tomorrow someone else would simply
slip straight into their position. There is a much more fundamental problem than Big Macs and French
Fries: capitalism.

EMPLOYMENT
The Corporation has pioneered a global, highly standardized and fast production-line system,
geared to maximum turnover of products and profits. McDonald's now employ more than a million
mostly young people around the world: some say a million people who might otherwise be out of work,
others however consider that they are in fact a net destroyer of jobs by using low wages and the huge size
of their business to undercut local food outlets and thereby force them out of business. Is McDonald's a
great job opportunity or are they taking advantage of high unemployment to exploit the most vulnerable
people in society, working them very hard for very little money? Complaints from employees range from
discrimination and lack of rights, to understaffing, few breaks and illegal hours, to poor safety conditions
and kitchens flooded with sewage, and the sale of food that has been dropped on the floor. This type of
low-paid work has even been termed 'McJobs'.

ENVIRONMENT
Conservationists have often focused on McDonald's as an industry leader promoting business
practices detrimental to the environment. And yet the company spends a fortune promoting itself as
environmentally friendly.
One of the most well-known and sensitive questions about McDonald's is if they are responsible for the
destruction of tropical forests to make way for cattle ranching. McDonald's say no. Many people say yes.
So McDonald's sue them. Not so many people say yes anymore, but does this mean McDonald's aren't
responsible?
They annually produce over a million tons of packaging, used for just a few minutes before being
discarded. What environmental effect does the production and disposal of all this have?

EXPANSION
In 1996 McDonald's opened in India for the first time: a country where the majority of the
population is vegetarian and the cow is sacred. Can people challenge the undermining of long-lived and
stable cultures, and regional diversity? Self-sufficient and sustainable farming is replaced by cash crops
and agribusiness under control of multinationals - but how are people fighting back?

FREE SPEECH
So, it seems as though lots of people are opposed to the way McDonald's go about their business.
So there is a big global debate going on about them right? Wrong. McDonald's know full well how
important their public image is and how damaging it would be to them if any of the allegations started
becoming well-known amongst their customers. So they use their financial clout to influence the media,
and legal powers to intimidate people into not speaking out, directly threatening free speech. The list of
media organizations who have been sued in the past is daunting, and the number of publications
suppressed or pulped is frightening.

NUTRITION
Nutritionists, for example, argue that the type of high fat, low fiber diet promoted by McDonald's
is linked to serious diseases such as cancer, heart disease, obesity and diabetes. The sort of diseases that is
now responsible for nearly three-quarters of premature deaths in the western world. McDonald's responds
that the scientific evidence is not conclusive and that their food can be a valuable part of a balanced diet.
Some people say McDonald's are entitled to sell junk food in exactly the same way that chocolate or
cream cake manufacturers do: if people want to buy it that's their decision.

2. EXTERNAL ENVI RONMENT ANALYSIS
2.1 Analysis of McDonalds macro-environment
Political factors
The international operations of McDonalds are extreme under influence of a policy of the
separate state put into practice by each government. For example, there are certain groups in Europe and
the United States which demand the acts of governmental power concerning medical values of meal of
fast food. They have specified that harmful elements as cholesterol and negative influences as fatness are
concerning consumption of products of fast food.
On the other hand, the company operates the separate policy and instructions of operations. The
certain markets concentrate on various areas of anxiety, such as various area of health, protection of the
worker, and environment. All these elements are noticed in the state control of licensing of restaurants in
the corresponding states. For example, there is a hung legal dispute in privilege McDonalds in India
where certain infringement of rights and infringement of the religious laws concerning the maintenance of
meal. Meat existence in their menu in India is obviously offensive to Indian religions in the mentioned
market. There are also other researches which specifies in infringement of McDonald's Stores concerning
existing laws on employment in the target market. As any business enterprise, these McDonald's stores
should argue with problems of procedures of employment just as their tax obligations to succeed in the
foreign market.
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Economic factors
The organizations in the fast food industry aren't excused from any disputes and problems.
Definitely, they really have the separate problems involving business factors. Branches and privileges of
networks of the enterprises of fast service as McDonalds has a tendency to experience difficulty in cases
where the economy of the corresponding states is amazed by inflation and changes in exchange rates.
Clients hence face a survey stalemate through their separate budgets, whether they should spend more on
these foreign networks of the enterprises of fast food. Hence, to these chains, possibly, it is necessary to
take out problems of effects of economic environment. Especially, their problem depends on the answer
of consumers to these main principles and how it could influence their general sales. In an estimation of
operations of the company, food chains as McDonalds tend to import the biggest part of the raw
materials to certain territory if there is a delivery lack. Exchange rate fluctuations will also play an
essential role in companys operations.
As it is declared in the paragraph above, stores of McDonald should take a big reason concerning
their microenvironment. The companys international supply as well as the existing exchange rates is
merely a part of the overall components needed to guarantee success for the foreign operations of
McDonalds. It is besides obligatory, that the company has been informed on the existing tax
requirements needed by the separate governments on which they operate. It basically guarantees smooth
operations of McDonalds privileges. In the same relation the company should consider also a state
economic situation on which they influence on. Level at which the economy of special state grows,
defines purchasing capacity of consumers in that country. Hence, if the privilege works in the especially
economically weak state, then their products should cost above than other existing products in the market,
these privileges should take certain regulators to support economy at the expense of manufacture growth.
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Socio-Cultural factors
Articles about the international strategy of McDonalds, apparently, function on several areas to
guarantee profitable returns for the organization. To illustrate, the organization changes to the best an
establishment of positive thinking from their basic consumers. McDonalds indulges a special variety of
consumers with certain types of persons. Also it has been noticed that the company has given the markets,
such as the United Kingdom, a choice concerning their lunch requirements. Specified that McDonalds
beginnings considerably valued set of meal which offers a reliable degree of quality for the corresponding
market where it works. In addition, those who are elderly only below a bracket of thirty five as said are
the most frequent consumers of McDonalds privileges.
Many-sided character of business is reflected now in sharp value of the information about the
existing market. This procedure is essentially identified in area as market research. Information
concerning the reference and potential areas of the market would double as a barrier to success of the
company if this area of operations neglected. In case of McDonalds they establish good system in
determining of requirements of the market. The company uses concept of consumer individuality of a
product of behaviour and decisions on purchase to its advantage. It is said, to have the main influence on
understanding of prospective result of the organization in the particular market.
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Technological factors
McDonalds makes a demand for their own products. The key tool of the company for marketing
is by means of TV advertisings. There are some requirements that McDonalds is inclined to interest the
younger population more. Existence of game stains also toys in the meal offered by the company shows
this validity. Other demonstration of such marketing strategy is obvious in advertising they use. They use
recovered descriptions of the characters as Grimace and Hamburglar. Other advertising operations
employ popular celebrities to promote their products. Similar became endorsees for McDonalds all over
the world loving it campaign. Besides, operations of McDonalds have considerably been infused with
new technology. Elements as the system of stock and management of the value chain of companys
creation consider easy payments for the suppliers and other sellers with which the person supplies in the
corresponding agreement on the markets. Technology integration into operations of McDonalds tends to
increase cost of their products. Basically it is shown in improvements on its chain of creation of value.
Improvement of stock system just as its systems of deliveries allows the company to work in the
international context.
21


Legal factors
There was a current roar against the fast food industry. It has forced McDonalds to apply more
close examination on their corporate social responsibility. As a whole it has addressed to requirement of
the company to generate its corporate reputation to more positive and the more socially responsible
company. The reputation of McDonalds is obviously a huge question. Noticed on companys web site,
seems, that they have got steps to take in hand the key social condemnation that they abused them in the
last decades. The company gave to their clients the corresponding data in which they need the relation of
food essence of their products. This is to attend to the arguments of obesity charged against the products
of the company. In the same way consumers have provided freedom in a choice, whether they want to buy
the meal.
It is connected with socio-cultural market signs which they influence. For example, operations in
predominantly Muslim countries demand, that their meat corresponded to Halal requirements of the law.
In the same regard, those that operate in countries in the European Union should correspond to the
existing laws forbidding usage of genetically modified meat products in their meal. Other legal concepts
as tax obligations, employment standards, and requirements to a degree of quality are only a few of
important elements on which the company should consider. Otherwise, smooth operations should be
difficult to reach.
22


Environmental factor
Social responsibility of McDonalds on the state influences to company operations. They involve
charges of harm to environment. Among the reasons why they are accused of such requirements, is that
the work of substances is not decomposed by microorganisms for their drinks glasses and treasury of
expanded polystyrene for meal. Some civil groups in Hong Kong have made actions to make McDonalds
privileges in Hong Kong aware of the rather copious use of containers of expanded polystyrene and
resulting abusing by environment. Further, has specified that in 1995, McDonalds Hong Kong ran
through the expanded polystyrene used by both Australia and the incorporated United States.
23


2.2 Analysis of industry (five forces framework)
A business has to understand the dynamics of its industries and markets in order to compete
effectively and intensively in the marketplace. The forces which derive competition and attractiveness of
a market, contending that the competitive environment is created by the interaction of these five different
forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into
the market, there are also the forces of supplier power, the power of buyers, and the threat of
substitute products or services (The Figure1 Porters Five Forces Framework). Michael E. Porter
suggested that the intensity of competition is determined by the relative strengths of these forces.
Figure 1 Porters Five Forces Framework
Source: Splash map on the five competitive forces

The Five Forces directly are interconnected
with the effect on the companys ability to serve its
customers and to make a profit. A change in any of
these forces generally requires a company to re-assess
its competitive strategies.

Competitive rivalry
According to Porters Five Forces Model, if entry into a market is easy then rivalry is likely to be
high. Considering McDonalds competitive rivalry, there is intense competition in fast food industry that
many small fast food businesses fight with each other to improve their customer base. This makes a
competition the major focus between businesses. Although, McDonalds, with more than 32,000 local
restaurants serving more than 60 million people in 117 countries each day, has a number of fast food
outlet competitors across the countries such as Burger King, Taco Bell, KFC, Wendys, it is currently the
leader of the industry in market capitalization with a cap of $39.31 billion.

The Threat of new entrants
The threat of new entrants in the fast food industry is high because there are no legal barriers
which would keep them from entering the industry. The economies of scale and the access of the
distribution are the major barriers that firms face in the industry. Firms must spend a large amount of
capital on advertising and marketing in order to enjoy successful existence and long life of a fast food
outlet. Large established companies with strong brand names such as McDonalds make it more difficult
to enter the market because new entrants are faced with price competition from existing chain
restaurants. Thus, it takes a pretty much time for a new business to establish in the fast food industry.

Supplier bargaining power
The bargaining power of suppliers of McDonalds is high because McDonalds restaurants use
the same products from the same suppliers and it doesnt matter if you are in Rochester, MN or Beijing,
China you can get the same Big Mac everywhere. This is a feature McDonalds want to keep going on by
encouraging consistency among its restaurants. Supplying these products to McDonalds across the globe
is the whole business for the suppliers and, however, if McDonalds would lose even one supplier it
would have to change one or more of its product lines and perhaps the whole menu what the McDonalds
customers were used to. This gives the suppliers of McDonalds a high bargaining power.

Buyer bargaining power
Buyers, in the fast food industry, are those who is ordering fast food at the local restaurant, over
the telephone, or internet or just paying or consuming the products
24
. Bargaining power of customers of
McDonalds is low because of low customer switching costs which are nearly zero; however, for
example, one-fifth of the USA population eats in a fast food restaurant every day. Thus, fast food industry
does not worry about customers loyalty. Fast food products industry is differentiated which are usually
or almost always promoted by advertising that is because of a vast competition between fast food firms.
Product differentiation is very important in fast food industry to make your product stand out against the
crowded fast food industry products. Furthermore, quality of the product or service in the fast food
industry is very important as customers have full information of the products they buy and consume.
Furthermore, if the fast food industry does not match the demands of the buyers and the general
consumer trends, then the buyers can choose not to buy their product and convince others to do the same.
A good example of this is the movie Super Size Me. It is a movie showing an ordinary consumer trying
to live of McDonalds fast food, and the purpose of the movie was to see what the traditional fast food
from McDonalds could do to your health if you were to eat their products for every meal. This movie
shows what the buyers possible reactions could be if not satisfied or not being pleased. The reactions from
the whole market were a large change in consumer preferences and brand preferences.

The threat of substitutes
Several factors determine if there is a threat of substitute products in an industry. First, if the
consumers switching costs are low, which means that there is little of anything stopping the consumer
from purchasing the substitute instead of the industrys product, then the threat of substitute products is
high. Second, if the substitute product is cheaper than the industrys product there is a high risk of threat
of substitutes. Third, if the substitute product is having equal or superior quality, functions, attributes, or
performance compared to the industrys product, the threat of substitutes as well is high.
With so many firms in the fast food industry with low switching costs, vide variety of similar
products that people can chose, and healthier alternatives, the threat of substitutes is very high.
As there is intense competition between rival sellers in the fast food industry, the competition
between firms selling substitute products is intense as well. One very important issue is that the customer
always tends to find another product comparable or better in terms of the quality of fast food products.
Another thing is that fast food industry is unhealthy to its customers health. The majority of the public
think that fast food restaurants primarily serve high in fat content foods which are unhealthy and as a
consequence they tend to look elsewhere for healthier alternatives. While fast food products are not
always associated with health and quality, fast food restaurants keeps a major advantage over other firms
selling substitute products through the lower prices of their products and a quick, convenient service.


2.3 Key strategic factors in the industry (strategic groups, market segments, critical success
factors)
2.3.1 Strategic groups
McDonalds company is one of the leading companies in the fast food industry with over 32000 of
restaurants in 117 countries around the globe. McDonalds is also worlds first fast food company by sales,
which gives for them advantage over their competitors in terms of profit.
The main competitors of McDonalds in the global market are:
YUM! Brands;
Burger King Holdings;
Dominos Pizza;
Triarc Companies.
All of these companies serve fast food around the world and are focused on providing a product
that is based on low price convenience. Their strategic group is associated with many geographic
locations and low price and quality. Even though these companies could be considered the biggest players
in the global market, they face in each country local fast food restaurants, but bigger influence on them
these local competitors are not able to do.
The Figure 2 below represents the strategic group mapping of the fast food industry. The graph
represents fast food companies, which were divided into different groups according to their price level
and product line variety. As was stated before and we can see in the graph, all of the main and biggest fast
food companies have limited menu with low prices for their products. This way all of them can compete
on the same basis, according to these specifications.
There are always competitive pressures and driving forces which adversely affect the firms in
strategic groups. Therefore, some firms may try to shift to a more favorably situated group. This shifting
is however difficult if the entry barriers of the target strategic group are high.

Figure 2 Fast food industry strategic group mapping.
2. 3.2. Market segments
Demographic segmentation - divides the market into groups based on
demographic variables including age, gender, family size and life cycle.
25

Life cycle. McDonalds has targeted children, youth singles and the young urban families. It is
attracting the young urban families wanting to spend some quality time while their children have
fun at the outlet.
Age. Mostly youngsters and kids are target, so to attract children McDonalds has Happy Meal
with which toys ranging from hot wheels to various Walt Disney characters are given. Sometimes
it also provides special facilities like Play Place where children can play arcade games, air
hockey, etc. Mostly target is under age 5-6, 12-15, 15-20 and over.
Gender. McDonalds have segmented its services to males as well as females.
Occupation. McDonalds has mostly segmented its market to the school and college going
students.
Income. McDonalds has targeted mostly middle class and upper class urban families who can
afford its luxury meal.
Psychographic segmentation. - sometimes also referred to as behavioural
segmentation. This type of segmentation divides the market into groups according to
customers lifestyles. It considers a number of potential influences on buying
behaviour, including the attitudes, expectations and activities of consumers. If these
are known, then products and marketing campaigns can be customized so that they
appeal more specifically to customer motivations.
26

Needs-motivation. The luxury services of McDonalds fulfil the needs of self-worth.
Personality. McDonalds mostly segments is market to extrovert people who usually hang out
with friends and family in restaurants and other enjoyment places.
Motivation slogans. McDonalds provides motivate slogans to attract its customers and make a
good image in the minds of the customers like IM LOVING IT, EVERY TIME A GOOD
TIME, PUT A SMILE ON, ENJOY MORE, MY MCDONALDS WHAT YOU WANT
IS WHAT YOU GET and others.
These are one of the famous slogans of McDonalds through these slogans McDonalds is
attracting its customers and making a good image in the minds of the customers. Company has
segmented on basis of making relationship with the customers and making them believe that they
are on the right place.
Region. Worldwide McDonalds is giving its services to almost more than 110 countries. This
means they must much into each tradition of different cultures, religions and views, thats why in
every country McDonalds has updated their menus according to local customers, but still saves
their main products.
Use-related segmentation - popular and effective form of segmentation that
categorizes consumers in terms of product, service, or brand usage characteristics,
such as usage rate, awareness status, and degree of brand loyalty.
27

Use rate: medium users
Awareness status: mostly people are aware of McDonalds and are interested to have services of
McDonalds.
Brand Loyalty: McDonalds have strong loyal customers.
Use-situation segmentation - involves segmenting consumers on the basis of
time, objective, location, and person.
28

Time: leisure
Objective: fun
Person: self, family members, friends, peer

2.3.3 Critical success factors
Critical success factors are limited number (usually between 3 to 8) of characteristics, conditions,
or variables that have a direct and serious impact on the effectiveness, efficiency, and viability of
anorganization, program, or project. Activities associated with CSF must be performed at the highest
possible level of excellence to achieve the intended overall objectives.
29

The research about McDonalds company has led to the following success factors:
Standardization
Environment oriented
Willingness to innovate
One dollar menu
Following healthy food trends

Standardization
In order to maintain the highest quality of their products McDonalds standardized the production
methods and processes. The company just adjusts to different culinary differences in different countries,
for example McDonalds offered vegetarian burgers to practicing Buddhists or Asian countries preferring
spicy taste saw the introduction of spicy burgers, chicken and seasoning. This gives for people possibility
to try either original US or their local taste. McDonalds achieves balance by maintaining standardization
in products but adjusting to the local taste.

Environment oriented
One of the main companys orientations now is the development of a strong company-wide
environmental policy declaring that McDonalds is committed to protecting the environment for future
generations, and that it believes that business leaders must also be environmental leaders. The policy
takes a total lifecycle approach to reducing and managing solid waste: a sizable challenge, considering
that each of McDonalds 8,600 U.S. restaurants 3 238 pounds of waste per day and each of its 34 U.S.
regional distribution centres disposes of another 900 pounds of waste per day.

One dollar menu
With its one dollar menu McDonalds reaches very wide range of customers. One dollar menu
was a response to competitors one dollar menus and it gave very good effect for the company, since the
customers could find their loved fast food in just one dollar price.

Willingness to innovate
McDonalds is all the time trying to be on time with new trends, demand or technology, even
while striving to achieve consistency in the operation of its many outlets. The breakfast menu,
salads, Chicken McNuggets, and the McLean Deluxe sandwich were all examples of how the company
tried to appeal to a wider range of consumers.

Following healthy food trends
In response to obesity trends in Western nations and in the face of criticism over the healthiness
of its products, the company has modified its menu to include healthier alternatives such as salads, wraps
and fruit.

2.4. Future scenarios
McDonald's developed its future scenarios around three strategies customer
convenience, customer value, and optimal operations.
More than ever, McDonalds is focused on and committed to doing the right thing for the local
communities in which the company operates and for the customers it serves. This philosophy of doing
good and giving back has always been at the heart and soul of the McDonald's business -like fries and
hamburgers - and started with founder, Ray Kroc. Before there was even a name for "social
responsibility," McDonald's was setting the standard, and theyve been the leader ever since.
As we deal with challenging economic and political climates around the world, McDonalds role
as an employer and local business becomes even more important. The company remains steadfastly
committed to addressing various social responsibility issues, policies, and practices within the
McDonald's system that affect local communities and customers.
McDonalds has made significant progress toward becoming a more socially responsible
organization, but there is always work to be done. Through its 30,000 restaurants, its owner/operators and
suppliers, the company continues to drive so.

2.5 Identification of opportunities and threats
McDonalds is a huge industry of franchise companies all over the world. It is diversified almost
in all countries of the world and has a huge power in the market because of its responsiveness to
customers and substantial quality of a product. As it is the only one brand in this company, it serves
actually many segments of the customers. The product diversity is quite high and serves the widest
segments of a society. The product diversifies not only for different groups of customers with different
tastes and needs but also for different groups of customers in different countries. This makes
segmentation more complex, as a matrix and contributes to business huge successes. The example of a
segmentation of McDonalds would be different kind of meet served in burgers in different countries.
There are some Muslim countries, where pork is not accepted and there are other European countries
where such kind of meat is really desirable. The new segment of a customer has been found recently,
when the boom of healthy food came into society, people became more aware of unhealthy fast food,
which McDonalds is serving. So its production of McFeast of whole bread burgers attracted more
people with different tastes and lifestyle, not as fast food eaters.
Over the years of operation this company has achieved its recognition and name and is a strong
outstanding company from its competitors. The business is ranked number one in Fortune Magazine's
2008 list of most admired food service companies.
30

Marketing efforts in McDonalds Corporation is huge. From advertisements, which includes
television, audiovisual, posters and other, also includes sponsorships of famous events, such as Olympic.
McDonalds is a community oriented, socially responsible company. They run Ronald McDonald House
facilities, which provide room and board, food and sibling support at a cost of only $10 a day for families
with children needing extensive hospital care.
31
This shows that McDonalds tries to achieve every spot
of attention, what makes this business more successful.
However, even this company has a strong experience and recognition; there are some threats that
occur in all the markets, especially when food market is one of the widest markets in the world. Taking
McDonalds business it doesnt mean being oligopoly or monopoly, it means being in a market where
perfect competition takes place. So, it is useful to consider what opportunities and threats may arise for
such a company as McDonalds.
As we identified some characteristics of this successful company, we can draw out the
opportunities that this company can achieve in the nearest future:
The first opportunity that can be realized in this company is new segments identification. Of
course there are no limits in business to expand and there is no business that could survive
without any growth or promotion. It is a very good opportunity to define some new needs or
tastes of customers, despite all those diet cokes or healthy bread burgers that McDonalds already
included, there are so many other different needs that people have.
The other more specific opportunity for McDonalds would be new technology adoption. Not
talking about those new high technology cash-registers that are based on computer programs,
McDonalds could include new technological ways in product making, that could make the
process itself more fast or special products more tasty and with higher quality (like for example
ice-cream or fresh juice machines).
The internal strategy improvement has never gone to bad. As McDonalds already has a good
strategy and employees training and promotion, it can make it more efficient and more productive
by applying some new ways of motivation or work organization. As the food is made in lines, it
can be somehow more diversified to achieve the more efficient operation.
Provide optional allergen free food items, such as gluten free and peanut free.
32
That would be a
great success of concentration to people, who have serious health problems and have to avoid fast
food.
Also McDonalds could consider new brands development. As it is a franchise, it doesnt mean
that it hasnt opportunity of brands extent. It could make another niche where it would sell some
other kind of products, like chocolate bars or other kind of sweats.

As there are many opportunities that can be fulfilled in the future, however McDonalds has also
some weaknesses and threats.
Talking about weaknesses McDonalds had some bad luck or unsuccessful projects in the past that
manifested some weaknesses and also there are some disadvantages of fast food industry:
Their test marketing for pizza failed to yield a substantial product. Leaving them much less able
to compete with fast food pizza chains.
High employee turnover in their restaurants leads to more money being spent on training.
They have yet to capitalize on the trend towards organic foods.
McDonald's have problems with fluctuations in operating and net profits which ultimately impact
investor relations. Operating profit was $3,984 million (2005) $4,433 million (2006) and $3,879
million (2007). Net profits were $2,602 million (2005), $3,544 million (2006) and $2,395 million
(2007).
33


The threats, that exist in all the markets, that have some features as perfect competition and of
course in the franchising companies, are such:
The industry of fast food restaurants is huge and so do the competition in it. Some companies get
old and boring in time and so can happen to McDonalds if it wont get adapt to new changes in
trends and lifestyles. Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC
and any mid-range sit-down restaurants.
34

Another huge threat is the threat of human health deterioration. The industry of fat food is huge in
the world and especially in most developed countries. People become more aware of unhealthy
additives and processed foods that are included in McDonalds food production. Also the extreme
rate of fat people in some countries can raise some disciplines in fast food making or prevent it at
all.
Another threat of going into franchising is reputation. It is essential to maintain a good reputation
of your name; otherwise no one will buy your franchise.

3. DEVELOPMENT and RECOMMENDATI ONS FOR I MPLEMENTATI ON OF
STRATEGI C OPTI ONS
Strategic options:
Reduction of employee training spending (lowering employee turnover);
Taking advantage of organic food industry popularity (develop new products for new segments);
Advantage of human health problems (improvement of products).

1. Reduction of employee training spending (lowering employee turnover).
In order to reduce of employee training spending and to lower turnover, we would like to suggest:
To give the job just for highly motivated people. It means, that they are going to be loyal and not
to leave job so fast;
To train new employees using Big Brother principle. New employees would be trained by
employees, who are working longer. In this way, company reduces training spending, new
employees are trained by the people, who are working inside the company and do the same things
every day.
To motivate employees and always take care about their expectations. It can be money premiums
for good working in the end of the month (or year), some employees parties, Employee of the
week (month) competition and etc.; also employer should take a look of what employee is
expected from employer and try to solve that, ex. Maybe employee is not expected to get
premium every month, but for good and loyal working he would like that the company would pay
his child studies fee after 5 years.
2. Taking advantage of organic food industry popularity (develop new products for new segments);
McDonalds is not that company, who suggest the most organic food, so they can try:
To make a line of organic food in their menu and take a look what is more popular and healthy
for their customers. If it is going more popular than usual menu food, it is more worth to make all
food in organic way, even it is more expensive. First of all, people like what is natural, and then
they are interested in the price.
To be in a partnership with scientists and doctors in order to take care of their customers heath.
Everybody knows that organic food makes people feel better and healthier; also it affects nature
in a good way. McDonalds declares that everything is for customer, so it must take an
advantage of organic food popularity and make their customers to live healthier and in more
natural way.
To make big advertisement companies declaring organic food pluses and make it more popular in
such way. Many people loves McDonalds food, so it has an authority and can show good
example of necessity of organic food in people life and compare how organic and usual
McDonalds food effect customers health and all the nature about them.

3. Advantage of human health problems (improvement of products)
McDonalds is big food supplying company, and all of us know, how food affects our health. It is
one of the main factors, what built our body and strength our brains. Knowing that, McDonalds
should:
Suggest just high quality, improved products, which is full of vitamins and minerals. So, it means
that the company must improve their products, all the food must be certificated and fit for all
healthy food standards.
Be in a contact with suppliers, who supply products for McDonalds food and always check if the
products is natural, high standard and healthy for all of age customers.
Contact with doctors, scientist and improve their products to fit for all of age customers, even
they have some problems with their stomach. It means to make measures and find what is the best
for all possible customers.




























CONCLUSI ONS

Our team project is based on the literature of International Marketing and Management subject
and the additional information which we have found as a reference to the proposed theme for this paper
work. So, what we had to do was to refer to the whole plan of this paper work and to cope with the tasks
which were concluded.
The whole paper work consists of three main parts which are: company analysis, external
environment analysis and development and recommendations for implementation of at least three
strategic options.
In the first part, concerning companys analysis, there was McDonalds as our chosen company
described (its history, managers, mission, values, main products and markets), as well McDonalds
resources and capabilities, financial analysis, its current strategy and identification of strengths and
weaknesses, issues facing McDonalds were proposed.
So, describing the company it is very important that nowadays McDonalds, producing
Hamburgers, Chicken, fish and pork products, French fries, Soft drinks, healthy items e.g. salads and
Desserts, is considered to be the leading global food service retailer owning more than 32,000 local
restaurants in 119 countries worldwide and more than 75% of McDonalds is set by franchising. The
principle of this expansion is to serve high quality, standardized products to all customers. The restaurants
are operating independent and they run by local businessman or businesswoman. There are round 1.7
million employees in corporate and restaurant positions. McDonald's brand mission statement is to "be
our customers' favorite place and way to eat." The vision of McDonalds is to be the best quick service
restaurant in the whole world. It refers to outstanding quality, cleanliness, high quality service and high
value food in order to make every customer smile.
The financial analysis of McDonalds says that the recovery of McDonalds after the global
crises seems to be surprisingly fast and the sales growth rate continues to increase. It tries to improve
customer metrics by which it can follow and decide what are the changes in the customers needs and
wants, how they can satisfy these issues. The most important thing is to think globally but act locally.
The later stage of the second part proposes companys current strategy. McDonalds has a
specific Plan to win current strategy since 2003. These are 5Ps that are behind the Plan to Win, and it
includes: People, Place, Product, Price, and Promotion. As changing requirements and instructions from
clients and the government, McDonalds should study their basic products in the future.
Furthermore, strengths and weaknesses as internal factors of a company are crucial not only in
strategic decisions making but also in strategys implementation. Some weaknesses should be eliminated
and strengths should be revealed and consolidated in order to follow organizations strategy in most
efficient way.
There are a lot of issues, which McDonalds is facing, as well. The most important of them are:
advertising, animals, capitalism, employment, environment, expansion, free speech and nutrition.
So, in the second part we have reviewed the information associated with external environment
analysis where the analysis of macro-environment were done which says that McDonalds is under
influence of the policy of the separate state by each government i.e. it has a tendency to experience
difficulty where countries are amazed by inflation and changes in exchange rates.
The Michael E. Porters analysis of industry (five forces framework) defined the forces which
derive competition and attractiveness of a market. So, McDonalds competitive rivalry is intense because
of many small fast food businesses always fighting with each other. Considering the force of the threat of
entry, the economies of scale and the access of the distribution are the major barriers that firms face in
the industry. High bargaining power of suppliers of McDonalds says that a company uses the same
products from the same suppliers and is very dependent on them if something would go wrong or the
supplier would stop supplying raw materials to McDonalds. The Bargaining power of customers of
McDonalds is low because of low customer switching costs what means that customers can easily go
from one fast food restaurant to another and do not feel big disadvantages. The competition between firms
selling substitute products is intense because of the customer who always tends to find another product
comparable or better in terms of the quality of fast food products or even healthier for his/her health.
Talking about key strategic factors of McDonalds, a company representing one of the largest
segments of the food industry and also being worlds first fast food company by sales this all gives
them advantage over their competitors in terms of profit, focusing on providing a product that is based on
low price convenience, associating with many geographic locations and low price and quality.
The research about McDonalds Company has led to the following key success factors:
standardization, environment oriented, willingness to innovate, one dollar menu and following healthy
food trends.
The later stage of future scenarios explains us that McDonald's developed its future scenarios
around three strategies customer convenience, customer value, and optimal operations. McDonalds
through its 30,000 restaurants, its owner/operators and suppliers has made significant progress toward
becoming a more socially responsible organization.
And the last subpart of the first part of our paper work the opportunities and threats itself are
identified through SWOT analysis of a company. SWOT analysis is a tool for auditing an organization
and its environment. After identified characteristics of McDonalds, the opportunities that this company
can achieve in the nearest future and threats of this company can be drawn out. It is very important for to
know what threats exists and what opportunities are possible in a company. These can lead company into
better or worse future. It depends on how managers are able to use the advantage of external
environment.
And, the third and the last part, associating with the development and recommendations of
strategic options for McDonalds, proposes three strategic options and the recommendations for their
implementation, as well the evaluation and control of these three strategic options.
Strategic options are creative alternative action-oriented responses to the external situation of an
organization. Our formed strategic options are: reduction of employee training spending (lowering
employee turnover), taking advantage of organic food industry popularity (develop new products for new
segments), advantage of human health problems (improvement of products).


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1 McDonalds History
http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destination=http://www.aboutmcdo
nalds.com/mcd/our_company/mcd_history.html
2 McDonalds FAQ http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html
3 Values in Practice http://www.aboutmcdonalds.com/content/mcd/csr/about/values.html
4 McDonalds (NYSE:MCD) report: Market share, margins on the
rise http://www.stockmarketsreview.com/recommendations/mcdonalds_report_20101115_59520/
5 McDonalds (NYSE:MCD) report: Market share, margins on the
rise http://www.stockmarketsreview.com/recommendations/mcdonalds_report_20101115_59520/
6 Resource of financial analysis http://uk.finance.yahoo.com/q/bs?s=MCD&annual
7 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-strategy/
8 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-strategy/
9 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-strategy/
10 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-
strategy/
11 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-
strategy/
12 Strategic analysis of internal environment of a business organization http://bizcovering.com/business/strategic-
analysis-of-internal-environment-of-a-business-organisation/
13 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT
14 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT
15 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT
16 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT
17 Issues of McDonalds http://www.mcspotlight.org/issues/intro.html
18 PESTLE analysis to explain companys international strategy of
McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html
19 PESTLE analysis to explain companys international strategy of
McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html
20 PESTLE analysis to explain companys international strategy of
McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html
21 PESTLE analysis to explain companys international strategy of
McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html
22 PESTLE analysis to explain companys international strategy of
McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html
23 PESTLE analysis to explain companys international strategy of
McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html
24 Bargaining power of buyers http://www.smo.dk/mcd-assignment/porters-five-forces-analysis/
25 Exams Tutor. Demographic
Segmentation http://www.examstutor.com/business/resources/studyroom/marketing/market_analys
is/7_demographic_segmentation.php
26 Tutor2u. Market segmentation - psychographic segmentation http://tutor2u.net/business/marketing/segmentation-
psychographic.html
27 BusinessiHub. Use-related segmentation http://www.businessihub.com/use-related-segmentation
28 IBS Center of Management Research. Consumer
Behavior http://www.icmrindia.org/courseware/Consumer%20Behavior/CBC02.htm
29Business dictionary. Critical success factors
definition http://www.businessdictionary.com/definition/critical-success-factors-CSF.html
30 SWOT Analysis McDonald's http://www.marketingteacher.com/swot/mcdonalds-swot.html
31 SWOT Analysis McDonald's http://www.marketingteacher.com/swot/mcdonalds-swot.html
32 SWOT Analysis McDonalds http://www.marketingteacher.com/swot/mcdonalds-swot.html
33 SWOT Analysis McDonalds http://www.marketingteacher.com/swot/mcdonalds-swot.html
34 SWOT Analysis McDonalds http://www.marketingteacher.com/swot/mcdonalds-swot.html



Studiu de caz - McDonalds
In anii 1990 restaurantele McDonalds au fost vandalizate in 50 de tari, deoarece
simbolizeaza imperialismul American. Stilul de viata traditional este afectat de practicile de
marketing ale firmei, de conceptul de fast food si de mancarea nesanatoasa pe care o
promoveaza.
La ora actuala, compania incearca sa se integreze mai bine in culturile locale prin
sistemul de franciza pe care il promoveaza. Proprietarii afacerilor locale aleg meniurile care se
adapteaza culturii lor si pot alege furnizori alternativi.
In India, unde gusturile locale sunt foarte diferite fata de America, compania a ales un
meniu complet diferit care nu foloseste carne de vita si de porc datorita unei populatii in mare
parte vegetariana. Big Mac-ul din India este realizat din carne de miel. In Israel, peste 80% din
ingrediente sunt achizitionate de la producatori locali.
Cele mai importante probleme cu care se confrunta McDonalds la ora actuala apar in
SUA, Canada si Marea Britanie, unde mancarea este considerata nesanatoasa. Canada si Marea
Britanie s-au gandit sa impuna o taxa pe aceasta mancare deoarece afecteaza sanatatea oamenilor
si costa sistemul sanitar foarte mult dar s-au lovit de numeroase obiectii din partea oamenilor
saraci care au argumentat ca aceasta taxa ar fi o povara pentru cei care depind de hrana ieftina.
In prezent firma a introdus mai multe optiuni mai sanatoase pe pietele europene si in
America de Nord.
Faimoasele arcuri aurii se gasesc la ora actuala in 118 tari, firma construindu-si reputatia
prin oferirea unor produse relative ieftine, a unor servicii rapide si a unui mediu curat,
familiar. Posibilitatea cumpararii produselor din masina si locurile de joaca pentru copii au fost
idei de success. Datorita unor eforturi promotionale intense, arcurile aurii reprezinta al doilea cel
mai recunoscut simbol din lume dupa cercurile olimpice.
Patrunderea in zona Asia Pacific
In 1996 compania a deschis primele restaurante in New Delhi si Mumbai si se confrunta cu o
concurenta puternica din partea Subway, Pizza Hut, KFC si Dominos Pizza. Preturile sunt mai
mici decat in alte tari, fiind adaptate unei puteri de cumparare mai scazute. De exemplu,
majoritatea sandwich-urilor costa sub 1 USD iar un meniu complet costa aproximativ 2 USD.
McDonalds arata ca 95% din ingredientele pe care le foloseste sunt produse local si fiecare
restaurant este dotat cu 2 bucatarii, din care una este destinata vegetarienilor.
In China firma americana detine peste 800 de restaurante, 95% din produse provenind din
surse locale. Achizitionarea produselor de la furnizorii locali ajuta firma sa evite riscurile legate
de fluctuatiile valutare.
Intrarea in Europa de Vest
Europa contribuie cu 25% la vanzari si cu 45% la venitul net. In perioada 1999-2000 s-a
inregistrat o reducere a vanzarilor cu 3%, datorita preocuparilor clientilor legate de boala vacii
nebune.
In Franta, firma americana s-a confruntat cu numeroase probleme, desi aceasta piata este
a treia ca marime in Europa. In primul rand, firma a fost afectata de concurenta din partea
micilor bistro-uri locale care serveau produse proaspete, foarte rapid si la preturi foarte mici. O
alta problema a firmei a fost cea legata de aspectul restaurantelor. A fost nevoie de o redecorare a
restaurantelor pentru a fi pe placul francezilor. Numeroase restaurante aveau podeaua din lemn si
peretii din caramida iar arcurile aurii erau prezentate mult mai subtil. Restaurantele ofera
clientilor oportunitatea de a asculta muzica la iPod si de a urmari videoclipuri la monitoare TV.
In urma acestor schimbari, francizatii au raportat o crestere a vanzarilor intre 10% si 20%.
Intrarea in Europa Centrala si de Est
In 1990 s-a deschis primul restaurant McDonalds din Rusia, avand 900 de locuri, 800 de angajati
si 27 de caserii, ceea ce reprezinta echivalentul a 20 de restaurante. In prezent, firma americana
foloseste 75% din ingrediente de la furnizorii locali.
Firma americana a fost nevoita sa-si reinvesteasca profitul in Rusia deoarece rubla nu era
convertibila.
Noi restaurante s-au deschis in Ucraina si Belarus iar in Ucraina firma are in plan sa
deschida 100 de locatii pana in 2008, cu o investitie totala de 120 milioane de dolari. Numeroase
restaurante au fost deschise in Croatia, Slovacia, Romania si in alte tari.
Refocalizarea pe piata americana
McDonalds a inceput sa recunoasca cresterea popularitatii pentru mancarea etnica si
cresterea interesului consumatorilor pentru mancarea sanatoasa. Din acest motiv, a achizitionat o
parte din actiunile lantului Chipotle Mexican Grill. Trendul achizitiilor a continuat cu Donatos
Pizza si Boston Market.
Schimbarea directorilor a determinat si schimbarea strategiei de promovare. Agentia de
publicitate DDB Worldwide se ocupa de publicitate in 34 de tari, inclusiv Australia, SUA si
Germania. Leo Burnett se ocupa de reclama adresata copiilor. Firma americana a renuntat la
vechea tema Smile si a trecut la o noua tema de marketing global im lovin it.
Meniurile oferite de firma au fost imbunatatite si cuprind tot mai multe salate si
sandwich-uri. Firma este preocupata de protectia mediului, prin folosirea unui numar mai mic de
ambalaje din plastic si prin reciclarea altora.
In 2007 vanzarile inregistrate in Europa au crescut semnificativ.

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