McDonalds

BACKGROUND:

McDonalds, the worlds largest fast food chain,

has over 34,000 restaurants across 119 countries. The
company was founded in 1940 in the United States as a
standalone barbecue restaurant. It was started by Richard and Maurice McDonald, who
later revolutionized the companys business model using production line principles to
set up hamburger stands. In 1955, businessman Ray Kroc joined the team and started
franchising restaurants and improving company return on capital. Today, McDonalds
serves nearly 70 million global customers daily.

AREAS OF CONSIDERATION:

SWOT Analysis of McDonalds

Strengths
McDonalds is a well established and growing business. It has efficiently handled to
end up huge amount of earnings every year therefore it has adequate number of
investors. The adequate number of investors, invest largely and help McDonalds
maintain its competitive advantage. McDonalds is a well and great funded company that
has the capability to cost extremely low on its products and end up a higher benefit.
Other companies that are restricted on resources cannot charge low, as they have to
fulfill their costs.
McDonalds has a reputed name amongst competitors in the food industry because of
the quality of food and service.
The McDonaldss logo is one of the most recognized logo in various countries,
specially amongst children.
McDonalds has kept the quality of its services standardized and the certain quality
measures are followed to keep its food products hygienic and service quality of high
standards.
McDonalds was the one first food outlet that provided its customers with nutritional
facts on their menus
McDonalds engages in many projects to help people and therefore considered as a
socially responsible firm
McDonalds along with its focus on continuously improving its food quality, also focuses
on training its employees and improving their skills, by training their staff they better
cater to their customers achieve customer satisfaction.
 McDonalds gives importance to cultural and regional barriers while deciding the food
menus. Therefore, has been successful in most of the countries.
Weakness:
Selling junk food at low price has pulled McDonalds into negative press over the years.
McDonaldss advertisements focus mainly on targeting kids. Other target groups are
ignored in their advertisements.
McDonalds has outlets worldwide and due to the adequate franchising agreements
they face quality issues at times.
McDonalds has a high initial cost.
McDonaldss sales largely depend on peoples disposable income. When the economy
fluctuates, people disposable income and also their spending pattern
Changes, hence McDonalds drop out on revenue.
McDonalds often gets a lot of complaints because they provide only inorganic and
processed food products.
McDonalds every year fire many employees from their restaurants and has a high
employee turnover.
McDonalds spend a lot on training of employees which results in high cost and often
reduces the total profit.
Opportunities:
McDonalds can expand by providing organic food line for the people who are health
conscious.
McDonalds could expand by offering menu which caters to all the individuals.
McDonalds could offer various discount deals to attract more customers such as
promotions and seasons discount to beat its competitors.
McDonalds could attract attention by arranging or sponsoring various events for
children and adults.
McDonalds could provide additional services, such as free internet to attract and
maintain its customers.
McDonalds in order to become environmental friendly can use packaging material that
can be recycled later.
McDonalds in order to maintain its image of socially responsible firm can do more to
help people around
McDonalds could further expand by opening outlets to cover untapped areas.
THREATS
McDonalds sales largely dependent on the economy of a country. Therefore, if a
countrys economy faces recession, it also tends to have a bad impact on McDonalds
sales volume.
McDonalds is facing huge competition from the new emerging restraints and organic
food outlets
If corrective measures are not taken, then the negative press could have a significant
impact on McDonalds.
As more people are becoming health conscious they people would not want to go for
junk food, once they know its adverse effects.
McDonalds also faces competition in various countries by the local food outlets there.
By looking at the SWOT Analysis of McDonald competitors can clearly comprehend
what you are up against. Competitors should use the analysis wisely to realize their
weak areas, enhance their own strengths accordingly, understand how to handle the
threats and use the opportunities. If the SWOT analysis is successfully done then the
competitors even have the opportunity over come obtain multinationals like PepsiCo.
Also, PEST Analysis is done to understand impact of external factors on your business.
It is an analytical tool for strategic business planning. It covers Political, Environmental,
Social and Technological factors that affect your business.
STATEMENT OF THE PROBLEM:
7S Analysis of Mcdonalds
Seven S Strength Weakness
Strategy Mcdonalds concentrates Extreme rivalry within
on quality along side with industry
good customer service
Structure McDonald uses freedom Different regulation and
within the frame work not structure is needed in
hierarchy where as another country
Starbucks has flat structure.
System both has good internal Product development
communication and sector can improve
customer complaints
handling system

Skills Staffs has the knowledge of Entrepreneurial and

IT and media sector leadership can be
motivated
Style Innovative, flexible and Maintaining
team orientated. competitiveness and
cooperative
Staff 191000, full time Less number employees in
employees of comparison
Starbucks and good
training
and rewards, good level of
motivation

Shared values Mcdonalds have distinct

values

McDonalds PESTEL analysis involves the analysis of potential impact of these factors
on the bottom line and long-term growth prospects
Political Factors

McDonalds operates in over 100 countries, so its political exposure is all over the
board. Generally, McDonalds, like any other restaurant, has to comply with government
regulations pertaining to health and hygiene. Some governments have been pressuring
the fast food industry, because fast food has increasingly been seen as junk food,
leading to obesity, cardiovascular difficulties and high cholesterol. Moreover, the current
tumult in relations between the United States and Russia may threaten McDonalds
ability to function and turn a profit in the Russian Federation.

In general political factors do not affect companies as much .Only the companies are
obliged to pay taxes like sales tax or payroll tax to the government. Like any other
business, McDonalds is also obliged to pay these taxes .These tax obligations are
different in each country. But in countries where there are strict consumer protection
laws, companies have to make sure that the quality is maintained and they deliver what
they claim.

On countries where consumers laws are that strong McDonalds enjoys an added
advantage there but in countries like US, McDonalds has to face high cost in forms of
lawsuits and litigations with a breach of quality of a service.

The governments role is immensely important. It is because the government policies

have a deep effect on the performance of the brand. Whether it is the trade related
regulations or taxes, all impact the business environment of a nation. In nations where
the business environment is heavily regulated, the situation for these brands is difficult.
This is the situation in Asian nations particularly. China and India have stiff laws that
make it difficult for the foreign brands to operate profitably.

New trade agreements have come which can impact a brands performance
positively or negatively. Trade agreements like NAFTA might make it easier for the US
based brands to do business in the member nations. Apart from these there are
government made policies that may make it easy or difficult for the brands to do their
business. Health policies of the government too have an impact on the performance of
fast food brands. It is not just the finance related regulations but also the food and
health related regulations that affect McDonalds sales and profits globally. Political
changes occurring in the Asian countries can sometimes have worse than desired
impact on the performance of the international brands. These countries are less open to
foreign investment and foreign brands which makes the situation even difficult.

In McDonalds case, the most significant political external factors are as follows:

1. Increasing international trade agreements (opportunity)

2. Pending tax reform (opportunity)
3. Evolving public health policies (threat and opportunity)

McDonalds has the opportunity to expand its business based on improved

international trade, which can enhance global supply chains. McDonalds also has the
opportunity to reform its practices and strategies to lessen the impact of taxation on the
business without violating the law. However, public health policy increasingly tends to
discourage people from consuming fast foods from firms like McDonalds. Nonetheless,
the company has the opportunity to address this external factor by improving the
healthfulness of its products.

Economic Factors

Economic factors are of paramount importance to McDonalds, especially

considering that it operates in over 100 countries. The decision whether to import raw
materials or buy them locally is one important factor; another is tax rates. How much are
tariffs on imported raw materials? How much are foreign corporations taxed? What is
the unemployment rate, and how much are unemployment taxes in a given country?
How much severance pay must an employer pay an employee upon termination?

Economic factors play an important role in operations of a company. If an economy of a

country is doing well, the business will flourish specially those producing luxury goods
but if an economy faces recession these business will face negative impact on their
sales.
McDonalds falls in the same category. Their sale is largely dependent on economy of
country. If the economy does well, people will have more disposable income and will
spend more in consuming food items from McDonalds. Also, McDonalds imports much
of its raw material from other countries. Exchange rate fluctuations will also affect the
operations of the company.

Its most important when the companies are operating in a global environment.
McDonalds is also affected heavily by the economic environment. It is not just about the
local economies of the nations in which it operates but also the world economy that
affects the brands performance. The world economy was through a deep recession a
few years ago. Now, things have started getting better. It is why McDonalds
performance has also improved. It is doing better since 2015. The US economy has
grown .

In US, McDonalds has shown improved performance with improved economic

conditions. However, globally the brands performance has continued to improve but for
the strengthening dollar. A stronger dollar has had a bad impact on the brands profits.
Thus, economic forces have a direct impact on the financial performance of the
economy. With improved economic conditions, it is going to improve further. In the
coming days, if dollar weakens, the financial performance of fast food brands like
McDonalds could get better.

In McDonalds case, the following are the most notable economic external factors:

Slow but stable growth of the U.S. economy (opportunity)

Stable but risky European economies (threat)

Slowdown of the Chinese economy (threat)

McDonalds has the opportunity to grow, even slowly, in the American economy, which is
the firms biggest market. However, the current economic conditions in Europe could
threaten McDonalds growth in the region. Also, the slowdown of the Chinese economy
threatens the companys growth in Asia.

Socio-Cultural Factors

Evolving lifestyles can have an effect on sales performance. People increasingly are
seeking more sophisticated fare when they eat out. Hamburgers and fried potatoes are
not as special as they once were. Moreover, while people in western countries such as
the United States may enjoy hamburgers and French fries, people in Asian countries,
for example, prefer rice. A few years back, McDonalds promoted a rice burger in China;
it is now promoting rice for dinner in that nation.

Social factors are very important while making strategic business decisions.
Culture, values, norms and the living style of people all affects the operations of a
company.
McDonalds has various outlets in different countries. Each country has its own
culture and McDonalds makes sure that the cultural and religious barriers are kept in
mind while deciding the food menus at these different outlets. For instance the
existence of meat in food menus is considered offensive in India by some Hindu
religious groups. McDonalds has launched special vegetarian meals to cater to that
market.
Also McDonalds has the image of a socially responsible firm because of their
involvements in projects to help people like they announced backing to the rainforest
Alliance. But in some countries where there is anti American feeling among the people,
McDonalds sales has been affected because of people boycotting American goods.
The importance of social factors is important to be considered to analyse the
performance of any business. There are so many social factors like the social trends,
lifestyle changes and many other factors which have a direct impact on a brands
performance. Particularly, changing tastes of the consumers and lifestyle changes can
drive sales up or low. Customers are growing increasingly health conscious. It requires
brands like McDonalds to have a menu that suits their preferences. Millenials are both
health and price conscious. To drive its sales and profits up, McDonalds needs to focus
on them and the kind of food they want.
Currently, McDonalds Menu is so complex and made of such fat recipes that its
franchisees have grown frustrated. A slimmer menu with low calories items can make
McDonalds more popular among the millennial customers. Health is a very important
factor that any food brand has to consider. In the last decade, due to growing obesity
around the world, the societys focus has been on low calorie diet. They do not want
calorie heavy burgers or colas. Apart from it McDonalds should target the right
segments in the society. Its target market is mainly made of the young people from the
middle class.
In McDonalds case, the most significant sociocultural external factors are as follows:

1. Widening wealth gap (opportunity)

2. Increasing cultural diversity (opportunity)
3. Healthy lifestyle trend (threat & opportunity)

Based on the external factor of the widening wealth gap, McDonalds has the
opportunity to grow because the companys target consumers are mostly from medium
and low-income households. Also, McDonalds has the opportunity to improve its
products mix to satisfy a more diverse target market. However, the healthy lifestyle
trend is a threat because many of McDonalds products are often criticized for their
negative health effects. Nonetheless, the company has the opportunity to improve the
healthfulness of its products.

Technological Factors

While technology may seem to play a very limited role in the fast food industry,
nothing could be further from the truth. In fact, high technology helps organizations
improve their management and productivity, while reducing wasted time and resources.
It can help with scheduling, ordering, forecasting sales and foot traffic, and easy
customer payment for food. Technology can also be used for easy, inexpensive
advertising on the Internet, providing Wi-Fi and even computing devices to satisfy
customer needs.

McDonalds mainly markets its products through television advertisements and

billboards. There are claims that McDonalds only targets children in their
advertisements. This is apparent in the TV commercials and the play spots and toys,
further proves this actuality. McDonalds also uses animated depictions of their character
like Hamburglar and Grimace and to attract children.
Other advertising strategy that McDonalds use is employing popular celebrities to
promote their products. Like the McDonalds worldwide loving it campaign is endorsed
by the Like .Moreover, the operations of McDonald's have altogether been mixed with
new technology. Management of value chain and inventory system of the organization
takes into account simple installments for their suppliers and different merchants which
the distinctive stores in different markets. The infusion of technology in the operations of
McDonalds adds quality to their items. The improved inventory system as well as the
supply chain enables the organization to work in a global context.
The growing importance of technology for the business world is well known.
Technology is virtually everywhere. It is at the counter; it is inside peoples pockets.
Technology enables everything in the modern world from sales to customer service.
Technology can amplify the power of any brand. It can increase its brand power.
Technology is just as important for McDonalds too. Whether it is marketing, advertising,
sales or even customer service, in all aspects technology accelerates the brands
performance. Customers place orders and make payments online. They also track their
orders online and make payments from their smartphones. Companies have developed
smart apps that customers can use to shop from their favorite brands .
Apps have become especially famous among the companies to attract customers
and sales. They have also become a great tool to provide extra ordinary customer
service. Any brand can reach millions of customers and engage them using the social
media. The brands like McDonalds have a huge line of fans and followers that follow it
on the social media. Other big brands have also developed great social media
strategies to engage their customers. These strategies play a major role at attracting the
millennial customers. Automation has also made these brands more efficient with
customer service and service delivery. Not just this, technology is also being used in the
area of research and development to grow a brand and its number of followers.

McDonalds must address the following technological external factors:

1. Moderate R&D activity in the industry (opportunity)

2. Increasing business automation (opportunity)
3. Increasing sales through mobile devices (opportunity)

McDonalds has the opportunity to increase its research and development

investments to improve business effectiveness and efficiency. Also, McDonalds can
apply more automation to maximize productivity, based on the external factor of
increasing business automation. Furthermore, McDonalds can improve its mobile
services to tap more consumers via its website or mobile app.

Environmental Factors

Today more than ever, people care about protecting the environment. They care
about problems such as air and water pollution, and the effects waste packing are
having on the environment. A few years ago, McDonalds found itself in the crosshairs of
environmentalist wrath over the polystyrene packaging it was using for its sandwiches.
With over 60 million people buying food from McDonalds daily, that was a great deal of
polystyrene waste packaging finding its way into landfills. McDonalds responded to
criticism by phasing out polystyrene in favor of paper-based packaging, which breaks
down into organic ingredients much more quickly in the environment.

All around the globe, governments are now focusing on environmental protection.
The focus is now on sustainability. It is not just a trend but a change with a long term
impact. The focus is not just on brands but on their supply chains too. Brands like
Starbucks and McDonalds are focusing on having environment friendly and sustainable
supply chains. The environment friendly brands also have a larger customer base. Such
brands are more popular among their customers. Many of such brands that did not
focus on their environmental liability have suffered a loss of reputation. It is why all the
major brands have a well-developed CSR policy to handle their environment related
concerns. Environment is a concern for all. McDonalds too focuses on framing policies
that are more environment friendly.

In McDonalds industry, the following are the most significant ecological external factors:

1. Rising interest for corporate environmental programs (opportunity)

2. Increasing emphasis on sustainable business strategies (opportunity)
3. Climate change (threat)
 McDonalds can expand its corporate social responsibility strategies to reach even
high performance in addressing environmental concerns. However, climate change
remains a threat because of its negative effects on farms and, thus, McDonalds supply
chain.

Legal Factors

Regulation is always the biggest concern to a company. As a company in the fast

food industry, McDonalds must adhere to many legal requirements, such as the labor
and employment law, corporate law and tax requirements, to name a few.

Law too has a major impact on the businesses around the world. The legal
environment of a nation has a deep effect on how well the businesses do there. If the
legal environment is relaxed, the companies do better. The burden is less in such
environments. Compliance is an important factor. There are several nations where
bureaucracy and red tape make it difficult for the brands to operate profitably. When
compliance becomes the bigger issue, brands find their focus shifting. It is why in many
nations where the laws are complex, foreign brand find it difficult to make an
investment. Indian laws are not very open towards FDI (Foreign Direct Investment).

If the legal environment of a nation is favorable brands operate both safely and
profitably. Otherwise taxes and compliance related factors can make it so difficult that
the brands find it impossible to do business profitably. Slowly, the Asian countries have
started relaxing their laws to invite foreign brands. Such an environment will make it
easier for brands like McDonalds to earn their profits and deliver their services. Poor
state of law also leads to the difficulties. Several nations still do not have well
development employment laws. In such environments employees may find themselves
at the receiving end. This is not very good for the big brands either since they will
experience a high turnover rate.

The most significant legal external factors for McDonalds are as follows:

1. New legal minimum wage levels in the U.S. (threat)

2. Local health regulations in workplaces and schools (threat)
3. Animal welfare regulation (threat & opportunity)

McDonalds faces the threat of higher minimum wages, which lead to higher costs
and prices. Also, local health regulations impacting food service in workplaces and
schools could reduce the companys revenues from these areas. In addition,
McDonalds must address animal welfare regulatory effects on its supply chain. For
example, the company can implement new policies to ensure animal welfare among
meat producers.
OBJECTIVES:
1.Tomaintaining product and service standardization,tastes and preferences,
when developing its menu and engaging in marketing efforts.

ALTERNATIVE COURSES OF ACTION:

1. McDonalds competitive advantage is based on the following points:

Cheat prices is McDonalds main competitive advantage. The company is

engaged in an extensive utilization of economies of scale to achieve the
cost advantage.
True to fast food format of its restaurants, McDonalds is famous for the
speed of customer service without compromising the quality of the
service.
Universality of the taste to a great extent represents another base of
McDonalds competitive advantage. Big Mac tastes almost all over the
world due to the use of the same ingredients in the same quantities and
application of the standardized ways of cooking around the globe. Such a
consistence in taste has positive implications on consumer loyalty.

It is important to note that McDonalds competitive advantage based on costs can be

difficult to sustain in long-term perspective, since new competitors may emerge with
access to cheaper resources.

1. How McDonald's Makes its Money.

McDonald's differentiates four markets; U.S., International Lead Markets, High Growth
Markets and Foundational Markets and Corporate. Each segment accounts for 33.5%,
29.3%, 25% and 12.1% of revenues respectively.

U.S. the Company's largest segment with revenues of $8.3 billion in 2016.
International Lead Markets established markets such as Australia, Canada,
France, Germany, the U.K., and similar. This segment had $7.2 billion in
revenues in 2016.
High Growth Markets markets McDonald's believes have a higher growth
potential including China, Italy, Korea, Poland, Russia, Spain, Switzerland, the
Netherlands, and similar. This segment had $6.2 billion in revenues in 2016.
Foundational Markets & Corporate the remaining markets. Corporate activities
are also reported within this segment, and total revenues were $3 billion in 2016.
 Revenues were down across the board last year compared to 2015, something
the company said was due to re-franchising and foreign currency translation.

Franchises

McDonalds has notoriously strict criteria for its franchisees (net worth, liquidity
etc.). Franchisees are also responsible for paying salaries, ordering supplies and paying
rent/owning the premises. In return, McDonalds provides them with an almost
guaranteed moneymaker. About 85% of restaurants are owned by franchisees, the rest
by the corporation itself. The chain is nearing the end of a three-year "re-franchising"
period of which the goal is to be 95% franchised by the end of 2017.

Leadership

The company's net income in 2016, was $4.7 billion, which is up some $200
million from the previous year. In 2015, for the first time since the McDonald brothers
sold their interest in the business to Ray Kroc, the company had something of a
management crisis. Chief executive officer Don Thompson, a McDonalds lifer and the
hand-picked successor of legendary boss Jim Skinner, was sent packing barely two
years into his tenure. Not only did annual income fall under Thompson, but the stock
price stayed constant despite huge jumps in the Dow.

Curiously, if not coincidentally, the signature accomplishment of Skinners leadership

was turning around the companys fortunes by slowing expansion. Today, the general
opinion is that the chain is proliferating too quickly on its home turf. Forty percent of
McDonalds restaurants are in the United States and per-store sales shrinking to the
point where one of the most desirable properties in all of franchising is in danger of
becoming just another chain.

In April, three other key executives the chief marketing officer, the vice president of
menu strategy and the vice president of digital were replaced. Most recently in May,
CEO Steve Easterbrook announced that the company would partner with UberEATS for
home delivery across the U.S. The partnership is part of a strategy to keep up with
current trends, and the newer generations prefer home delivery over pickup,
Easterbrook said.

ANALYSIS OF ALTERNATIVE COURSES OF ACTION:

1. McDonalds mission is evaluated 2.2 points out of 4.5, indicating an average

level. The statement lacks following components: products and services,
technology, concern for public image and concern for employees. McDonalds
mission doesnt mention any of the values used in our evaluation framework, but
 provides their values separately. McDonalds values that guide companys
actions and decisions are:

We place the customer experience at the core of all we do

We are committed to our people
We believe in the McDonalds System
We operate our business ethically
We give back to our communities
We grow our business profitably
We strive continually to improve

2. The statement is customer-oriented, which means that the company is focused

on satisfying customer needs, which is exactly what McDonalds stress in its
mission. Nonetheless, McDonalds statement doesnt fully reveal companys
reason for being and poorly communicates primary business information to its
stakeholders.

POINT OF VIEW:

McDonalds vision is to be a fast-food restaurant with the best service in the world. To
achieve this vision, McDonalds has always guarantee the quality of products, provide
outstanding service, offer the hygiene and safety of food products as well as other
added values. For McDonalds, every customers smile is the most important things.

McDonalds mission being the best company for all of our employees in every
community around the world.Delivers services with superior operational system for each
our customers in every branch of McDonalds restaurants.Keep progressing in a
favorable direction as a brand, as well as continuing to develop operational systems
McDonalds toward better through innovation and technology

RECOMMENDATION:

McDonalds vision statement reflects the overall strategic direction of the company. The
different aspects of the business are covered and characterized in the vision statement.
Thus, McDonalds comprehensively states what it wants to achieve, making the vision
statement satisfactory. A satisfactory vision statement helps unify the aims in the
different areas of the organization.
McDonalds mission statement is also comprehensive. For instance, the aspects
of human resource management and corporate social responsibility are included
in the mission statement. However, a point of interest is the aspect of innovation.
For example, how does McDonalds ensure that it addresses consumers
expectations? Thus, it is better to include innovation in the mission statement, as
well. McDonalds mission statement can specify research-based or technology-
based product innovation as a general approach to ensure customer satisfaction.
Through this additional detail, the mission statement could be more relevant to
McDonalds business condition, which actually involves product innovation.

McDonald's Unveils New Global Growth Plan

McDonalds today unveiled its long-term global growth plan during the Companys
Investor Day event in downtown Chicago. President and Chief Executive Officer Steve
Easterbrook and members of the senior management team presented the plan, its
financial targets and outlined the initiatives to unlock meaningful growth and increase
guest counts.

The growth plan focuses on:

Enhancing digital capabilities and the use of technology to dramatically elevate

the customer experience
Redefining customer convenience through delivery
Accelerating deployment of Experience of the Future restaurants in the U.S.
Initiating a new 3-year target for cash return to shareholders, and
Establishing new financial targets for Sales, Operating Margin, Earnings per
Share and Return on Incremental Invested Capital
We have fundamentally changed the trajectory of our business over the past two years.
Now, we are fit for purpose, ready to build on our momentum and transition to focus our
efforts on profitable, long-term growth, said Easterbrook. We are building a better
McDonalds, one that makes delicious feel good moments easy for everyone, and I
believe the moves we are making will reassert McDonalds as the global leader in the
informal eating out category.

Harnessing McDonald's Size and Scale to Create Growth

McDonalds today unveiled a customer-centric strategy informed by deep consumer
insights conducted across multiple markets to drive guest count growth.

To deliver sustained growth, we have to attract more customers, more often, said
Easterbrook. Our greatest opportunities reside at the very heart of our brand - our food,
value and the customer experience.
The strategy connects key tenets of the brand to well-defined customer groups built
around three pillars:
 Retaining existing customers by fortifying and extending our areas of
strength. Through a renewed focus on areas such as family occasions and food-
led breakfast and transforming the experience in our restaurants, McDonalds will
build on the strong foothold it has and grow the core of the business.
Regaining customers lost to other QSR competitors. As customers
expectations increased, McDonalds simply didnt keep pace with them. Making
meaningful improvements in quality, convenience and value will win back some
of McDonalds best customers.
Converting casual customers to committed customers by being more
present in underdeveloped categories and occasions and competing more
aggressively given the untapped demand for McCafe coffee and other snack
offerings.
These pillars are designed to guide McDonalds efforts through three initiatives that
will accelerate growth and enable the Company to have the biggest benefit to the most
customers in the shortest possible time.

Enhancing Digital Capabilities and the Use of Technology to Dramatically

Elevate the Customer Experience
To bring customers into the restaurants, McDonalds must matter to people and be
relevant in their daily lives. To do so, McDonalds is accelerating digital capabilities and
enhancing its use of technology in restaurants, in the drive-thru, and on the go.

Inside the restaurants, McDonalds is bringing greater control, convenience and

personalization to our customers through the use of kiosks to place orders, staffed with
guest experience leaders to assist in the process. Customers can place their order and
skip the front counter entirely, with their food brought right to their table. Additionally,
customers will be able to place orders directly on the mobile app for pickup or have a
kiosk recognize their app profile, which holds customized favorites and preferred
payment methods. The result is a more stress-free, personalized experience,
enhanced by technology and world-class hospitality that puts customers in control.

The same enhanced experience will be available outside the restaurant too. In the
1970s, McDonalds revolutionized convenience in the drive-thru to make getting high-
quality food easy. Now, that experience is being transformed once again. By enabling
mobile order and pay through the McDonalds app, customers can personalize their
order while skipping the drive-thru line and instead choosing curbside delivery. If
customers choose the drive-thru, they will simply read the already placed order code to
the crew and their mobile order will be ready for pickup at the window. These more
efficient enhancements will speed up the process and allow more customers to pass
through our drive-thrus.

Mobile order and pay will be launched in 20,000 restaurants in some of our largest
markets, including the U.S., by the end of 2017.

Redefining Convenience through Delivery

One of the most significant disruptions in the restaurant business today is the rapid
increase in delivery. Through technology, delivery has changed the way customers
order, pay, track and receive food and provide feedback. Coupled with the explosive
growth in third-party delivery companies, the landscape has created an exceptional
opportunity for growth.

Because of our extraordinary footprint, McDonalds is uniquely positioned to become

the global leader in delivery. In McDonalds top five markets (U.S., France, the U.K.,
Germany and Canada) nearly 75% of the population lives within three miles of a
McDonalds. McDonalds is already one of the largest providers of delivered food in the
world, with annual Systemwide delivery sales of nearly $1 billion across various
markets including China, South Korea and Singapore. China has tripled its delivery
business since its launch in 2008. In 2016 alone, Chinas delivery business grew 30%.

No other food company in the world has this reach and ability to be this convenient to
so many customers through delivery. Currently, McDonalds is experimenting with
different delivery models including partnering with third parties for ordering and
fulfillment throughout the world.

Accelerating Deployment of Experience of the Future Restaurants in the U.S.

Experience of the Future elevates the customer experience at McDonalds to provide a
more convenient, more personalized and more enjoyable visit. It leverages the
convenience and technology of kiosk ordering and table service, increasing
functionality of the mobile app to enhance the enjoyment of our food and the hospitality
of the McDonalds crew, all in a more modern, more exciting restaurant environment. In
restaurants around the world with Experience of the Future, we have realized mid-
single digit sales lifts above the market.

In the near-term, McDonalds is redirecting a portion of capital saved from

refranchising to modernizing the U.S. estate. The Company plans to reimage about
650 restaurants in 2017. When combined with previously modernized restaurants
which will be updated with Experience of the Future elements this year, the U.S. will
have approximately 2,500 Experience of the Future restaurants by the end of 2017.

Because this investment represents one of the greatest opportunities to build on

business momentum and grow guest counts, McDonalds intends to have most of the
traditional free-standing U.S. restaurants modernized to reflect the Experience of the
Future by the end of 2020.

Progress on the Company's Turnaround Plan and a New Cash Return to

Shareholders Target
In November of 2015, the Company provided targets for its refranchising, G&A savings
and cash return to shareholders. Today, the Company updated its progress against
these targets, specifically noting the following:
 Refranchising - the Company is on track to refranchise 4,000 restaurants by
the end of 2017, a full year ahead of schedule. Once completed, this will bring
the Companys global franchised percentage to approximately 93%.
Cost Savings - the Company achieved more than $200 million in savings
through the end of 2016 towards its goal of reducing net G&A levels by $500
million by the end of 2018, and expects to trim another 5 to 10% from its
remaining cost base by the end of 2019.
Cash Return to Shareholders - 2016 marked the achievement of the
Companys 3-year target of $30 billion cash return to shareholders. Today, the
Company announced a new $22 to $24 billion cash return target for the 3-year
period ending 2019, reinforcing managements confidence in the Companys
long-term strategies and financial targets.
Financial Performance Expectations for 2019 and Beyond
Over the last two years weve fundamentally enhanced the strength and stability of our
business by shifting our ownership structure and reducing capital and G&A needs going
forward. We are now squarely focused on growing global top-line sales and guest
counts to directly support our critical revenue stream, said Chief Financial Officer Kevin
Ozan. McDonalds business model supports the Companys ability to achieve and
sustain the following updated long-term, average annual constant currency financial
targets, beginning in 2019:

Systemwide sales growth of 3% to 5%;

Grow operating margin from the high-20% range to the mid-40% range;
Earnings per share growth in the high-single digits; and
Raise the return on incremental invested capital target from the high-teens to
the mid-20% range.
Through enhanced technology to elevate and modernize the customer experience, a
focus on the quality and value of our food and redefined convenience through delivery,
we have a bold vision for the future and the urgency to act on it, said Easterbrook. We
are moving with velocity to drive profitable growth and becoming an even better
McDonalds serving more customers delicious food each day around the world.

Related Communications
McDonalds Corporation broadcasted todays Investor Meeting live over the Internet at
www.investor.mcdonalds.com. There will also be an archived webcast available for a
limited time.
 CASE STUDY
IN
MARKETING 5
(AGRICULTURAL/INDUSTRIAL MARKETING)

GROUP MEMBERS:

AGUSTIN, MA. THRICIA

BUCIO, CHRISTINE

DELA MUJER, STEPHANIE

MORILLA, KAREN

RODRIGUEZ, PERINE

RONGAP, VIRGIE

SAMPANG, SHARMAINE
SUMILE, ESTEFANIE