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McDonalds the global fast-food powerhouse

McDonalds is a publicly traded company and around 80% of the McDonalds restaurants all over
the world are operating on franchisee basis. Its competitors consist of Sub Way, Burger King,
Wendys and YUM which run some of the very famous brands like KFC, A&W, Pizza Hut and
Taco Bell. McDonalds is the industry leader in terms of sales, market cap, employees, gross and
net margins. The main cited reason of McDonalds success is the quality standards they have
been able to maintain all over the world despite having location constraints at some of the
places. They have consistently developed new menu items thereby always attracting new sets of
customer and giving enough reasons to old customer to be attached. With this challenging cut
throat competition, public relations are becoming very critical for quick restaurant industry. A
psychological competition right now in US is the criticism this industry is facing from large obese
population. This is especially true for the concept of value meals, which provide extra large
portion of unhealthy foods. The nutritional value of the quick restaurant segment has sparked
many a campaigns and few legal actions. According to New York City department of Health a law
was passed in 2008 making it mandatory for quick restaurant to post all the calorie related
information against the food item on the menu boards. One of the biggest outcries has been the
promotion of this food habits among the socio economic classes and the direct correlation of the
obesity among the people. In response McDonalds introduced new and healthier item in the
menu and shifted its marketing. With this background McDonalds entered into Singapore as a
very famous brand to cater.
McDonald's vision
McDonald's Brand vision is "To be the best quick service restaurant experience". Being the
best means providing outstanding quality, service, cleanliness, and value, so that we make
every customer in every restaurant smile. McDonalds has a corporate mission statement
They focus on providing consumers with tasty and nutritious food and beverages that is
consumed from morning to night. They want to be for their customers the favorite place and
way to eat. Our worldwide operations are aligned around a global strategy called the Plan to
Win, which center on an exceptional customer experience People, Products, Place, Price
and Promotion. We are committed to continuously improving our operations and enhancing
our customers experience (McDonalds, 2012)
This was the concept that attracted students and office goers of all ages to patronize it. The
other and singularly most important item was the soft drinks, milk shakes and their irresistible
desserts. The quality standards of McDonaldss have become stringent and towards the rise.
This has attracted more customers to their operations across the globe. In March 1998 the
company has introduced a new food processing platform Made for You McDonalds
intention to preserve the food safety, freshness, hygiene and quality standards (Smith, 2011).
However, this also meant a bit slower fast food.
When McDonalds started their operations in 1948 the menu consisted of cheese burgers and
hamburgers, pie, potato chips and beverages like milk, soft drinks, coffee. The cost of
hamburger at that time was mere 15 cents. Now it is the largest food chain all over the world.
By 1965 McDonalds had 700 restaurants. McDonalds all over the worlds are aligned by

Global strategy of plan to win. This strategy focuses on price, people, customer experience,
promotion and place.
The think global and act local strategy brought McDonalds competitive advantage in the
fast-food industry. They customized their marketing strategies based on the cultural,
economical and sociopolitical factors of different nations (Cooper & Edgett, 2009). Adapting
and executing this strategy, the company is capable of adjusting their products and services
to the preference of their local consumers. This is also why you see difference in their global
branches in prices, atmosphere, advertisement tools and even the architecture.
The localization strategy is beneficial for anticipating the changing needs and preferences of
the consumers within the industry. It also creates such operational efficiency, which enables
to absorb changes frequently (Barnes, 2008). If any changes occur in one country
McDonalds has to adjust only that country specific strategy rather than entire global strategy.
The franchise business model brought structure and organizational unity as it provides a
platform for business opportunities for individuals in emerging markets. It creates new
employment opportunities and personal growth for local people. The local employees assist in
establishing a friendly and local corporate image and adding to the success of the company.
This model also provides significant help and assistance in formulation of marketing plan for
local market (Minniti, Zacharakis, Spinelli, Rice, 2007).
Quality is the mirror of any organization, customers could judge about the organization based
on the level of the organization quality, therefore the first step to attract customers is through
quality objective which is in somehow is to guarantee that customers will return back again, in
this part McDonalds provided high quality products and services though standardize all its
branches, and therefore McDonalds obtained customers satisfaction additional to made the
operation more easy for the staff, for example McDonalds deal with over 20 bakeries to
standardize the products in all the united states in terms of color, flavor etc , the target of
standardization is not only to aim to standardize the food in all restaurants but also to reduce
the possibility of mistakes and therefore reduce costs too, another part of the quality objective
that McDonalds provided which consider as rare in front of many restaurants is providing
customers with nutrition information, thus customers can select the meal that applicable to
their

health.

Speed

is

the

core

of

McDonalds

objectives,

to

achieve

speed

objective McDonalds provide set of order channels such as drive-thru, home delivery etc,
according to McDonalds CEO McDonalds that put the fast in fast food, and its speed
continues to be a major factor in the iconic restaurant chains profits (Restaurant
news/Online). Flexibility which consider the secret of McDonalds Success in front of its
traditional competitors, McDonalds almost managed to be flexible in all the markets its
entered, the flexibility of McDonalds made kind of loyalty among customers and McDonalds
due to the changes that McDonalds made it based on the customers cultures and taste,

additional to the flexibility to supply from local suppliers of the host country, for example
McDonalds added corn soup to the food menu in China, adopted slaughter by Islamic
method in GCC countries etc, flexibility to reflect positively inside the operation through the
readiness to response to any increase in the demands.
McDonalds is one of the rare organization that succeed to balance between its operation
strategic and customer demands, McDonalds combined order-winning and qualifying factors,
in terms of order-winning which refer to the customer as key reason of purchasing the
product or service (A case of McDonalds, 2010), McDonalds as we clarified previously its
ability to be flexible for any changes based on the host county culture, in terms of the
qualifying factors which refer to that operation performance has to be above a particular level
just to be consider by the customer (A case of McDonalds, 2010), McDonalds paid attention
to the quality aspect, and strive to make all its brunches standardized, therefore McDonalds
built hamburger university to teach the franchisers how to be on the standard. Therefore
McDonalds operation process aligned with the strategic objectives successfully.

MACRO ENVIRONMENT
PEST analysis:
PEST analysis will give us deatails about Political,Economical,Sociocultural and
Technological analysis and effects of these analysis on Mcdonalds.
POLITICAL INFLUENCES:
Good relations in terms of creating jobs and tax revenue for government is a must to succeed
in any market. India is very rich country in terms of politics. The world largest democracy is
present in India. But being nationalist country they create some difficulties for foreign
entries. Good news is that trends in India are changing and young people like to eat fast food.
India is changing slowly from nationalistic society to liberal mind set up. Mcdonalds
expanded very fast in the last decade.
ECONOMICAL INFLUENCE:
Economical variables such as currency exchange,employment,Interest rate,tax ratio and need
of international supply. Most of the organisations depend on foreign supply of raw metarials
for their products making. Currency exchange also have a great impact on any organistion.
Business for Mcdonalds in USA is already established and low risked but for india high
unemployment rate,dealing in Rupees as currency and millions of people living below
poverty line is a concern for Mcdonalds but India is having a booming economy,low tax rate
and availability of labour in abundance and development of middle class society in India is a
positive sign for Mcdonalds future.
Sociocultural influences:
Culture and society has a big impact on any organisation sales. Though India is heavily
populated but still Hindus dont eat meat,Muslim only eat Halal and they dont eat pork. In
India religion has a very big impact on society. For Mcdonald it is a big concern.But in India

life style is changing,earning power is increasing,middle class is getting bigger in its size and
people like to eat outside in restaurants this has a very good impact on society.
Technological influence:
One positive benefit of globalisation was technological advancement. Although Mcdonalds
doesnt use too many complicated machines in their food production but still they need
highly competitive technology. Technology is needed for example in supply chain
management,order taking,Inventory control,easy and quick payment procedures .Use of
technology can make management more reliable,effective and cost saving in short term as
well as long term. Customers happiness after getting what they are looking for on time and in
a deciplinery way make them come over and over again. In USA Mcdonalds use very
effective and expensive technology to be in a very competitive position to their rivals. In
india as franchises they use high technology. They use very good till system,good and
deciplined order taking and well managed staff who knows the proper use of technologies
inside the store.

MICRO ENVIRONMENTAl ISSUES:


Competitive Intensity:
Competitive intensity of Mcdonalds can be determined with Porters five forces.Porter five
forces is business strategy formed by Michael E.Porter of Haward business school in 1979.he
determined five forces which actually determines attractiveness of the market and
competitiveness.these five forces are
1) Threats of new entrants
2) Threats of substitute
3) Bargaining power of customer
4) Bargaining power of supplier
5) Competitive rivalry with in organisation.
1) Threats of New Entrance:
Entry to a restaurant Business is very difficult. It is hard to make a prominent brand name.
There is high research and development costs and high cost of entry. Strong brands already in
competition make it more difficult such as Mcdonalds, Pizza Hutt, Dominos etc. New
entrants face a very high competition in the start of the business. In USA and India both
Entrance of new organisation is very difficult as explained above.
2) Threats of Substitute:
The substitutes in this industry are very high. People can choose variety of products they can
either choose Burger King, KFC, Indian Cuisine, Indian local shops and Indian Vegetarian
restaurants. The same situation is faced by Mcdonalds in USA and all over the world.
3) Bargaining power of customers:
Bargaining power of customers refers to pressure a customer can exert on a business to get
good quality of food, good customer service and low price. Bargaining power of customer in
this industry is low. As Mcdonalds provide a standard service, one price strategy and quality
of food, customers have low bargaining power throughout the world in food industry.
4) Bargaining power of supplier :

Bargaining power of buyer in this industry is low. Situation can change if the main
ingredients are not available. But with Mcdonalds simple menu and working with many
supplier, they are not facing a big threat.so the bargaining power is relatively low.
5)Rivalry with in the organisation:
Fast food restaurant industry is very competitive. The competition is so high as all the
organisations want to get hold of customer base. Food industy all over the world has the same
criteria because there are many small businesses operating in abundance and also top brands.
Mcdonalds knows about the customers taste and preferences all over the world.so they
started Mccafe (morning breakfast), so Mcdonalds is providing quality food from early
morning till late night in order to get competitive edge In the market.
COMPANY ISSUES:
Competitive Strategies:
As we know fast food industry proved to be very competitive industry.Mcdonalds from its
day first has always tried to have strong competitive advantage over its rival.This is the only
way for Mcdonalds to survive in globalised environment.Mcdonalds strong rivals
KFC,Dominos,Pizza Hut and Subway are also operating in India as well as USA.In the fast
food most important thing for some customers is how quickly you take order and ready the
meal for customer.KFC and Jumbo King are offering very quick service to customers and in
this way taking customers from Mcdonalds .Mcdonalds has tried very well to overcome this
advantage by making and readying its food as quick as possible.Mcdonalds is trying to
improve its graph for customer satisfaction and they are investing heavily through out the
world including India.mcdonalds uses Wi-Fi and they are trying to emphasise on
demographic characteristic of its customers in the area.Each month mcdonalds add some
thing special in its menu.To check Mcdonalds quality and reliability administration has
developed a very unique idea of Gapbuster visiting Mcdonalds as mystery customer.They are
expertise who comes in the form of a customer and after serving give credits scoring to the
store.Mcdonald has introduced McBreakfast from 6 am to 11 am.
Mcdonalds in its competitive strategies is emphasising to target customers in the new
urban

areas.Mcdonalds

Indian

menu

offers

very

competitive

strategy

for

Mcdonalds.Vegetarian products,Halal and non vegetarian foods for its customer is a


unique and successful idea in India.Kids like mcdonalds in India as they are giving free
toys to customers who buy happy meal deals.Mcdonalds has actively invested in
Discount vouchers given as a leaflets,newspapers,Magazines certainly is a good business
strategy and it has boosted Mcdonalds customer number,Business and sales.
One of the main competitive advantages of McDonalds is its high brand recognition. The
brand itself has become an idiosyncrasy for high quality and well appreciated goods as well
as a symbol of American Business. The affiliation of McDonalds with American business
created a great advantage. Nations with positive attitude towards the American business
applying the same attitude towards McDonalds. It is perceived as an admired food service
company
Establishing play areas for children is another advantage McDonalds utilizes to gain trust
and loyalty of its consumers.

McDonalds and its global advertising increased the visibility and name recognition of the
company which encourages consumers worldwide to experience McDonalds. These factors,
combined with maintaining the high standards of food and quality have put McDonalds on the
top of the fast food industry. The introduction of healthy food with overview of consumed
calories (salads, wraps, fruit, etc.) in the junk food chain has captivated the calorie counting
consumers and created an image of socially and environmentally responsible company. Also
because of projects like Ronald McDonalds House where families with children needing
extensive hospital care, can board for free or a minimum price a day (Ronald McDonalds
House Charities, no date).
More recently, in 2009, McDonalds added a new line of premium coffee to their menu which
led to creation of McCafe. In 2010 McCafe added to their menu Real Fruit Smoothies to
broaden their reach. (McDonalds, 2010).
The numerous awards and recognitions such as 2011 most Innovative Food Companies,
2010 Most Inspiring Brand speak for themselves.

Diversification:
Mcdonalds has diversified product range in India and all over the world. Due to diversified
nature of products Mcdonalds is famous among masses. They offer McBreakfast,Lunch and
Dinner,Coffee and many more diversified products. Now if Mcdonalds move to fully new
business for example Hotel (McHotel) will be a concern. According to guardian news moving
to totally new business will damage the image of Mcdonalds. If they are really interested they
should do a partnership with another company. As Burger King has done it. Diversification
can be revealed from Indian market.75 % menu has been Indianised. Halal food for Muslims
has been introduced. Mcdonalds happy price menu in India, the 5ps and flexible operating
platform all shows Mcdonalds to be a diversified organisation.
Organisational Structure of Mcdonalds:
Mcdonalds has a centralised organisational structure. Centralised structure means the
decision making comes from top management in the hierarchy and people on the floor are not
contributing to the decision making. The decision making system is very much Bureucratic.
In centralised structure main decisions are made by top level management. Mcdonalds all
over the world has the same structure and they have to follow all the decisions from the
parents company as they are working as a franchise. Most of the fast food chains (for
example KFC,Burger King etc) have the same centralised structure. Centralised structure has
some advantages and disadvantages. Advantages like Common policy all over the world can
easily be revealed and practised. Other parts of the Business are stopped from being too
independent and central control is easy to handle.it has great Economies of scales and
specialisation can be used greatly. Disadvantages include some time too much bureaucratic
organisation leads to extra layers in hierarchy.it can reduce motivation in staff as we go down
the hierarchy because of lack of involvement in decision making process. Customers are not
benefited some times as there is a need of quick decision making.

Standardisation Vs Adaptation:
Standardisation:
Mcdonalds has a slogan. Think globally and act locally. Mcdonalds sell standardised
product, the taste make up, ingredients, looks, weight etc. will be similar in one part of the
world to the other part of the world. Cheese Burger in United Kingdom will taste similar to a
cheese burger in USA. Think globally and act locally can be proved in India as Mcdonalds
in India has changed its menu list. Halal Burger and McVeggie burgers have been introduced
looking to the customers believes in India. Similar experience has been exercised in Middle
east and Fiji. In Middle east eating of Bacon is banned by government. Halal food is served
in Middle East. McVeggie Burger in India will taste the same in comparison to McVeggie
burger in Fiji.Mcdonalds sell standardised products. All the products should be
looking,tasting,weighing and prepared in the same way across the globe.McVeggie burger
was prepared in India after Research and Development was condcucted purely in India.
Adaptation:
Mcdonalds follows strategy of product adaptation.Mcdonalds slogan think globally and
act locally is the best example.the best example for mcdonalds adaptation strategy will be
India.Mcdonalds cannot use beef Tallow to fry the fries and burger cutlets (Cows are sacred
due to religious belief of Hindus).Bacon cannot be used in Middle east as they are Muslim
countries and it is against their religious belief to eat pork.products are tailored according to
the personal taste of the country people where it operates.Due to adaptation Mcdonalds
menu in various countries is different.
Motivation for Market entry:
Parent company of Mcdonalds USA was aware of some facts that motivated them to enter
Indian market.some of them are given below.The worlds second largest country by
population after china.Indias population is 4 times more then USA.India call itself the most
democratic nation in the world so it means all the decisions are made by parliament and not
one person or dictator who can freeze assets for a company in any kind of bad relations
emerging. Brand awareness is improving day by day, literacy rate is improving, middle class
is getting larger, economy of India is booming,Unemployment is reducing ,laws are flexible
for foreign businesses.all these facts contributed to motivation of Mcdonalds to enter Indian
fast food Market.
Modes of Market entry:
There are different ways a company can start opening their business in another country. For
example Franchising, licencing, Joint Venture, wholly owned subsidiary etc. But Mcdonalds
entry to India involved join venture and Franchising technique.
Franchising is the right a firm acquires from another firm that allows them to do particular
business activities, such as service or selling the good, under the name of
a specific firm, e.g. McDonalds.in Franchising a company follows strict rules from its parent
company. Mcdonalds have 210 stores in India. Mcdonalds all over the world has almost
85% of franchises. The benefit of franchising is that in short period a company expands its
business. The risk involved for parent company to move into another country and invest
heavily can sometimes be too risky but when local people start doing it by themselves, the
risk level is minimised and quality control is difficult with franchising.
Although Mcdonalds indian is a 50-50 joint venture company managed by indian.
Performance:

Much of retail is struggling in India but Mcdonalds has been seen unaffected and its
planning on accelerating its expansion on the Indian subcontinent. Mr Jatia who is managing
half of the Indian franchises said number of customer is jumping 10% to 15 % each month
compared to a year ahead. People of India are now relying on Mcdonalds. Mcdonalds
adaptation policy has boosted its sales. Mcdonalds annual sale throughout the world is $29
billion annually. Due to company having a customised menu in India Mcdonalds is getting
popular day by day. Performance can be measured in terms of outlets opened by Mcdonalds
in the past years.in 2010 and 2011 Mcdonalds opened 80 stores in India. In 2010 mcdonalds
sale improved by 30%.Vikram Bakshi MD Mcdonalds India said the total sale of $29 billion
doller Mcdonalds India just accounts for 0.37% of the whole sale. The potential is so high
and are expecting to get higher in future. Although Mcdonalds is facing certain problems
like roads are not in very good condition for transport,power supply shortage etc but still
sales rise and customer satisfaction shows that Mcdonalds in India is performing very well.
Short,Medium and long term strategies employed:
Strategy is a planning that is used by an organisation to achieve its goal and objectives. Short
term strategy starts from a minute to 6 months, medium account from 6 month to a year and
long term mean 5 years or more strategy. In short term Mcdonalds is trying to bring in
innovation and make customer satisfy, day to day issues are planned to satisfy customers.
New products are introduced each month.in medium term they are trying to maximise its
profit and sales.In long run Mcdonalds is planning to open new branches across India and
indian Mcdonalds sale which accounts only 0.37 % of overall sale of Mcdonald to be taken
to 0.50 percent and more in the coming years.
SWOT ANALYSIS
SWOT analysis is a strategic planning method used to evaluate strength
weaknesses,opertunity and threats involved in a project or in Business.SWOT analysis will
give us a quick review of an organisation current status.
Swot analysis for Mcdonalds in India
Strength:
Mcdonalds is a market leader in the fast food industry. Mcdonalds has a very strong brand
image. Mcdonald has expanded its business to more than 125 countries with more than 33000
outlets throughout the world. McDonalds has one competitive advantage and that is Strategic
location.In India they are located in busy shopping malls, Airports and busy drive through.
Weaknesses:
Mcdonalds has created very successful brand image but the market segment is too focused
on Kids. Mcdonalds is often related to unhealthy food and obesity. Employee turnover rate is
so high. These all are weaknesses of McDonalds in the world and India in particular.
Opportunity:
Mcdonalds can introduce healthy food consisting of low calories items. They should put
more efforts in Research and Development. Management should try finding ways to reduce
food wastage which leads to cost control. New products with different variety should be
introduced to capture the market.
Threats:
Mcdonalds is facing major competition from its rivals KFC and Burger King all over the
world. In India local curry shops are offering great challenge to mcdonalds. Company rapid
growth has made mcdonalds very velnerable to other contries economic slowdown. Press
associating Mcdonalds with obesity destroys Mcdonalds image. McDonalds in the past has
been sued for its unhealthy products. McDonalds should try and solve these problems by
investing heavily and effectively in research and development.

MARKETING MIX OR 4 Ps:


Price, Product, Place, Promotion are collectively called as product mix.In order to meet
organisational objectives product mix is considered to be very vital.it should be viewed as
coordinated and integrated package of benefits that shows the characteristics of customers
and related place.
Product:
Product is the physical product or service that is offered to a customer.as we know that
Mcdonalds is very customer oriented and all their products are customised according to the
local community.in order to succeed in market research has suggested that customers are
always looking for innovation and new products. Mcdonald is famous for its product
innovation. Mcdonalds has introduced new products, removed old products and always
looking for the better products so that customers are satisfied, McDonalds India majority of
products are vegetarian products.
Price:
Price is a very important tools which identifies how reliable and qualitative a product is when
a customer is buying something He/she first draw in his/her own mind of what the product is
worth of.If the price of a product is very low customer think quality is being promised and
price should really reflect brand and its integrity. Mcdonalds products are classified in two
categories,BA (Branded affordability) and BCV (Branded Core Value products)an example
of BA is McAllo tikka and chicken Mcgrill burgers which cost consumer 20-30 rupees. BCV
products mainly include McVeggie and McChicken Burgers that cost 50-60 Indian rupees.
Promotion:
Promotion is a way by which company tries to communicate with public and make them
aware of what the company is offering. One of the method is Advertisement. Advertisement
is conducted on TV, Cinema, Internet, magazines, Poster site, press and radio. Other ways of
promotion includes direct mail, loyalty scheme, door drops and merchandising. Mcdonalds
is unique in the way they do promotion. In order to capture the market Mcdonalds India has
promoted well to improve its sales. Although advertising is expensive but the return is so
high. Mcdonalds spends big part of its budget on promotion.
Place:
Place plays very important role in launching a product and making it successful. Mcdonalds
has expanded throughout in India Urban areas. Mcdonald is currently targeting urban areas as
we know that big part of population is living in urban areas. Place doesnt only include
physical location but it is includes all the processes that eventually leads to product ending in
customers hand. Place plays very important role in getting priority over the rivals and place
should be selected after research on the local demography, income level and customers
preferences. Mcdonalds in India chooses a particular place after long research and checking
local areas demographic characteristics, income level etc. This is the reason Mcdonalds is
very successful in India.

Value Chain Analysis

Primary Activities
1. Inbound Logistics
McDonalds purchases raw vegetables and other raw materials from its fixed, pre- defined
suppliers only, therefore by increasing capital and labour, their production will increase
proportionately. McDonalds has practiced a backward vertical integration,
by replacing most of its suppliers. It has done so for two reasons
1) To reduce costs
2) To ensure that its products are of top quality.
These suppliesinclude beef and milk to be used in its products, which it gets from its farms.
Other suppliers include local grocery stores that supply McDonalds with fresh
vegetables. Soft drinks are supplied exclusively by Coca-Cola, which is also its
ally. McDonalds supplies also include raw material such as flour, sugar, yeast,
etc.McDonalds own information: They import some beef raw materials from Australia and
New Zealand. And those plants have to meet all our same requirements that we hold our U.S.
plants to; which includes animal welfare and food safety, testing everything.
2. Operations :
McDonalds Backgrouds for Operation Management
Before the McDonalds brothers invented their fast-food operations system, some restaurants
did make food pretty quickly. These restaurants employed short-order cooks, who specialized
in making food that didnt require a lot of preparation time.
Being a short-order cook took skill and training, and good cooks are in high demand. These
speedee system, however, was completely different. Instead of using a skilled cook to make
food quickly, it used lot of unskilled workers.
The McDonalds Brothers changed the design of restaurant kitchen. Instead of having lots of
different equipment and stations for preparing a wide of variety food, the Speede kitchen had:
A very large grill where one person could cook lots of burgers simultaneously
A dressing station where people added the same condiments to every burgers

A fryer where one person can made french fries


A soda fountain and milkshake machine for desserts and beverages
A counters where customers placed and received their orders.

The Process
The mass-production process requires each restaurants chain to have a distribution network to
carry the food to every restaurant. Warehouses store enormous amounts of everything a
restaurant needs. Including foods, paper products and cleaning supplies. The warehouses the
ship supplies to each restaurant by truck. Warehousing and distribution, just like the
management of chain, is centralized rather than handled by each restaurant.
In some chains, managers track the restaurantss inventories of food, wrappers, cups, and
other necessary items. They often order everything the restaurant need from the distribution
center, which ships it to them.
In other chains, it is automated, which means, a computer keeps track of what the restaurants
have and should have on hand, or the distribution center ships the necessary items on a
regular schedule instead of waiting a request from the restaurant.
McDonalds is always keen to take the charge of crucial task of turning the company around
to meet customer demands. One of thefirst steps that it prposeshas been to inovate the process
of manufacturing and logistics.
This had been done with the view to increase efficiency of the supply chain in terms of
capacity, technology selections, and buying policies.
3. Outbound Logistics
McDonalds is committed to providing the highest quality food and superior service, at a
great value, in a clean and welcoming environment. Thats why we work with our employees,
franchisees, and suppliers to serve a balanced array of food choices and provide the nutrition
information needed for customers to make sound decisions.
At the restaurant level, McDonalds is focused on energy conservation, sustainable
packaging, and waste management. We are dedicated to innovation and improving our
operations in order to build an even more sustainable, environmentally friendly, and
profitable business. And we will continue to reoptimize our menu, modernize the customer
experience, and broaden accessibility to our brand, so that consumers will always enjoy the
maximum McDonalds experience.(
4. Marketing and Sales
McDonalds restaurants are found in 119 countries and territories around the world and serve
58 million customers each day. McDonalds operates over 31,000 restaurants worldwide,
employing more than 1.5 million people. The company also operates other restaurant brands,
such as Piles Caf.
Focusing on its core brand, McDonalds began divesting itself of other chains it had acquired
during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until
October 2006, when McDonalds fully divested from Chipotle through a stock exchange.
Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonalds sold
Boston Market to Sun Capital Partners.
Notably, McDonalds has increased shareholder dividends for 25 consecutive years, making
it one of the S&P 500 Dividend Aristocrats In October 2012, its monthly sales fell for the
first time in nine years.
Advertising
McDonalds has for decades maintained an extensive advertising campaign. In addition to the
usual media (television, radio, and newspaper), the company makes significant use of

billboards and signage, sponsors sporting events ranging from Little League to the Olympic
Games, and makes coolers of orange drink with its logo available for local events of all kinds.
Nonetheless, television has always played a central role in the companys advertising
strategy.
To date, McDonalds has used 23 different slogans in United States advertising, as well as a
few other slogans for select countries and regions. At times, it has run into trouble with its
campaigns.
McDonalds in Indonesia
The first McDonalds restaurant was founded in 1940 by two brothers Dick and Mac
McDonald, but was later bought out by Ray Kroc and expanded to the entire world.
Until in 2004, McDonalds has 30,000 restaurant worldwide with an average number of
visitors to 50 million people and visitors per day and eating houses 1,700 people.
The first McDonalds restaurant located at Sarinah in Indonesia, Jakarta and opened on
February 23, 1991. Different from most McDonalds restaurants abroad, McDonalds also
sells fried chicken and rice in a restaurant-restaurant in Indonesia.
On October 1, 2009 McDonalds turned into a Tony Jacks Indonesia but not all McDonalds
outlets. There are 13 outlets of McDonalds owned by Bambang Rachmadi changed among
others located in Sarinah (Thamrin), Melawai Plaza, Blok M Plaza, Arion, Kelapa Gading,
Sunter, Bandung Indah Plaza, Tunjungan Plaza, Soekarno-Hatta Airport, ITC Mangga Dua,
Citra Land , Gajah Mada Plaza, and Kebon Jeruk. Shortly thereafter, in 2010 Tony Jacks
Indonesia expert bankrupt and was taken by McDonalds.
5. Services
Free Wi-Fi @ McDonalds
Your favorite McDonalds meal now comes with complimentary Wi-Fi. Get some work
done, check email, connect with friendsfor free!
With free Wi-Fi at more than 11,500 participating restaurants, customers can access the
Internet using their laptops or PDAs at no charge. So grab a McCaf Latte and log onits
on us! Just one more thing to love about McDonalds.
PlayPlaces & Parties
You bring the kids, well make the party. Super-fun for the kids, stress-free for you! Weve
got this party thing down to a science: Happy Meals, cake, decorations, party favors. Talk to
your local McDonalds manager to make arrangements.Depending on your location, you can
have your childs party at a McDonalds PlayPlace for even more fun!
Support Activities
1. Firm Infrastructure
McDonalds Infrastructure is modern an sophisticated, they using the advanced IT and yet
theyre still maintaining the green activities.
Greener Than Ever
McDonalds strives to provide eco-friendly workplaces and restaurants that reflect our
sustainability goals and demonstrate environmental stewardship in the workplace.
In August 2008, McDonalds USA opened its first corporate-owned pilot green restaurant
and received Leadership in Energy and Environmental Design (LEED) Gold certification in
April 2009. Some of the green attributes of the Chicago restaurant include energy-efficiency
equipment and lighting, high efficiency plumbing fixtures, and permeable pavement and
rainwater collection for irrigation. Were using this green building lab to help refine our

green building strategy. Our second green restaurant was completed in North Carolina in
early 2010.
Green building strategies arent limited to McDonalds restaurants. Using the LEED rating
system developed for Existing Buildings (LEED EB), we recently tackled our Global
Headquarters in Oak Brook, Illinois. Our 20-year-old Campus Office Building (affectionately
known as the COB) was granted Platinum Certification, the highest level possible. The COB
is one of the oldest buildings to receive this certification.
The sustainable building enhancements made during the certification process have resulted in
clear financial and environmental benefits. Energy use is at its lowest level in five years,
helping to offset rising utility costs. Enhanced recycling efforts have diverted over 58% of
waste targeted for landfill, helping control disposal costs. And overall, our efforts are
reducing McDonalds environmental impact.
2. Human Resource Management
The work offered by McDonalds may have some positive elements, but workers are often
choosing employment at McDonalds in the context of having few other attractive options.
Almost regardless of what people think of the work itself, working at McDonalds could be
said to offer advantages for some employees who want flexible hours and are engaged in
other activities and responsibilities. For those marginalised in the labour market who have
few chances of a job elsewhere, McDonalds offers much needed work.
However, the employees dependence on McDonalds and/or their tendency to see their
employment as a short-term strategy makes them vulnerable to management manipulation.
Those with minimum interest simply leave if they do not like it, and this is clearly reflected in
high labour turnover. Perhaps they are attracted by the combination of fairly secure
employment, familiar family surroundings created by a highly paternalistic approach to
management and lots of employees of similar age or temperament. This may help to explain
how the corporation sometimes retains individuals who could probably obtain better paid and
more skilled work elsewhere. It is recruiting as means of control. As already suggested,
however, whether this is a deliberate strategy or something else is not clear.
The employment relationship at McDonalds is managed by a complete spectrum of controls,
from simple, direct and bureaucratic controls to the management of subjectivity. At one end
of the spectrum, restaurant managers are disciplined to accept tough work schedules and must
prove themselves up to the challenge of punishing schedules. Long hours and loyalty are
locked in, with young managers being persuaded not only to accept as the norm many hours
of unpaid work but also to gain a perverse satisfaction from surviving these tough and
uncompromising work routines. In addition, young managers who may or may not get similar
opportunities elsewhere in the labour market are romanced by offers of promotion and
career development. At the other end of the spectrum, more direct methods are used to
maintain control. However, this still leaves unanswered the question of how the corporation
has managed to sustain the uniformity of its employee relations practices despite major
differences across societal cultures.
3. Technology Development
Even as consumer confidence stagnates domestically and in Europe, McDonalds will focus
on modernizing restaurants, evolving the menu and engineering value, said Don Thompson,
the companys president and chief operating officer, in an earnings call on Friday.
McDonalds net income rose 5 percent and same-store sales increased 7.3 percent for the
quarter, and the brand gained market share in the United States and abroad, according to the
companys first-quarter earnings report.

The call marked a transition from McDonalds Corp. chief executive Jim Skinner, who will
retire June 30, to incoming leader Thompson, but both executives stressed that the companys
strategy going forward would remain as focused as ever on the brands Plan to Win.
Asked what he thought his legacy would be after taking over for Skinner, Thompson
responded that he would preach fundamentals just like Skinner. Thompson gave a few hints
toward McDonalds near-term strategy.
When we talk about modernizing the customer experience, technology will play a big role in
that, and so will the new look of McDonalds, he said. When we talk about optimizing the
menu, well be more focused on nutrition-based products, as well as our core items and
premium products like those coming out of Europe. Weve proven that we can scale products
and learn from our other areas of the world, and well do that at an accelerated pace.
4. Procurement
McDonalds E-Procurement System: McDonalds E-Procurement System is basically a main
reason for their successful supply chain management. It is so efficient that it provides the
backbone not only to all the logistics but the whole McDonalds supply chain management.
How McDonalds Uses E-procurement Systems Emac Digital:(Internet procurement site
designed for McDonalds Corporations 27,000 franchises) Emac Digital Company is EProcurement website which is jointly owned by McDonalds and Accel-KKR Internet Co.
It is a procurement hub launched in 2001 to allow all of McDonalds franchises across the
globe to buy everything needed to run their restaurants. From uniform to HamBurger
Aside from being faster and more convenient for franchisees, the procurement site also allow
business owners to buy supplies and materials at a discounted price, ultimately reducing costs
for McDonalds. E-Procurement allows 85% cut in costs according to McDonalds supply
chief Edwards.
Benefits For the Suppliers McDonalds works with two types of suppliers. Major Suppliers
and Small Suppliers
McDonalds Competitive Advantage
1. Cost Leadership
Supply chain: McDonalds buys supplies in bulk and, to get lower prices
Real Estate: McDonalds leases land and property they own to franchises
Marketing: McDonalds is such a well-known brand name and Ronald McDonald such
a well known mascot McDonalds has to do much less advertising than many other chains to
maintain awareness of their brand.
Strategic/predatory customer selection (see Supersize Me) Mc Donalds purposefully
aims their brands at kids who can be taught to over-eat fast food and, in addition, serves
things like ultra-fatty sauces with salads and fatty foods in general with sugar baked into
breads and often soda-only drink selections, all designed to make McDonalds customers
unhealthily addicted to compounds in their food.
2. Differentiation
McDonalds does not believe in opening its restaurant without any knowledge of the local
culture and tastes.
The company caters to a large customers market with varying tastes and thus cant afford to
introduce products without familirizing itself with provincial prefences in food. For this

reason, McDonalds distributes its products in foreign locations with the lots of franchises
who are well aware in of that works in their country. This is an exremely inteligent
distribution method because on the one hand, it doesnt create rifts between governments and
McDonalds official, and on the other hand, it helps in providing people with the kind of
products they desire. It is important to understand that Mcdonalds doesnt change its basic
product range for any country but tries to introduce certain changes in secondary products in
order to make them suitable for local tastes.
McDonalds predominantly sells hamburgers, various types of chicken sandwiches and
products, French fries, soft drinks, breakfast items, and desserts. In most markets,
McDonalds offers salads and vegetarian items, wraps and other localized fare. On a seasonal
basis, McDonalds offers the McRib sandwich. Some speculate the seasonality of the McRib
adds to its appeal.Various countries, especially in Asia, are currently serving soup. This local
deviation from the standard menu is a characteristic for which the chain is particularly
known, and one which is employed either to abide by regional food taboos (such as the
religious prohibition of beef consumption in India) or to make available foods with which the
regional market is more familiar (such as the sale of McRice in Indonesia). In Germany,
McDonalds sells beer.
Types of restaurants
Most standalone McDonalds restaurants offer both counter service and drive-through
service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive,
or McDrive as it is known in many countries, often has separate stations for placing, paying
for, and picking up orders, though the latter two steps are frequently combined; it was first
introduced in Arizona in 1975, following the lead of other fast-food chains. The first such
restaurant in Britain opened at Fallowfield, Manchester in 1986.
In some countries, McDrive locations near highways offer no counter service or seating. In
contrast, locations in high-density city neighborhoods often omit drive-through service. There
are also a few locations, located mostly in downtown districts that offer Walk-Thru service in
place of Drive-Thru.
To accommodate the current trend for high quality coffee and the popularity of coffee shops
in general, McDonalds introduced McCaf, a caf-style accompaniment to McDonalds
restaurants in the style of Starbucks. McCaf is a concept created by McDonalds Australia,
starting with Melbourne in 1993. Today, most McDonalds in Australia have McCafs
located within the existing McDonalds restaurant. In Tasmania, there are McCafs in every
store, with the rest of the states quickly following suit. After upgrading to the new McCaf
look and feel, some Australian stores have noticed up to a 60% increase in sales. As of the
end of 2003 there were over 600 McCafs worldwide.
Some locations are connected to gas stations/convenience stores, while others
called McExpress have limited seating and/or menu or may be located in a shopping mall.
Other McDonalds are located in Wal-Mart stores. McStop is a location targeted at truckers
and travelers which may have services found at truck stops.
Since 1997, the only Kosher McDonalds in the world that is not in Israel, is located in the
Abasto mall, in Buenos Aires, Argentina.
Conclusion
McDonalds restaurants are found in 119 countries and territories around the world and serve
58 million customers each day.] McDonalds operates over 31,000 restaurants worldwide,
employing more than 1.5 million people. The company also operates other restaurant brands,
such as Piles Caf.

Focusing on its core brand, McDonalds began divesting itself of other chains it had acquired
during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until
October 2006, when McDonalds fully divested from Chipotle through a stock exchange.
Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonalds sold
Boston Market to Sun Capital Partners.
Notably, McDonalds has increased shareholder dividends for 25 consecutive years, making
it one of the S&P 500 Dividend Aristocrats. In October 2012, its monthly sales fell for the
first time in nine years].

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