MC DONALDS

McDonald's is the world's largest chain of hamburger fast food restaurants, serving around
68 million customers daily in 119 countries across 35,000 outlets.Headquartered in the
United States, the company was founded in in 1940 as a barbecue restaurant operated by
Richard and Maurice McDonald. In 1948, they reorganized their business as a hamburger
stand using production line principles. Businessman Ray Kroc joined the company as a
franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers
and oversaw its worldwide growth.[7]
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation
itself. The McDonald's Corporation revenues come from the rent, royalties, and fees paid by
the franchisees, as well as sales in company-operated restaurants. In 2012, the company had
annual revenues of $27.5 billion and profits of $5.5 billion. According to a 2012 BBC report,
McDonald's is the world's second largest private employerbehind Walmartwith 1.9
million employees, 1.5 million of whom work for franchises.
McDonald's primarily sells hamburgers, cheeseburgers; chicken, french fries, breakfast items,
soft drinks, milkshakes, and desserts. In response to changing consumer tastes, the company
has expanded its menu to include salads, fish, wraps, smoothies, fruit, and seasoned fries.
Business model
McDonald's Corporation earns revenue as an investor in properties, a franchiser of
restaurants, and an operator of restaurants. Approximately 15% of McDonald's restaurants are
owned and operated by McDonald's Corporation directly. The remainder are operated by
others through a variety of franchise agreements and joint ventures.
The McDonald's Corporation's business model is slightly different from that of most other
fast-food chains. In addition to ordinary franchise fees and marketing fees, which are
calculated as a percentage of sales, McDonald's may also collect rent, which may also be
calculated on the basis of sales. As a condition of many franchise agreements, which vary by
contract, age, country, and location, the Corporation may own or lease the properties on
which McDonald's franchises are located. In most, if not all cases, the franchisee does not
own the location of its restaurants.
The United Kingdom and Ireland business model is different from the U.S, in that fewer than
30% of restaurants are franchised, with the majority under the ownership of the company.
McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois.

In other countries, McDonald's restaurants are operated by joint ventures of McDonald's

Corporation and other, local entities or governments.
As a matter of policy, McDonald's does not make direct sales of food or materials to
franchisees, instead organizing the supply of food and materials to restaurants through
approved third party logistics operators.
According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the
U.S. have at some time been employed by McDonald's. Employees are encouraged by
McDonald's Corp. to maintain their health by singing along to their favorite songs in order to
relieve stress, attending church services in order to have a lower blood pressure, and taking
two vacations annually in order to reduce risk for myocardial infarction.
Fast Food Nation also states that McDonald's is the largest private operator of playgrounds in
the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The
selection of meats McDonald's uses varies to some extent based on the culture of the host
country.
Advertising
Main article: McDonald's advertising
McDonald's 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 FIFA
World Cup and Olympic Games. McDonald's 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 company's advertising strategy.
To date, McDonald's 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. McDonald's was criticized for illegally hanging banners on flag poles and
blocking the bicycle path in South Korea.
Strengths
1.

Largest fast food market share in the world. McDonalds is the largest fast food
restaurant chain in terms of total world sales (8%). It is the second largest outlet operator with
more than 34,000 outlets, serving 69 million consumers every day in 119 countries.

2.

Brand recognition valued at $40 million. Companys brand is the most recognized
brand in fast food industry and is valued at $40 billion. McDonalds is also famous by the
Ronald McDonald clown.

3.

$2 billion advertising budget. McDonalds spends on advertising more than the next
4 fast food restaurant chains combined.

4.

Locally adapted food menus. The fast food chain is operating in many diverse
cultures where tastes in food are extremely different than those of US or European
consumers. Thus ability to adapt to local tastes is one of McDonalds strengths.

5.

Partnership with best brands. McDonalds offers only most popular brands in its
restaurants, such as: Coca Cola, Dannon Yogurt, Heinz ketchup and others.

6.

More than 80% of restaurants are owned by independent franchisees. Therefore,

McDonalds can focus more on perfecting its serving system and marketing campaigns.

7.

Children targeting. The business successfully targets very young children through
offering playgrounds, toys with its meals and advertisements.
Weaknesses

1.

Negative publicity. McDonalds is heavily criticized for offering unhealthy food to its
customers, stimulating obesity and strong marketing focus on very young children.

2.

Unhealthy food menu. Although McDonalds tries to introduce healthier choices in

its menu, the menu is largely formed of unhealthy meals and drinks. Such menu offering
prompts protests by organizations that fight obesity and hence, decreases McDonalds
popularity.

3.

Mac Job and high employee turnover. Mac Job is a low paid and a low skilled job,
which is often seen negatively by its employees. This results in lower performance and high
employee turnover, which increases training costs and add to overall costs of McDonalds.

4.

Low differentiation. McDonalds is no longer able to substantially differentiate itself

from other fast food chains (at least not enough to gain some market share) and opts to
compete by price rather than by additional features.
Opportunities

1.

Increasing demand for healthier food. While demand for healthier food increases,
McDonalds could introduce more healthy food choices in its menu and reverse its weakness
into strength. McDonalds is trying to seize such an opportunity and soon plans to open only
vegetarian restaurant in India.

2.

Home meal delivery. McDonalds could exploit an opportunity of delivering food to

home and increase its reach to customers.

3.

Full adaptation of its new practices. McDonalds has redesigned its logo and
restaurant design in 2006. In addition, it has introduced some new practices. In a result,
remodeled restaurants have seen 8-9% higher than average market growth. McDonalds
should finish remodeling all of the restaurants and adapt the best practices in them as soon as
possible.

4.

Changing customer habits and new customer groups. Changing customer habits
represent new needs that must be met by businesses. So far, the company has been successful

in introducing its McCafe, McExpress and McStop restaurants to meet the changing customer
habits and the needs of previously untapped customer groups.
Threats
1.

Saturated fast food markets in the developed economies. The fast food market in
the developed countries is already overcrowded by so many fast food restaurant chains and
this already proves to be a threat to McDonalds as it barely grew through 2012.

2.

Trend towards healthy eating. Due to government and various organizations

attempts to fight obesity, people are becoming more conscious of eating healthy food rather
than what McDonalds has to offer in its menu.

3.

Local fast food restaurant chains. Local fast food restaurants can often offer a more
local approach to serving food and menu that exactly represents local tastes. Although
McDonalds does a great job in adapting its own menu to local tastes, the rising number of
local fast food chains and their lower meal prices is a threat to McDonalds.

4.

Currency fluctuations. The business receives a part of its income from foreign
operations. The profits that are sent back to US have to be converted into dollars and may be
affected by the exchange rates, especially when the dollar is appreciating against other
currencies. In 2012, McDonalds profit was largely affected by appreciating dollar.

5.

Lawsuits against McDonalds. McDonalds has already been sued for many times
and lost quite a few lawsuits. Lawsuits are expensive as they require time and money. And as
McDonalds continues to operate more or less the same way, there is high probability for
more expensive lawsuits to come.
INTERNAL ENVIRONMENT
McDonalds Structure:
McDonalds has a functional structure which serve many product lines in the same industry.
Its chain of command is as follow: Chief Executive
Operations
Development
Finance
Marketing
Human Resources
McDonald's are structured along functional lines. Their Chief Executive oversees five major
areas of activity:

Operations (equipment and franchising)

Development (property and construction)
Finance (supply chain and new product development)
Marketing (sales marketing)
Human Resources (customer services, personnel, hygiene and safety)
Culture:
McDonalds is all about corporate culture. From its Hamburger University (where managers
and assistant managers are trained) to its vision statement of Quality, Service, Convenience,
and Value (QSCV), McDonalds corporate culture is a shared value system that forms the
basis of all company decisions.

A relatively enduring, interdependent symbolic system of values, beliefs, and assumptions

evolving from and imperfectly shared by interacting organizational members that allows them
to ascribe common meanings to stimuli encountered in the organizational context; these
functions are accomplished through the mediation of implicitly and explicitly rules that act as
cultural warrants.
McDonald's vision statement creates the values by which are made all managerial and
corporate decisions. These guiding values are exhibited in all aspects of business, from social
responsibility and diversity to training and policies. McDonalds operates four Hamburger
Universities in four countries.
McDonalds has and provides the best employees-business relationship via providing an equal
opportunity employer. As an equal opportunity employer McDonald's ensures that employees
and job applicants are selected, trained, and promoted without discrimination to race, gender,
sexual orientation, age or disability.
The company promotes their employees based on their relevant skill, talents, and
performance. In support of this McDonald's promotes and sustains a working environment,
which is free from unlawful discrimination, harassment and bullying.
Employees are regarded as members of a team where everyone's opinion is valued and
respected. The Human Resources department monitors the effectiveness of the discrimination
policies at regular intervals and takes corrective action as necessary to ensure that they being
complied with Employees who feel that they have been treated unfairly are encouraged to use
the remedies outlined in the Company's handbooks.

The Ronald McDonald House charity offers thousands of sick children in approximately 48
countries hope and it inspires courage. They say laughter is the best medicine and nothing
makes people smile more than a Happy Meal.ourworld-policy-hero
At McDonald's we recognize our responsibilities to protect and preserve the environment for
future generations to come...
Our goal is simple, is achieving a continuous environmental improvement across all areas of
our business.

Litter
McDonald's provides trash cans outside every store all around the world.
food-fries
Waste
Used cooking oil represents 10% of the restaurant total waste, and is recycled into biodiesel,
which our delivery bikes runs on.
food-saladsplus
Packaging
For the salads containers McDonald's replaced them with a paper card base; saving nearly 69
tones of plastic purchased by the firm.
Energy
All our restaurants uses low energy lampsrestaurants-whatson
Resources
Suppliers:
Meat: from Brazil in bulks and then processed in Egypt.
Potato: Farm frites
Vegetable: Egyptian farms
Dairy: Egyptian farms
Bread: Egyptian suppliers
Assets:
60 restaurants

Delivery Motorcycles
Office equipment
Manufacturing plants
Restaurant equipments
Skills & Knowledge:

Employees are trained on the same values and are given the required skills to achieve
company's success.
EXTERNAL ENVIRONMENT
Natural environment:
McDonalds doesn't supply its franchises from the headquarters in fact it treats every franchise
as its own operating business that will order it's supplies from the suppliers they want taking
into consideration the quality assurance this could be based on the country itself or from
imported goods.
For McDonalds Egypt they order nearly 92% of their supplies from Egyptian producers
whom produce the supplies in Egyptian land because Egypt is considered to be a good
agriculture region for its good climate and having the Nile River.
Potato: Farm frites
Vegetable: Egyptian farms
Dairy: Egyptian farms
Bread: Egyptian suppliers
Societal:
Political:
Taxes before 2005 were 40%, after 2005 and until now it is reduced to 20% this encouraged
McDonalds to expand into what it is now 60 Branches and rising.
Economical:
Inflation has a very huge impact on McDonalds Egypt as prices are increasing and people
have low income this leads them to spend money on cheap products, McDonalds has to
increase its prices because it's supplies are becoming more expensive.

The economic crises has also affected McDonalds because people are saving more and
spending less and as McDonalds is not considered as a need and people have many other
cheap substitutes such as Amo Hosney and Momen, McDonalds sales are reduced.
As McDonalds has a high unemployment rate it is not hard to find employees because
McDonalds has a training center that trains them and candidates don't need to have special
skills or certificates to work at McDonalds.
Socio-culture:
As McDonalds operate in many different countries it has to take into consideration their
beliefs and traditions.
It introduces new products besides the standard menu that suits every culture for e.g. in the
Middle East MC Arabia and in India Mc Panton.
McDonalds also cares about the factors that could offend each culture for e.g. a state in USA
considers the red color in McDonalds logo as evil therefore McDonalds has introduced the
BLUE color in the logo.
Technological:
McDonalds uses new technology in cooking and preparing the food to reduce the fats and
cholesterol in nutrition.
It has also introduced new technology to reduce costs (waste) and increase production
'efficiency'.

STRATEGY ADOPTED
. Mcdonalds starts in India mcdonalds entered India in 1996.The first mcdonalds restaurant
was opened on october 13th at basant lok in vasant vihar. mcdonalds in India is a 50-50 joint
venture between connaught plaza restaurants and hard castle restaurants which are owned
and managed by vikrambakshi and amit jitia respectively connaught plaza restaurants
operates in north India whereas hard castle restaurants operates in western India. after
opening their outlets in various metro cities, the company is now trying to expand in cities
like Pune and Jaipur also, but, the Indian consumers avoid burgers made from beef and pork
which is taboo according to their religions. so in order to evade this problem the Indian
menus of mcdonalds was indianised and specifically design in such manner that it can boost
its products to indian consumers, the menu includes chicken burgers, veg burgers, veg pizzas,
happy meal for childrens, beverages and deserts. Today there are 79 outlets in north-east
India and more than 53 outlets in south-west India. mcdonalds franchise model raymond kroc
vikram bakshi amit jatia mission statement"mcdonalds vision is to be the worlds 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." marketing

strategies of mcdonalds business strategy franchise modle as per franchise model of

mcdonald only 15% of the total number of restaurants are owned by the company. The
remaining 85% is operated by franchises. the company follows all the framework of training
and monitoring of its franchises to ensure that they achieve good quality service,cleanliness
and value forthe money offered by the company to its customers product consistency- by
developing a sophisticated supplier networked operation and distribution system, the
company has been able to achieve consistent product taste and quality across the nations of
the world act like retailer think like a brand- mcdonalds focuses not only on delivering sales
for the immediate present, but also protecting its long term brand reputation.Strategy as per
indian market re-engineering the menu-mcdonalds thinks according to the customers tastes,
value systems, lifestyle, language and perception.globally mcdonalds was famous for its
hamburgers which are prepared from beef and pork burgers. but, most indians religion does
not allow them to consume beef or pork. so in order to satisfy demand as per Indian
preference, mcdonalds came up with chicken, lamb and fishburgers to suite the indian diet.the
vegiterian customer-india has a huge population of vegetarians. to satisfy this customers
demand, the company came up with a completely new menu of vegetarian items like
mcveggie burger and mcalootikki. the separation of vegetarian and non-vegetarian sections is
maintained throughout the various stages.example of veg burgers: mcveggie mcaloo tikki
segmentation, targeting and positioning mcdonalds uses demographic segmentation strategy
with age as the parameter. the main target segments are children, youth and the young urban
family. if they take children into consideration, children are more attracted towards toys and
delicious meals including todays youth prefer such places for their entertainment and the
urban families select mcDonalds on various occasion like birthday party, treat to their
children etc.