Christine Rose Villaflor

Crystyll Parba
Ainee Joy Villares
November 16, 2016
History of McDonald's
McDonald's Corporation is the world's largest chain of hamburger fast food
restaurants, serving more than 58 million customers daily. The business began in 1940,
with a restaurant opened by brothers Richard and Maurice McDonald in San
Bernardino, California. Their introduction of the "Speedee Service System" in 1948
established the principles of the modern fast-food restaurant.
The present McDonald's corporation dates its founding to the opening of a
franchised restaurant by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955. Kroc later
purchased the McDonald brothers' equity in the company and led its worldwide
expansion.
The first McDonald's restaurant opened in Des Plaines Illinois on April 15, 1955.
Their first day sales were $366.12. By 1965 there would be over 700 McD's throughout
the United States. In 1967 McDonald's went international with restaurant openings in
Canada and Puerto Rico.
McDonalds Philippines is a subsidiary of the Filipino-owned Golden Arches
Development Corporation. The first Filipino McDonalds to open for business was in the
Morayta university districts in Manila during 1981. These days McDonalds is operating
over 150 restaurants throughout the islands of the Philippines. Being a 100% Filipino-
owned franchise allows McDonalds Philippines to be more agile and take quicker
actions, making them an even more competitive force in the Filipino fast-food market.

McDonald's today
Number of Global Restaurants: More than 32,000
Number of Countries: 117
Number of worldwide employees: 1.7 million
Percentage of franchised restaurants around the world: More than 75%
 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 responsibility.
Strengths
1. Strong brand name, image and reputation
McDonalds has built up huge brand equity. It is the no 1 fast food company by
sales, with more than 31,000 restaurants serving burgers and fries in almost 120
countries. The image of McDonalds is recognized everywhere. This brand is in top ten
of the most powerful brand names in the world with Coca-Cola, Nokia or GM.
2. Large market share
McDonalds is considered as the largest player in size and global reach. When
Wendys or Burgers King are losing market share in 2006, McDonalds still increases its
market share. Market share of McDonalds in the recent time is about 19% while
Yum!Brands is 9% and both Wendys and Burger King is 2%.
3. Specialized training for managers
McDonalds is very serious on training managers. This company has its own
program to train managers the most professionally, which is called Hamburger
University. As a result, McDonalds has many good managers who can help company
development well.
4. McDonalds Plan to Win
McDonalds customer focused Plan to Win provide a common framework for its
global business yet allows for local adaptation. Through the execution of initiatives
surrounding the five elements of its Plan to Win People, Products, Place, Price and
Promotion McDonalds has enhanced the restaurant experience for customers
worldwide and grown comparable sales and customer visits in each of the last eight
years. This Plan, combined with financial discipline, has delivered strong results for
companys shareholders.
5. Introduction of new production
McDonalds is considered the first one enter to fast food industry. It initiates to
other brand to enter this industry. As a result, when think about fast food, customers
always remember McDonalds first. In fact, in some big countries, especially in US,
McDonalds is the first choice of a large number of customers.
6. Technology Innovative:
McDonalds is keeping at the forefront of technology around the globe. For
example, In Brazil McDonalds is currently studying the installation of Internet access
terminals in some outlets as well as enabling customers to order online. This will create
a more efficient process that will reduce the amount of lag time between a customers
orders and pick up of the order.
7. Good marketing strategies:
No matter the continent, children and adults know the face of Ronald McDonald
is synonymous with the colossus restaurant chain. This results in wonderful marketing
strategies among management which conducts a very thorough market analysis,
resulting in much success around the globe.
Weaknesses
1. Unhealthy food image
McDonald's has been impacted by negative press like the documentary
"Supersize Me" by Morgan Spurlock in which he contributed our societys obesity to
McDonald's and other fast food chains. In fact, each McDonalds dishes provides large
amount of calories but not too much nutrition.
2. Customer looses due to fierce competition
McDonalds has to compete with many strong brand name in fast food industry
such as Wendys, Burger King or Yum!Brands. This fierce competition makes
McDonalds loose a large number of customers who prefer favor of other brands.
3. Problem related to health issue
McDonalds use Trans - fat and beef oil in their food. Although it is not illegal, it
affects badly on customers health because Trans fat is causes of some kind of
cancer. Consequently, a number of customers who care about their health stop eating
at McDonalds restaurants. It makes revenue of company decrease.
4. Legal action:
McDonalds has been involved in a number of lawsuits and other legal cases in
the course. For example, there are many case which involved with trademark issue.
McDonalds force many others restaurant, company of just a coffee shop to change
their brand name because of keeping Mc letters.
5. Unbalance meals:
Although McDonalds tries to update its menu by healthy criteria, McDonalds
meals are still unbalance. For example, there are many dishes with chicken (both grilled
and fried), bacon, beef, rib or egg. Besides, just several dishes are salad with vegetable
and fruit. Moreover, amount of fruit or vegetable is not much.
6. High employee turnover rate
Although McDonalds has many good managers as well as skillful employees, the
turnover rate is still high. Every year many of their employees are fired out of the
restaurants. Moreover, many others quit their jobs, especially part time employees
because of low salary as well as too high working pressure.
7. Action related to environmental issue
McDonalds uses HCFC 22 to make polystyrene that is contributing to ozone
depletion. The company has to repair this weakness if doesnt want to be criticized.
8. Dissatisfied Franchisees:
Franchisees are beginning to become very dissatisfied with the fees that
McDonalds are forcing them to pay. As the company continues to expand, they are also
increasing the amount of fees franchisees have to pay for the use of the notorious fast-
food brand. Many people are not very happy about this and as a result many
franchisees are selling their businesses.

Strategies of McDonald
McDonalds is one of the famous food chain all throughout the world known by
both the child and adult alike. It has increased it sales despite some issues being raised
against the company. To further increase sales on the business and improve its
performance, business strategies are done by person in-charge. It is in this stage
wherein the company would improve what they lack thus making prospective customers
to keep on coming back and ask for more. It is said that McDonald has been able to use
various strategies to uplift and sustain their competitive advantage in the market.
 Part of its business strategy is its plan to phase out its Super Size French fries
and soft drinks as it tries to create a healthier image for itself. The Super Size option is
to be phased out in an attempt to slim down its menu amid increasing concerns and
issues being raised about obesity (Crouch, 2004). The company is also planning other
menu changes, such as switching to a cinnamon roll and a sausage burrito as its core
breakfast offering, while bagels would become an optional item. The company also has
to stop selling its 14 ounce McDonalds Fruit n Yogurt Parfait and replaced it with a
smaller-sized version of the product (Crouch, 2004). All these changes in the menu are
part of its strategy to provide a range of choices that support a balanced lifestyle. The
company has also added that the simplified core menu would be rolled out to its entire
restaurant.
Furthermore, using the national rollout of its made for you platform as the
opportunity to re-evaluate its core brand attributes, the company has quietly formed a
global brand strategy task force that is looking for long and hard at the essence of the
Golden Arches (Howard, 1999). The group which will be led by new vp-brand strategy
has been meeting for several months and is anticipated to put forward its findings in
fresh consumer messages by mid-2000.
The slow-build will allow stores to work through an expected learning curve for
the new cooking system and avert major miscues as it attempts to deliver on the
promise of hotter, fresher foods made to order (Howard, 1999). The group also is
evaluating all elements of the brand from menu, service, and restaurant dcor to brand
icons Ronald McDonald.
Even though domestic sales have turned to healthy 5% level, the said company
is rethinking how to sustain growth in the face of both national and regional rivals.In the
past, the companys marketing strategy has been criticized for being short-term focused
and there has been no over-arching umbrella strategy. With that, the charge is to bring
continuity and consistency to the brand strategy piece.
Strategies in other areas of the organization is also made like the three-wheeled
vehicle that is used to collect discarded cups and burger wrappings from the
neighbourhood around the restaurant and the provision of good services to customer
which naturally begins and commences with hiring the right kind of people (Livesey,
1999).
Staffs are encouraged to smile, be optimistic and treat customers particularly with
respect, tell them what a person wants and follow up on the performance and reward
their behavior. The restaurants bathroom is not spared. Issues are raised on the
concerns about the said restaurant to be dirty and unhygienic. Customers want a clean
area especially the bathroom to make they feel comfortable. Strategies like this should
also be applied (Livesey, 1999).
McDonalds has developed three strategies for sustaining the competitive
advantage. These are customer convenience, customer value, and optimal operations.
Together with the digital strategies, it will help create new and bold ideas for the
company. The stores are characterized by the operations team as miniature
manufacturing facilities.
With its goal in improving the suite of its manufacturing systems (inventory
control, production planning, financial control, and point-of-sale order entry) that
supports the store, the team has developed ways of improving its overall operations.
Aside from offering hamburgers and French fries, the current trend in McDonalds
extends in serving as a family retreat, and as a community center for senior citizens.
The means for the former one are its extensive indoor playgrounds and promotional
toys, while the invitational plays of bingo are for the latter one. As this trend continues,
an extension of more service-oriented technologies is needed. They can conduct
studies and surveys to better know which among the different alternatives serves the
companys objectives the best. These might include robots taking orders instead of
humans, automated processes of food production, and the like.
To achieve customer convenience, one of their key initiatives is on the
improvement in the speed of new stores opening. To answer this, the day in the life
scenario was developed for site developers that described the optimal toolset and the
collaborative environment they would have with them as they scouted for locations.
Rather than choosing individual tools, they should think about the tools on the
horizon-geographical information systems, global positioning satellites, new media such
as teleconferencing, and the expanding flow of information through public networks like
the Internet. The adherence of the company to put WIFI technology in their stores for
instance has also become one of the attractive forces for customers.
For the achievement of customer value, focus should remain on real-time
information flow that allows instant corrections of the menu and prices in response to
customers preferences, competitive environment, and even the ingredients global
commodities market.

How does McDonalds maintain its branding success internationally?

1. Segmentation
McDonalds main focus is the US, where they spend most of their budget and
trial more new products and innovations. The American audience is their largest
Americans spend more money at McDonalds than any other fast food restaurant in the
country.
In the US, advertising normally targets children. Did you know that American kids
see more than 250 McDonalds advertisements per year?
In Japan, the advertising campaigns are more varied when approaching the
demographics, sometimes they focus on children but they also target adults. One
advertisement used McDonalds as a fetish object with sexy girls promoting the burgers,
something you would never see in the US.
McDonalds a brand thats been built through strategic marketing segmentation.
The questions you have to ask are:
What are the wants/needs and tastes of the customers?
Is the marketing up to date, reflecting the changing customer needs and
demands?
Although a multinational giant, McDonalds adapts its business and menu to the
different countries they operate in. They respect cultural differences and every country
has its own policy of developing menu items.

2. Testing
Experimentation is vital, and it is often carried out by adding or deleting food from
menus according to latest consumer trends and local popularity.
 In Japan, apart from the traditional menu you can find seasonal and limited-time
items such as The Teri Tama Burger, served during spring or The Tsukimi Burger,
served during Tsukimi season (in the autumn). In the US there are the popular
McRibs, just available for a short time each year.
This is a good example of adapting to customers tastes, vital when talking about
marketing.
Experimentation is vital, and it is often carried out by adding or deleting food from
menus according to latest consumer trends and local popularity.

3. The Secret Sauce

It is true that the marketing and branding strategy of McDonalds is based on
uniformity, no matter where in the world, you will always be able to order the most iconic
menu items such as the Big Mac.
The same kind of atmosphere and experience mean that your expectations will
be fulfilled, because you know what you can expect from the restaurant.
Despite its geographic variety the brand is actually very consistent, with a lot of
attention to detail to ensure the values are applied globally.

4. Global Product Marketing

When we look at the strategic differences between US McDonalds and the
Japanese version, we can appreciate the localized marketing strategies.
For example, the name of the restaurant is adjusted for the katakana, the
appropriate Japanese script for foreign words. In Japan, they call it Makudonarudo,

(), a more appropriate and attractive sound in Japanese.

Drink sizes and fries are much smaller than the ones in the US, and burgers are
a bit smaller too, to suit eating habits. McDonalds ensures the correct sizes before
exporting for international target markets.
Although McDonalds offers its products everywhere in the world, being the most
popular restaurant on the planet, the brand keeps recognizable with its original meaning
and identity whilst catering to local tastes.
5. Innovation and Collaboration
For McDonalds, globalization has meant embracing and engaging different cultures
while at the same time retaining a strong enough brand to be immediately identifiable.
But how can you ensure your brand transcends cultures and regional approaches to
marketing? This is where online innovations really come into their own by bridging the
cultural and physical gaps that can inhibit connection with a global audience.

Summary:

When most firms were struggling in 2008, McDonalds increased its revenues
from $22.7 billion in 2007 to $23.5 billion in 2008. Headquartered in Oak Brook, Illinois
McDonalds net income nearly doubled during that time from $2.4 billion to $4.3
billionquite impressive. Fortune magazine in 2009 rated McDonalds as their 16th
Most Admired Company in the World in terms of their management and
performance.

McDonalds added 650 new outlets in 2009 when many restaurants struggled to
keep their doors open. McDonalds low prices and expanded menu items have
attracted millions of new customers away from sit-down chains and independent
eateries. Jim Skinner, CEO of McDonalds, says, We do so well because our
strategies have been so well planned out. McDonalds served about 60 million
customers every day in 2009, 2 million more than in 2008. Nearly 80 percent of
McDonalds are run by franchisees (or affiliates).

McDonalds in 2009 spent $2.1 billion to remodel many of its 32,000 restaurants
and build new ones at a more rapid pace than in recent years. This is in stark contrast
to most restaurant chains that are struggling to survive, laying off employees, closing
restaurants, and reducing expansion plans. McDonald's restaurants are in 120
countries. Going out to eat is one of the first activities that customers cut in tough
times. A rising U.S. dollar is another external factor that hurts McDonalds. An internal
weakness of McDonalds is that the firm now offers upscale coffee drinks like lattes
and cappuccinos in over 7,000 locations just as budget-conscious consumers are
cutting back on such extravagances. About half of McDonalds 31,000 locations are
outside the United States.

But McDonalds top management team says everything the firm does is for the
long term. McDonalds for several years referred to their strategic plan as Plan to
Win. This strategy has been to increase sales at existing locations by improving the
menu, remodeling dining rooms, extending hours, and adding snacks. The company
has avoided deep price cuts on its menu items. McDonalds was only one of three
large U.S. firms that saw its stock price rise in 2008. The other two firms were Wal-
Mart and Family Dollar Stores. Other strategies being pursued currently by
McDonalds include replacing gasoline-powered cars with energy-efficient cars,
lowering advertising rates, halting building new outlets on street corners where nearby
development shows signs of weakness, boosting the firms coffee business, and
improving the drive-through windows to increase sales and efficiency.

McDonalds receives nearly two thirds of its revenues from outside the United
States. The company has 14,000 U.S. outlets and 18,000 outlets outside the United
States. McDonalds feeds 58 million customers every day. The company operates
Hamburger University in suburban Chicago. McDonald's reported that first quarter
2009 profits rose 4 percent and same-store sales rose 4.3 percent across the globe.
Same-store sales in the second quarter of 2009 were up another 4.8 percent.
References:
McDonalds Website
Retrieved on November 14, 2016
http://corporate.mcdonalds.com/content/mcd/our_company/mcdonalds-
history.html

McDonald's SWOT Analysis and Recommendations

Retrieved on November 14, 2016
https://toughnickel.com/industries/McDonalds-SWOT-analysis-and-
recommendations

Arnold, David (2003). Strategies for Entering and Developing International

Markets. In Mirage of Global Markets, The: How Globalizing Companies Can
Succeed as Markets Localize. Financial Time Prentice Hall, 2003.

Crouch, A. (2004). Fast-Food Business Strategy. The Raw Prawn Blog

Howard, T. (1999). The Over-Arching Strategy-McDonalds Global Brand

Strategy Task Force. Brandweek,November 8, 1999

Livesey, S. (1999). McDonalds and the Environmental Defense Fund: A Case

Study of a Green Alliance. The Journal of Business Communication, Vol. 36

What is the Secret to McDonalds Global Branding Success?

Retrieved on November 14, 2016
https://www.blurgroup.com/blogs/marketing/what-is-the-secret-to-mcdonalds-
global-branding-success/

Janet Adamy, McDonalds Seeks Way to Keep Sizzling, Wall Street Journal
(March 10, 2009): A1, A11. Also, Geoff Colvin, The Worlds Most Admired
Companies, Fortune (March 16, 2009): 7686.