Macdonalds introduction:

For Canadians, few names conjure up grander images of our shared past than Sir John A. Macdonald. A resolute architect of Confederation, Macdonald was a complex and passionate individual who played an epic role in Canada's history and remains today the country's most important political figure. He was known in his day as "Old Chieftain," "Old Tomorrow" and "Canada's Patriot Statesman." This political lion never wearied of the battle, fighting for office right up until the last weeks of his life. A charismatic leader and legendary firebrand whose exploits made him a favourite of voters, cartoonists and critics alike, Macdonald also was a beloved husband and an adoring father. He was active in politics before and after Confederation, and is Canada's second longest-serving prime minister, having held that position for 19 years in the vast new country he did so much to help build. Sir John A. Macdonald: Canada's Patriot Statesman is a tribute to this great Canadian. As well as presenting an exhibition of photographs, documentary art and other unique records held at Library and Archives Canada (LAC), this Web project introduces tens of thousands of pages from Macdonald's political papers and correspondence that will be made available online for the first time in 2008, enabling all Canadians to learn about Macdonald's life, career and legacy. LAC gratefully acknowledges the participation of the Right Honourable John Turner in this project, as well as the insights provided by the public figures and historians quoted throughout the exhibition. LAC also acknowledges the contribution of the Department of Canadian Heritage, whose financial assistance through the Canadian Culture Online Program made this exhibition possible. Special thanks to consultant Arthur Milnes, writers Brock Harrison and Brendan McNally, educational resource developer Alison Bogle, and in particular to the archivists, librarians and staff of Library and Archives Canada whose expertise and dedication have ensured that Sir John A. Macdonald's documentary heritage continues to be accessible, understood and honoure.

Industry Introduction: McDonald's Corporation is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily through more than 31,000 restaurants in 119 countries worldwide. McDonalds sells various fast food items and soft drinks including, burgers, chicken, salads, fries, and ice cream. Many McDonald's restaurants have included a playground for children and advertising geared toward children, and some have been redesigned in a more 'natural' style, with a particular emphasis on comfort: introducing lounge areas and fireplaces, and eliminating hard plastic chairs and tables.

Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The corporations' revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.1 History analysis: The business began in 1940, with a restaurant opened by brothers Dick and Mac McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald in 1963. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955 , the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion and the company became listed on the public stock markets in 1965. With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibili External Audit:
Opportunities
1.

Threats 1. Health professionals and consumer activists accuse McDonald's of contributing to the countrys health issue of high cholesterol, heart attacks, diabetes, and obesity. 2. The relationship between corporate level McDonald's and its franchise dealers.

Growing health trends among consumers Globalization, expansion in other countries (especially in China & India). 3. Diversification and acquisition of other quick-service restaurants.
2.

Growth of the fast-food industry. 5. Worldwide deregulation. 6. Low cost menu that will attract the customers. 7. Freebies and discounts.
4.

3.

McDonalds competitors threatened market share of the company both internationally and domestically. 4. Anti-American sentiments. 5. Global recession and fluctuating foreign currencies. 6. Fast-food chain industry is expected to struggle to meet the expectations of the customers towards health and environmental issues.

CPM-Competitive Profile Matrix

Critical Success Factors Price Financial Position Consumer Loyalty Advertising Product Quality Innovation Market Share Management Global Expansion Total Weight 0.15 0.08 0.10 0.10 0.10 0.15 0.10 0.07 0.15 1 McDonald's Rating Weighted Score 4 0.60 4 0.32 4 3 4 3 4 4 4 0.40 0.30 0.40 0.45 0.40 0.28 0.60 3.75 Burger King Rating Weighted Score 3 0.45 3 0.32 3 3 3 3 2 3 2 0.40 0.30 0.40 0.45 0.20 0.21 0.30 3.03 Yum Brands Rating Weighted Score 3 0.45 3 0.24 3 4 4 3 3 3 3 0.30 0.40 0.40 0.45 0.30 0.21 0.45 3.20 Wendy's Rating Weighted Score 3 0.45 2 0.16 2 2 2 2 2 3 1 0.20 0.20 0.20 0.30 0.20 0.21 0.15 2.07

External Factor Evaluation (EFE) Matrix

Key External Factors Opportunities Growing health trends among consumers Globalization, expansion in other countries (especially in China & India). Diversification and acquisition of other quickservice restaurants. Growth of the fast-food industry. Weight 0.08 0.12 .04 .10 Rating 3 4 3 3 Weighted Score 0.24 0.48 0.12 0.30

Worldwide deregulation Low cost menu that will attract the customers. Freebies and discounts.

.04 .08 .08

2 2 1

0.08 0.16 0.08

Threats Health professionals and consumer activists accuse McDonald's of contributing to the countrys health issue of high cholesterol, heart attacks, diabetes, and obesity. The relationship between corporate level McDonald's and its franchise dealers. McDonalds competitors threatened market share of the company both internationally and domestically. Anti-American sentiments. Global recession and fluctuating foreign currencies. Fast-food chain industry is expected to struggle to meet the expectations of the customers towards health and environmental issues. Total

0.10

0.30

0.09 0.12 .07 .04 .04 1.00

3 4 2 3 2

0.27 0.48 .14 .12 .08 2.85

Internal Audit
Strength Weakness 1. 2. Unhealthy food image. High Staff Turnover including

1.

Strong brand name, image and

reputation. 2. 3. Large market share. Strong global presence.

Top management 3. Customer losses due to fierce

4.

Specialized training for managers known as the Hamburger University.

competition.

4. Legal actions related to health issues; use

5.

McDonalds Plan to win focuses

of trans fat & beef oil.

on people, products, place, price and promotion.

5. Uses HCFC-22 to make polystyrene that

is contributing to ozone depletion. 6. Ignoring breakfast from the menu.

6.

Strong financial performance

and position. 7. 8. Introduction of new products. Customer focus (centric). 9. Strong MCD's performance in the global marketplace.

Internal Factor Evaluation (IFE) Matrix

Key Internal Factors Strengths Strong brand name, image and reputation. Large market share. Strong global presence. Specialized training for managers known as the Hamburger University. McDonalds Plan to Win focuses on people, products, place, price and promotion Strong financial performance and position. Introduction of new products. Customer focus (centric). Strong performance in the global marketplace. Weaknesses Unhealthy food image. High Staff Turnover including Top management Customer losses due to fierce competition. Legal actions related to health issues; use of trans fat & beef oil. McDonald's uses HCFC-22 to make polystyrene that is contributing to ozone depletion. Ignoring breakfast from the menu. Total Weight 0.12 0.10 0.04 0.04 0.12 0.08 0.06 0.06 0.08 Rating 4 4 3 3 4 4 4 4 4 Weighted Score 0.48 0.40 0.12 0.12 0.48 0.32 0.24 0.24 0.32

0.08 0.04 0.04 0.04 0.04 0.06 1.00

1 1 1 2 2 1

0.08 0.10 0.04 0.08 0.08 0.06 3.16

SWOT Matrix

1. 2. 3.

Strengths Strong brand name, image Large market share. Strong global presence. Specialized training for

1.

Weaknesses Unhealthy food

and reputation.

image.

2.
3.

High Staff Turnover Customer losses due

including Top management. to fierce competition.

4.

managers known as the Hamburger University. 5. McDonalds Plan to Win focuses on people, products, place, price and promotion. 6. 7. 8. Strong financial

4. Legal actions related to health

issues; use of trans fat & beef oil.

5.

Uses HCFC-22 to

performance and position. Introduction of new products. Customer focus (centric).

make polystyrene that is contributing to ozone depletion.

6. Ignoring breakfast from the menu.

9. Strong performance in the global

marketplace.

1.

Opportunities Growing health trends among consumers. 1. Globalization, expansion in other countries (especially in China & India). 2. Diversification and acquisition of other quickservice restaurants. 3. Growth of the fastfood industry. 4. Worldwide deregulation. 5. Low cost menu that will attract the customers. 6. Freebies and discounts.

S-O Strategies 1. Focus on Plan to win to attract customers and expansion in other countries (S5, O2, O6). 2. Expansion in market share by more investments in Asia (S2, O2).

W-O Strategies Minimize customers losses by provide low cost menu and discounts (W3, O6, O7).

1.

Threats 1. Health professionals and consumer activists accuse McDonald's of contributing to the countrys health issue of high cholesterol, heart attacks, diabetes, and obesity. 2. The relationship between corporate level McDonald's and its franchise dealers. 3. McDonalds competitors threatened

S-T Strategies More control on franchise dealers to maintain McDonald's reputation and quality (S1, T2). 2. Provide new product and keep innovation (S7, T3).

1.

W-T Strategies Applying 0 grams Trans fat in all worldwide McDonald's (W1, W4, O1). 2. Transfer from HCFC22 to HFC (hydrofluorocarbon)-free (W5, T6)

1.

SPACE Matrix
Financial Strength Return on investment Leverage Net Income EPS ROE Cash Flow Average Competitive Advantage Market share Product Quality Customer Loyalty Control over other parties Rating 4 4 6 5 5 4 4.67 Rating -1.00 -1.00 -1.00 -2.00 Environmental Stability Rate of inflation Demand Changes Price Elasticity of demand Competitive pressure Barriers to entry new markets Risk involved in business Average Y-axis Industry Strength Growth potential Financial stability Ease of entry new markets Resources utilization Profit potential Demand variability Average X-axis Rating -3 -3 -1 -3 -3 -2 -2.5 2.17 Rating 5 5 4 4 5 3 4.33 3.08

Average

-1.25

Grand matrix
Rapid Market Growth Quadrant II Quadrant I

Weak Competitive Position

Strong Competitive Position Quadrant III Quadrant IV Slow Market Growth

The Boston Consulting Group (BCG) Matrix

Relative Market Share Position

MCD Industry Sales Growth Rate

Stars

Question Marks

Cash Cows

Dogs

The Internal-External (IE) Matrix

The IFE Total Weighted Score

Strong 3.0 to 4.0 I

Average 2.0 to 2.99 II

Weak 1.0 to 1.99 III

High 3.0 to 3.99

IV

VI

The EFE Total Medium Weighted Score 2.0 to 2.99

McDonald's

VII

VIII

IX

Low 1.0 to 1.99

The Quantitative Strategic Planning Matrix (QSPM)

Strategy 1 Expand further in Asia by adding 500 restaurants Strategy 2 Applying 0 grams Trans fat in all worldwide McDonald's restaurants

Key Internal Factors Strengths Strong brand name, image and reputation Large market share Strong global presence Specialized training for managers known as the Hamburger University McDonalds Plan to Win focuses on people, products, place, price and promotion Strong financial performance and position Introduction of new products Customer focus (centric) Strong performance in the global marketplace Weaknesses Unhealthy food image High Staff Turnover including Top management Customer losses due to fierce competition Legal actions related to health issues; use of trans fat & beef oil Uses HCFC-22 to make polystyrene that is contributing to ozone depletion SUBTOTAL

Weight 0.12 0.10 0.04 0.04 0.12 0.08 0.06 0.06 0.08

AS 4 4 4 4 4 1 3

TAS 0.48 0.40 0.12 0.48 0.32 0.06 0.24

AS 4 2 2 4 4 4 1

TAS 0.48 0.20 0.08 0.48 0.32 0.24 0.08

0.08 0.10 0.04 0.04 0.04 1.00

1 3 1 -

0.08 0.12 0.04 2.34

4 1 4 -

0.32 0.04 0.16 2.40

10

Strategy 1 Expand further in Asia by adding 500 restaurants

Strategy 2 Applying 0 grams Trans fat in all worldwide McDonald's restaurants

Key External Factors Opportunities Growing health trends among consumers Globalization, expansion in other countries (especially in China & India) Diversification and acquisition of other quickservice restaurants Growth of the fast-food industry Worldwide deregulation Low cost menu that will attract the customers Freebies and discounts Threats Health professionals and consumer activists accuse McDonald's of contributing to the countrys health issue of high cholesterol, heart attacks, diabetes, and obesity The relationship between corporate level McDonald's and its franchise dealers McDonalds competitors threatened market share of the company both internationally and domestically Anti-American sentiments Global recession and fluctuating foreign currencies Fast-food chain industry is expected to struggle to meet the expectations of the customers towards health and environmental issues SUBTOTAL SUM TOTAL ATTRACTIVENESS SCORE

Weight 0.08 0.12 0.04 0.10 0.04 0.08 0.08

AS 1 4 4 4 -

TAS 0.08 0.48 0.40 0.16 -

AS 4 1 4 1 -

TAS 0.32 0.12 0.40 0.04 -

0.10

0.10

0.40

0.09 0.12 0.07 0.04 0.04 1.00

4 4 1

0.36 0.48 0.04 2.10 4.44

1 4 4

0.09 0.48 0.16 2.01 4.41

Coclusion

11

The last half of the twentieth century witnessed the development of many fast food chains. None were as successful as McDonalds at maximizing profit and minimizing cost. The rapid growth of McDonalds from one small store in 1948, to its first restaurant in 1955, to its worldwide dominance and market saturation at the turn of the twenty-first century, is a story of capitalist enterprise, sometimes at its worst and (to its shareholders) sometimes at its .best The business practices of McDonalds are, to put it kindly, slightly suspect. By keeping employee wages low and refraining from hiring full time workers, the company was able to save money on health care packages and employee benefits. In addition, McDonalds was able to gain ground on its competitors in the 1970s when a depression caused most other fast food chains to halt their growth. McDonalds used its superior resources to continue to grow and expand. Now, the restaurant is perhaps the greatest symbol of contemporary American capitalism. By saturating nearly every market it has entered, McDonalds now envisions itself as a stabilized company, not as interested in entering new markets as they are in exploiting those markets in every way available to them. The company is also more able to respond to consumer demands that, earlier in its existence, would have been impossible. But as one of the most powerful businesses in the world, McDonalds can pretty much do as it pleases- an advantage that has come to characterize the history of the .business When it comes to the environment, McDonalds irresponsibility toward the effects of their business practices is highly evident. These effects counter their recent efforts at cultivating a "green" image. However, they remain almost hidden behind that glossy green picture of McDonalds. Once uncovered, it is apparent that McDonalds is not such a friendly neighbor to the environment. They pride themselves on leading the industry in environmental protection, when it seems they do more harm than damage. The beef they use to feed America comes from cattle that graze on ex-rainforest land. The packaging that beef is wrapped in to be given to the consumer is used for mere minutes before being thrown away, many times landing back on the ground, polluting the environment. When two activists had finally had enough and spoke out against the business practices of McDonalds, McDonalds sued. They however would later make clear their intention not to collect any damages they were awarded. This was an effort to move attention away from the negative publicity of the McLibel case, and reclaim the positive image the case brought into question. In each instance, McDonalds claims they are not at faultthe cattle ranchers are to blame for rainforest destruction, the consumer for the litter, and the members of London Greenpeace were spreading lies. This distancing strategy only causes McDonalds self-promoted image of environmental friendliness to take center stage. Thinking of McDonalds as a good citizen .and good neighbor, America orders their hamburgers and McDonalds success increases

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