NAME
ROLL NUMBERS
Zahabiyah Zoomkawalla
A055
Neha Gupta
A057
Riya Shah
A058
Gitanjali Arora
A059
Alyque Virjee
A060
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SIGNATURES
INTRODUCTION McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald. 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. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. 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 and fruit. McDonald's restaurants are found in 119 countries and territories around the world and serve 68 million customers each day. McDonald's operates over 34,000 restaurants worldwide, employing more than 1.7 million people.
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TYPE OF RESTAURANTS: 1. Counter service – indoor/outdoor seating 2.McDrive – drive through for people on the go 3.McCafe – coffee shops 4.McExpress – connected to gas stations/ shopping malls 5. McStops- for highway truck drivers McDonald's has become emblematic of globalization, sometimes referred to as the "McDonaldization" of society. The company stated it will open vegetarian-only restaurants in India by mid-2013. McDonald's in suburban areas and certain cities feature large indoor or outdoor playgrounds. The first PlayPlace with the familiar crawl-tube design with ball pits and slides
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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 remaining is 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.
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TIMELINE 1940 – McDonalds Bar-B-Q opens in California by Dick and Mac McDonald. 1949 – The now World famous French Fries were introduced. 1954 – Ray Kroc visits McDonalds and is fascinated by the operations at McDonalds and volunteers to take McDonalds global. 1955 – Kroc opens his first McDonalds on April 15 in Illinois 1956 – Ray Kroc hires future McDonalds Chairman Fred Turner as a counter sales person 1961 – Hamburger University opens in Illinois and graduates are given Hamburgerlogy Degrees. 1965 – McDonalds celebrates its 10th Anniversary and issues its first Public Stock Option at $22.50 per share. 1966 – McDonalds has its first ever television commercial aired on national television starring Ronald McDonald making him an instant hit. 1967 – McDonalds goes international. 1969 – McDonalds went under massive remodeling and got rid of the red and white building structures and laid more emphasis on the Golden Arches. 1975 – Breakfast Menu is introduced. 1979 – Happy Meals are introduced. 1987 – Salad menu is started. 1988 – 10,000th restaurant is inaugurated 1996 – aboutmcdonalds.com is launched 2000 – We love to see you smile theme is launched 2002 – McHappyDay is celebrated on 22 Novemeber and the Dollar Menu is launched. 2003 – McDonalds Startegybaby , Plan to Win is born , Salads are added , I’m loving it Campaign is started in Germany 2008 – Global Packaging design 2009 – McCafe goes national and McDonalds is awarded for being a green organization 2010 – McDonalds offers visitors free Wi-Fi services 2012 – McDonalds announces that it is the Olympics TOP sponsor through the 2020 games
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MISSION McDonald's brand mission is to be our customers' 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.
ANALYSIS: Customer’s favorite place and way to eat - they give a touch of comfort and home which welcomes the customer to McDonalds and have a homely and sense of belonging.
People- The customers are the top priority at McDonalds, their tastes and preferences do matter. The staff at McDonalds is trained, welcoming and professional. Welcomed by sweet greetings and an ever so warm smile.
Products – Products are fundamentally the same (burgers) but still different as they are localized according to the country they are in keeping in mind the eating patterns, religious and social beliefs of the country citizens.
Place- Warm, Chirpy ,Colorful ,Peppy and Relaxed is how a customer would describe any McDonalds outlet. 6
Price – Relatively more or less the same on global levels still they do differ a little at a country’s local level making it attractive and affordable by the customers. Value pricing starts from Rs20.
Promotion – Their print and electronic mediums of promotion. Television ad commercials, Radio commercials and Print ad’s along with coupons and smile stamp coupons; which is made catchy through its through its tagline and jingles.
Improving operations and enhancing customers experience - Always challenging their service methods and aiming for continual improvement. Provide customer joy through a delightful experience.
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VISION To be the world’s BEST quick service restaurant.
ANALYSIS: McDonalds stands true to this vision statement as it is indeed the fastest service restaurant in the world. It constantly tries to compete and set challenging targets of delivery for itself. At the counter service- if you do not receive your order within 1 minute , a customer is authorized to get a small fries or a regular coke free of cost.
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TOWARDS CONQUERING THE WORLD 1. Focusing heavily on emerging markets McDonald's is booming, despite all the economic destruction going on around it. It has been the second-best performing stock in the Dow in 2011. In Q3 it beat revenue and profit projections yet again, its stock is up 63% in the last three years and same store sales continued to climb for the 103rd month, reports Julie Jargon at the Wall Street Journal . The success goes back further than that, too. Since 1980, McDonald's has absolutely blown away some of the biggest Dow blue chips around (like IBM, DIS, GE and XOM), notes Bespoke Investment Group. Meanwhile, competitors like Burger King and Wendy's continue to try new things as they fight each other for the #2 spot, but they're still leagues behind. McDonald's just keeps dominating, and it now has upwards of 33,000 stores worldwide. Yet somehow it's still expanding, and in more ways than one. So, how's McDonald's doing it? Its powerful brand and sheer size are two big, dependable advantages that it can always lean on. But just being McDonald's isn't enough — it's doing a lot, domestically and globally, to stay ahead. Here are ten strategies that are keeping McDonald's barreling forward 9
McDonald's may seem like it's already everywhere, but it hasn't quite saturated the world yet. Over the past few years, McDonald's has made a heavy push toward emerging markets. And not just trendy markets like China and India, but places previously devoid of the Golden Arches, like some African nations. Sales are up 8.1% from last year in Asia/Pacific, Africa and the Middle East Still, China is McDonald's most important international front, where it's battling Yum! Brands wholeheartedly. It plans to have a whopping 2,000 stores there by 2013 — that's 1,000 new stores in just four years. It’s going to need to keep it up, because the Colonel still reigns supreme in the world's biggest market, and Yum! Has no intention of letting up.
2. McCafé has been a big win The McCafé has been demolishing expectations ever since the company started revving up its marketing machine for it in 2002.Now, there are 1,300 McCafé's worldwide in dozens of countries, and it just keeps growing. Its latest moves have been to Ukraine, along with a national rollout in Canada. The McCafé menu has been growing as well, adding non-coffee items like smoothies over the past co uple years.
3. Offering a wider variety of food to attract more segments It's not just snack foods and desserts that it's expanding into — there's a whole lot more. McDonald's is trying to get more consumer segments to chomp up its offerings by expanding non-traditional menu items, while keeping its core base of burgers-and-fries eaters. Many of the new items help combat McDonald's ever-present negative image of unhealthiness, though it will likely never shake it fully. For instance, oatmeal has been a big hit for McDonald's, serving as a replacement for high-calorie breakfast sandwiches. Additional types of salads have worked too, for people looking for a somewhat healthier option.
4. Delivering food to customers in places that demand it Though not traditional in the US, McDonald's delivers in many markets around the world, and the company cites it as one of the reasons it has been so successful in those markets. Why? Delivery is a common practice, even for fancy restaurants, in many Asian and Middle Eastern cities, so McDonald's is just meeting the cultural norms of its surroundings. Yum! Brands' KFC does it too, with equal success. A select few places in the US deliver too — there are 10 stores in Manhattan that will bring a burger and fries to your building — but there are no plans to roll it out nationally.
5. Making its stores more attractive to get customers in McDonald's is improving its physical locations to make them more appealing to customers, and it seems to be working. In China, it's trying out a "Less is More" concept design, which goes with softer colors and cushioned seats. Also, over 95% of McDonald's locations have extended their hours now, and it has several thousand stores that are open 24/7. 10
Free wi-fi is now available in McDonald's restaurants across the world, and lately it has made a big push to get flat screen TVs in the stores. It's even starting up its own TV channel with original programming, called McTV.
6. Increasing its offering of snack items Americans love to snack on stuff, and McDonald's has recognized that demand and answered with a plethora of new products. Smaller items like wraps, along with an expansion into desserts (which it plans to amp up soon), have made their way onto the menu and have done well.
7. Shortening its menu cycle The most prominent example of this is the McRib, making an unprecedented second national appearance in two years. It took front and center this fall and was incredibly successful, driving a 4.9% gain in same store sales. Special edition McFlurries have been in and out of menus too, along with limited time smoothies. This sort of menu cycle is a move toward a more European model, which swaps out new menu items every six-to-eight weeks, reports Nation's Restaurant News.
8. Importing more of its successful niche products internationally McDonald's has an incredible variety of culture-specific food items across the planet, and most wouldn't stand a chance internationally. But some are winners, and the company has started to test them out in other markets. One example is Australia's Chicken McBites (think popcorn chicken), which are now being tested in Detroit, Michigan. Then there are full-size wraps, common in Europe, which are being tested in new markets like the U.K. They have so many of these products that some are bound to be hits, it just has to find the correct area to expand them to.
9. Expanding its dollar menu to breakfast McDonald's fired up a breakfast dollar menu in 2010 as the economy continued to slump, which supplemented its existing dollar menu for its usual fare. It has been working well thus far, capitalizing on Americans' attraction to the super-cheap in times like these. But even before that, its breakfast business was growing, just at a lower rate than normal. Competitors like Burger King and Dunkin' Donuts have made their own types of dollar menu, but nobody has had the widespread success that McDonald's has enjoyed.
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And it hasn't been scared to take anybody on
Many of these expansions drew looks from brand new competitors, because McDonald's was encroaching on their territory. In most cases, McDonald's leveraged its size and brand to attack head on. McCafé is the most obvious example, and it has performed admirably against Starbucks and Dunkin' Donuts. Its upcoming expansion into desserts is likely to concern Dunkin' even more, along with niche dessert chains like Dairy Queen. 11
But there's plenty of risk in doing this. As it opens itself to more fronts than ever, it has more big, powerful brands breathing down its neck, and even more comp lexity to worry about in its internal operations.
GLOBAL EXPANSION Introduction Since the start of the company in 1973, McDonald’ s Corporation began spreading domestically throughout the United States thus establishing its brand recognition. Its initial strategy began by advertising directly to the middle and upper class citizens, as can be seen in countries such as India and China. However, with its many bargain deals on several of its food items, McDonald’ s began to cater to several people belonging to the lower class. China was McDonald’s first global country in which it researched heavily before opening up restaurants. In fact, through globalization and internationalization,McDonald’s was able to develop marketing strategies, while at the same time customizing them for different regions in accordance to the cultural and national variations in order to serve specific target markets. The company conducts heavy research in regions where it desires to open locations based upon a few elements, including social, cultural, technological, political, and economic situations.
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McDonald’s key to success is its business mantra of ―think global, act local‖ (Vignali, 2001). This has allowedthe company to achieve financial success in every region it opens its fast food restaurants. Internationally, McDonald’s earns high revenues is India. India is one of the toughest markets to enter for foreign businesses, due to the governmental hardships imposed upon by the Indian government. The reason behind such hardships is solely based on the Indian government seeking to protect its domestic businesses, and employment for its citizens. VasantVihar, a prosperous residential area in New Delhi, was the initial location that McDonald’s opened up its first store in India in 1996. Since then, almost 60 McDonald’s restaurants have been opened. One of the most successive strategies that McDonald’s uses before opening up its stores is research and development of its foods. Tastes and preferences vary across the globe; therefore, the company thoroughly analyzes the preferred tastes, especially to not offend local cultures. For example, India is a nation where beef is highly unpopular due to religious purposes; therefore, the company had to come up with burgers that were not made with beef, but rather with chicken or lamb. Furthermore, the company had to create flavors that were spicy in order to meet the general taste preferences. INDIA’S BACKGROUND
Indian McDonald's restaurants do not serve beef and pork products, in deference to Hindu and Islamic beliefs respectively. The only animal products available are chicken and fish. Meat and vegetarian meals are prepared in separate areas of the restaurant due to religious laws; cooks preparing vegetarian dishes wear a distinctive green apron. All McDonald's restaurants in India are certified halal. Apart from selling the regular international McDonald's products such as 1. McChicken, 2. Chicken McNuggets, 3. Chicken McGrill 4. Filet-O-Fish McDonald's has developed a wide variety of vegetarian products exclusively for the Indian market, as a large number of Indians are vegetarians. Some of these products are : 1. McAlooTikki Burger 2. McVeggie Burger 3. McSpicyPaneer Burger 4. McSpicyPaneer Wrap 5. Pizza McPuff 6. McCurry Pan(It was later discontinued) 7. Pizza McPuff McDonald's has also developed variations of its international non-vegetarian products exclusively for the Indian market. 1. The Big Mac burger is sold as the Chicken Maharaja Mac, where instead of beef patties, chicken patties are used. 13
2. A spicy version of the McChicken, the McSpicy Chicken burger and its Mexican wrap equivalent, the McSpicy Chicken 3. In 2012, McDonald's India introduced the McEgg burger exclusively for the Indian market, keeping in mind the large eggitarian population in the country, this burger is extremely popular with college students. Discontinued McDonald's products in India include the Crispy Chinese burger and the Salad Sandwich burger.
Global growth and success strategies In order to further emphasize the globalization element incorporated by the company, the success strategies include:
1. Emphasis on Local Management Throughout the world, McDonald s prides itself in hiring locals, specifically management in order to gain acceptance into the country by Its citizens. The emphasis is based on the ―think global, act local‖ theme of the Company. For instance, the company decided to establish two joint ventures with two localentrepreneurs in New Delhi, who were selected to manage the fast food restaurant. This strategic move allowed the company to gain easy access to the bureaucracy associated with the country s government. ’
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2. Politically Sensitive Strategy 14
One of the company s major concerns was to develop ways to avoid political confrontation with the Indian government. The other major concern was to be careful of the religious sensitive in India. Almost 80% of Indians do not eat beef, and over 150 million Indian Muslims do not eat pork, therefore, instead of supplying the normal Big Mac, which consists of beef, the company developed the Maharaja Mac that is made of two lamb patties. Other foods were also added to the non-standardized menu including McAlooTikki Burger, and other common Indian dishes. ’
3. Employment Opportunity Foreign enterprises are often reluctant to hire locals in their companies, specifically at the managerial positions, however, McDonald s research concluded that in order to survive the brutal Indian government, it would have to hire locals as cashiers, cooks, managers, etc., as well as provide jobs for the country s agricultural workforce. In fact, McDonald s outsources its products to severalIndian companies throughout India. This provides evidence to the Indian government thatMcDonald s is not only customer friendly, but also employee friendly. ’
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4. Environmental Friendliness In order to achieve a positive reputation, as well as follow local and national policies of a country, McDonald s tries to establish services that are environmentally friendly. India is an example where the company provides financial contributions and sponsors several community related activities in order to promote environmental protection. This is primarily seen within schools; thus indicating that the company also supports local schools. ’
5. Corporate Citizenship In order to better its reputation, this multinational firm gives back to the local citizens in all countries it operates. For example, the company provides several financial donations to local organizations. This is one way to encourage consumers to eat at its restaurants, as it is an incentive that is used to spread the name.
6. Pricing As the value of currencies varies worldwide, McDonald s is often forced to change its pricing strategy in accordance to its target market. For instance, the value of a Big Mac varies worldwide. In Switzerland, the Big Mac is valued $.60 over the U. S. (price base of the product). However, in China, it is undervalued by $0.60 in comparison to the price of the Big Mac in the U.S. It seems that the company tries to maintain a price range on all its products based on the location, income distribution and it is for this purpose that the company opens up most of its restaurants in major cities such as New Delhi, Shanghai, Beijing, and so on. Its primary goal is to initially attract middle and upper class citizens, as they can afford McDonald s prices. After this, they slowly target the lower middle class citizens. In the United States, for example, the restaurant chain has appealed equally well to all classes ranging from the poor to the upper class; however, its popularity continues to be among the lower, middle and upper middle class. ’
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McDonald’s localization in India continues.. American fast-food giant McDonald’s continues its mass localization in India. It is betting big on spiritual Indians and plans to open a pure vegetarian outlet at the foothills of the Vaishno Devi shrine at Katra in Jammu & Kashmir and near the Golden Temple in Amritsar to tap the over 1 million pilgrims that visit these shrines each year.Given that there are no organized restaurants to serve these pilgrims; McDonald’s seems to have got its strategy bang-on this time. Given the pressure on margins and as more demand for vegetarians joints, it is clear that the sure route to success in the food business in India is to aim for the vegetarians. And unlike the West, there is no call for Big Macs or Chicken McNuggets in this market. The quick-service restaurant has developed the popular McAlooTikki burger for its Indian consumers that accounts for 25% of the company’s total sales in India. And it plans more vegetarian items in its menu. McDonald’s opened its first outlet in Jammu and Kashmir in August at posh Residency Road in Jammu, which will enable it to create the necessary supply chain in the region. It has begun introducing special promotions, discounts, value offers, and even cut back prices to revive flagging sales. 1. The McValue lunch for just Rs.55 has been introduced to promote sales during lunch hours and caters specially to college students. It offers a wholesome meal of a burger, fries and a drink at affordable prices. 2. Another special promotion offers is Shake Shake Fries campaign. The main aim of the campaign was to add something special to the mundane act of eating fries. One can add a spicy mix of masalas to their fries called Peri-Peri Masala. This campaign was quite a hit in India as it catered to palate of Indians and that we Indians love spicy food.
GOLDEN ARCHES- A BIG FAIL 16
Between November 1999 to February 2000,McDonald’s stocks fell from $48 to $32. The main reason for this was that McDonald’s had reached its saturation point. If they opened more restaurants, it would only eat into the profits of the restaurants already in operation. The only way forward for the company was to diversify. Therefore when the idea of diversifying into hotels was introduced by Urs Hammer, the CEO of McDonalds Switzerland, it was given the green light. This strategy would give the company a shot at entering a billion dollar industry. In March 2001, McDonald’s Corporation opened its first hotel in the Swiss town of Rumlang. The hotel which was opened under the name of Golden Arch Hotel was situated next to the airport Zurich-Kloten. A few weeks later another hotel was opened in Lully. The hotels provided many unique features for its customers which differentiated itself from any regular hotel.
Some of these features were:
The five story hotel at Rumlang had a 170-seat drive through Mcdonalds restaurants which was open 24 hours a day. This restaurant was separated from the main hotel to ensure that only hotel guests had access to the hotel building. In order to bypass the rush at the check-in and check-out process at the hotel, the guests had the privilege to check-in and check-out at the airport terminal itself. There were nine small meeting rooms, which were able to be transformed, due to a foldable-wall technology, into a larger 30-person conference room.
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The room layout had a curved wall that gave the room a special atmosphere and design. It was a one piece, ready to use design that would be patent protected by Mcdonalds Switzerland. The hotel rooms had a futuristic shower that projected into the bedroom. The rooms also had internet and computer facilities, with the TV screen serving as a computer screen, and a cable-free keyboard.
Mcdonalds had strategically opened the hotels in Rumlang, because it was close to the Airport Zurich-Kloten. This airport was the hub of the national carrier SwissAir. This generated more demand for hotel beds by tourist, business travelers, and airline crews. Despite the differentiation and it many advantages this diversification strategy failed miserably. The flaws in the strategies were: The image of Mcdonalds in the customers minds is that of affordability and not luxury but the rooms were priced between $120-$160 which were four star prices. Consumers couldn’t believe that a Mcdonald’s Hotel could offer four star accommodations. Guest complained about the lack of privacy in the rooms which arose due to the transparent bathrooms. Though the rooms were well designed and comfortable many people found the décor too plastic. Another major issue was that the English phrase ―Golden Arches‖ isn’t associated with McDonald’s in German -speaking countries. Even worse was that word ―arch‖ when pronounced by German speakers, sounds a lot like a vulgar word.
External factors also played a role in hampering the prospects of the McDonald’s Hotels. The outbreak of SARS, the 9/11 terrorist attacks, and the grounding and bankruptcy of SwissAir combined to lower tourism soon after the hotels opened.
In August 2003, the two hotels were sold to another operator and became the Park Inn Zurich and the Park Inn Lully. Luckily this failure did not cost the company a lot. Due to the uncertainty of success McDonalds had made a relatively small investment and this limited its risks. The venture was mainly publicized only in Switzerland and used the name Golden Arch rather than McDonalds, the company avoided significant damage to the corporate brand.
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McCafe
In 1993 McDonalds came out with its own café in Australia called McCafe. It is now the most popular and well known cafes in Australia and New Zealand. It then expanded to other European countries like Germany and Ireland. McCafe is a completely separate entity from McDonald’s. These cafes share the same entrance, but the McC afe section offers bug booth couches, upscale tables,Wi-Fi, and sophisticated curvy room and wall arrangements. It is a restaurant on its own. In the United States of America coffee was always a part of the menu but it did not hold much credibility as customers preferred going to their rivals for a cup of coffee. Before the launch of McCafe, it was all about building beverage credibility with a fast rate of 19
product introductions. The Premiun Roast Coffee gave McDonalds basic credibility in the coffee category. Next iced coffee was introduced, before the nationwide launch of McCafe. The products range from coffees to smoothies. McDonald’s entered the specialty coffee market at a time when due to the economic downturn people were less willing to pay $4 for a cup at coffee at a rival coffeehouse. Due to cheaper prices and same quality many customers didn’t mind switching loyalties. Through McCafe McDonald’s is also trying to target an older crowd. McDonald’s traditional appeal is to the children, but by introducing McCafe parents can sip on a cup of coffee and oversee their children playing or eating. With the introduction of McCafe many breakfast customers will be targeted. Customers can have a latte or cappuccino while eating the McDonald’s breakfast menu. Though the cafés will be attached to the main McDonalds restaurant they will be catering to a completely different crowd. McCafe is not a fast food joint and even offers a variety of food stuffs like pastries, sandwiches, muffins etc. This diversification will help McDonald’s increase the original restaurant’s sale but the restaurant will benefit from a better reputation and increased popularity. McCafe is a huge success. A survey conducted recently states that McCafe customers are more loyal to the brand than its rivals Starbucks and Dunkin Donuts. The McCafe brand is so well established that it is not even associated with McDonalds anymore. Now that McCafe has established itself in United States they are following an expansion strategy. Introducing new products as well as expanding in newer markets. There are currently 1300 stores worldwide. McCafe is becoming a coffeehouse to reckon with and their customers are loving it.
McDonald's Menu Items That Failed Spectacularly 20
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New product development always has a level of risk attached to it, and for fast food companies like McDonald's, the pace of the business requires the constant creation of new menu items. McDonald's has hundreds of different products that are offered in locations worldwide, but for every tremendously successful one like the iconic Big Mac, there's a spectacular failure. Why? Ineffective marketing, bad product launches and consumer reluctance for change are common. But when you're dealing with food, there's always the simplest of reasons: people just don't like the taste. We've compiled 11 of the biggest failures McDonald's has ever had. Some fizzled into obscurity, while others vanished completely. 1. McLobster 2. McGratin Croquette 3. Hula Burger 4. Pizza &McPizza 5. McSpaghetti 6. McAfrika 7. Arch Deluxe 8. McHotDog 9. McDLT 10. McLean Deluxe 11. Big N' Tasty Super-Size
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STRENGTHS
Brand Equity Worldwide
Overseas market
42% of US food hamburger business Successful items like fries, happy meal, alootikki, egg mcpuffin, promotions Consistency of food
WEAKNESS
Professional training for employees i.e. specialized universities
Great partnership with coca cola
Customer loyalty
Economies of scale
Having the right real estate
OPPORTUNITIES
Open up online services for customers. Low cost menu can easily attract the price sensitive Indian consumers Introduce healthy foods such as sandwiches and salads for health conscious people In order to be environment friendly they can use packaging material which can be recycled Opening up more joint ventures with several different retailers McDonald should research green energies and green packaging RECOMMENDATIONS: solutions and incorporate these finding as a part of their marketingstrategies and 23 advertisements.
Declining market share Weak product development-not much variation in seasonal offerings The taste & quality not liked by all High staff turnover High debt turnover Weak supply chain McDonald’s has been involved in a number of lawsuits and other legal cases in the course. Eg: The trademark issue
THREATS
Fluctuations in foreign exchange rate Strength of competition as new entrants entering the fast food industry More health conscious Consumers Changing lifestyles, tastes & preferences Social changes-government, consumer groups encouraging balanced meals Intensity of Competitors: There are number of fast food brand entering the market such as Wendy’s, Burger King, Yum
McDonald’s is a powerful brand name according to its SWOT matrix, it should do the following with its strategies. 1. Market development is one strategy that McDonald’s should implement. Company should prepare an international strategy which focus on big cities along with high populated areas, especially in Asia. There are not many McDonald restaurants in this potential market. Japan is the only Asian country which has a lot of McDonald’s fast food restaurants. In contrast, China is considered as one of the biggest market in the world because of this country’s population. Nevertheless, according to the recent figures, China is just in ninth position among the countries which have McDonald’s restaurants with about 1000 restaurant while this number in US is about 14000. If McDonalds can d evelop more and more in Asia, it is a huge advantage for company to gain market share. 2. One thing McDonald should focus on is that the play place for kids. McDonalds has play place but not in every restaurants. If you eat in McDonald’s restaurant, you can be free to party while your children play at the place for kids. Customers love this service. Thus, if it is popularized in all restaurant of company, customers will be more satisfy and of course they want to comeback regularly. Moreover, toys have to be cared much more with many new interesting toys as well as safety. Jolly Bee is one brand which applies this strategy very successful. 3. McDonalds focuses too much on cheese, beef or chicken menu, more than vegetable. For instance, McDonalds has fruit slice in menu. However, it is served once a week. In the recent time, with the change in eating habit of a large part of customers, McDonalds also should change. Company should bring new vegetarian products to restaurant’s menu. An organic menu is very necessary. This would give customers an alternative while allowing McDonalds to maintain its market share globally. 4. McDonald’s employees are evaluated hig h by customers because of their behaviors as well as attitude. However, customers are not pleased at the idea of waiting in long lines and insufficient employees to handle the volume of customers. Just the minority, but sometimes the employees are rude forcing the customers to go to a competitor’s restaurant next time. At the market which has high market share and very huge number of customers such as USA, Canada or United Kingdom, this issue occurs more frequently. McDonalds should find a way to solve it. For example, the company has to rent more employees and increase their salary in order to keep them working for a long time. This time is just enough for them to get skills to service customers well. Besides, it is necessary to increase the number of employees at the weekend or in the lunch time. More employees mean that pressures are shared and avoid the bad attitudes.
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CONCLUSION McDonalds has invested in major Expansion Strategies – Market Development. Market Penetration and Product Development along with a few Diversification Strategies. A few of them backfired but most of them were fruitful and thus added to the success of the ever so big – McDonalds. Showing the upward growth after adopting the Breakfast Menu.
The fries that bind us! 25
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Thank you!
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