Documente Academic
Documente Profesional
Documente Cultură
Topic: McDonalD’s
2
McDonald's
Table of contents
Overview
History
Mission and mission statement
Products or services offered
Organization structure
Departmentalization
Horizontal and vertical coordination
Mega environment
Task environment
HRM
Conclusions
Recommendations
References
3
McDonald's
ACKNOWLEDGEMENT
Words will never be able to express enough my fervent gratitude to almighty Allah, the most
compassionate and merciful, for giving us the courage and fortitude to accomplish this
gargantuan task. We are the Holy Prophet‟s (PBUH) Ummah and we acknowledge that the Holy
Prophet‟s (PBUH) moral and spiritual teachings have enlightened our heart and mind and have
guided our thoughts towards new horizons enriched with great ideas of life.
We are undoubtedly indebted to Miss Sonya Omer who has been our mentor and thanks for her
kind supervision, valuable suggestions and moral support throughout our project. We are highly
impressed by her intellectual activities and inexhaustible energies used in steering forth the
students.
We must take this opportunity to appreciate efforts and co-operation of our fellow students and
friends whose constructive suggestions made it possible for us to conduct this project. We extend
our thanks to all of them for their helping hand whenever needed. Once again words fail in
expressing our thanks to our families, whose hands are always raised in prayers for our success.
4
McDonald's
Company Profile
5
McDonald's
History
Ray Kroc became the first franchisee appointed by Mac and Dick McDonald in San Bernardino,
California. Ray Kroc opened his first restaurant in Des Plaines, Illinois (near Chicago), and the
McDonald's Corporation was created. Quality, Service, Cleanliness and Value (Q.S.C. & V.)
became the company motto. McDonald's is the leading global foodservice retailer with
more than 30,000 local restaurants serving nearly 50 million people in more than 119
countries each day. McDonalds is one of the world's most well-known and valuable
brands and holds a leading share in the globally branded quick service restaurant
segment of the informal eating-out market in virtually every country in which we do
business. McDonalds serves the world some of its favorite foods - World Famous
French Fries, Big Mac and Chicken McNuggets.
Sindh
Baluchistan
Punjab
N.W.F.P.
6
McDonald's
For second venture (for the territory of Punjab and NWFP), McDonald's has made franchise-
contract with "Ghouse Akbar", who is now the president of McDonald's -Lahore.
Until now there are six stores of McDonald's, operating in Lahore. Currently McDonald's-Lahore
is planning to expand its business to other cities by following preferences:
Sialkot
Faisalabad
Gujranwala
Peshawar
Multan.
McDonald's Lahore is a joint venture between McDonald's Corporation U.S.A and GAM Corp
(Pvt.) Ltd. McDonald's made its debut in Pakistan on 19th September 1998 when it‟s Grand
Country Opening was held in the provincial metropolis of Lahore. This made Pakistan the 113th
country on the globe where the world renowned Golden Arches were unfolded. After Lahore,
McDonald's made Golden Arches glitter in other cities of Pakistan, Faisalabad is already open,
soon to be followed by other cities.
McDonald‟s has set the ball rolling in Pakistan with two modern, state-of-the-art restaurants, one
in Lahore and Karachi each. The McDonald's Lahore Restaurant is located on Gulberg‟s Main
Boulevard while the one in Karachi is situated on the Main North Nazimabad Road. The Lahore
McDonald's has scored another first in Pakistan with its Drive-Thru – a modern customer service
concept in quick service restaurants that has been introduced for the first time in Pakistan. The
customer simply drives into McDonald's, places the order and pays at one window and collects
the food within a minute at the next – all without leaving the car.
7
McDonald's
Our Vision
McDonald's vision is to be the world's best quick service restaurant experience. Being the
best means providing outstanding quality, service, cleanliness and value, so that they make
every customer in every restaurant smile. To achieve their vision, they are focused on three
worldwide strategies:
8
McDonald's
Mission Statement
Mc Donald's is the largest and best known global food service retailer entertaining 1.6million
customers everyday in 121 countries. McDonalds is the market leader with outstanding brand
recognition, experience management, high quality food, site development expertise,
advanced operational systems and unique global infrastructure which ensures a position that
enables us to capitalize on global opportunities. We plan to help in the development of the
social infrastructure of the country where we work in. We want to be the best employer for
our people in each community around the world. We plan to expand our leadership position
through great testing food, superior services, everyday value and convenience.
• Customers:
• Product or Services:
The aspect of products is mentioned here as they are basically a food manufacturing company, so
they have mentioned them in these word “Mc Donald's is the largest and best known global
food service ……high quality food…”
• Markets:
McDonalds have mentioned about the markets in which they operate in words:
“……entertaining 1.6million customers everyday in 121 countries”
9
McDonald's
• Technology:
McDonalds is technologically very sound as they have mentioned:
“…… advanced operational systems….”
Philosophy:
Philosophy is included in the mission statement of McDonalds in words:
“We want to be the best employer for our people in each community around the world.”
10
McDonald's
McDonald's original restaurant served only hamburgers, cheeseburgers, milkshakes, and French
fries. Today's menu includes numerous other items that have been added through the years.
Below are listed the basic items sold by the company.
Breakfast
Burgers
Beef Burger
Cheese Burger
Spicy Chicken Burger
Double Cheese Burger
Big Mac
Chicken Big Mac
McRoyale
McArabia
Spicy McCrispy Chicken Deluxe
Cheese Burgers
11
McDonald's
Drinks
Regular - 12 oz cup
Medium - 16 oz cup
Large - 21 oz cup
Hot Drinks
Cappuccino
Latte
Mocha
Hot Chocolate
Long Black
Tea
Shakes
12
McDonald's
13
McDonald's
Organizational Structure
CEO
GM
Director GM Development Purchase
Operations Finance
& Marketing
Senior
Country Executive
HR Manger marketing
Manager Manager Marketing
Finance
Marketing
Manager Asst mang
Executive
Operations Manager real estate
Lahore Import &
Export Admin
Manager Office
Operations Assistant
Karachi Accountants
Country
Training HR
Consultants Coordinator
Lahore
HR
Coordinator
Karachi
14
McDonald's
In Pakistan, there are two setups. First is for Punjab and NWFP, and this are headed by
Mr.Ghous Akbar (CEO), while the second region
Finance department is headed by GM finance; all the financial activities of each and every outlet
are under his command. The import and exports of ingredients and other necessity objects of the
company are also made under the command of GM finance.
15
McDonald's
The person responsible for Customer Services and Training is the Head of Human Resources but
it is the responsibility of all employees, particularly managers and area management, to
challenge questionable behavior and practices. The Human Resources Department monitors the
effectiveness of the policy at regular intervals and takes corrective action as necessary to ensure
that it is being complied with the policies of the company.
16
McDonald's
DEPARTMENTALIZATION:
McDonald‟s has a lot of products ranging from burgers to shakes to breakfast. They ensure high
quality in their products, keeping in mind the demand of the customers. Their main efforts are in
a direction of maintenance of their unique firm power, and creation of the additional added cost
through experience to keep and develop their product quality.
R&D conducts surveys to gather the data about the choices of the customers like what kind of
change they want in their product line. Then the entire concerned department work closely
together to ensure the customer‟s choices are met.
The sizes of McDonald‟s franchises are enormous and it has an advantage of economies of scale,
which is crucial for every business. McDonalds carefully observe the area in which it wants to
open its franchise like the overall demographics of that area.
17
McDonald's
McDonalds follows both vertical and horizontal coordination. Vertical coordination is used in
hierarchal system from top to the lower management a horizontal coordination is used among
peers to communicate their ideas etc.
Vertical coordination
Vertical coordination is done in McDonalds when the management conveys their ideas and
solves their ambiguities in any case the coordination of the lower management is always
involved, suppose McDonalds is about id to launch their new product like burger, breakfast etc,
then the top management i.e. is the executives receive feedback from lower management about
what does the consumer wants. Then the top management considers this fact and evaluates the
effectiveness of the launch of that product and transfers their final judgment to the lower
authority. Thus a new product is launched by the coordination of senior executive sand the lower
management. Vertical coordination is also very helpful in the case when the lower employees
need to seek assistance thus the executives those employees the needed assistance.
Horizontal coordination
In horizontal coordination the same level employees coordinate with each other to solve the
management or company‟s conflicts. For example a situation arises in which sales promotion of
the new product is involves then all the managers cooperate with each other to ensure the
promotion‟s effectiveness and its good results. Similarly if they want to solve an issue regarding
company‟s inner management, then they coordinate with each other to solve the issue without
concerning the higher authorities.
18
McDonald's
19
McDonald's
20
McDonald's
Mega environment
Political factors
On the other hand, the company operates the separate policy and instructions of
operations. The certain markets concentrate on various areas of anxiety, such as various area of
health, protection of the worker, and environment. All these elements are noticed in the state
control of licensing of restaurants in the corresponding states. There are also other researches
which specifies in infringement of McDonald's Stores concerning existing laws on employment
in the target market. As any business enterprise, these McDonald's stores should argue with
problems of procedures of employment just as their tax obligations to succeed in the foreign
market.18
Economic factors
The organizations in the fast food industry aren't excused from any disputes and
problems. Definitely, they really have the separate problems involving business factors.
Branches and privileges of networks of the enterprises of fast service as McDonald‟s has a
tendency to experience difficulty in cases where the economy of the corresponding states is
amazed by inflation and changes in exchange rates. Clients hence face a survey stalemate
through their separate budgets, whether they should spend more on these foreign networks of the
enterprises of fast food. Hence, to these chains, possibly, it is necessary to take out problems of
effects of economic environment. Especially, their problem depends on the answer of consumers
to these main principles and how it could influence their general sales. In an estimation of
operations of the company, food chains as McDonald‟s tend to import the biggest part of the raw
materials to certain territory if there is a delivery lack. Exchange rate fluctuations will also play
an essential role in company‟s operations.
21
McDonald's
As it is declared in the paragraph above, stores of McDonald should take a big reason
concerning their microenvironment. The company‟s international supply as well as the existing
exchange rates is merely a part of the overall components needed to guarantee success for the
foreign operations of McDonald‟s. It is besides obligatory, that the company has been informed
on the existing tax requirements needed by the separate governments on which they operate. It
basically guarantees smooth operations of McDonald‟s privileges. In the same relation the
company should consider also a state economic situation on which they influence on. Level at
which the economy of special state grows, defines purchasing capacity of consumers in that
country. Hence, if the privilege works in the especially economically weak state, then their
products should cost above than other existing products in the market, these privileges should
take certain regulators to support economy at the expense of manufacture growth. 19
Socio-Cultural factors
Many-sided character of business is reflected now in sharp value of the information about
the existing market. This procedure is essentially identified in area as market research.
Information concerning the reference and potential areas of the market would double as a barrier
to success of the company if this area of operations neglected. In case of McDonald‟s they
establish good system in determining of requirements of the market. The company uses concept
of consumer individuality of a product of behaviour and decisions on purchase to its advantage.
It is said, to have the main influence on understanding of prospective result of the organization in
the particular market.
20
Technological factors
McDonald‟s makes a demand for their own products. The key tool of the company for
marketing is by means of TV advertisings. There are some requirements that McDonald‟s is
inclined to interest the younger population more. Existence of game stains also toys in the meal
offered by the company shows this validity. Other demonstration of such marketing strategy is
obvious in advertising they use. They use recovered descriptions of the characters as Grimace
and Hamburger. Other advertising operations employ popular celebrities to promote their
22
McDonald's
products. Similar became endorsees for McDonald‟s all over the world “loving‟ it” campaign.
Besides, operations of McDonald‟s have considerably been infused with new technology.
Elements as the system of stock and management of the value chain of company‟s creation
consider easy payments for the suppliers and other sellers with which the person supplies in the
corresponding agreement on the markets. Technology integration into operations of McDonald‟s
tends to increase cost of their products. Basically it is shown in improvements on its chain of
creation of value. Improvement of stock system just as its systems of deliveries allows the
company to work in the international context.21
Legal factors
There was a current roar against the fast food industry. It has forced McDonald‟s to apply
more close examination on their corporate social responsibility. As a whole it has addressed to
requirement of the company to generate its corporate reputation to more positive and the more
socially responsible company. The reputation of McDonald‟s is obviously a huge question.
Noticed on company‟s web site, seems, that they have got steps to take in hand the key social
condemnation that they abused them in the last decades. The company gave to their clients the
corresponding data in which they need the relation of food essence of their products. This is to
attend to the arguments of obesity charged against the products of the company. In the same way
consumers have provided freedom in a choice, whether they want to buy the meal.
It is connected with socio-cultural market signs which they influence. For example,
operations in predominantly Muslim countries demand, that their meat corresponded
to Halal requirements of the law. Other legal concepts as tax obligations, employment standards,
and requirements to a degree of quality are only a few of important elements on which the
company should consider. Otherwise, smooth operations should be difficult to reach. 22
Environmental factor
23
McDonald's
TASK ENVIRONMENT:
The summary of the task environment which is by definition a specific organizations or groups
that affect the organization, which includes competitors, suppliers, customers, strategic allies and
regulators. The work force at McDonald's also have some say in their working hours, such as if
they prefer the morning, mid-day, or evening shifts in the restaurant. Direct competitors refer to
firms producing the same products or services as McDonald's does.
McDonald's has thousands of competitors, each seeking a share of the market. McDonald's
recognizes that it is up against not only other large burger and chicken chains but also
independently owned fish and chips shops and other eat-in or take-out establishments. A
company like McDonald's therefore, has to develop competitive strategies that differentiate it
from its rivals.
24
McDonald's
Competitive Analysis
25
McDonald's
BCG Matrix:
According to BCG Matrix McDonald‟s is a star. The reason for this is its high market growth
and high market share in the Pakistani market. On the other hand KFC and Pizza Hut are the
cash cows because of their low growth rate and high market share. During past some years KFC
and Pizza Hut have lost their market growth because of the fact that they lost their standard war
to their competitor i.e. McDonald‟s. Another direct competitor of McDonald‟s is Subway.
According to BCG Matrix it is a dog. Some of the reasons that are responsible for its low market
share and low market growth are the less expansion strategies being followed by the company.
Secondly they are not focusing at all on all the major cities, rather they are only focused on the
target segments of Lahore and Karachi.
26
McDonald's
27
McDonald's
• There is price competition among McDonalds and its direct competitors like Kfc and
indirect competitors like Pizza Hut.
• McDonalds is engaged in an intense advertising battle with its competitors who include
both advertisement promotion and price competition.
• McDonalds is in an intense product competition with its competitors as all are striving to
introduce innovative products at any time period possible.
• Above all these, they are trying to improve their service and operations efficiency in
order to attract more customers.
• The competition is still not very intense as the industry is still in the growth stage as
McDonalds has a upper hand in few areas whereas as its competitors has in others.
• Currently fixed costs for each competitor in the industry is high which the only entry
barrier is for any new comer.
• The capital requirement to enter into the middle class segment of the industry is very
large as the industry is already penetrated by giants as McDonalds.
• In the fast food industry there is no or very less product differentiation. So new
competitors can come up with innovative products into the market which may pose a
threat to McDonalds.
28
McDonald's
• The most important factor that constitutes a barrier of any potential entry into the market
is the economies of scale that McDonalds currently have.
• There is lack of adequate distribution channels for new entrants as no new entrants would
have enough funds to either join a distribution channel or create their own whereas
McDonalds has an adequate distribution channel.
• The bargaining power of suppliers in the fast food industry for McDonalds is very low as
there are a number of local suppliers from whom McDonalds buy few ingredients
whereas their major ingredients come from foreign suppliers.
• There are a number of foreign and local companies who would at any time be willing to
supply McDonalds the ingredients.
• Also the fast food industry importance to the suppliers is much more as it is very
profitable and also McDonalds always has the option to switch suppliers.
29
McDonald's
30
McDonald's
SWOT Analysis
On the basis of environmental analysis of McDonald's, the structural analysis of fast food
industry, and the assessment of internal resources of the company, following strengths,
weaknesses, opportunities and threats are there for McDonald's:
31
McDonald's
STRENGTHS
McDonald's strong financial position, growing cash flow, solid international presence
makes McDonald's one of the consumer products with a high growth rate.
Working environment in McDonald's is very friendly and all the employees of the
company are treated as members of McDonald's family.
McDonald's has menu, which has more breadth and depth than any other fast food
franchisee in Pakistan.
Well documented fair and strict criteria for recruitment of employees.
Flexible workforce, which can work on more than one job at a time.
32
McDonald's
Secured jobs.
WEAKNESSES
Along with a lot of strengths there are some weaknesses also by which McDonald‟s suffers:
Management of McDonald‟s does not consider other fast-food chains or outlets in Lahore
as its competitor e.g. KFC Pizza Hut & local burger market which are their competitors
in real sense.
With the passage of time the expenses of McDonald‟s are increasing. The reason is the
big part of fixed costs e.g. fixed overheads & fixed salaries of all the employees, which
increases directly with the decrease in “production.”
Dominant class in Pakistan is middle- income class for which it is difficult to afford the
menu – items of McDonald‟s or at least middle-class cannot enjoy McDonald‟s product
more frequently.
McDonald's has product portfolio (menu) of greater width and depth; this broad array of
products allows attacks from niche players.
Some of the products of the company are not competitively priced.
All the raw materials are imported from different countries; this increases their cost of
production.
33
McDonald's
OPPORTUNITIES
The marvelous growth in # of stores outlets all over the world in the result of great opportunities
granted to McDonalds.
THREATS
McDonald‟s people say that there is no threat for them and it can also be a big threat for
them.
Threat of new entrants is also working there because industry is growing at a rapid speed
and a lot of attraction is there for new- comers. Entry barriers are also low in Pakistan so
this threat really works for McDonald‟s.
Double digit inflation prevailing in the country, which in turn increases the cost of
production.
Continuous devaluation of rupee that has increased the import bill of raw materials.
Imposition of heavy taxes on fast food industry including Sales Tax and Entertainment
Tax.
Complex rules and regulations imposed by government.
34
McDonald's
HRM is aimed at recruiting capable, flexible and committed people, managing and
rewarding their performance and developing key competencies.
The HRM model emphasizes:
• The treatment of workers as individuals rather than pan of a Collective work force.
Employees of McDonald‟s fall into three groups‟ restaurant workers, corporate staff, and
franchise owners. The fast group is the biggest –a local McDonald‟s restaurant usually
employs between 25 and 35 people.
Control at McDonald's is not merely achieved by direct supervision, machines, the
physical layout of the restaurant and the detailed prescription of rules and procedures but
also through recruitment.
When asked how they motivated employees, managers at McDonalds and senior
management level stressed the importance of good communication. This may take the
form of 'employee of the month' awards, day trips and cash bonuses or of encouraging
workers to strive for promotion and take on responsibility.
35
McDonald's
•Promotion on Performance:
McDonalds follow a promotion on performance too. Every
employee in McDonalds has to start from the lowest job offered. He has to remain there
and his performance is being scrutinized. If he is found to possess certain necessary skills
for a higher job, he is promoted.
36
McDonald's
Leadership Roles
• As already told every employee at McDonalds has to start from the lowest job and
then gradually progresses. The only reason is to create awareness in him about the
conflicts, problems and point of views of the staff at all levels. So until he becomes a
leader, he gains all the information about all the employees working at all levels. So he is
more able to help his employees then when he is in the management.
• Also as McDonald‟s motto is that they give more preference to their employees
rather than anyone else. So the management is bound to give more attention towards the
employees.
• So it is all about the transformational role of the leadership that encourages rather
than control employees to get involved in the company.
37
McDonald's
Intensive Strategies
• Market Penetration:
• Product Development:
Diversification Strategies
• Concentric diversification:
McDonalds is introducing new deals which would attract more price sensitive
customers to them too.
• Horizontal diversification:
McDonalds has introduced the new „Mc Arabia‟ and the new „Arabian rice‟ for its
present customers.
38
McDonald's
Defensive Strategies
• Retrenchment:
McDonalds has a strategy of closing down all the non-profitable branches in
Pakistan which they think are not up to the mark in terms of quality, objectives and sales.
39
McDonald's
Conflicts
40
McDonald's
McDonald‟s is all the time trying to be on time with new trends, demand or technology, even
while striving to achieve consistency in the operation of its many outlets. The breakfast menu,
salads, Chicken McNuggets, and the McLean Deluxe sandwich were all examples of how the
company tried to appeal to a wider range of consumers.
One of the main company‟s orientations now is the development of a strong company-wide
environmental policy declaring that McDonald‟s is committed to protecting the environment for
future generations, and that it believes that business leaders must also be environmental leaders.
In order to maintain the highest quality of their products McDonald‟s standardized the
production methods and processes. The company just adjusts to different culinary differences in
different countries. For example in Pakistan they have offered Halal food.
41
McDonald's
Recommendations
In order to reduce of employee training spending and to lower turnover, we would like to
suggest:
To give the job just for highly motivated people. It means, that they are going to be loyal
and not to leave job so fast;
New employees would be trained by employees, who are working longer. In this way,
company reduces training spending, new employees are trained by the people, who are
working inside the company and do the same things every day.
To motivate employees and always take care about their expectations. It can be money
premiums for good working in the end of the month (or year), some employees parties,
‟‟Employee of the week (month)‟‟ competition.
To make a line of organic food in their menu and take a look what is more popular and
healthy for their customers. If it is going more popular than usual menu food, it is more
worth to make all food in organic way, even it is more expensive. First of all, people like
what is natural, and then they are interested in the price.
To make big advertisement companies declaring organic food pluses and make it more
popular in such way. Many people loves McDonald‟s food, so it has an authority and can
show good example of necessity of organic food in people life and compare how organic
and usual McDonald‟s food effect customers‟ health and all the nature about them.
42
McDonald's
McDonald‟s is big food supplying company, and all of us know, how food affects our
health. It is one of the main factors, what built our body and strength our brains. Knowing
that, McDonald‟s should:
Suggest just high quality, improved products, which is full of vitamins and minerals. So,
it means that the company must improve their products, all the food must be certificated
and fit for all healthy food standards.
Be in a contact with suppliers, who supply products for McDonald‟s food and always
check if the products is natural, high standard and healthy for all of age customers.
Contact with doctors, scientist and improve their products to fit for all of age customers,
even they have some problems with their stomach. It means to make measures and find
what the best is for all possible customers.
43
McDonald's
CONCLUSIONS
44
McDonald's
REFERENCES
http://www.mcspotlight.org/issues/intro.html
3. Key Ingredients of the McDonald's Experience [online], Available from the Internet:
http://www.meettheboss.tv/Article/11/Key-Ingredients-of-the-McDonald's-Experience/
http://www.aboutmcdonalds.com/mcd/our_company/bios.html>
<http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm>
45
McDonald's
11. Resource of organization‟s history, managers, mission, vision, values, main products and
markets [online]. Available from the Internet:
http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destinati
on=http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html
12. Social Analysis In Macro Environment: 2009 [online]. Available from the Internet:
< http://www.koellay.com/2009/05/social-analysis-in-macro-environment.html>
<http://www.marketingteacher.com/swot/mcdonalds-swot.html>
46