Mcdonald Strategic Mgmt Project 161bh

According to a McDonald's corporate press release: "i'm lovin' it is a key part of McDonald's business strategy to connect with customers in highly relevant, culturally significant ways around the world." Translation: the focus groups they used happen to listen to rap and hip-hop. In an effort to show that McDonald's is "down" with their customers, they bought off a few rap artists to pose with this goofy white guy and their dumbass mascot:

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Introduction McDonald as being ninth most valuable brand in the world which has replaced the US army as the Nation’s largest job training organization &Controls the market share of more than 3 food

chains

taken

together

in

America

started

in

1940.

McDonald's Corporation (MCD) is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily. McDonald's primarily sells hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milkshakes and desserts. More recently, it has begun to offer salads, wraps and

fruit.

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. Company has also expanded the McDonald's menu in recent decades to include alternative meal options like salads and snack wraps in order to capitalize on growing consumer interest in health and wellness. Each McDonald's restaurant is operated by a franchisee, an , 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

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McDonalds’s success is the result of superior products, high standards of performance, distinctive competitive strategies and the high integrity of our people. McDonalds is continuing to expand and introduce new alternative beverages in the market. Approximately 85% of McDonald’s restaurant businesses worldwide are owned and operated by franchisees .All franchisees are independent, full-time operators. McDonald’s was named Entrepreneur’s Number-one franchise for 1997 McDonald’s corp. is currently one of the most successful consumer products company in the world with annual revenues exceeding $23 million and has more than 1.6 million employees. McDonald’s products are recognized and are most respected all around the globe. Currently, its divisions operate in all over the world

in

beverages,

corporations

increasing

snack

foods,

success

has

and been

restaurants. based

on

The high

standards of performance, marketing strategies, competitiveness, determination, commitment, and the personal and professional integrity of their people, products and business practices. McDonald’s believes their success depends upon the quality and value of their products by providing a safe, whole some, economically efficient and a healthy environment for their customers; and by providing a fair return to their investors while maintaining the highest standards of integrity.

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McDonald's - A Global Phenomenon McDonald's opened its doors in India in October 1996. Ever since then, our family restaurants in Mumbai, Delhi, Pune, Ahmedabad,

Vadodara,

Ludhiana,

Jaipur,

Noida

Faridabad,

Doraha, Manesar and Gurgaon have proceeded to demonstrate, much to the delight of all our customers, what the McDonald's experience is all about. Our first restaurant opened on 15th April 1955 in Des Plaines, Illinois, U.S.A. Almost 50 years down the line, we are the world's largest food service system with more than 30,000 restaurants in 100 countries, serving more than 46 million customers every day.

Locally Owned

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McDonald’s in India is a 50-50 t venture partnership between

McDonald’s

Corporation

[USA]

and

two

Indian

businessmen. Amit Jatia’s company Hardcastle Restaurants Pvt. Ltd. owns and operates McDonald's restaurants in Western India. While Connaught Plaza Restaurants Pvt. Ltd headed by Vikram Bakshi owns and operates the Northern operations. Amit Jatia and Vikram Bakshi are like-minded visionaries who share McDonald's complete commitment to Quality, Service, Cleanliness and Value (QSC&V). Having signed their t-venture agreements

with

McDonald's

in

April

1995,

they

trained

extensively, along with their Indian management team, in McDonald's restaurants in Indonesia and the U.S.A. before opening the first McDonald’s restaurant in India.

History

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The McDonald's History - 1965 to 1973 McDonald's Comes To Wall Street In 1965 McDonald's went public with the company's first offering on the stock exchange. A hundred shares of stock costing $2,250 dollars that day would have multiplied into 74,360 shares today, worth approximately $3.3 million on December 31, 2006. In 1985 McDonald's was added to the 30company Dow Jones Industrial Average. A Big Idea Called "Big Mac" "Introduced systemwide in 1968, the Big Mac was the brainchild of Jim Delligatti, one of Ray Kroc's earliest

franchisees,

who

by

the

late

1960s

operated a dozen stores in Pittsburgh."

The Egg McMuffin Introduced in 1973, the Egg McMuffin was developed by owner operator Herb Peterson.

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The First Ronald McDonald House in Philadelphia, PA In 1974 Fred Hill of the Philadelphia Eagles teamed up with McDonald's to create Ronald McDonald House. Here the families of critically ill children have a place to call home while they're away from home as the young patients undergo treatment for their conditions. The Happy Meal Since 1979 the Happy Meal has been making kids visits that much more special. Clubs the world over collect Happy Meals toys & boxes.

The Future Begins Now McDonald's Express for a world that can't slow down! McDonald's is popping up in more nontraditional locations like Amoco & Chevron stations, with full menu offerings & dining room seating, just like you'll find in a traditional McDonald's. Another slide History of McDonald’s.

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McDonald's has come a long way ever since it’s beginning in 1955. Here are a few milestones of the McDonald's journey... 1955 Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald's Corporation is created. 1957 Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto. 1959 The 100th McDonald's opens in Chicago. 1961 Hamburger University opens in Elk Grove, near Chicago. 1963 One billion hamburgers sold. Ronald McDonald makes his debut. 1964 Filet-O-Fish sandwich is introduced. 1965 McDonald's Corporation goes public. 1967 The first restaurants outside of the USA open in Canada and Puerto Rico. 1968 The Big Mac is introduced. The 1,000th restaurant opens in Des Plaines, Illinois.

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1972 A new McDonald's restaurant opens every day. The Quarter Pounder is introduced. 1973 Egg McMuffin is introduced. 1974 The first Ronald McDonald House 1983 Chicken McNuggets is introduced. New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres. Training is provided for every level of McDonald's management worldwide. 1984 50 billionth hamburger sold. Ronald McDonald Children's Charities is founded in Ray Kroc’s memory to raise funds in of child welfare. 1989 McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges. 1990 McDonald's opens in Pushkin Square and Gorky Street, Moscow. 1993 The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing between Stockholm and Helsinki. 1994 Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and United Arab Emirates, bringing the opens in Philadelphia. The Happy Meal is launched. total to over 15,000 in 79 countries on 6 continents. 1996 McDonald's opens in India – the 95th country. Background 55

Founded: 1955 Franchising since: 1955 Ray Kroc, a milkshake mixer salesman, ventured to California in 1954 to visit McDonald's hamburger stand, where he heard they were running eight mixers at once. Kroc was impressed by how rapidly customers were served and, seeing an opportunity to sell many more milkshake machines, encouraged brothers Dick and Mac McDonald to open a chain of their restaurants. Kroc became their business partner and opened the first McDonald's in Des Plaines, Illinois in 1955. McDonald's and the Golden Arches have since become an internationallyrecognized symbol of quick-service hamburgers, fries, chicken, breakfast items, salads and milkshakes. Franchisor is a publicly-held company with 885 employee(s); 20 employee(s) in franchise department.

Franchise Units Year

U.S. Franchises

Canadian Franchises

Foreign Franchises

Company Owned

2009

12,221

1,070

12,510

6,357

2008

12,136

1,046

12,283

6,502

2007

11,674

927

10,498

8,078

2006

11,608

890

10,056

8,269

Products of McDonalds 55

Beverages

Cold-Coffee

Hot Serves

Ice-Tea

McShakes

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Coca-Cola

Frozen Desserts

55

Flavour Burst

Floats

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McSwirl

Soft Serves

Soft Serve Cone

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Non- Veg Menu

Filet-O-Fish

Chicken Maharaja Mac

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Chicken McCurry Pan

McChicken

55

Chicken McGrill

Chicken Mexican Wrap

Veg Menu

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Crispy Chinese

McALOO Tikki

55

McCurry Pan

McVeggie

55

Pizza Muff

Paneer Salsa Wrap

Services of McDonalds 55

McDonald's - More Than 15,000 Wi-Fi Enabled Restaurants Around the Globe! We believe in bringing you innovative and convenient services that enhance your McDonald's restaurant visit, and Wi-Fi is a perfect example. As McDonald's continues to deliver fast and friendly food service at more than 30,000 convenient locations around the world. To access the Wi-Fi services in a restaurant, you need a WiFi enabled device, such as a laptop or PDA. Our local service providers provide high-quality Wi-Fi service through several convenient connection options: on-line credit card payment,

subscriptions,

prepaid

cards,

or

(sometimes)

promotional coupons. If you have questions or need technical help, the Wi-Fi provider's customer number should be handy in the restaurant.

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Currently there are no roaming capabilities between different countries, neither for customers nor McDonald's employees. You will have to connect separately with the respective Wi-Fi service provider.

Enjoy surfing and working in your local McDonald's!

Connectivity and/or usage fees may apply and be required for WiFi services. Access details, fees and availability subject to change without notice.

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Management structure

Managing Director

Head of Marketing Senior marketing executive

Director of Finance

Human Resource head

s Manager Finance manager Employees

Marketing executive Brand Manage Research & Development officer Assistant Brand Manager Customer service manager Sales manager Branch manager

Product Development Market research Team

Compensation officer

Recruitment & Selection Training & Development

Branch employees

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Levels of strategic Management The products and services mentioned above reflect three types of major strategies employed by the organization at various levels. Namely they are:

Corporate strategy Corporate level strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of businesses. McDonald's is engaged in. Mc Donald’s only deals in the restaurant business, so its corporate strategy is a single business unit strategy, likely of growth. To make this clearer, GE's corporate strategy is of interrelating business units. Consumer electrics, submarines, locomotives, light bulbs etc share some synergies and each is a separate business unit.

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Corporate level strategy is concerned with: •

Reach

-

defining

the

issues

that

are

corporate

responsibilities; these might include identifying the overall goals of the corporation, the types of businesses in which the corporation should be involved, and the way in which businesses will be integrated and managed. •

Competitive - defining where in the corporation competition is to be localized. Take the case of insurance: In the mid-1990's, Aetna as a corporation was clearly identified with

its

commercial

and

property

casualty

insurance

products. The conglomerate Textron was not. For Textron, competition in the insurance markets took place specifically at the business unit level, through its subsidiary, Paul Revere.

(Textron

divested

itself

of

The

Paul

Revere

Corporation in 1997.) •

Managing Activities and Business Interrelationships Corporate strategy seeks to develop synergies by sharing and coordinating staff and other resources across business units, investing financial resources across business units, and using business units to complement other corporate business activities. Igor Ansoff introduced the concept of synergy to corporate strategy.

•

Management

Practices

-

Corporations

decide

how

business units are to be governed: through direct corporate intervention

(centralization)

or

through

more

or

less

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autonomous government (decentralization) that relies on persuasion and rewards. Corporations are responsible for creating value through their businesses. They do so by managing their portfolio of businesses, ensuring that the businesses are successful over the long-term, developing business units, and sometimes ensuring that each business is compatible with others in the portfolio.

Business strategy: A strategic business unit may be a division, product line, or other profit center that can be planned independently from the other business units of the firm. At the business unit level, the strategic issues are less about the coordination of operating units and more about developing and sustaining a competitive advantage for the goods and services that are produced. This might be low-cost strategy, differentiation, or focus strategies. McDonald’s has pursued two strategies since 2003. To keep

up

with

rapidly

changing

consumer

preferences,

demographics, and spending patterns, McDonald's has introduced new items ( Chicken sandwiches and the Angus Beef Burger) and campaigns to create more healthy foods ( Salads). The strategy reflects the philosophy that novelty, as opposed to loyalty to traditional products, is the key determinant of sales in the fast food industry. 55

McDonald’s has also focused on increasing sales at existing restaurants instead of opening new ones. To do so, McDonald's has remodelled many restaurants, kept stores open longer, and increased

menu

options.

Nevertheless,

new

McDonald’s

restaurants are still opening around the world at a rapid rate - the company plans to open about 1,000 units in 2008, and continues to grow its restaurant base by 1-2% each year. At the business level, the strategy formulation phase deals with: •

positioning the business against rivals

•

anticipating changes in demand and technologies and adjusting the strategy to accommodate them

•

Influencing the nature of competition through strategic actions such as vertical integration and through political actions such as lobbying.

Michael Porter identified three generic strategies (cost leadership, differentiation, and focus) that can be implemented at the business unit level to create a competitive advantage and defend against the adverse effects of the five forces.

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Functional Level Strategy The functional level of the organization is the level of the operating divisions and departments. The strategic issues at the functional level are related to business processes and the value chain.

Functional

level

strategies

in

marketing,

finance,

operations, human resources, and R&D involve the development and coordination of resources through which business unit level strategies can be executed efficiently and effectively. Functional units of an organization are involved in higher level strategies by providing input into the business unit level and corporate level strategy, such as providing information on resources and capabilities on which the higher level strategies can be based. Once the higher-level strategy is developed, the functional units translate it into discrete action-plans that each department or division must accomplish for the strategy to succeed.

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KEY STEPS TOWARDS STRATEGIC PLANNING The preparation of a strategic plan is a multi step process covering Vision, Mission, Objectives, Values, Goals, Strategies and Programmes.

Vision

Mission

Objectives

Goals

Value

Strategies Programmes

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Vision Statement "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, & value, so that we make every customer in every restaurant smile."

Mision statement 

Be the best employer for our people in each community around the world



Deliver operational excellence to our customers in each of our restaurants;



Achieve enduring profitable growth by expanding the brand and leveraging the strengths of the McDonald's system through innovation and technology.  

Objectives In a business when a number of brains are working together, there are always different views on a certain aspect, therefore

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aims and objectives are used to help them focus on one view on the aspect which either seems right or is right. Aims & Objectives help an organisation grow; it is used as a guideline, a plan & goal. What the organisation is heading for & how it is heading there & where it is heading? All the answers for these

questions

are

answered

by

Aims

&

Objectives.

The Main Objectives of a Business are: Sales – Sales revenue is the total amount of money a company has earned by providing their service or selling their stock. Growth – An increase in the Business capacity to produce more stock or provide better or greater service. Profit – Residual value gained from business operations after cutting out expenses such as stock cost etc. Customer Satisfaction – Providing service to customers to their satisfaction level such as hygienically clean place or high quality food. SMART Before a business can set objectives it is important that they follow the SMART criteria. • Specific – Detailed and Exact • Measurable – Targets should be measurable • Achievable – Something that can be achieved

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• Realistic – Targets must be realistic, so that they can be met • Time Specific – That can be achieved by a deadline Aims & Objectives of McDonald’s’ – “it’s what I eat and what I do…I’m lovin’ it” McDonalds objectives are to reverse the decline of sales, to continue staying ahead of the competition in the fast food industry and to find new strategies that would help the restaurant successfully compete in the a fiercely competitive market.

Goal McDonalds goal in laid our in their second Worldwide Corporate Responsibility Report is to communicate our progress and direction related to the most relevant and material corporate responsibility - related aspects of their business. To that end, the report is structured according to key elements of our business strategy - the “Plan to Win.” The Plan is a global alignment around five drivers of exceptional customer experience, all beginning with the letter P. They have focused on three of the five Ps: Products, People and Place. (The remaining two are Price and Promotion.)

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Values 

We place the customer experience at the core of all we do: Our customers are the reason for our existence. We demonstrate our appreciation by providing them with high quality food and superior service, in a clean, welcoming environment, at a great value. Our goal is QSC&V for each & every customer, each & every time.  We are committed to our people We provide opportunity, nurture talent, develop leaders and reward achievement. We believe that a team of well-trained

individuals

with

diverse

backgrounds

and

experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to our continued success.  We believe in the McDonald’s System McDonald’s business model, depicted by the “threelegged stool” of owner/operators, suppliers, and company employees, is our foundation, and the balance of interests among the three groups is key.

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 We operate our business ethically Sound ethics is good business. At McDonald’s, we hold ourselves and conduct our business to high standards of fairness,

honesty,

and

integrity.

We

are

individually

able and collectively responsible.  We give back to our communities We take seriously the responsibilities that come with being a leader. We help our customers build better communities, Ronald McDonald House Charities, and leverage our size, scope and resources to help make the world a better place.

 We grow our business profitably McDonald’s is a publicly traded company. As such, we work

to

provide

sustained

profitable

growth

for

our

shareholders. This requires a continuing focus on our customers and the health of our system.  We strive continually to improve

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We are a learning organization that aims to anticipate and respond to changing customer, employee and system needs through constant evolution and innovation.

Strategy "McDonalds possesses a highly visible and popular brand image around the world. The firm has grown to become one of the most popular food brand names in the world, with continuous increases in exposure in new markets, such as Asia and Europe, amongst others. Although McDonalds has been in existence in North America for many decades, the increasing popularity in new markets has positioned the firm for continued growth in market share and customer buying power. The McDonalds strategy map encomes four key perspectives: 1) Financial; 2) Customer; 3) Internal Process; 4) Learning. These perspectives have evolved over time into a welldefined vision for the corporation, which is to become the most positive dining experience in the world ("McDonalds")."

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Key steps towards business strategies A scan of the internal and external environments forms an important part of the strategic planning process. Environmental factors internally affecting the firm can be classified as Strengths or Weaknesses and those externally affecting to the firm can be classified as Opportunities and Threats. This is referred to as SWOT Analysis.

Strengths 

Global brand

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McDonald’s has a well-established global brand that appeals to all age groups and customer segments. In 2005, McDonald’s placed ninth in the top 100 global brands ranking of Business Week magazine and Interbrand, a branding consultancy. 

Strong operational capabilities McDonald’s has strong operational capabilities which allow it to provide high quality products and customer service across its restaurants. The company has a worldclass supply-chain and standardized processes to deliver products of uniform quality across restaurants, regardless of their location or nature of operation (company-owned or franchisee-operated).

The

company

and

its

partners

purchase food and related items from an approved group of suppliers. 

Successful items Some of its products such as Big Mac, and Chicken McNuggets and have become brands in their own right. Strong brand draws customers to the company’s restaurants and provides it with a recognized ’brand currency’ in new markets.



Quality Products McDonalds is the symbol of quality with respect to its offering. 55

Weakness 

Weak revenue growth Low revenue growth suggests that the company has not been able to expand customer traffic at existing restaurants thanks mainly to the maturation and saturation of its key markets.



Weak product development McDonalds faces a strong competition and its weak product development creates problem.

Opportunities 

Expansion McDonalds is serving only in few cities of Pakistan. There is a large market for McDonalds still to serve. Furthermore it has few outlets within cities in which it is currently serving, so McDonalds also has opportunity to expand within cities.



Franchisee-operated restaurants McDonald’s intends to sell about company-operated restaurants in the Pakistan to franchisees. The operating margin of franchisee-operated restaurants is higher than that of company-operated restaurants.

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The

sale

of

company-operated

restaurants

to

franchisees is likely to increase the overall profitability of McDonald’s Pakistan’s business. 

Growing dining-out market As the lifestyle trends of consumers are changing, the dining out market is growing, that would serve as an opportunity for the McDonalds

Threats 

Intense competition McDonald’s restaurants face intense competition from international, national, regional and local retailers of food products. The company competes on the basis of price, convenience, service and quality of food products. The company’s competition includes restaurants, quick service eating establishments, pizza parlors, coffee shops, street vendors, convenience food stores, delicatessens and supermarkets.



Growing health consciousness As the education level in Pakistan has increased in last few years, health consciousness has also increased .A growing consciousness of health matters could reduce McDonald’s revenues

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

Increased Sales Tax Sales tax has increased which results in the increased customer prices and reduced sales level.

Strategic Management Process The strategic management process of McDonalds is made up of four elements: situation analysis, strategy formulation, Internal implementation, and strategy evaluation. These strategy Assessment elements are steps that are performed, in order, when developing a new strategic management plan. Existing businesses that have already developed a strategic management plan will revisit these steps as the need arises, in order to make necessary changes and improvements Strategy Formulation

Strategy Implementatio n

Strategy Control

Environmental Analysis

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Situation Analysis Situation analysis is the first step in the strategic management process. The situation analysis provides the information necessary to create a company mission statement. Situation analysis involves "scanning and evaluating the organizational context, the external environment, and the organizational environment". This analysis can be performed using several techniques. Observation and communication are two very effective methods. To begin this process, organizations should observe the internal company environment. This includes employee interaction with other employees, employee interaction with management, manager interaction with other managers, and management interaction with shareholders. In addition, discussions, interviews, and surveys can be used to analyze the 55

internal environment. Organizations also need to analyze the external environment. This would include customers, suppliers, creditors, and competitors. Several questions can be asked which may help analyze the external environment. What is the relationship between the company and its customers? What is the relationship between the company and its suppliers? Does the company have a good rapport with its creditors? Is the company actively trying to increase the value of the business for its shareholders? Who is the competition? What advantages do competitors have over the company?

Strategy Formulation Strategy formulation involves deg and developing the company strategies. Determining company strengths aids in the formulation of strategies. Strategy formulation is generally broken down into three organizational levels: operational, competitive, and corporate. Operational strategies are short-term and are associated with the various operational departments of the company, such as human resources, finance, marketing, and production. These strategies are department specific. For example, human resource strategies would be concerned with the act of hiring and training employees with the goal of increasing human capital. Competitive strategies are those associated with methods of 55

competing in a certain business or industry. Knowledge of competitors is required in order to formulate a competitive strategy. The company must learn who its competitors are and how they operate, as well as identify the strengths and weaknesses of the competition. With this information, the company can develop a strategy to gain a competitive advantage over these competitors. Corporate strategies are long-term and are associated with "deciding the optimal mix of businesses and the overall direction of the organization" (Coulter, 2005, p. 216). Operating as a sole business or operating as a business with several divisions are both part of the corporate strategy.

Strategy Implementation Strategy implementation involves putting the strategy into practice. This includes developing steps, methods, and procedures to execute the strategy. It also includes determining which strategies should be implemented first. The strategies should be prioritized based on the seriousness of underlying issues. The company should first focus on the worst problems, then move onto the other problems once those have been addressed. "The approaches to implementing the various strategies should be considered as the strategies are formulated”. The company should consider how the strategies will be put into 55

effect at the same time that they are being created. For example, while developing the human resources strategy involving employee training, things that must be considered include how the training will be delivered, when the training will take place, and how the cost of training will be covered.

Strategy Evaluation Strategy evaluation involves "examining how the strategy has been implemented as well as the outcomes of the strategy”. This includes determining whether deadlines have been met, whether the implementation steps and processes are working correctly, and whether the expected results have been achieved. If it is determined that deadlines are not being met, processes are not working, or results are not in line with the actual goal, then the strategy can and should be modified or reformulated. Both management and employees are involved in strategy evaluation, because each is able to view the implemented strategy from different perspectives. An employee may recognize a problem in a specific implementation step that management would not be able to identify. The strategy evaluation should include challenging metrics and timetables that are achievable. If it is impossible to achieve the metrics and timetables, then the expectations are unrealistic and the strategy is certain to fail. 55

Conclusion The strategic management process is a continuous process. "As performance results or outcomes are realized - at any level of the organization - organizational assess the implications and adjust the strategies as needed". In addition, as the company grows and changes, so will the various strategies. Existing strategies will change and new strategies will be developed. This is all part of the continuous process of improving the business in an effort to succeed and reach company goals.

BCG Matrix The need for strategy in order to expand its existing product in very promising markets for McDonald’s is very essential. McDonald’s along with KFC and other major fast food chains have dominated the American continent as well as elsewhere. BCG Matrix: The market growth rate measures industry attractiveness. The underlying theory for examining market growth rate is the industry life cycle. The BCG assumes that growth rates, life cycle stages affect a firm’s finances.

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Placing products in the BCG matrix results in 4 categories in a portfolio of a McDonalds:

1. Stars (=high growth, high market share) o Frequently roughly in balance on net cash flow. However if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept. So, McDonald’s USA is under Star position. 2. Cash Cows (=low growth, high market share)

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o Profits and cash generation should be high, and because of the low growth, investments needed should be low. Keep profits high. 3. Dogs (=low growth, low market share) o Avoid and minimize the number of dogs in a company. o Beware of expensive ‘turn around plans’. 4. Question Marks (= high growth, low market share) o Have the worst cash characteristics of all, because high demands and low returns due to low market share

GE Matrix Growth matrix The GE Matrix is a model to perform business portfolio analysis on the Strategic Business Units of a corporation. The General Electronics of USA with the of consulting firm Mckinsey and Co. developed a more complicated matrix as a technique of portfolio analysis. The GE business screen can be shown with the help of the following diagram:

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McDonald don’t have GE matrix

7s MCKINSEY’s MATRIX Mckinsey developed a new framework to better represent the challenges of Services Marketing and for analysis and improving organization’s effectiveness i.e. the 7S model which can be shown with the help of the following diagram:

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Most of us grew up learning about 'the 4Ps' of the marketing mix: product, price, place, promotion. And this model still works when the focus is on product marketing. However most developed economies have moved on, with an ever-increasing focus on service businesses, and therefore service marketing. To better represent the challenges of service marketing, McKinsey

developed

a

new

framework

for

analyzing

and

improving organizational effectiveness, the 7S model: The 3Ss across the top of the model are described as 'Hard Ss': • Strategy: The direction and scope of the company over the long term.

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• Structure: The basic organization of the company, its departments,

reporting

lines,

areas

of

expertise,

and

responsibility (and how they inter-relate). • Systems: Formal & informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of with the customer (retail systems, call centre systems, online systems, etc). The 4Ss across the bottom of the model are less tangible, more cultural in nature, and were termed 'Soft Ss' by McKinsey: • Skills: The capabilities & competencies that exist within the company. What it does best. • Shared values: The values and beliefs of the company. Ultimately they guide employees towards 'valued' behaviour. • Staff: the Company’s people resources and how they are developed, trained, and motivated. • Style: The leadership approach of top management and the company's overall operating approach.

In combination they provide another effective framework for analyzing the organization & its activities. In a marketing-led company they can be used to explore the extent to which the company is working coherently towards a distinctive & motivating place in the mind of consumer. 55

Organizational Chart

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Supply Chain

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Our growth plan for the next three years is more a function of getting our logistics and cold chain right rather than going to far off places.“ - Amit Jetia, managing director, McDonald's India, Mumbai t Venture,

Supply chain

Overvie w

Local Sourcin g

Cold chain

Supplier s

Supply Chain

Suppliers

Manufacturing

Distributors

Retailers

Customers

Strategies of McDonalds Following are the strategies adopted by McDonalds 55

•

International Growth McDonalds has expanded to international markets in the face of increasing regulations in the United States and domestic

market

saturation.

They

initially

entered

international markets by leveraging standardized product offerings, clean and bright environments, and American brand equity.

However, recent years have seen McDonalds adapt to local regions by remodeling its retail space while changing the product line to appeal to local tastes. While the strategy has paid off well in the short term and McDonalds has realized that they must adapt to each country they enter, their tactics of both catering to local tastes and changing the restaurant’s design and appeal is diluting brand equity. This will have disastrous consequences in the long term. 

US Market Saturation – Slow Expansion



Focus on Same Store-Sales Growth and Improving

Delivery Outlets

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• Forward Integration A business strategy that involves a form of vertical integration whereby activities are expanded to include control of the direct distribution of its products.  •

Distribution through Franchisees Backward Integration

Acquiring ownership of one's supply chain, usually in the hope of reducing supplier power and thus reducing input costs.  •

Local Sourcing, Cold Chain, Suppliers

Market penetration & Development Market

penetration

occurs

when

a

company

enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-s of your product or convincing current clients to use more of your product/service (by advertising etc). Ansoff developed the Product-Market Growth Matrix to help firms recognise if there was any advantage of entering a market. 

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

New Product Development Product development is the process of deg, creating, and marketing an idea or product. The product can either be one that is new to the marketplace or one that is new to your particular company, or, an existing product that has been improved. In many instances a product will be labeled new and improved when substantial changes have been made.

Aloo Tikki, Salad

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Recommendation  Increase and Provide Delivery Services to every Potential Customer-Potential Segment. 

Increase Drive through Branches.

 Remove U.S. Branding Consciousness.  More

Awareness

to

remove

Obesity

link

with

McDonald’s.  Understand Local Tastes.

Conclusion

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If the Golden Arches are more representative of America than GEORGE BUSH is, McDonalds isn’t exactly an alien entity in India too. After spending Rs. 25 crores on its Indian operations, the global food-chain is out to make its presence felt in every part of the country and it has succeeded in serving up an exciting new combo to Indian customers. Take two pieces of bun, put in a patty and garnish it with two equations. Price leads to volumes. Children bring in the family that explains why McDonalds is the only food chain in India that can afford to stand tall. McDonalds is in the throes of a major expansion. Rs.30 crores plan will be funded through internal accruals and loans. It is adding 10 outlets to the 25 existing ones-13 in Delhi and 12 in Mumbai. Early next year, McDonalds will foray into the southern metros, starting with franchisee operations. McDonalds in corporate India is also associated with the excellent in Supply Chain Management

Increase its product line. To have more variety to choose from, to include more deserts and more items like Pizza Muff. It

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should continue to provide better and quick service. By lower the supply chain cost so that it helps in cost reducing. McDonald is willing to expand their Happy Meal choices to attract and retain customers& can also Introduction of MacAfee’s serving and specialty coffees and other beverages and other products such as cakes, pastries etc in the existing McDonald’s. Focus on gifts for all generations i.e. youth, kids’ especially senior citizen which is a completely new concept. McDonald

should

provide

special

promotions

during

festivals. They should increase the space for provision of birthday party areas& try to sponsor college festivals. After analyzing the marketing mix of McDonald’s, it is clear that the company can be said to be `global’, i.e. combining elements of globalization and internationalization. McDonald’s have achieved this through applying the maxim, `think global, and act local’

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